Delek US Holdings (DK) risk factors, FY2024 10-K

Risks Relating to Our Industries

1. 01Developments which impact the global oil markets have had, may continue to have, or may have an adverse impact on our business, our future results of operations and our overall financial performance
2. 02disruptions in the labor market. There can be no assurance as to how long such uncertainty will persist or that a recurrence of price weakness will not arise in the future
3. 03A regional or global disease outbreak could result in financial and operational impacts that have a material adverse effect on our business, financial condition, results of operation and liquidity
4. 04A substantial or extended decline in refining margins would reduce our operating results and cash flows and could materially and adversely impact our future rate of growth and the carrying value of our assets
5. 05Some of these factors can vary by region and may change quickly, adding to market volatility, while others may have longer-term effects. The long-term effects of these and other factors on prices for crude oil, refinery feedstocks and refined products could be substantial
6. 06We operate in a highly regulated industry and increased costs of compliance with, or liability for violation of, existing or future laws, regulations and other requirements could significantly increase our costs of doing business, thereby adversely affecting our profitability

Risks Related to Workplace Safety Regulations

1. 07The availability and cost of RINs and other required credits could have an adverse effect on our financial condition and results of operations
2. 08sufficient RINs are unavailable for purchase, if we have to pay a significantly higher price for RINs or if we are otherwise unable to meet the RFS-2 mandates, our financial condition and results of operations could be adversely affected
3. 09Increased supply of and demand for alternative transportation fuels, increased fuel economy standards and increased use of alternative means of transportation could lead to a decrease in transportation fuel prices and/or a reduction in demand for petroleum-based transportation fuels
4. 10Competition in the refining and logistics industry is intense, and an increase in competition in the markets in which we sell our products could adversely affect our earnings and profitability
5. 11Decreases in commodity prices may lessen our borrowing capacities, increase collateral requirements for derivative instruments or cause a write-down of inventory
6. 12Acts of terror or sabotage, threats of war, armed conflict, or war may have an adverse impact on our business, our future results of operations and our overall financial performance
7. 13Legislative and regulatory measures to address climate change and GHG emissions could increase our operating costs or decrease demand for our refined products
8. 14imposes a charge on methane emissions from certain petroleum system facilities and could have an indirect impact on demand for the goods and services of our business. Our business could also be impacted by governmental initiatives to incentivize the conservation of energy or the use of alternative energy sources
9. 15Increasing attention to environmental, social and governance matters may impact our business, financial results, cost of capital, or stock price

