HF Sinclair (DINO) 3 Aug 212021 Q2 Earnings call transcript

Company Profile

Participants

Craig Biery	executive
Michael Jennings	executive
Richard Voliva	executive
Ryan Todd	analyst
Theresa Chen	analyst
Paul Cheng	analyst
Paul Sankey	analyst
Timothy Go	executive
Thomas Creery	executive
Phil M. Gresh	analyst
Manav Gupta	analyst
Spiro Dounis	analyst
Kaleinoheaokealaula Akamine	analyst
Michael Blum	analyst
Jeremy Tonet	analyst
Jason Gabelman	analyst
Roger Read	analyst
Carly Davenport	analyst
Bruce Lerner	executive

Call transcript

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Operator

Good morning, and welcome to HollyFrontier and Holly Energy Partners Investor Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, and the press release and slide presentation regarding today's announcement are available on the Investor Relations section of the HollyFrontier and Holly Energy Partners website. The archived replay can also be accessed on both websites following the call.

I will now turn the call over to your host, Craig Biery, Vice President of Investor Relations. Mr. begin. now may you Biery,

Craig Biery

Thank you, joining thank for everyone, Good morning, us. and you Lauren.

call are and Executive On Executive me Financial Voliva, with the today and President Holly President Energy and Chief HollyFrontier Energy Executive Holly Vice Officer of Mike of and of of Chief HollyFrontier Officer Officer Partners; Rich President and Chief Jennings, Partners.

of of also Vice President Operating Officer Executive HollyFrontier by President and Creery, Go, HollyFrontier; Tim joined Tom We are and Renewables. Chief

intended remarks, the made statements if predictions in securities safe differ with expectations, results statement please are provisions today's to press under are summary, our harbor expectations, statements, could safe of laws. disclosure or proceed those including SEC In cause in such we be Before these note are from federal filings. forward-looking judgments noted regarding to many harbor covered the release. There are factors that statements management

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

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

Michael Jennings

morning, everyone. Craig, Thanks, good and

we'll We call doing Corporation definitive the Partners that, morning have In things to agreements companies. on the entered a differently today. with that are be thrilled and news of this light into share little HollyFrontier Holly Energy the Sinclair

for and Partners for will Rich our walk quarter that, first HEP's for shareholders. will I transactions HFC Energy it we the turn the briefly benefits and the and review results will over before create Rich questions. and expected HollyFrontier, Holly through they After

will flow portfolio network; business, To for of Sinclair's the mover Slide the distribution in in shareholders the we year, deepen be complementary the strengthen our flow HollyFrontier's addition we HollyFrontier sustainability. X which It to and position, it its Sinclair's scales will Holly financial and diversifies its Rocky put free to refineries acquisition and with our positioning increase expect cash and And renewable within the brand Mountain integrated was space; ESG returns it while simply, X. first the Partners. Energy and earnings, transformative of cash region. iconic to our on and both Starting us assets commitment diesel first increasing

this For provides HEP, financial too, transformative and benefits. transaction strategic

capture integrated of facilities, the With increasing focus network and HEP pipelines opportunities on and scale Sinclair's to the storage returns to addition will new and of incremental earnings have growth power unitholders.

a merger a establishing to business, Holly decade Turning and of follows building business, the Frontier. period, and since of our We of X. This that Renewables Slide growth our transaction expanding spent greater Refining part special Partners. our $X.X Energy $X.X and additional regular through our benefiting more through from billion growing business and Since in interest Lubricants an cash Holly XXXX, we've than billion repurchases. and dividends share returned in

plus. our We're century for and chapter believe this Sinclair. and for we family HF combined a merger, we're inflection these as stake Sinclair We our about employees and respect transactions Similar generations significant pleased excited in last next with the an to the holding the our XXXX company. well deep brand they know business have represent point of and this will built have incredibly Sinclair beginning family the over retain companies,

now Slide on of turn the overview X. I'll a transaction to of details the brief

of related refineries. iconic this hospitality Rocky Sinclair's Sinclair's an and renewable Mountain-based build branded marketing not HollyFrontier thereto, commercial upon brand oil and loyalty; the transaction. X First, transaction. acquiring activities diesel Sinclair's with Sinclair's are also exceptional customer which and businesses business upstream and ranching business all HollyFrontier gas is part

shareholders XX.XX% HF the Sinclair. of shareholders will of shares own in Sinclair, million Sinclair HollyFrontier's of holding HF the stock new a will receive create company to equity of will existing HF shares or newly-formed XX.X million approximately publicly-traded XXX.X named XX.XX% approximately common equal Sinclair Corporation. the the HollyFrontier company.

outstanding share stock The value on into July stock a result, common HollyFrontier's XXXX, of with transaction $X.X a closing Sinclair has all-stock As price common billion of the will of HollyFrontier each on at convert closing. comes HF X Sinclair no debt. based and share stock XX,

to closing, mid-XXXX. Upon at to the been management HollyFrontier's senior combined of Directors Sinclair is Directors team the will Sinclair the to the The operate and transaction granted HF right X Board existing has close expected in company, closing. nominate

I'll now Rich. to call the turn And

Richard Voliva

Thank you, everybody. Mike. Good morning,

X. and pipeline, acquire comprised of of integrated Sinclair's crude and assets operated product pipeline terminal with Slide million will barrels to HEP terminals storage. Turning of terminals X X and miles X,XXX crude refined X.X product

We X product offtake, joint midstream Pioneer including in significant and crude ventures the will pipeline, gathering, we a acquire of the Pipeline, also Flats which already remaining stake. for Sinclair's UNEV Powder interest own interest Pipeline in

