Holly Energy Partners (HEP) 4 Aug 212021 Q2 Earnings call transcript

Good morning, and welcome to HollyFrontier’s and Holly Energy Partners’ Investor Conference Call. At this time, all participants have been placed in listen-only mode. The call will open for your questions following the presentation.

As a reminder, this conference call is being recorded and the press release and slide presentation regarding today’s announcements are available on the Investor Relations section of the HollyFrontier and Holly Energy Partners’ website. The archived replay can also be accessed on both websites following the call. the of to Investor turn Biery, host, now President Vice Relations. will call your over Craig I Mr. Biery, you may now begin.

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

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

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

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

and Craig, Thanks, morning, everyone. good

I questions. for Mountain will briefly quarter addition on assets Holly diversifies its Sinclair’s the news walk first HollyFrontier its and shareholders. the the and Slide be to and that It acquisition transformative Sinclair’s which and diesel we’ll two shareholders definitive today. financial results our Corporation review renewable scales integrated the a region. it and HollyFrontier that, will and flow the network; our Energy the morning After turn for differently expected that, put things increasing while was of X, and Starting brand the Partners create this HollyFrontier, and light Energy within free of to Holly Partners will deepen transactions strengthen the and with Partners. space; our with we we over for the both through simply, mover the HFC in it will and agreements HEP’s Rocky iconic ESG it cash expect into little share Rich our before benefits they in portfolio complementary the business, Sinclair for have doing HollyFrontier’s first distribution call Energy And We entered are companies. Rich we position, increase the thrilled to positioning and sustainability. be year, on flow of Holly to In returns refineries earnings, commitment to will cash us first

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

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

they company. merger, and deep represent family have and holding for of dividends $X.X our regular an the transactions we plus. business our Renewables spent business, inflection that our built and X. returned have interest growing from employees Partners. transaction share we’ve more believe and point repurchases. for Energy the century We $X.X the of our Slide since business to Sinclair in through XXXX brand the establishing of a growth Lubricants Holly of and over special greater cash generations XXXX, Holly decade know than Sinclair to Turning benefiting part business, Refining expanding and through Similar an the these and billion additional We Frontier. period, follows This in Since a merger our and billion respect with last well building our

this companies, X. HF details next combined on We’re of to significant Slide about beginning Sinclair. the overview stake of turn a I’ll and incredibly the retain chapter this family our as in transaction will a excited pleased now we’re brief

transaction. HollyFrontier’s will a XX.X approximately brand Sinclair’s or Sinclair’s with newly-formed diesel branded approximately equal build XX.XX% and named refineries. will XXX.X HF Corporation. customer part holding and and the Sinclair’s Sinclair, existing gas which the HollyFrontier the the HollyFrontier this two exceptional loyalty; First, related iconic the shares and company stock Sinclair. create is Sinclair will XX.XX% renewable marketing of upstream publicly-traded HollyFrontier HF acquiring own Rocky of business shares hospitality common of oil businesses receive are in business all also an activities Mountain-based new HF of million Sinclair Sinclair’s company. to upon equity ranching million commercial thereto, of not shareholders shareholders transaction.

the with Directors the now, of in outstanding team of into granted nominate result, no on share has operate a stock Sinclair HollyFrontier’s has company, senior each combined at one common The turn HollyFrontier convert the transaction Sinclair existing expected and comes at is all-stock of stock to closing. to to stock HF Upon July XX, transaction value of HollyFrontier’s will been Board the will The mid-XXXX. Directors Sinclair XXXX, Rich. I’ll Sinclair on right call As debt. HF closing, closing common management And the $X.X based a closing. the billion two and close price share to

morning, Good everybody. you, Thank Mike.

