HF Sinclair (DINO) 5 Nov 202020 Q3 Earnings call transcript

Company Profile

Participants

Craig Biery	executive
Michael Jennings	executive
Richard Voliva	executive
Paul Cheng	analyst
Timothy Go	executive
Brad Heffern	analyst
Manav Gupta	analyst
Thomas Creery	executive
Ryan Todd	analyst
Matthew Blair	analyst
Neil Mehta	analyst
Theresa Chen	analyst
Phil M. Gresh	analyst
Jason Gabelman	analyst

Call transcript

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Operator

Welcome to HollyFrontier Corporation's Third Quarter 2020 Conference Call and Webcast. Hosting the call today from HollyFrontier is Mike Jennings, President and Chief Executive Officer. He is joined by Rich Voliva, Executive Vice President and Chief Financial Officer; Tim Go, Executive Vice President and Chief Operating Officer; Tom Creery, President, Refining and Marketing; and Bruce Lerner, President, HollyFrontier Lubricants and Specialties. [Operator Instructions] Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Craig Biery, Vice President, Investor Relations. begin. may you Craig,

Craig Biery

September Good XXXX and we Earnings announcing quarter press Rob. Corporation's issued to Third release ending the for Quarter Call. results XXXX. morning, you, welcome everyone, HollyFrontier a XX, Thank This morning,

the If may release, hollyfrontier.com. find copy website, you our press you on a would like of one

Please GAAP forward-looking release. information are please provided from please expectations, says webcast it statements factors in call to longer regarding management with replay to or SEC expectations, time-sensitive Before may The safe financial results note those under harbor of at release disclosure any summary, transcript. we remarks, call today's any filings. the our be proceed noted time for differ statements statement could reconciliations that security provisions the In accurate harbor or measures. see statements. predictions the be press covered the of non-GAAP are judgments Also, cause the to include many no may intended including laws. measures. note in on These today's press also discussion safe are rereading There of made federal of

call And turn Mike I'll the to with that, Jennings. over

Michael Jennings

pleased quarter the health and third We're safety everyone. to businesses Thank Good report during remain quarter. the X operations operating on by We had to you, I'm across focused we've and cycle Craig. reliable the morning, the of face economic caused employees, report results solid down pleased both the third our in of COVID-XX and safe pandemic. our

ability our both the XXXX, of products talented As in employees. long-term confident and last we our work quarter this remain through market of for the I

results net to results. by special $X our reflect $XX income We shareholders These million. items $X.XX per reported Turning of quarter diluted collectively third net that loss share. attributable increased a million or HollyFrontier to

net XXXX. EBITDA reported income the for diluted compared with third for of $XX the $X.XX quarter decrease million diluted $X.XX refining prior was or of of the $XX This XX% compressed negative segment was to compared and per period third consolidated of due adjusted per a weak million items, period the the margin share decrease a million refinery crude demand period. was quarter $XXX the share million, for Adjusted net in per $XXX XXXX. to EBITDA $XXX for these to or of negative versus the continued million Excluding adjusted distillates, And loss XXXX. million $XX decrease to The for produced third barrel, coupled quarter was primarily compared $X.XX gasoline differentials. gross same

quarter barrels crude day, was of XXX,XXX above XXX,XXX. throughput per XXX,XXX to approximately guidance our Third

we well, Rockies. the particularly August, last and began saw ran Our the we conversion and and of the barrel our demand we expected Southwest somewhat than renewable in in markets, better oil diesel. plants operated product crude In Cheyenne, to at

margin. higher to The Our quarter compared EBITDA markets, segment Specialty versus improved Lubricants volumes million were prior EBITDA down the industrial second in XXXX. million, and of demand $XX which Rack compared Products X% third and transportation-related $XX business Forward Rack in the was quarter margins Sales drove year. end third the XX% unit improvement quarter during and the million representing a $XX Forward EBITDA of of reported to XXXX. and XX% saw

This at rates oil and combination higher at third drove co-located Rack fourth quarter was the base the demand factors supply levels, Gulf increased reduced our of fuels on refineries run plant of factors, oils while during quarter. a due to for to and base plants including utilization margins closures, portion, XXXX Within U.S. with Back hurricane limited number facilities impacts Coast.