EBITDA. scale earnings by additional add million provides will annual transaction expected power to $XX assets minimum Over Sinclair. commitments and these on the of be with this XX% $XX Critically, revenue of HEP, volume million to supported long-term is to HF

receive Under consideration common shareholders million based XX, $XXX July transaction, a closing XX of of XXXX. will HEP units the cash and price total HEP the on for $XXX million Sinclair terms million on of HEP's

HEP company, transaction to management continue On team HEP's for the The nominate Board closing granted right X been the mid-XXXX. at of close in is HEP the Sinclair Director has expected to the acquisition, closing. and will senior also existing operate to

Michael Jennings

Thanks, Rich.

be and turning the positioned beyond. Sinclair will So Slide next X. for to decade well HF

deliver returns free continued commitment expect will fuel per strong and enhanced We our underpin cash value all as shareholders earnings through as generate growth. flow, increased share well to to a synergies, realizing cash which shareholder to of

future. environmental carbon low transaction business. step share endure and and will philosophy our stewardship, HF Sinclair sustainability of for diversify governance corporate a Sinclair. that Slide X. on our a strong HollyFrontier be within forward to will as is commitments business scale common strengthened renewable the This Moving and diesel critical increase we to The a

deep people first, our share our put by day safety, right and to strive risk. manage a do also cultures important every commitment as communities is to which we to Our us

with provide very and also take quality mobility for of seriously customers products supplying the We the life. exceptional responsibility our that

the governance at ensure and and and with the of experience stakeholders. are is company our Board equipped our to right other skills delivering And shareholders our we oversee for mix the level,

Slide X. to Turning

see the You creating of strategic we business individual within are how our I complementary to time our our With with can scale this why some a benefits presence. a through that marketing take in an clearly these business businesses walking compelling fit some of and are building want integrated geographies, and discuss in existing mind, diversifying strong business acquisition.

of wholesale business. Sinclair have will a business across grow with combined branded opportunity the significant company sales products By HF to adding this business, branded a geographies the through On Slide XX, a begin channel. I'll a base and brand consistent the marketing iconic range and

Sinclair. Sinclair sales. us symbols The for branded marketing to XXX recognized and and annual the dinosaur, of HF industry's of footprint as most distributors represent grow with across known DINO, one states a thrilled locations bring X,XXX of billion gallons will will Sinclair's on over brand is X manage board to and fuel over We're the help XX who team branded

credit provides The RIN licensing The distribution additional Sinclair's channel marketing addition well as also for a or product fuels programs. through marketing consistent business identification card business stable earnings generation significant from of and sales margins produced network. brand with provides the branded renewable as integrated

Feedstock mover been is the to Sinclair diesel Sinclair on Turning colocated Sinclair, now has was barrels Wyoming space. Its to XX. renewables day. this expanded flexibility was in Slide also be XXXX the pretreatment single XX,XXX since first expected process in fuel per for constructing at produce of unit advantage to standard and higher and renewable generates its in while low carbon refinery operational pretreatment currently recently completed value mid-XXXX. lower unit, intensity through also allowing mitigating unit a further carbon risk. The is flexibility. feedstock feedstock

support with will The we production and the and be procurement, production and renewable enhance combined have help Together, million leading a anticipated as synergies transition. approximately facilitate profile XXX diesel operational U.S. to X clean facilities ESG a we producer the diesel with energy gallons will renewable diesel an will renewable our annually. of feedstock logistical, of scale in business to size

Sinclair synergy and size scale the to With is team feedstock, expanding leverage of the transaction. our brings renewables logistical, additional significant to that further part intend the fast-growing In to key are a we this we procurement, have Beyond Sinclair, short, capture opportunities. will facilities, synergies. segment, support expertise operational we and and

on Refining Turning to business Slide XX. the

Rocky We are adding footprint day HollyFrontier's barrels X the barrels of of storage. refineries Sinclair Together, million X.X approximately network, almost capacity refinery region. expanding that Mountain company's XXX,XXX complementary to gas and adds the the refineries in per operating are combined existing

and to refinery refineries convert region the access crudes. and are of high-value Denver products and Sinclair Rocky feedstock-advantaged Sinclair refineries, has Salt delivers refinery Mountain tier products given oils Eastern pipelines existing gasoline, Dakota. City, The high a discounted to across the crude Canadian and percentage into distributes refined Casper Rocky refinery their other Mountain diesel Like the and products. to HollyFrontier's northern complexity the by Each Lake South

capacity day. refineries combined oil a of Looking per will the barrels refining our with feature at Rocky processing Northwest and XXX,XXX Mid-Continent, Mountain crude network, we combined in complex X Southwest, Pacific regions

significant these additions, cost opportunity With and has combined value an company increased through to create structure. the an reliability improved

Rich?

Richard Voliva

Okay.

including to pipeline million provides Partners storage of Turning acquisition expansive assets product of miles to Energy over with of barrels the with of and system terminals capacity. Rockies, Together, X,XXX Holly key Slide company Casper combined XX and hubs the Guernsey. will connectivity Sinclair's in network crude and XX. crude integrated an operate XX

River commitments, product will with of distribution business, joint also these volume Powder through acquire existing in supported representing long-term ventures, by be Nevada. in production will X and and stakes assets from Basin XX% HEP's revenue minimum the serving HEP the Wyoming crude generated. Consistent Utah

We million $XXX HEP in to annual EBITDA to million million translate acquisition $XX to this will annually to from $XX and of expect million $XXX EBITDA. this grow

let's financial of these aspects to So acquisitions. turn the

and post run $XXX We through improvements, closing first operating within years combination million expect savings. generate commercial reductions, rate the of a X expense synergies of SG&A to

sale expect million refined business, gross the costs. and branded as product margin by feedstock the wholesale commercial multiple through side, legacy On to sales in HollyFrontier increase values through such renewable improvements opportunities $XX we diesel the of

the another improvements savings company's primarily From renewable an optimization of operating million expense combined activities. the logistics perspective, in we procurement anticipate $XX through from our diesel cost and

with associated in finally, reductions corporate million SG&A savings. And traditional also expect we $XX

expect $XXX working X In we from addition rate to capital synergies, the during to million run to $XXX benefits. savings generate in another onetime these years first million

