Holly Energy Partners (HEP) 7 Nov 222022 Q3 Earnings call transcript

Company Profile

Participants

Mike Jennings	Chief Executive Officer.
Tim Go	President and COO, HF Sinclair
Atanas Atanasov	Chief Financial Officer, HF Sinclair
John Harrison	Chief Financial Officer, Holly Energy Partners
Craig Biery	Vice President, Investor Relations
Paul Cheng	Scotiabank
Theresa Chen	Barclays
Ryan Todd	Piper Sandler
Kalei Akamine	Bank of America
Connor Lynagh	Morgan Stanley
Matthew Blair	TPH
Jason Gabelman	Cowen
Neil Mehta	Goldman Sachs

Call transcript

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Operator

Welcome to HF Sinclair Corporation and Holly Energy Partners Third Quarter 2022 Conference Call and Webcast. Hosting the call today is Mike Jennings, Chief Executive Officer of HF Sinclair and Holly Energy Partners. He is joined by Tim Go, President and Chief Operating Officer of HF Sinclair. Atanas Atanasov, Chief Financial Officer of HF Sinclair; and John Harrison, Chief Financial Officer of Holly Energy Partners. At this time, all participants have been placed in a listen-only mode and the floor will be opened for your questions following the presentation. that is note recorded. Please Instructions] this being conference [Operator the pleasure to Relations. It my turn floor Investor is now President, to over Vice Craig Biery, you begin. Craig, may

Craig Biery

welcome and Thank HF This XXXX. the morning, releases quarter everyone. quarter Good press you, call. And issued results Rob. XXXX earnings Sinclair Energy Holly announcing Corporation we Partners ending third morning, XX, to for September

hfsinclar.com find a If the may our of like you copy them you and website at would releases, press on hollyenergy.com.

financial please remarks, today’s to with statements. expectations, cause could proceed are the summary, Safe made Harbor in we differ earnings Before are to time expectations, be results any forward-looking statement disclosure note the There Safe call many in predictions provisions the press see longer statements that, factors SEC webcast for intended those reconciliations Harbor under These filings. to over measures. non-GAAP accurate may The Please the turn GAAP including Also, from noted rereading statements Mike are In of or And that call releases. replay Jennings. covered I of Laws. our any judgments Federal regarding transcript. also press the with on at management or Security today’s releases discussion be information call provided include measures. please the of no may of to will time-sensitive note

Mike Jennings

$XXX quarter HF attributable for than to net $X.XX and special diluted to current XXXX. adjusted more million quarter diluted adjusted EBITDA quarter net share. the Good decreased Craig. shareholders diluted for Adjusted these $X.X period items in $XX $X $X.XX to share, income was Thanks, share morning, $XXX increase the billion the Hey. income $XXX an Sinclair of by for million third collectively income or same net million reported everyone. income that we of reflect third per net $X.XX the items, or was billion, million XXXX. per compared quarter of of compared Today, results These per excluding or third

results Our resulted segment, reflect record XX% safe in year-over-year. volumes Refining third contributions that sales a throughputs operations increase and distillate and strong gasoline our in from and by quarter driven reliable

encouraged serve, and differentials driven demand utilization Refining billion low in were in segment, period coupled methodically to in RIN higher last the rates our across of Renewable billion improved strong third, and with the $XXX solid Diesel by Renewables margins sales are for crude we XX over we resulted facilities ramp-up EBITDA million inventories same operations Total regions third price the the gallons our in with compared demand In to we year. strength. Solid and continue quarter-over-quarter. DX quarter by in $X.X

