DINO - Earnings call 4 2023 | HF Sinclair Corporation

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Operator

Welcome to HF Sinclair Corporation's Fourth Quarter 2023 Conference Call and Webcast. Hosting the call today is Tim Go, Chief Executive Officer of HF Sinclair. He is joined by Atanas Atanosov, Chief Financial Officer; Steve Ledbetter, EVP of Commercial; Valerie Pomper, EVP of Operations; and Matt Joyce, SVP of Lubricants and Specialties.

[Operator Instructions] Please note, this conference is being recorded. It is now my pleasure to turn the floor over to Craig Biery, Vice President, Investor Relations. begin. may you Craig,

Craig Biery

ending Good Quarter and morning, XXXX release the a Gavin. Sinclair we to Corporation's press quarter for results Fourth Earnings announcing XX, morning, you, XXXX. welcome everyone, HF issued December Thank Call. This

copy would at press website release, the you find If of on may it earnings a like our hfsinclair.com. you

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

Timothy Go

goals new cash significant year. to When report of portfolio team operational including our the improved excellence, CEO against everyone. has the our cash businesses; to role to pleased X drive during to and last and very to I'm return three, I integrate generate the strong these strategy. our morning, flows stepped progress advance executed into out reliability; Good one, year, I priorities: laid optimize two,

during across portfolio. across step delivered we year improving heavy process the took as our safety successfully our refineries another on all at in XXXX, completed record of and schedule portfolio. budget best our First, on refining we maintenance turnarounds towards and performance reliability

the fourth business quarter buy and to asset efforts to our integrate our and the closed optimize we our in Second, furthered in HEP transaction base.

site segment Specialties segment marketing earnings In Lubricants addition, in and we and delivered oil strong cracks delivered base our volumes weakening count despite of the in XXXX. growth and

year, Third, to also return and $X.X on repurchases through delivering dividends, commitment cash billion shareholders cash share in our to the during over we shareholders. returned

momentum good businesses, are across well to shareholders we XXXX. value our creating positioned for With compelling believe we in continue our

refinery to turn the segment let's total runs full annual In set and crude heavy our for we throughput. Now Parco year refining, in highlights. records at XXXX, both our

refineries schedule executed strategy Improved our We on also our in our reliability at on renewables, normalized at and XXXX volumes is facilities for budget. the to and all and of do turnaround we achieved of pretreatment execution throughout our on allowed our driving in renewables planned to all the rate us essential turnaround work improvements turnaround work record equipment intended utilization In fourth quarter, our run in delivered and unit we side. the Artesia.

opportunity pathways, also which believe our benefit capture forward. CI new margin our We received will going we

improved and to plan assets reliability to optimize continue our the of through efforts. commercial For renewables XXXX, operation improved we

XXXX. branded as business wholesale The Sinclair delivered the Marketing to branded volumes and after well for XXXX, gasoline segment period in our branded which XXXX, diesel in March growth includes as count compared site XX, sales

well volumes number above base We and lower despite Lubricants and mid-cycle are remain we pleased with we portfolio, on performed sales [ annual reported and to focused the sites brand margins million. in in and of value our XXXX, In EBITDA branded our XXXX. guidance that Tino the of ] the and brings oil increasing $XXX Specialties

midstream, Partners the and finished XXXX value strategy and on sales Holly upon further In optimize look to to the this we mix Sinclair across bonds reflect optimization in supporting strengthens results HF as integration products for This portfolio, XXXX exchange of associated efforts our in business. build the a new acquisition with further Energy across outstanding acquisition Our HEP closed and our assets. we enhance on reduced structure integration the combined our the efforts to December simplified bonds. our of continued company, of the XXXX, costs corporate business and specialties feedstock X, along as we our

Going to separate fourth the $XXX forward, in shareholders as and to our a returned through be financials. segment midstream share operation reported million we In will continue quarter, stand-alone repurchases our dividends.

to include the $X.X payout HEP in over to unitholders the returned and representing million cash of we market XXXX, This cash $X shareholders. our cash HEP does year acquisition we of $XXX full paid Since cash to additional of December XXXX. of not XX% which XX, annual have as XXXX, XX, an shareholders, March in billion cap on the XX% For in ratio return approximately the billion represents in Sinclair transaction. closing the of returned XX%.

authorization, As X, fully and we investment-grade maintaining and return of remain current payout repurchase and we cash remaining long-term our committed strong $XXX long-term ratio February while our rating. XXXX, credit to a share strategy sheet on have balance million

