DELEK US HOLDINGS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

Forward-Looking Statements

This Annual Report on Form 10-K contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. These forward-looking statements reflect our
current estimates, expectations and projections about our future results,
performance, prospects and opportunities. Forward-looking statements include,
among other things, statements regarding the effect, impact, potential duration
or other implications of, or expectations expressed with respect to, the
outbreak of COVID-19 and the related Pandemic with respect to oil production and
pricing, and statements regarding our efforts and plans in response to such
events, the information concerning our planned capital expenditures, possible
future results of operations, business and growth strategies, financing plans,
expectations that regulatory developments or other matters will or will not have
a material adverse effect on our business or financial condition, our
competitive position and the effects of competition, the projected growth of the
industry in which we operate, and the benefits and synergies to be obtained from
our completed and any future acquisitions, statements of management's goals and
objectives, and other similar expressions concerning matters that are not
historical facts. Words such as "may," "will," "should," "could," "would,"
"predicts," "potential," "continue," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates," "appears," "projects" and similar
expressions, as well as statements in future tense, identify forward-looking
statements.

Forward-looking statements should not be read as a guarantee of future
performance or results, and will not necessarily be accurate indications of the
times at, or by, which such performance or results will be achieved.
Forward-looking information is based on information available at the time and/or
management's good faith belief with respect to future events, and is subject to
risks and uncertainties that could cause actual performance or results to differ
materially from those expressed in the statements. Important factors that,
individually or in the aggregate, could cause such differences include, but are
not limited to:

•volatility in our refining margins or fuel gross profit as a result of changes
in the prices of crude oil, other feedstocks and refined petroleum products and
the impact of the COVID-19 Pandemic on such demand;

•reliability of our operating assets;

•actions of our competitors and customers;

•changes in, or the failure to comply with, the extensive government regulations
applicable to our industry segments, including current and future restrictions
on commercial and economic activities in response to the COVID-19 Pandemic or
future pandemics;

•our ability to execute our strategy of growth through acquisitions and capital
projects and changes in the expected value of and benefits derived therefrom,
including any ability to successfully integrate acquisitions, realize expected
synergies or achieve operational efficiency and effectiveness;

•diminishment in value of long-lived assets may result in an impairment in the carrying value of the assets on our balance sheet and a resultant loss recognized in the statement of operations;

•the unprecedented market environment and economic effects of the COVID-19 Pandemic, including uncertainty regarding the timing, pace and extent of economic recovery in the United States ("U.S.") due to the COVID-19 Pandemic;

•general economic and business conditions affecting the southern, southwestern
and western U.S., particularly levels of spending related to travel and tourism
and the ongoing and future impacts of the COVID-19 Pandemic;

•volatility under our derivative instruments;

•deterioration of creditworthiness or overall financial condition of a material counterparty (or counterparties);

•unanticipated increases in cost or scope of, or significant delays in the completion of, our capital improvement and periodic turnaround projects;

•risks and uncertainties with respect to the quantities and costs of refined petroleum products supplied to our pipelines and/or held in our terminals;

•operating hazards, natural disasters, weather related disruptions, casualty losses and other matters beyond our control;

•increases in our debt levels or costs;

•possibility of accelerated repayment on a portion of the J. Aron supply and
offtake liability if the purchase price adjustment feature triggers a change on
the re-pricing dates;

•changes in our ability to continue to access the credit markets;

•compliance, or failure to comply, with restrictive and financial covenants in our various debt agreements;

•the suspension of our quarterly dividend;

•seasonality;

•We 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;

•Legislative and regulatory measures to address climate change and greenhouse
gases emissions could increase our operating costs or decrease demand for our
refined products;

•acts of terrorism (including cyber-terrorism) aimed at either our facilities or
other facilities that could impair our ability to produce or transport refined
products or receive feedstocks;

•future decisions by OPEC+ members regarding production and pricing and disputes between OPEC+ members regarding the same;

•disruption, failure, or cybersecurity breaches affecting or targeting our IT systems and controls, our infrastructure, or the infrastructure of our cloud-based IT service providers;

•changes in the cost or availability of transportation for feedstocks and refined products; and

•other factors discussed under Item 1A. Risk Factors and Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations and in
our other filings with the SEC.

In light of these risks, uncertainties and assumptions, our actual results of
operations and execution of our business strategy could differ materially from
those expressed in, or implied by, the forward-looking statements, and you
should not place undue reliance upon them. In addition, past financial and/or
operating performance is not necessarily a reliable indicator of future
performance, and you should not use our historical performance to anticipate
future results or period trends. We can give no assurances that any of the
events anticipated by any forward-looking statements will occur or, if any of
them do, what impact they will have on our results of operations and financial
condition. All forward-looking statements included in this report are based on
information available to us on the date of this report. We undertake no
obligation to revise or update any forward-looking statements as a result of new
information, future events or otherwise.

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                                            Management's Discussion and 

Analysis

Executive Summary: Management's View of Our Business and Strategic Overview

                       Management's View of Our Business

We are an integrated downstream energy business focused on petroleum refining, the transportation, storage and wholesale distribution of crude oil, intermediate and refined products and convenience store retailing.

Business and Economic Environment Overview

As we reflect on the macro environment in 2021, the economy continued to recover
from the impact of the COVID-19 Pandemic, both globally and domestically.
However, despite improved consumer demand resulting from stabilization in cases
of COVID-19 and decreasing mortality rates during much of the period and across
much of the country, and corresponding to the availability of vaccines,
improvements in domestic refining margins have been slow to materialize. This
was largely attributable to limited demand from international markets where
consumer demand improvement has lagged behind the U.S. resulting in the closing
of much of the U.S. export arbitrage. In February 2021, the operations of many
U.S. refineries, including ours, were temporarily disrupted due to the negative
effects arising out of Winter Storm Uri. This contributed to a significant
depletion of transportation fuel inventories throughout much of the country.
Additionally, in May 2021, there was a cybersecurity incident with the Colonial
Pipeline which resulted in pipeline shutdowns that interrupted supply to much of
the eastern U.S. for six days, and which caused disruption for Delek primarily
at our Krotz Springs refinery. As a result of both of these events, the U.S.
market attracted higher levels of supply from international markets, which
diluted price increases and associated refining margins for much of the year.
That said, the fourth quarter of 2021 finished strong for the downstream oil and
gas sector, with higher oil prices, widening crack spreads and improving demand
for refined product.

While there have been improving crack spreads during 2021, driven largely by the
improvement in domestic consumer demand and the modest economic improvement and
outlook associated with stabilizing Pandemic uncertainties, the ability of U.S.
refiners to capture those improvements were impacted by the following macro
factors:

•Rising RIN Prices: For the first half of the year, the RINs market was impacted
by 2020's judicial rulings imposing limitations on smaller refineries' abilities
to qualify for the EPA's SREs under the RFS, which was exacerbated by worsening
environmental regulatory sentiment coming out of Washington, D.C. Following the
June 2021 U.S. Supreme Court reversal of the lower court's ruling, however,
there was a notable improvement in market optimism that existing SRE
applications from 2019, as well as new applications for 2020, may be granted. As
a result, we saw some improvement in RIN prices during the third quarter 2021,
in anticipation of possible EPA relief. This expectation was dampened by the
release of a proposed rule by the EPA in December 2021 which recommended revised
volumetric rates for 2020 and, for the first time, introduced proposed rates for
2021 and 2022, with no final ruling on the likelihood of small refinery
exemptions. Also of note, movements in crack spreads behave independently from
movements in RFS regulatory requirements and RINs prices and thus can
disproportionately impact small refiners. For example, in periods of low crack
spreads and high RIN costs (which are a function of both regulatory volumetric
requirements and market RINs prices), small refineries may experience negative
operating results where other, larger refineries with better economies of scale
and other competitive advantages may fare better. Even when increases in crack
spreads coincide with the independent increases in RIN prices, small refiners
may continue to see a larger burden of such costs on crack spread capture in
contribution margin than many larger refineries experience.

•Rising Energy Costs: Crack spread capture was further impacted by rising energy
(natural gas and electricity) costs. Throughout most of 2021, domestic natural
gas demand outpaced growth in supply and contributed to sustained increases in
natural gas prices. Additional factors, including increased exports triggered by
unusually high international gas prices, as well as critical pipeline outages
and the prices and availability of substitute fuels for power generation, put
additional upward pressure on domestic natural gas prices. The spike in natural
gas prices in the first quarter of 2021 relating to Winter Storm Uri had a
significant impact on our refining contribution margin, and despite mitigating
commercial efforts, the high natural gas prices continued to impact our crack
spread capture for the remainder 2021.

•Unfavorable Location Differentials: Most midstream and downstream oil and gas
entities have competitive advantages or disadvantages that relate to their
geographic positioning. We have a significant presence in the Permian Basin,
with one of our best performing refineries and much of our gathering assets
located there. For these reasons, our refining operations are heavily dependent
on Midland WTI crude, and our refining margins are likewise impacted by the
Midland-Cushing differential. While an unfavorable Midland differential compared
to Cushing on WTI crude oil will have a negative impact on our results, a
favorable differential (or discount compared to Cushing barrels) will
significantly increase our refining margin. Such conditions are highly dependent
on domestic and global demand and supply, which can be impacted by geopolitical
conditions as well as unexpected outages or disruptions and can shift quickly.

See further discussion on macroeconomic factors and market trends, including the impact on 2021 and the outlook for 2022, in the 'Market Trends' section below.

Overall, our Refining results are much improved in 2021 compared to 2020,
largely attributable to improvements in oil prices and crack spreads combined
with cost control efforts we implemented, while Pandemic-related pressure on
demand combined with high RIN costs and energy costs continued to strain our
crack spread capture in contribution margin. On the positive side, while
increasing RINs prices weighed negatively on Refining margins; year-over-year we
experienced improvement in crack spread net of incremental RINs cost, driven
primarily by steadily improving crack spreads during most of 2021 combined with
a fourth quarter 2021 stabilization of RIN costs to first quarter 2021 quarter
levels. Furthermore, while RINs costs will impact our capture rate in a more
pronounced manner than many larger refineries, if RINs costs stabilize, we are
poised to take advantage of possible widening crack spreads and increased demand
in 2022. If we receive SREs, the benefit will be even more significant, and will
allow us to maintain a more consistent capture rate, which will align more
closely to some of the larger refiners. Logistics results continued to be strong
in 2021 and benefited from MVCs during periods that may otherwise have been
constrained, such as

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                                            Management's Discussion and 

Analysis

the first quarter when much of our market was impacted by the winter storm.
Logistics also continues to benefit from strong performance amongst our pipeline
joint venture investments. Retail stores continue to perform well and we are
beginning to realize the benefit of store optimization activities we conducted
during the past two years, and we expect to begin seeing growth from new stores
and successful re-branding. Looking forward to 2022, besides the expected
favorable benefit of market improvements described above, we have many strategic
initiatives that align with our new long-term sustainability view, as discussed
in the 'Strategic Overview' section below. Additionally, in 2022, we expect to
begin realizing returns from our indirect investment in the WWP pipeline, as the
majority of the segments are now fully online and supported by existing
throughput MVCs, and we also look forward to evaluating the potential for
exercising our call option for a 33 1/3% limited member interest in a clean
energy facility in California.

Refining Overview

The refining segment (or "Refining") processes crude oil and other 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. The
refining segment has a combined nameplate capacity of 302,000 bpd as of December
31, 2021. A high-level summary of the refinery activities is presented below:

                               Tyler Refinery             El Dorado

Refinery Big Spring Refinery Krotz Springs Refinery Total Nameplate

                    75,000                     80,000 (1)                     73,000                    74,000

Capacity (bpd)

                        Gasoline, jet fuel,                                 

Gasoline, jet fuel, Gasoline, jet fuel,

                        ultra-low-sulfur diesel,     Gasoline, 

ultra-low-sulfur ultra-low-sulfur diesel, high-sulfur diesel, Primary Products liquefied petroleum gases, diesel, liquefied petroleum liquefied petroleum gases, light cycle oil,

                        propylene, petroleum coke    gases, propylene, 

asphalt propylene, aromatics and liquefied petroleum

                        and sulfur                   and sulfur                   sulfur                       gases, propylene and
                                                                                                               ammonium thiosulfate
Relevant Crack Spread         Gulf Coast 5-3-2           Gulf Coast 5-3-2 

(2) Gulf Coast 3-2-1 (3) Gulf Coast 2-1-1 (4) Benchmark

                        The refining segment's petroleum-based products are 

marketed primarily in the south central and southwestern Marketing and

           regions of the United States, and the refining 

segment also ships and sells gasoline into wholesale markets in Distribution

            the southern and eastern United States. Motor fuels 

are sold under the Alon or Delek brand through various

                        terminals to supply Alon or Delek branded retail 

sites. In addition, we sell motor fuels through our wholesale

                        distribution network on an unbranded basis.


(1) While the El Dorado refinery has a total nameplate capacity of 80,000 bpd,
in order to qualify for the small refinery exemption under the EPA's Renewable
Fuel Standards regulations total output cannot exceed 75,000 bpd. We currently
expect that the El Dorado refinery's output will remain under the 75,000 bpd
threshold in the current economic environment.

(2) While there is variability in the crude slate and the product output at the
El Dorado refinery, we compare our per barrel refined product margin to the U.S.
Gulf Coast 5-3-2 crack spread because we believe it to be the most closely
aligned benchmark.

(3) Our Big Spring refinery is capable of processing substantial volumes of sour
crude oil, which has historically cost less than intermediate, and/or
substantial volumes of sweet crude oil, and therefore the WTI Cushing/WTS price
differential, taking into account differences in production yield, is an
important measure for helping us make strategic, market-respondent production
decisions.

(4) The Krotz Springs refinery has the capability to process substantial volumes of light sweet crude oil to produce a high percentage of refined light products.

Our refining segment also owns and operates three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas, and New Albany, Mississippi.

                               Logistics Overview


Our logistics segment (or "Logistics") gathers, transports and stores crude oil
and markets, distributes, transports and stores refined products in select
regions of the southeastern United States and West Texas for our refining
segment and third parties. It is comprised of the consolidated balance sheet and
results of operations of Delek Logistics (NYSE: DKL), where we owned a 79.8%
interest at December 31, 2021. Delek Logistics was formed by Delek in 2012 to
own, operate, acquire and construct crude oil and refined products logistics and
marketing assets. A substantial majority of Delek Logistics' assets are
currently integral to our refining and marketing operations. The logistics
segment's pipelines and transportation business owns or leases capacity on
approximately 400 miles of crude oil transportation pipelines, approximately 450
miles of refined product pipelines, and an approximately 900-mile crude oil
gathering system and associated crude oil storage tanks with an aggregate of
approximately 10.2 million barrels of active shell capacity. It also owns and
operates ten light product terminals and markets light products using
third-party terminals. Logistics has strategic investments in pipeline joint
ventures that provide access to pipeline capacity as well as the potential for
earnings from joint venture operations. The logistics segment owns or leases
approximately 264 tractors and 353 trailers used to haul primarily crude oil and
other products for related and third parties.

                                Retail Overview


Our retail segment (or "Retail") at December 31, 2021 includes the operations of
248 owned and leased convenience store sites located primarily in West Texas and
New Mexico. Our convenience stores typically offer various grades of gasoline
and diesel under the DK or 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 DK or Alon
brand names pursuant to a license agreement with 7-Eleven, Inc. In

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                                            Management's Discussion and 

Analysis

November 2018, we terminated the license agreement with 7-Eleven, Inc. and the
terms of such termination and subsequent amendments require the removal of all
7-Eleven branding on a store-by-store basis by December 31, 2023. Merchandise 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. As of
December 31, 2021, we have removed the 7-Eleven brand name at 55 of our store
locations. 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. In connection with our Retail strategic initiatives, we
closed or sold 51 under-performing or non-strategic store locations since the
fourth quarter of 2018.

                         Corporate and Other Overview


Our corporate activities, results of certain immaterial operating segments,
discontinued operations, our asphalt terminal operations, our wholesale crude
operations, and intercompany eliminations are reported in 'corporate, other and
eliminations' in our segment disclosures. Additionally, our corporate activities
include certain of our commodity and other hedging activities.

                               Strategic Overview


The Road So Far: A Look Back
In recent years, the Company's overall strategy has been to take a disciplined
approach that looks to balance returning cash to our shareholders and prudently
investing in the business to support safe and reliable operations, while
exploring opportunities for growth. Our goal has been to balance the different
aspects of this program based on evaluations of each opportunity and how it
matches our strategic goals for the Company, while factoring in market
conditions and expected cash flows. To that end, in 2019, Delek's leadership
team built a Five-Year Strategic Framework to facilitate development of the
Company's strategies and initiatives. This framework lays out the Company's
overarching objectives for a five-year period and provides the foundation for
our Core Strategic Focus Areas, our Strategic Initiatives, and ultimately our
Annual Strategic Priorities, as follows:

                     [[Image Removed: dk-20211231_g29.jpg]]

Previous Core Strategic Focus Areas
During much of the first half of 2021, our principal focus was on managing the
operational and financial risks related to the COVID-19 Pandemic while also
maintaining our attention on these Core Strategic Areas of Focus, which in turn
continued to guide our objectives and initiatives:

I. Safety and wellness.

II. Reliability and integrity.

III. Systems and processes.

IV. Risk-based decision making.

V. Positioning for growth.

We have consistently reevaluated our initiatives and immediate strategic
priorities in light of the significant economic and operational impact of the
COVID-19 Pandemic. We also have continued to actively review our targeted
Pandemic strategies and related operational objectives and consider the need for
changes in order to address the evolving industry and market, while ensuring
that we continue to appropriately consider

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                                            Management's Discussion and 

Analysis

and capitalize on our operational strengths and strategic positioning in the
near term. As the impact of the Pandemic began to stabilize in the latter half
of 2021, we began to shift our attention to the post-Pandemic horizon in
earnest, now that there's a clearer picture of what that may look like.
Capitalizing on our unwavering commitment to strategic thinking in a rapidly
changing environment, we have embraced a seismic shift in perspective around our
long-term strategic direction and outlook, which now is guiding changes to our
strategic framework and objectives. The critical principle underlying this
evolving perspective is sustainability, and is discussed in more detail below.

