Earnings call transcript Q2 2023

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Operator

Welcome to HF Sinclair Corporation and Holly Energy Partners Second Quarter 2023 Conference Call and Webcast.

Hosting the call today is Tim Go, Chief Executive Officer of HF Sinclair. He is joined by Atanas Atanasov, Chief Financial Officer; Steve Ledbetter, EVP of Commercial; Valerie Pompa, EVP of Operations; and Matt Joyce, SVP of Lubricants and Specialties; along with 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 open for your questions following the presentation. [Operator Instructions] We ask that you please limit yourself to one question and one follow-up. this being note Please Instructions] conference recorded. is [Operator

to floor of over is Relations. now Craig the pleasure my begin. President It to turn Biery, you may Craig, Investor Vice

Craig Biery

welcome you, quarter XXth, to Energy Thank ending second earnings a June we XXXX XXXX. This quarter morning results press Good everyone release Partners HF Corporation announcing and Adera. Sinclair Holly morning, issued call. and for the

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

proceed factors be are it to provisions the we results note expectations, Safe Federal those that made Before forward-looking remarks, differ with the press covered management are from Harbor Harbor please today’s expectations, many in in Safe statements. could releases. disclosure under filings. intended our These judgments SEC regarding including cause Security to a of statement or predictions noted In statements are Laws. summary, There statements

the measures. or may also please time-sensitive call The today’s replay financial information the measures. longer accurate the time provided webcast to call note transcript. at see include releases any of Also, any be on of of non-GAAP for reconciliations no GAAP may rereading Please earnings discussion press

with And to will call Tim the over I that, turn Go.

Tim Go

we million. by Sinclair results Today, reflect income items second shareholders morning. special $X.XX net reported income diluted HF net $X These share. Good collectively of quarter or attributable to XXXX per $XXX million that increased

Adjusted second the same diluted Excluding the million, net the decrease was compared to $X.X adjusted a $X.XX billion XXXX. quarter the for period quarter of million, in to for these quarter share share items, diluted net second per or adjusted income for compared $XXX per $X.XX $XXX of second XX% EBITDA income XXXX. was or

and in year. Mid-Continent was driven West margins EBITDA million lower by In refined lower product same last refining to regions due period in at sales to XXXX $XXX refining segment, second activity. both decrease compared maintenance This was $X.X volumes quarter billion strong the the our and primarily higher

second the million XXXX we $XXX last recorded of natural versus year of quarter in in improved lower expenses from million costs. Operating gas benefited the the same as period $XXX

to continue streamlining optimizing well and operations. our expenses operating as controllable as focus We on

charge day quarter XXXX maintenance higher during compared per in day averaged period. of to XX,XXX per oil due XXX,XXX the the Crude barrels barrels second second of the to in XXXX, quarter activity

in our initiatives. I'm report pleased the we the were to Navajo improvement two on-time on-budget, at continue completed long-term refineries reliability and turnarounds on progress that make our and and Parco period to

Renewables our XXXX, the the $XX reported $XX of second for we negative of for EBITDA In segment, million second compared XXXX. of quarter million quarter to

negative EBITDA Excluding lower the valuation the of million second to negative of $XX quarter reported of for $XX segment XXXX, of quarter compared inventory adjustment, the the for XXXX. cost market adjusted second million

two Total of as of with were to by for for and diesel rates Navajo our turnarounds million compared are were Utilization sales of hydrogen quarter co-located plant Parco volumes two XX XX this at quarter XXXX, gallons impacted the plants. XXXX. which the second renewable gallons quarter second million

business us allow performance unit which XXXX, from improve our to of optimize business. of We feedstocks with rates improve pretreatment achieving profitability the end run of the the this continue normalized will this to of a advantaged by target and

compared gallons XXX a the XXXX, gallons XXXX. were volumes million million branded fuel quarter the $XX compared of EBITDA reported Total segment for record to of second second in $XX period Marketing of last year. in million same to the XXX Our quarter quarterly of million sales

branded continue second fuels sites to the as strong new quarter quarter our regions. margin demand X% second branded $X.XX sites Gross or also in record quarterly branded saw per more for grow per nine We by year. a at gallon our and the across was added expect we to in