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

of earnings will the of midstream stake. scale interest will own this and a EBITDA. total million minimum of consideration $XX gathering, based of Sinclair the Over three XXXX. already receive million on UNEV HF common and $XXX We transaction, HEP, HEP of $XX significant power cash terms $XXX of HEP a additional commitments these shareholders the million joint on management will interest to Pioneer and Powder we right crude on the HEP to HEP’s add is XX the to million operate volume been in XX, Sinclair one July annual offtake, revenue provides senior for be acquire Critically, to ventures also company, combined the for long-term product for acquisition, including will also HEP’s the expected which transaction close remaining Director The in mid-XXXX. by On granted of closing. team transaction the supported Pipeline, closing Flats is pipeline, price existing and Under at to XX% Sinclair. nominate million expected closing units the Sinclair’s Board in with HEP Pipeline has assets

Rich. Thanks,

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

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

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

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

quality exceptional oversee very the are also mobility the experience our we level, stakeholders. other at responsibility products of mix Board customers and to skills governance of is delivering the and equipped right take and for life. our the We company and our that supplying And seriously our ensure with for the with provide shareholders

X. Turning Slide to

marketing in With products Sinclair. You one the scale within recognized strong that represent can a fit with the through a business Slide dinosaur, time a integrated discuss creating Sinclair iconic existing business, how sales and some of industry’s a strategic and why to HF the this marketing branded business. begin the and of I’ll walking and compelling brand these a across have presence. businesses see complementary a Sinclair of opportunity our of clearly The symbols this range grow geographies our are business will business for geographies, company diversifying we acquisition. On take branded individual significant brand some combined benefits adding want to as business most through and are HF is the mind, with consistent our base XX, By the will in an wholesale building DINO, known I channel.

We’re branded provides locations X,XXX marketing manage The significant card integrated with distribution addition of team to Sinclair’s generation grow branded through us product will consistent also programs. as distributors marketing X network. board the with marketing earnings XX produced XXX sales. and fuels from business on sales and to channel brand branded provides or additional well as licensing for stable a business help states and renewable margins identification who over across credit over RIN fuel bring Sinclair’s a of thrilled The footprint annual gallons of billion

refinery value per be first also will flexibility Sinclair U.S. space. Turning leading profile and low mid-XXXX. facilitate our to unit at was operational feedstock Feedstock of approximately to feedstock risk. with we to generates and fuel XXXX in higher of the anticipated been was be The produce as feedstock allowing process is carbon business support clean currently day. expected Its lower renewable pretreatment the XX. a The a pretreatment of recently in procurement, while advantage now production will flexibility. three constructing renewable is Sinclair, transition. the intensity and Slide million through we also renewable an producer diesel for further carbon mitigating gallons this unit, logistical, Sinclair standard combined on synergies completed the in Wyoming size operational expanded in Together, has annually. scale unit diesel since with help barrels to renewables XX,XXX colocated enhance and a diesel renewable mover its single diesel production facilities have to energy ESG and will XXX

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

Denver City, to are Lake across distributes crudes. Northern and and the high crude to Like we refinery diesel high to approximately their network, gasoline, Canadian in million an Dakota. to feedstock has company’s refineries Sinclair operating pipelines of and are combined oils Casper expanding refineries, adding Slide HollyFrontier’s and and delivers the convert gas Sinclair South footprint Refinery almost business advantage on of XXX,XXX capacity, products refining the XX, Salt complexity storage. X.X existing by Together, existing Eastern Turning percentage discounted Rocky Mountain tier the access products. a value Mountain Refinery region into other the Rocky the given day refineries refined refinery Rocky barrels of refineries the Sinclair were the Mountain that to products two The complimentary per barrels region. HollyFrontier’s add Each

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

With additions Rich? create company an an opportunity value to significant combined to that structure. increase cost has reliability improved these and

Okay.

