DINO - Earnings call 4 2021 | HF Sinclair Corporation

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Craig Biery

Thank you, Julie. Good morning, everyone, and welcome to HollyFrontier Corporation's Fourth Quarter 2021 Earnings Call. This morning, we issued a press release announcing results for the quarter ending December 31, 2021.

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

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

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

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

Michael Jennings

Thanks, a momentous Good year everyone. Craig. XXXX morning, for was HollyFrontier.

injury recognize safety. contractor and for was and I challenges our a COVID-XX continuing workforce First HollyFrontier. for record for reportable their the our Despite want rate the commitment to to employee of foremost, low the employees pandemic,

by solid We shareholders strategic acquisition in renewables enhance to closed over on led and Second, significant, the advanced our term. investments both capital initiatives plans the we people. acquire are Lubricants results, for our our terms Sound record in of These delivered value these segment, the announced combination of to projects, our earnings Puget will financial long our believe and Sinclair.

committed these initiatives taken has team Our head-on to and strategic remain execution.

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

was margin last transportation compared as path for This $XXX an adjusted pre-pandemic to the period negative compared XXX% or due to loss increase same loss million, the XXXX. million net the period of to per on higher of Refining produced of adjusted $X.XX items, consolidated segment XXXX of fourth we share and by million fourth to year. versus XXXX. The strong refinery increase to million the EBITDA a fuels the EBITDA increase was for for continue in per for million million compared demand to these quarter reported fourth the margins was net levels. driven diluted $X same gross $X.XX quarter period Adjusted $X.XX recovery per $XX Excluding $XXX quarter of $XX barrel, was diluted share product for the or $XXX

quarter the day guidance barrels Fourth due approximately XXX,XXX crude was XXX,XXX and day, and per maintenance quarter. our throughput planned unplanned heavy barrels XXX,XXX downtime below refinery during per to weather-related initial to of

$XX Our $XX impairment EBITDA business goodwill compared Specialty Lubricants before the fourth million quarter XXXX. of $XX the charge reported million of of Products and which in is to million,

For the led full most of year by EBITDA, Lubricants $XXX and in the million record Specialties XXXX, results of for base achieved oils margins adjusted our strong throughout year. business financial

$XX quarter to Holly million reported the $XX the of last adjusted quarter Energy Partners fourth year. million compared of for in fourth EBITDA

over Despite with ratio in continued Refinery, financial quarter delivered the and HEP's million leverage planned of ended deleveraging bringing to of maintenance year and distribution and strong and repaying XXXX its in another the turnaround HEP its $XX performance HEP maintained a unplanned at results. and HollyFrontier's strategy, X.Xx coverage operational X.Xx. Navajo debt

oil. at Looking Puget Navajo from XXX,XXX impact We within between pandemic. per Refinery, economy and run XXX,XXX as the Refining expect we the first will of to as quarter. recovers day weather-related continue downtime the ahead, Refinery quarter well Refinery Cross of of segment, XXXX, our crude at believe first transportation maintenance global Woods the at barrels the to the guidance for Sound This throughout a the demand fuels for that as activities reflects strengthen turnaround scheduled

Back. XXXX, for in segment, Rack a improvement mix toward Forward quarter continued first Products we the seasonal of Rack Specialty shift and from and expect in Lubricants our Within earnings

the through base expect continues and We oil continue recover. as decline prices base to to oil supply first to quarter margins

In basis. and greater, coverage $X.XX capital to XXXX, to an maintaining distributable remains of per at of cash or unit cash operating its with their X.Xx committed to flow $X.XX X.Xx. distribution distributions annualized reducing within X.Xx and on expects all HEP on the leverage HEP expenditures funding to flow quarterly distribution constant hold goal strategy focused or

In our product. operational the RDU pleased Renewables segment, X,XXX produce on-spec out are to now announce day aligning the that per is unit fully we to we're Cheyenne barrel and

to quarter The ability to barrels with second RDU will day of the unit operational we sourcing in own feedstock and XX,XXX expected is approximately per to Once the pretreatment Artesia of unit. pretreatment through XXXX Artesia the expected completed be our completed, have and in quarter first diesel, advantaged is produce the be 'XX. flexibility of renewable

ended XXXX foundation continued value. financial bright growth for a and prospects We robust and with