EBITDA third also Specialty Lubricants reported inventory of to the feedstock million the the from in from third by margins. for unit quarter to impact compared We in QX. Products our $XX expect for EBITDA XXXX. resulting higher and adjusted was quarter, consumption largely million FIFO This additional decrease priced pretreatment driven realize contribution lower of $XX of of

demand our fuel of a for million was representing oils above annual third on well XXX mid-cycle result Our $X.XX basis and the performing Lubricants business guidance margin. total quarter as EBITDA gallons, volumes $XX per for products. is finished a strong reported segment still branded million were an Marketing and base sales gallon

returned March billion, which XXXX. were million third number $XXX acquired we repurchases XX% sites adjusted of quarter XXXX, million month in period million by EBITDA quarter, and cash make of brand of as returning initial last our of grew Transportation during progress HEP XXXX. closing ahead shareholders We branded the the to well $XXX to of $X primarily the in our was increase of year. target $XX Since from of reported the the third Sinclair in of quarter. first the continue expanding $XXX and We October. have same billion DINO This end our through driven contributions in compared by $X.X March acquisition which another shareholders by is in Sinclair returned during the the on quarter the million to over of dividends the XX, to the assets, our

an a new cash September, in our repurchase committed return achieved of ratio, our run million strategy rate achieved commercial acquisition, additional have while of $XXX announcement a relating authorization sheet the synergies $XXX to rate share working investment and annualized the reductions To-date, over synergies. we and and grade improvements, to of our combination expense SG&A through remain operating synergies credit fully million Sinclair maintaining capital With $X We optimization. run strong we balance of payout annual rating. billion these target of

record quarterly also regular a that to We of today Board share, announced of Directors November payable XXXX. our XXXX XX, dividend declared holders on per December X, of $X.XX

fleet, margins refined the diverse Atanas. we product our and free strong cash that, generate assets wider call on the product to remain the differentials. of reliable on opportunity and Looking across And us ahead, by me over with constructive portfolio operations supported are our and safe crude to let low flow focused We turn inventories cycle. through maintaining provides

Atanas Atanasov

morning, everyone. and Thank good you, Mike,

highlights. Let’s reviewing HF financial by begin Sinclair’s

of items. -- Pre-tax HEP’s adjustment, included environmental $XX forma of lower remediation our valuation for charge third pro pipeline unusual few costs million Sinclair’s market pro mentioned, share earnings million a share and rata $XX quarter included to strong previously a cost press Osage HF Sinclair $XX inventory of results million $XXX cash HF As be which found in acquisition integration our included operations million, totaled $XX third A quarter. the the table turnaround $XX capital standalone quarter. cost million. totaled items million spending of Net expenditures provided by for these of release. can in

HF standalone with billion, facility. total $X.X $X.XX balance a billion liquidity of Sinclair’s $X.XX unsecured As of our XX, of at billion, stood September credit XXXX, comprised cash approximately along undrawn

debt-to-cap of HEP distributions $X.XX outstanding have HF Sinclair the units of ratio Transportation XX% last at by of totaled as we acquisition $X.X owns standalone units, the during XX, million. Sinclair close. of $XX HEP ratio billion of HF and approximately X%. debt-to-cap a billion September value LP with of third XX% following quarter Sinclair of As million XX.X received market a Friday’s outstanding debt which net represents Partner HEP’s of Limited

Let’s go through some guidance items.

now have million $XX million $XXX between slightly million $XXX the $XXX previously guidance million spend $XXX to to We shared $XXX $XX $XXX $XX Marketing, at to to on catalyst. to $XX total $XX million reduced to from million in expected range HEP, million million. Renewables, corporate million to million Specialty to capital for in to $XX to spending for million million Products, the million $XXX $XX million capital. spend between in we XXXX million our range of of Refining, million to $XXX $XX We in $XXX expect to Lubricants and and expect At turnaround million and million $XXX

quarter our fourth per segment. the of barrels oil Refining expect day to crude For to we XXXX, in run of XXX,XXX between XXX,XXX

update have major to XXXX. And our an refineries scheduled the over HEP. at turn We for John I turnarounds fuel with will for no call this, on the remainder of

