Earnings call transcript Q2 2023

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Operator

Welcome to HF Sinclair Corporation and Holly Energy Partners Second Quarter 2023 Conference Call and Webcast. Hosting the call today is Tim Go, Chief Executive Officer of HS Sinclair. He is joined by Atanas Atanasov, Chief Financial Officer; Steve Ledbetter, VP of Commercial; Valerie Pompa, EVP of Operations; and Matt Joyce, SVP of Lubricants and Specialities, along with John Harrison, Chief Financial Officer of Holly Energy Partners. At this time, all participants have in place listen-only mode and the floor will be open for your questions following the presentation. [Operator Instructions] Please note, this conference is being recorded.

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

Craig Biery

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

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

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

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

Tim Go

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

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

expenses refining $X.X margins primarily compared last In refined our product lower improved million sales $XXX strong in West costs. volumes the and the in due benefited versus driven decrease Operating year. gas quarter in and as This the XXXX million was quarter the same year to second maintenance lower natural to lower segment, XXXX $XXX second period from recorded the was of in by Mid-Continent $XXX billion regions activity. period million EBITDA last we at higher of refining both same

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

in due period. XXXX, averaged per of the in charge to second oil compared Crude XXXX maintenance turnarounds progress period reliability day budget, day Parker quarter I'm pleased XX,XXX to the the continue during quarter and our our barrels report XXX,XXX barrels activity on of that we higher to second time in and on X at refineries Navajo the improvement initiatives. long-term on the to were make completed and and per

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

million hydrogen volumes plants. of market million X segment compared of quarter sales were to inventory gallons to quarter this and plant are Parco, for quarter turnarounds rates Navajo were X XX as with which the of diesel renewable gallons Utilization impacted our second XXXX second XXXX. of by the quarter at to co-located for for the XX adjusted the quarter compared million lower the for EBITDA of negative Excluding cost XXXX. of $XX reported negative XXXX $XX second second the of million valuation Total adjustment,

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

also same to across of in XXXX. we as XXX fuels XXX record compared a million gallons quarter, the added quarter fuel the to year. more by million regions. quarterly quarter for period Our $XX we per Gross saw of to Marketing branded expect second segment branded quarter reported second margin were X strong We quarterly in sales XXXX last EBITDA at continue of the gallon branded compared for to Total million or volumes our million demand $XX gallons second second was in record the and our sites grow the in per new X% $X.XX a year. branded sites of

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

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

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

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

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

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

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

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

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

Atanas Atanasov

you, good and everyone. Thank Tim, morning,

Let's and financial Claire's highlights. reviewing begin HF by

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

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

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

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

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

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

John Harrison

to posted of period attributable was of can strong million year. $XX second another reconciliation release. press XXXX driven earnings, $XXX HEP's to table and interest Holly primarily found net to Partners HEP's quarter Energy be in to income compared Thanks, region. the Rockies Atanas. HEP year-over-year quarter adjustments in primarily $XX expense. product solid these net quarter reflecting million XXXX. second The EBITDA adjusted higher volumes last million decrease compared XXXX in The million the same second was attributable the by was $XXX quarter ATP's in crude

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

turn call ready the over now for Andre We are to any questions. to [ph]

Operator

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

Manav Gupta

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

Tim Go

for is your This question. Manav Thanks, Tim.

comment Steve Let rates me to ask capture too. on

Steve Ledbetter

for thanks the Manav, question.

a that to our then produced to right want operations taking a the capture of molecules about markets molecule of the that to some everything. optimize to to we take and get right advantage the combination of market. laid-in we're It's structure had look From really where in optimization, the it's to of bit perspective, getting crude margin we've And them a perspective, seen. support. from think be. it's it getting we've around out an right I running making and decisions the full, sure the right put and we differentials We

of a everything. combination it's So kind of

Manav Gupta

have quick I Perfect. a follow-up.

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

Steve Ledbetter

Yes. is Again, this Steve.

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

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

Manav Gupta

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

Steve Ledbetter

Yes, believe case. that's we the

Tim Go

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

Manav Gupta

congrats and very a on detail on Thank strong the you for quarter.