As acquisition toward business on we the the a to integration of up after serve to as closing work operations we the look are start thing, be Sinclair one Execution our and up will closing. XXXX, diesel renewable focused ramp we and execution. critical subsequent economy, recovering

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

Richard Voliva

you, Thank Mike.

table few $XX diesel can of previously Pretax of Refinery the found press a $X items by negatively the to conversion or market of cost acquisition inventory $X production million, these release. be impacted fourth quarter earnings in included lower to our integration were of million. items. As million related Cheyenne unusual mentioned, charges valuation A a and renewable adjustment costs of

Net consumption. which for maintenance, unplanned working headwinds, reduced and turnaround largest operations capital $XXX million of planned million which in included and quarter, throughputs, $XXX spending of fourth was single $XX cash refinery the both working capital of used totaled the million driver the

million We this take to us expect refinery will fully recover. $XXX as this and to into the operations working capital normalize, recover quarter second million of $XXX to

for year stand-alone capital the $XXX quarter the totaled million $XXX million expenditures HollyFrontier's full and for XXXX.

$X.X total debt-to-cap credit XX, our a As $X.XX billion cash XXXX, tax XX, from with in Act. undrawn million stood approximately December balance we XXXX recovering comprised XX% in $X.XX debt-to-cap billion had We along facility. a of December million, $XXX outstanding, billion of cash at our of liquidity debt ratio with net unsecured anticipate At of a the under loss stand-alone $XX CARES the and XX%. benefit carryback potential of of ratio

HFC HEP partner distributions XX% over a million. representing limited HEP's of billion units, XX.X of during units last received owns market HollyFrontier of value $XX as fourth the close. $X and totaled quarter LP million by night's HEP

we million With expect and spending at to respect for renewables; $XX $XX million in to turnaround in to Specialties in $XXX to million maintenance in million $XXX million capital expansion spending and $XX HollyFrontier between and spend continue million $XX XXXX, we million million to Lubes to $XXX $XX to expect $XX turnarounds. million for million $XXX in $XX to processing million to unit million capital capital, HollyFrontier $XXX for At catalysts. refinery $XX million to million HEP, $X Refining;

in Beginning a the at renewable report Artesia diesel and first facilities Cheyenne to pretreatment of units segment HollyFrontier quarter new Renewable will that well XXXX, related Artesia information as the the contain the as financial will all unit.

And questions. with take we are that, ready to

Theresa Chen

can driving first, call in the guess, terms you Sinclair FTC? the are if HEP just I on yesterday, what's that? delay closing, you your on the in deal, over progress can the about of we Rich, comments of where go modest with And the given talk working

Michael Jennings

Yes. Theresa, this is Mike.

We're conditions. to satisfy is factor We working and with and obviously principal are with gating with The us collaboratively clearance. obtain closing the Sinclair time FTC, this to cooperating closely closely all FTC at is working that Sinclair the process. the

to beyond in the we And expect as that. have We closing previously. soon close transaction point, can. at as we've still we update said as this expect don't XXXX, We

Theresa Chen

Puget. to Got then maybe it. turning And

talk the quarter in crude of in TMX volatility does you the that just downtime the the Given of asset first fourth for the still for further and that, change reflected your coming economics that and from the here about in outlook in quarter, the online, general? if area your outlook can some postponement delay

Timothy Go

Yes, is Lisa ]. Go. [ This Tim (sic) Theresa

a Refinery pipeline We that. maintenance the but Puget outlook a were we some unplanned take that that me and basically XX X impacted carries occurred remarks. basically of fourth first days first freezing had Sound days change still Let the profitability as you temperatures impacted heard. not under the the X then in occurred was event may freeze operation shot crude that followed that does into the as XX owned mentioned his Mike got to for for by quarter, record guys have our prepared that of the by flooding quarter, Puget weeks that It Sound the it, in event disappointed it refinery. at in

of of at all $XXX conditions that none Puget Sound. that our events, the They're of or we mid-cycle has think the are of million mid-cycle for to still mid-cycle view EBITDA in long-term still a we rest We that that believe million. it nothing But And year. $XXX changes -- above isolated changes.

think still we basis, annualized deliver an on that Puget at look you will if So Sound that that.

existing crude runs lines with we as long-term we've going The our our the the to TMX, delayed on our waters a And believe dry us far TMPL providing impact that is got As through on the in of large that is bring dock. not portion based delay over we the rest today. outlook PSR.

