Holly Energy Partners (HEP) 9 May 222022 Q1 Earnings call transcript

Welcome to the HF Sinclair Corporation and Holly Energy Partners First Quarter 2022 Conference Call and Webcast. Hosting the call today is Mike Jennings, Chief Executive Officer of HF Sinclair and Holly Energy Partners. He is joined by Rich Voliva, Executive Vice President and Chief Financial Officer of HF Sinclair and President of Holly Energy Partners; Tim Go, President and Chief Operating Officer of HF Sinclair; and Tom Creery, President, HF Sinclair Renewables. [Operator Instructions] Please note that this conference is being recorded.

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

Earnings Partners Thank you, Sinclair Quarter Energy HF welcome and XXXX First Chantal. Good Corporation morning, and everyone, Call. to Holly

morning, the ending for March announcing quarter issued releases XXXX. This we results press XX,

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

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

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

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

Great. morning, Good Thank Craig. you, everyone.

of Sinclair And first on we transformational was acquisition of renewable diesel HF the of sales the quarter as we first companies, The new XXXX the our marking closed Sinclair. made Cheyenne. from

decreased income by first million share. net items by million. of $XXX collectively net our performance per quarter diluted the to Refining shareholders platform led segments. $XX reflect Our These results, integrated Lubricant We financial income special $X.XX combined reported strong delivered HF that or and results of attributable Sinclair

XXXX. per quarter or diluted increase loss to million net negative an first quarter of share the in the Excluding the Adjusted per quarter the for compared EBITDA net XXXX. for items, compared current was of to diluted million, was for the period $XXX $X.XX $XXX $XXX of or same $XX million million share adjusted $X.XX income

per acquisitions our our an to at the Sinclair business strategy in through announcement plan. dividends of excess of reinstatement dividend has of the Refinery long-term regular commitment returning pleased With returning of This in Renewables the the the to Board HF the months, The full XX% to our Directors allocation income share. and of announce milestone and closing to quarterly $X our the reflects our of capital next of with buybacks. $X.XX increased cash allocation are Sound declared shareholders of over the approaching target first rate net we Sinclair Puget operation, XX capital billion and shareholders

The Refining of compared segment Sound as period margin Puget of reported driven per and million higher EBITDA of gross of from a impact the $XX same XXXX the year. well the an and EBITDA produced product adjusted million Sinclair compared was $XX.XX demand as volumes for sales margins. to stronger XX% increase and million gross compared quarter first to by acquisitions to refinery loss increase last barrel, adjusted of million. This $XXX $XXX was the $XXX Consolidated

per and mechanically barrels first and XXXX. of 'XX first segment EBITDA Cheyenne $XX reported volumes fourth XXXX. negative of fully XXX,XXX diesel total The day. of averaged throughput The the renewable the quarter million, of in X operational crude approximately quarter First unit for gallons were was quarter quarter the Renewables million sales adjusted complete in

closed RDU. complete to the March segment Renewables New operational the quarter PTU, completed first our the was unit, RDU is Sinclair of and XXXX. in And XX, effective in Artesia, acquisition expected of facility be XXXX. at Mexico Sinclair Also, includes second the the Artesia the with The quarter pre-treatment fully that

second to the will expectation earnings the modest of with quarter. in assets We these positive continue and optimize production ramp up

branded total We existing fuel the The representing remain Marketing segment and the first marketing believe segment of $X.XX fuels, were branded the per addition sales $X XX geographies. in for uplift produced with this provides on for quarter we million focused a and business XXXX. growing gallon gallons, volumes consistent channel EBITDA sales margin of margin was million a our

and Within our Specialty year. period driven of and in quarter segment, EBITDA pricing that for demand reported the by energy Lubricants first initiatives increase compared and million the product of to rising was finished same XXXX, $XXX million outpaced strong Products last we $XX costs. feedstock This

EBITDA for is $XX that in decrease $XX sales-type the million in a million first mainly compared million accounting of to first to gain $XX quarter on recorded of quarter of the attributable of first ATP The lease reported the XXXX. 'XX quarter was 'XX.

