Delek US Holdings, Inc.DK
Delek US Holdings, Inc. Fair Value Disclosure
Fair Value Measurements
Our assets and liabilities that are measured at fair value include commodity derivatives, interest rate derivatives, investment commodities, environmental credits obligations, and our Inventory Intermediation Agreement. ASC 820, Fair Value Measurements ("ASC 820") requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs. Level 3 inputs are unobservable inputs for the asset or liability reflecting our assumptions about pricing by market participants.
Our commodity derivative contracts, which consist of commodity swaps, exchange-traded futures, options and physical commodity forward purchase and sale contracts (that do not qualify for the NPNS exception under ASC 815), are valued based on exchange pricing and/or price index developers such as Platts or Argus and are, therefore, classified as Level 2.
Our interest rate swaps are valued based on discounted cash flow models that incorporate the cash flows of the derivatives, as well as the current SOFR rate and a forward SOFR curve, along with other observable market inputs and are, therefore, classified as Level 2.
Our environmental credit obligation positions are subject to fair value accounting pursuant to our accounting policy. As part of our refining operations, we generate certain regulatory environmental credit obligations, the most notable of which are RINs. Because our obligations to provide RINs exceed the RINs we are able to generate annually on a consolidated basis, and because we have the legal ability to transfer RINs generated or purchased through any of our entities to our obligated parties as needed, we view and manage the Company’s RINs holdings on a consolidated basis. Therefore, the sum of all of our obligated parties’ Net RINs obligations and our RIN holdings at the end of each period comprises the Company’s “Consolidated Net RINs Obligation.” The Consolidated Net RINs Obligation may be a surplus (Consolidated Net RIN surplus) or deficit (Consolidated Net RIN deficit) at the end of each reporting period depending on the amount of RINs held on a consolidated basis and the amount owed to the EPA. When there is a Consolidated Net RIN deficit, we have elected to apply the fair value option using the fair value guidance provided by ASC 820. To the extent the obligations are measured at fair value they are categorized as Level 2, either directly through observable inputs or indirectly through market-corroborated inputs, and gains (losses) related to changes in fair value are recorded as a component of cost of materials and other in the consolidated statements of income. When there is a Consolidated Net RIN surplus, we value the asset at historical cost under the inventory method.
On August 22, 2025, the EPA announced its decisions on multiple outstanding small refinery exemption (“SRE”) petitions from refineries seeking an exemption from their Renewable Fuel Standard obligations for the 2016–2024 compliance years. The EPA granted Delek full and partial exemptions for substantially all of our 20 petitions for the 2019-2024 calendar years.
For the years in which Delek received a partial or complete exemption, the EPA refunded to Delek the vintage 2019-2023 RINs retired to meet those RVOs. A majority of the refunded RINs had no value due to RFS limits on the amount of RINs from previous periods that can be used to satisfy future obligations or because the RINs had expired. We were able to use some of these RINs to satisfy our Consolidated Net RINs Obligation for previous compliance periods. In addition, the exemptions granted for 2024 relieved or partially relieved Delek of its RIN obligations for certain refineries for the 2024 compliance year, allowing the company to retain or monetize the valid RINs that would have otherwise been required for compliance. Delek was not able to benefit from a majority of the refunded RINs. The relief received also was not sufficient to offset our 2025 compliance obligation and thus Delek’s refineries will need to seek relief from the EPA for the hardship imposed by the RFS for the 2025 compliance year.
Some of the RINs returned or retained as a result of the SREs granted were recognized by the Company based on weighted average RIN costs as of the date of compliance for each respective period. The cost of RINs for the years in which we have received the SREs were previously recorded in cost of materials and other in prior periods based on the Consolidated Net RINs Obligation recorded for each period.
Our RINs commitment contracts, which are forward contracts accounted for as derivatives (see Note 12 and Note 19), are future commitments to purchase or sell RINs at fixed prices and quantities. The RINs commitment contracts are categorized as Level 2, and are measured at fair value based on quoted prices from an independent pricing service.