Paul Cheng

of first past the least give first days the have months an Sound, to also that And XX been Can frankly, talking billion update, it the ownership. would That's quarter, your condition? in a to return up think days in capital the operation or $X living after shareholders, call you is Puget has I Rich, also And delayed. XX to quite you the market up been being question. at first about XXX Sinclair there not expectations, I given say. during

Richard Voliva

Paul. Sure,

a expect time the Sinclair Puget in consistent to ratio reinstate expect of any then that So both with in there's to dividend a appropriate I business plans per capital repurchase ours. to And the don't and think we announced level. the of return then quarter the and both the our share Sound like the of May 'XX. of And repurchase long $X $X.XX term, at payout billion return we we acquisition, what inclusive for XX% we dividends first think combination and is cash at into in of dividend change in total, the

Paul Cheng

is Sinclair previously may delay look you midyear, by the that's though but like to even I the -- because it likely. that able So be close Sinclair could doesn't be think expectation

so look return? if And capital XXXX, you at way that's change beyond does the delayed how the that further

Richard Voliva

it don't I think Paul, No, does.

Paul Cheng

understand issue? you plus. never happened Mountain least Okay. years have shut in can Can back then question. least have temperature, a quarter, down. what And which, last you Puget Fourth operating at go understand, we the And I second sub-zero at Sound from XX into Trans we the

you downtime? to to first you that plan But And that, causing perhaps into what coker the that in what's operation better? the I -- in Can problem you mean, you January hydrocracker the at north game quarter maybe. the still end or had tell is the us be make

talked you about remarks, And prepared frankly, execution. Mike, quite in your

every set is past think the has periodically the talked has important priority been it unfortunately, most like company X getting for For of about ] years, by But I a execution the year, [ the seems company. issues. CEO the

And so it get you confidence what this gives that time you the will right?

Michael Jennings

That's a Paul. loaded question, Thanks.

issue Puget remaining starting and coker point, major Sound a weather-induced, effectively pertains the following As compressor the the to and that needed the was weather. maintenance damage issue in a by unit

it Tim, So to this you take from there? that if is, point, want to

Timothy Go

Yes.

me Let this, back been then to that, that Paul, tell it and over in, jump can I issue Mike. I'll on has you But turn resolved.

quarter, Puget of the has the it Puget and Sound first full we at quarter. into carry has process Sound. now the issue the when been so returning rates in impacted resolved first to say are that But will we And it

Michael Jennings

guess of I downtime that, freedom of are where during pretty we operate degrees refineries, the And unit a inland limited. network beyond

And it, network. matter the coastal so context operational in than that a more get that results plants among are perhaps we

in have on have this the forward put the leave be to is call, on future so I into working a the And And I fourth affected on toward But I'll improvement. we better. asset I carry ground priority we issues, results. But first. we've to we told at it, And they think issues so operational hard. what the strategies and will certainly in had effectively, that. results quarter think the you that obviously have we're And our us roll going say proof be we it than high more people

Operator

Gresh from Your next coming from Phil question JPMorgan. is

Phil M. Gresh

this First half the tailwinds. just about one, you you the in of capital expect mentioned could You balances progress cash how talk Rich, first working to year? the

to cash those the in 'XX. think levels the point tax of would at then back about to mentioned some allow dividend trying just cash for You reinstatement. that million getting I'm benefit minimum $XXX

Richard Voliva

Phil. Sure,

in So quarter. look, hard obviously, to we're have going a Take first this pieces.