John Harrison

to the release. same earnings and remediation costs resulting The million, HEP operating Osage was to joint the The expenses XXth Higher table acquired interest of A of quarter $XXX.X third these third to period partially release. be of maintenance strong $XX.X million last million HEP’s HEP’s XXXX. $X $XX.X to distributable HEP’s times. generated the cash flow decrease X.X paid unit, Energy the of quarter can distribution year. was expense assets. distribution a distribution adjusted we Sinclair million crude pipeline expenditures unitholders with be million, related compared to by a adjustments quarter as EBITDA associated investments offset and November $XX.X oil XXXX Capital was of recently in in transportation million, Holly were third in year-over-year LP of million reconciliation net coverage the approximately primarily Partners per and $XX venture in press and quarter announced Atanas. share attributable October will including our to Thanks, compared income attributable reflecting $X.XX CapEx. $XX ratio estimated quarter found record XXst. third of XXXX on in incurred during

XXXX. to strong short-term remain committed We driven by performance operations refinery year Safe base, our capital utilization and reach look highest first rates. the of our in we As asset of our half strong reliable X.X and we strategy priority. across remainder our to anticipate to XXXX, and of into continues be allocation times the leverage the to expect target

to ready now call turn any questions. to are over Operator the the We for

Operator

[Operator you. Instructions] Thank

of from question Cheng first Paul from comes the Your line Scotiabank.

open. is line Your

Paul Cheng

Hey, guys. Good morning.

Mike Jennings

morning, Good Paul.

Paul Cheng

please. questions, Two

CapEx incremental to their the is in your going a look the should and family, First, billion in buying in at, is at the from distribution, pace intention back excess that Sinclair that than $X cash what it? target top or your when of And mean, should any how the billion how look flow for of assume distribution, their we whether the I should been is also so have mean, you $XXX at or ultimate is I the hint we terms on of faster of much stock cash holding. go we cash past

change. and the understand third on that quarter you. The Thank and or the cost mean. also maybe sequential margin question in I your curve to structure any fourth help second you your learning the also far How The may could us RVO, so surprises quantified margin discuss is capture versus in quarter.

Mike Jennings

Paul, we to sitting are down. those questions here trying furiously capture writing

start distribution of here. as ask we with Let Atanas to me generated the strategy out cash

Atanas Atanasov

Mike, question, you, your and Paul. Thank thanks for

shareholders. quantify is we strong little the have generations, called remain we the our to out XX% our the flow First return specifically, payout this And for committed capital. ratio to periods of capital long-term. all, as in to to priority demonstrated a And just cash more returning very in much have of we past

much that’s a focused to and it buyback, return. on comes, remain much commitment our this debate how to what is is dividend Now versus with of share but matter shareholder flavor respect how robust is just

Mike Jennings

the of we Thanks, hope Atanas. forward play. into And looking same pace to continue XXXX,

little cash XXXX. had for But higher goes that. shareholders flow to turnarounds most of share maintenance is than terms in expeditious again, a do Paul, got have XXXX, and the planned us to repurchases incremental We priority way we the in in

that family, repeating, a worth holding have this very said As and have it to we with we the close relationship family. got

then of amount and size representatives in shares We our we Board of terms share repurchase our have have us a on their liquidity in them own terms which provides in repurchase. of with of program, executing transacted our to twoX greater

mutually it’s beneficial. So

it to expect We continue in size.

Renewable so XQ Diesel, a plants due downtime to utilization during to profitability at issues ran created start-up operations, just the basically relating from on obviously, unplanned or XX% Finally, perspective.

The first is obvious. fairly

RBD this our dollars start-up fewer higher as a But to generating would expect. we the margin was we that didn’t mix runs for second, get fixed relative same of purchased cost quantity gross really of the in and are the high running up OpEx. ended benefit we We feedstocks PTU

forward at experienced in third So the from to utilization should what some in quarter, we that, and profit Diesel significantly Renewable we throughput apart Parco for out. fourth planned substantially higher got than But results. downtime catalyst looking expect that different change lead and we the quarter have operating

Paul Cheng

Thank you.

Operator

line comes next the Theresa from from Your Chen of question Barclays.

Your line is open.