Operator

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

Neil Mehta

here. RH. the return Congrats off want a a kick pieces moving good agreement on I lot repurchases quarter around with to of on and of share capital,

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

Tim Go

I'll -- and at then off, start end Neil come more to Great. share and can in the as some ask I [ph].

Atanas Atanasov

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

we consistently that. target constructive we can family, relationship. to to remains have With respect the a be speak above but or have and for family, the our exceeded We that, at

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

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

Tim Go

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

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

the back that provides was So HEP terms along public. I wanted restricted to the of as of discussions. window shareholder rest found We took X HP their that returns. to discussions, and are, clarity parties, was it Atanas think we and during make our to that the opportunity clear sure our buy the these We going to some during the be between commitment and we very said want to in of But of to they intentions reiterate what shares in mentioned, these middle all an advantage executed.

we'll continue year progresses. as the look more so opportunities And to for

Neil Mehta

The you the the year heavy how we can again half a first about of the should from maintenance you of has of that. the as follow-up turnaround is it back balance of been very think made and was look trajectory perspective schedule year? at the half, us the remind maybe a through and lot kind volume through

Valerie Pompa

is This Valerie.

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

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

Tim Go

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

Operator

to at next go Cheng Paul We'll Scotiabank.

Paul Cheng

On the improvement long refining term. reliability

complete? process to happy X XX we do we another this about X Are sustainable rebid And reliability, Or you seeing. years? you X I will more what for the you in sustainable or what X-year next will think is having past within that and you the the largely target then months, very have per turnaround on complete process, initial be cost be could maybe throughput a -- year structure to said to kind XX we are circumstances process a that. And looking more be? a and that into on X- think also when still under is the of are X what you in the with maybe that

Tim Go

is this Paul, Tim.

You're right.

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

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

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

Valerie Pompa

Yes.

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

and robust more system. a resilient have we So

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

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

Tim Go

And last Paul, one thing.

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

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

Paul Cheng

you you the accrue that or at Can mentioning? throughput are total

Tim Go

crude. That's

Paul Cheng

cost kind then And that, talking? unit be we will what of under

Tim Go

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

Paul Cheng

I in on is gas natural XXX. the price X somewhere to the assume

give X what you So if improvement. say can that winnability on target is that this some you unit your idea the what us regions, once complete is the cost

Valerie Pompa

Yes.

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

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

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

Tim Go

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

Operator

from next Piper Ryan at comes Todd question Our Sandler.

Ryan Todd

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

Atanas Atanasov

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

As of gave side, you to make improvements our But can opportunity had impacted recall, two equipment. the an we of the on our co-located also under which rates. hood, and us utilization look to it to turnarounds speak, flip so facilities, the

the -- OpEx of is which of decreasing positive XX% you're seeing quarter-over-quarter. per One the some already the that gallon, declined things

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

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

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

Steve Ledbetter

I'll Yes, on add just to that.

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

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

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

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

Ryan Todd

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

Atanas Atanasov

Atanas. This Sure. is

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

so again, volumes those -- our shift the the it back goal color. forward. finished Josh at to to more day, our volumes businesses of Matt base a to is you, over to provide I look and turn some that on oils we And basis. And look specialty. more base of end to into remind at want and don't And holistic rack We I'll at it continue

Matt Joyce

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

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

the of we've mix are quarter that benefits, So at looking putting And that right into looking quarter of products. together. when those X, been pieces you're some we're for the

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

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

Ryan Todd

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

Operator

We can now.

Tim Go

Let's on move question. the to next

Operator

go to going We're TD Jason Okay. to at Gabelman Cowen.

Jason Gabelman

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

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

Steve Ledbetter

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

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

Tim Go

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

Jason Gabelman

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

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

Tim Go

the we've liquid believe we we have did with successful in the said Having acquired acquired. believe decades done would potential that, discussions transaction there Sinclair, assets. the which growth not We that course, we diesel we working for or XXXX. We transportation HEP. question. Sound were we've Yes, the We XXXX, left fuels, just refining And not a PM believe for gone right with very business. Puget not through we're a refinery assets, XXXX. renewable on Sinclair for our thanks XXXX, added acquired years, in of with