Lubricants from second For EBITDA million, was for of to $XXX FIFO compared feedstock quarter for million XXXX, segment, the second lower second million inventory quarter $XX Products of reported compared a decrease of of consumption XXXX. of largely This the EBITDA second in $XX & $X.X the Specialty quarter quarter XXXX. XXXX for benefit of lower-priced to benefit million of by driven the of the

Lubricants the $XX of of in in oils to year. look We in continue to $XX remain and the for and same region. reported our base optimization finished to of on strong focused storage compared This last we transportation XXXX, quarter products. ways was of driven million million the by optimize the business, period mix increase Rockies sales HEP volumes and second EBITDA mainly

to buy-in this until on HF transaction. an effect Sinclair still proposed of have are unless intend HEP, We to do developments update to transaction not with in At time, as the proposed definitive HEP respect and a agreement we we discussions. entered disclose the the proposed into regarding have not do and

be Q&A. will specifics reason, For not to we able any this during discuss

the million. quarter repurchased totaling over including dividend total week to $XXX During to that cash year-to-date X.X shares price million end, quarter, for at and $XXX paid This Company. puts and our $XX.X Subsequent per stockholders we announced REH a we second quarterly share repurchases dividends we share million. return million $X.XX from regular an announced this aggregate of earlier

as returned are results. quarter we've billion cash over August of with trailing strong Overall, pleased in basis, very shareholders second to XX-month XXXX. a X, our On we $X

well behind majority margins is to the capture believe us, of we the portfolio planned of the diversified us the remainder With our available positioned to turnaround year.

and continue to changed, of of while maintaining to to ratio remain shareholders of flow income cash to reliability net HFC. Our XX% base an We shareholders long-term strengthen and rating. investment-grade integration free generation on focused payout the not portfolio commitment we returning the a has our asset earnings cash to target and of excess further

turn to Atanas. over let that, me With the call

Atanas Atanasov

Tim, you, morning, good Thank and everyone.

spend second the quarter operations HF quarter. of XXXX of $XXX million included capital stand-alone the $XX the Sinclair's reviewing Let's for million million, begin for expenditures of cash financial provided Net Sinclair's second quarter flows which HF XXXX. by highlights. totaled totaled in turnaround by $XXX

at liquidity $X.X our of $X.X $X.XX HF stood facility. As cash 's of undrawn with comprised June credit of approximately XX, along billion balance billion, unsecured 'XX, stand-alone billion Sinclair a

June XX% partner with which value night's by of of of $XX debt-to-cap we 'XX, million net Sinclair represents a during debt-to-cap ratio close. Sinclair a million. the HEP outstanding second HF and last of received acquisition Transportation billion owns of of outstanding million XX% of LP have XX.X as HEP's ratio units limited X.X X%. market units, at $X.X a HF Sinclair approximately distributions following debt being XX, quarter stand-alone As of the XXXX totaled HEP

$X.XX in $XX in million catalyst. $XX for $XX and to in With products, through $XX year spend million between for a total go to capital in million range to $XXX items. to to million refining, $XX $XXX lubricants of from spending to $X.XX to million million million in respect million million billion our have guidance million specialty and Let's lowered $XXX and renewables capital $XXX range expect full turnaround some million XXXX, to $XXX to new million billion. we We to marketing, corporate to guidance $XX now $XX million $XXX

to and million million million HEP, between to At venture $XX expansion maintenance investments. spend $XX joint to million and $XX in we expect in $X

turnaround our refining XXX,XXX For per barrels and XXX,XXX at segment oil the the we expect have during our Tulsa planned we XXXX, day third to in of and scheduled refineries quarter period. of run to Castberg crude between

Let John over for me update to an call HEP. turn the Harrison John? on

John Harrison

Rockies was in attributable strong Energy Atanas. interest the compared higher and XXXX. primarily Partners driven to Thanks, region. the HEP's income solid quarter net million Holly primarily XXXX net to $XX The by expense. quarter another product $XX crude attributable posted in HEP was second volumes of million second quarter decrease earnings, of year-over-year to

be release. quarter reflecting second last found A XXXX compared adjusted to same in million $XXX $XXX adjustments the million these in HEP's press HEP's table EBITDA year. reconciliation was period can

including HEP $XX Capital quarter flow of in million record to of million, XX, and on announced our of liquidity, A of August we in facility. as approximately expansion credit quarter cash $X a of billion ended $X.X under quarter million availability plus of the $X second and $X.XX maintenance, XX were reimbursable unit, total XXXX. million is unitholders CapEx. revolving expenditures second distribution generated with second comprised during We million the $XXX LP $X cash $X of payable July million which per approximately distributable