began that on of our completed running at successfully in late back at In full we're we turnaround planned the rates. oils and maintenance, September, terms Mississauga white to unit

the $XX of Holly to a of reported million third million for quarter in million $XXX Partners compared XXXX quarter EBITDA last the quarter the year. included third third EBITDA leases, for XXXX of quarter Energy charge in Reported and reported the EBITDA financial a on results. gain consolidated which $XX for of million of impairment both third the company's goodwill $XX sales-type eliminated included

we At assets for quarter trend continue in to HEP, expect terminaling quarter in through the around see area, the incremental fourth demand the particularly of and during this third we Salt have the XXXX, improvement continued to of transportation Lake services and year. this

from on next lubricants progress Although time quarter. up the on will transportation which resilient will for the businesses We're X remain and projects, our cycle. that our challenged, currently well midstream positioned in our by current refining the of budget. outlook for we on demand fuels the all are and confident financial third making be and return encouraged remains performance renewable We're

that, with the And let to me turn call Rich.

Richard Voliva

Mike. you, Thank

gain Pretax million $X Woods As production, of $XX our upon million. press items items costs cost settlement of can totaling inventory market and earnings million decommissioning related refinery were including of positively of the million, million. charges LIFO found in to by Cheyenne by gain refinery, previously a charges mentioned, a $XX the conversion items. the these A interruption $XX to renewable These related occurred impacted which offset at along or $XX inventory partially of company's were table XXXX, charges lower unusual release. be loss the severance business a a of Cross diesel included quarter liquidation the recognized third in claim few to with

totaled and of which included HollyFrontier's Cash for flow million third stand-alone turnaround capital $XX the quarter. operations was $XX capital from the of million million expenditures gains. in spending working $XX million quarter, $XX

robust Artesia capital bond and X-year well as unsecured to ensures position fully million coupon bond our offering. and of a $XXX bond necessary X The X consisted million through a This in tranches financing reinforced fund opportunistic $XXX million X/X% we unit the enhanced with diesel offering of renewable a as September, with pretreatment notes, liquidity coupon announced of successful with Artesia. liquidity the XX-year Cheyenne In $XXX HollyFrontier a previously senior a the X.X%. of units located in provides and

September XX, of with stand-alone facility. along approximately $X.X of cash undrawn stood billion, unsecured liquidity at balance billion, a $X.XX As credit total our of billion comprised $X.X our

billion debt ratio have September As a XX% outstanding we of debt-to-cap of debt-to-cap X%. with $X.XX net of stand-alone XX, ratio of and

and $X.XX repurchase units, HEP our third third did as paid intend market until third the quarter, HFC units improves. distributions XX% visibility lines by During not products quarter owns limited million. in HEP's $XX $XX repurchase a equity million. we LP do representing the of of any the demand declared blast approximately a of dividend received partner We the $XXX and share, during for per value quarter HollyFrontier and to not at normalize totaling totaled XX.X HEP million close. shares million

million to We capital $XXX $XXX have of reduced million million XXXX year the from budget $XXX $XXX range to consolidated our million. to full

XXXX, million for For and year million at in of million now $XXX the to $XXX million renewables, spend Refining, and capital full to and $XX expect million HollyFrontier of million to million lubes turnaround catalyst. and in $XX million $XX $XXX we specialties, $XXX between $XXX to

million reduced to from to a range HEP, million our has of capital At $XX $XX $XX million. budget million to $XX

market barrels to adjust between commensurate to XXXX, demand we we of quarter production expect XXX,XXX For the refinery levels drivers. of and XXX,XXX and with expect run day per crude fourth economic and oil,

our currently and in year, to fourth we And plan Looking are to we're with take ready capital next release to operating finalizing the guidance and quarter. future budget that, questions. later

Operator

first from Cheng. Our Paul is question coming Instructions] [Operator

Paul Cheng

Two questions. Scotiabank.

cost everyone reduce in is still I we're side, mean the there cost? My do opportunity trying reduction high. what refining, On further the we can cost unit they if -- rightsize your it. to your at seems there unit Is to over any looking

have has margin in basically. very also demand that we the you look report by like? the into line Secondly, fourth discuss been Do what lubricant strong seen that strong that the quarter? improved quarter trend And and extend can does third everyone --

