Delek US: record $1.13bn profit, but a third of it came from one-off biofuel waivers

On 6 November Delek US reported third-quarter 2026 results: revenue of $4,392.1m (+52.1% YoY), EBITDA of $1,630.3m, net income of $1,133.8m. Growth accelerated from +47.8% in Q2, but a large part of the profit is one-off: biofuel waivers and obligation revaluation. At an LTM EV/EBITDA of 2.82 and a portal-model upside of +53%, the share looks attractive, though the durability of the margin is open to question.

Key takeaways

— Revenue rose 52.1% on crack spreads that climbed 191.2%

— EBITDA margin of 37.1% is nearly triple last year's 13.8%, but one-off items inflated it

— Of the $1,133.8m profit, $334.7m came from biofuel waivers

— Leverage of 1.03x LTM EBITDA is moderate, and net debt fell to $2.5bn

— Free cash flow of $456.1m supported buybacks and dividends

— Dividend yield of 1.21% is modest, but the company raised its quarterly dividend by 18%

— At 2.82x LTM EV/EBITDA and a +53% portal-model upside, there is room left

Attractiveness

Key figures, USD bn

Revenue rose 52.1% on crack spreads that climbed 191.2%

Third-quarter 2026 revenue was $4,392.1m versus $2,887.0m a year earlier, up 52.1%. That is an acceleration from Q2, when revenue grew 47.8%. The main driver is market conditions: Delek US benchmark crack spreads rose an average of 191.2% year on year, as stated in the release.

Adjusted EBITDA in the refining segment reached $1,242.1m versus $697.4m a year earlier. Logistics added $142.9m, slightly above last year's $138.1m. The revenue increase is almost entirely explained by refining margin rather than volumes: refinery capacity remains 302,000 barrels per day, and the release does not indicate a material rise in utilisation.

EBITDA margin of 37.1% is nearly triple last year's 13.8%, but one-off items inflated it

Quarterly EBITDA was $1,630.3m, a margin of 37.1% versus 13.8% a year earlier. However, the company's adjusted EBITDA is $1,280.4m, and excluding biofuel waivers it is $1,038.1m. The gap between reported and adjusted EBITDA – $349.9m – comes from one-off items, primarily the revaluation of RINs obligations.

Adjustments include a $377.8m reduction in the RINs obligation due to lower RINs prices and hedging, plus a $234.2m reversal of prior-period waivers. These items are not related to operations and are unlikely to recur at the same scale. Without them, the EBITDA margin would be around 23.6% – still well above last year's, but not triple.

Of the $1,133.8m profit, $334.7m came from biofuel waivers

Net income was $1,133.8m versus $178.0m a year earlier, up 537.0%. Adjusted net income was $843.0m, or $13.55 per share. The $290.8m after-tax difference is adjustments, the largest tied to biofuel waivers: the EPA granted a full exemption from RFS obligations for the Krotz Springs refinery for 2024 and for all refineries for 2025, reducing obligations by $334.7m.

Excluding waivers, adjusted EPS would have been $10.53 – still a record high, but 22% below the reported $13.55. Profit was also supported by operating income rising to $1,518.9m. The durability of this level depends on high crack spreads persisting: the company points to a "constructive margin environment" for the rest of the year but gives no guarantees for 2027.

Leverage of 1.03x LTM EBITDA is moderate, and net debt fell to $2.5bn

Net debt at 30 September 2026 was $2,478.3m, or $2.5bn. That is down from $2.6bn at 30 June 2026 and $2.9bn at 30 September 2025. The $0.4bn decline over the year reflects strong operating cash flow. The ratio of net debt to LTM EBITDA is 1.03x, moderate for a refiner with cyclical revenue.

The company plans to repay the remaining $850m term loan in Q4, further reducing debt. Quarterly interest expense was $73.4m, below last year's $93.1m. Liquidity is high: cash of $1,335.1m, and excluding DKL, Delek US had $1,286.1m. This provides room for buybacks and dividends.

Free cash flow of $456.1m supported buybacks and dividends

Quarterly operating cash flow was $567.4m versus $44.0m a year earlier. Capital expenditure was $111.3m, giving free cash flow of $456.1m. This allowed the company to allocate $50.0m to buybacks and pay $15.6m in dividends, as well as reduce debt.

However, operating cash flow includes a working capital change of minus $808.8m, meaning an outflow. Without this outflow, cash flow would have been even higher, but a reversal is possible next quarter. The company expects to buy back up to $100m of shares in Q4, which should support the price.

Dividend yield of 1.21% is modest, but the company raised its quarterly dividend by 18%

Over the last 12 months, the dividend yield was 1.21%. The company paid $15.6m in dividends for the quarter and raised its regular quarterly dividend by about 18% to $0.30 per share. At a price of $62.49, the annual dividend of $1.20 gives a yield of about 1.9% – above the historical level but still below the key rate.

Our estimate for the 2026 dividend – based on current profit and the payout ratio – is about $1.20 per share, corresponding to a 1.9% yield at the current price. That is modest for a cyclical company, but the payout is covered by profit and cash flow. The risk of a dividend cut is low as long as crack spreads remain high.

At 2.82x LTM EV/EBITDA and a +53% portal-model upside, there is room left

The LTM EV/EBITDA multiple is 2.82x, and P/E LTM is 3.24x. These are low values, reflecting cyclicality and one-off effects in profit. The multiple's own history is not in the facts, so a comparison with its three-year average is not possible. But even adjusting for one-off items, the valuation looks low.

On the portal's model, repricing EBITDA to current commodity prices at the target EV/EBITDA gives an upside to fair value of +53%. This is our own estimate, not a consensus. After the report, the share rose 2.3% on the publication day and 4.0% from the release to 9 November, reflecting the positive, but upside remains.

Valuation on the latest reported figures

Bottom line

Delek US's Q3 2026 report showed record profit of $1,133.8m, but a large part is one-off biofuel waivers and obligation revaluation. Operationally, the company benefited from high crack spreads, and the EBITDA margin excluding one-offs remains high. Debt is falling, cash flow is strong, and the dividend is rising. At 2.82x LTM EV/EBITDA and a +53% portal-model upside, there is room left, but cyclicality and one-off effects warrant caution. Verdict – attractive.