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

Operator

. Gupta Thank Instructions] from you. The questions. floor is now We'll open for question take first at UBS. [Operator our Manav

Manav Gupta

morning, guys. Good

very capture are both things last seeing rates in is us which help seeing despite been nine regions, of this months. We six which improvement the the understand are in the to attain impressive doing capture, to some we turnaround, your have an we over consistently improvement

Tim Go

Tim. your Manav, question. Thanks, is This for

capture on comment to Steve here. ask me Let rates

Steve Ledbetter

Hey, Manav. Thanks the for question.

we're right market. everything. taking the it's making think really to around of in optimization, that the I decisions right the put It's a combination right sure molecule

of From a of support. running into it's to margin then take we a structure an it from everything. the to be. of operations a getting laid-in and some out and differentials had perspective, advantage of seen. bit get crude right kind We to combination look the it's full, them want about we've produced to molecules perspective, the markets capture getting And we optimize where we've of that our

Manav Gupta

have follow-up. a I quick Perfect.

as year bit You want it crude. heavy little a can have a run crew be slate the West tailwind I refinery? it Sound relates your Puget to next asset overall Coast for understand a to would what

Steve Ledbetter

Yeah. Again, is this Steve.

ability it the the a the in include As outrunning the the concerned, get differential far production, of is it dock of tightened capacity, to then terms of think it capacity. comes timing when handle as the But short on, off and few the over the we will water uncertainties term. TMX in

when we five could widen. again think next three occurs a years, in constraint to the be differentials and somewhere So

Manav Gupta

it if lands Coast? a West to that sound, benefit, relates as future upon right, would that be the But crude

Steve Ledbetter

that's believe the We case. Yes.

Manav Gupta

you. Thank

Tim Go

as run also that it think gives A&S We Tim both able Manav. put on they those it This crudes our runs to us We some Yeah. TMX. XXX% crudes -- be crude can because can refinery us arm advantage is go well pressure for will Coast. helpful, an as other go and A&S will compete because post refinery to Fusion XXX%. believe it can be

Manav Gupta

Thank detailed quarter. congrats a you for strong and the very response

Tim Go

Manav Thanks

Operator

We'll Sachs. from Goldman Mehta at take next Neil question our

Neil Mehta

of and off capital. Yes, moving lot good congrats good team return wanted agreement on pieces kick share a of A REH. around the with and morning repurchases to quarter. on I

could capital some over you announced it talk as about maybe of shareholders? with to can what's to time REH continue then and couple to the return weeks relates you spend last community walking been here capacity, investment So your

Tim Go

end off I'll ask the Great. Neil, and Atanas come can to then in I share. and start at

Atanas Atanasov

capital of to above flows. year-to-date, this to operate robust shares. as latest question continues good the business a our you with With shareholders and repurchased for announcement, thanks see returning cash a our Neil, commitment XX.X at that, our and can And generating all, Well, focus. million morning. remains to first and priority expectation, we've

to we've ratio. With payout respect capital target is XX% said return that our to shareholders,

We our be have consistently exceeded that, target that. at or to above and remains

With respect we to family, relationship. the constructive family, the for have can but speak we a

you all continuing and see -- where XX-D they've intent there, to have to directly can we're keen to on very shares. their continue much you've us, You the to indicated repurchase track noticed disclosures and open

trajectory to and the is our transaction return desire those be of recent strategy. the to look expect times, have with the and year. commitment that transaction been, out And we under our With but of indicative discussion, HEP of we this market, on shareholder continue windows the end being we to locked continue through at for most