In accretive be increased XX. anticipate flow will is mid-cycle of our Turning transaction scale to expected and year. HollyFrontier's be as year. per for we to the to billion is cash approximately and earnings, The cash first year, profile the flow company's Sinclair environment, a HF over free Slide free per expected leverage, the billion within to part through after-tax EBITDA total combined credit company $X.X enhanced flow of of diversification $X.X reduced businesses. cash be and

credit our support investment shareholders. with return a history, sheet to be investment-grade significant generation, we flow Consistent able balance cash maintain expect to rating. free by Fueled the and strong to combined to approach company will cash balanced a capital and

XX than the returning of dividend the quarter In and cash of our later To that per to the XXXX. $X.XX dividends medium renewed by intend second intend to regular share XXXX. end, announced, no return shareholders first Slide previously our of near the as share we lays HollyFrontier's billion term, capital the to quarterly repurchases to quarter of In to through $X shareholders. reinstate term, the commitment regular we

[ represents this there. XX% increase months, a cash XX next to from XX% returns from ]. return the And For

implement For line, the benefits renewables as we of we are of repurchase adjusted payout returns Refinery Sinclair both the Oil. ratio target intend of capital in to XXXX committing we our Sound initiatives income. share net growth acquisitions dividends to comprised XX% and and realize and Bottom the of Puget beyond, of and substantial

to XXXX, we sustainable and of flow Inclusive In unitholder distribution per we The ratio to target leverage near to while maintain the Slide coverage repurchase support acquisition transaction again, with is the ratio target will returns. X.Xx a Sinclair ratio by unit. X.Xx quarterly repurchase Xx to a leverage of increased Longer X.Xx, term maintain of reach in below reduce this allowing generated to deleveraging HEP's. and expect goal distribution for option term, and option and a with leverage our increasing units. the units. XXXX increase our of of in coverage with Turning the beyond, XX and distributions strategy to the free maintain $X.XX intend and cash we our

unit We expect increases free the quarterly these funded and that through be to cash distribution flow. repurchases optional excess will

Mike?

Michael Jennings

Thanks. Yes.

of unanimously approved map and receipt certain conditions, road closing has Looking a presented clearance. of completion. been ahead on The companies subject transaction the Boards including we've both by Slide Directors to regulatory XX, is to of

in expect We close mid-XXXX. to

to Partners. will walk ask I Rich results the second both now quarter so for Energy and And through Holly HollyFrontier financial

Richard Voliva

our in Mike. of press Okay. this Thank you, Details earnings available morning's are releases.

of income and share share reported for to net million adjusted $XXX was per million. consolidated of quarter. diluted $X.XX $XXX attributable HollyFrontier million $X.XX EBITDA income or stockholders and per million, second net the or $XXX $XXX Reported diluted was adjusted EBITDA

visible strong refinery. and were results as by margins HollyFrontier improvements specialties West our regions, second driven the quarter results sequential the portion Refining both as as base in Back from margins, in well Mid-Continent the the strengthening Our and leads which are as in Tulsa Rack in on of well

June $X.X our approximately at second XXXX, totaled approximately $XXX million For provided billion, the quarter of quarter. build stood And million. representing in operations of cash net balance cash at the a by XX, $XXX

XXXX Refining of running XXX,XXX business, barrels our per between anticipate oil. third we crude and For of the XXX,XXX quarter in day

for reported and demand we refined of unitholders product Distributable and in supported continued markets per $XX the distribution X. last increase income million, HEP, reported within paid quarter, quarterly of $XX record per crude net August million improvement a X% cash by attributable million HEP quarter At a serve. August period on or versus we all announced unit be of on unitholders $XX $X.XX second to EBITDA same to flow unit $X.XX representing the was to XX of the year.

back thoughts. it some closing Mike hand for I'll that, with And to

Michael Jennings

those Thanks Okay. details, Rich. for

the to cash value solid. stakeholders. more benefit Slide revenues as shareholders. on and and to scale, XX, very from flow will accretion, operationally and drive and integrated With all this we today, transaction synergies and the approach cash investment with balanced Ending financially a increased Shareholders is was will believe enable communicated free which will we quarter for win. return a second of transaction The our diversified

storage customers employees, For network we the business and capitalize of will provide. combination we our for and segments. this of and will our strong confident products the with a across workforce adds Sinclair pipelines transaction together, will talented opportunities this extend I'm many partners, reach and that of And on facilities. all

open going Lauren, that, with questions. the to And for we're line you. Thank

Operator

from comes Piper question first Our Instructions] Ryan from Todd [Operator Sandler.

Ryan Todd

you the the of guys. this a just about Congratulations, talk the environment year, differently of it's of things yourselves or what's how environment going -- talk from sellers willing you the mean I now multiple Great. of how transformative view a a, maybe this, Anacortes more you Sinclair could opportunistic whether guess, the that uncertain versus kind deal, does refining strategic deal. Maybe of I position on an the view for earlier how And kind more particularly previously? driven, couple after from timing transactions could you all? you of you What has forward high-level timing in deal year? outlook can an single

Michael Jennings

major and Rocky channel, absolute add add a a through protect has downstream combining increase marketing basis on Mountain our Absolutely, to add investment utilization our improve in through to market all exceptional also months a on branded worked knits we've a to and taken past refineries, to renewables a our our and network together. Puget as shift very being high-value renewable logistics intentional Listen, quality on Sinclair reliability that of products both and this mix for presence production relative in now increase fuels Sound with and call. adding while economics the and the really states, Ryan. strategic our at redouble the feedstock increase company XX asset our efforts Thanks pretreatment, asset our in

other response us have here from business many we and This us, is built environment the that I transformative businesses now the in that in think to it exceptionally downstream differentiates for we're in.