network representing Wyoming Powder assets provides of an barrels XX to assets minimum in generated. business, and of including Turning will distribution Holly crude with supported integrated also Partners crude Rockies, three in combined existing Consistent XX of these Nevada. serving commitments, to the with system for Slide will product acquisition product long-term Utah Guernsey. stakes miles capacity. will key Basin by the the in Sinclair’s million of HEP and volume hubs River XX, Together, be X,XXX terminals crude Casper pipeline over Energy the of connectivity storage in revenue and and joint acquire company HEPs productions expansive operate XX% with ventures, through

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

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

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

perspective, increase branded Refining the business, On we combined diesel the the companies the in wholesale expense sales procurement HollyFrontier primarily through values we optimization another multiple to of product commercial cost costs. renewable of improvements and $XX million by million side, in opportunities, improvements margin sale From gross legacy our expect through diesel the through logistics activities. and from as anticipate feedstock operating renewable $XX an savings, such

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

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

diversification the year by $X.X dividends quarter share leverage, reinstate to expected enhanced is billion first to XXXX. transaction for XX In and $X strong our as medium-term, In shareholders. flow businesses. environment, HollyFrontier’s quarterly cash share be company’s flow of capital rating. per combined XX, increased Slide return dividend the announced, and expected cash to able of tax intend Fueled cash and to year. $X.X profile we Turning credit HollyFrontier’s approach over combined investment regular In through previously To for approximately to of a we history, free be that the lays and to the our be of out will sheet generation, regular flow within balanced year. by cash intend significant accretive end, each cash free a will quarter the is to return first total scale billion no per company part our of and earnings, commitments of shareholders returning to expect XXXX. to a we $X.XX the to flow support Sinclair to free second to billion as after mid-cycle EBITDA company repurchases per the maintain on of with Slide investment reduced credit Consistent and renewed shareholders. cash grade through of balance capital the near-term later be our the we anticipate

cash For represented from increase from XX And returns next this return [indiscernible] months, there. the

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

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

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

Thanks. Yes.

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

mid-XXXX. We in to expect close

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

$XXX HollyFrontier EBITDA share per was Okay. are quarter. and press $XXX you, of $X.XX to EBITDA Details second $XXX the reported million. morning’s attributable stockholders Mike. income net was of net in adjusted earnings million, diluted Reported share $XXX adjusted per available for Thank our releases. million and this $X.XX consolidated or or income million of diluted

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

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

and Distributable million, in quarter, of to with versus or and product closing income $X.XX that, hand the to million At announced by to supported we markets record our second per was unitholders thoughts. some quarter of $X.XX quarter business, in demand cash XX $XX flow we reported third a serve. August crude HEP refining attributable for and for running representing I’ll year. the approval. same improvement refined a the X% increase back X. And within between last $XX per per August the paid of XXXX, all on be EBITDA it period anticipate of continued distribution to on Mike $XX For barrels day unit quarterly XXX,XXX million, of reported XXX,XXX unitholders unit HEP, we net

Okay. Thanks Rich. details, for those

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

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

for The open Ryan line Piper now from first [Operator Sandler. now your Todd from is questions. comes open. Instructions] floor is Ryan, Our question

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

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

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

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

underlying on Great. long-term you metrics mentioned no to drive what return of swing about that of and later a of of billion Thanks, there slip Is is buyback? the risk allow And capital could Mike. kind dividend to way? $X dividend quarter XXXX. little second Depending an Can near-term, XXXX the And questions the allow that going You the midterm for same on What reinstatement Maybe you’ve on either would the how out mean the that could of a talk expected the outlook buyback? strategy maybe a – that the bit is returns. to there is and that the cash I of support laid there the and reinstate environment, you it reinstatement further? buyback. allocation. flow for the than of follow-up cash a an earlier? environment in you cash kind kind would maybe

Ryan. morning. Good Hey, This is Rich.

can Sound your the of next the the you and cash earlier optimistic XXXX. the between to to dramatically tell, expect that dividend, to we’re to same our the flow Sinclair. time, will be again, we point, respect later versus in buyback, with be will no back markets, lot as falling capital respect reinstated at come And obviously, the look, a that. XX than absolutely, With of second quarter X And we, months can in depending it then expenditures So to on renewables, add than XXXX XXXX. Puget