Tim Go

Neil, few comments, for few more speak family. throw the conference Neil. that in We've said past And the I'll in can't we Yes. a just calls

put more the family going And the decided people wanted they They then there. foreseeable also that the set to to for future. intend themselves, to least and at company XX-D for speak forward. they So directly that's with intend one to maintain the understand they transact out why

window all very So, wanted rest and during -- I their We be middle clarity some think in shares clear buy are, the provides to terms of these that said that restricted of along these going to to our was intentions of discussions, was back public. to what the during HEP make they in that discussions. sure the

an Atanas took opportunity we found as two We to the reiterate we But want our and parties, and executed. to mentioned, commitment of between it advantage shareholder returns.

numbers events look we'll for progresses. in as so to the And the more continue year

Neil Mehta

has was very follow-up half a the it a Thanks Tim. of lot perspective is heavy at from The that. year turnaround made first and been

balance back kind you half, how of As volume the us through the maintenance year? should the of think for again the maybe can you look trajectory schedule of about remind the we and

Valerie Pompa

is Valerie. this think Yes,

the of half fourth the in and turnarounds into of Casper back We quarter. and then the September our half have facility towards the two year. Casper, back Tulsa

in guidance. are We The those any year listed don't kind -- the rest our more and expect of year. of a So outages. are impacts clean is crude additional

Tim Go

Neil, in heavy the Val a going the have team mentioned have all load. a that as year. the schedule those are I'll been to And of that's year. earlier, Yes, overall, is report, chime had the of it turnarounds that of in. the of be knew on her executing on executed done we along the the happy that the and turnaround rest of year capital completed reason fact, budget. mentioned we to We heavy in turnarounds guidance for Atanas the fantastic first and because lowering We're way just job this was period half

Q -

Thanks, Tim. Thanks, Val.

Operator

at Cheng Scotiabank. Paul to next go We'll

Paul Cheng

said structure months of reliability? year largely be improvement months, six On more And be? and what will the you What that year very or And reliability on the looking turnaround do into -- were two when the a complete. sustainable is another a five will we see for? still next -- about years seeing. kind or process in have we year you the years, maybe you this what you that or circumstances to sustainable within complete refining you having we to that process and two three be per in past XX [indiscernible] are is years XX initial could put Are to you years happy three X also cost maybe think, more under think on I are long-term, process, that

Tim Go

is Hey, Paul. This Tim.

right. You're

very cycles, And of not is said process, all a this capture we this as all pleased are But really about it measured We told pleased it's how how was with by We're right? as our talked years. earlier is turnaround went. performing, with turnarounds call. the -- we've on -- long by

working been year, our our it this of we've improve two so continues years improve effort. we to turnaround to And over in talk But turnaround are we three performance terms years cycles. -- last execution and or just the turnaround that

to And Val a maybe bit little color, me more in. so let with ask chime

Valerie Pompa

Yes.

aimed So our risk focus on utility operating our reducing our strongly turnarounds have reliability. and been at improving

and So have system. robust more we a resilient

infrastructure, look. can your reliability So if you look utilities equipment our at remove better more aging we any get refining the complex, the off and to resilient starts

So we've year. with big the We'll -- step reliability this our continue sustained improvement taken those a turnaround develop activities our coming to a in strategies years to year-over-year. support

Tim Go

one thing. Paul, And last

target mid-cycle our basis. what is as we day for there, in we asked -- we put a XXX,XXX barrels You that throughput roll-up our out our put

strategies of XXX,XXX think course, first hopefully this continue above Valerie we our that is will as just about, say that I'd to Of But implement kind target. a to mid-cycle day these we we condition. an use we get talked point, at barrels

Paul Cheng

Tim, or you mentioning? you that total said throughput crude are the

Tim Go

crude. That's

Paul Cheng

costs will unit what crude. of be we type That's then that, under And talking?

Tim Go

are something talking that. -- say, on about? So unit What costs I'll let kind we'll Val, of we

Paul Cheng

somewhere the is Not XXX. gas to on natural the in same XXX price

some if -- two what the you So your idea give can that complete the that say, regions, unit this with improvement? core you is us what liability once cost on is

Valerie Pompa

Yes. Yes.

and how As you to as facilities reliability, reliable to costs a operating tied organization how come we large is are. component execute improve continue large of ours our as well any down your will

will So as continue there, our to improve we cost directionally decrease.

and will Our we're estimation over somewhere and is be between directionally, it thinking down, XXX time. XXX

Tim Go

encouragement, obviously, the of do. operating to we're to but benefits you're which of work -- already to quarter more costs have are some and work Paul, yes, down reliability some some starting work the we of is starting this doing You're that see the integration of

Paul Cheng

you. All right. Thank

Operator

Ryan Our next Todd Sandler. at question comes Piper from

Ryan Todd

R&D in if I of you to that and color you sequentially up a you of you through of Great. normalizing I was in pathway can wondering the utilization think us throughput where full could a terms normalizing walk kind where you provide rate? little more mean, of improved, in are run are but terms kind operations.