work think going the this HF to to we've out will return forward-leaning Sinclair a we that is strategy be So place deal. support that great and capital laid alongside

to durable what and build we responsive rather asset isn't our desire I'd willing the a As on but the it market future. on sellers, is for comment that to availability, is going this in business be say pertains think to the manner your to really

Ryan Todd

mentioned to Depending earlier? the reinstate the reinstatement near-term, there follow-up dividend environment, long-term What later is slip of a the kind than dividend and returns. is drive you the of going you you've would I the an maybe on on what capital talk mean no for reinstatement Maybe metrics -- laid would midterm allow second allow a You strategy XXXX. it you Can quarter that and could there little bit the buyback? further? a of to of a out environment risk allocation. that that is about cash the

same the cash that there for of could billion maybe expected And outlook and to questions And support that buyback? XXXX the the kind the swing $X return of underlying an in on cash of way? kind how Is flow buyback. either

Richard Voliva

Rich. it's Ryan,

with respect reinstated that. point, So can than be than to we of And we're to come the your quarter it second will that back again, the markets, depending no dividend, on later optimistic XXXX. the earlier

to With will versus add dramatically and Puget renewables, in flow be XXXX. respect same next expenditures Sinclair. the expect absolutely, as capital XX you time, obviously, And lot falling to look, of can our XXXX then cash at we, between tell, the a in Sound X buyback, months to the

up shareholder. cash dramatically, So to here and flow free that generation going to is return we go to intend the

Operator

comes question Theresa from next Barclays. Chen from Our

Theresa Chen

the can cash that assumptions that these allocation just capital benchmark be free your underlie flow, terms and achieve get to the that to differentials targets? cracks, to of that EBITDA your follow I your not broad-based are also capture? question and able What happen the you'll What target. to environment last in the but has expectation assumptions on if macro up Maybe asked about just Ryan underlies target the

Richard Voliva

not I terribly They're them Rich. would call it's aspirational. not Theresa, --

dissimilar estimates consensus. internal are Our not very from

You're touch probably lower. a

just free scenario. large really, under recovery not it But And to that, of the assuming that worse. or we exotic get we're better environment a these again, So some than dramatic cash expect it we If be better. need generate to get not even really, numbers. macro in of will to amount sort to gets anything order

Michael Jennings

I an right in know, are the what healthy We despite as all business a looking gut solid Really, is take renewable be quarter business now. of to it it aspects you example, second big you well. recovered working order in laying to base targets been we've our but to well, were think as forward able the state very and doesn't if Theresa, pretty a diesel, COVID, take that the forward where out. punch from has returns a meet step isn't we're these in

Theresa Chen

Got the it. terms And just be of to in refineries acquired. X

breakdown In of provide each? can between crudes, you the percentage a of other sweet terms and WCS, range Rocky

Michael Jennings

Yes. all more Casper barrels sweet, principally and refinery of a the The day. crudes. being the we're XX,XXX XX,XXX to of Sinclair, in runs XX,XXX, on sweet Canadian remainder neighborhood the that's refinery, with a barrels heavy otherwise, XX,XXX Rocky is in day

Operator

question comes next from from Scotiabank. Paul Our Cheng

Paul Cheng

wondering, of any you provide and XXXX? mid-cycle midterm us, in compared there half marketing that mid-cycle, for expectation actual comparison some how give those this things, a number year the gave can use? you or first renewable. Just we Can Is can that to the refining, Rich, -- result maybe you tell

Richard Voliva

a at on cracks I similar of X:X assumptions. some Paul, roughly of think we've looking out historic historic barrel, cleaning... we're materials Gulf laid our really, a So But Coast IR $XX this in basis

Paul Cheng

the Gulf in work doesn't Coast here, right? But

Richard Voliva

Pardon, Paul?

Paul Cheng

No, Coast matter in I It doesn't here. is the Mountain. Gulf Rocky on more really say really the

Richard Voliva

Right.

mid-cycle Gulf Obviously, Gulf that Coast, sets market the of day, premiums end that you're So help? assume on. crude that historic we the marginal to but the similar numbers the trade those across have differentials barrel. we Does product Paul, fleet we to assume the I history. the And mentioned, at to believe be Coast do to our those advantages at that we going

Paul Cheng

marketing on the renewable? about the How and

Richard Voliva

business marketing, that do publicly-traded in you looks now very similar to respect out what see there to So wholesale. with this companies the are that Paul,

in well, You a to cards very money wholesale typically and stable brand over see license credit gallon There's -- few be branding of time. as pennies made a margin. some

to moving your things it is today in With high-grade broader What about into Mike really pretreatment. that we and feeds, economics diesel. turn I to the discounted to dramatically, are renewable soybean think renewables, obviously, ability question, in the much respect see take not to the oil are around process your so and made ability point

We end expect why and over that's that day. feedstock that'll time, of that, on move having we're the of kind the around consistent at flexibility

Paul Cheng

second marketing share can And Okay. you that, generates? is with that much business how the us the RIN question

Richard Voliva

basically, DX got. basis are long or They fuels via business balanced renewable Sinclair long more is less Paul, they've and So that on DX RINs. RINs the the

So pro forma transaction...

Paul Cheng

that Can us is much how you actually tell in January?

Richard Voliva

think basically HollyFrontier Well, is HF or better Paul, the balanced. excuse should I I transaction, Sinclair forma, will probably me, say, here, be answer pro the

Paul Cheng

you that's renewable balanced. X your your own you're say including X diesel plant, renewable And -- when right,

Richard Voliva

Yes.