Evolving Focus: A Sustainability Strategy

It is vitally important that our strategic process, especially in view of the
evolutionary direction of our macroeconomic and geopolitical environment,
involves a continuous evaluation of our business model in terms of long-term
economic and operational sustainability. We are operating in a mature industry
(the production, logistics and marketing of hydrocarbons and hydrocarbon-based
refined products), with increasingly difficult operational and regulatory
challenges and, likewise, pressure on operating costs/gross margins as well as
the availability and cost of capital. More consolidation in our industry is
expected as the regulatory environment continues to move towards reducing carbon
emissions and transitions to renewable energy in the long-term. Additionally,
evolving consumer and capital markets sentiment, regulations, talent
availability, supply chain constraints and customer demand are expected to cause
disruption and increasing pressure in the intermediate term. In order to compete
under historic environmental and regulatory changes, companies in our industry
will need to be adaptive, forward-thinking and strategic in their approach to
long-term sustainability. What this picture looks like, as we come to understand
it, is what we refer to as our "Sustainability View."

A New Framework: Long-Term Sustainability

The emphasis on environmental responsibility and long-term economic and
environmental sustainability is accelerating, with increased demand for
transparency evolving out of the ESG movement. As we evaluate our current ESG
positioning in the market, we also must integrate a broader sustainability view
to all of our activities, both operational and strategic. For these reasons, we
have developed a Long-Term Sustainability Framework, which will help us to
formulate our strategic objectives and initiatives.

Long-Term Sustainability Framework: Overarching Objectives

Certain fundamental principles are foundational to our Long-Term Sustainability Framework, and direct us as we develop our guiding objectives. With that in mind, we have initially identified the following overarching objectives:

I. Redirect Corporate Culture towards Innovation, Excellence, and Operating Discipline.

II. Focus on Operational Optimization and Improved Margin Capture.

III. Implement Digital Transformation Strategy.

IV. Identify ESG-Conscious Investments with Clear Value Propositions and Sustainable Returns.

V. Evaluate Strategic Priorities and Redefine Long-term Sustainable Business Model.

Long-Term Sustainability Framework: Key Initiatives

Additionally, integral to our Long-Term Sustainability Framework and the achievement of the initial overarching objectives are the following key initiatives:

?Transform our corporate and operating culture into "One Delek" through unification of purpose, vision and strategy with an emphasis on cultural sustainability.

?Transform our refining operations into the "Refinery of the Future" founded on digitization and automation, innovation and synergistic discipline.

?Develop a "New Energy" mentality focused on understanding the future of energy
on a global scale and how Delek can be a leader and facilitator of positive,
sustainable change in the energy industry.

Long-Term Sustainability Strategy: A Snapshot

The Overarching Objectives and Key Initiatives are integrated and
interdependent, representative of the synergistic approach we are employing, and
together comprise our Long-term Sustainability Strategy. To illustrate these
overlapping components and their interdependence, see the illustrative snapshot
of our Long-Term Sustainability Strategy below:

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                                            Management's Discussion and 

Analysis

[[Image Removed: dk-20211231_g30.jpg]]

Our Key Initiatives, which are integrated with our Overarching Objectives, also provide clear, actionable paths toward long-term sustainability, as shown below:

                     [[Image Removed: dk-20211231_g31.jpg]]

Long-Term Sustainability Strategy: Developing Actionable Key Initiatives, Focused Objectives and Specific Priorities

Developing a strategy focused on long-term economic and operational
sustainability in a challenging and rapidly changing environment is a larger and
more ambitious objective than a strategy that is simply centered on growth and
return on shareholder investment in the near-term. For these reasons, it is
important to understand the scalability of our strategy and what are the
appropriate stages and priorities, recognizing that the inherent complexity of
achieving long-term sustainability is a long game requiring both a measured,
disciplined approach as well agility and flexibility to changing conditions. As
a result, we are implementing our new strategic framework in intentional stages.

Stage 1 - Second Half of 2021

While this Framework is in its early phase, we have already been hard at work
executing on our Stage 1 Priorities in the context of our Overarching Objectives
and Key Initiatives. This progress is, in part, due to some overlap with our
previous strategic objectives (thus also validating that our previous objectives
were, in many ways, the right areas of focus), but also the result of the energy
and commitment that our sustainability framework is generating in our
organization. We selected these Stage 1 Priorities because they are all
foundational to a continued progression toward achieving our overarching
strategic objectives under the Long-Term Sustainability Framework. As we
continue to develop future Stage Priorities, they will be designed to further
advance the realization of our Key Initiatives. Furthermore, we fully expect

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                                            Management's Discussion and 

Analysis

overlap with previous stages and that our priorities will evolve over time to
align with changing circumstances and to reflect obstacles we encounter as well
as our continued progress. This is an evolution, not a "one-and-done" exercise.

Stage 2 - 2022

We developed our Stage 2 activities more intentionally, in the context of the
new Framework. First, we identified our Stage 2 Key Initiatives, which are a
targeted subset of the Key Initiatives discussed above. We then developed Stage
2 Focused Objectives which reflect the strategic objectives we want to achieve
specifically in 2022. Finally, we developed Stage 2 Specific Priorities, which
represent those priorities that we believe will help us accomplish our Stage 2
Focused Objectives, and will likewise advance achievement on our overall Key
Initiatives. As our approach becomes more integrated, you will see that our
Focused Objectives serve cross-purposes across our Key Initiatives, and that our
Specific Priorities serve cross-purposes across our Focused Objectives.

Action Plan and Timeline

The following graphic shows the overall timeline and structure of our Key Initiatives, which guide our Focused Objectives, and ultimately our Specific Priorities, for Stage 1 and Stage 2, based on our planned timeline:

[[Image Removed: dk-20211231_g32.jpg]]

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                                            Management's Discussion and 

Analysis

Long-Term Sustainability Strategy: Stage 2 Activities Planned for 2022

We have preliminarily identified our Stage 2 Priorities, in the context of our Stage 2 Focused Objectives and Stage 2 Key Initiatives, as follows:

                                       Key Initiative: Planning for 

Refinery

Key Initiative: Implementing One Delek of the Future Operational

Key Initiative: Preparing for the

        Culture Transformation                    Transformation            

New Energy Transition

                                 Focused Objective: Safety & Wellness 

Leadership

We strive to be nationally recognized as an industry leader for our commitment to sustaining safe work environments that help every employee feel and do their best. We want every Delek employee to come to work every

                                   day knowing they are valued and 

protected.

Continuing to incorporate the Create an operating model with an

qualities of the "Delek Leader" and empowered, highly effective workforce the "Employee of the Future" into our ready for any challenge by removing human capital programs, incentives and barriers and streamlining processes

               rewards                            and procedures
                           Focused Objective: Operating with Reliability and Integrity
By focusing on reliability and integrity, we maximize the return on our investments. Our employees, customers and
shareholders can count on us to operate every aspect of our business responsibly, reflecting that the work we do
                     every day is recognized across our industry as 

reputable and essential.

   Continued progress on new system
implementations that will improve our    Sustain low operating cost model

ability to understand all aspects of through spending discipline, supply our business as well as our ability to chain management, and innovation

  make real-time and forward-looking                 solutions

operational decisions

                        Focused Objective: Improving Efficiency in Systems 

and Processes

We are committed to becoming even more efficient by focusing on our systems and processes. We know there is

always room for improvement, and those improvements can make every employee more effective and valued.

Continuing to redefine our framework

   Continued progress on new system                                              for evaluating, tracking and
implementations that will improve our   Develop and cross-develop internal  

understanding the value creation

ability to understand all aspects of capabilities - "taught by Delek,

   propositions for proposed capital
our business as well as our ability to   supported by Delek, empowered by   

and strategic investments under the

  make real-time and forward-looking                  Delek"                

context of our evolving Long-Term

        operational decisions                                               

Sustainability Objectives and our

Sustainability View

    Develop a Post-Pandemic Talent                                         

Continue to develop process for

Retention Task Force to identify the                                       

identifying and evaluating the types

risks around retaining talent and to Improve discipline around outage

of investment opportunities that fit

develop strategies for retaining spend and optimizing downtimes

our Sustainability View, including

 talent given the changing workforce                                        

consideration of strategic

  expectations and tight market for                                         

investments or joint ventures in

                talent                                                      

renewables, incubator investments in

innovative new technologies, and

other core-business investments that

  Continued enterprise-wide cost and                                          could improve our scalability and
waste reduction initiatives as well as                                                     agility

initiatives focused on eliminating

lost revenue and value leakage

                                  Focused Objective: Balancing Risk and 

Reward

As we continue to grow, we want to cultivate a healthy appetite for risk. That means, when we make decisions, we

plan to identify those risks that come with the greatest potential for success, and pursue them with care.

   Continue to develop process for                                          

Continue to develop process for

 identifying and evaluating the types                                       

identifying and evaluating the types

 of investment opportunities that fit                                       

of investment opportunities that fit

  our Sustainability View, including                                          our Sustainability View, including
consideration of strategic investments                                      

consideration of strategic

   or joint ventures in renewables,                                         

investments or joint ventures in

 incubator investments in innovative                                        

renewables, incubator investments in

     new technologies, and other                                           

innovative new technologies, and

 core-business investments that could                                       

other core-business investments that

 improve our scalability and agility                                        

could improve our scalability and

                                                                                           agility

Continue exploring opportunities to

  monetize some of our investment in
Delek Logistics, which will help us to
 better capture tangible value in the
Delek valuation, while also improving
liquidity in the market for DKL units
without dilution of overall DKL market
            capitalization
                                 Focused Objective: Driving EBITDA 

Improvements

Increasing our profitability will allow us to become a more sustainable business that is equipped for steady

               growth. It also means that we can achieve both our

short-term and long-term goals.

Through cross-functional Sustain low operating cost model

collaboration, identify operational through spending discipline, supply

improvements to reduce the cost of chain management, and innovation

    crude and transportation costs                   solutions

Through cross-functional

collaboration, identify operational Improve discipline around outage

improvements to reduce yield loss spend and optimizing downtimes

inside and outside of the fence

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                                            Management's Discussion and 

Analysis

2021 Strategic Activities - A Look Back

In addition to the Phase 1 Strategic Priorities that were identified in connection with the development of the Long-Term Sustainability Framework in the latter part of 2021, our 2021 strategic activities were also driven by the following strategic initiatives which were identified under our previous Five-Year Strategic Framework and which were aligned to our previous Core Strategic Focus Areas:

•Maintain and Continue to Enhance Our Safe Operations. Our commitment to safety
has been reflected in our continuous improvement in DART (days away, restricted
or transferred) and TRIR (total recordable incident rate) metrics since 2016.

•Drive Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Cash Flow Improvement. In 2021, the company continued to deliver cost savings and implement initiatives for margin improvements through optimization.

•Develop and Utilize Systems, Processes and Technology to Improve Operations. We
have increased our focus on upgrading our technologies and implement advanced
systems and processes to achieve further, more structural cost reductions,
operational improvements and asset optimization over the medium to longer term.

•Ongoing Commitment to ESG. We are still relatively early in our ESG journey,
and we are striving for progressive improvements over time in terms of
underlying performance metrics and disclosure in all ESG categories. We recently
announced our first greenhouse gas emissions reductions target as we seek to
align our business with the Paris Climate Accords, as well as a diversity goal
for our Board of Directors composition.

•Laying the Foundation for Future Growth. After focusing mainly on improving our
cash flow break-even profile through reduced discretionary capital expenditures
and operating costs in 2021, we are emerging from this downturn with an improved
cost structure, a healthy balance sheet and opportunities to pursue future
growth. We are constantly evaluating the optimal investment options available in
our various business units and comparing the potential returns of both organic
and inorganic opportunities.

2021 Significant Strategic Developments/Areas of Focus

The following table highlights our 2021 Strategic Developments/Areas of Focus, with linkages to our new Long-Term Sustainability Strategy Overarching Objectives and Key Initiatives:

                                                                                          Under our new
                                                                                Long-Term Sustainability Strategy
                                                                          Linkage to Overarching       Linkage to Key
2021 Significant Developments/Areas of Focus                                    Objectives              Initiatives
Significant Developments: (1)
Initiated a program to monetize a portion of our ownership in
Delek Logistics under a Rule 10b5-1 program to sell up to 434,590
common limited partner units, which helped us to not only capture          Long-term Sustainable
$2.1 million (pre-tax) to date of tangible value in the Delek                 Business Model             One Delek
valuation but also serves to improve the liquidity of the Delek
Logistics units without diluting the overall market capitalization
of Delek Logistics.
Negotiated an accretive buy-out of a financing commitment
agreement with WWP which allowed us to recoup capital expenditures       Operational Optimization
we may not have incurred had it not been for the financing                  and Improved Margin          One Delek
commitment and recognize an incremental gain of approximately               

Capture

$10.2 million.
Successfully completed a $400.0 million senior note debt issuance
at Delek Logistics (the "Delek Logistic 2028 Notes") which the net         Long-term Sustainable         One Delek
proceeds were used to pay down borrowings under the Delek                     Business Model
Logistics Credit Facility and likewise enhance liquidity.
Other Areas of Focus:
Continued expansion in our crude gathering business in the Permian         Long-term Sustainable         One Delek
Basin.                                                                      

Business Model Executed an exclusive supply and strategic relationship agreement for the supply of certain chemicals exclusively which Delek

              ESG-Conscious Investments
Logistics can then use, through blending competencies utilizing              with Clear Value            One Delek
proprietary intellectual property, to clarify slurry which can               Propositions and
then be used in International Maritime Organization                         Sustainable Returns
("IMO")-compliant products.
Executed opportunistic turnaround and maintenance activities to           Culture of Innovation,
minimize impact of disruption from Winter Storm Uri and the El           Excellence and Operating  Refinery of the Future
Dorado refinery fire.                                                       

Discipline

Implemented enterprise-wide cost and waste reduction initiatives Operational Optimization as well as initiatives focused on eliminating lost revenue and

              and Improved Margin    Refinery of the Future
value leakage.                                                              

Capture

Continued our retail rebranding efforts, and resumed retail growth Long-term Sustainable One Delek plans with four new-to-industry locations in the planning phase.

              Business Model
Progressed on digital system implementations that will improve our
ability to understand all aspects of our business as well as our          Digital Transformation         One Delek
ability to make real-time and forward-looking operational                                          Refinery of the Future

decisions.

Identified the qualities of a "Delek Leader" and the "Employee of         Culture of Innovation,
the Future" to help incorporate those qualities into our human           Excellence and Operating        One Delek
capital programs, incentives and rewards.                                   

Discipline

Began to develop a process for identifying and evaluating the types of investment opportunities that fit our Sustainability

            ESG-Conscious Investments
View, including consideration of strategic investments or joint              with Clear Value            One Delek
ventures in renewables, incubator investments in innovative new              Propositions and            New Energy
technologies, and other core-business investments that could                Sustainable Returns
improve our scalability and agility.
Redefined our framework for evaluating, tracking and understanding                                       One Delek

the value creation propositions for proposed capital and strategic Long-term Sustainable Refinery of the Future investments under the context of our evolving Long-Term

                       Business Model             New Energy

Sustainability Objectives and our Sustainability View.

(1) For further discussion of these items, see Notes 5, 6 and 10, respectively, in our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

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                                            Management's Discussion and 

Analysis

Significant Known Uncertainties Impacting Delek

Aside from the market trends and the uncertainties inherent to those market
drivers many of which are referenced in the 'Executive Summary' above and which
are discussed at length in the 'Market Trends' section below, we have also
identified certain uncertainties that we believe to be sufficiently significant
to our financial results in the near term as to warrant additional discussion.
We have included supplemental discussion of those uncertainties, and our efforts
for mitigating them, below. However, note that this discussion is to bring
additional attention to areas that have been of particular interest to
management but should not be considered comprehensive of all known trends and
uncertainties which may be relevant. Instead, in the context of all known trends
or uncertainties that have had, or that are reasonably likely to have, a
material favorable or unfavorable effect on financial results, they should be
considered part of the larger discussion on market trends and uncertainties
throughout our management's discussion and analysis.

COVID-19 Pandemic

The outbreak of the COVID-19 Pandemic has resulted in significant economic
disruption globally, including in the U.S. and specific geographic areas where
we operate. Actions taken by various governmental authorities, individuals and
companies around the world to prevent the spread of COVID-19 through both
voluntary and mandated social distancing, curfews, shutdowns and expanded safety
measures have restricted travel, many business operations, public gatherings and
the overall level of individual movement and in-person interaction across the
globe. This has in turn significantly reduced global economic activity which has
had a significant impact on the nature and extent of travel. The COVID-19
Pandemic has had a devastating impact on the airline industry, dramatically
reducing the number of domestic flights and, due to foreign travel bans and
immigration restrictions abroad as well as traveler concerns over exposure,
virtually eliminating international travel originating from the U.S. to many
parts of the world. Additionally, the COVID-19 Pandemic has had a significant
negative impact on motor vehicle activity. As a result, and particularly during
2020, we experienced a decline in the demand for, and thus also the market
prices of, crude oil and certain of our products, particularly our refined
petroleum products and most notably gasoline and jet fuel. Uncertainty about the
duration of the COVID-19 Pandemic has caused periodic storage constraints in the
U.S. resulting from over-supply of produced oil. Additionally, significant
environmental events, such as extreme weather conditions or natural disasters
can impact pipeline accessibility and utilization, other supply sources, as well
as demand. While in the last several months, the availability of the COVID-19
vaccine across the U.S. has led to some improved stability in the capital
markets as well as improved pricing in crude oil, refined products, and related
forward curves, there continues to be general economic uncertainty, and,
accordingly, demand for refined product and for our logistics assets has not yet
returned to normal levels. Such uncertainty has been further aggravated by the
mutation of the COVID-19 virus into new variants and plateauing demand for
currently available vaccines. Based on these conditions and events, downward
pressure on commodity prices, crack spreads and demand remains a significant
risk and could continue for the near term.