Timothy Go

on is Paul, the Go. question take OpEx. Yes. Tim refining this first I'll

Cheyenne As the announced last as refinery strategic and that reduce especially know, some take diesel consisted of looking out into our the refining as from into turnaround our burdens, we significantly refining renewable will which load well decisions quarter, of business OpEx XXXX. to plant, you converting CapEx cost

We in but those a other our recall, XXXX up believe restructuring, OpEx. steps as million, only carry of particularly will million $XX and costs. that going continue $XX both which are announced XXXX here us our was not refinery million of will around show you to SG&A overall was into will in thing to reduce SG&A, over in costs. And help $XX we The up show

thing notice, structural The we in reductions driving refining are our you'll is other costs. though,

$XX about continuing what believe reductions further we're year-over-year, compare to down million roughly at We is able million year-over-year. carried year. last quarter, X% If into be versus over year-to-date, third refining there. that in to And and it's reductions XXXX, you the we were be or those will drive again X% $XX

I'll you, involves look, efficiencies operating honest to operating just involves excellence. came performance, But to be That HollyFrontier it EHS involves I operations improvements Paul. reliability and drive and with it costs.

we continue are high through lower. be barrel. cost to those try our in at so to to the gaps. We're outside some closure plants. cost structures prioritizing we our we've costs And what to look We're drive assessing some looking consider per help operating And overall to at effectiveness. working relative cases, of And us some those gap in help process brought at we're

not our hard know we're this working or structure point, want announce but we're Paul, continuing to ready at to disclose operating on cost to just further So competitive. more anything you I make

Paul Cheng

to lower $XX related the OpEx, them of of the throughput? million lower how Tim, is much

Timothy Go

lower deferred amount Paul, just either you some that our tell But in obviously, efficiencies would there's variable -- cost or through are fixed center. It's in that. improved or that structural of maintenance is cost Yes. I included of more costs, most maintenance that

we again, in and XXXX. overall that business, into -- So will cut to some on our believe carry we've some refining structure continue

Paul Cheng

how lubricant? And about

Richard Voliva

which past for to you was related question, Okay. and quarter I quarter think performance. Thank demand current the

a and serving had we have motor food, So the of a which to diversified the pharma, economic perform. portfolio inherently this resistant all what other it mid-third oil strongly applications. which throughout COVID-XX car personal cosmetic of in wide care serve. and about passenger markets, performance construction, is forestry, products quarter I strong that business such fact heavy And and product breadth has are more areas auto-related to which of continued the recovering are began many Other environment as industry, downturns of enjoy lines mining, really

quarter is to leading for while to so slightly, down have expected. goods. our all lower We've a And SG&A, same leads of further from than And well we've higher managed cost stronger volume the volumes gross higher EBITDA. margin, which enjoyed year-over-year benefited would reduced enjoyed we and this

demand the side we Our order remains book as of seasonality the et with of quarter, remains to subject, robust further strong COVID-XX in cost as recovery quarter, current and fourth restrictions course, along risk spending the to cetera. such and the same look normal lockdowns, and trends

Paul Cheng

How margin? about

Richard Voliva

sure over should the part given certainly it as the accordingly. I'm robust of the Margin trend will some in be line the not would third elevated flow be so quarter, it year. but as earlier of seasonality

Operator

question Heffern RBC next the comes line of Brad Markets. from Your from Capital

Brad Heffern

you $XXX of the sort is and what Starting that million renewables. of with this for Can sort still that $XXX for far trajectory been year the CapEx next thinking? give million to we're million year question that's the $XXX guys and $XXX approximately the just provided on million of verify to you incurred so

Richard Voliva

Brad, Rich. it's

really I in right invoices $XXX So can to have first million. are to $XXX we million we to the number, reduced bit for little the incurred from date front guidance into What's What XXXX tell here of timing you don't happening the $XXX is to is million $XXX -- million that quarter. of me. here a sliding guided I the

the mentioned, on projects on Mike time still budget. As and are

bit spend think seeing door to overall of is going dollars the out of XXXX, little probably be I actually So a impact. no but you're from to XXXX what shift of