fundamentals next we as our diesel the are refining years, gasoline X new remain low of favorable includes summer very segment assets, Renewables product our and we Together into with production integration executing synergies forward, strong focused to which excess to head coupled of our season, successful million demand, cash inventories. realization and driving up strategy, on ramping shareholders. our of new employees, with due the Looking returning the in over $XXX

to So let turn with me that, the Rich. call over

Mike. you, Thank

Sinclair's Let's begin HF financial highlights. by reviewing

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

cash the first $XXX Net operations totaled million sourced million $XXX spending $XXX from quarter. million capital. by $XX working capital included cash provided Sinclair's for million, expenditures totaled which stand-alone of HF of turnaround and

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

facility billion to previous provide our ratio billion liquidity in we At and XX% the we $X.XX credit due a in debt-to-cap increased XX, to billion debt-to-cap XX%. a for order revolving scale. outstanding, debt $X.XX additional stand-alone of our with April, March $X.XX operational ratio have In net XXXX of of upsized from

units, owns Friday's million. XX% million HEP at units received LP XX.X HEP's the Limited value first by the of distributions outstanding represents close. Sinclair a billion totaled HEP $X.X of of as Sinclair of Partner which, last Transportation, HF acquisition market quarter following Sinclair during approximately HF $XX

to some Turning guidance items.

$XXX Lubricants million With Refining, at our $XX for the in million completion the $XX to for million of in and Sinclair we total million $XXX expected to $XXX capital. catalysts. at HEP, and to We guidance have $XXX corporate $XX we $XXX and million to million expect million expect capital between $XX million and Marketing, and between in acquisition, Renewables, $XX At now updated $XXX Specialties, $XXX million to million XXXX. and million million million spend between $XX million turnaround $XX in to spend

other a this XXXX, economics as At we time, suspending of as alternatives. unit pre-treatment are well pending review of until project construction the potential Sinclair

and spend For remain of million RDU Artesia and on $XXX we the million. Cheyenne our to PTU total RDU projects, $XXX capital budget for

to tax, XXXX in from tax million we respect Act. under $XX carryback anticipate recovering still the potential With CARES cash loss the benefit in

be tax the Sinclair acquisition, to of rate closing XX% expected Sinclair corporate HF approximately forward, the the is to XX%. going With

on demand per XXXX, the and Russia's the oil of refineries. barrels quarter full quarter guidance the the product in day our run Casper impact margins XXX,XXX of to Refining global XXX,XXX For trends of strong in expect This our we a contribution and reflects reaction between crude of markets, invasion and and underlying second segment. to the of Ukraine Sinclair

to $X fully As allocation billion our returning strategy capital XX months. of remain Mike to shareholders mentioned, committed the next we over

intend we the per calendar addition of resume In existing repurchase reinstated on repurchase to our quarterly of share, stock billion to program in dividend common $X share $X.XX XXXX.

approximately Company. close, profile, March of we Transportation and consistent Sinclair to fee-based the of XX% revenue. minimum expected the assets Transportation volume XX, with Turning contracted Upon business with completed On contracts, HEP. commitment XX-year Sinclair acquisition we HEP's representing

Sinclair assets guidance $XX EBITDA unchanged million $XX annually. remains to at million to Our Transportation related

strong volumes HEP of increase volumes financial a quarter to Overall representing XX% region and increase mainly to attributable Cushing contribution the an in from increases delivered year-over-year. improve, Connect and terminal. These and quarter-over-quarter another XX% and the continued pipeline are Rockies strong performance. operational

paid per to of to XX announced a cash May we Additionally, quarterly be of X. May as $X.XX LP record distribution unitholders unit on

$X.XX For XXXX, to the distribution at hold constant or quarterly expect unit LP $X.XX the per we balance of basis. annualized on