to second the see on the Renewables expect line, of better a as cash, half we through expect cash We to a the starting We quarter, refinery the of in second earnings with half, be performance things cash really not income generated first going delivering a the lot lot see well statement, we're generate ramp will as this our clearly working from of capital. to there. as clearly in recovery Obviously, year. which significantly up both

So dividend that comfort second around gives the the in us quarter.

on extremely the at The this be is To frustrated the to office back refund, still your honest. we in and speed question government that. their of reflects work are tax not point,

So working it's I to to all X not back control, we about have be so. our I this this We'd money -- honest. are obviously months diligently issue. It's in can't have. expected ago,

around accumulate start point, dividend your comfort that we'd that So when second in us number expect particular. to showing cash really really quarter that gives is we'll seeing start and to

Phil M. Gresh

correct that target the still minimum $XXX would million? saying Am cash I the in be

Richard Voliva

Yes.

good I a target. think that's

I think in work we're number close liquidity through remain. seek and some more balance expanding of target that's cash expanded still We an $XXX a Sinclair, this good company. doing an probably But expect will we that million as think would I now, as we'll integrate revolver.

Phil M. Gresh

Okay.

towards follow-up and you the startup comments X take costs positive you your that the things on don't first you through of should almost just renewable said quarter, that on that guess, much would would there we expenses that, diesel, now start-up trending at that half. first we're that said I are make quarter, expect with time? Or this would of as mean, that you're things some start-up I in just with thinking a the you look months Okay. But EBITDA? contribution My be we like first say be and some and

Richard Voliva

a while. No, to I little going think it's take

very probably start these and be I'd into ask to negative units I'll honest. EBITDA up. careful, to we've we Obviously, on second quarter, first others expect being chime the in quarter, Tom small have issues. major So in seen the We're how

prudent them So this babying years. But have way earnings to we're we a power bit, will. next the the that's in you several if little approach that we think the so

Thomas Creery

Yes, this Phil, Tom. is

Richard's parrot new are purpose. slow These units on somewhat are to we to comments, going Just us.

do our goal from and the and slow. is one something time, Although we us, going understand want we're it right, process we refinery for do want this operations, hydrotreating new We so to still it to that's here.

no as we new get of to As to up, at business, can have we in renewable you up look to volumes we're we can virtually the in diesel, we're customers. tanks appreciate, sales working going a build place have going start entertaining before that to stock have even to

though generate So extend time to the until that extend of does that going period we're it's some -- can even going we it's to and revenue. take time running,

be a So process. to going it's slow

Phil M. Gresh

Got in have start-up? it. Sinclair Sinclair And pretreatment? Where does their is their pretreatment

Thomas Creery

this third is this public that knowledge, quarter the To of and between of second is our the sometime looking for year and they're best just information, start-up.

Operator

coming Read Fargo. Roger from question is Your Wells next from

Roger Read

security just deeper at seen of careful you want running running kind I process -- start-up problems across in in the to a renewable the comfort? the are look I getting a mean you others will Where the And you recognize I'd maybe go. terms all I like and question. little to it. are terms we've and here's feedstock types? units guess maybe how have of all of in with just as But dig where of through you be feedstock diesel any

Thomas Creery

high From Roger, Tom. -- a is Okay. level this

temperatures, process. we feed. all is have just within then increasing levels sure have we hydrogen. know that it's we very we introduce in these get all, introducing the feed, we by time a up we start-up to slowly units walk And start start heat And which do slow units. and units We at the various make properly so are just working once to then the the reach can to to where the warm, them we instrumentation First up of certain and have process, and

So slow it's process. a

sure not throughout and both It and multiple to and we're So isoms. everything and stability switch temperatures the at days various it's usually operating out make a things flipping like run. the reactor that whole get units, we lined these takes have properly the

So -- It Cheyenne, feed let any not haven't of in a been problem the Artesia in terms feed, me has whatsoever acquiring had we or PTU. for problem.

that our problems We have it feeds. feeds the in of so to year through highest on in going balancing buy to still of index. us believe secured some volumes this and long-term continue versus PTU start-up we price the into different don't place, foresee will get We even us flexibility the the any early carbon return give gives remainder that by by more We buy having contracts. to strategy XXXX And forward.