-- focus there's EHS our But first last that and I priorities about hopefully So as focus talked reliability. the job. will opportunity need there's lot call, I growth the We discussions on got a a on successful when run we same there. had mentioned, continue of to into we've continue right very as the on of with and We HEP. now, we've is know

we're that refinery and opportunity we throughput -- and assets try into Val the of you're thing and earlier inorganic. In was terms the to currently -- then think the a capturing on anything what those there's operations of integrating to in we more there to head is seeing what have. focused have. going fact, capture that we to We that now folks. seeing improving Steve to and of second focus have improve our optimizing believe sense as like talking talking the assets about that's inwardly in opposed about right our say was in we assets I'd our focus And and to in our is and in in terms you're what what the that And

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

Operator

comes question Roger Wells Fargo. Our from at next Read

Roger Read

Good Thanks. morning.

We've going of But business the I've Sorry, lube crazy in if back, this. of a with I kind of the to earnings just of come to we the front. terms part morning missed here side got on operations. could, wanted

Just this, moves in so chain out? in seasonally, quarter and -- but supply oil how hit. seen here issues is third prices that is base usually that shaking we've have pretty good many

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

Matt Joyce

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

an not really business. base the that's But an the the we're that very now, hearing are market there's upheaval additives lubricants tepid we're to globe fill the I the I have We're faced some past think to really have regards when some right And industry, of some business. we've oils. as out coming COVID certainly, know, -- briefly impact hangover. in to that also anticipation business just the with going the And around how as chains see issues specialties probably reliability as supply good that certain here and and impacted We're whole supply the big other of think that comes a demand. green going you been needed. of it's of over have void also of to shoots position start and years, the and it in issues that on a couple again, brokered lot stop and to with there

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

Tim Go

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

Roger Read

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

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

Steve Ledbetter

take that. is Yes, I'll this Steve.

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

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

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

Roger Read

on follow-up one that. And

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

Steve Ledbetter

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

Atanas Atanasov

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

Operator

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

Paul Cheng

take may availability talking availability. Audit Two back want say, to, you about hydrogen bottom-neck. capacity, Tim you order into hydrogen you're then that the closer that run had to and mean, for the questions, believe namesake to to guys I XXXX. think substantially please. mentioned was are improve until go I in And I working I

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

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

Tim Go

Paul, is Yes Tim. this

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

that will rates, we have. with facilities able half right? we believe we with you've the we XX% be that XX% the Val turnarounds So of hydrogen before. completed the that second do in We to some we to we that say number the normalized able with level in run can the that utilization, think And we're second get of year. current when And to mentioned quarter normalized of run rates talking been kind short-term team steps have to just that run optimization and here implement, these and

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

Valerie Pompa

Valerie. is This Yes.

you the first sites. the on take let's hydrogen; So as co-located mentioned,

just and turnarounds is made and reformers We've today in through improving. we have is those We expected seeing significant went that we're reliability improvements what assets on.

Additionally, our complex. generation hydrogen

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

bit catalysts. a Let me on comment

So we -- our catalyst is performing well.

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

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

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

Paul Cheng

current the is you between catalyst. what Robert, So the to change care have the for expectation

Valerie Pompa

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

Paul Cheng

Okay.

point year pretty So assume a have you XX%. like availability XX%, operation next better from make hydrogen LD than meta it sounds be the same a fun much or that then we doing investments, some shouldn't could significant were

Tim Go

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

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

Paul Cheng

have when personnel? that at Tim, commercial improved Okay. and right to have profitability you do think built wondering an culture competitors you catcher the of operation. one due the actually the looking you're Dino, your that substantial and of commercial that and organization

Tim Go

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

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

of some as capability. our well as part are that think commercial trading competitors talking of I about

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

Steve Ledbetter

have from a refining Thanks, have I'll culture being -- early capability, want who after lot days and understand both people that, even that of we arena, trades, Yes. think assets is of advantage to that I play. high extent go to in across and take about so Paul, the planning, this months, advantage expertise. markets non-speculative we easy advantaged think the X and really when and this Tim. And still, optimization, I where talent commercial a have differentials. -- we into the take degree of of we here we reflect things on for but the you commercial capable asked

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

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

Tim Go

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

Operator

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

Tim Go

[ph]. Andre you, Thank

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

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

Operator

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

HF Sinclair (DINO) 3 Aug 232023 Q2 Earnings call transcript