February quarterly XX, per and increase an of share, of our of declared Board $X.XX over dividend X, XXXX, to XXXX. on holders that record payable on Directors XX, March previous $X.XX announced also We on the of XXXX, February a dividend regular

reflects cash our increase to dividend to board's excess commitment shareholders. returning XX% The

disciplined believe will our Looking for corporate me remain our that, success. shareholder executing over position strategy maximize let capital well call asset with With new allocation, diversification further coupled We value. to Adi. ahead, and strength the the approach our to turn on us base, focused we of to

Atanas Atanasov

morning, good Thank you, Tim, and everyone.

that we Sinclair's HF or to negative Let's Sinclair These million attributable net items $XX Today, net of $X.XX decreased share. highlights. $XXX quarter diluted reflect collectively results per by special begin reviewing shareholders HS by reported loss income financial fourth million.

income adjusted XXXX. $X.XX diluted items, million $XXX $XXX income to for adjusted Excluding compared share negative the $X.XX period in same or per these of per the million was net quarter share fourth net for or diluted

$X weakening segment, fourth was $XXX refining charge. our EBITDA 'XX. Renewables the the adjusted the million negative This fourth EBITDA $XXX charge million, XXX,XXX for quarter the excludes for cost reported or which quarter valuation the per market for averaged quarter fourth of lower volumes we were billion segment EBITDA XX operations to period prices. inventory $XXX gallons of EBITDA the earnings In million credit sales XX RINs $XXX as both day Adjusted quarter fourth the day the quarter for adjusted for 'XX. negative for In in 'XX. in segment, to Total million barrels for million fourth compared LCFS $X XXX,XXX was 'XX. was gallons lower refining for barrels of Improved the primarily to in and $X compared the quarter. West which margins of to quarter segment decrease fourth of driven per compares million million lower quarter fourth by and fourth oil fourth quarter resulted offset our This of to the the Mid-Con refinery the gross quarter in refining 'XX. million in regions, Crude quarter were by compared fourth compared

million per reported Marketing branded of gallon of quarter Our 'XX. margin. million for representing compared $X.XX fourth were EBITDA sales million segment $X Total to XXX gallons, the for volume fourth $XX quarter the

$XX a of $XX high-priced fourth $XX for Our from XXXX. XXXX the million million $X the Lubricants decrease and of the fourth FIFO of inventory consumption million for the of quarter compared to to FIFO driven million charge reported quarter of charge quarter This feedstock was EBITDA segment EBITDA by fourth a in quarter of 'XX. Specialty largely in compared fourth

loading period pipelines, the compared from Our same $XX fourth million our includes quarter. provided Midstream the of expenditures for the terminals last the fourth driven segment in was racks. $XX of revenues by operations increase and quarter reported $XXX Net quarter. EBITDA million totaled to by of $XXX $XXX in turnaround million, cash million totaled million spend year. Sinclair's This in higher capital HF which

$XXX capital full million, year were in the expenditures includes total XXXX, million turnarounds. For $XXX our which

spend full budget due to under our planned came year the capital execution of maintenance improved Our activities. in

$X.X cash availability undrawn HP billion on which includes credit As of stood of facility. XXXX, the unsecured facility approximately HF and credit liquidity balance Sinclair's December billion, XX, a million $X.X $XXX at billion $X.XX our total

year, of HEP down by debt we the $XXX X.XX% million at outstanding senior of notes by revolver. the portion During paying to maturity our and October reduced a our our repayment in

As debt and a ratio with outstanding ratio debt-to-cap of had debt-to-cap we XX, net XX% of December $X.X billion of of XX%.

for Let's $XX midstream, $XX renewables, go through year XXXX, respect turnarounds in million spending expect some million $XX marketing, we million in full specialties, in in to catalysts. $XX guidance $XXX for spend capital $XXX million corporate lubricants to and items. and million in million With $X million refining, and in

segments. we our spend addition, In to across investments in million growth capital $XX business expect

we and the per our audience. refinery from barrels first between have the crude scheduled XXX,XXX period. oil ready turnaround in quarter run planned take the of For to refining we Puget expect We're our questions segment, some XXX,XXX XXXX, day of now a Sound during at to to

Operator

[Operator comes Neil Instructions] the & of Our Co. question Mehta of first Goldman line from Sachs