Risks Relating to Our Business

1. 16We are particularly vulnerable to disruptions to our refining operations because our refining operations are concentrated in four facilities
2. 17Because all of our refining operations are concentrated in the Tyler, El Dorado, Big Spring and Krotz Springs refineries, significant disruptions at one of these facilities could have a material adverse effect on our consolidated financial results
3. 18The physical effects of climate change and severe weather present risks to our operations
4. 19Our operations are subject to business interruptions and casualty losses. Failure to manage risks associated with business interruptions and casualty losses could adversely impact our operations, financial condition, results of operations and cash flows
5. 20There are certain environmental hazards and risks inherent in our operations that could adversely affect those operations and our financial results
6. 21The costs, scope, timelines and benefits of our refining projects may deviate significantly from our original plans and estimates
7. 22We depend upon our logistics segment for a substantial portion of the crude oil supply and refined product distribution networks that serve our Tyler, Big Spring and El Dorado refineries
8. 23Interruptions or limitations in the supply and delivery of crude oil, or the supply and distribution of refined products, may negatively affect our refining operations and inhibit the growth of our refining operations
9. 24We are subject to risks associated with significant investments in the Permian Basin
10. 25We have made investments in joint ventures which subject us to additional risks, over which we do not have full control and which have unique risks
11. 26General economic conditions may adversely affect our business, operating results and financial condition
12. 27We may be adversely affected by the effects of inflation
13. 28Disruption of our supply chain could adversely impact our ability to refine, manufacture, transport and sell our products
14. 29Our business could be adversely impacted as a result of our failure to retain or attract key talent
15. 30We have capital needs to finance our crude oil and refined products inventory for which our internally generated cash flows or other sources of liquidity may not be adequate
16. 31Our insurance policies historically do not cover all losses, costs or liabilities that we may experience, and insurance companies that currently insure companies in the energy industry may cease to do so or substantially increase premiums
17. 32Our ongoing study of strategic options to unlock and enhance stockholder value poses additional risks to our business
18. 33We may not be able to successfully execute our strategy of growth through acquisitions
19. 34Acquisitions involve risks that could cause our actual growth or operating results to differ adversely compared with our expectations
20. 35We may not enter into a cost sharing agreement with the DOE’s Office of Clean Energy Demonstrations
21. 36Our future results will suffer if we do not effectively manage our expanded operations
22. 37We may incur significant costs and liabilities with respect to investigation and remediation of environmental conditions at our facilities
23. 38We could incur substantial costs or disruptions in our business if we cannot obtain or maintain necessary permits and authorizations or otherwise comply with health, safety, environmental and other laws and regulations
24. 39Our Tyler refinery primarily distributes refined petroleum products via truck or rail. We do not have the ability to distribute these products into markets outside our local market via pipeline
25. 40An increase in competition, and/or reduction in demand in the markets in which we purchase feedstocks and sell our refined products, could increase our costs and/or lower prices and adversely affect our sales and profitability
26. 41Compliance with and changes in tax laws could adversely affect our performance
27. 42Adverse weather conditions or other unforeseen developments could damage our facilities, reduce demand for our products and services and impair our ability to produce and deliver refined petroleum products
28. 43Our operating results are seasonal and generally lower in the first and fourth quarters of the year for our refining and logistics segments. We depend on favorable weather conditions in the spring and summer months
29. 44A substantial portion of the workforce at our refineries is unionized, and we may face labor disruptions that would interfere with our operations
30. 45We rely on information technology in our operations, and any material failure, inadequacy, interruption, cyber-attack or security failure of that technology could harm our business
31. 46If we lose any of our key personnel, our ability to manage our business and continue our growth could be negatively impacted
32. 47Our business requires us to make significant capital expenditures and to maintain and improve our refineries and logistics assets
33. 48If our cost efficiency measures are not successful, we may become less competitive

Risks Related to Ownership of Our Common Stock

1. 49The price of our common stock may fluctuate significantly, and you could lose all or part of your investment
2. 50Stockholder activism may negatively impact the price of our common stock
3. 51In March 2022, we entered into a stock purchase and cooperation agreement with IEP Energy Holding LLC and certain of its affiliates, pursuant to which we agreed to purchase an aggregate of 3,497,268 shares of our common stock, at a price per share of $18.30, which equals an aggregate purchase price of $64.0 million
4. 52Future sales of shares of our common stock could depress the price of our common stock, and could result in substantial dilution to our stockholders
5. 53We depend upon our subsidiaries for cash to meet our obligations and pay any dividends
6. 54We may be unable to pay future regular dividends in the anticipated amounts and frequency set forth herein
7. 55Provisions of Delaware law and our organizational documents may discourage takeovers and business combinations that our stockholders may consider in their best interests, which could negatively affect our stock price

Financial Instrument and Credit Profile Risks

1. 56Changes in our credit profile could affect our relationships with our suppliers, which could have a material adverse effect on our liquidity and our ability to operate our refineries at full capacity
2. 57Our commodity and interest rate derivative activity may limit potential gains, increase potential losses, result in earnings volatility and involve other risks
3. 58We are exposed to certain counterparty risks which may adversely impact our results of operations
4. 59From time to time, our cash and credit needs may exceed our internally generated cash flow and available credit, and our business could be materially and adversely affected if we are not able to obtain the necessary cash or credit from financing sources
5. 60Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities
6. 61In addition, a substantial portion of our debt has a variable rate of interest, which increases our exposure to interest rate fluctuations, to the extent we elect not to hedge such exposures
7. 62Our debt agreements contain operating and financial restrictions that might constrain our business and financing activities
8. 63Fluctuations in interest rates could materially affect our financial results
9. 64We may refinance a significant amount of indebtedness and otherwise require additional financing; we cannot guarantee that we will be able to obtain the necessary funds on favorable terms or at all
10. 65We recorded goodwill and other intangible assets that could become impaired and result in material non-cash charges to our results of operations in the future
11. 66An impairment of our long-lived assets or goodwill could negatively impact our results of operations and financial condition