XML 73 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
Segment Data
 12 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
Segment Data Segment Data
We aggregate our operating segments into three reportable segments: refining, logistics and retail.
Our corporate activities, results of certain immaterial operating segments, including our Canadian crude trading operations (as discussed in Note 12) , Alon's asphalt terminal operations effective with the Delek/Alon Merger, our equity method investment in Alon prior to the Delek/Alon Merger, as well as our discontinued Paramount and Long Beach, California refinery and California renewable fuels facility operations (acquired as part of the Delek/Alon Merger - see Note 8 for further discussion) and the discontinued Retail Entities operations (for 2016), and intercompany eliminations are reported in the corporate, other and eliminations segment. In November 2016, Delek sold the Retail Entities to COPEC, as further discussed in Note 8. On March 16, 2018, Delek sold to World Energy, LLC (i) all of Delek’s membership interests in the California renewable fuels facility, (ii) certain refining assets and other related assets located in Paramount, California and (iii) certain associated tank farm and pipeline assets and other related assets located in California. On May 21, 2018, Delek sold certain assets and operations of four asphalt terminals (included in Delek's corporate/other segment), as well as an equity method investment in an additional asphalt terminal, to an affiliate of Andeavor. The transaction to dispose of certain assets and liabilities associated with our Long Beach, California refinery, to Bridge Point Long Beach, LLC, closed July 17, 2018.
Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of the reportable segments based on the segment contribution margin. Segment contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization. Operations which are not specifically included in the reportable segments are included in the corporate and other category, which primarily consists of net revenues, operating costs and expenses, depreciation and amortization expense and interest income and expense associated with our discontinued operations and with our corporate headquarters.
The refining segment processes crude oil and other purchased feedstocks for the manufacture of transportation motor fuels, including various grades of gasoline, diesel fuel, aviation fuel, asphalt and other petroleum-based products that are distributed through owned and third-party product terminals. Prior to the Delek/Alon Merger, the refining segment had a combined nameplate capacity of 155,000 bpd, including the 75,000 bpd Tyler refinery and the 80,000 bpd El Dorado refinery. The refining segment also owns and operates two biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas and Cleburne, Texas. Effective with the Delek/Alon Merger, our refining segment now also includes the operations of the Big Spring refinery with a nameplate capacity of 73,000 bpd, the Krotz Springs refinery, with a nameplate capacity of 74,000 bpd and the Bakersfield refinery, which has not processed crude oil since 2012 due to the high cost of crude oil relative to product yield and low asphalt demand. Alon's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States and also ships and sells gasoline into wholesale markets in the southern and eastern United States. Motor fuels are sold under the Alon brand through various terminals to supply Alon branded retail sites, including our retail segment convenience stores. In addition, Alon sells motor fuels through its wholesale distribution network on an unbranded basis.
Our refining segment has services agreements with our logistics segment, which, among other things, requires the refining segment to pay service fees based on the number of gallons sold and a sharing of a portion of the margin achieved in return for providing marketing, sales and customer services at the Tyler refinery, and effective March 1, 2018, at the Big Spring refinery (see Note 6 for further discussion regarding the new marketing agreement). These intercompany transaction fees in regards to the Tyler refinery were $21.8 million, $20.4 million and $16.9 million
during the years ended December 31, 2018, 2017 and 2016, respectively. The intercompany transaction fees in regards to the Big Spring refinery for the year ended December 31, 2018 were $11.2 million. Additionally, the refining segment pays crude transportation, terminalling and storage fees to the logistics segment for the utilization of pipeline, terminal and storage assets, including effective March 1, 2018, those related to the Big Spring Logistic Assets Acquisition discussed further in Note 6. These fees were $200.4 million, $129.6 million and $123.2 million during the years ended December 31, 2018, 2017 and 2016, respectively. The logistics segment also sold $2.6 million, $5.6 million and $6.7 million of RINs to the refining segment during the years ended December 31, 2018, 2017 and 2016, respectively. The refining segment recorded sales revenues from the retail segment of $438.2 million and $186.8 million during the years ended December 31, 2018 and 2017, respectively, and recorded sales revenues from the Retail Entities, the operations of which are included in discontinued operations, in the amount of $292.1 million during the year ended December 31, 2016. The refining segment includes sales revenue from our logistics segment of $349.0 million, $57.5 million and $26.0 million during the years ended December 31, 2018, 2017 and 2016, respectively. The refining segment also includes sales revenue of $51.8 million and $11.8 million from sales of asphalt to our other segment during the years ended December 31, 2018 and 2017.
Our logistics segment owns and operates crude oil and refined products logistics and marketing assets. The logistics segment generates revenue by charging fees for gathering, transporting and storing crude oil and for marketing, distributing, transporting and storing intermediate and refined products in select regions of the southeastern United States and west Texas for our refining segment and third parties, and sales of wholesale products in the west Texas market. The logistics segment is currently managing a long-term capital project on behalf of the Company for the construction of a gathering system in the Permian Basin and a long-haul crude oil pipeline that will originate in Midland, Texas and terminate near Houston, Texas. The logistics segment received management fees of $4.8 million during the year ended December 31, 2018, from the Corporate/Other segment for the management of this project.The logistics segment incurs costs in connection with the construction of the assets and is subsequently reimbursed by the Corporate/Other segment.
Effective with the Delek/Alon Merger July 1, 2017 (see Note 3), Delek's retail segment includes the operations of Alon's owned and leased convenience store sites located primarily in central and west Texas and New Mexico. These convenience stores typically offer various grades of gasoline and diesel under the Alon brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money orders to the public, primarily under the 7-Eleven and Alon brand names. Substantially all of the motor fuel sold through our retail segment is supplied by our Big Spring refinery, which is transferred to the retail segment at prices substantially determined by reference to published commodity pricing information. We operated 279 and 302 stores as of December 31, 2018 and 2017, respectively.
In November 2018, we terminated the license agreement with 7-Eleven, Inc. and the terms of such termination require the removal of all 7-Eleven branding on a store-by-store basis by the earlier of December 31, 2021 or the date upon which our last 7-Eleven store is de-identified or closed. Merchandise sales at our convenience store sites will continue to be sold under the 7-Eleven brand name until 7-Eleven branding is removed pursuant to the termination.
All inter-segment transactions have been eliminated in consolidation.
The following is a summary of business segment operating performance as measured by contribution margin for the period indicated (in millions):
 