Neil Mehta

question macro as you your some see competitors. world a gasoline the and question as with January, Mid-Con weak diesel go both we we from the summer, getting the lot go the of perspective I just disruptions obviously, questions about be would investor into micro and into stronger guess from here for setup one One very I macro summer question. in guys on how But the your February think mid-cut. the we're

Timothy Go

come little Steve and on bit Mid-Con ask a back more and on little a Neil, I'll provide macro that. let top me the to bit then comment of outlook,

Steven Ledbetter

a We kind did for that support little come we in the and there. through Hey February. you We're in quarter. the particularly Mid-Con, to supportive see to as heading structure think the to driving season. the in progressed the we starting the view off of did QX back. Neil, we patterns quarter X-year that see see we as coming is Steve. this this off articulated, is into inventories here range is seeing into some see rise earlier But and cyclical starting question. a stayed in fall Mid-Con, margin Thanks structure the demand We're

Timothy Go

that, the jump were see Mid-Con it is just what We And seasonality we December, time January in I'll of year. do Neil. believe frame. We that top every on seeing

widening we talk have significantly In this typically about and inventories call drawn Mid-Con the fact, typically have cracks I BP mid-kind And grow during at inventories it downtime significantly. this because course, frame. improved of since think time

believe overall still the you through here market. at to XXXX million a demonstrate what than higher supply for this XXXX day, And utilization at least we barrels as think We that perspective, demand XXXX. we able to you significantly make is demand. a believe macro will to mean are X% has look is more requirement We in look at industry constrained, Neil, continue versus I X% you just the that the supply-constrained up If where least again, is order a in past. know. step-back if of demand X at levels additional in been above

we And a so We issue expectations still of are industry what on think think than good Whiting example is BP to utilization the able industry higher that is produce. the the still that.

the we're lot a so not There's of And just result, country. remain a capacity, of incentive into the more supply-constrained going this in rest capital as current refining of XXXX. the given put policies environment to through to

bullish And is refining bullish, with general, we portfolio. that believe still so especially very we're in still our margins, liquid particular, fuels in transportation and

Neil Mehta

is around on lot back here? and you profitability, in business to about profitability renewable the towards And see getting I which and then Tim, trajectory how talked hydrogen path diesel, is normalized issues do the to and be at of versus market a just it a something and follow-up general, Yes have from the you continue how path RD. the more many to this driven

Timothy Go

and top on Neil, then ask I let can me jump of comment Steve in again Yes, that. to

Steven Ledbetter

Yes.

business think better at I learning and we're doing this overall.

quarter and was we XX% Artesia. putting If December a advantage XX%. of facility PTU we low in you for QX] We value Cheyenne of the an where utilization some terms records performance good in financial [ as well includes them cap That progress challenged, us of or CI the utilization. We into look and turnaround did demonstrate change had chain. eclipsed that's our a at as taking north close the in think to but at feedstock at Artesia across

high-priced some of We have up through a considerable sheet. on but amount a impact working balance freed did negative earnings with associated cash the inventory

the 'XX. If forward, the about is the LCFS outpacing of softness picture. we and the kind on. XX,XXX think a capacity additional that's in to do supply mandates There's I some barrels margin So looking close see The RD and day nameplate of programs. RFS coming QX

structural So things all bit impact. a of those create a margin

not that but are that were proposed the the car at incentive pace decline, to see seen XXXX. And them. prices values RVO structurally don't supporting changes a anything feedstock than We have impacted slower the and we

work flip, utilization utilization CI and an markets pathways low putting and on approved feedstock advantaged laser-focused then feeds, our the and optimization most OpEx, economic finding facility and our we're getting then and So for fuel. driving to strategy catalyst our executing

softness some there of we structure feel like a we it's to see take for in the do good run, So we're forward place when the market us. advantage in but

Timothy Go

I'll Yes. to feedstock Steve performance profitability, but feel we I utilization. we've And diesel mentioned we us impacted the and operating of XXXX that very quarter lag price say, spring about into against just believe our went XX% fourth good our with. mean, got in Neil, obviously renewable achieved good platform overall business The a the

was prices first business. lower when basis RINs being obviously, what look rate You the and at our our significantly we than launched the LCFS

time, their example, as other like is that going the know passed some last margins again. over credits the the We LCFS just as project to it's into LCFS. it's programs and RIS that continue to LCFS going own Mexico to believe to saw in those show going credits that But things well. tighten do for to and improved that continue We New world jump recover, you

diesel are that, believe The case we are going advantaged largest we New boots improvements. significant our in so that facility to And facilities transportation for renewable the example, alone have savings Mexico. New be in Mexico our

under our feeling our about as And future operating so positive we we're balance. our performance. get