Paul Cheng

say DX when a I in on And you balanced individually, balanced, total on let's and mean balanced, say, your DX? or DX and RIN you're individually

Richard Voliva

on Paul. RINs, We'll be our balanced total

Paul Cheng

specifically? DX, about how And

Richard Voliva

So long directionally, DX aggregate. in we'll imbalanced DX be short and and

Operator

have Paul We Sankey from Research. Sankey now question from a

Paul Sankey

Just EBITDA could question. on the if continue I

So crack Coast, your there and XX% saying it you we on you've about talked of HFC, just just you the company? want that for for mid-cycle mid-cycle would about much this about $X some Can travel and get you based $X.X feels sort the said like if given billion that before you elements report below refining billion combined the $XX Gulf what of is that run would EBITDA where the that the on that to of only made be be EBITDA of we're on distance a to we through assumption. about how you're

Richard Voliva

of $X flagged this we quarter, legacy $XXX refining for I HollyFrontier, billion In million. about Paul, printed So we right? EBITDA look, think,

your offset. point, little to So a we're just

get little jet just us market, home. in if more probably that directionally, bridges think a fuel improvement I we

Paul Sankey

really thinking was I Yes. about the more Sinclair breakdown.

Richard Voliva

Well, similar, to it's be Paul. going

and assumptions legacy, where HollyFrontier day, these across the these are Puget you of end Sinclair. all the at apples-to-apples think add I Sound together,

Michael Jennings

Paul, seeing that, Beyond what is... you're think I

Paul Sankey

guess go -- ahead. I

Michael Jennings

Rockies you're really seeing in to couple in last is mid-cycle earnings going and was the the years of say of margins. ahead what I

that the the in extent so continues, puts And wind to that sales.

Paul Sankey

Great.

that Okay. over you with project one budget. you've as sit What And you some can as you in much that -- and behind with well had you've taking you're the it. your is some for have bigger diesel that tough years, able give question And right had then to on that are thing important over criticisms to you far but #X guys conviction issues is and operational to efficiently? us I footprint be the a a renewable it's the and the most time tough ask a thing, to which going do you way be to that's assets know and run I answer, the for

Timothy Go

Paul, it's is tough question. This Tim. a

Let discipline But to want on this operating and capability, we've me We've X implementing in. grow last to see really operating X.X chime years others focused really, start and programs. it. try to a if year been build been the with our trying

process leadership. our we've that operational We've both overall an some the system we've resources out. integrity, excellence bringing help additional We've that got side, operations management up in management the on shore safety process side, mechanical [indiscernible] implemented. turnaround existing have capability on laid We a team to been

foundation the in assets. see able you're with Sound Sinclair improve here last and I labor few to on Puget years the refining of serve it's internal think the that last to even to for this just to some fruits to update. the strengthen of be not quarterly us spent which We just with starting to the earnings build as capability But going our operations, trying

familiarity thing We understand One understand operating will I markets. We environment crude Rockies. you markets. the we've the is that. in operating We with got for tell understand the product the

execute time, scheduled the of fourth plenty time have in give which transaction and integrate quarter, us Puget mind will Keep we're of Sinclair, close this to is integration. to mid-'XX. which Sound to the the to in plenty acquisition plan and continue in of to here anticipated anticipating close plan We believe, we or

think able the and have this we have build time, integrate think we resources So we be we transaction. to and to

Thomas Creery

this Tom Paul, is Creery...

Paul Sankey

Yes, sorry.

Thomas Creery

ahead. go Sorry,

Paul Sankey

No, you go.

Thomas Creery

to Creery in renewables. I say, of was going Tom just is this terms

heavily last really schedule long last items schedule. a are the been All has have changed. where We're critical ordered looks at we on path update items. Just lead that I quick as into the locations, going on as plants all this No well shortages in the X And reported. being we talked still X track well. construction phase the at of call. good and at anything manpower We're time. last both since the been like as Artesia. PTU on track Their terms Nothing are point RDU say, or in the are still in we Things as cost have earnings else.

Michael Jennings

of Yes, would it. diesel, the think to sometimes highlight you these them Paul, laid about delivered. our renewable With it's can the is it. And Tom's execution we've on here on and from add projects, to I mean excited and that pizza I and we're we out. got we're a we that, when particularly took respect schedule nearing critical, really budget we end a But to time bring absolutely big project, during get hard according a

a in like spot there. feel good we we're So

Paul Sankey

Yes, statement result point way -- operating well now? can this feels result would you it at the say HollyFrontier you running and to you'd want like Is the level. this morning's everything right and are it make? that things Is a

Thomas Creery

Absolutely.

Michael Jennings

Yes.

Operator

JPMorgan. Phil question We now from have Gresh a from

Phil M. Gresh

the think, on side refining operating. talking is were the that You Sinclair EBITDA, you

does have ahead a right pretreatment you the performance it how diesel that business in characterize unit not said renewable I mid-cycle. given would I was the now, you think currently? wondering of

And to try could model there we EBITDA $XXX some we million then through kind you the this. that could of to walk think of if of about your assumptions get to as

Richard Voliva

Rich. it's Phil,

their a thing right But last months. not the before to here have the to they given for be in and a a So moment, and close. just that been they're given again, an completed that doing tough little up do unit pretreatment it's expect running of XX plant, they investing pretreatment expansion at unit the X we

essential we've So that's made the assumptions to here. think I

tax it in Blender's get time we DX of long expecting out we're longer we we've be over be then somewhat forward, LCFS do expect But XXXX. north assumed. to to credit, continue expect higher will $X probably than phased RINs Going to what now credits the extended expect is and run.