We elected to account for our Inventory Intermediation step-out liability at fair value in accordance with ASC 825, as it pertains to the fair value option. This standard permits the election to carry financial instruments and certain other items similar to financial instruments at fair value on the balance sheet, with all changes in fair value reported in earnings. With respect to the Inventory Intermediation Agreement, we apply fair value measurement as follows: (1) we determine fair value for our amended variable step-out liability based on changes in fair value related to market volatility based on a floating commodity-index price, and for our amended fixed step-out liability based on changes to interest rates and the timing and amount of expected future cash settlements where such obligation is categorized as Level 2. Gains (losses) related to changes in fair value due to commodity-index price are recorded as a component of cost of materials and other, and changes in fair value due to interest rate risk are recorded as a component of interest expense in the consolidated statements of income; and (2) we determine fair value of the commodity-indexed revolving over/short inventory financing liability based on the market prices for the consigned crude oil and refined products collateralizing the financing/funding where such obligation is categorized as Level 2 and is presented in the current portion of the obligation under Inventory Intermediation Agreement on our consolidated balance sheets. Gains (losses) related to the change in fair value are recorded as a component of cost of materials and other in the consolidated statements of income. See Note 10 for discussion of gains and losses recognized from changes in fair value.
The fair value of the Delek Logistics 2028 Notes is measured based on quoted market prices in an active market, defined as Level 2 in the fair value hierarchy. The carrying value (excluding unamortized debt issuance costs) and estimated fair value of these notes was $400.0 million and $402.7 million, respectively, as of December 31, 2025, and $400.0 million and $399.1 million, respectively, at December 31, 2024.
In addition, the fair value of the Delek Logistics 2029 Notes is measured based on quoted market prices in an active market, defined as Level 2 in the fair value hierarchy. The carrying value (excluding unamortized debt issuance costs) and estimated fair value of these notes was $1,050.0 million and $1,100.4 million, respectively, as of December 31, 2025, and $1,050.0 million and $1,086.9 million, respectively, at December 31, 2024.
Also, the fair value of the Delek Logistics 2033 Notes is measured based on quoted market prices in an active market, defined as Level 2 in the fair value hierarchy. The carrying value (excluding unamortized debt issuance costs) and estimated fair value of these notes was $700.0 million and $716.4 million, respectively, as of December 31, 2025.
The fair value approximates the historical or amortized cost basis comprising our carrying value for all other financial instruments and therefore are not included in the table below. The fair value hierarchy for our financial assets and liabilities accounted for at fair value on a recurring basis was as follows (in millions):
| As of December 31, 2025 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Commodity derivatives | $ | — | $ | 15.0 | $ | — | $ | 15.0 | ||||||||||||||||||
| Interest rate swap derivatives | — | — | — | — | ||||||||||||||||||||||
| RINs commitment contracts | — | — | — | — | ||||||||||||||||||||||
| Total assets | — | 15.0 | — | 15.0 | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Commodity derivatives | — | (16.7) | — | (16.7) | ||||||||||||||||||||||
| Interest rate swap derivatives | — | (2.3) | — | (2.3) | ||||||||||||||||||||||
| RINs commitment contracts | — | (2.7) | — | (2.7) | ||||||||||||||||||||||
| Environmental credits obligation deficit | — | (107.4) | — | (107.4) | ||||||||||||||||||||||
| Inventory Intermediation Agreement obligation | — | (119.5) | — | (119.5) | ||||||||||||||||||||||
| Total liabilities | — | (248.6) | — | (248.6) | ||||||||||||||||||||||
| Net liabilities | $ | — | $ | (233.6) | $ | — | $ | (233.6) | ||||||||||||||||||
As of December 31, 2024 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Commodity derivatives | $ | — | $ | 24.9 | $ | — | $ | 24.9 | ||||||||||||||||||
| Interest rate swap derivatives | — | 8.3 | — | 8.3 | ||||||||||||||||||||||
| RINs commitment contracts | — | 0.3 | — | 0.3 | ||||||||||||||||||||||
| Total assets | — | 33.5 | — | 33.5 | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Commodity derivatives | — | (27.4) | — | (27.4) | ||||||||||||||||||||||