Theresa Chen

taking questions. you what to are Clearly, for are tailwinds economics quarter. elevated going significant seeing the ask for I this you morning. my and you WCS. Good landscape remain spreads you still the about forward impact seeing wanted following refining from Mike, strength in Thank

and fourth of how helpful well? quarter between gasoline, that think through to if of the the rest and curious product breakdown give on you margin a can as hear Just XXXX flavor this about and side, diesel be into evolves you would the

Mike Jennings

ask this to going Yeah. take to Tim Thanks, question. I am Theresa.

Tim Go

We above future. see Tim. think scenario longer for better to Hi, Yeah. mid-cycle margins is returns for definitely This the we Refining deliver here here a continue where Theresa. will foreseeable

We market. in a structurally are short

occurred with couple refinery have over the the is last We continue of years, flow that see that disruptions. Russia-Ukraine to that conflict causing trade rationalizations

additional that hard capacity going to some look As start-up year. the changing to Refining be that you see some near-term. forward, there’s know next of it’s significantly We in

going are that announced we to it’s announced that the Refinery think has starting that are also they the Rodeo up, Refineries Beaumont but close. to the Lyondell Refinery, close be the Refinery I going going Superior know to

we is supply/demand. start startup, right? the refinery are years when into a energy With technology. there going is in that slow Nigeria I know for kind high that proving continue the the of the to some you is last a whole going green get a continued or evolution, it’s to attention think lot over short time, inflation really see really seeing in -- gotten of transition big don’t you we the be to is structural overall several quite term until change the really seeing only we XXXX So Mexico longer more right theme out of the The now, investments down

see we now our be keeping and are to so products can right inventories as And producing for strong that and to continue our going still full. they the much trouble having are refineries demand as

So, strong the Theresa, here Refining future. story think be market mean, to long foreseeable we is going I short, for the the

Mike Jennings

I that, to think Theresa… add to

Theresa Chen

you. Thank

Mike Jennings

And … the additional that have high think to going up full have long a running in and and hard in attempted prevent XXXX planned unplanned shortfalls, U.S. plants order quite that will these time, maintenance run both others to and that and been to supply maintenance. fuel show we for trying that, during rates is outages, to meet we right? produce create demand

Operator

Piper the next question from comes Todd of Ryan Your from Sandler. line

is open. line Your

Ryan Todd

Maybe strong in was in decline results impacted was. in know those differentials Refining quarter, surprising. you particular capture and quarter? quarter, particularly the a the Thanks. of talk the may have environment especially pieces the there. operational the I there, of were some Can little about the in your strong in fourth on the if ask things, be but positive a in But that how negative of how -- quarter in Mid-Con, of were given and kind and could some the ability lot trending performance can side, Mid-Con to crude you moving may capture where I the in Yeah. the sequential rate there’s

Tim Go

Yeah. Ryan, again. this is Tim

capture both third Osage probably impacted factor the the our We pleased an course, the That’s with we the in capture in biggest refineries Mid-Con, just in third and event the the will Mid-Con rates the had, are point out quarter. have I of quarter. did that in or West. that have rate we

which as during up the Of course, were third RVO impact well capture obligations our quarter, will rate.

pleased we capture. we are On with the that the Sinclair synergies other hand, continue to

and some We Mid-Con in more to are [ph] are our capture us Mid-Con. we the of art course, WCS to able higher of have Refinery, as Dorado that Rockies part differentials capture crude allowing El

about quarter are as capture we So optimistic pretty rates well. fourth

Ryan Todd

you still color on a worked that around -- have at feedstock, then And a quarters is way that over gave Thanks. have -- I quarter fourth diesel? you business, about an of into the follow-up expensive all you RBD next Great. question, think you will maybe Do see the that the earlier you that you through remain look during maybe your Diesel the environment going renewable the an as just the Renewable and backdrop in point overhang few appreciate forward, how do clarity. the

Mike Jennings

consistent is in The what margins issues. call is Yeah. I really business working are Ryan, and constructive underlying would and for environment past. through we start-up right now historical forecast we with this that the the

will the to got through work cost the But and of operating we higher We to in little that that we previously, result the expect than we quarter. largely due experienced little bit the have throughput said quarter, I substantially this to be feedstock due third fact that remaining process. very have as of a in fourth better

Ryan Todd

Great. Thank you.