Phil M. Gresh

And rough PTU? do mix you have a post for feedstock

Richard Voliva

CI There little versus on bean maybe higher XX-XX, will roughly oil. probably high-grade be low feed a

Phil M. Gresh

Okay.

of million does renewables so or not the are amount credit? $XXX you of tax include does EBITDA, that saying And some blender's

Richard Voliva

It does yes. amount credit, of some tax include blender's

Phil M. Gresh

and be And on looks to of Rich, of flow -- numbers cash a dilutive I'm okay. share. stand-alone little Okay, on free bit running then, just flow free share kind per it pro Holly the forma, just cash per like versus

So you valuation. how stand-alone general, the with Sinclair you just But my Obviously, do I'm if guess has mix the just paid? Holly. in agree than And comment? a different valuation think about think I about you curious how

Richard Voliva

now, synergies year, flow as Phil, free will we across time be over cash tune frankly, earnings it, that metrics, share increase come cash flow that mid-single dramatically per share, call expect, those in. share actually, accretive will first look, per in the and digits, all So per the and of to

the So metrics at. expecting now of conventional some substantial look we're across kind all accretion you would

Operator

Manav question Crédit Gupta next comes from Our Suisse. from

Manav Gupta

out-earning we just if your and you diversified Rich look bigger XQ more right, earnings, Mike, are competitors. so competitors at and the

a I is if it massive there's only XX. you basis, a your PE think in your right? price, stock so And on dislocation about stock mean

Your are and XX bigger XX. peers

And make lot take next there your execution could Again, actually you just renewable change stand-alone out, on actually understand, There's if to doing is this all you're nicely working be to risk an things, And transformation, Puget from out which when that And much about very you'll for works EBITDA so basis? push year, everything for to sure well Sinclair. diesel right. of are you. but perspective, things and billion are trying so $X.X so why here. a I'm go a have Sound,

Michael Jennings

generation. really compliance of Yes. wholesale, It's going And believe the a customers we help value good environment business gross and that with branded serving quarter controlling conservative good would and integration both with say downstream RFS into us Manav. What basis a is on margin a good point, those branded and I looking the see the more out, we is that chain doesn't at foresee, to comprise strategy. that the

move. So that smart a we think it's

an see to have finally, adding business also the experience gain expand and plants. sets Mountains opportunity high optimize important our is geography diesel us thing the to a in We we that synergies given try Rocky in do. of the and to across and as that exposure addition And renewable as to X smart earnings

well So for X and enough build the not but we're alone, forward, to we this for XX next quarters. leave X I could the years guess trying

Manav Gupta

oil a And is see discounts still some CapEx RBD bean on -- same, design again, lower-quality quality a [ lower escalation (sic) during the that the to oil (sic) $X.XX a I'm your to of because the that make would was the is be soya more is was did So [ up That's you because second like actually fair the ]? positive that the your RBD the made it's went reason was soya last RDB renewable in guidance diesel your use did but that change of understand, renewable one allow went one. lot you one to quarter. ]? pretty trying My that reasons versus last up And diesel question CapEx also process somewhere trading cases, quarter? there side should RDB actually CapEx bean that

Thomas Creery

excellent also went for do to at scope with Artesia Refinery, going CI changes some Creery. repurposed you PTU It's us Yes, well. to make is along we point. we Manav, Tom and our feedstock bring as predominantly terms of feedstocks, works as Cheyenne did a refinery. low lot at it well the up Tallo the accommodate in an flexibility, That

flexibility it think well play going of to reduces that the a out us maximum And value and RBD we to able be a oil. we amount great forward dependence or it's soybean give refined our variety So of as run get we'll to upon up. feedstocks move

Manav Gupta

the great the forward on look quarter and Congrats to deal.

Operator

from We from now have question Dounis the Spiro Suisse. Crédit

Spiro Dounis

opportunities $XX legacy you And could, versus about if more First these strategy Can assets provide little bit some And $XX synergies? and more integration your that why expand EBITDA assets HEP. any million for contemplates million of Rich, there? on talk synergy assets maybe some of question, the just the on for to these you HEP level? at growth if a curious opportunities just for the

Richard Voliva

it's as and based fit. a both in operate, Look, a of assets, cultural the steady very refinery Sure, sense we sense Spiro. being way around customers a of well complementary set in culture the as of

some really excited new welcome to we're So colleagues here.

I we'll be think some -- we'll growth, organic not to on able historically, I particularly to I level that side. crude where point had look, your real scale markets a the corporate in and find about to think opportunities think gathering we're going achieve at we've certain have

able year. little going So of forward the To question, grow number to a to on few side. a a assume we're be a going not really It's does your huge to here. it HEP forward be dollars synergy, million looking bit

Spiro Dounis

a it. Rich. Got That's couple,

talk that reading maybe reaching mechanics much, Second Sound could downs of sure ratio contemplated how drop a at outlook around double-digit want reduction The just Puget you guess, healthy seems asset growth. are question I I that once didn't the then to capital of if the in goal. imply that of miss distribution outlook, allocation to And right. for I coverage about sort all? any, HEP. make again if And in pretty if kind just that in anything just

Richard Voliva

Yes.

on correct So where you rate are a you growth your is math in basis. getting

range. here here consistent worth what It's phase will in I highlighting is in the be $X probably embedded probably with side, maintenance the Puget transportation think Sinclair that. I think capital change. we million-ish any very it'll is today It's see that. step There don't at into not a HEP you Sound low. on

flow share flow through cash cash going EBITDA the that So and flow. is per right to distributable

Operator

America. Bank question have now Legate We of a from Doug from

Kaleinoheaokealaula Akamine

This on is for Kalei Doug.

couple from of Just a questions me.

argue wondering think don't if building strategic anyone in assets. logic scale I the on firstly, But of issues of Rockies. see So would concentration the FTC any the guys you

Michael Jennings

a don't we for marketers, it expect and as see and to transaction we we We serve, that employees this believe FTC. thoroughly by communities transaction have our the customers, good the it's reviewed No, reducing competition.

we So at are this that's kind point. of where

Kaleinoheaokealaula Akamine

Got it.

operation of I'm how robust. just you're purchasing you on overlap. the being It's us breakdown And question, of the the fairly concentration the Second and conservative wondering can given power the remind synergy?