While the risk surrounding the uncertainties of the COVID-19 Pandemic appears to
be lessening, they still represent risks that could impact our operations,
financial condition and results of operations. We have identified the following
known uncertainties resulting from the ongoing COVID-19 Pandemic:

•Significant declines and/or volatility in prices of refined products we sell
and the feedstocks we purchase as well as in crack spreads resulting from the
COVID-19 Pandemic could have a significant impact on our revenues, cost of
sales, operating income and liquidity, as well to the carrying value of our
long-lived or indefinite-lived assets;

•A decline in the market prices of refined products and feedstocks below the
carrying value in our inventory may result in the adjustment of the value of our
inventories to the lower market price and a corresponding loss on the value of
our inventories (See also Note 2 of our consolidated financial statements
included in Item 8. Financial Statements and Supplementary Data, of this Annual
Report on Form 10-K for additional discussion of specific statement risks);

•The decline in demand for refined product could significantly impact the demand
for throughput at our refineries, unfavorably impacting operating results at our
refineries, and could impact the demand for storage, which could impact our
logistics segment;

•The decline in demand and margins impacting current results and forecasts could
result in impairments in certain of our long-lived or indefinite-lived assets,
including goodwill, or have other financial statement impacts that cannot
currently be anticipated (See further discussion in Note 2 of our consolidated
financial statements included in Item 8. Financial Statements and Supplementary
Data, of this Annual Report on Form 10-K);

•A significant reduction or suspension in U.S. crude oil production could adversely affect our suppliers and sources of crude oil;

•An outbreak in one of our refineries, exacerbated by a limited pool of qualified replacements as well as quarantine protocols, could cause significant disruption in our production or, worst case, temporary idling of the facility;

•The restrictions on travel and requirements for social distancing could significantly impact the traffic at our convenience stores, particularly the demand for fuel;

•Customers of the refining segment as well as third-party customers of the
logistics segment may experience financial difficulties which could interrupt
the volumes ordered by those customers and/or could impact the credit worthiness
of such customers and the collectability of their outstanding receivables;

•The impact of COVID-19 or protocols implemented in response to COVID-19 by key
or specialty suppliers may negatively affect our ability to obtain specialty
equipment or services when needed;

•Equity method investees may be significantly impacted by the COVID-19 Pandemic which may increase the risk of impairment of those investments;

•Access to capital markets may be significantly impacted by the volatility and uncertainty in the oil and gas market specifically which could restrict our ability to raise funds;

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                                            Management's Discussion and 

Analysis

•While our current liquidity needs are managed by existing facilities, sources
of future liquidity needs may be impacted by the volatility in the debt market
and the availability and pricing of such funds as a result of the COVID-19
Pandemic; and

•The U.S. Federal Government has enacted certain stimulus and relief measures
and may consider additional relief legislation. Beyond the direct impact of
existing legislation on Delek in the current or prior periods (as applicable),
the extent to which the provisions of the existing or any future legislation
will achieve its intention to stimulate or provide relief to the greater U.S.
economy and/or consumer, as well as the impact and success of such efforts,
remains unknown.

Other uncertainties related to the impact of the COVID-19 Pandemic as well as
global geopolitical factors may exist that have not been identified or that are
not specifically listed above, and could impact our future results of operations
and financial position, the nature of which and the extent to which are
currently unknown. The U.S. Federal Government's passage and/or enactment of
additional stimulus and relief measures, as well as their future actions may
impact the extent to which the risk underlying these uncertainties are realized.
To the extent these uncertainties have been identified and are believed to have
an impact on our current period results of operations or financial position
based on the requirements for assessing such financial statement impact under
U.S. GAAP, we have considered them in the preparation of our consolidated
financial statements included in Item 8. Financial Statements and Supplementary
Data, of this Annual Report on Form 10-K.

Delek's Response to Significant Uncertainties Associated with the COVID-19 Pandemic

Management has actively responded to the continuing impact of the COVID-19
Pandemic on our business. Additionally, to the extent warranted, we continue to
monitor the impact and implement measures to mitigate the risk. Such efforts
include (but are not limited to) the following:

•Reviewing planned production throughputs at our refineries and planning for optimization of operations;

•Coordinating planned maintenance or turnaround activities with possible downtime as a result of possible reductions in throughputs;

•Searching for additional storage capacity if needed to store potential builds in crude oil or refined product inventories;

•Finding additional suppliers for key or specialty items or securing inventory or priority status with existing vendors;

•Reducing discretionary capital expenditures;

•Suspending the share repurchase program and dividend distributions until our internal parameters are met for resuming such activities;

•Taking advantage of the income and payroll tax relief afforded to us by the
Coronavirus Aid, Relief, and Economic Security Act ("CARES") or other Pandemic
relief legislation;

•Implementing regular site cleaning and disinfecting procedures;

•Adopting remote working where possible, and when immediate exposure risk warrants, and where on-site operations are required, taking appropriate safety precautions;

•Identifying alternative financing solutions as needed to enhance our access to sources of liquidity; and

•Enacting temporary cost reduction measures across the organization, including
reducing contract services, reducing overtime and other employee related costs,
and reducing or eliminating non-critical travel.

The most significant of these efforts to date as well as specifically identified measures that are anticipated in the near term, in terms of realized or anticipated impact on our financial results, include the following:

•For the year ended December 31, 2020 pursuant to the provisions of the CARES
Act, we recognized $16.8 million of current federal income tax benefit
attributable to anticipated tax refunds from net operating loss carryback to
prior 35% tax rate years, and deferred $10.9 million of payroll tax payments
which was and will be payable in equal installments in December 2021 and
December 2022. Additionally, we recorded a current income tax receivable
totaling $135.6 million and a non-current tax receivable of $20.6 million as of
December 31, 2020, related to the net operating loss carryback, all of which we
received in the third quarter of 2021.

•We made significant efforts to temporarily reduce our capital spending,
particularly on growth and non-critical sustaining maintenance projects, and by
deferring non-critical turnaround activities (for example, we are conducting
"surgical strike" turnaround activities at our Tyler refinery, which allows us
to defer the full turnaround until 2023). See the "Liquidity and Capital
Resources" section of Item 7. Management's Discussion and Analysis, for further
information.

•In light of the weak macro-economic environment, we elected to pull forward
turnaround work into the fourth quarter of 2020 on certain units at the Krotz
Springs refinery that was conducted on a straight-time basis. This allowed us to
continue running the more profitable units of the refinery and should help
improve economics toward a break-even level. We completed this turnaround work
late in the first quarter 2021 and have since returned to normalized production.

•Additionally, we implemented a temporary cost reduction plan for 2021 designed
to significantly reduce operating expenses and general and administrative
expenses. The majority of the operating expenses reduction was attributable to
the temporary unit optimization at the Krotz Spring refinery, with additional
reductions arising from other efforts such as targeted budgeting around outside
contractor expenses and deferral of certain non-critical, non-capitalizable
maintenance activities. Furthermore, both operating and general and
administrative expenses were favorably impacted by a cumulative reduction in
workforce, some of which were temporary.

•Finally, we elected to suspend dividends beginning in the fourth quarter 2020
in order to conserve capital. This has helped us maintain our liquidity and
manage our cost of capital impacted by the Pandemic, as well as provided
additional flexibility to pursue opportunities to provide value to investors
with respect to our stock price, which we believe is undervalued.

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                                            Management's Discussion and 

Analysis

The combination of these efforts had a mitigating impact on cash flows as well
as our operations, which we believe has improved our liquidity positioning and
operational flexibility and response in anticipation of the continued economic
impacts of the COVID-19 Pandemic. See the "Liquidity and Capital Resources"
section of Item 7. Management's Discussion and Analysis of this Annual Report on
Form 10-K for further information.

The extent to which our future results are affected by the COVID-19 Pandemic
will depend on various factors and consequences beyond our control, such as the
duration and scope of the Pandemic; additional actions by businesses and
governments in response to the Pandemic, and the speed and effectiveness of
responses to combat the virus and any new variants. The COVID-19 Pandemic, and
the volatile regional and global economic conditions stemming from the Pandemic,
could also exacerbate the risk factors identified in the "Risk Factors" section
located in Item 1A. of this Annual Report on Form 10-K. The COVID-19 Pandemic
may also materially adversely affect our results in a manner that is either not
currently known or that we do not currently consider to be a significant risk to
our business.

Regulatory Volatility

Our RINs cost and RINs Obligation (as defined in Note 11 of our consolidated
financial statements included in Item 8. Financial Statements and Supplementary
Data, of this Annual Report on Form 10-K) have been negatively impacted by
increasing RINs prices during much of 2021 which resulted from the 2020
unfavorable ruling against companies previously granted the EPA's SREs under the
RFS which governs RINs volume obligations for U.S. hydrocarbon refining
companies, importers and blenders. Additionally, increased environmental
regulatory activity in Washington, D.C. following the change in the presidential
administration in January 2021 continued to put upward pressure on RIN prices.
The 10th Circuit Court of Appeals ruling, which was subsequently appealed and
(for the first half of the year) was waiting to be heard by the U.S. Supreme
Court, stalled the approval of 2019 SRE applications already submitted
(inclusive of 2019 SRE applications for each of our four refineries) and led to
the postponement of 2020 SRE applications. Additionally, because of these delays
and uncertainties, the EPA issued, by Final Rule, extensions on the compliance
deadline under the RFS as well as the deadline for submission of the obligated
party attestation reports as of December 31, 2020 that delayed the deadlines
until future periods. In late June 2021, the U.S. Supreme Court overturned the
10th Circuit's previous ruling regarding RINs, resulting in market optimism that
the stalled SRE applications from 2019, as well as new applications for 2020,
might be granted, based on the published criteria. Market expectations that at
least some SRE applications may be approved and/or that the EPA may reduce
certain outstanding compliance requirements, resulted in an improvement in RINs
prices during the third quarter of 2021. However, this expectation was dampened
by the release of a proposed rule by the EPA in December 2021 which recommended
revised volumetric rates for 2020 and, for the first time, introduced proposed
rates for 2021 and 2022, and proposed denial of pending SRE petitions, noting
that the proposed volumetric rate changes may be sufficient to render the
granting of small refinery exemptions unnecessary based on the arguably
inaccurate presumption that small refineries are not unduly burdened by the cost
of RINs. The December 2021 Proposed Rule is still under comment and review and
has not yet been finalized. Because of the delays and uncertainties, the EPA
Issued, by Final Rule in February 2022, compliance and attestation reporting
deadline extensions based on a formula that begins with the first reporting
deadline that is at least 60 days after the 2019 RINs Obligation compliance
requirements are made effective via Final Rule, with the 2020, 2021 and 2022
deadlines to occur at each successive quarterly reporting deadline. So if the
2019 compliance requirement is finalized in June 2022, it's reporting and
attestation compliance deadline would be September 1, 2022, followed by the
following deadlines for subsequent RINs Obligation years: 2020 - December 1,
2022; 2021 - March 31, 2023; 2022 - June 1, 2023.

Uncertainty remains regarding the likelihood of SREs being granted as well as
the potential for EPA relief from certain compliance requirements. Additionally,
uncertainty remains regarding the impact that proposed EPA rules, or future
revisions to proposed rules, may have on RINs prices, which impact the
determination of the fair value of our Net RINs Obligation, as well as the fair
value of forward RIN commitment contracts. While we cannot know the outcome of
our SRE applications, Delek has a history of being granted the waivers with most
grants to the Krotz Springs and El Dorado refineries. As an example, in 2018, we
were granted SREs for our Tyler, Krotz Springs and El Dorado refineries.
Additionally, while our current Net RINs Obligation reflects current RINs market
prices as of December 31, 2021, the financial statement impact, including both
the income statement and net cash impact, of any future receipt of SRE(s) or
future changes to enacted Renewable Volume Obligation rates, is not determinable
because of the complexity of the Net RINs Obligation and related transactions,
where such financial statement impact is dependent upon the following: (1) which
refineries receive exemptions and/or the extent of enacted volumetric
requirement changes; (2) the composition of the specific Net RINs Obligation (in
terms of the vintages of RINs we currently own versus the waived RINs
Obligation) and the related market prices at the date each exemption is granted
or volumetric requirement change is enacted; (3) the composition of our RINs
forward commitment contracts that may be settled or positions closed as a result
of any exemption or enacted change and the related gains or losses; (4) the
settlement requirements of related RINs product financing arrangements; and (5)
the quantity of and dates at which excess RINs can be sold and the sales price
(see also Note 11, Note 12 and Note 19 as well as our related accounting
policies related to RINs included in Note 2 of our consolidated financial
statements included in Item 8. Financial Statements and Supplementary Data, of
this Annual Report on Form 10-K). We note that our total gross RINs Obligation
for 2020 (which is the most recent period for which volumetric requirements have
been enacted), for all four refineries, was approximately 340 million RINs,
across all RIN categories. While receipt of any SREs could result in significant
benefit, both in terms of income statement effect and cash flows, other enacted
regulatory changes could impact our financial results in ways that we cannot
currently anticipate.




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                                            Management's Discussion and 

Analysis

Delek's Response to Significant Uncertainties Associated with Regulatory Volatility

As discussed above, RFS activities and Renewable Volume Obligation requirements, and their impact on RIN prices, represent a significant risk which has, and could continue to, materially impact our financial results in ways that are currently uncertain. Our efforts to mitigate this risk include the following:

•Aggressively pursuing small refinery exemptions for all four of our refineries;

•Immediately following the favorable U.S. Supreme Court ruling in June 2021, we
undertook efforts to prepare 2020 SRE applications for our refineries and we
submitted them in August 2021. We believe that RINs do significantly impact the
crack spread capture at our refineries and therefore the original intent of SREs
is still applicable and, likewise, that SREs should be granted to us.
Furthermore, Delek has a history of being granted the waivers. Because EPA
failed to decide Delek's pending 2019 SRE petitions within the statutorily
prescribed 90-day period, Delek filed suit against the Agency in federal
district court in the District of Columbia. That case remains pending before the
court.

•Actively monitoring EPA rule-making and RFS actions regarding volumetric requirements, remittance due dates, and deferral opportunities in order to make decisions about RINs inventory;

•Proactively monitoring our Net RINs Obligation position (inclusive of our RINs
inventory portfolio), by vintage and RIN category, in order to make decisions
about the purchase and sale of RINs, based on both a current and forward basis,
and considering the risk of floating versus fixed pricing; and

•Incorporating into our strategic priorities activities designed to enhance
incremental crack spread capture so that the impact of high RIN prices or RINs
price volatility is diminished.

While there continues to be risk around the fair value of RINs Obligation that
we incur and the RINs cost we recognize in our results of operations, we believe
that our risk management activities around RINs are comprehensive. That said,
because the RINs market is subject to factors outside of our control, there will
continue to be risk that RINs cost could adversely affect our financial results.
See additional discussion of the effect of RINs prices and volatility on our
refining margins in the "Market Trends" section below.

Climate Change

Increasingly unstable environmental conditions and spontaneous extreme weather
events are making it costlier and more difficult for oil and gas companies to
operate in certain environments. Consequently, climate-change, and related
current and proposed regulations, are directly and indirectly impacting industry
bottom lines globally and in specific geographic areas where we operate. Current
and proposed climate-change and environmental regulations, laws and government
policies affect where and how companies invest, conduct their operations and
formulate their products and, in some cases, limit their profits directly. There
continues to be significant uncertainty around coming regulatory requirements,
not just from an operational perspective, but also around what reporting
requirements may be, as well as the associated cost. The SEC is currently
considering its requirements for ESG reporting in the near term, which may
include requirements that independent assurance be obtained and reported for ESG
disclosures, similar to financial statement audit reports.

Delek's Response to Significant Uncertainties Associated with Climate Change

We remain committed to complying with all regulations, laws and government
policies designed to curb the growing climate-change crisis. In 2021, the
Company announced goals to reduce Scope 1 & 2 emissions by 34% through emission
reductions and carbon offsets. This goal is aligned with both the IEA's SDS and
the Paris Accord's goal of limiting warming to less than 2°C above
pre-industrial levels. Using 2012 as our baseline, we plan to pursue the
reductions via a combination of steps including, but not limited to:
energy-efficient operational improvements; transitioning some refinery
production away from transportation fuels and towards chemicals; renewable power
purchases, when feasible, and offsets, when necessary; and previously executed
facility shutdowns that were later divested Our pledge is the first step towards
a long-term roadmap which we are seeking to align with the SBTI, to move Delek
firmly in the direction of the carbon-neutral operating environment as
envisioned by the Paris Accords.

We also continue to monitor the activities of the SEC as it works towards issuing reporting compliance rules around ESG and climate change, which includes consideration of framework and/or standards introduced by the Task Force on Climate-related Financial Disclosures ("TCFD") Sustainability Accounting Standards Board ("SASB"), so that we may ensure timely compliance with requirements as well as meaningful disclosure for our investors and stakeholders.

Talent Retention

It is widely reported that post-Pandemic talent retention has become a very real
risk for companies that are looking forward to emerging from Pandemic
conditions. According to a 2021 report by Achievers Workforce Institute, 52% of
employees in North America will look for a new job in the near future, leading
many to refer to the phenomenon as a "turnover tsunami" or the "Great
Resignation." The Pandemic has caused changes in consumer behavior, in travel
and also in the way we work. It has triggered a fundamental shift in the way
many people view their lives and their relationships with employers, in a time
when concern for the health and well-being of loved ones has been paramount.
Additionally, the job market has changed. COVID-19-related fatalities have taken
a toll on the talent pool, and the remaining workforce have shifted their views
of what's important. Encouraged/forced retirement and workforce reductions
during the height of the Pandemic pushed workers into different roles, while
health concerns, flexibility needs and the success of remote working optionality
have changed the way employees view work. Additionally, changing consumer
behavior and demands during the Pandemic have fueled certain industries and
decimated others, creating new demand for certain jobs and changing the market
compensation for many.

As we look to 2022, we have identified certain key contributors to post-Pandemic talent retention risk which include the following:

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                                            Management's Discussion and 

Analysis

•Highly Competitive Labor Markets - in many of the markets where we operate, we
recognize that there turnover rates are at historic highs, combined with low
unemployment rates;

•Voluntary Underemployment or Unemployment - many workers have been forced into under- or unemployment during the Pandemic, and either have successfully adjusted to it or continue to have concerns about health and safety and/or caring for family members; and

•Evolving Employee Value Proposition Expectations - Rising wages and new expectations for working flexibility favor employers who are culturally responsive.

We have also identified the following potential consequences of failing to adequately to address the risk around retaining talent:

•Strategic Transformation Failure - failure to recruit and retain employees for roles necessary for specific organizational transformation objectives can contribute to delay or failure of the transformation;

•Cultural Disruption/Erosion - failure to retain team builders and talent with
institutional knowledge can cause cultural disruption/erosion, leading to
employees that feel less invested in the success of their teams and the company,
and contributing to the risk of escalating turnover; and

•Loss of Agility Required for Sustainability - in a rapidly evolving economic landscape, agility is often dependent upon the talent and institutional knowledge of your employee force, and loss of that talent and knowledge can impact a company's ability to remain competitive and to achieve or maintain long-term sustainability.