Operator

Cheng of Our next Scotiabank. Paul from comes question

Paul Cheng

Tim. for -- this is that Maybe

have you impact rolled Can it some or up file government don't are data reducing there ask the give a And is after it's maybe question. second question. have simply HEP. -- to entity? I separate that any you operation? regulatory -- the it I example how my then your does that us does mean, some you just because that, to first the G&A with That's You as synergy

Timothy Go

question. few HCP, few for the a Okay, I'll let I'll a and Paul. Atanas provide mention well. as Yes, thanks then comments on things

Atanas Atanasov

with like benefits. seen your intercompany Yes, -- opportunity our not a meaningfully us number for helpful When for thanks operational Paul, question. side, to us. commercial business. the and provided negotiate something on for having we've contracts, at that's a Things simplifying has HEP we meaningful example, look is of to

back-office income does and some Integrating because to don't Another side worry about point as when efficiency versus comes to functions [indiscernible] not well. is have we actually qualified benefit bring to it bring the having up we anymore. nonqualified deal a of commercial our how on the

thing -- So gone. is with things point pleased second that's And pure been we've a pure thing. one how view, just on from the extremely economic a have of

business has accretion see you in on and operating that the goes hoped just had to from fourth that flow in cash performance As meaningful in transaction the what our this we the can the provided view EPS better beginning. indicate quarter, frankly, accretion than

Timothy Go

pleased than We economics. a do we in with the that saw increase it's even out Atanas very are better turning I Paul, what on HFB planning for just our we mentioned, really dividend think the is we passing top Yes. -- And what that's not of what would increase. say dividend basis just to cash little shareholders believe just announced accretive. We've We our we're but that flow and it's through it EPS the it's originally, very much last than that week. much seen accretive, thought we maybe better on a only transaction.

Paul Cheng

can how here? you in quantify you share benefit achieve will you operational number to able a to there think is Tim, be the it of long terms synergy and

Timothy Go

with number public synergies and a back very first Paul, hard very of to we into associated we obvious some talked, with X no, we discussions companies one. office haven't the there. on our consolidation When put limited

there, sure not seeing synergies for talk are to it about but out We there. we're ready out

Paul Cheng

Okay.

could think help XXX to cost yourself question where you X.XX, you're you're And operating Can operating second The and unit at ] [ gap point, utilization at you I and your in the higher. run be your that X.XX still is to on know to barrel. want is with cost the you on sustainable crew be bridge time longer could on the rate get are be maybe journey, that a at I term. to standard between the going per unit saying your trying you an that up over basis, today?

your Your the around $X.XX Mid-Con, in $X.XX, in -- you're West $X.XX on about at $XX. your to

can't So average costs close associated is like the assume Even the than We that's throughput higher a company the $X.XX throughput. $X. higher to $X.XX more for to if to we get with $X.XX.

are steps that will that an much? that lead down the initiative come cost expect what that unit So we should to or

Timothy Go

taken we've Paul, a big mentioned, you've as reliability. Yes. forward, in step

and that We turnaround earlier about biggest done believe a effort. have think cost to for turn per is up that knob reliability success. numerator how denominator. the on Val We've let OpEx and working the we it that's progressing team because I of to more in talk us things her barrel great Val I'll barrel. the affects job setting talked off we're improve and about examples on both op have some and per the cost our

Valerie Pompa

Sure.

as on is and before, mentioned efficient So that we've delivery things: you talked our really so -- of gap is about reliability the work. our focusing X on focus

in and working of is And step big those turnaround a both reliability. so we're

every turnaround, dollars. we're fewer we're where As work we our running and not the the scope processes, get spending our throughput, turnaround more reliability right and just barrels improves

improvement work, whether the And do secondarily what maintenance, how reliability. And so use. suppliers execution, connection we focus we deliver products, is to we work then the that be of with how it main that's we in the how

and across of technology leveraging better work businesses. around then a integrated So there our strategies, processes, are all lot initiatives of our execution workflow

Timothy Go

there, $X.XX, before ] is we that the [ and what with portfolio put we Paul, Sinclair both it out expanded ] and with [ number HEP when was you for our Yes, $X.XX that. before assets would I tell Cusson