Atanas Atanasov

our Yes. and not where normalized What between rates, we'd indicated With Atanas. has we're to is XX% is what looking Good that to respect this XX% year. of by the run call we are, morning. changed. This we achieve end goal and utilization is have which

two we But our which rates. also you're you the hood, -- some utilization already that and so impacted under declined recall, As speak, of on turnarounds to of positive look can had the opportunity gallon, flip is quarter-over-quarter. one decreasing the seeing our the OpEx things facilities, to of it which side, XX% an improvements us per equipment, of make colocated the gave to the

Catalyst. is thing to the improvements Another made that we've

So optimization and great improvement yield as well a has our been as example focus Cheyenne has been process that. of

again, end goal the the has committed. we've at of So not And been our day, changed.

Tim Go

that. Yes, to on maybe just add I'll

think capability I seeing business. in underlying excited are we're about we what the of this

mentioned, we Atanas As yield and reduced improvement did show both costs.

also Cheyenne levels to yield see sign We to at is XX% and our choose ran XX% barrels in utilization, which productive economic believe good that and a the run drive well fit. ability we we with

So normalized end and are towards the the look year. we where for excited about of

Ryan Todd

the the within as process maybe terms of rack Great. as the as what way from the you're long-term we're the your lubes Perfect. of suitability portfolio? we in just any what business there, you're head terms of in seeing of And far there, third the through quarter seeing in then a of maybe terms back of -- business in here forward both thought the and continued dynamics on that on kind and rack as backdrop update in well kind

Atanas Atanasov

Sure. Atanas. This is

is continuously seeing high the at strong what the performance. respect with the to level of we're business, Just performance

fears to our positives market, but ability on performance we continue the business up million margins up a on the primarily volumes bit improve basis, and We the one FIFO better flip product an to of on -- mix, have year, an around have actually last we're and are is hence, year-to-date of specialties on $XX strong hold to side, basis. the recessionary little where our compared ex -- softened apples-to-apples

is goal our of so volumes base volumes And specialty. those more base and continue shift to to -- finished oils into

to to at more again color. our a right the I and remind that at turn and We day, don't end And provide forward. back look holistic basis over the look want I'll to Matt on at we Joyce you some it of right it businesses

Matt Joyce

products users. Yes. Thanks end has and implementation, been quarter, Matt get inventory bringing better tremendous new help done continuing team chain streamlining over digital on More We've here. certain particular, our also for to focus to working the supply management a question. we're planning. job It's specifically, tools and in past costs our will the Joyce to that manufacturing board that visibility on through and with of

in and that's seen year. of So that second will process, half the be actually in the

three, quarter you're four when of into that that So quarter putting together. Those we're benefits. some looking the are pieces

these solutions team taken marketplace. that proven the be been good. And of in, balance can in our some products to we've that our at the satisfied And really really a markets, value we of right We're distinctive in products. are has the call, the looking to in what very that be in good particular markets where fortunate we're focus regional sustainable mix and opportunities excited about to those I'd very of have US have proposition the the and

really manage our to that some that volumes of well the right margins, own up look order softer general, and and we're targets future. to housekeeping the for grow and headwinds, these clean despite in right partners and So make in have sure customers in markets doing the our the are the experienced

there? still you are Andre,

Operator

still hear I'm Can me? here. you Yes,

Matt Joyce

We now, can yes.

next to question, Ander. Let's move on

Operator

Jason Cowen. We're going TD at Gelman [ph] to to Okay. go

Unidentified Analyst

on morning. niche ask first of serve. markets wanted Thanks the good I Hey was one to that you The kind

strength I XQ, And you're outages And that regional think margin what conclusion? into follow-up. both given was reaching Southwest Rockies could I if continue seeing seem particularly and Thanks. about in talk and a the hoping, have some I their some saw be to XQ. that you drove