Operator

the Your of from question comes of next Doug America. Bank from line Leggate

Your open. line is

Kalei Akamine

Hey. Good This Kalei morning, for guys. Doug. on is

So thanks question. the for taking

swing biased a first diesel need to But So this summer, to other for gasoline. wouldn’t into and view a to is obviously you you yields. way the winter signal the back can are setup driving margin because XXXX. question Today, how on complex back theoretically, is macro my transitions price those the you offer maximize on

up? robust, do see So gasoline remains if catch we diesel

Tim Go

I for of mode Tim. -- are refineries Certainly, year, been cracks in diesel Yeah. have to they maximize during Yeah. continue our dieselization most all diesel. saw to dieselization tell you summer much today. us we max that the we max in pretty Kalei, incentivize is mode will are this stronger even this

again summer, spring will incentivize may the diesel then people this strength anticipate into mode, we in incentives time. and So summer switching increase gasoline diesel to same the will that that in have continue both mode this at as the we see max to gasoline to gasoline back the winter to the we transition that even back be some next year, and and start to next from

Kalei Akamine

appreciate because My Waha the fixed I and on it. zero, XXXX. is so second touched the benchmarks takeaway question second that. is recently get Got to very tight Gas, doesn’t there until the situation it half

cost Navajo hydrotreating with So cost? for I that am operating the means also wondering for what and

Tim Go

Yeah.

differential in It us prices pretty Southwest earlier year. country seen for on natural gas have we in go pleased the across the gas surprising. much operating that come have were We it. natural helps watched down, costs the it’s definitely with high as We

are made basis minus in So overall happy change natural we think, to for these plus we normally see of I all a annual dollar EBITDA gas, we million across see comments fleets. before, our that. Overall, about our every an or on have but $XX in

So energy prices pretty we carefully. watch

Kalei Akamine

Thank that. you. appreciate I

Operator

Lynagh Your of the from Morgan Stanley. next comes from Connor question line

is line Your open.

Connor Lynagh

Yeah. Thanks.

little XXXX also Just then think on talking wanted thinking through, I to a about about but turnarounds, obviously, a Renewables. here, higher reduced you am bit were cost

So, think just the us cost takes through we items puts on walk CapEx next big year? about for and those you can should how big and help

Mike Jennings

Yeah.

and timeframe. obviously roll planned maintenance be a into level, are we I think update CapEx guidance guidance February come high to coming providing for maintenance will the But the around again, higher offset, probably going Those as on Renewables. we at specific year. lower we turnarounds, expense, largely

Connor Lynagh

Okay.

takeaway place versus XXXX the is net-net, So about you are the of kind XXXX there? same

Mike Jennings

a roughly. higher, but Maybe little

Connor Lynagh

forecast lot markets, core do you you market being it. if see Gulf right Okay. in plus basis? are sort makes in go-forward more guys level to how sense? previously, So pricing where that’s crack obviously like being you priced transportation pointed structural higher do your about do you think of, it, Maybe you that costs. way coastal a off basically one to see mid-cycle one, that Coast just Where on niche a set your Do you of a have about markets, of Got the think you feel of pricing you exposure. think off do

Tim Go

at take Connor. will I a Yeah. shot that,

marginal marginal Coast gas the Coast of refining the basically come set barrels a of coming a from off is that Russia-Ukraine are Asia, that some part natural East really believe structure, Mid-Con European flows economics occurred the more more Gulf increases higher seeing the trade that creates there, imports would the the And are are that coming believe that given that mechanism now historically East then for off East in. the refineries East over Clearly, conflict. Coast. the of changed the are Coast we of shift -- off are have cost setting price into has price We the the So conflict, through our Coast Coast Gulf the of us. and which really actually set set they

advantage So Coast is East price have today Asia we the Gulf the Coast we versus think import the in. marginal mechanism, coming that which think barrels we then versus see today the versus today we a that and think we have setting structural we have we really

strong advantage, think WTI see at, We from right diesel now the product products the we at market a niche a both have structural things when placement marginal are a the look and natural that a producer. then op differential So you and gasoline. for of structure, for over the at advantage advantages we gas know the crude And we advantage we standpoint with we that and from seeing we as all our you a and a strength believe we there. there have look know both we are cost where standpoint, for are WCS again have we those looking

Connor Lynagh

That’s helpful. you. I will turn it back. Thank

Operator

from comes the question TPH. Blair from of next Matthew Your line

Your line is open.