Roger Read

And for Great. the renewable Okay. me side. diesel on question final just then a

and in I say the of most do total, $XXX point to the at to terms the at kind you're this In come to million original recent, CapEx think you $XXX going level? guidance, CapEx of where CapEx on guidance don't want total which original, million was the but

Richard Voliva

Rich. it's Roger,

We will be that range. within

Operator

is from question Goldman from Neil next Mehta Sachs. coming Your

And question coming next Connor Morgan your is Stanley. from from Lynagh

Connor Lynagh

stay wanted question sourcing I for the diesel. to feedstock on renewable

participate kind last you said the options of chain. up had You evaluating to in were value -- quarter

where I'm on exploring? been that, you've So at your is any options curious head just

Thomas Creery

XX presented to soybean is Sure. have Connor, HollyFrontier. oil We're tracking that Tom this investment again. opportunities processing currently over plant been

had strategic counterparties. underway either opportunities, I'm are We equity have ways, possible -- we've long-term discussions at offtakes active equity or been X looking with And sorry, investments.

best optimize flexibility. give What us most -- like I said the before, to we netback, want the

it that comes So base plant aware. well HollyFrontier. across shortage to as probably to touch there's value for everything announcements, we're And of if see you're presents crush with no trying

Connor Lynagh

manage that? independent are of in of refining the you to type side. your certainly production mean determining you important feedstock say on What I would criteria you

do guess value that you to see I the ultimate So want more invest? hedge? creation basically, question would Just what shifting is Or of to it make is, the side? you a

Thomas Creery

Probably specific more (sic) point. that market. And of us into it to entered to as capture chain One a the certainly a ] opposed allows PTU [ why same hedge. It's throughout profitability vertical we as along is and integration, part the so the lines to

Richard Voliva

And Connor. so a of -- sort any clearing of Just is of returns form returns against those not price criteria are whether capital, seen our we're on the returns return on hurdle. the Look, come in to cost have there, investment. or just in pile that reduction far, we obviously,

Timothy Go

Which outright towards an us back is pushing agreement. just or an lifting offtake

Operator

is from Your next from Suisse. coming question Manav Gupta Credit

Manav Gupta

Do differentials accelerate of scenario of where Permian. on then we XX%, refining. It are a see love the seems it more could Question are and -- of now crisis. inland more people reemergence Permian the accelerating XX%, and the And to as looks to of you're Exxon some have we go saying Chevron the 'XX? like these a some 'XX, resurgence guys in inland these is with looking at up a to looking production grow rig want counts coastal like all they a lot a Ukraine expected

Timothy Go

this is I'll in take Tim, been the at see increased We've pleased Manav, production Yes, a shot the that. first to Permian.

a setting they this over is million X think that. Takeaway new capacity hit month greater last day still than I records. and here barrels

refinery. focus us, of that world here refinery still to be out. out where volatility certainty continue as plays be well one most production growth Mid-Con So the rest benefit as is going our is dynamic in see Permian in to that seems of to in the on the that's But the there our U.S. certainly, as that we to And Southwest playing both the out, the the seems

not so. to but TI So lot bit spread last bullish. don't it levels, you've market Brent the short-term of day the hold same that a more if a do TI just at about And here blowout expect or you We think in that necessarily term, look we way, these some long strip like even $X in little Brent going feels at out, makes if sense. seen the the seems the

Manav Gupta

could remind your How in if you us? much Permian system, can you run

Timothy Go

runs on some can we call send Well, basically into it, we Permian. Centurion Southwest a Mid-Con whole XX,XXX pipeline. then all -- down the through run day And Navajo refineries our refinery, barrels Refinery, additional, our

good exposed we've crudes. be good to to optionality exposure, So got Permian

Manav Gupta

up. A quick policy follow

XXXX. renewable Build and will think diesel you did got BTC situation And when everything put BTC Back Better most I a and we with clearly, your projections, then you not to Rich, likely I people very initially started out extended. remember assuming have in be

from be margins? lot understand of could to extended, there you want the for uncertainty so where just takes do before see support scenario kind of I But a year-end is it like BTC. like RD BTC perspective, policy Now off that from a