Brad Heffern

you 'XX. additionally, have in that. have see it. out? a peers many that, you -- that capital, Do you in your call point? fourth level are you, you takes receivable then this about can can tax Got on then And like out On the of second Okay. of that sizable or balance any missed we And that Or puts potentially I quarter the I a quarter on quarter? talk the called and Rich. at working just guess do with sticking third

Richard Voliva

and From So think maybe Brad, to we perspective, quarter. capital, be positive an in the going on neutral pretty here probably inventory we're I much we're working to where be. fourth slightly need

obviously the a what in function So way. turn huge capital The this as looks going wouldn't does you're expect curve aware, primarily. of right, pretty flat, to flat you either into working move is price a so

loss your forecasting yet -- second But so a now second position a the -- a tax, to number. now to we'd I refund we see are quarter. XXXX, not are taxable expect in question on a to We don't in we're give for

good good would The -- of one is news loss. have prefer not news, news to you I bad those stories, mean right, a this

we're So just where line we're the forecasting crossing that.

see any point. for expect I guidance a do refund at year, don't to we but this have again, So you next

Operator

question next of Your from from Suisse. comes Manav Credit the line Gupta

Manav Gupta

probably be would This for Tom.

production hit renewable gallons. Your diesel million would XXX about

you So X.Xx get about RINs. diesel

lowers obligation once running. gallons facilities million both that RIN are XXX So up by your technically, the and

obligation? you much And obligation the what's trying the XXX RIN current when your come RIN net then do do volume how of I'm understand to terms gallons of So in additional lower blending. volume, in,

Thomas Creery

bit at look And it. walk We basis. volumetric it value on how than me through you Tom speaking. look with We a RIN on just do on we coverage let look a It's a little differently the standpoint. at at

So and difference we price the that sell in revenues the DXs we and are do we the keeping when math the and take plants and the at operation. and you, DXs purchase DXs that's ourselves DXs balanced And same would then and in methodology, that and assume between the we being diesel RVOs. as up all come consistent with back those renewal under look see

Manav Gupta

facilities? So technically up once you're goes obligation your RIN running and in away these

Thomas Creery

the yes. or that answer There's that case, of lot directionally, on that one numbers But -- between now that the the main That to main the the getting see justification for things of is that into and based go now, renewable a and then. can is right ones. on the diesel was we us

As factor as program. at you'll RFS looking for mitigation a recall, we compliance the it were

Manav Gupta

Perfect.

is be pretreatment targeting corn? intensity targeting flat a distillers you main The given corn sir. idea is could to we distillers if Like some unit? your location basically and which carbon the animal Or you're lower that it question, the will maybe XX-XX quick some animal should with oil Second assume one unit, the you pretreatment fat? us give and as feedstock,

Thomas Creery

not a price Artesia, determination, variety CI refinery. there an is what be at a a will price DCO, the a is you it's PTU LP as that, feedstocks, able know, low sort different UCO. Well, we're And running including of Kallo, crude located doing be of to and CI to run to just necessarily like in going it's yield oil

PTU going mean And that We the return. are to purchase and soybean. run feedstocks the soybean, those could also that run through give XXX% that best we us just

So an basis. ongoing be we that looking on will

seeing we're increases in CI they not amounts When looking volumes. lower on and the across seen as we've we're at because why same are look you not it's to those increases well on DCO not soy. that country They're year-on-year at And be -- are supplies. that's the tallow, going up and They're the soy bid low price, unlimited feedstocks. price

Operator

Ryan from Energy. comes Simmons the next of question Your line Todd from

Ryan Todd

I'm this but I thoughts. a your ask as curious just don't for suggestion,

enough equity. as stock the you balance the opposed excess going X.X% of on dividend credit a sheet Your how to yield, benefits capital to obviously is right maintain there the using quarter. increase given raise steep is your I'm visibility forward, with But with cash market programs about of dividend just now? this the curious strong back this the of the with and the debt to dividend not the buy an the undervalued giving options cash ton you the you using argument relative to for paying discount think

Richard Voliva

Ryan, it's Rich.

committed particular. a in business long-run what to in see adding tremendous equity. That renewables we the in our said, doing in value we're look, we're opportunity So

of So going be that's to the really source our cash.