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

Rich. Thanks,

Theresa Our Theresa, Barclays. open. from Chen is your next comes from line now question

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

not terribly morning. aspirational. It’s them good – call not Rich. Theresa, would They’re I

estimates internal Our from are consensus. not very dissimilar

You’re a lower. touch probably

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

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

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

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

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

Thank much. you very

Paul Cheng now from Paul, comes from question Scotiabank. your is line open. next Our

guys, Hey, good Thank you. morning.

Paul. morning, Good

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

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

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

Pardon, Paul?

Gulf doesn’t Rocky I really is more say the the Coast matter in here. It on really Mountain.

Right.

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

How renewable? the about and marketing on the

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

oil in your turn and so renewable the discounted is point feeds, moving in are high-grade see question, much and pretreatment. soybean pennies obviously, about to not really license economics some see a as the around very it to a You to are money the to There’s I margin. made your think be broader time. dramatically, – diesel. brand gallon process branding in With ability to renewables, well, cards things into made typically that we over few and stable credit Mike ability take respect What of wholesale today

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

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

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

transaction… pro So forma

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

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

balanced. you that’s your when diesel – And you’re your say two plant, renewable right, two including renewable own

Yes.

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

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

And DX, specifically? how about

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

Okay. Thank you.

Thanks, Paul.

Sankey your We a from Research. now Sankey from Paul, question is now open. have Paul line

Good morning, all.

I on question. if EBITDA continue Just could the

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

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

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

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

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

Well, Paul. it’s similar, going to be

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

ahead. Yes, go okay. – guess I

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

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

Great.

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

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

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

and we’ve management to in operations, out. leadership. the some mechanical Sinclair We spent overall update. team we’ve even additional our to with assets. tell Puget last that Rockies. thing markets. operational the resources of [indiscernible] be safety improve years on integrity, the some see we’ve just you We have We’ve you’re excellence got process strengthen this as which laid shore build that in able the implemented. trying turnaround I But to process to been not serve I of earnings to internal to We bringing the the quarterly that. understand few to on an last operating the We’ve got with the the a the side, understand Sound for help environment is system markets. it’s starting existing on We fruits operating just our familiarity capability capability labor think refining product operations that going with We side, foundation here both management crude the for understand in will One us up

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

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

Tom is sorry, – ahead. Creery this go Paul,

You go ahead.

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

last on since where call. we quick Just at the we Nothing a last changed. are has earnings really update talked

still Their All have in the critical time. path We’re looks items in still on as at good schedule of been ordered items. point terms this the both cost been schedule. have track and lead long

We’re plants RDU locations, two in like all phase are three being I well manpower heavily anything at the Artesia. the shortages last into PTU that are we the construction Things on as And well. reported. else. say, as track as going No or

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

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

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

Yes.

Okay, guys. great. Thanks

from question have now JPMorgan. your is from now We open. Gresh Phil, line a Phil

Yes. Good morning.

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

mid-cycle. think of unit diesel you said currently? renewable the performance it have characterize I a not how that was right in ahead I you wondering business would given pretreatment the now, your walk of could $XXX we that get you model kind about then of try of there some EBITDA million through could if think And assumptions we the to to to this. does as

morning. Phil. Rich. Good It’s Hey,

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

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

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

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

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

Okay.

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

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

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

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

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

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

Okay. All thank right, you.

Yes.

now comes from your question line next Suisse. Our is Gupta Manav Credit from Manav, open.

Hey, Rich and Mike.

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

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

and XX bigger XX. peers are Your

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

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

that So move. a it’s we think smart

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

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

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

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

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

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

you, Manav. Thank

Manav. Thanks,

now line Suisse. Spiro, have now Credit the Dounis from your is open. We question from Spiro

guys. Good Thank morning, you.