Richard Voliva

with is and perspective, tax support were or [ that's is see type events. in if ] been the we rate historically manner Manav, consistent form one package long-term extender a think our that will view will, point, you project affairs of not a fashion, our predicated So last-minute I some from of done original on government in there the it BTC, these your extended lot to economics But BTC. for

Thomas Creery

long-term around -- the Better. Back wasn't our was for affected extension. support expectation by preceded Build this it But It political that, BTC

see as don't those we tied. necessarily So X

Operator

question is Bank coming America. Your from Leggate Doug of from next

Douglas Leggate

and all forth and Speedway, so you and satisfied you didn't they they I'm -- did in guys anyway, hate it question. just formal where filing don't your but sell self, When hand too anyway. to I thanks answer, their on the satisfying the apparently. more for was it, deal don't know curious to to Marathon get want are much hypothetical process ask still but filing? to fellas. lowers how requirements star talk I all I But the to on, they than X ahead about Note a just want about Sinclair, of getting hit trying once, back a went you ask

Michael Jennings

than tactics have and to aren't that. it. a with call. conversation this Doug, expect staff. going this explicitly, discussions to be -- But and we second our public And about share more we're we're XXXX, transaction in with for complied Paul and really request, excited in and we close It's Well, the I'm continuing sorry, strategy the can't I

as that's as much So go. I'll

Douglas Leggate

apologize and color. curious, Sinclair, transfer and think wanted just And you. best the best Yes. I'm just two terms a the better I Sound better? maybe I make ] make you it's think and one ones, with asking. [ one of question Paul's Well, is who Sound? take when to if improvement. Sinclair about to best Does for has was any quick about company? I'm there reliability practice? follow-up operating I thinking same macro additional Puget the go-forward practice. of to Puget may specific Does operational if of in about Holly Sinclair the combined operational Holly you How do generic see

Timothy Go

is this Doug, Tim.

at a me it. Let shot take

answer make I both the HollyFrontier better. Puget make think HollyFrontier and and Puget Sinclair Sinclair Sound Sound the yes questions. to better and is

basically I backwards each of share forward think both opportunities there these to are with and assets.

sits Puget talked talented it in. growing advantaged market a a assets, Sound, that as about workforce, we've very before, has

things within to can its HollyFrontier, have think not the I of to offer lot independent them optimize region. a in mindset, an as we some within asset to way terms additional larger have a but system try to individual they think work try I to a offer but have we refiner well

there I a work to think opportunity of there's lot together.

we're advantage. very comments from. portfolio will to so branded has in limit tremendously their outlets that have we're market merchant different They in. on Sinclair, we I'll you to close, And it's my benefit a know, looking attractive refining a forward Sinclair. model still obviously Sinclair that very as our -- they take But full to that attaching looking marketing to operate

people as to assets run as the hand, think On well. their can systems better we processes offer to some we Sinclair try get help have other we well that to and to and

I it both goes So think ways.

Douglas Leggate

supply I macro appreciate golden I it then. all My question Asia is a did the back remember gas don't you than so guys, to back has take this. know we today one, speak, natural age, is want But to in XXXXs. Europe last answer. that different a and if got very My dependency this, one, and

of, So on U.S. basis, I'm you European does go-forward current your margins? maybe -- but how premium if the thinking not do go-forward say, gas persists, impact mid-cycle how curious, at levels, that a let's

Timothy Go

year. on bullish refining we're this Doug,

I refining low U.S. European the a think a in this will U.S. advantage of at the already natural gas We announced if think the one, the case. and versus for there turnaround that maintenance lows going out workload lot product heavy associated and now this is right you example, system supply, other maintenance lot year year. inventories, continue just the is who be to this We they're component to X-year majors one competitors in look a heavy think with of

As we've heavy talked not year. load about before, we this turnaround for do have a

this be maintenance and from then to maintenance unplanned the environment. good Aside we're looking year, smaller planned in shape actually full pretty some throughout to take advantage of this

think improve out only that. year the and at above the or situation will strengthen whether natural help out play depend on this that's not. or to geopolitical going be persist, is And risks Whether will gas think to think so mid-cycle. lot We a we going I that there

Operator

Goldman is from question coming from Neil next Mehta Your Sachs.