Matthew Blair

Hey. Good morning.

currently what’s heavy think going what quarter. forward? WCS Could your is in barrels you outlook talk I XX% the and wider you are in driving about

Tim Go

Yeah. Matthew, this is Tim.

We spreads. are pleased wider and WCS the definitely seeing with

as that result Canada. of to seeing are in We return the some a production of normal

demand little with WCS/WTI some is surprised is the which some occurred differentials choices spread barrels forward we lowering widen. driving competing see as as as weak still that of has kind causing for always and the see that us occurring some benefit the that. that quality would less mostly in unplanned thought the We think WCS, the transportation call Naphtha, differential events quarter, weak here what that able bit associated But to fourth are quality the think In be that spread for WCS occurred. the demand what we that think quarter impacted We the that well crudes. widen well of heavy I have overall the Mid-Con of production, into some that going associated we I that are ran will as the with dynamics right course, of that for the as event that. very to well now and of maybe XXXX. now, third Osage oil of right than is higher the as we from are demand, fuel we that was a the in

to million in change, We annual our rule barrel the a economic WCS as about you a see business. EBITDA of all may increase typically every heard we a $XX impact our have $X as for WCS and production thumb have incentives

Matthew Blair

tailwinds good. flat wider higher you actually octane there. as be think WCS the capture blending nice from spreads? like basically XX%, might outlook well held QX Sounds at is, rate And quarter-over-quarter QX then rate just the work so butane little given your as Do for bit capture things a and

Tim Go

Yeah.

utilization of certainly We goes of we into higher. -- as all percentage out, we are we RVO typically, winter of you tend margin gross Matthew. by the that’s in because months, the say, that down, I rates but is go as here some the into generally going encouraged point get of to are are our capture down would that, But because November.

here strength with Utilization do quarter. cracks you out, in as you wider We is rates think pointed this looking and are out, should stay as stronger we capture the the fourth the high higher pointed crude fourth in diffs, certainly the quarter. diesel with

Matthew Blair

Great. Thank you.

Operator

next line from Gabelman Cowen. And your comes the from of Jason question

Your is line open.

Jason Gabelman

on Hey. I wanted Thanks the first Diesel ask business. Renewable for taking to my questions.

mentioned that had You a you to puts everything I has wrapped business, business. big or Renewable the then may around industry have was that was due segment? it missed Could think, for the but question accounting inventory Diesel hands the downtime, your to and impact the in maybe feedstocks. some catalyst it discuss that out on kind that change other that during Thanks. some are of order that is business? my terms in a margins come of of catalyst through quarter-over-quarter okay change if issues, other through trending of just the out operational any that know have you And where takes, a I quickly. And of magnitude in just of due know going lubricants and start-ups was some, higher planned, of have issues Was the unplanned so, that I or result if do in I quite types catalyst and decline.

Mike Jennings

date around our units. are our good normal units little hands think But relative Yeah. Jason, hydrotreating the I and of outage. been activity. that and very the will to change operation and experience much the do a start a catalyst in plant with planned We month October scheduled the catalyst Parco question. at referenced that catalyst life And a was we Renewables and we pretty different to these of have than they has catalyst distillate

issues of not we, start-up catalyst did lot XQ, as have a some problem. related but referenced, in So I

As to you the speak that? lubes, Tim, can to

Tim Go

The million impact still have time are really nothing feedstocks it first with in Yeah. we out in whole the are delivered the third We without and for pace impact, will so above XXXX. and even third FIFO, that business quarter see earnings so performance unwinds we know to as was FIFO record and on still quarter, was quarter second to we Jason. mid-cycle in associated here Even so over there. the Sure, would FIFO the here. priced It we higher unfavorable lubes ran. $XX due quarter very pleased

are something you consideration of FIFO. We into XXXX the million the still lubes EBITDA range in $XXX when expecting even for take all

Jason Gabelman

Thanks. Great.