Because of the pervasiveness of the risk, and that it is not specific to Delek,
there remains significant uncertainty about the extent to which we may
experience post-Pandemic talent attrition, and how workforce demands and
expectations may continue to evolve on both a macro and micro level.
Furthermore, there is significant uncertainty as to the impact of post-Pandemic
talent attrition, in terms of the specific talent and institutional knowledge
that may be lost and how that could impact our strategic transformation
activities, our culture and our ability to remain agile. Failure to
appropriately mitigate this risk, ultimately, could impair our long-term
sustainability.

Delek's Response to Significant Uncertainties Associated with Post-Pandemic Talent Retention

We recognize that talent retention is a significant risk to the Company post-Pandemic, for all the reasons discussed above. Our efforts to mitigate this risk include the following:

•We have engaged consultants to benchmark our overall Enterprise Risk Management framework, and as a result, we have:

•Identified Post-Pandemic Talent Retention ("PPTR") as one of the most critical emerging risks facing the Company; and

•Identified the key drivers or post-Pandemic talent retention risk and potential consequences

•We have recently established a PPTR Task Force which has been charged with the following:

•Drilling down on the potential consequences of failing to appropriately manage PPTR identified above and identify underlying drivers and risks specific to Delek;

•Ranking each identified driver/risk to determine priority for mitigation activities; and

•Identifying action plans for the mitigation activities, based on priorities

These efforts are incremental to our existing human capital programs, and are
specifically designed to address the risks presented by the changing
environment. Additionally, the PPTR Task Force is recently established, and its
function and responsibilities will continue to evolve over time. That said,
because the PPTR risk is subject to certain factors outside of our control,
there will continue to be risk that our PPTR will not be sufficiently successful
and that resulting turnover could indirectly result in an adverse effect on our
financial results.

Other Significant Events

During February 2021, the Company experienced a severe weather event ("Winter
Storm Uri"), at all the refineries, resulting in units being temporarily shut
down and damages being incurred to parts of the facilities due to extreme
freezing conditions. Due to the extreme freezing conditions, and despite the
acceleration of planned and ongoing turnaround work at the El Dorado and Krotz
Spring refineries (which provided some mitigation), we experienced reduced
throughputs at our refineries as there was a disruption in the crude supply,
increases in natural gas costs, as well as damages to various units at our
refineries requiring additional operating and capital expenditures.
Additionally, on February 27, 2021, our El Dorado refinery experienced a fire in
its Penex unit, in which six Delek employees were injured. Our on-site emergency
response team, with the assistance of the El Dorado Fire Department,
extinguished the fire, and we immediately began to monitor the air quality
within the refinery and the community. The incident was investigated by the OSHA
and Chemical Safety Board and resulted in operational disruptions as well as
property and casualty damages.

For the year ended December 31, 2021, we have recognized approximately $30.9
million ($23.9 million after-tax) of insurance recoveries related to property
and casualty claims relating to the winter storm and the fire, $13.4 million of
which related to replacement cost coverage on property losses and which helps
offset corresponding capital expenditures, and the remaining $17.5 million of
which relates to repairs and other operating expenses incurred in connection
with our property and casualty damages. Additionally, during the first half of
2021, the fire and freeze events caused us to experience operational disruptions
that significantly affected our results. While we cannot know what our EBITDA
would have been, we submitted business interruption insurance claims for covered
economic losses based on our insurance policies. For the three months and year
ended December 31, 2021, we have recognized $9.9 million ($7.7 million
after-tax) of business interruption insurance recoveries, which were recorded in
other operating income on the consolidated statement of income. There are
additional property and casualty claims, as well as business interruption
claims, that are outstanding and still pending which are expected to be
recognized in future quarters.

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                                            Management's Discussion and Analysis

Market Trends

Our results of operations are significantly affected by fluctuations in the
prices of certain commodities, including, but not limited to, crude oil,
gasoline, distillate fuel, biofuels, natural gas and electricity, among others.
Historically, the impact of commodity price volatility on our refining margins
(as defined in our "Non-GAAP Measures" in MD&A Item 7.), specifically as it
relates to the price of crude oil as compared to the price of refined products
and timing differences in the movements of those prices (subject to our
inventory costing methodology), as well as location differentials, may be
favorable or unfavorable compared to peers. Additionally, our refining margin
profitability is impacted by regulatory factors, including the cost of RINs.

As we reflect on the macro environment in 2021,the economy continued to recover
from the impact of the COVID-19 Pandemic, both globally and domestically. While
the effects of recurrent COVID-19 variant mutations caused fluctuating travel
restrictions, global chip shortages, supply chain challenges, and inflationary
pressures in multiple parts of the world, these effects were generally less
pronounced than in 2020, which was characterized by economic lockdowns and
pervasive uncertainty about the viability and availability of vaccines. In the
last several months, the availability of the COVID-19 vaccine across the U.S.,
as well as stabilizing trade relations with global partners, has led to improved
stability in the U.S. capital markets and certain industry sectors. Crude oil
markets experienced increasing levels of demand, which combined with
intermittent constraints on supply, translated into a strong oil price recovery.
We saw this in the recovery of WTI, which is the largest component of our crude
slate, with an average price per barrel of $77.33 in the fourth quarter of 2021
(for Cushing barrels) compared to an average price of $42.63 in the fourth
quarter of 2020. This translated into improved crack spreads and increases in
CBOB gasoline prices, where the average 5-3-2 crack spread increased from $7.83
to $17.51 and where CBOB gasoline prices increased from an average of $1.17 to
$2.22 in the fourth quarter of 2020 versus the fourth quarter of 2021,
respectively. These increases reflect recoveries of prices to pre-Pandemic
levels. That said, our refining operations are heavily dependent on Midland
crude, because of our geographic footprint and gathering activities in Midland
and surrounding Permian area. Thus, an unfavorable Midland differential compared
to Cushing on WTI crude oil will have a negative impact on our results. The
Midland differential was at an unfavorable premium for the latter half of 2020
through the third quarter 2021, and has just now flattened to near zero in the
fourth quarter of 2021.

Other conditions impacting the macro-economic environment during 2021 included
several events of unexpected severe weather. Violent storms, wildfires and
extreme temperatures across the U.S. impacted travel, disrupted supply chain
infrastructure and resulted in consumer losses of property and, in some cases,
lives, which put pressure on the economy. Winter Storm Uri, which crippled much
of Texas in February of 2021, impacted much of our network in the Permian Basin
and Gulf Coast region, causing pipeline disruptions, power outages and
constrained consumer travel. Additionally, 2021 ushered in both improvements in
COVID-19 testing and vaccine distribution, but also a shift in regulatory
sentiment. The changing regulatory landscape has renewed industry focus on
climate change concerns and resulted in an acceleration of ESG efforts. While it
has inspired expansion of technological investment in lower carbon-emission
technologies such as renewables, green and blue hydrogen energy, as well as
carbon capture, utilization and storage ("CCUS") projects, it has also
translated into delays in the EPA's RFS activities with respect to proposing and
finalizing volumetric requirements for Renewable Volume Obligations and granting
small refinery exemptions, which in turn has had a significant impact on the
prices of RINs. Unfavorable RINs prices can impact the capture of crack spreads,
and can be especially impactful to small refineries, and we felt the squeeze of
high RINs prices in our refining segment, particularly with respect to our Krotz
Springs and El Dorado refineries.

The cost of energy also affects our macro-economic environment. During 2021,
U.S. natural gas prices saw a brief spike in February during Winter Storm Uri,
which strained natural gas supply and distribution and, likewise, the
electricity markets in Texas and Oklahoma. Throughout most of the remainder of
2021, domestic natural gas demand outpaced growth in supply and contributed to
sustained increases in natural gas prices. Additional factors, including
increased exports triggered by unusually high international gas prices, as well
as critical pipeline outages and the prices and availability of substitute fuels
for power generation, put additional upward pressure on domestic natural gas
prices. Domestically, U.S. Henry Hub natural gas prices rose dramatically to an
average $3.86 per million British thermal units on a quarterly basis in 2021, up
from $1.86 in 2020. International natural gas pricing was volatile despite
following the traditional seasonal pattern, swinging from Pandemic-driven lows
in 2020 to record highs around the world. The spike in natural gas prices in the
first quarter of 2021 relating to Winter Storm Uri had a significant impact on
our refining contribution margin, and the high natural gas prices continued to
impact our crack spread capture for the remainder 2021. That said, we
successfully employed commercial strategies to help mitigate the risk of extreme
volatility in energy costs during much of the year, following that initial
spike.

Looking Ahead to 2022

As we look ahead to 2022, we expect the global economic environment to continue
to support growth, though both growth and stability may be constrained by
building inflationary pressures. In February 2022, oil prices have surged toward
$100 a barrel for the first time since 2014 which has the effect of both
hampering growth and driving inflation. There is an expectation that the U.S.
Federal Reserve and fellow central banks may make rate changes to combat the
rising inflation. At the same time, inflation hits companies and consumers with
higher costs for essentials like food, transportation and heat. In fact, the
International Monetary Fund recently raised its forecast for global consumer
price increases to an average 3.9% in advanced economies this year, up from
2.3%, and 5.9% in emerging and developing nations.

Additionally, military actions by Russia towards the Ukraine are causing
significant consternation among NATO countries and across the global landscape,
and could result in sanctions on Russia that could disrupt the global markets in
ways that cannot yet be anticipated, but that could reduce Russian supply and
create demand for domestic crude and refined product, and could also impact
natural gas exports and domestic prices. The uncertainties surrounding future
oil supply are compounded by conflicts in the Middle East, which resulted in
damaged fuel storage

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                                            Management's Discussion and 

Analysis

facilities in Abu Dhabi and increases in oil production in countries such as
Libya and Kazakhstan in response to blockades and other disruptions. Concerns
about low oil inventories and potential supply disruptions have outweighed
downward price pressure from China's announcement that it will release crude oil
from its national strategic stockpiles.

All of these contributing factors, combined with upward price pressures on
natural gas, liquified natural gas ("LNG"), and coal energy are expected to
increase the demand for hydrocarbon-based energy in 2022. Likewise, we expect
continued improvements in crack spreads, driven by increased demand. Absent
government intervention, industry analysts expect the Brent-WTI differential to
be favorable for domestic exports in 2022, including the U.S. Gulf Coast region.
However, the Midland-Cushing differential is not expected to improve
significantly in 2022, due to overbuilt pipeline capacity despite an expectation
for depleted Cushing inventory. However, significant export developments and
other factors could quickly shift differentials to be more favorable to our
Permian-heavy positioning. Meanwhile, in December 2021, the EPA proposed a rule
to revise 2021 Renewable Volume Requirements and to suggest rates for 2022 and
2023. Additionally, the EPA has proposed views that such changes may be
sufficient to render the granting of small refinery exemptions unnecessary,
based on the arguably inaccurate presumption that small refineries are not
unduly burdened by the cost of RINs. In any case, we will continue to pursue the
small refinery exemptions. Furthermore, the establishment of volumes for two
years may stabilize RIN prices, though they may continue to be higher than
historical averages.

See below for further discussion on how certain key market trends impact our operating results.

Crude Prices


WTI crude oil represents the largest component of our crude slate at all of our
refineries, and can be sourced through our gathering channels or optimization
efforts from Midland, Texas or Cushing, Oklahoma or other locations.The table
below reflects the quarterly average prices of WTI Midland and WTI Cushing crude
oil for each of the quarterly periods over the past three years. As shown in the
historical graph, WTI Midland crude prices can be favorable or unfavorable as
compared to WTI Cushing. We manage our supply chain risk to ensure that we have
the barrels to meet our crude slate consumption plan for each month through
gathering supply contracts and throughput agreements on various strategic
pipelines, some of which include those where we hold equity method investments.
We manage market price risk on crude oil through financial derivative hedges, in
accordance with our risk management strategies.

The chart below illustrates the average quarterly price of WTI Midland and WTI Cushing over the past three years.

[[Image Removed: dk-20211231_g33.jpg]]

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                                            Management's Discussion and Analysis

Crude Pricing Differentials


As U.S. crude oil production has increased over recent years, domestic refiners
have benefited from the discount for WTI Cushing compared to Brent, a global
benchmark crude. This generally leads to higher margins in our refineries, as
refined product prices are influenced by Brent crude prices and the majority of
our crude supply is WTI-linked. Because of our positioning in the Permian basin,
including our access to significant sources of WTI Midland crude through our
gathering system, we are even further benefited by discounts for WTI Midland/WTI
Cushing differentials. When these discounts shrink or become premiums, our
reliance on WTI-linked crude pricing, and specifically WTI Midland crude, can
negatively impact our refining margins. Conversely, as these price discounts
widen, so does our competitive advantage, created specifically by our access to
WTI Midland crude sourced through our gathering systems.

The chart below illustrates the key differentials impacting our refining operations, including WTI Cushing to Brent, WTI Midland to WTI Cushing, and LLS to WTI Cushing over the past three years.

                     [[Image Removed: dk-20211231_g34.jpg]]

Refined Product Prices


We are impacted by refined product prices in two ways: (1) in terms of the
prices we are able to sell our refined product for in our refining segment, and
(2) in terms of the cost to acquire the refined products to meet Refining
production shortfalls (e.g., when we have outages), or to acquire refined fuel
products we sell to our wholesale customers in our logistics segment and at our
convenience stores in our retail segment. These prices largely depends on
numerous factors beyond our control, including the supply of, and demand for,
crude oil, gasoline and other refined petroleum products which, in turn, depend
on, among other factors, changes in domestic and foreign economies, weather
conditions, domestic and foreign political affairs, production levels, the
availability of imports, the marketing of competitive fuels and government
regulation.

Our refineries produce the following products:

                                   Tyler Refinery             El Dorado Refinery          Big Spring Refinery      Krotz Springs Refinery
                            Gasoline, jet fuel,                                       Gasoline, jet fuel,          Gasoline, jet fuel,
                            ultra-low-sulfur diesel,     Gasoline,

ultra-low-sulfur ultra-low-sulfur diesel, high-sulfur diesel, Primary Products

            liquefied petroleum gases,   diesel, liquefied 

petroleum liquefied petroleum gases, light cycle oil,

                            propylene, petroleum coke    gases, propylene, asphalt    propylene, aromatics and     liquefied petroleum
                            and sulfur                   and sulfur                   sulfur                       gases, propylene and
                                                                                                                   ammonium thiosulfate


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                                            Management's Discussion and 

Analysis

The charts below illustrate the quarterly average prices of Gulf Coast Gasoline (CBOB), HSD and ULSD over the past three years.

[[Image Removed: dk-20211231_g35.jpg]]

Crack Spreads


Crack spreads are used as benchmarks for predicting and evaluating a refinery's
product margins by measuring the difference between the market price of
feedstocks/crude oil and the resultant refined products. Generally, a crack
spread represents the approximate refining margin resulting from processing one
barrel of crude oil into its outputs, generally gasoline and diesel fuel.

The table below reflects the quarterly average Gulf Coast 5-3-2 ULSD, 3-2-1 ULSD
and 2-1-1 HSD/LLS crack spreads for each of the quarterly periods over the past
three years. As the chart illustrates, the 3-2-1 crack spread has consistently
outperformed the 5-3-2 and the 2-1-1 crack spreads. When market conditions
consist of near-capacity throughputs and no significant outages, our Big Spring
refinery, whose benchmark is the 3-2-1 crack spread, should outperform our other
refineries in terms of refining margin, which are benchmarked against either the
5-3-2 or the 2-1-1 crack spreads.

[[Image Removed: dk-20211231_g36.jpg]]

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                                            Management's Discussion and Analysis

                                RIN Volatility


Environmental regulations and the political environment continue to affect our
refining margins in the form of volatility in the price of RINs. On a
consolidated basis, we work to balance our RINs Obligation in order to minimize
the effect of RINs prices on our results. While we obtain RINs in our refining
and logistics segments through our ethanol and biodiesel blending and generate
RINs through biodiesel production, our refining segment still must purchase
additional RINs to satisfy its obligations. Additionally, our ability to obtain
RINs through blending is limited by our refined product slate, blending
capabilities and market constraints. The cost to purchase these additional RINs
is a significant cash outflow for our business. Additionally, increases in the
market prices of RINs generally adversely affect our results of operations
through changes in fair value to our existing RINs Obligation, to the extent we
do not have offsetting RINs inventory on hand or effective economic hedges
through net forward purchase commitments. RINs prices are highly sensitive to
regulatory and political influence and conditions, and therefore often do not
correlate to movements in crude oil prices, refined product prices or crack
spreads. Furthermore, RINs prices are impacted by market expectations regarding
whether the EPA may grant SREs. The unfavorable 2020 SRE judicial rulings, as
well as the changes in regulatory sentiment following the presidential
administration change, have caused significant increases in RINs prices to
all-time highs in 2021. Because of the volatility in RINs prices, it is not
possible to predict future RINs cost with certainty, and movements in RINs
prices can have significant and unanticipated adverse effects on our refining
margins that are outside of our control.

The chart below illustrates the volatility in RINs over the past three years.

                     [[Image Removed: dk-20211231_g37.jpg]]




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                                            Management's Discussion and Analysis

                                  Energy Costs


Energy costs are a significant element of our Refining contribution margin and
can significantly impact our ability to capture crack spreads, with natural gas
representing the largest component. Natural gas prices are driven by supply-side
factors such as amount of natural gas production, level of natural gas in
storage and import and export activity, while demand-side factors include
variability of weather, economic growth and the availability and price of other
fuels. Refiners and other large-volume fuel consumers may be more or less
susceptible to volatility in natural gas prices depending on their consumption
levels as well as their capabilities to switch to more economical sources of
fuel/energy. Additionally, geographic location of facilities make consumers
vulnerable to price differentials of natural gas available at different supply
hubs. Within Delek's geographic footprint, we source the majority of our natural
gas from the Gulf Coast, and secondarily from the Permian, coinciding with the
physical locations of our refineries. We manage our risk around natural gas
prices by entering into variable and fixed-price supply contracts in both the
Gulf and Permian Basin or by entering into derivative hedges based on forecasted
consumption and forward curve prices, as appropriate, in accordance with our
risk policy.