So belt, putting certainly accomplish under trying better to looking what our we're -- now about that are long-term we here going we think year to put we've near a got together outlook kind able of and in be on our to plans the term. a

prepared long-term probably in cycles, anything as we're today. something But to do in year. be years. Remember, these position mentioned, turnaround I is say in not different a But measured will cycles. not are Reliability, this later to

Operator

of Doug Your the next line America. comes Bank from question of of

Douglas Leggate

XX going one But -- Tim, there's specific runs, guess, obviously, my happens forward heavy Canada, what specific. supposedly business about advantage the macro lot put on to company I'm crude a and for significant line very light going spreads runs -- appropriate Canadian I is company in in potentially example a is what TMX, one there's of are a here methods things a see follow to crude changing, time how it. We'll of consequence. in way slate you But thinking lot years. of your is spreads change to fill. the oil a first at in in your

Steven Ledbetter

that Doug, we're the TMX very one. situation watching this take Steve. Yes, is closely. I'll

the QX, late coming and know, more likely fill online we sometime you As announcement line for full expect QX.

As advantaged we think clearly about most that, run the will we crude.

slate, compressed And through heavy advantage for a significant take QX. has will our value when to remain then about over somewhat in wide think that Our dips We that QX the chain continue the is crude provided Sound and advantage crude us. optimal think the allow the We going you more us barrels to proximity to water. to refinery. Puget think of dock

remind you run the ample we and dock capacity. have sour we heavy that ability and have to and I'll take

of the hubs the to key of then that look well. have optimize grades to to connected the moving many kits, oil by our value continue that flexibility multiple will we optimize take forward, chain. flexibility believe we kit a to portfolio that is we And So our default, heavy and optimize our but element drive value the we're as of and we'll to chain chain -- value the to

Timothy Go

to be arb crude but flexibility refinery, Puget for advantage the whatever us, Sound to site El optionality crude would access an the got at access continues to is Dorado refinery. I refinery say with direct We've that our not best Doug, Cushing. and just also with to for Yes. ability just the

picture month think crude to in records monthly production that remind they quarter And From a production every crude November, takeaway just I production records continues bigger annual want the increase. that will during TMX the closer month, capacity. perspective. Every I set even or that to once Alberta Canadian folks quarter to crude or again crude the frame. delays time TMX when production a outpace December, is

is ] again X that that advantaged be So will takeaway on going constrained, fairly to situation win crude. in frame this be maybe we to capacity and back [ time we'll short, years be believe something period Abby into good

position So increases we again. a this is crude -- just short-term think until Canadian crude production

Douglas Leggate

and what figure Great out stuff. watching We're all happens. to try

us your navigate. buy-in walk So obviously, just I big was housekeeping the is you because other The it a probably give I'll if issues And of have guys in My appreciate leave in to us there? you you light you quarter, still it any Thomas. at cash I'm helping like cash. can us Any wondering help question, that. change through like if interest in was mind was the draw tax can and HEP, but

Unknown Executive

working was depreciation items the a million. on we of almost closing that kind dividends did the the kind we it you is from was on the the HEP Obviously, from as we on essentially in, of account is transaction obviously, When look about capital, buyback And from in incrementally the the -- draw for that the of quarter terms we the tax HEP substantial. flat ticket which -- on into took bonds, you once payment at the got $XX of the look benefited cash well. paid we the $XXX big that cash rest side, stock it, Yes. at was of revolver that to we -- perspective, depreciation the that. buy the and when of on million the HEP bonus

Timothy Go

bonds that some million in we quarter bonds. maturing had we forget, paid with don't down Doug, $XXX And

Unknown Executive

Dino bonds, correct. bonds, bonds, our not are HEP I to want those And

Douglas Leggate

Yes.

depreciation gap the I bonus the on us. think tax, think, I the closes for help the

helpful. really that's So

Operator

the Your Gutter Manav next question line of comes from from UBS.

Unknown Analyst

the to go the lubes XXXX. as I for ask wanted outlook business clarification also quick And about we a into there.

Sometimes don't. FIFO looks but there reported you EBITDA segments, EBITDA for sometimes XX% like a -- charge. was adjusted report for million inventory the $XX loss, you it was some the

So the could number was if that? actual XX%, closer to clarify you

Timothy Go

Yes.