Neil Mehta

be on your curious Mid-Con and other margins that inventories notable winter work it the Mike I'd X, to time are time to do the where the We team. inventories from a than bit see then But through that get elevated the in relative look, is it. you So happen PADD softer views, PADDs. country in and rest product of little

just your it anything normal is And Just this should or seasonality? about we concerned there. is be observation

Timothy Go

don't mid-cycle in today. different. now. The we definitely are winter. the Mid-Con seasonal higher to first any be right shot. again, going we're be me summer every attribute typically strong think that is this high think And that take inventories let inventories obviously, will the We to above, this behaviors. do Neil, We Mid-Con, or despite We that this see the certainly seeing

Neil Mehta

of then with helpful. right at That's curve time all stuff. geopolitical so strong the right. the And shape thoughts just All on being up spreads given front, your now the

relative Just affects that that the to think structure. market capture a we And of deduct is that how rates, the your should thoughts something as margins? on

Timothy Go

backwardation But that's Yes, with there, capture I what geopolitical Neil, got. contango-shaped would there. from prefer like standpoint. not all we've backwardation risk a helpful looks we to obviously here steep right it next a some market. out few you're to the face we the But the on not months, for And mean, is are going higher-than-normal continue that's

you do here yes, it's but the back line factor we that think your we into the rest don't So out to of models, -- year. going should think

Michael Jennings

Yes.

the add strong. product jump that to I'll think is I the But are obvious. seasonally even adjusted, perhaps in, and cracks, RVO

example, as at they're gasoline. pretty you the country an a for Mid-Con the for depressed remainder February frame relative If of look still decent time but to

look elsewhere other better. you a I markets, in the seeing think from And either a or road we're what back snapback certainly steady it's country, is If COVID. served

You're it traveled. miles vehicle in seeing

certainly it and inventories. distillate demand You in see

product is into And look forward expect we so year, year sector. capture, hurts financial the a be strong while of overall as this we for it backwardation good. level to margin pretty our And

Operator

And your next Jason question is from Gabelman coming Cowen. from

Jason Gabelman

two on had business. diesel renewable the I

pieces projects, projections, number? you renewable forecast. There's still diesel $XXX there a Is that million annual the credits. been financial sanctioned lot the of on free was think environmental moving flow with First, when cash right I the

the that's BTC. if excluding right wondering the So number,

renewable about And on then secondly, diesel. M&A just thinking

maybe that be market You mentioned up conversations running? upstream of take types there an diesel you in those or could equity you potential parties had? a to Are renewable once business. parties stake you could project just to out a and potentially Or Is your discuss you've it stake there. looking potentially interested get sell for in

Richard Voliva

Rich. Jason, it's

cash same earnings there's Obviously, expect second puts term. LCFS look, level, see takes, we 'XX half tailwind of think those diesel. really in a to respect going high renewable But BTC the long on probably that I and bullish those as run. some market near free projections our but little flow to a -- the mentioned. like you into bit the and on with looks headwind, are of remain 'XX. that is a very in we So

anything -- that we will value projects we to focused really more look M&A, always activity us. are But for create here. to we've front got open to to respect With speak of to nothing There's look, are executing in no to shareholders. speak our the on

Thomas Creery

not Sinclair. Yes. a Sinclair to make Yes. busy acquisition us, some or family, contiguous got the We've ahead one up of units, own do after Tom. our Jason, to project. this starting optimization happy integrating of road but the it only facilities got is We've

we've So plate a a renewable full from standpoint. got

So in comments, spinning it. haven't really to of we equity the kind an at off share any looked Rich's renewables or potential off spinning of

Operator

[Operator next Paul Your Instructions] Scotiabank. from coming is Cheng question from

Paul Cheng

quick two just Mike, follow-up.