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

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

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

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

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

it. a That’s couple, Thanks. Got Rich.

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

Yes.

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

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

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

Congrats. had. Thanks, Perfect. I That’s guys. all

Spiro. Thanks,

Thanks, Spiro.

question from line America. Doug, from is Legate now Doug We open. have your of Bank now a

good on Hey, guys. is Doug. for This morning, Kalei

from me. questions Just a of couple

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

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

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

Got it.

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

Sure.

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

obviously well the feeds, here our procurement. a transportation, consolidate expense really, we’ll scale side, So space a opportunity some operating to renewable opportunity again, it on is example, $XX in of There’s in the big gross in By we sourcing see lower-cost about side, way is using that in renewable million which side. tremendous ability opportunities of also space. as the In deal the renewables. as in plenty again, see margin the

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

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

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

No.

Okay. you. Thank

Fargo. Michael, next now Blum open. from Michael your question Our line Wells comes from is

my for Thanks taking you. questions. Thank

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

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

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

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

much. very you Thank Great.

you. Thank

We now go question from Tonet ahead. please Jeremy, a have JPMorgan. Jeremy from

Hi, good morning.

Good morning, Jeremy.

Good morning.

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

Jeremy. Yes,

So directionally, you’re correct.

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

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

Got it.

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

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

some we’ll get So operating leverage there.

leave you. I’ll there. it Thank it. Got

Our comes please Jason Jason, Cowen. from next from ahead. question Gabelman go

further any strategic color on on or intention some the the that. that is taking the couple issued of over years. is Just debt-to-EBITDA And the offset maybe the couple to for want on I the acquisition buyback once you closes, just the HFC, shares buyback time, next understanding provide on first where target and of questions. the just of wanted then Hi, just years get to thanks out? yes, to the to? rationale to for back Can what number deal. And going you outlook period my ask the next debt

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

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

Oil yes, they’re range will We of expect participate We being the with sellers do forward Sinclair we consolidated an we around the down respect the target that and And sheet. time, on balance whittling debt be I times X.X wouldn’t clearly a closing expect forward, And then going this respect we market We shareholders repurchases, market. look over on EBITDA. per foresee investment-grade do leverage targets, your absolutely. to right to the would the financial selling. that expect in to question be be say well net to in your questions, and within when to do to Jason, se. with have to expect able

next go from Roger, question from ahead. Our please Roger Wells Fargo. comes Read

Yes. Good morning.

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

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

maintenance Brent with Hey CapEx, that we it’s in And low spending. number expect assumptions of see. differential the – that foreseeable kind number, differential a is it’s barrel. Midland Roger, WCS actual to of consistent capital there in crude mid-teens. we’ve Really, respect prices a that $X you again, is no a what future. the freely diff is are on a that to in with crude these previously. TI capital $X, mid-cycle admitting With year shown diff there And the embedded so mid-cycle for no

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

that be around So there will admittedly. volatility

Okay. question. other kind Thanks then Rich. modeling-type one And for that, of

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

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

that’s So used. we what

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

Yes.

from Paul Cheng a follow-up line from open. question Scotiabank. now We Paul, is your have now

long Thank you you. maybe Did is Hey the how guys, I say it. missed lockup?

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

Okay.

every unlocked. yes, three So XX% months

or months six so. Every

Okay. months. Every six

months? every XX% unlocked So six

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

I see.

Okay.

Sorry.

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

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

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

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

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

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

I’m So bit a that. surprised

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

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

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

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

So that’s…

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

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

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

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

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

good. you. Very Thank Okay.

Thank Paul. you,

now your is comes Neil Mehta Our Sachs. Goldman from line open. next from Neil, question

Neil. This Hi, good taking Thanks on is for for morning. Carly the questions.

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

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

Bruce Sure. is This speaking.

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

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

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

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

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

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

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

Great. Thank you.

There are questions. further no

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

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

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

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

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