Let me comment ask know, Matt. is tops for Matt, our business, you me leader him as let have first. our

Matt Joyce

Thanks, Matt Manav. It's here.

oils on Just Speaking FIFO that finished We inventory, range. It's XX% the which up excluding saw absolutely number think, to the But FIFO, the range. we -- to shifted and feed you're FIFO $XX quarter. drove million really result, costs a throughout lower I quarter, expensive number. impact that It's a including had final robust base and was the FIFO, quarter. more as actually XX.X%, And older our consumed right.

falling and the that not quarter really the But XX%, volumes of anticipation kind it, hangover portfolio. when seen by that demand a back We've what's saw And now. of starting of across the month replenishing we many first destocking through slowdown to come of customers the of was come at offtake driving in of look in back the we're prices first but really, to we of see the half their driven quarter, inventories.

there. So that was primary driver the

did to market the all working the provide a still a that, there. bit that our trying execute we is environment still despite with end-use course, team regards bit of strategy. to a in the market tremendous European of The are some But find its to sluggish. markets job really of of over feet Of

the finished product we by basal have. lines than and captive more We year ever placing

that and that We also the focused continuing lines our earnings to getting throughout a and housekeeping aside us to reduction. result. well Put performed that transparency we're EHS, as got course, instituted and efficiencies complexity and more give those business together, a position to -- product reliability costs, after we're gaining simplifying processes you've do I of mentioned and really better on from about healthy quarter. a quarterly tools by quality it driving digital that profitable operational prior and in our we've And we're

Timothy Go

of So our FIFO impact Manav, that million accounting system. is it $XX

out So actually adjust we that. don't for

million representative is we how is Our a people the FIFO impact the that business about. to range $XX of talked like in still that is help underlying we adjusted But EBITDA understand more that is because performing. what

just to people help that. want understand we So

FIFO time. the in out over end evens

back we to have been increase so years us time for team very deliver prices bullish believe And we business. think good continue we'll last be phenomenon that continue as will get out and margins outsized that we in oil even despite yet, on think will Matt over well. year. decreasing, we his to to base and this and all that XXXX, as And don't XXXX here We're different the saw We anything year. able results, -- expect

Unknown Analyst

gross time, A is quick be follow-up here, like of period a team Tim, highest refiner. you the to and margin the you would have indicated that over

highest a capture. in the way, reporting So

#X your You you what steps of are U.S. reliability good understand have in commercial or to to help looking Help over get refiner goal the it's you the us margin gross it. to made more whether progress take, being

Unknown Executive

well the with production, on kit, advantage take way of our we and in, but some pleased absolutely our heavy latent that we're place. a and things that That one the to oil are path that. markets value doing not we've Manav. distillate our of advantages of the that include taking to we're that taking approach pushing that We're chain. to capture the Jet. a take going doing drive in taking premium goals, of Thanks, stronger We advantaged only crude we're production, is markets advantage increased believe our put we're but things on

but light products you across with those cost that chains things of to well. approach acquisition the is the the of business in of the our look value business. I'll our some We And performing do our and through only what do asphalt heavy also we right not is and differential, all finishing

So we'll we continue the that our see the focus on fit grade geographies. take to can best look high and in to molecule to advantaged it optimize markets and where we

Operator

Blair Matthew from TPH. Your next line question comes from of the

Matthew Blair

think [ are results I impact And this had QX sound? you have of on you that capture ] downstream a bound able that the still FCC so, plan if that about questions [ is on ] dips Ake.] benefits few to PG you'll the turnaround the your units might of still QX, your running First, in the about like second, PG do and Syncrude given be XX% [ these turnaround syncrude wider

Timothy Go

well. Yes, crew we'll It's those not that bit in this And run a are lot of that in, the during even Tim. Syncrude, crude do a we are and take barrels pantaged quite turnaround. is it still able Canadian of of is heavy Matt, We all as PG crude. some be to we --

that is And blend you point. still ANS and brought up we an basically available. So that good going barrel believe to be mimic to a we

a able talk been that. has and about were of how we as take you've heavy Syncrude and at of advantage very to really able We strong, to dips take Canadian lot advantage peaks. we're The pointed out, differential that full

Matthew Blair

your fold. regards think bonus depreciation there then deferred XX%. that about then taxes, rate Sounds I talk good. that long-term still for is in HEP changing anything to outlook in guidance is the on XXXX? now could roughly Does is your guess, to your And the maybe in your given tax And you I XX% hold?