in cash view seriously returns. years upon also like view cash XX the the cash that a acted our low-growth We return and return the primary as The fundamental consistently is to dividend and last ours, it very in we've source with shareholders. of industry-leading mature industry

times said, poor. is like, visibility are that these unusual Now and

we of dividend and as the to returns, particular, the investment-grade our company. So maintaining we an who balance financing the decision, discuss Board, level the with need make rating in dividend, cash

probably tremendous the XX to themselves, needs to see point, in but look, cash your immediate months. opportunity next we've So we got shares the for more in XX

Ryan Todd

a been appreciate And in there's and capacity that, Great. I a rationalization Rich. maybe of -- follow-up discussion refining. lately as market on lot the

how efforts view You guys XX maybe out view recovery the you and weakness Can Cheyenne obviously the about with conversion And portfolio playing capacity you next rest persists dynamic at at of how XXXX? into talk your sector, between and already environment have taken action resilience if over there the across the the ongoing you that the demand broader rationalization? for well months Artesia. the

Michael Jennings

this speak Mike. portfolio. our to Ryan, I'll is

diesel spoke industry, for pundit substantially the Within to diesel I renewable And of business. on like HollyFrontier, optimize have more asset Tom don't the least and is the to renewable to recently that that the to than ability but unit know As an be competitive that feedstocks action create going anybody X we opinion, to nature frankly. we've better includes that competitive plants. refining real pretreatment it's these our taken important strategic of, a we feel else's,

of the has either As of portfolio, the something special refining each these geography, remainder et its served markets, of in to assets feedstock, terms cetera.

out portfolio as march many we production these through assets in the it and we to Group and in create that our for feel And a that so I portfolio, gives dear, durability. existing some short so becoming If has and the advantage of and that fairly have, is lubes Group seek has we something strength asset, competitive as simply is take Tulsa. to we I supply each Tulsa And advantage competitive example, lubricants don't asset refiners durability. though so the petroleum

does As what respond huge for we a and are segment, will market We we The have roll to but question assets look is that prevail. intrinsically the or forward, as compressed there we hydrocarbon be quickly level? product that competitive will demand. how recover fuels the fuel this clearly, valuable it and think forward, most

So we to come in to that the is point our curve. try competitive portfolio up, believe our on to We supply that to portfolio point the to and that within something do. the adding the business, assets opportunities and extent want this get to creating most is advantage right

Operator

comes Tudor, Pickering, Matthew Your the Holt. of Blair from line from next question

Matthew Blair

issues I City the It especially the question on pretty for of time had Vegas diesel dynamics Do a are here? that like you Salt arb? Las at there strong up? cracks, market. that pushing time? open the could actually talk City Can And Lake Lake talk about this -- refining cracks, to about looks you supply this things are Salt are year. also Is

Thomas Creery

we've level, Tom. crack with stay it's and consistently with seen Matthew, expect High and markets, remained that Woods in way. Cross. Woods other that start very pleased we we've them been to high We'll They've the Cross. and to spreads compared high

markets In distillate there. been late, terms potatoes, lot strong. It's a of attribute beets, and that to of Idaho the we up of specifically wheat sugar harvest the

supply and a pricing the market lot [ the and to We still Vegas forward. big Salt we the ] of a go And there arbitrage that Lake in to between Northern The depends a City Las pipeline product Lake been in in margins demand Salt as valley. big expect Coast because limited deliver it lot U.S. market, see demographics Pipeline to hurry. of West continue we see options -- and volatile a growth that -- that there's Kalama product into pretty good into can is get on with

much with well casinos off The Las pretty other decimated shut the is really could being seen you that Vegas COVID-XX. there, the imagine, with market It's as thing fallen we've down.

more back go to As they in, people come Vegas. will

Vegas our right the month-to-month Salt So margin, opportunity it's continually it the the putting do or basis. right and to -- highest that barrels by on has in it capture at Lake, we will be place whether a to time, the into Las continue and is

Matthew Blair

here? capacity? still to outlook WCS those just markets? happen to up going on to also going what's your capacity resell then for are And talk them pipeline could take to, Cheyenne? about helpful. giving guess, WCS Are you your that WCS I other you And differentials and pipes into you That's Or