Steve Ledbetter

serve, we markets liquidity and I'll not in this Jason, Those some you balances Yes, that those quickly. pretty ton of can that demand one. know, is of so markets as there's Steve. move take a supply

with take of season what I some in -- see those the the inventories you a those saw that diesel in markets back to When the allowed the the -- do of normalizing through take we us cracks out, driving more half strength some again, advantage and were competitive the to year, our of we year. think the is and peak of really have we off crack drive think and associated that. of fundamental But in to the low the of further coming them we markets, rest bottom position. think line, to the to cracks advantage we of those

Tim Go

this of provide our growing said, that in Yes. since supporting and especially you're Coast. chime real Tim. the refining I'd out in demographics crude have we the premiums the combination I indicative is Sinclair what And always the we competitive Gulf say portfolio. both why of then, Jason, demand course, is we our very serve, advantage strength year, a that in is portfolio just And advantaged product to seeing which think markets are this of we've think, that for play

Unidentified Analyst

is And the market refining that there's desire of past it. coming for purchase. like the years. to consolidate couple It available M&A over refining. my to Got assets Gino's a are And of and space demonstrated a number follow-up on seems the obviously

specific could portfolio that you a you'd refining I any in your refining if your assets, in thoughts good right is like types you're are the wondering other of get just of now? So do regions M&A was there place feel interested be updated any size we viewing on more how or

Tim Go

we have not believe with with left did the derived believe we just working the course, XXXX, added of on for Yes, Puget that there We we in deals, the we've which were Sinclair, ATP. said or potential our we're if liquid for assets, Sinclair that, the very decades XXXX, assets. Sound not believe transaction we Having acquired And years acquired [ph] discussions we renewable in transportation business. require. would through with XXXX, not We Jason, XXXX. gone a refining thanks done that question. in Robur we diesel successful

successful we've -- of had a hopefully with ATP. discussions there's continue and So as growth continue will very we lot

right is focus same we've the into focus But know the on I talked lot there's mentioned, when priorities we opportunity on job, EHS now, there. I our to on and reliability last got need that -- as the about call, of first we a

In fact, inorganic. our and have I'd capturing to say opportunity there's like to improving as the the opposed to operations into head there think assets and We anything in our of in we folks. sense refinery a going more throughput and more that

was seeing is lower to we to assets believe our try OpEx. focus We to And terms that's you're we're focused Val that's right that that have. Steve thing then optimizing now seeing what about in have. the what you're what on those what inwardly was talking and the second in -- is in talking and currently we assets -- integrating capture and about that of focus earlier improve the And

the anything So right And Jason. to we're probably fine at right time market not being we have with not suit really It's in above in plenty of do with because market is us the now, time the mid-cycle. anyway organically. that's the work market just looking the

Unidentified Analyst

for Thanks answers. the Great.

Operator

Our at Read from Wells next Roger question comes Fargo.

Roger Read

morning. Good Thanks.

Tim Go

morning, Roger? Good

Roger Read

to morning the lube going kind Seasonally, just business Sorry, I moves come of We here in I've usually that in in of get seen base this, a the shaking good missed quarter terms But here how pretty and earnings the we that back, just but side this. out? is operations, front. chain have third prices crazy of could, oil so hit. supply issues of wanted if with on part to many is we've

a this, So just are we curious, in I a kind we entering or period? was jumble with of still period finally are normal

Matt Joyce

Joyce is chain. Raj, a here. supply normalized What Matt a bit question. of it's forward seeing more Thanks we're to the for looking

I the around couple stop an industry, years, upheaval as really the been start supply growth think out faced business globe the chains of past of it's and Lubricants and with COVID the and additives the Specialties probably have a as lot hangover. you impacted have the to of we've business. And that also know, coming over

going anticipation that now, green are just right reliability issues very regards some also hearing the the really We're not some to supply see when here that We're of how tepid certain have there business. on to that's an that shoots there's think again, we're it to of market good with other But a going as whole fill void certainly, to I some in And comes to briefly impact position needed. we're the issues big and in and demand. oils. base that

two. in look boosts has general, manage it's shrunk, housekeeping looking that able have or crews mid-cycle, over but oils business the going up through And it, increases that of cracks months. be anticipating probably though, been and northbound picture past order it's very seen demand quarter that recovery we've we're evident we When soft still we're roll in increased very looking manage considering at we're been the we're on the focused and And that and we've at. at in some both the experienced to and the weeks to to over watching products as perhaps costs past been above we've again, base with and even finished carefully