The charts below illustrate the quarterly average prices of Waha (Permian Basin) and Henry Hub (Gulf Coast) over the past three years.

                     [[Image Removed: dk-20211231_g38.jpg]]




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Summary Financial and Other Information

The following table provides summary financial data for Delek (in millions):

Summary Statement of Operations Data (1)                      Year Ended December 31,
                                                                2021               2020
Net revenues                                             $    10,648.2          $ 7,301.8

Total operating costs and expenses (2)                        10,778.6      

8,029.8

Operating loss (2)                                              (130.4)     

(728.0)

Total non-operating expenses, net                                102.6      

35.1

Loss before income tax benefit                                  (233.0)            (763.1)
Income tax benefit                                               (62.5)            (192.7)

Net loss                                                        (170.5)            (570.4)
Net income attributed to non-controlling interests                33.0      

37.6

Net loss attributable to Delek                           $      (203.5)

$ (608.0)

(1) This information is presented at a summary level for your reference. See the
Consolidated Statements of Income included in Item 8.Financial Statements and
Supplementary Data, of this Annual Report on Form 10-K for more detail regarding
our results of operations and net loss per share.

(2 ) For the year ended December 31, 2021, we recorded an immaterial cumulative
correction relating to prior periods to capitalize manufacturing overhead costs
that should have been included in refining finished goods totaling
$21.5 million. The impact of the balance sheet error correction would not have
been material to the prior periods presented and is not material to total
inventory or to beginning retained earnings. Of that amount, $14.0 million was
recognized as a reduction of operating expenses and $7.5 million was recognized
as a reduction of depreciation in the refining segment.

We report operating results in three reportable segments:

•Refining

•Logistics

•Retail

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 its reportable segments based on the segment
contribution margin.

Results of Operations

Consolidated Results of Operations - Comparison of the Year Ended December 31, 2021 versus the Year Ended December 31, 2020

Net Loss

Consolidated net loss for the year ended December 31, 2021 was $170.5 million
compared to $570.4 million for the year ended December 31, 2020. Consolidated
net loss attributable to Delek for the year ended December 31, 2021 was $203.5
million, or $(2.75) per basic share, compared to $608.0 million, or $(8.26) per
basic share, for the year ended December 31, 2020. Explanations for significant
drivers impacting net loss as compared to the comparable period of the prior
year are discussed in the sections below.

Net Revenues

We generated net revenues of $10,648.2 million and $7,301.8 million during the
years ended December 31, 2021 and 2020, respectively, an increase of $3,346.4
million, or 45.8%. The increase in net revenues was primarily due to the
following:

•in our refining segment, increases in the average price of U.S. Gulf Coast gasoline of 85.2%, ULSD of 69.5%, and HSD of 65.1%;

•in our logistics segment, increases in the average sales prices per gallon of
gasoline and diesel sold in our West Texas marketing operations, as well
increased revenues associated with agreements executed in the year 2020,
partially offset by decreased throughputs primarily due to the impact of Winter
Storm Uri; and

•in our retail segment, increases in fuel sales primarily attributable to a 42.4% increase in average price charged per gallon sold.

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                                            Management's Discussion and 

Analysis

Total Operating Costs and Expenses

Cost of Materials and Other

Cost of materials and other was $9,739.6 million for the year ended December 31,
2021, compared to $6,841.2 million for 2020, an increase of $2,898.4 million, or
42.4%. The net increase in cost of materials and other primarily related to the
following:

•an increase in the cost of crude oil feedstocks at the refineries, including a
70.7% increase in the average cost of WTI Cushing crude oil and a 71.3% increase
in the average cost of WTI Midland crude oil;

•increases in average RINs costs during the year ended December 31, 2021 compared to the year ended December 31, 2020;

•increases in the average cost per gallon of gasoline and diesel sold, partially
offset by decreases in the average volumes of gasoline and diesel sold in our
West Texas marketing operations; and

•an increase in retail fuel cost of materials and other primarily attributable to a 51.6% increase in average cost per gallon sold.

Such increases were partially offset by the following:

•an increase in commodity hedging gains to a loss of $51.7 million recognized
during the year ended December 31, 2021 from a loss of $87.5 million recognized
during the year ended December 31, 2020;

•the benefit (expense) of $22.3 millions related to the change in pre-tax inventory valuation recognized during the year ended December 31, 2021 compared to $(29.2) millions recognized during the year ended December 31, 2020.

Operating Expenses

Operating expenses (included in both cost of sales and other operating expenses) were $595.6 million for the year ended December 31, 2021 compared to $559.8 million in 2020, an increase of $35.8 million, or 6.4%. The increase in operating expenses was primarily driven by the following:

•an increase in variable expenses primarily associated with higher natural gas
costs during the February 2021 severe freezing conditions that affected most of
the regions where we operate and higher natural gas pricing during the third
quarter of 2021; and

•increases in employee and outside services costs in our logistics segment due
to terminating certain cost cutting measures previously implemented in response
to the Pandemic.

Such increases were partially offset by the following:

•a one-time favorable adjustment of $14.0 million in the third quarter of 2021
to reflect the cumulative adjustment to capitalize manufacturing overhead in
refining finished goods inventory.

General and Administrative Expenses

General and administrative expenses were $229.4 million for the year ended December 31, 2021 compared to $248.3 million in 2020, a decrease of $18.9 million, or 7.6%. The decrease was primarily driven by the following:

•a decrease in employee expenses partially due to additional severance costs
incurred in prior year and suspension of matching contributions to our 401(k)
plan for the first half of 2021 while the plan was still in place during the
year ended December 31, 2020; and

•a decrease in contract services due to additional legal and consulting services associated with the drop downs in prior year and cost reduction measures.

Depreciation and Amortization

Depreciation and amortization (included in both cost of sales and other operating expenses) was $264.6 million and $267.6 million for the years ended December 31, 2021 and 2020, respectively, a decrease of $3.0 million, or 1.1%.

Other Operating Income, Net

Other operating income, net was $50.6 million and $13.1 million for the years
ended December 31, 2021 and 2020, respectively, an increase of $37.5 million,
primarily due to following:

•a gain of $23.3 million from property and casualty and business interruption
insurance recoveries associated with losses incurred from Winter Storm Uri and
the El Dorado fire; and

•a $21.8 million increase in gains from our trading derivatives

Such increase was partially offset by $10.8 million gain on the underlying commodity related tie the Strategic Petroleum Reserve financial asset during the prior year period.

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                                            Management's Discussion and Analysis
Non-Operating Expenses, Net

Interest Expense

Interest expense was $137.2 million in the year ended December 31, 2021, compared to $129.0 million for 2020, an increase of $8.2 million, or 6.4% primarily due to the following:

•an increase in net average borrowings outstanding (including the obligations
under the supply and offtake agreements which have an associated interest
charge) of approximately $80.6 million during the year ended December 31, 2021
(calculated as a simple average of beginning borrowings/obligations and ending
borrowings/obligations for the period) compared to the year ended December 31,
2020; and

•an increase in the average effective interest rate of 0.16% during the year
ended December 31, 2021 compared to the year ended December 31, 2020 (where
effective interest rate is calculated as interest expense divided by the net
average borrowings/obligations outstanding).

Results from Equity Method Investments

We recognized income from equity method investments of $18.3 million for the year ended December 31, 2021, compared to $30.3 million for the year ended December 31, 2020, a decrease of $12.0 million. This decrease was primarily driven by the following:

•decrease in income from our logistics' equity method investments due to lower
volumes as the impact of the February 2021 Winter Storm Uri was pervasive across
all of our equity method investments' pipeline systems; and

•a decrease in income from our investment in W2W Holdings LLC to a loss of $17.7
million during the year ended December 31, 2021 from a loss of $8.5 million in
the year ended December 31, 2020.

Other

During the year ended December 31, 2021, we recognized a receivable of $27.5
million, $20.9 million of which is included as a gain in other income, related
to payment to be received from a loan buy-out agreement between Wink to Webster
Pipeline LLC and the Company. Refer to Note 6 of our consolidated financial
statements included in Item 8. Financial Statements and Supplementary Data, of
this Annual Report on Form 10-K for additional information.

During the year ended December 31, 2020, we recognized a gain of $56.8 million
on the sale of our non-operating refinery located in Bakersfield, California.
See Note 3 of our consolidated financial statements included in Item 8.
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.



Income Taxes

Income tax benefit decreased $130.2 million resulting in net benefit of $62.5
million during the year ended December 31, 2021 compared to the same period for
2020, primarily driven by the following:

•pre-tax loss of $233.0 million compared to $763.1 million for the years ended December 31, 2021 and 2020, respectively;

•2020 federal net operating loss carryback to a prior 35% tax rate year creating a 14% rate arbitrage and $16.8 million benefit in 2020;

•the reversal of a valuation allowance attributable to book-tax basis
differences in partnership investments reported as a discrete benefit in the
first quarter of 2020, versus a net increase in valuation allowance on certain
state tax attributes in 2021; offset by

• exclusion of impairment of goodwill expense in 2020 which reduced taxable benefit.

Refer to Note 14 of the consolidated financial statements included in Item 8.
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K,
for additional information.



A detailed discussion of the fiscal year 2020 compared to year-over-year changes
from fiscal year 2019 can be found in Part II, Item 7. Management's Discussion
and Analysis, "Results of Operations", of our 2020 Annual Report on Form 10-K,
filed on March 1, 2021.


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                                            Management's Discussion and Analysis
                               Refining Segment

The tables and charts below set forth certain information concerning our refining segment operations ($ in millions, except per barrel amounts):

                                       Refining Segment Margins
                                                                          

Year Ended December 31,

                                                                          2021                 2020
Net revenues                                                         $    9,956.0          $ 5,817.7
Cost of materials and other                                               9,439.5            5,745.5
Refining Margin                                                             516.5               72.2
Operating expenses (excluding depreciation and amortization)
(1)                                                                         434.1              402.7

Contribution margin (1)                                              $       82.4          $  (330.5)
Contribution margin percentage                                                0.8  %            (5.7) %


(1) As of December 31, 2021, we recorded an immaterial cumulative correction
relating to prior periods to capitalize manufacturing overhead costs that should
have been included in refining finished goods totaling $21.5 million . The
impact of the balance sheet error correction resulted in a reduction in
operating expenses of $14.0 million during the year ended December 31, 2021, and
would not have been material to the prior periods presented.

Factors Impacting Refining Profitability

Our profitability in the refining segment is substantially determined by the
difference between the cost of the crude oil feedstocks we purchase and the
price of the refined products we sell, referred to as the "crack spread",
"refining margin" or "refined product margin". Refining margin is used as a
metric to assess a refinery's product margins against market crack spread
trends, where "crack spread" is a measure of the difference between market
prices for crude oil and refined products and is a commonly used proxy within
the industry to estimate or identify trends in refining margins.

The cost to acquire feedstocks and the price of the refined petroleum products
we ultimately sell from our refineries depend on numerous factors beyond our
control, including the supply of, and demand for, crude oil, gasoline and other
refined petroleum products which, in turn, depend on, among other factors,
changes in domestic and foreign economies, weather conditions such as hurricanes
or tornadoes, local, domestic and foreign political affairs, global conflict,
production levels, the availability of imports, the marketing of competitive
fuels and government regulation. Other significant factors that influence our
results in the refining segment include operating costs (particularly the cost
of natural gas used for fuel and the cost of electricity), seasonal factors,
refinery utilization rates and planned or unplanned maintenance activities or
turnarounds. Moreover, while the fluctuations in the cost of crude oil are
typically reflected in the prices of light refined products, such as gasoline
and diesel fuel, the price of other residual products, such as asphalt, coke,
carbon black oil and LPG are less likely to move in parallel with crude cost.
This could cause additional pressure on our realized margin during periods of
rising or falling crude oil prices.

Additionally, our margins are impacted by the pricing differentials of the
various types and sources of crude oil we use at our refineries and their
relation to product pricing. Our crude slate is predominantly comprised of WTI
crude oil. Therefore, favorable differentials of WTI compared to other crude
will favorably impact our operating results, and vice versa. Additionally,
because of our gathering system presence in the Midland area and the significant
source of crude specifically from that region into our network, a widening of
the WTI Cushing less WTI Midland spread will favorably influence the operating
margin for our refineries. Alternatively, a narrowing of this differential will
have an adverse effect on our operating margins. Global product prices are
influenced by the price of Brent which is a global benchmark crude. Global
product prices influence product prices in the U.S. As a result, our refineries
are influenced by the spread between Brent and WTI Midland. The Brent less WTI
Midland spread represents the differential between the average per barrel price
of Brent crude oil and the average per barrel price of WTI Midland crude oil. A
widening of the spread between Brent and WTI Midland will favorably influence
our refineries' operating margins. Also, the Krotz Springs refinery is
influenced by the spread between Brent and LLS. The Brent less LLS spread
represents the differential between the average per barrel price of Brent and
the average per barrel price of LLS crude oil. A discount in LLS relative to
Brent will favorably influence the Krotz Springs refinery operating margin.

Finally, Refining contribution margin is impacted by regulatory costs associated
with the cost of RINs as well as energy costs, including the cost of natural
gas. In periods of unfavorable regulatory sentiment or uncertainty regarding the
possibility of SREs, RINs prices can increase at higher rates than crack
spreads, or even when crack spreads are declining. This can be particularly
impactful on smaller refineries, where the operating cost structure does not
have as much scalability as larger refineries. Additionally, volatility in
energy costs, which are captured in our operating expenses and impact our
Refining contribution margin, can significantly impact our ability to capture
crack spreads, with natural gas representing the most significant component.
Within Delek's geographic footprint, we source the majority of our natural gas
from the Gulf Coast, and secondarily from the Permian, and we do not currently
have the capability at our refineries to switch our energy consumption to
utilize alternative sources of fuel. For this reason, unfavorable Gulf Coast
(Henry Hub) differentials can impact our crack spread capture.

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                                            Management's Discussion and 

Analysis

The cost to acquire the refined fuel products we sell to our wholesale customers
in our logistics segment and at our convenience stores in our retail segment
largely depends on numerous factors beyond our control, including the supply of,
and demand for, crude oil, gasoline and other refined petroleum products which,
in turn, depend on, among other factors, changes in domestic and foreign
economies, weather conditions, domestic and foreign political affairs,
production levels, the availability of imports, the marketing of competitive
fuels and government regulation.

In addition to the above, it continues to be a strategic and operational
objective to manage price and supply risk related to crude oil that is used in
refinery production, and to develop strategic sourcing relationships. For that
purpose, from a pricing perspective, we enter into commodity derivative
contracts to manage our price exposure to our inventory positions, future
purchases of crude oil and ethanol, future sales of refined products or to fix
margins on future production. We also enter into future commitments to purchase
or sell RINs at fixed prices and quantities, which are used to manage the costs
of our credits for commitments required by the EPA to blend biofuels into fuel
products ("RINs Obligation"). Additionally, from a sourcing perspective, we
often enter into purchase and sale contracts with vendors and customers or take
physical or financial commodity positions for crude oil that may not be used
immediately in production, but that may be used to manage the overall supply and
availability of crude expected to ultimately be needed for production and/or to
meet minimum requirements under strategic pipeline arrangements, and also to
optimize and hedge availability risks associated with crude that we ultimately
expect to use in production. Such transactions are inherently based on certain
assumptions and judgments made about the current and possible future
availability of crude. Therefore, when we take physical or financial positions
for optimization purposes, our intent is generally to take offsetting positions
in quantities and at prices that will advance these objectives while minimizing
our positional and financial statement risk. However, because of the volatility
of the market in terms of pricing and availability, it is possible that we may
have material positions with timing differences or, more rarely, that we are
unable to cover a position with an offsetting position as intended. Such
differences could have a material impact on the classification of resulting
gains/losses, assets or liabilities, and could also significantly impact
refining contribution margin.