Michael Jennings

commodity Okay. are differentials, a to that we barrels Hardisty as On move WCS of forward. base. We our express out we keeping move view as valuable

to we probably think XL can expect Mountain built going be nor Trans isn't anytime Express. I soon,

issues years, to So we're full. the few and on Keystone for still few being had going apportionment same the years, Enbridge be that the system the and confronted with for that's past next we've

then for there. or WCS. that Cushing now, differentials not using Woods with a So is is Cushing us, fit capacity supply markets, are also like other an for there if outlet as some various -- gives because WTI of and to with blend that sweet so there down access to blend Platt to the looking is back well we're alternatives. We're an Express in into Edmonton opportunity to mixed to the good also market crude synthetic but Spearhead Cross including St. it of on may and at -- opportunity mix move Enbridge out move to into a the our going Louis We get us refinery it's be Patoka, an use right and it is space as some may to tie place that

again, going right highest there, to So generate to use and picking the the us. crude flexibility we're for netback

levels those are and apportionment. 'XX. coming in good government, months, schedule the of when December XX% off not Alberta past WCS, even we the That's by restrictions you on, the over look end until the year. we're although Going also put production at reserve few allocation the seeing the I by right production in production they're numbers them to hitting government, But on think, know the this Alberta back forward, a that they on move

million takeaway there barrels and the only enough capacity, of is So there's up XX,XXX. I at there maximum Hardisty, There's storage taken not is XX think availability. but some being storage

short field, hanging seeing and around to in see again, back we're is differentials what term, into marketplace. more more WCS the that But start the would historic So drilling looking producers medium this that as widening in mark probably $XX the now expect we there'll we that be differential further, WCS to coming market levels. the in get in

Operator

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

Neil Mehta

is There's on a barrel quarter. margins were? items. the the of the out going regions question onetime calling mind just in because lot of noise First gross refining the adjusted per you some Do margins by of what

Timothy Go

Neil, this Tim. is

Let the that take me had. a because try shot the situation Rockies to at it. we was of The messiest region Cheyenne

mentioned the Cheyenne. we index consideration. at the we oil take The publish X of does pulled Mike As that August beginning into in call, that not

have adjust got what understand you to is running do so And index for X that up only really X. month that to you to

we decommissioning that in our also numbers impact flow the thing the and severance some that had The Rockies costs margin. other will is into gross

of we're account So those XX% published we X we things, Rockies about on our when you index. capture you look a the and saw at for what in what

call was Mid-Con, well specific in the to Brent that the the region. the Southwest, out at quarter-over-quarter spread there's than that from Primarily, compressed driven the region that's then over as we compressed with had, significantly in differentials was look the WCS. crude lower nothing you TI If by as And probably that been again, that past. cleanest we've and where

Neil Mehta

a very I supply? in we've potentially due robust. onetime that lubes? that a on quarter to And there nature about speeding. on anything run Index view rack of or lubricant that October as do there you in Or But QX higher back little normal II know you for was disrupted published. The new talked a hurricanes storms rate HollyFrontier VGO then sticking the the was bit with Group margin

Timothy Go

with that supply Back hit business, hurricanes saw Louisiana. and at that associated at both I Tulsa That into improved certainly short-term We think certainly -- supply Mississauga. Rack the some has the disruptions disruption

We that talked the so normal. the in closer that about. as XX have year balances And we've They depressed of or past months, the are XX, last did that supply-demand believe over talked to think we about would were seeing some we that. return we

onetime improving. there a the But of is yes, that from standpoint we disruptions. business Rack the certainly a some So was through trend correction secular think Back weather

Operator

comes of question line next from Your Chen. the Theresa

Theresa Chen

Barclays.