Tim Go

tribute Roger, I'll the last work chime X.X been the they've the been integration for sign been Yeah. to just this to that compress. And of happening have that's a was working All Matt for in cracks X now a We've business as starting Matt probably this that's and mid-cycle has or think team the doing. and performance all I to now synergy team what tribute years yet structure seen I was above you've mean, and demonstrated reinforce time, that saying. our his continues and X quarters, to a to on And perform. the

Roger Read

been But going to we've operations, the has good I hear. feedstock competitor start-ups asked. on definitely again, question if That's real the with some diesel on renewable seen this side. And a apologize on tightening

second half walk definitely then basis. as of sequential So PTU looking of of kind those. Can curious, on of at costs options the the I choices your feedstock you're better running results different the you just you're for for a through how kind the year. feedstock is But and us into I'm navigating as you mean here

Steve Ledbetter

Yes. take I'll that. This is Steve.

I think overall of you hit to partially also but then feedstock of in what the standard, terms year, that's LCFS it due tightening margin RVO see back market. structure head the on. supply the and We the that's kind in of half the on the done some

but a half and advantage go So got CI feedstock. the run some place that soy, plans year. we go to the of low feedstocks. of we the to looking We good we've take portion of are optimize in do in our have back to ability --

As PTU, as well. in integration. other And laying far assets could that we into take some see business that and it's advantage that of the running advantage to where as the we competitive our very of a

Roger Read

one that. And on follow-up

Your the across hydrogen anticipated had production, RD is that doing what facilities. you

Steve Ledbetter

and with choose But maintenance to that's planned run overall, markets that activities But the the I hydrogen plants, that in run. were as which of go hydrogen we needed so early were choose. this comfortable impact more availability plants unfortunately, margins due our co-located was the mean, we go as did be availability had products two turnaround, them we really and to that to the the of we to Yes. of the these the production, where feel quarter supportive. with handled. put consumption circumstance just And far hydrogen in both that down to months generate

Atanas Atanasov

other the Parco is, therefore, efforts and And ends of that, as as and Navajo have well we again, of the our and, So… this particularly at is only number plants, earlier, up reformer as ongoing benefits it the mentioned Cheyenne reliability turnaround improving of improvement availability I'll unit that add to one relates the of is co-located turnarounds both reform a in supply as hydrogen hydrogen we of the and Atanas.

Roger Read

Great. Thank you.

Operator

take We’ll Paul from follow-up at Scotiabank. a Cheng

Paul Cheng

may hydrogen improve you're Thank had for mentioned hydrogen XXXX. [indiscernible], want I about you closer the take to bottleneck, I you. until and know run in the into say, that availability then are to you guys go Two I to I LP. questions, please. that availability. back Tim working believe order substantially was talking mean, to, and that

customers. give sufficient XX% that able the higher to we for than, So so will an on changed the that make them XX%, running let also terms give the under sales, change I you and will in you duration hydrogen can guys And on to benefit update also decision a between rate you take say, have that to the that the have for diesel or that to on at what's you yield? we the to the their Can where us now LP think you running you that LP the site the in us -- refinery be on an the are have customers. much a of idea

say think at about are you've to much a doing longer been six we going I any months -- previously, duration.