Atanas Atanasov

tax taxes, to was bonus Yes. as -- 'XX, This of to now depreciation is planned quarter well. the impact a Atanas. fourth deferred benefit XX% impact we'll XX% some but in our does tax rate. And respect largest deferred the XXXX in have rate the With as with yes, on tax respect to

Operator

Your from from question John JPMorgan. next Royall line of comes

John Royall

Sinclair. target XXXX? synergies we the after progress speak your any hitting to there Is update that you past you is for there should you've incremental on original initiative? And a that those? out to Can in on expect -- longer-term see spoken are some think some there Or in

Atanas Atanasov

John, capturing thanks for is integrate to your and and we synergies, question. With optimize Atmos. portfolio, our continue additional to respect synergies. This our we're

our already systems, to integrate also of synergies point, our we're to chain, in on across base to example, side, in at oils of resources. the we're but portfolio able continuing offices for lubricants optimize Matt's automate itself value For looking we've lubricants, through as the specialties in systems to such continual upgrades example, in finished our and continuing integration, incremental segments, back in value and terms both where, existing Sinclair through the we're processes IT realized, capture that some

beyond provide In we more good we're companies, give these value-enhancing synergies related not example. as to prepared go into having after are the say, to processes we're XXXX. streamlining types so said and is of HEP, to respect yet. procurement X number, example, further public earlier, as synergies For we are a With systems. be And But the I'd year. that these able to a -- clarity continuing that probably we'll this to one specific -- go

Timothy Go

the John, in add had that top continues that quarter, And Yes. some reflecting continue of would the see to we opportunities of think and the you I additional find I fourth continue the improvements you quarter-over-quarter. and as just West will to and And capture to synergies reflect finding capturing. able that, I good just that that we're additional on the some guys to in of that watch capture that think we're

John Royall

could I one it returns we Atmos. a payout about target think, talk reason this or you speak for think Should any the the your sales open maybe then expectations And versus And of and terms Can year? next market or XX% purchases in you to be the shareholders can more Sinclairs just form the about of then buyback, is, to Great. into there? also less? from

Atanas Atanasov

With return Sure. for your shareholder Thank XXXX. to you for respect question. expectations

reiterate as want shareholders. -- again, all, return committed capital we're we to to our that of our to we First strategy XXX%

XX% long-term target. year. that And to the exceed prevails, this the dynamic shy that. have payout payout mid-cycle is as XXXX our view to our another we're is ratio not ratio extent But that above We --

we and to last to top see, dynamic we cash our year. both we've this as As the dividends have priority, shareholders payout you purchases, could to the REH that continue done in excess returning and will to markets. will cash we're year, both. through diligence respect and to buyback, again, And buyback coal we're keep is form demonstrated shareholders. returning of ratio, and With our and and open consistent remain

Timothy Go

we increasing returns to and returns. of Yes. just John, last The again. goal just commitment our announced dividend I'll continued shareholder shareholder and that week, increase add

put the have directly speak their for XXD to Rego [ contributing company in Look, shares can't they do so. sell year preference the But that's they their to would So that family that said we we out that continue that. when ] last be to Sinclair. to owns to desire a

Our preference is to buy those shares directly from them.

do full We in just the on is And we've well. that. us return continue we're sides Mid-Con, inventories above we on turn, good not be. on for us and excess seen about, before, be going both to what it's with that think XXXX, 'XX have We but as be to as is seasonality do recovering I our market in to view talked consistent when starting mid-cycle. opportunity think going think, and advantage so going going mentioned to few bullish be for is we cracks continues the what think and overall that in We as us to to is last as to another that's Rockies we're We as long to take years. XXXX. an allow our going shareholders year to the And the the to to cash

Operator

Stanley. comes question Laetsch of the Joe next line Your of from Morgan

Joseph Laetsch

back the macro to the versus you're like just system just the West any what then hoping within I'd seeing in seeing across could would you're diesel. So highlight and I great. trends first. And go was be your you gasoline demand to Mid-Con differences both

Steven Ledbetter

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

than but think in pre-COVID demand and I softer both was diesel QX as talked versus also quarter higher we same So levels XXXX. general, earlier, for XXXX, about gas

bit more diesel versus a more think becoming on supportive. that and the gas same is the articulated, think seeing above see as associated into looking mainly XXXX. this and margin mid-cycle an And it is improvements both inventories, for we structure Tim and and structurally, negatively picture in West. balance quarter versus little seasonality, demand it's impacted forward the for we're demand already Mid-Con, both Overall, I QX. Specifically we're seeing the We in

Timothy Go

that think even Mid-Con, took balances that. the really a again, people especially very of the in saw, And basically very, project. now, with I January right weather We what cold being are are a over lot bite in I came time frame, know early watching that through of Joe, The inventories further now. those right time, outage typically the BP than seasonality out demand and restored widening would those

