What caused DK's earnings to decline in Q4?

Delek US Holdings, Inc. (DK) experienced a decline in earnings in the fourth quarter (Q4) primarily due to lower refining crack spreads and reduced wholesale activity, which significantly impacted the Refining segment's performance.

1. **Refining Segment Challenges**:
- The Refining segment's adjusted EBITDA decreased to $10.2 million in Q4, down from $296.1 million in the same quarter of the previous year. This decline was attributed to lower refining crack spreads. In the third quarter of 2024, DK's benchmark crack spreads fell by an average of 49.1% compared to the prior year's levels.
- The segment's performance was also affected by lower year-on-year contributions, which led to a net loss of $1.45 per share in Q4. This loss per share was narrower than the Zacks Consensus Estimate of a loss of $1.71 but reflected a deterioration from the year-ago quarter’s profit of $2.02 per share.
2. **Logistics Segment Performance**:
- In contrast, the Logistics segment showed resilience, with an adjusted EBITDA of $106.1 million in Q4, an increase from $96.5 million in the year-ago quarter. This segment's strong performance was due to strategic investments in midstream infrastructure and operational efficiencies.
3. **Company-Wide Impact**:
- DK's consolidated net revenues decreased by 35.9% year-over-year to $3 billion in Q4. This decline missed the Zacks Consensus Estimate by $48 million.
- The company's overall adjusted EBITDA was $70.6 million in Q4, down from $345.1 million in the same quarter of the previous year. This reduction highlighted the pressure on profitability due to refining margins' contraction.

In summary, Delek US Holdings' Q4 earnings decline was mainly driven by the Refining segment's weak performance resulting from lower refining crack spreads and reduced wholesale activity, despite some stability provided by the Logistics segment.