So gasoline the in as in And the and first, for to areas touch you diesel? I demand markets. the many picture wanted demand to data far what cases are your given Mid-Continent, related just on live seeing uptick of points as

Thomas Creery

exceeded the refinery Northern Corners expectations area, Southwest has us. helped the both of continue regions been pretty at I'll and And and let's it's demand the a all and has across for highly I'm good to X little Marathon some really in markets, and some markets And Salt ebbs gasoline our Cross shot has and because and talk over they're The City national rages which and it aren't. start good has it one, the to as Theresa, Arizona have COVID this very flows fluid become them diesel, answering the question by all in way. shutdown bit different, better following to Tom. we and going place. some of are give to easy all degree patterns of some with expect to them Woods a or Four of Lake been that remain the

the So incrementally that's a priced XX,XXX of that benefit at Maybe getting to little time. of day -- nice into But benefit. the priced upwards only market COVID this be barrels. it's barrels that XX,XXX could a of attractively in a we're new point

more In averages. demand national in group, seeing we're the line with supply

this activity about than the now, than harvest year-on-year harvest gasoline in going year Magellan in is running through system some the down XX%. seeing that we're it's The what that's think less Distillate, years. demand that. on probably to Mid-Continent. of the X%, Right I by is but prior earlier attribute we

on as at around XX%, we were XX%. compared last think we're corn, probably The to to XX% I XX%. year, almost harvest

So that's uptick. an

into fall off winter little the go here, well imagine. as we to demand bit distillate a expect we So can you as

there also About and in those see go COVID. spike down. get to more commuting demand to see when school, That seem been gasoline in We work to start But areas. fluctuations due to again, seems demand. people going we'll a back went to it's -- to on, have be we back gasoline when people there settled more

not of factors the jet being big various at have change in I to see did little regions. that lot sort see is time. of in before how XX% we there's about year-on-year. in that's down talk than it demand the So category, more we are point going this jet And a to across increases its because own jet

Theresa Chen

rating an make or time change on looking And Rich, measures agencies? either the they're for quantitative update what of conversations with your line a can us you just way? give And kind to

Richard Voliva

absolutely. Theresa, Yes,

So we stay their spoken agencies. debt. broadly lot maintain both the in ratings when we that agencies when made all They on I'll with both things Obviously, a contact of that their at in issuance. look And and note outlooks issuing a the of mid-cycle Xx we've them going September And Approximately XXXX go flow. were the we to X they've to communicated to we're in we cash be threshold there. mid-cycle believe the debt-to-EBITDA substantially us, 'XX, an as we'll then obviously, more and a into issue trough run, is through we and long basis. generating get without regular

earnings credit bring. be into stability the going growth it's both for is to to of diversification Our and positive renewables going

in pretty we're like feel side. the shape rating good on we So

Operator

Phil Your Gresh question of line the comes JPMorgan. next from from

Phil M. Gresh

[indiscernible]

Richard Voliva

we're a hearing really having you. Phil, hard time

Phil M. Gresh

hear me Can you okay now?

Richard Voliva

No.

Phil M. Gresh

[indiscernible]

Richard Voliva

and Can suggest Yes. dial back you drop in? I

Operator

line Gabelman [Operator next Jason question Instructions] the comes Cowen. from of Your from

Jason Gabelman

to X I ask wanted questions.

Rockies the First, on region.

help down to shut is cost us just, operating are way Any costs incurring quantify it's conversion, also during is plant. talk the some a basis? Cheyenne to you going that about the go-forward Woods then I be to model that costs that it on now Cross for being converted? overhead with the could is? structure one, that associated there what Given that Cheyenne being be believe And will period the that

I updated Fuel Carbon then Standard the And to (sic) your Carbon secondly, wanted get just outlook. Fuel ] views Low on [ Standards Low

probably medium-term of that's I take for like other to some legislation there's pass focus to a fact passed. time seems the programs to it's progressing that states going are going But benefit. on think a to that lot get be it

your what time. call term thoughts and, the are on between near it, just price XXXX, So way wondering, now credits XXXX, over more that

Richard Voliva

Jason, it's Rich.

put we cost your a out refining cost with In regions an we Let X-K shot take question. our at me recast where September, data.

you for in that general. point I'd context, to So

Cross has As expect, just Woods its plan higher you size. of a cost would because

of there's, out $X expenses. in thing Woods HEP the a it, is The Cross other operating barrel point charges I'd call

it higher it with But look is. to help to So X-K reference I'd little a really the you makes than modeling. that it again,

guidance we for Going this guidance around until out later We're to Cheyenne. X with and, out put report. then next renewables put for revenue have in put going Cheyenne. in X associated to point, both XXXX or going some in quarters the expenses -- the for 'XX forward Corporate renewables capital your segment to We're cost quarter we'll to on for our

there in give some So detail a better you few we'll weeks.