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                                            Management's Discussion and Analysis

                                           Refinery Statistics
                                                                             Year Ended December 31,
                                                                             2021                 2020
Tyler, TX Refinery
Days in period                                                                   365                366

Total sales volume - refined product (average barrels per day) (1)

                                                                           71,016             74,075
Products manufactured (average barrels per day):
Gasoline                                                                      35,782             40,031
Diesel/Jet                                                                    27,553             29,220
Petrochemicals, LPG, NGLs                                                      1,957              2,794
Other                                                                          1,503              1,461
Total production                                                              66,795             73,506
Throughput (average barrels per day):
Crude Oil                                                                     65,205             67,868
Other feedstocks                                                               1,971              6,112
Total throughput                                                              67,176             73,980
Total refining revenue ($ in millions)                                  $    2,337.4          $ 1,432.2
Cost of materials and other ($ in millions)                                  2,169.5            1,331.7
Total refining margin ($ in millions)                                   $      167.9          $   100.5
Per barrel of refined product sales:
Tyler refining margin                                                   $       6.48          $    3.71
Direct operating expenses                                               $   

3.91 $ 3.45 Crude Slate: (% based on amount received in period) WTI crude oil

                                                                   90.8  %            92.0  %
East Texas crude oil                                                             9.0  %             8.0  %
Other                                                                            0.2  %               -  %

El Dorado, AR Refinery
Days in period                                                                   365                366

Total sales volume - refined product (average barrels per day) (1)

                                                                           70,182             75,992
Products manufactured (average barrels per day):
Gasoline                                                                      32,004             35,480
Diesel                                                                        24,777             28,429
Petrochemicals, LPG, NGLs                                                      1,078              1,772
Asphalt                                                                        6,352              6,687
Other                                                                            646                789
Total production                                                              64,857             73,157
Throughput (average barrels per day):
Crude Oil                                                                     62,067             70,385
Other feedstocks                                                               3,580              2,979
Total throughput                                                              65,647             73,364
Total refining revenue ($ in millions)                                  $    2,387.7          $ 1,788.8
Cost of materials and other ($ in millions)                                  2,345.5            1,809.3
Total refining margin ($ in millions)                                   $       42.2          $   (20.5)
Per barrel of refined product sales:
El Dorado refining margin                                               $       1.65          $   (0.74)
Operating expenses                                                      $       3.81          $    3.81
Crude Slate: (% based on amount received in period)
WTI crude oil                                                                   49.0  %            52.3  %
Local Arkansas crude oil                                                        18.5  %            17.8  %
Other                                                                           32.5  %            29.9  %


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                                            Management's Discussion and Analysis

                                     Refinery Statistics (continued)
                                                                            Year Ended December 31,
                                                                            2021                 2020
Big Spring, TX Refinery
Days in period                                                                  365                366

Total sales volume - refined product (average barrels per day) (1)

                                                                          71,930             65,508
Products manufactured (average barrels per day):
Gasoline                                                                     35,640             32,340
Diesel/Jet                                                                   25,284             23,283
Petrochemicals, LPG, NGLs                                                     3,712              3,183
Asphalt                                                                       1,475              1,685
Other                                                                         1,404              1,119
Total production                                                             67,515             61,610
Throughput (average barrels per day):
Crude oil                                                                    68,038             61,428
Other feedstocks                                                                843              1,078
Total throughput                                                             68,881             62,506
Total refining revenue ($ in millions)                                 $    2,561.3          $ 1,531.7
Cost of materials and other ($ in millions)                                 2,375.3            1,497.2
Total refining margin ($ in millions)                                  $      186.0          $    34.5
Per barrel of refined product sales:
Big Spring refining margin                                             $       7.08          $    1.44
Operating expenses                                                     $       4.57          $    4.33
Crude Slate: (% based on amount received in period)
WTI crude oil                                                                  71.0  %            67.0  %
WTS crude oil                                                                  29.0  %            33.0  %

Krotz Springs, LA Refinery
Days in period                                                                  365                366

Total sales volume - refined product (average barrels per day) (1)

                                                                          65,992             61,302
Products manufactured (average barrels per day):
Gasoline                                                                     26,170             20,615
Diesel/Jet                                                                   21,387             20,422
Heavy Oils                                                                      719                418
Petrochemicals, LPG, NGLs                                                     5,170              2,223
Other                                                                         7,895             13,512
Total production                                                             61,341             57,190
Throughput (average barrels per day):
Crude Oil                                                                    55,321             53,875
Other feedstocks                                                              5,912              4,126
Total throughput                                                             61,233             58,001
Total refining revenue ($ in millions)                                 $    2,674.9          $ 1,266.6
Cost of materials and other ($ in millions)                                 2,550.2            1,296.3
Total refining margin ($ in millions)                                  $      124.7          $   (29.7)
Per barrel of sales:
Krotz Springs refining margin                                          $       5.18          $   (1.32)
Operating expenses                                                     $       4.20          $    3.97
Crude Slate: (% based on amount received in period)
WTI Crude                                                                      65.3  %            70.1  %
Gulf Coast Sweet Crude                                                         34.3  %            29.1  %
Other                                                                           0.4  %             0.8  %

(1) Includes inter-refinery sales and sales to other segments which are eliminated in consolidation. See tables below.

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                                            Management's Discussion and 

Analysis

Included in the refinery statistics above are the following inter-refinery and
sales to other segments:

                                               Inter-refinery Sales
                                                                              Year Ended December 31,
(in barrels per day)                                                    2021                           2020

Tyler refined product sales to other Delek refineries                   1,636                             2,010
El Dorado refined product sales to other Delek refineries                 866                               924
Big Spring refined product sales to other Delek refineries              1,502                             1,356
Krotz Springs refined product sales to other Delek refineries             150                               190




                                            Refinery Sales to Other Segments
                                                                                     Year Ended December 31,
(in barrels per day)                                                             2021                          2020

Tyler refined product sales to other Delek segments                                463                          1,623
El Dorado refined product sales to other Delek segments                              9                             94
Big Spring refined product sales to other Delek segments                        22,174                         22,601
Krotz Springs refined product sales to other Delek segments                      2,927                            362




                        Pricing Statistics (average for the period presented)
                                                                         Year Ended December 31,
                                                                         2021                2020

WTI - Cushing crude oil (per barrel)                                $      68.11          $  39.89
WTI - Midland crude oil (per barrel)                                $      68.55          $  40.02
WTS - Midland crude oil (per barrel)                                $      68.29          $  39.96
LLS (per barrel)                                                    $      69.60          $  41.56
Brent (per barrel)                                                  $      70.96          $  43.24

U.S. Gulf Coast 5-3-2 crack spread (per barrel) - utilizing HSD

$      12.14          $   5.87
U.S. Gulf Coast 5-3-2 crack spread (per barrel) (1)                 $      16.62          $   8.18
U.S. Gulf Coast 3-2-1 crack spread (per barrel) (1)                 $      17.79          $   8.70
U.S. Gulf Coast 2-1-1 crack spread (per barrel) (1)                 $      

10.41 $ 4.65

U.S. Gulf Coast Unleaded Gasoline (per gallon)                      $       2.02          $   1.09
Gulf Coast Ultra low sulfur diesel (per gallon)                     $       2.02          $   1.19
U.S. Gulf Coast high sulfur diesel (per gallon)                     $       

1.75 $ 1.06 Natural gas (per One Million British Thermal Units ("MMBTU") $ 3.73 $ 2.13

(1)For our Tyler and El Dorado refineries, we compare our per barrel refining
product margin to the Gulf Coast 5-3-2 crack spread consisting of WTI Cushing
crude, U.S. Gulf Coast CBOB and U.S. Gulf Coast Pipeline No. 2 heating oil
(ultra low sulfur diesel). For our Big Spring refinery, we compare our refined
product margin to the Gulf Coast 3-2-1 crack spread consisting of WTI Cushing
crude, Gulf Coast 87 Conventional gasoline and Gulf Coast ultra low sulfur
diesel, and for our Krotz Springs refinery, we compare our per barrel refined
product margin to the Gulf Coast 2-1-1 crack spread consisting of LLS crude oil,
Gulf Coast 87 Conventional gasoline and U.S. Gulf Coast Pipeline No. 2 heating
oil (high sulfur diesel). The Tyler refinery's crude oil input is primarily WTI
Midland and East Texas, while the El Dorado refinery's crude input is primarily
a combination of WTI Midland, local Arkansas and other domestic inland crude
oil. The Big Spring refinery's crude oil input is primarily comprised of WTS and
WTI Midland. The Krotz Springs refinery's crude oil input is primarily comprised
of LLS and WTI Midland.




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                                            Management's Discussion and 

Analysis

Refining Segment Operational Comparison of the Year Ended December 31, 2021 versus the Year Ended December 31, 2020

Net Revenues

Net revenues for the refining segment increased $4,138.3 million, or 71.1%, in
the year ended December 31, 2021 compared to the year ended December 31, 2020.
The increase was primarily driven by the following:

•increase in the average price of U.S. Gulf Coast gasoline of 85.2%, ULSD of 69.5%, and HSD of 65.1%; and

•increases in sales volumes of refined and purchased product of 0.7 million and 1.6 million barrels, respectively.

Net revenues included sales to our retail segment of $355.7 million and $220.0
million, sales to our logistics segment of $321.9 million and $203.8 million and
sales to our other segment of $110.1 million and $30.8 million for the years
ended December 31, 2021 and 2020, respectively. We eliminate this intercompany
revenue in consolidation.


                     [[Image Removed: dk-20211231_g39.jpg]]

Cost of Materials and Other

Cost of materials and other increased $3,694.0 million, or 64.3%, in the year ended December 31, 2021 compared to the year ended December 31, 2020. This increase was primarily driven by the following:

•increases in the cost of WTI Cushing crude oil, from an average of $39.89 per barrel to an average of $68.11, or 70.7%;

•increases in the cost of WTI Midland crude oil, from an average of $40.02 per barrel to an average of $68.55, or 71.3%; and

•increases in RINs costs from an average cost per RIN of $0.44 and $0.64 for
ethanol and biodiesel RINs, respectively during the year ended December 31, 2020
to an average of $1.31 and $1.50 during the year ended December 31, 2021.

These increases were partially offset by the following:

•the benefit (expense) of $23.6 million related to the change in pre-tax inventory valuation recognized during the year ended December 31, 2021 compared to $(29.4) million recognized during the year ended December 31, 2020.

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                                            Management's Discussion and Analysis

                     [[Image Removed: dk-20211231_g40.jpg]]

Our refining segment purchases finished product from our logistics segment and
has multiple service agreements with our logistics segment which, among other
things, require the refining segment to pay terminalling and storage fees based
on the throughput volume of crude and finished product in the logistics segment
pipelines and the volume of crude and finished product stored in the logistics
segment storage tanks, subject to MVCs. These costs and fees were $367.9 million
and $339.1 million during the years ended December 31, 2021 and 2020,
respectively. We eliminate these intercompany fees in consolidation.

Refining Margin

Refining margin increased by $444.3 million, or 615.4%, for the year ended
December 31, 2021 compared to the year ended December 31, 2020, with a refining
margin percentage of 5.2% as compared to 1.2% for the years ended December 31,
2021 and 2020, respectively, primarily driven by the following:

•a 106.8% improvement in the 5-3-2 crack spread (the primary measure for the
Tyler refinery and El Dorado refinery), a 104.5% improvement in the average Gulf
Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery), and
a 123.9% improvement in the average Gulf Coast 2-1-1 crack spread (the primary
measure for the Krotz Springs refinery); and

•an increase in reversal benefit of inventory valuation reserve during the year 2021 compared to the prior year period.

These increases were partially offset by the following:

•increases in average RINs costs during the year ended December 31, 2021 compared to the year ended December 31, 2020.

[[Image Removed: dk-20211231_g41.jpg]][[Image Removed: dk-20211231_g42.jpg]]

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                                            Management's Discussion and Analysis

                     [[Image Removed: dk-20211231_g43.jpg]]



Operating Expenses

Operating expenses increased $31.4 million, or 7.8%, in the year ended December
31, 2021, compared to year ended December 31, 2020. The increase in operating
expenses was primarily driven by the following:

•an increase in utilities costs primarily associated with higher natural gas
costs during the February 2021 related to Winter Storm Uri and pricing increases
in the later half of 2021; and

•an increase in catalyst costs due to increased production at the refineries.

Such increases were offset by the following:

•a one-time favorable adjustment of $14.0 million in the third quarter of 2021
to reflect the cumulative adjustment to capitalize manufacturing overhead in
refining finished goods inventory.

Contribution Margin

Contribution margin increased by $412.9 million, or a 6.5% improvement in contribution margin percentage, for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily driven by the following:

•an increase in refining margin primarily driven by an overall increase in the average crack spreads, partially offset by higher percentage of purchased product sold and increase in average RINs cost.

Such increase was offset by the following:

•an increase in operating expenses of $31.4 million, or 7.8%.

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                                            Management's Discussion and Analysis
                               Logistics Segment

The table below sets forth certain information concerning our logistics segment operations ($ in millions, except per barrel amounts):

                         Logistics Contribution Margin and Operating Information
                                                                            Year Ended December 31,
                                                                           2021                 2020
Net revenues                                                          $      700.9               563.4
Cost of materials and other                                                  384.4               269.1
Operating expenses (excluding depreciation and amortization)                  60.8                56.2
Contribution margin                                                   $      255.7          $    238.1
Operating Information:
East Texas - Tyler Refinery sales volumes (average bpd) (1)                 68,497              71,182
Big Spring wholesale marketing throughputs (average bpd)                    78,370              76,345
West Texas wholesale marketing throughputs (average bpd)                    10,026              11,264
West Texas wholesale marketing margin per barrel                      $       3.72          $     2.37
Terminalling throughputs (average bpd) (2)                                 138,301             147,251
Throughputs (average bpd):
Lion Pipeline System:
Crude pipelines (non-gathered)                                              65,335              74,179
Refined products pipelines to Enterprise Systems                            48,757              53,702
SALA Gathering System                                                       14,460                 13,466
East Texas Crude Logistics System                                           22,647                 15,960
Permian Gathering System (3)                                                80,285                 82,817
Plains Connection System                                                   124,025             104,770

(1) Excludes jet fuel and petroleum coke.

(2) Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas terminals, El Dorado and North Little Rock, Arkansas terminals and Memphis and Nashville, Tennessee terminals.

(3) Throughputs for the Permian Gathering System and the Plains Connection System are for the approximately 275 days we owned the assets following the Big Spring Gathering Assets Acquisition effective March 31, 2020.

Logistics revenue is largely based on fixed-fee or tariff rates charged for
throughput volumes running through our logistics network, where many of those
volumes are contractually protected by MVCs. To the extent that our logistics
volumes are not subject to MVCs, our Logistics revenue may be negatively
impacted in periods where are customers are experiencing economic pressures or
reductions in demand for their products. Additionally, certain of our throughput
arrangements contain deficiency credit provisions that may require us to defer
excess MVC fees collected over actual throughputs to apply toward MVC
deficiencies in future periods. With respect to our equity method investments in
pipeline joint ventures, our earnings from those investments (which is based on
our pro rata ownership percentage of the joint venture's recognized net income
or loss) are directly impacted by the operations of those joint ventures. Items
impacting the joint venture net income (loss) may include (but is not limited
to) the following: long-term throughput contractual arrangements and related
MVCs and, in some cases, deficiency credit provisions; the demand for walk-up
nominations; applicable rates or tariffs; long-lived asset or other impairments
assessed at the joint venture level; and pipeline releases or other contingent
liabilities. With respect to our West Texas marketing activities, our
profitability is dependent upon the cost of landed product versus the rack price
of refined product sold. Our logistics segment is generally protected from
commodity price risk because inventory is purchased and then immediately sold at
the rack.

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                                            Management's Discussion and 

Analysis

Logistics Segment Operational Comparison of the Year Ended December 31, 2021 versus the Year Ended December 31, 2020

Net Revenues

Net revenues increased by $137.5 million, or 24.4%, in the year ended December
31, 2021 compared to the year ended December 31, 2020 primarily driven by the
following:

•increased revenues associated with agreements executed in connection with
Permian Gathering System and Delek Trucking acquisitions, which were effective
March 31, 2020 and May 1, 2020, respectively. Refer to Note 5 of the
consolidated financial statements included in Item 8. Financial Statements and
Supplementary Data, of this Annual Report on Form 10-K, for additional
information.

•increased revenues at our Big Springs Refinery Crude Pipeline, as a result of new contracts executed in the second quarter of 2020; and

•increases in the average sales prices per gallon of gasoline and diesel sold,
partially offset by decreases in the average sales volume of gasoline and diesel
sold in our West Texas marketing operations:

•the average sales prices per gallon of gasoline and diesel sold increased by $0.78 per gallon and $0.83 per gallon, respectively; and

•the average volumes of gasoline sold decreased by 10.5 million gallons, offset by 8.8 million decrease of diesel gallons sold.

Such increases were partially offset by the following:

•decreases in throughputs due to the impact of the severe freezing conditions
that affected most of the regions where we operate resulting in lower volumes
outside of contractual MVCs during the year ended December 31, 2021 when
compared to the year ended December 31, 2020; and

•decreases in throughputs at the Paline pipeline due to scheduled pipeline maintenance.

Net revenues included sales to our refining segment of $417.0 million and $377.7
million for the years ended December 31, 2021 and 2020, respectively, and sales
to our other segment of $1.8 million and $2.1 million for the years ended
December 31, 2021 and 2020, respectively. We eliminate this intercompany revenue
in consolidation.

[[Image Removed: dk-20211231_g44.jpg]][[Image Removed: dk-20211231_g45.jpg]]

Cost of Materials and Other

Cost of materials and other for the logistics segment increased by $115.3 million, or 42.8%, in the year ended December 31, 2021 compared to the year ended December 31, 2020. This increase was primarily driven by the following related to our West Texas marketing operations:

•the average cost per gallon of gasoline and diesel sold increased by $0.83 per gallon and $0.80 per gallon, respectively; and

•the average volumes of gasoline and diesel sold decreased by 10.5 million gallons and 8.8 million gallons, respectively.

Our logistics segment purchased product from our refining segment of $321.9 million and $203.8 million for the years ended December 31, 2021 and 2020, respectively. We eliminate these intercompany costs in consolidation.

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                                            Management's Discussion and Analysis
                     [[Image Removed: dk-20211231_g46.jpg]]



Operating Expenses

Operating expenses increased by $4.6 million, or 8.2%, in the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily driven by the following:

•increases in employee and outside service costs after cost cutting measures implemented to respond to the COVID-19 Pandemic, including delaying non-essential projects, ended;

•increase in energy costs due to higher natural gas prices;

•increases in variable expenses such as maintenance and materials costs due to higher throughput; and

•increases in utility costs as a result of significantly higher energy costs
during the February 2021 severe freezing conditions that affected most of the
regions where we operate.



Contribution Margin

Contribution margin increased by $17.6 million, or 7.4%, in the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily driven by the following:

•an increase in gross margin of $1.35 per barrel in our West Texas marketing operations; and

•increases in revenues associated with agreements executed in connection with the Permian Gathering System and Delek Trucking acquisitions.

Such increases were partially offset by the following:

•a decrease in gasoline and diesel volumes sold in our West Texas marketing operations; and

•an increase in operating expenses.

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                                            Management's Discussion and Analysis
                                Retail Segment

The tables below sets forth certain information concerning our retail segment operations (gross sales $ in millions):

                             Retail Contribution Margin and Operating 

Information

Year Ended December 31,

                                                                                 2021                 2020
Net revenues                                                               $       797.4              681.7
Cost of materials and other                                                        635.6              523.6
Operating expenses (excluding depreciation and amortization)                        89.8               90.5
Contribution margin                                                        $        72.0          $    67.6




                                           Operating Information
                                                                               Year Ended December 31,
                                                                              2021                 2020
Number of stores (end of period)                                                 248                  253
Average number of stores                                                         248                  253
Average number of fuel stores                                                    243                  248
Retail fuel sales                                                        $     480.9           $    357.9
Retail fuel sales (thousands of gallons)                                     166,959              176,924

Average retail gallons per average number of stores (in thousands)

      688                  715
Average retail sales price per gallon sold                               $      2.88           $     2.02
Retail fuel margin ($ per gallon)(1)                                     $     0.341           $    0.347
Merchandise sales (in millions)                                          $     316.4           $    323.8
Merchandise sales per average number of stores (in millions)             $       1.3           $      1.3
Merchandise margin %                                                            33.2   %             31.0  %




                                  Same-Store Comparison (2)
                                                             Year Ended December 31,
                                                                2021                2020

   Change in same-store retail fuel gallons sold                       

(5.3) % (17.3) %

   Change in same-store merchandise sales                              

(1.8) % 6.2 %

(1)Retail fuel margin represents gross margin on fuel sales in the retail segment, and is calculated as retail fuel sales revenue less retail fuel cost of sales. The retail fuel margin per gallon calculation is derived by dividing retail fuel margin by the total retail fuel gallons sold for the period.