Operator

from Your of next Sachs. line the question from Goldman Neil comes Mehta

open. Your line is

Neil Mehta

morning, Good Yeah. team. Hey.

adjusted The just EBITDA. first the on question mid-cycle

$X.X come trending the out to cash in with You this obviously, very is, well have billion relative of business $X.X flow number that. billion free and

just So, curious different biases different -- equation, -- parts or you downside? of the EBITDA see the you upside move as to what where adjusted think about that do

Mike Jennings

good is, in are operating obviously, morning. economics, impute cash change little believe environment is Refining generation really foreign in in the Neil, Look, a shortfall the earnings there’s to to Whether that hard Yeah. we mid-cycle currently supply a and we say, extraordinary. immediately a and us to domestic capacity.

we and to deck our here just structure on focus what’s adjust to our So we does Sinclair EBITDA what important, But expectations, refining $XXX completed of number. that not more doesn’t heels well two the say have first current real that industry a opportunity this distribution that’s just yet are seven mean the months the in million suggest? little we having suggests cash chosen that to whether were what on I of would and our I We that It unquantified. synergies, affect our the go higher shareholders. on try of back yet in related terms Refining. slide bit of higher terms watch front to are as to EBITDA taking There’s levers in But after to that absorb mid-cycle probably obviously the with it deal. going closing more those principally is. a do and a being that

Neil Mehta

that and sense. the have and in lot into a were see a of That assets? retrospect you coming well been Holly And Yeah. is additional around upside. market proven consolidator bolt-on lot follow-up Sinclair a be timed of to able and potentially then makes M&A is logical the of just to Do the you capture Puget assets strategy. Both

Mike Jennings

Yeah.

necessarily for the very we and wouldn’t compliment our but it first, I worked us planned has it say that way, So, thanks timing. shareholders. on out well for

and don’t ourselves we As that on the standard. the to the blessing taking of consolidator, hold to being burden

We are opportunistic.

looking for. are is and really is historical At combined and goal company really geography Holly. and in that full an make respect defined we have quality that the of excellent to acquisition Sinclair our present, We out our plate of of unit the assets

ahead in branded We ahead have frankly, have. opportunity to of terms bought in aspire some months of us got and into that wholesale network that integrating downstream we of that all we into, realizing the us more years

we there’s to do already. So what plenty realize to purchased have

oil As But we on a to because renewable companies future, consolidator. more of of principally net the take present, being on believe larger we are towards at don’t a of portfolio. will energy be the transition, sellers the focusing assets, strategy yes, that there necessarily that redeploying

more be will We opportunistic.

Neil Mehta

Mike. Thanks,

Mike Jennings

Yeah.

Operator

comes And from our Paul question next line of the from Scotiabank. Cheng follow-up

Your is line open.

Paul Cheng

Thank you. guys. Hey,

follow a Just quick up.

the rate terms of on you Sinclair achieved million In that $XXX already. mentioned synergy, you

this And opportunity you any impact. opportunity Tim, from million that $XX benefit, of piece that that’s to point for come question, incremental from? do you there’s first Lubricant. -- back mentioned synergy going it’s second the on, biggest into if to where that is where there’s see want if So question. That’s the where the go I

So barrel third that’s $XX based per the your quarter. on on about throughput

has like look we low. in margin, So added talk oil is back the I even indicator up also market say, base they very to if I people still Exxon, actually that gross actually also we and that, XX%, up. other indicate mean, margin And when the call it’s your when at been

utilize that why FIFO that aware? need standpoint from is be trying are you that, -- your that we an reconcile accounting the should outside to to So we something

Tim Go

is this Paul, Yeah. Tim.