| Interest rate derivatives | — | (5.1) | — | (5.1) | ||||||||||||||||||||||
| RINs commitment contracts | — | (5.6) | — | (5.6) | ||||||||||||||||||||||
| Environmental credits obligation deficit | — | (30.6) | — | (30.6) | ||||||||||||||||||||||
| Inventory Intermediation Agreement obligation | — | (408.7) | — | (408.7) | ||||||||||||||||||||||
| Total liabilities | — | (477.4) | — | (477.4) | ||||||||||||||||||||||
| Net liabilities | $ | — | $ | (443.9) | $ | — | $ | (443.9) | ||||||||||||||||||
The derivative values above are based on analysis of each contract as the fundamental unit of account as required by ASC 820. In the table above, derivative assets and liabilities with the same counterparty are not netted where the legal right of offset exists. This differs from the presentation in the financial statements which reflects our policy, wherein we have elected to offset the fair value amounts recognized for multiple derivative instruments executed with the same counterparty and where the legal right of offset exists. As of December 31, 2025, and December 31, 2024, $2.4 million and $7.5 million, respectively, of cash collateral was held by counterparty brokerage firms and has been netted with the net derivative positions with each counterparty. See Note 12 for further information regarding derivative instruments.
Non-Recurring Fair Value Measurements
The Gravity Acquisition was accounted for as a business combination using the acquisition method of accounting, with the assets acquired and liabilities assumed at their respective acquisition date fair values at the closing date. The fair value measurements were based on a combination of valuation methods including discounted cash flows, the market approach and obsolescence adjusted replacement costs, all of which are Level 3 inputs. See Note 3 for further information.
The H2O Midstream Acquisition was accounted for as a business combination using the acquisition method of accounting, with the assets acquired and liabilities assumed at their respective acquisition date fair values at the closing date. The fair value measurements were based on a combination of valuation methods including discounted cash flows, the market approach and obsolescence adjusted replacement costs, all of which are Level 3 inputs. See Note 3 for further information.
During the second quarter of 2025, we recognized an impairment of $8.6 million related to two equity investments recorded within other non-current assets on the consolidated balance sheets. Our estimated fair value of the investments as of June 30, 2025, was based on additional funding at lower valuations. The impairment is included in other expense (income), net on the consolidated statements of income.
During the third quarter of 2025, we recorded an $11.6 million asset impairment related to software development costs. Our estimate of the fair value of the impaired long-lived asset as of September 30, 2025 was primarily based on the expectation that we would no longer utilize the asset and no proceeds could be obtained from the sale of the asset. Thus we recorded a full impairment of the asset
During the year ended December 31, 2024, we recorded an impairment for our three biodiesel facilities. Our estimate of the fair value of the impaired long-lived assets were primarily based on the expectation that these assets are unlikely to generate future cash flows either through continued operation or through proceeds from the sale of the assets and thus they were written down to $0.5 million, which is the estimated fair value of the land. See Note 20 for further information.
During the years ended December 31, 2024 and 2023, we recognized goodwill impairment based on fair value measurements utilized during our goodwill impairment testing. The fair value measurements were based on a combination of valuation methods including discounted cash flows, the guideline public company and guideline transaction methods, all of which are Level 3 inputs. See Note 17 for further information.
During the year ended December 31, 2023, we recognized right-of-use asset impairment based on fair value measurements utilized during our impairment testing. The fair value measurements were based on a combination of valuation methods including discounted cash flows, which includes estimates and assumptions for future sublease rental rates that reflect current sublease market conditions, as well as a discount rate, both of which are Level 3 inputs. See Note 25 for further information.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.