(2)Same-store comparisons include year-over-year changes in specified metrics
for stores that were in service at both the beginning of the year and the end of
the most recent year used in the comparison.



Our retail merchandise sales are driven by convenience, customer service,
competitive pricing and branding. Motor fuel margin is sales less the delivered
cost of fuel and motor fuel taxes, measured on a cents per gallon basis. Our
motor fuel margins are impacted by local supply, demand, weather, competitor
pricing and product brand.


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                                            Management's Discussion and 

Analysis

Retail Segment Operational Comparison of the Year Ended December 31, 2021 versus the Year Ended December 31, 2020

Net Revenues

Net revenues for the retail segment increased by $115.7 million, or 17.0%, for
the year ended December 31, 2021 compared to the year ended December 31, 2020,
primarily driven by the following:

•an increase in total fuel sales which were $480.9 million for the year ended
December 31, 2021 compared to $357.9 million for 2020, primarily attributable to
a $0.86 increase in average price charged per gallon sold, slightly offset by a
decrease in total retail fuel gallons sold; and

•slightly offset by a decrease in merchandise sales to $316.4 million for the year ended December 31, 2021 compared to $323.8 million for 2020, primarily driven by the same-store sales decrease of (1.8)%.

[[Image Removed: dk-20211231_g47.jpg]][[Image Removed: dk-20211231_g48.jpg]]

                     [[Image Removed: dk-20211231_g49.jpg]]



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                                            Management's Discussion and Analysis

Cost of Materials and Other

Cost of materials and other for the retail segment increased by $112.0 million, or 21.4%, for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily driven by the following:

•an increase in average cost per gallon of $0.86 or 51.6% applied to fuel sales volumes that decreased period over period.

Our retail segment purchased finished product from our refining segment of $355.7 million and $220.0 million for the years ended December 31, 2021 and 2020, respectively. We eliminate this intercompany cost in consolidation.

Operating Expenses

Operating expenses for the retail segment decreased by $0.7 million, or 0.8%,
for the year ended December 31, 2021 compared to the year ended December 31,
2020.



Contribution Margin

Contribution margin for the retail segment increased by $4.4 million, a 6.5%
increase in contribution margin percentage, for the year ended December 31, 2021
compared to the year ended December 31, 2020, primarily driven by the following:

•an improvement in merchandise margin percentage of 2.2%, partially offset by 2.3% decrease in merchandise sales; and

•an increase in fuel sales due to $0.86 increase in sales price, offset by a
decrease in average fuel margin of $0.006 per gallon applied to lower fuel sales
volumes.

                     [[Image Removed: dk-20211231_g50.jpg]]




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                                            Management's Discussion and 

Analysis

Liquidity and Capital Resources

Sources of Capital

Our primary sources of liquidity and capital resources are

•cash generated from our operating activities;

•borrowings under our debt facilities; and

•potential issuances of additional equity and debt securities.

At December 31, 2021 our total liquidity amounted to $2.2 billion comprised
primarily of $729.6 million in unused credit commitments under the Delek
Revolving Credit Facility (as defined in Note 10 of our consolidated financial
statements included in Item 8. Financial Statements and Supplementary Data, of
this Annual Report on Form 10-K), $592.0 million in unused credit commitments
under the DKL Credit Facility (as defined in Note 10 of our consolidated
financial statements included in Item 8. Financial Statements and Supplementary
Data, of this Annual Report on Form 10-K) and $856.5 million in cash and cash
equivalents. Historically, we have generated adequate cash from operations to
fund ongoing working capital requirements, pay quarterly cash dividends and fund
operational capital expenditures. In response to the COVID-19 Pandemic and the
decline in oil prices, on November 5, 2020, we announced that we elected to
suspend dividends in order to conserve capital. Other funding sources including
borrowings under existing credit agreements and issuance of equity and debt
securities have been utilized to meet our funding requirements and support our
growth capital projects and acquisitions. In addition we have historically been
able to source funding at terms that reflect market conditions, our financial
position and our credit ratings. We continue to monitor market conditions, our
financial position and our credit ratings and expect future funding sources to
be at terms that are sustainable and profitable for the Company. However, there
can be no assurances regarding the availability of any future debt or equity
financings or whether such financings can be made available on terms that are
acceptable to us; any execution of such financing activities will be dependent
on the contemporaneous availability of functioning debt or equity markets.
Additionally, new debt financing activities will be subject to the satisfaction
of any debt incurrence limitation covenants in our existing financing
agreements. Our debt limitation covenants in our existing financing documents
are usual and customary for credit agreements of our type and reflective of
market conditions at the time of their execution. Additionally, our ability to
satisfy working capital requirements, to service our debt obligations, to fund
planned capital expenditures, or to pay dividends will depend upon future
operating performance, which will be affected by prevailing economic conditions
in the oil industry and other financial and business factors, including the
current COVID-19 Pandemic and oil prices, some of which are beyond our control.

During 2021 and through the date of this Annual Report, the COVID-19 Pandemic
has had a significant negative impact on economic conditions in the U.S., and a
particularly severe impact on the oil and gas industry because of the
significant impact the Pandemic has had on motor and air travel. As previously
discussed at length in the 'Executive Summary and Strategic Overview' Section of
Management's Discussion and Analysis, we have identified several uncertainties
and related risks associated with the current and potential future effects of
the Pandemic, including increased uncertainty and risk associated with our
ability to manage liquidity and capital resources. As a result, and while it's
always a critical area of focus, we have dedicated significant efforts
throughout 2021 to monitoring and evaluating the evolving uncertainties around
liquidity and capital resources and implementing measures and plans to mitigate
and manage the associated risk. Here are some of our most significant areas of
focus:

•We have focused on required maintenance and regulatory projects as well as
strategically-timed turnaround activities. As a result, we were able to reduce
our capital expenditures to $227.1 million during the year ended December 31,
2021, compared to our initial full-year forecast included in our December 31,
2020 Annual Report on Form 10-K of $239.6 million;

•The temporary suspension of growth and non-essential projects (particularly in
Refining) provided us with the opportunity to shift our focus to process
improvement initiatives, cost control measures, and opportunities for
innovation, which has improved our ability to control costs in terms of
operating expenses and critical capital projects, all of which also favorably
impact our cash position and provide a longer term foundation for increased
operational effectiveness;

•Throughout 2021, we continued to monitor credit and liquidity of our key
customers, which already go through a stringent and ongoing credit evaluation as
part of our internal controls, and we have been able to successfully maintain
our collection efforts without significant losses or write-offs. As part of this
effort, we also continue to monitor our customers, as well as vendors, for any
areas of concentration that could put us at undue risk, and have experienced no
significant deterioration in credit or concentration risks that warrant
disclosure;

•We continued executing on our strategy of divesting of non-strategic or
underperforming assets. We made significant divestitures of underperforming
stores in Retail during 2019 and in 2020 we focused on executing a transaction
to divest our remaining non-operating refinery located in Bakersfield,
California. See further discussion in Note 3 of our consolidated financial
statements included in Item 8. Financial Statements and Supplementary Data, of
this Annual Report on Form 10-K;

•To mitigate some of the risk inherent in prices, we utilized (and continue to
utilize) various derivative financial instruments to protect a portion of our
commodity exposure against pricing risk. In many cases, we hedge our production
in a manner that systematically places hedges for several quarters in advance,
allowing us to maintain a disciplined risk management program as it relates to
commodity price volatility. We supplement the systematic hedging program with
discretionary hedges that take advantage of favorable market conditions. These
activities included certain fixed price purchase contracts and crack spread
hedges executed throughout the year to ensure that we were not overly exposed to
the unusually high market volatility which could impact cash requirements at
settlement. However, many of these activities also require margin deposits that
can fluctuate significantly in a volatile market, much of which cannot be
anticipated;

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                                            Management's Discussion and 

Analysis

•We continue to actively monitor our maintenance and incurrence covenants under
our credit facilities and debt instruments, and have implemented enhancements in
our cash forecasting and modeling that allow us to better anticipate potential
issues, in many cases, before they occur. We believe that our enhanced
forecasting efforts and processes will better position us to preemptively work
toward amendments with lenders as needed, though it is possible that amendments
may not be granted for reasons that may or may not be known to us;

•We have examined our discretionary uses of cash, including our stock repurchase
activities and dividend distribution payments, both of which are designed to
provide a return on shareholder value in times of favorable economic conditions
and operating results, but which can actually weaken shareholder value in times
of economic distress and downward pressure on our operating results if such
activities diminish our ability to appropriately manage and mitigate the
heightened risk. As a result of this examination, beginning in the second
quarter 2020, we have temporarily suspended the repurchase of shares.
Additionally, on November 5, 2020, we announced that we have elected to suspend
dividends indefinitely beginning in the fourth quarter of 2020. Both of these
decisions have the immediate benefit of conserving capital. Depending on market
conditions, we may make the decision to resume share repurchases which may take
priority over future dividends or growth capital; and

•Finally, we are always evaluating our existing sources of capital and
considering the feasibility and potential advantages of strategic transactions
and capital markets opportunities that could expand our sources of liquidity and
strengthen our flexibility, while balancing the comparative cost of capital, the
incremental leverage risk, as well as the potential transactional risk on our
core business and infrastructure. We are pleased that, despite the challenging
environment, we have continued to successfully manage our liquidity and
available sources of capital during 2021 through strategic transactions such as
the following:

•By monetizing assets (including financial assets such as RINs inventories), where the cost of capital is not cost-prohibitive compared to the liquidity considerations, through product financing arrangements; and

•By taking advantage of credit opportunities and favorable investment markets,
where appropriate. The most significant of these transactions executed during
2021 were as follows:

?On May 24, 2021, Delek Logistics and Finance Corp. issued $400.0 million in
aggregate principal amount 7.125% Senior Notes due 2028 (the "Delek Logistics
2028 Notes") at par, requiring semi-annual interest payments in arrears on each
June 1 and December 1, commencing on December 31, 2021. See further discussion
in Note 9 of our consolidated financial statements included in Item 8. Financial
Statements and Supplementary Data, of this Annual Report on Form 10-K.

?In December 2021, we initiated a program to monetize a portion of our ownership
in Delek Logistics under a Rule 10b5-1 program to sell up to 434,590 common
limited partner units, which helped us to not only capture $2.1 million
(pre-tax) tangible value to date in the Delek valuation but also serves to
improve the liquidity of the Delek Logistics units without diluting the overall
market capitalization of Delek Logistics. See further discussion in Note 5 of
our consolidated financial statements included in Item 8. Financial Statements
and Supplementary Data, of this Annual Report on Form 10-K.

As a result of these efforts, and despite the devastating economic effects of
the Pandemic on our industry, we have maintained a strong cash position with
capital resources flexibility that positions us well as we look forward to the
expected economic recovery from the Pandemic, where crack spread forecasts and
forward curves indicate the market's expectation for significant recovery in
2022 and stabilization by 2023. We believe we have sufficient financial
resources from the above sources to meet our funding requirements in the next 12
months, including working capital requirements, quarterly cash distributions for
Delek Logistics public unitholders, and planned capital expenditures. However,
if market conditions were to change, for instance due to the significant decline
in oil prices or uncertainty created by the COVID-19 Pandemic, and our revenue
was reduced significantly or operating costs were to increase significantly, our
cash flows and liquidity could be unfavorably impacted.

As of December 31, 2021, we believe we were in compliance with all of our debt
maintenance covenants, where the most significant long-term obligation subject
to such covenants was the Delek Logistics Credit Facility (see further
discussion in Note 10 of our consolidated financial statements included in Item
8. Financial Statements and Supplementary Data, of this Annual Report on Form
10-K). After considering the current effect of the significant decline in oil
prices and uncertainty created by the COVID-19 Pandemic on our operations, we
currently expect to remain in compliance with our existing debt maintenance
covenants, though we can provide no assurances, particularly if conditions
significantly worsen beyond our ability to predict. Additionally, we were in
compliance with incurrence covenants during the quarter ended December 31, 2021
to the extent that any of our activities triggered these covenants. However,
given the uncertainty around economic conditions arising from the COVID-19
Pandemic, it is at least reasonably possible that conditions could change
significantly, and that such changes could adversely impact our ability to meet
some of these incurrence based covenants, in the event that our activities would
warrant testing these covenants. Failure to meet the incurrence covenants could
impose certain incremental restrictions on our ability to incur new debt and
also may limit whether and the extent to which we may resume paying dividends,
as well as impose additional restrictions on our ability to repurchase our
stock, make new investments and incur new liens (among others). Such
restrictions would generally remain in place until such quarter that we return
to compliance under the applicable incurrence based covenants. In the event that
we are subject to these incremental restrictions, we believe that we have
sufficient current and alternative sources of liquidity, including (but not
limited to): available borrowings under our existing Wells Fargo Revolving
Credit Facility, and for Delek Logistics, under its Delek Logistics Credit
Facility (see further discussion in Note 10 of our consolidated financial
statements included in Item 8. Financial Statements and Supplementary Data, of
this Annual Report on Form 10-K); the allowance to incur an additional $200
million of secured debt under the Wells Fargo Term Loan Credit Facility (see
further discussion in Note 10 of our consolidated financial statements included
in Item 8. Financial Statements and Supplementary Data, of this Annual Report on
Form 10-K); as well as the possibility of obtaining other secured and unsecured
debt, raising capital through equity issuance, or taking advantage of
transactional financing opportunities such as sale-leasebacks or joint ventures,
as otherwise contemplated and allowed under our incurrence covenants.

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                                            Management's Discussion and Analysis

Cash Flows

The following table sets forth a summary of our consolidated cash flows (in
millions):

                                        Consolidated
                                                 Year Ended December 31,
                                                    2021                2020
              Cash Flow Data:
              Operating activities         $      371.4              $ (282.9)
              Investing activities               (178.4)               (191.3)
              Financing activities               (124.0)                306.4
              Net increase (decrease)      $       69.0              $ (167.8)

Cash Flows from Operating Activities

Net cash used in operating activities was $371.4 million for the year ended
December 31, 2021, compared to cash used of $282.9 million for the comparable
period of 2020. Cash receipts from customers and cash payments to suppliers and
for salaries increased resulting in a net $660.5 million increase in cash from
operating activities. Partially offsetting these increases in cash provided were
an increase in cash paid for debt interest of $1.6 million, an increase in
income taxes paid of $0.6 million and a decrease in dividends received of $4.0
million.

Cash Flows from Investing Activities

Net cash used in investing activities was $178.4 million for the year ended
December 31, 2021, compared to $191.3 million in the comparable period of 2020.
The increase in cash flows used in investing activities was primarily due to
distributions received in the prior year from our WWP Project Financing JV to
return excess capital contributions made in the amount of $69.3 million and
proceeds of $39.9 million from the sale of the Bakersfield refinery in the prior
year for which there was no comparable activity in the current year period.

These increases in cash used in investing activities were partially offset by a
decrease in cash purchases of property, plant and equipment which decreased from
$269.4 million in 2020, to $222.2 million in 2021, partially attributable to
delaying non-essential projects in light of the COVID-19 Pandemic. Additionally,
equity method investment contributions decreased $29.5 million primarily due to
contributions made related to our Red River Pipeline Joint Venture and WWP
Project Financing JV (each as defined in Note 6 of our accompanying consolidated
financial statements in Item 8. Financial Statements and Supplementary Data, of
this Annual Report on Form 10-K) for $12.2 million and $18.9 million,
respectively, during the year ended December 31, 2020. During the year ended
December 31, 2021, we contributed $1.4 million related to our Red River Pipeline
Joint Venture and $0.3 million related to our WWP Project Financing JV.

Cash Flows from Financing Activities

Net cash used in financing activities was $124.0 million for the year ended
December 31, 2021, compared to cash provided of $306.4 million in the comparable
2020 period. This decrease in cash provided was predominantly due to net
payments on long-term revolvers and term debt of $132.0 million during the year
ended December 31, 2021, compared to net proceeds of $275.3 million in the
comparable 2020 period. Additionally, net proceeds from product financing
arrangements decreased to $38.5 million for the year ended December 31, 2021
compared to $169.1 million in the comparable 2020 period.

Such decreases were partially offset by increases of $69.1 million due to suspension of dividends in the fourth quarter of 2020 and $28.9 million due to the repurchase of non-controlling interest in the prior year period with no comparable activity in the current year.

Cash Position and Indebtedness

As of December 31, 2021, our total cash and cash equivalents were $856.5 million
and we had total long-term indebtedness of approximately $2,218.0 million. The
total long-term indebtedness is net of deferred financing costs and debt
discount of $10.5 million and $18.7 million, respectively. Additionally, we had
letters of credit issued of approximately $270.4 million. Total unused credit
commitments or borrowing base availability, as applicable, under our revolving
credit facilities was approximately $1,321.6 million. The decrease of $130.4
million in total long term indebtedness as of December 31, 2021 compared to the
prior year resulted primarily from net repayments under the Delek Logistics
Credit Facility and other term debt in 2021. As of December 31, 2021, our total
long-term indebtedness consisted of the following:

•an aggregate principal amount of $1,260.0 million under the Term Loan Credit Facility, due on March 30, 2025, with effective interest of 3.53%;

•an aggregate principal amount of $29.2 million in outstanding borrowings under
the Delek Hapoalim Term Loan, due on December 31, 2022, with effective interest
of 3.67%;

•an aggregate principal amount of $258.0 million under the Delek Logistics Credit Facility, due on September 28, 2023, with average borrowing rate of 2.46%;

•an aggregate principal amount of $250.0 million under the Delek Logistics 2025 Notes, due in 2025, with effective interest rate of 7.20%;

•an aggregate principal amount of $400.0 million under the Delek Logistics 2028 Notes, due in 2028, with effective interest rate of 7.41%;

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                                            Management's Discussion and 

Analysis

•an aggregate principal amount of $50.0 million under the Reliant Bank Revolver, due on June 30, 2022, with fixed interest rate of 4.50%; and

•the Revolving Credit Facility, due on March 30, 2023, with borrowing rate of 3.50% for base rate loans, and no principal amount outstanding.