Richard Voliva

Sure.

you give little a me there, Kalei. detail Let more

million is is side, well of plenty side. margin gross the way scale By a space sourcing in the lower-cost on we the our renewable using it deal $XX of space. see as in really, about the again, transportation, renewable obviously example, as which opportunity consolidate feeds, that big So in ability to

the opportunities procurement. again, renewables. we'll here a In also see opportunity in There's expense operating tremendous some in side,

in can of has we're years, and realize with group. opportunities comfortable we'll value Our million $XX And mentioned, that there. we that obtain us to lot X delivered procurement last from the again, organization to a real some able be Sinclair G&A, as

rate So these run to comfortable like synergies feel very us.

Kaleinoheaokealaula Akamine

sneak one, in operating Are last it. considerations any And Sinclair? can for net I Got tax from just there if in. it asset launches

Richard Voliva

No.

Operator

Blum Our Michael next Wells from comes Fargo. question from

Michael Blum

Just X any follow-ups with One, or question. Sinclair? first there maintenance the on from CapEx acquired assets HEP. is growth the That's associated

Richard Voliva

joint to count the be Flats So well Michael, growth capital, particularly with There I be venture, that's these $X capital is and for area. assets. in maintenance growth by think a there's going rig Power year opportunity roughly that to million in of the driven going but

Michael Blum

simultaneously? then growth plan Is towards X.X things to Xx sequence just get sort on clarify of leverage going and to leverage. And that be distribution pushing Okay. the and those do will of coverage? to the to on from anticipate Or X.X the first then to happen start Great. you

Richard Voliva

Michael. stair these a work So I I happen change don't think our this. want things simultaneously, step Again, expect We way here. into to will

Operator

have Tonet JPMorgan. a Jeremy question from from now We

Jeremy Tonet

wanted HEP looks more the transaction the to here to that, fairly could perspective achieving and maybe similar goes on in transaction regards this to if up maybe just at the the timing what -- follow on wondering of EBITDA with dive Just accretion on the terms level because you from into accretion HEP trade accretion. level bit so HEP and in that a little where

Richard Voliva

Jeremy. Yes,

correct. directionally, So you're

leverage the low which side, with think maintenance earlier, be we'll what HEP mentioned about talking So these I using at marginally assets. consistent in helps. more we're capital I very And

will a this basis. flow on flow really cash through per So share

Jeremy Tonet

Got it.

is here, about should So we it. think just really it's how leverage

Richard Voliva

to And again, we're add G&A. going not any

So some we'll get leverage operating there.

Operator

Cowen. Jason from next Gabelman Our from comes question

Jason Gabelman

years. on debt ask to the once and is to outlook couple you the want just understanding that target Can the get just the what to? I you acquisition closes, first for wanted buyback number where next HFC, provide of debt-to-EBITDA

on that. the the offset the the issued is shares next maybe buyback years further Just color of time, to or couple over intention out? on And of some period any

the deal. just on to strategic going rationale back And then the

business see following a business. be HFC more you place in You Or years? Sinclair durable think mentioned is wanted? Sinclair you create the to wanted that durable the post a do do else to need acquisition, to anything X to the the position next a get now Do to over XX in you you

Michael Jennings

and This But optimize have. the excited got is lot answer on then of satisfied We've our time run and really the cash what we're for is get basically to, integrate about We've do will third a launchpad. Jason, answer on and going business to short it as and need obviously to mind, period first, and be our we the Rich the we're it emphasized returns. critical, to I'll being and a question model no. leverage, very hit comes as we metrics execution Do it plate. else it okay? there? financial The together focus next anything

Richard Voliva

respect I to clearly an sheet. investment-grade down on of We we Jason, right we a that whittling the to target closing do do around within to consolidated wouldn't going balance then have well expect say your range leverage and per net And financial this forward, debt X.Xx foresee with targets, questions, EBITDA. the be expect se.

in to expect the in absolutely. be over be shareholders the expect We on that And being with selling. your do respect market Oil market. would to participate time, and look Sinclair when the able to yes, to sellers will We question forward they're repurchases, we

Operator

Roger Read from Fargo. Wells from comes question next Our

Roger Read

that to what a back on the are various catch question I for couple WCS? on getting LLSTI TI and guess, Brent to wanted kind of or the Just crude the your predominantly, up mid-cycle, expectations the One, diffs items. of

my side. then other And question CapEx on is the

there? segments leads in is company million at included just level? consolidated Any of renewable Or And all by refining, and maintenance look business. what of kind the a gave, You $XXX a breakdown the is believe, we CapEx. that as I

Richard Voliva

so $X, of future. there TI Midland in these a a crude the embedded crude are prices we that in And mid-teens. $X to for of with with WCS what we've Really, foreseeable shown assumptions consistent Roger, on barrel. low no diff diff the differential kind previously. Brent is differential expect the

in mid-cycle -- With year it's that that freely there a again, capital is is respect spending. you it's And no mid-cycle see. a actual number capital maintenance to number, CapEx, that admitting

the As in share is you can imagine, and of the refineries turnaround. in is lion's that

be will that there So volatility [indiscernible]. around

Roger Read

other one modeling-type And of question. then Okay. kind

of it call diesel look a we your at you renewable sorry, I'm the well, mid-cycle, extension mentioned you was -- possible run and the of but for of BTC kind mentioned mentioned, assumptions As time. Just on your you assuming the the are a period a analysis. $X.XX Are -- What the assuming a for Or you stays gallon? of you're math. $X.XX? sort using it curious you what