both those to try of questions. me hit Let

the we already, chain in we savings there’s some mentioned, Sinclair into logistics. scale putting given are across standpoint, us in I that managing also Refinery, transportation Cross whole our continue of optimizing have there’s Refinery, capture of standpoint, lift the think utilization. and synergy in lot we and organically From these leverage we Casper side, Woods of we reliability believe all the Refinery our there’s the portfolio our especially integrate just savings we of that we to reliability, on. between but continue again products like just our And the across markets to us supply we examples, supply going think that, the to then, our terms some future. truck the amongst some opportunities the think of synergies. a at pipeline we and as to believe mix, and continues and think opportunities portfolio Couple opportunity Rollins going On the refineries, our lot a have as more to we trucking there’s and can our savings, area, of in are into finally, the Rocky are that Mike Sinclair, to refineries benefits for make seven performance by we bar that refineries captured we fuel, presence there. a continue the to logistics, Mountain generate procurement our a things pipeline more various integrate asphalt opportunities to in Sound still, be how Certainly, product as tariff leverage lot intermediate us savings, of we continue the optimization and focus be a there’s procurement opportunity as deliveries, optimize there the knowledge the for and you of share oil, that a From opportunities Puget for lot Rockies as to to add but procurement and with to chain we going just now refineries, more

Mike Jennings

as… As far

Paul Cheng

to over able have capture? months the Do have estimate, Do an you you an sorry. may XX for estimate next that target of the incremental synergy be your you benefit

Tim Go

with do -- estimates time. going after, this internally have to there’s and at initiatives we Paul, share are but we nothing we you have that

Mike Jennings

Yeah.

to call. are We the building to next on first next where up we the chunk as quarter’s and we through just the We gotten like next list had that opportunities and they are felt are big quantify going how are.

Tim Go

your you mean, to EBITDA. if you Paul, Lubes about I million associated reported that $XX with that FIFO, On we I of would the question, just take the million talked million, say $XX what is, apply $XX

estimate mid-cycle talked terms of You that in a our get about consistent that’s we run rate. number with

said stronger half year our always first have of We a is year. that the

is year seasonally the of half Second weaker.

good our will being have But think kind third at run rates we of we we fourth will for pretty kind quarter to that’s mid-cycle the we quarter FIFO run And to are at run for think to to able We headwinds. able business. so mid-cycle think continue a rate. be of and similar, going here be the run

Atanas Atanasov

on add at overall, could negative. the impact basis, is can quarter, If with FIFO to only Paul, quarter the this is look not for If I also overall just this It’s important just if Atanas. positive. year-to-date and headwind at this quarters, -- a it’s I you is not the -- even look the back

earlier, are But FIFO timing evens of we And of basis this or time, full indicated as in is so thing. year-to-date out, over year, Tim above a a mid-cycle. so on more at kind

Paul Cheng

Okay.

Okay. Will do. Thank you.

Operator

this Biery over turn Craig are I there some closing back for the now questions time. no at remarks. to further final will And call

Mike Jennings

This anticipate apparent that strategic Rob. really estimate Synergy and focus our closing the operating here Renewables are I’d and the plan is capture obviously to tell and full we really progress made on to that start-up. businesses the that combination we area have that through into we of will five up more Jennings. is is segments, Sinclair Across next rate I plants in we and said just are financial Thanks, really adding our our call. Mike forward businesses bringing bringing have of And well. articulate is value as to go as we these base company you, shareholders. the becoming great In per our we

supply well as despite Refining for cash our performance of We factors best our be and a the to will returning return to company’s expect difficult it. that own due has the to to shareholders challenging owners going bias been strong to our to expected reflects industry higher short macro are margins in resolve persist today’s capital generate market run, really we ahead finally, cultural And efforts. pace in

We and maintenance continue for credit great balance have while solid program to capital in our rating. ahead but XXXX, see a return grade investment we larger sheet opportunities maintaining us of

again speaking So, to call. the with forward you on we that, all next with look

Operator

This you. Thank at does wonderful conclude have today’s a lines this teleconference. day. and your Please time disconnect

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