the that haul, will in money for what mean one-off are of in and look today curious you the Do substantially facility, for Cheyenne wondering so is that at that And to facility opportunity unit the just really these you some with build and in you do but Cheyenne is you more is this capacity? the because in Or expense. want -- see not economic game also the X I plan with the how Just business? stick Navajo making end today, existing up facility? that that long if guys it? you that

business? the longer-term for is this what game So plan

Thomas Creery

Yes. unknowns. example today's Paul, we to there's a of still don't because -- lot Creery. economics, Tom costs expenses have factors. have have, don't there's this lot for is operate, We yet still operating so In or we of operating a

It be under circumstances. would still today's profitable

seeing are through LCFS some lower you're aware, headwinds, We prices. as

we're However, units these XX-year into economics, didn't those we not don't term, we economics. continue over that's build long not -- on built them expect -- the we've today's to and

they So we financial think hit profitable our over will run, will the and be targets. long

Michael Jennings

-- existing segment, in say to we businesses as Renewables right and what we've also within on to would running future the get Paul, Most look and that to assets projects is try around and completed we these in like and bringing With profitable we our to opportunities. participate be But them. X and facilities, on those of constructed plate our our likely, building operate. lot up that looking is focus brownfield. said, today, we're asset the up would a now forward, forward meaning critically have as

Operator

question from Phil is JPMorgan. Gresh coming Your from next

Phil M. Gresh

the give how I about and we're the just we curious headwinds had relative to saw have you're range if potential Back, kind some benefits in be. for to XXXX, you've for Rack lubes. bit With Forward of of on And just the commentary you year II in and there? in different you a of that Group first know thinking what your XXXX there to with around Rack follow-up past, willing a was And starting Forward any sometimes a thoughts could I curious what been Forward. see the one guidance quarter there. Rack here think of Rack

Timothy Go

Yes.

very year take Back, fluctuations that's why of strange on It's Rack this you me at shot Rack into and year we between was a let Tim, provide any year this Forward that. saw. as a market year Forward. and Rack is guidance didn't Last continuing this for So

EBITDA the this for a In would still the or lubes in tell would And is a think year fact, mid-cycle XXXX, on to $XXX what basis. we how look we believe year. you And business we tell I our business you mid-cycle you we expect at probably business above environment. be that a at million for that's is suggest combined lubes we that would

the will strengthen. prices in especially here, margin to seeing same Rack in will in of happening. and we're business are the conditions. some keep U.S., that And think the business, time, to We that market of producing think same turnarounds That to starting base continue oil return the continue oil more seeing hearing to oil business and the we signs we're will heavy show tight. base Forward allow But events base Rack unplanned at recovery time, our normal at Forward compression to we

we're in our profitability see to from And optimistic going that so of business. lubes mid-cycle the certainly above half the here year first we're

Operator

this remarks. over questions time. And closing for floor there will Craig back at further I turn no to are the

Michael Jennings

emphasizing Thank And the operator. morning This wrap for points. you I'd to all Mike. a like call this you, participating. thank up is couple of

The recover by need one included recognize made on and that which extraordinary And about own these expectations some all our we events first On were team manage. reliability many from to weather, of the I'll which is say are for fourth that brought operational better to issues. my but hand, to the and major challenges, of the by going quarter throughput. other, I'm significant

with to than average. company, and our contractor half ever was best and respect recordable is This XXXX year employee on of industry reflection safety, our the what note for achieving less ground. we're the of I our injury the that a was will rate

business We're from going I the to transition completion nearing to our look the and to a exciting of management. company, our operations be venture renewable management an for believe project owners. is and our it's This diesel new really for attractive investments forward

may And of for is Sinclair an final transaction transformative It's close from the away while limelight us. this And that the plan view the for and point the announcement the investment, incredibly as strategic truly aggressively and to is supplier HollyFrontier. some take company from time exciting for we're the an really as continue and we a to And deal, closing combined integration. working to internally, lag an employer. the compelling

again. for all talking today, forward participating thanks we look to So and with you

Operator

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

HF Sinclair (DINO) 23 Feb 222021 Q4 Earnings call transcript