See Note 10 to our accompanying consolidated financial statements in Item 8.
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K
for additional information about our separate debt and credit facilities.

Additionally, we also utilize other financing arrangements to finance operating
assets and/or, from time to time, to monetize other assets that may not be
needed in the near term, when internal cost of capital and other criteria are
met. Such arrangements include our supply and offtake arrangements, which
finance a significant portion of our first-in, first-out inventory at the
refineries and, from time to time, RINs or other non-inventory product financing
liabilities. Our supply and offtake obligation with J. Aron amounted to $487.5
million at December 31, 2021, $330.4 million of which is due on December 30,
2022, except that a portion (not to exceed $28.6 million, net of the $(10.0)
million settlement threshold) of this otherwise long-term component is subject
to potential earlier payment under the Periodic Price Adjustment provision. See
Note 9 of the our accompanying consolidated financial statements in Item 8.
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K
for additional information about our supply and offtake facilities. Our product
financing liabilities consisted primarily of RIN financings as of December 31,
2021, and totaled $249.6 million, all of which is due in the next 12 months. See
further description of these types of arrangements in the Environmental Credits
and Related Regulatory Obligations accounting policy disclosed in Note 2 to our
accompanying consolidated financial statements included Item 8. Financial
Statements and Supplementary Data, of this Annual Report on Form 10-K. For both
arrangements and the related commitments, see also our "Contractual Obligations
and Commitments" section included in Item 7. Management's Discussion and
Analysis.

Debt Ratings

We receive debt ratings from the major ratings agencies in the U.S. In
determining our debt ratings, the agencies consider a number of qualitative and
quantitative items including, but not limited to, commodity pricing levels, our
liquidity, asset quality, reserve mix, debt levels and seniorities, cost
structure, planned asset sales and production growth opportunities.

There are no "rating triggers" in any of our contractual debt obligations that
would accelerate scheduled maturities should our debt rating fall below a
specified level. However, a downgrade could adversely impact our interest rate
on any credit facility implementations and the ability to economically access
debt markets in the future. Additionally, any rating downgrades may increase the
likelihood of us having to post additional letters of credit or cash collateral
under certain contractual arrangements.

Capital Spending

A key component of our long-term strategy is our capital expenditure program.
The following table summarizes our actual capital expenditures for 2021, by
segment, as well as planned capital expenditures for 2022 by operating segment
and major category (in millions):

                                                                          Year Ended December 31,
                                                                    2022 Forecast          2021 Actual
                                                Refining
Sustaining maintenance, including turnaround activities            $       83.1          $      170.6
Regulatory                                                                 12.6                   1.8
Discretionary projects                                                     11.8                   0.2
Refining segment total                                                    107.5                 172.6
                                               Logistics
Regulatory                                                                  8.1                   2.2
Sustaining maintenance                                                      3.8                   4.7
Discretionary projects                                                     59.0                  20.4
Logistics segment total                                                    70.9                  27.3
                                                 Retail
Regulatory                                                                    -                     -
Sustaining maintenance                                                      3.6                   2.8
Discretionary projects                                                     31.4                   2.3
Retail segment total                                                       35.0                   5.1
                                          Corporate and Other
Regulatory                                                                  3.4                   4.9
Sustaining maintenance                                                     26.6                  11.8
Discretionary projects                                                     10.0                   5.4
Other total                                                                40.0                  22.1
Total capital spending                                             $      253.4          $      227.1




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                                            Management's Discussion and 

Analysis

The amount of our capital expenditure budget is subject to change due to
unanticipated increases in the cost, scope and completion time for our capital
projects and subject to the changes and uncertainties discussed under the
'Forward-Looking Statements' section of Item 7. Management Discussion and
Analysis, of this Annual Report on Form 10-K. For further information, please
refer to our discussion in Item 1A. Risk Factors, of this Annual Report on Form
10-K.

Cash Requirements
Long-Term Cash Requirements Under Contractual Obligations

Information regarding our known cash requirements under contractual obligations of the types described below as of December 31, 2021, is set forth in the following table (in millions):

Payments Due by Period

<1 Year            1-3 Years          3-5 Years          >5 Years            Total
Long term debt and notes payable
obligations                                  $    92.2          $    284.0

$ 1,471.0 $ 400.0 $ 2,247.2 Interest(1)

                                       92.0               170.7               74.5              42.8              380.0
Operating lease commitments(2)                    65.6                97.6               50.9              40.5              254.6
Purchase commitments(3)                          968.0                   -                  -                 -              968.0
Product financing agreements(4)                  249.6                   -                  -                 -              249.6
Transportation agreements(5)                     169.2               266.2              273.9             299.7            1,009.0
J. Aron supply and offtake obligations
(6)                                              345.5                   -                  -                 -              345.5
Total                                        $ 1,982.1          $    818.5          $ 1,870.3          $  783.0          $ 5,453.9


(1) Expected interest payments on debt outstanding at December 31, 2021.
Floating interest rate debt is calculated using December 31, 2021 rates. For
additional information, see Note 10 to the consolidated financial statements in
Item 8. Financial Statements and Supplementary Data, of this Annual Report on
Form 10-K.

(2) Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of December 31, 2021.

(3) We have purchase commitments to secure certain quantities of crude oil,
finished product and other resources used in production at both fixed and market
prices. We have estimated future payments under the market-based agreements
using current market rates. Excludes purchase commitments in buy-sell
transactions which have matching notional amounts with the same counterparty and
are generally net settled in exchanges.

(4) Balances consist of obligations under RINs product financing arrangements,
as described in the 'Environmental Credits and Related Regulatory Obligations'
accounting policy included in Note 2 to the consolidated financial statements in
Item 8. Financial Statements and Supplementary Data, of this Annual Report on
Form 10-K.

(5) Balances consist of contractual obligations under agreements with third parties (not including Delek Logistics) for the transportation of crude oil to our refineries.

(6) Balances consists of contractual obligations under the J. Aron Supply and
Offtake Agreements, including annual fees and principal obligation for the
Baseline Volume Step-Out Liability. For additional information, see Note 9 to
the consolidated financial statements in Item 8. Financial Statements and
Supplementary Data, of this Annual Report on Form 10-K.

Other Cash Requirements

Our material short-term cash requirements under contractual obligations are
presented above, and we expect to fund the majority of those requirements with
cash flows from operations, with the exception of the supply and offtake
obligations, which are expected to be refinanced. Our other cash requirements
consisted of operating activities and capital expenditures. Operating activities
include cash outflows related to payments to suppliers for crude and other
inventories (which are largely reflected in our contractual purchase commitments
in the table above) and payments for salaries and other employee related costs.
Cash outlays in the first quarter of 2022 are planned to include incentive
compensation payments that were earned and accrued in 2021. In line with our
Long-term Sustainable strategy, future cash requirements will include
initiatives to build on our long term sustainable business model, ESG
initiatives and digital transformation.

Refer to the cash flow section for our operating activities spend in 2021. While
many of the expenses related to the operating activities are variable in nature,
some of the expenditures can be somewhat fixed in the short-term due to forward
planning on our level of activity.

Refer to the 'Capital Spending' section for our capital expenditures for 2021 and our anticipated cash requirements for planned capital expenditures for 2022.

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                                            Management's Discussion and 

Analysis

Critical Accounting Estimates

The fundamental objective of financial reporting is to provide useful
information that allows a reader to comprehend our business activities. We
prepare our consolidated financial statements in conformity with GAAP, and in
the process of applying these principles, we must make judgments, assumptions
and estimates based on the best available information at the time. To aid a
reader's understanding, management has identified our critical accounting
policies. These policies are considered critical because they are both most
important to the portrayal of our financial condition and results, and require
our most difficult, subjective or complex judgments. Often they require
judgments and estimation about matters which are inherently uncertain and
involve measuring at a specific point in time, events which are continuous in
nature. Actual results may differ based on the accuracy of the information
utilized and subsequent events, some over which we may have little or no
control.

Goodwill

Goodwill in an acquisition represents the excess of the aggregate purchase price
over the fair value of the identifiable net assets. Goodwill is reviewed at
least annually for impairment, or more frequently if indicators of impairment
exist, such as disruptions in our business, unexpected significant declines in
operating results or a sustained market capitalization decline. Goodwill is
evaluated for impairment by comparing the carrying amount of the reporting unit
to its estimated fair value. Prior to the adoption of Accounting Standard Update
("ASU") 2017-04, Simplifying the Test for Goodwill Impairment, if a reporting
unit's carrying amount exceeds its fair value (Step 1), the impairment
assessment leads to the testing of the implied fair value of the reporting
unit's goodwill to its carrying amount (Step 2). If the implied fair value is
less than the carrying amount, a goodwill impairment charge is recorded.
Subsequent to adoption of ASU 2017-04 (which we adopted during the fourth
quarter of 2018, as permitted by the ASU), Step 2 is no longer required, but
rather any impairment is determined based on the results of Step 1.

In assessing the recoverability of goodwill, assumptions are made with respect
to future business conditions and estimated expected future cash flows to
determine the fair value of a reporting unit. We may consider inputs such as a
market participant weighted average cost of capital ("WACC"), forecasted crack
spreads, gross margin, capital expenditures, and long-term growth rate based on
historical information and our best estimate of future forecasts, all of which
are subject to significant judgment and estimates. We may also consider a market
approach in determining or corroborating the fair values of the reporting units
using a multiple of expected future cash flows, such as those used by
third-party analysts. The market approach involves significant judgment,
including selection of an appropriate peer group, selection of valuation
multiples, and determination of the appropriate weighting in our valuation
model. If these estimates and assumptions change in the future, due to factors
such as a decline in general economic conditions, sustained decrease in the
crack spreads, competitive pressures on sales and margins and other economic and
industry factors beyond management's control, an impairment charge may be
required. The most significant risks to our valuation and the potential future
impairment of goodwill are the WACC and the volatility of the crack spread,
which is based on the crude oil and the refined product markets. The crack
spread is often unpredictable and may negatively impact our results of
operations in ways that cannot be anticipated and that are beyond management's
control. Additionally, rising interest rates (which often occur in under
inflationary conditions) may also adversely impact our WACC. A higher WACC, all
other things being equal, will result in a lower valuation using a discounted
cash flow model, which is an income approach. Therefore, rising interest rates
can cause a reporting unit to become impaired when, in a lower interest rate
environment, it may not be.

We may also elect to perform a qualitative impairment assessment of goodwill
balances. The qualitative assessment permits companies to assess whether it is
more likely than not (i.e., a likelihood of greater than 50%) that the fair
value of a reporting unit is less than its carrying amount. If a company
concludes that, based on the qualitative assessment, it is more likely than not
that the fair value of a reporting unit is less than its carrying amount, the
company is required to perform the quantitative impairment test. Alternatively,
if a company concludes based on the qualitative assessment that it is not more
likely than not that the fair value of a reporting unit is less than its
carrying amount, it has completed its goodwill impairment test and does not need
to perform the quantitative impairment test.

We performed a qualitative assessment on the reporting units in our logistics
segment for the years ended December 31, 2021, 2020 and 2019, which did not
result in an impairment charge nor did our analysis reflect any reporting units
at risk.

Our quantitative assessment of goodwill performed on the reporting units in our
refining and retail segments during the fourth quarter of 2021, resulted in no
impairment during the year ended December 31, 2021. There was $126.0 million
impairment during the year ended December 31, 2020 and no impairment in 2019. As
part of our assessment, the aggregate fair value of all reporting units have
been reconciled to our market capitalization for reasonableness. Each of the
reporting units have a fair value that is substantially in excess of its
carrying value, with the exception of the Krotz Springs refinery ("KSR")
reporting unit.

Given the relatively small cushion for the KSR reporting unit, we performed a sensitivity analysis on our impairment test noting the following:

                            (in millions)                                                  Sensitivity
                   Goodwill Balance at 2021 Annual      % Estimated Fair Value     Increase in WACC that could
                           Assessment Date              exceeds Carrying Value         cause impairment (1)
KSR              $                             212.2             <10%                       1.5%-2.0%

                 (1) Assumes no other changes in any of the key

assumptions.




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                                            Management's Discussion and 

Analysis

Details of remaining goodwill balances by segment are included in Note 17 to the consolidated financial statements in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Evaluation of Variable Interest Entities ("VIEs")

Our consolidated financial statements include the financial statements of our
subsidiaries and VIEs, of which we are the primary beneficiary. We evaluate all
legal entities in which we hold an ownership or other pecuniary interest to
determine if the entity is a VIE. Variable interests can be contractual,
ownership or other pecuniary interests in an entity that change with changes in
the fair value of the VIE's assets. If we are not the primary beneficiary, the
general partner or another limited partner may consolidate the VIE, and we
record the investment as an equity method investment. Significant judgment is
exercised in determining that a legal entity is a VIE and in evaluating whether
we are the primary beneficiary in a VIE. Generally, the primary beneficiary is
the party that has both the power to direct the activities that most
significantly impact the VIE's economic performance and the right to receive
benefits or obligation to absorb losses that could be potentially significant to
the VIE. We evaluate the entity's need for continuing financial support; the
equity holder's lack of a controlling financial interest; and/or if an equity
holder's voting interests are disproportionate to its obligation to absorb
expected losses or receive residual returns. We evaluate our interests in a VIE
to determine whether we are the primary beneficiary. We use a primarily
qualitative analysis to determine if we are deemed to have a controlling
financial interest in the VIE, either on a standalone basis or as part of a
related party group. We continually monitor our interests in legal entities for
changes in the design or activities of an entity and changes in our interests,
including our status as the primary beneficiary to determine if the changes
require us to revise our previous conclusions.

Environmental Liabilities

It is our policy to accrue environmental and clean-up related costs of a
non-capital nature when it is both probable that a liability has been incurred
and the amount can be reasonably estimated. Environmental liabilities represent
the current estimated costs to investigate and remediate contamination at sites
where we have environmental exposure. This estimate is based on assessments of
the extent of the contamination, the selected remediation methodology and review
of applicable environmental regulations, typically considering estimated
activities and costs for 15 years, and up to 30 years if a longer period is
believed reasonably necessary. Such estimates may require judgment with respect
to costs, time frame and extent of required remedial and clean-up activities.
Accruals for estimated costs from environmental remediation obligations
generally are recognized no later than completion of the remedial feasibility
study and include, but are not limited to, costs to perform remedial actions and
costs of machinery and equipment that are dedicated to the remedial actions and
that do not have an alternative use. Such accruals are adjusted as further
information develops or circumstances change. We discount environmental
liabilities to their present value if payments are fixed or reliably
determinable. Expenditures for equipment necessary for environmental issues
relating to ongoing operations are capitalized.

Changes in laws and regulations and actual remediation expenses compared to
historical experience could significantly impact our results of operations and
financial position. We believe the estimates selected, in each instance,
represent our best estimate of future outcomes, but the actual outcomes could
differ from the estimates selected.

Asset Retirement Obligations

Delek recognizes liabilities which represent the fair value of a legal
obligation to perform asset retirement activities, including those that are
conditional on a future event, when the amount can be reasonably estimated. If a
reasonable estimate cannot be made at the time the liability is incurred, we
record the liability when sufficient information is available to estimate the
liability's fair value.

In the refining segment, we have asset retirement obligations with respect to
our refineries due to various legal obligations to clean and/or dispose of these
assets at the time they are retired. However, the majority of these assets can
be used for extended and indeterminate periods of time provided that they are
properly maintained and/or upgraded. It is our practice and intent to continue
to maintain these assets and make improvements based on technological advances.
In the logistics segment, these obligations relate to the required cleanout of
the pipeline and terminal tanks and removal of certain above-grade portions of
the pipeline situated on right-of-way property. In the retail segment, we have
asset retirement obligations related to the removal of underground storage tanks
and the removal of brand signage at owned and leased retail sites which are
legally required under the applicable leases. The asset retirement obligation
for storage tank removal on leased retail sites is accreted over the expected
life of the owned retail site or the average retail site lease term.

In order to determine fair value, management must make certain estimates and
assumptions including, among other things, projected cash flows, a
credit-adjusted risk-free rate and an assessment of market conditions that could
significantly impact the estimated fair value of the asset retirement
obligations. We believe the estimates selected, in each instance, represent our
best estimate of future outcomes, but the actual outcomes could differ from the
estimates selected.

New Accounting Pronouncements

See Note 2 to the consolidated financial statements in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for a discussion of new accounting pronouncements applicable to us.

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                                            Management's Discussion and Analysis

Non-GAAP Measures

Our management uses certain "non-GAAP" operational measures to evaluate our
operating segment performance and non-GAAP financial measures to evaluate past
performance and prospects for the future to supplement our GAAP financial
information presented in accordance with U.S. GAAP. These financial and
operational non-GAAP measures are important factors in assessing our operating
results and profitability and include:

•Refining margin - calculated as the difference between net refining revenues and total cost of materials and other;

•Refined product margin - calculated as the difference between net revenues
attributable to refined products (produced and purchased) and related cost of
materials and other (which is applicable to both the refining segment and the
West Texas wholesale marketing activities within our logistics segment); and

•Refining margin per barrels sold - calculated as refining margin divided by our
average refining sales in bpd (excluding purchased barrels) multiplied by 1,000
and multiplied by the number of days in the period.

We believe these non-GAAP operational and financial measures are useful to investors, lenders, ratings agencies and analysts to assess our ongoing performance because, when reconciled to their most comparable GAAP financial measure, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and they may obscure our underlying results and trends.

Non-GAAP measures have important limitations as analytical tools, because they
exclude some, but not all, items that affect net earnings and operating income.
These measures should not be considered substitutes for their most directly
comparable U.S. GAAP financial measures.

Non-GAAP Reconciliations

The following table provides a reconciliation of refining margin to the most directly comparable U.S. GAAP measure, gross margin:

Reconciliation of refining margin to gross margin

                                                Refining Segment
                                                                            Year Ended December 31,
                                                                   2021               2020               2019
Net revenues                                                   $ 9,956.0          $ 5,817.7          $ 8,798.5
Cost of sales                                                   10,072.3            6,346.5            8,154.9
Gross margin                                                      (116.3)            (528.8)             643.6
Add back (items included in cost of sales):
Operating expenses (excluding depreciation and
amortization)                                                      434.1              402.7              492.4
Depreciation and amortization                                      198.7              198.3              134.3
Refining margin                                                $   516.5

$ 72.2 $ 1,270.3

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