Joseph Laetsch

throughput target your Great. And barrels towards the on now? in know is the per first I get the on hit want quarter I just XXX,XXX wanted the we that are then to to where guidance. path gave thoughts throughput day you guide, I but just right

Unknown Executive

I'll Maybe in forward can look. chime then start and Val on our

mid-con in the and that rest on And fleet Our that gave Puget. quite QX runs. was a season the slightly our turnaround then actually or the for lower economic guidance of driving $XXX we quarter, earlier impacted positioning includes the lower year. it and that million, at the $XXX million reflects We're cracks a to into and for strong the laser-focused bit

Valerie Pompa

And to Yes. I'll our back just go reliability focus.

over focused of really we the we've earlier So talked on -- years couple PARCO. about last

improvements see and record crew past improvements to reliability facilities, story. quarter, in achieved same Our this at we're runs continuing their facility and Parco Nava, those

stable yield to intervals. $XXX optimizing reliable operation focus we're the a And the going steady cycle runs our -- and path really time a is and turnaround on million time. to That's over so million $XXX

Operator

comes from Cowen. question the Jason of line from Gabelman TD next Your

Jason Gabelman

discussed The journey the have are And out selling overall M&A has just exploring kind there. first you you kind maybe market in business at the on discuss asset where the that is lubricants performance for interest of and an in moment? on lubricants one sales. the is of current Can for past, straightened as you've

Timothy Go

bullish shot a take that. lubes me We're let on still business. our Jason, at very Yes,

business. XXXX for than In investors the up we And business strong that be year earnings shaping We think credit another believe the of has the it believe really fact, to year are undervalued. we've multiple still higher is third us. for. in a again, We a good just that put books from giving is that what us

the these for forward. us that But as the in market actuals books in we that of hoping going additional credit years put will we're give

you're nothing alluding of changed has there. chemicals of kind in their the So lower general, is cycle. to The as at part market

now right standpoint. best is chemical the And not itself so market a the from market

but And so there There's what really well. It's midterm nothing thing it's not X we're X going changed or short-term a we've said look a at the -- thing. next always is to for no as more of years. this,

full stock But anything do out chance looking our market in own it's something and want to value before that we So we're still we go give very at. the that in interested show price a different. to

of still want continuing we've We we're think forward also Matt drive that more We improve structural business. as about the lot bone lot a talked to got a to, and our well. business improvement there's as earlier, on opportunities base lubes meat to

to So is say course. still basically, Jason, nothing new update to but on everything

Jason Gabelman

with you of and correct? Rockies. Got how couple product it. but on And obviously less my years strong summer very there do that product you follow-up some have are the forward, the I that Is back. in pipeline coming another summer expected before kind pricing driving moving market a refinery is region, view of capacity in on up that there's just think And season. And start to

you prior COVID? relative where general price thoughts expect it So on just to to that where maybe market to was

Steven Ledbetter

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

with you're refinery I So issues long green And think into gets based start-up that we're the tight. runs. one goes gets product is pipeline I that quickly watching up it the that on to referring that market very -- Junction. associated or premise think there supply and

so to think And to be they that. -- looking would I take of take looking advantage

I only going forward on going barrels those markets terms look Our to a footprint, the advantaged as an give also continue view there, us. see to forward-looking perspective pricing logistically Sinclair to a current the our we still our Southwest. source to but go the not that for elements in it's brand do branded strong and because the grow this to capability a into continue in structure of there's market from of we're and is don't something think at us, lot play drive. but for opportunity market, guidance we're in important to

Timothy Go

is pipeline and Gallup this the high shut some structure has tariff be down -- really We of since that up were that that just And the Jason, for going barrels a I'll you there, pretty to there. there just precoated. was that pre-COVID already replacing is remind think refinery area.

source we to going still we're into a advantage that barrels to competitive so region. regardless, And think have

Operator

are this questions at There further no time.

So I'd comments. for back to like hand closing to Tim

Timothy Go

advantages our the portfolio competitive in mentioned out of Gavin. These these and to achievements for in these Well, my give new remarks, results. employees hard dedication opening to testament highlights I I a outstanding of results employees a shout of to thank business XXXX. and the execute are of delivering on our to also our and work want strategies lot you, a and all our deliver

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

Operator

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

HF Sinclair (DINO) 21 Feb 242023 Q4 Earnings call transcript