Thomas Creery

X. the we to at X it the that absence of ratchet -- modeled XX, analysis XX and XX, any is information Tom way That's this at unchanged point expected -- XXXX the next at we Creery. BTC used years continue firm given our this Well, on in we What we in then down in over that and then through time.

what So we used. that's

Roger Read

using. were No, you that's what fine with me. I'm curious just

Operator

have now We follow-up Scotiabank. Paul Cheng from question a from

Paul Cheng

is Maybe you the lockup? long it. how say Did I missed

Richard Voliva

mark. quarter XX-month closing, going Paul, there'll over So in a quarter through be a will XX-month the mark, the the worked be then period. and Basically, the phases be first a is mark to and XX-month the at of lockup X-month stock unlocked unlocked

Paul Cheng

Okay.

yes, unlocked. So months X XX% every

Richard Voliva

Every X so. months or

Paul Cheng

months. X Every Okay.

So XX% every months? X unlocked

Richard Voliva

a X shorter and the XX close months So months at one little months. at is last at then and XX

Paul Cheng

see. I

Okay.

Sorry.

months, X months all XX and XX then months, right. So

that for brand million. million. more it's million, only be maybe the think, I with it's the $XX CapEx million. Rich, Probably On on its you since $XX million, logistic is $X Page the probably Sinclair of asset Renewable than wholesale, $XX -- can't XX high. that so marketing marketing not million, mentioned on And a $XXX $X

really million high. to something seems range. my $XXX to refining done be seems math $XXX the it So Is That about wrong? million suggest back may have that out --

Richard Voliva

be to and be honest, higher we've the be you're than conservative No, are you're margin, I capital saying. than a yes, been on little Paul, pretty I probably the the little renewals capital refining the numbers saying, probably to to side. with marketing think a think think, are the going in I higher going But

Paul Cheng

day because capacity. and barrels mean is I Yes, total that XXX,XXX XX,XXX in day a per barrels

So should have million the or there thought CapEx one would than, so. for $XX maintenance say, more be not

So that. I'm a bit surprised

that that, think number So could you be potentially conservative?

Richard Voliva

Yes.

Michael Jennings

Yes. ensure Paul, laser-focused we be we that want and as our are to we you have planning modeling and our heard execution and from results. to to asset reliability, Tim, deliver sufficient on those able capital in

it's yes, achieve until in So intentional help the across to But reliability do it's going conservative. we to now, system. for really to to what we're understand get want higher about and more

Paul Cheng

something it's such to totally comparing much of want make fine. in the the as their to to U.S. sure higher per daily not other maintenance just that be X of barrel will capacity assets CapEx a on that's I that Yes, those and facilities related speculations

that's... So

Michael Jennings

we ensure Paul. that can fair our no. a That's question, promises. answer fair That's on our is to question, and deliver the It's own conservatism a

Timothy Go

a capital way Yes. would just I And and that I just is in their this -- in $X X their in in modernize several last fact, Paul, has as billion Sinclair Tim. the chime improve completed would investing infrastructure. over just years refineries to

taking So that are facilities we're not on these here. undercapitalized

Paul Cheng

tie-up X Oh, pending need there they And should regulation that I next and over in those years? the or say. outstanding spend facilities emission to meaningful, X environmental spending is any

Michael Jennings

exceed continues environmental environmental normal a and would and to spending. try to and improve as our regulations normal our grow, we It's spending I desire so emissions. say footprint reduce to The those it's

Operator

Our comes Mehta Goldman Sachs. from Neil question next from

Carly Davenport

Neil. on This for Carly is

strong the robust on a quarter. the quarter. to Just were be continue quick of one to margins here, HFLSP in kind and history Base results relative oil

you're views seeing half So the time? oil what about on can base in margins back around base oil real in your just supply/demand just you and talk the

Bruce Lerner

Sure. speaking. This Bruce is

balance the year. way continuing So the it the see environment we is through of the

as remains in little global particularly indicates oil tight, pretty basis more but And a base in X well Group on a forecast is Two forward still supply, Group and domestic general, Our balanced, that. favorable. as X.

for continuation look the of would we So same we've seeing. that metrics been

Carly Davenport

follow-up returns capital Great. just And helpful. That's a the around then point.

the for years of has special Holly dividends known So a and capital. been return strong over

you any and you in would buybacks. dividend So time returns would just of there the the over regular that But other mentioned reinstatement curious if consider means be capital addition.

Richard Voliva

variable. X cash the the and treat volatility stable going business more buyback but We source have return have Obviously, would be we'll at forward, as the still as those really No. stable capital focus we'll we'll the and look on. the a of in flows. Carly, dividend our

Operator

further no There are questions.

So over you now for hand any Craig closing I to back will remarks.

Michael Jennings

has time we're Obviously, petroleum take willing downstream think business we're Thanks country, strategic and which step you centered transformative built transaction. the around so thank that enough most into We and brand, for our it's much, all incredibly about name. as and we in an the to integrated really joining been the Lauren, to through DINO one important recognizable company its of excited this us. brands for

Sinclair has space. that this The for incredibly we has So on is going that built also in to have to add diesel renewable business going is what and us. big

we crude that customers understand, well and system. it. fit finally, in is One And really to thing. careers, and supply to for the all and our product our company the doing investors and our second employees markets to forward enjoy within that's from is looking petroleum earnings people for those the do an cash to of opportunity engine really their going comes refining what every a day to is drive of together right It's this we're returns stable and And things. have productive on long to X high intent and

so your look talking So to your support to today, participation you forward and much you next and we'll for thank quarter.

Operator

Thank Please wonderful disconnect day. you. your have conference lines, call. today's and a This concludes

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