Thomas Creery

various of else states diesel Tom, and model I'll agree years as into to on through not to a any the LCFS probably the and it's place, you huge opening model to going the Jason, something it's issues. or get there's be We in their whether get try couple answer in the your renewable up markets. California next markets go question that with

you So modeled on we economics we've selling and as market, established. already is continue which of California the our into the continuation what know, is

or to and our don't unique of are in diesel permitting they next in couple expect most of of the years, been onstream schedules. either all hand, lot position a have not them We're to problems. expect of have coming we and of COVID For permits because -- they're meet a we renewable be our in because filed, hand if approval plants

will in LCFS will think we that's -- that and and market. the credits same take and advantage XXX as XXX that for able we're now, they result, the be news the number we up running us. California at, a that be range And good to be of looking are as that So to

on just the point to another And BTC. make is

have past not included any benefit We year BTC XXXX. the

and are in time. outlook economics our So this our point conservative very at

now, that say maybe expect but -- could be be. continued If I to in the ask it probably is will you BTC I off-line, it would past not XXXX, same form me would

I in format. continued think it will be some

Operator

Your Phil next JPMorgan. from Gresh question comes from

Phil M. Gresh

right. All

Let's try better? this this Is again.

Michael Jennings

better. Much Thanks.

Richard Voliva

Phil. Better,

Phil M. Gresh

is lubes. question Sorry. My first on

Obviously, quarter. Just results, really notwithstanding this second the COVID a strong situation, follow-up through there.

that guidance XXX of XXXX, to there? you've can latest think give your -- ahead you that there? that to getting kind for you? XXX look willing is comfortable you you I reinstate But to you more say on As would you're rack the this do still been in past, forward. view guidance whole normalized know what range, a are thoughts Or

Richard Voliva

Rich. it's Phil,

what the think is, mid-cycle, business So can do. that run think in we look, long that and we the

we're quarter with fluidity the given point, here the seeing referenced, a give this as feel But the XXXX Tom at premature of think we're as fourth little situation, it's about mentioned, Bruce that. COVID comfortable confident I what in guidance. probably just and to

Phil M. Gresh

Right.

want was the the rate Okay. second lapping follow when quarter had then low and Obviously, you the very the Mid-Con on I to on just you're contango capture refining, there, up And performance. benefits.

unique of you quarter this diffs, but a point in that it we're Or type sounded kind when low environment? were just it saying there tight like is this run goes that capture, out? the So this -- would the in what is little anything just of is rate crack, as was you

Timothy Go

Yes.

Mid-Con look I you our to significantly in really differentials. which compressed the if Mid-Con, quarter bridges in when Especially the barrel, it between capture the just down second a boils the of the at crude third the to about So the diff quarter-over-quarter, the crude difference really and tune $X capture. look numbers quarter

Operator

to any Craig will I for over back questions. floor further the no turn remarks. are closing There

Michael Jennings

our with said, sheet the with The Thanks, balance is through and space. And refining Great. Jennings. participating now quarter. in obviously third well economic HFC is are equipped right We This environment appreciate participating today that testing Mike approximately with billion that is investment-grade and an your us $X.X hearing we really Rob. been further really segments third our that our through in of lubricants in quarter. through and business by this currently business midstream existing X liquidity. we We've base heartened distinct in diversification our down strengthen will as refining see. through asset performance to investing great and provide We're the cycles the cycle believe we

investment I in more those we occurring that thesis recovers we levels. naturally economic think as both activity that to see sort have. And normal of validates of growth the businesses

markets as kind will our of doing still and and that premium products add helped have value, what and access and Finally, advantage due by flexibility express with our that we sourcing in accentuated to. capture ultimately, have our geographic great we're niche space. for and improve gross Tom We sit to serve location us crude margins to believe we to the assets logistics and

something and toward our in look grow going a business on heavily exciting company. is we and as value forward to investing renewables is our So of strong this business that's for looking lot

So thanks again, to and next we talking look quarter. forward you to

Operator

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

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