 
As of and For the Year Ended December 31, 2018
(In millions)
 
Refining
 
Retail
 
Logistics
 
Corporate,
Other and Eliminations
 
Consolidated
Net revenues (excluding intercompany fees and sales)
 
$
8,771.4

 
$
915.4

 
$
416.8

 
$
129.5

 
$
10,233.1

Intercompany fees and sales
 
839.0

 
—

 
240.8

 
(1,079.8
)
 
—

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Cost of materials and other
 
8,279.9

 
755.8

 
429.1

 
(904.3
)
 
8,560.5

Operating expenses (excluding depreciation and amortization presented below)
 
465.4

 
100.7

 
58.7

 
20.2

 
645.0

Segment contribution margin
 
$
865.1

 
$
58.9

 
$
169.8

 
$
(66.2
)
 
1,027.6

Depreciation and amortization
 
133.7

 
24.6

 
26.0

 
15.1

 
199.4

General and administrative expenses
 
 
 
 
 
 
 
 
 
247.6

Other operating income, net
 
 
 
 
 
 
 
 
 
(31.3
)
Operating income
 
 
 
 
 
 
 
 
 
$
611.9

Total assets
 
$
5,430.1

 
$
310.6

 
$
624.6

 
$
(604.7
)
 
$
5,760.6

Capital spending (excluding business combinations)(1)
 
$
203.9

 
$
10.0

 
$
11.6

 
$
91.7

 
$
317.2


 
 
As of and For the Year Ended December 31, 2017
(In millions)
 
Refining
 
Retail
 
Logistics
 
Corporate,
Other and Eliminations
 
Consolidated
Net revenues (excluding intercompany fees and sales)
 
$
6,364.5

 
$
426.7

 
$
382.3

 
$
93.6

 
$
7,267.1

Intercompany fees and sales
 
256.1

 
—

 
155.8

 
(411.9
)
 
—

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
 
Cost of materials and other
 
5,852.2

 
350.3

 
372.9

 
(247.8
)
 
6,327.6

Operating expenses (excluding depreciation and amortization presented below)
 
317.7

 
49.6

 
43.3

 
18.4

 
429.0

Segment contribution margin
 
$
450.7

 
$
26.8

 
$
121.9

 
$
(88.9
)
 
510.5

Depreciation and amortization
 
109.2

 
7.0

 
21.9

 
15.2

 
153.3

General and administrative expenses
 
 

 
 
 
 
 
 
 
175.9

Other operating expense, net
 
 
 
 
 
 
 
 
 
1.0

Operating income
 
 
 
 
 
 
 
 
 
$
180.3

Total assets (2)
 
$
4,846.5

 
$
331.4

 
$
443.5

 
$
313.8

 
$
5,935.2

Capital spending (excluding business combinations)(3)
 
$
128.2

 
$
11.7

 
$
18.4

 
$
19.2

 
$
177.5


 
 
As of and For the Year Ended December 31, 2016
(In millions)
 
Refining
 
Logistics
 
Corporate,
Other and Eliminations
 
Consolidated
Net revenues (excluding intercompany fees and sales)
 
$
3,605.1

 
$
301.3

 
$
(0.6
)
 
$
3,905.8

Intercompany fees and sales (4)
 
318.1

 
146.8

 
(172.8
)
 
292.1

Operating costs and expenses:
 
 
 
 
 
 
 
 
Cost of materials and other
 
3,614.1

 
302.2

 
(103.4
)
 
3,812.9

Operating expenses (excluding depreciation and amortization presented below)
 
212.4

 
37.2

 
(0.3
)
 
249.3

Insurance proceeds - business interruption
 
(42.4
)
 
—

 
—

 
(42.4
)
Segment contribution margin
 
$
139.1

 
$
108.7

 
$
(69.7
)
 
178.1

Depreciation and amortization
 
88.2

 
20.8

 
7.4

 
116.4

General and administrative expenses
 
 
 
 
 
 
 
106.1

Other operating expense, net
 
 
 
 
 
 
 
4.8

Operating loss
 
 
 
 
 
 
 
$
(49.2
)
Capital spending (excluding business combinations) (3)
 
$
27.9

 
$
11.8

 
$
6.6

 
$
46.3


(1) Capital spending excludes transaction costs capitalized in the amount of $0.4 million during the year ended December 31, 2018, that relate to the Big Spring Logistic Assets Acquisition.
(2) Assets held for sale of $160.0 million are included in the corporate, other and eliminations segment as of December 31, 2017.
(3) Capital spending excludes capital spending associated with the California Discontinued Entities of $2.6 million during the year ended December 31, 2017. Capital spending excludes capital spending associated with the Retail Entities of $14.4 million during the year ended December 31, 2017 .
(4) Intercompany fees and sales for the refining segment include revenues from the Retail Entities of $292.1 million during the year ended December 31, 2016, the operations of which are reported in discontinued operations.