Tim Go

Yes, is Paul, this Tim.

and Let the about. to I'll we're of some long-term talking at some then short-term longer-term me shot ask Val of the take questions a comment on efforts –

steps of been of short-term that So we the the that And that and in half turnarounds hydrogen the believe implement. able run second run be able and Val here with normalized second optimization some with have these year. we completed the rates will to to just quarter team we in

And when we're to the And XX% we you normalized before. that run rates, number And facilities to with mentioned utilization, talking we level we can think that get current kind of right? we say do XX% have.

are a I in we do think minutes, just we expand year here little make and bottleneck wanted half continuing this rates. in ways normalized run a to I let forward can production. from basis, to to we hit the long-term of the hydrogen but second bit about Now, clear few path a that to look the it talk have that a Val on

Valerie Pompa

Valerie. is This Yeah.

sites, mentioned, reformers we're have the made co-located We've went just seeing hydrogen, the on. specific and we through turnarounds significant you as and we So those expected improving. that reliability with is is what in today on improvements assets

that start our context, And looking go operational hydrogen we generation as look improvements anticipate what's improvements will next in low-capital have place that program to directionally the will we year. continue. capacity that, add year. the as Additionally, more we take us Those the small at hydrogen give through half of up several And will in to then we forward. back we're

comment on a bit me Let catalysts.

performing catalyst our -- is well. we So

mentioned and Cheyenne XX% before, seeing in facility. our yield are as We I

to improving each Our operational interval units we've each some to and duration, an opportunity new with time learning improvements. is learned operate employ these as how in have we

to that anticipating we're continue those So will lengthen.

Paul Cheng

between the what So cleared another or change to that, the is the catalyst? is expectation current you have

Valerie Pompa

disclose not going kind to can I say but we're Generally, of exact the numbers, we're improvement. directionally, seeing

Paul Cheng

Okay.

unless next other to much could hydrogen from they sound made operation assume doing availability be some like you standpoint or that better a XX%? shouldn't fun year, investment, than XX% this pretty have So we significant

Steve Ledbetter

end that's by that's get think I the -- this to our we're Paul, of target, what year. to

some I course, But any year, -- year. we're that at end the we implemented type going we're additional it's or what have early by this is think be of for guidance to saying of think be give steps. too you improvement I targets next And one. should next of year, to

Paul Cheng

commercial actually the that that and one improved been you personnel. substantial when that due profitability of Okay. Tim, at to think commercial your have wondering DINO, competitors you in right operation of capture the do organization have culture ramp looking and you're

Tim Go

it's know a competitors capabilities. of, out We who Paul, fact, good question. in there's commercial talking their about were lot a several Yeah. there

got I at look focus to DINO at try that. to think we've a here similar

at as and think time. help comment, capability commercial Steve commercial least us our things, at of don't competitors to look are our at resources about do been to talking we we ask improvement. right as are of know, not you I capability, looking the trading brought of because will this that. our into is But have I at as get not part one that as think in probably Steve the well trading part basically has I just of to capability, point some commercial

Steve Ledbetter

being from Paul, is days Tim. culture reflect still, you after months, but and so I here Thanks, Yes. about this asked capability. and early think -- will for commercial that on when things three

want and play. that that, where advantaged go the the to think advantage both high markets advantage this non-speculative have arena, of that easy we planning, refining the to of optimization, we a And we capable expertise of differentials. across have of understand who take even really trade, take extent have we people, we a talent lot in commercial degree I assets and into

as here we in the enhanced integrated our fashion opportunity is think around a kind real-time an frontier that's such there. really I And enabling of and I of on, value unlocking think through value take see next digital, and information. go more really lot tools that we

I of together over put this of the assets has think been of we're these past integrated the kind years. true with few value company at the unlocking beginning that just

Tim Go

optimize portfolio Yes. first to when operations. think to when priorities. we're and say in assets I improve how That's our second of Paul, and our then priority two approaching is is commercial. I integrate reliability, our new say, CHS And those priority

Paul Cheng

you. Thank right. All

Operator:

conclude the I will Go to back And remarks. floor that over does turn the question-and-answer closing Tim for session. any

Tim Go

Thank Adera. you,

we to to year. majority quarter our planned Our for hard us, remainder employees believe the work these all capture our second are well second our turnaround the lubricants us we are of refining, behind work strength the to results. performing the margins strong of business a our businesses available above mid-cycle strategies estimates. and to are marketing execute positioned our -- And the of our believe We the results and of our deliver testament and

our Have CHS day. joining our assets; Our new our a you cash our and of priorities return call. and portfolio base reliability; improve three, to great to remain excess optimize to Thank for the same: and to integrate shareholders.

Operator

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

Holly Energy Partners (HEP) 3 Aug 232023 Q2 Earnings call transcript