Turning highlights. financial to

attributable net HEP $XX.X quarter to in first the to income compared million of was quarter The $XX.X million XXXX. first

a net income $XX million quarter goodwill million. on excluding $XX.X comparison, $XX was For charge XXXX, an leases the and in million of gain first sale-type

quarter XXXX found period can same last $XX $XX.X in adjusted adjustments A reflecting First million million to table be release. in compared these year. the reconciliation press EBITDA our was

of reflective as of with distributable acquisition. ratio a unit which flow coverage cash the LP is X.Xx, Sinclair generated million, HEP a of quarterly higher $XX.X approximately count distribution the result outstanding of

turnaround the to related were Cross capital million total million, approximately expenses our million expenditures $X maintenance in $XX $X of units, Woods and quarter, expansion of refinery approximately During capital approximately capital. processing $XX including million

million $XX investments, million For which to and of Sinclair million full related million of CapEx, comprised $XX of acquired is $XX million expansion in the and we and to million CapEx recently $X of million between spend Transportation $XX $XX $XX capital XXXX, to to venture capital, total year million of maintenance expect to joint capital turnaround inclusive $XX assets.

and repay and all strategy of X.Xx outstanding applied due the operating $XXX under or borrowings our flow capital distributions coverage million the We X.Xx. issued committed credit to In expenditures greater, flow partially full capital to in maintaining net remain April, within with X and we to notes cash to allocation goal of cash reducing leverage of of funding our facility. proceeds distributable XXXX senior

Chantal, questions. we're ready take with that, to And

[Operator first Credit Manav comes Suisse. Gupta with Instructions] from question Our

and Mike word. thank Rich, first, keeping So for your you,

You still you a said strong and saw rebound quick XQ year, But issues lingering that. some did, you from thank My for X Refining earnings. the dividend had you question so in here in XQ. very XQ your is will restart

really not running all You even in are out XQ.

running. look So XQ, you we Puget have now Sound at

It of looks You is like and the running. stuff most up have Sinclair assets running.

So unplanned stronger should downtime at you? that planned the XQ, given runs is in -- where downtime when that a and most and and behind you plan XQ, are expect relative look in materially we the no XQ cracks of cracks on the fact

this a I'll Yes. shot at Manav, Tim that. Go. is take

our second We are constructive very outlook. quarter on

of to the in Sinclair full we've got quarter. contributions As quarter look mentioned, second to forward a you

We turnarounds. as quarter occur overall, you that guidance in to and the have the will see XXX,XXX April on expect over throughput the second got we've first barrels mentioned, that quarter. day we throughput in more May. Rich see no But than some versus maintenance activities And major a

Manav, in is the refining at and So look the we capacity Russian-Ukraine conflict, leading that you impact when and mean, you on and the pre-pandemic of markets, to in see the constructive our rationalization I impact the overall in industry, place you supply. definitely demand yes, which that post-pandemic taking look is quarter. seen see the the supply second at an supply market we've

is here follow-up quick a very My again strong Perfect. from quarter Lubes.

you grow the drove to what here if that? one point, talk Lubes business. is, bigger at So wanted a question could But you little the

Now you other have got a lot avenues. of growth

happens business growing a a what it not becomes sometimes, is a little the bit of in is And kind of that firm, divestiture.

reason asking to the $XXX you market leakage, and a cash have tax XX% said decide in in cap Even pure think cash past, like some your -- I'm business. of million -- the the you get you about could this in it, XX like quarter if do multiple. if divest you flow is with business, Can

theoretically, So transaction could kind be here. an speedway of doing you like MPC a

This So be is core to there. leave price to Lubes you? a there, Is wanted to just at a avenues. was businesses? the business I'll And you And divesting have even it still this now grow, if right understand. more open looking to you very would you trying lot your

the and of that question. with business, our grow oil still sustainability like expense to business, power finished thanks it's cut attractive very proportion its bone that, or opportunities owners. in Lubricants there's Manav, terms earnings Yes, improve a for of the of feel the sales. we And Obviously, certainly some at of meat base for lubricants your apparent the on

our So wind sails think here. is we in the

But obviously And inherent grow we else. all in it. somebody assets present try realize of versus is their our worth the worth intention business to our look and to terms in this at opportunity our shareholders of their to

question comes Gresh JPMorgan. from next Our Phil with

buyback First question, the plans. on just

the your particular obviously goal about up this if looking strength there later to for timing talked given you around would any there wondering in year. I where that? anything just was cash today? you're and fundamentals Is You that specific decide from are starting considering back here balance XQ, of posts that preclude to stands

expect we real give it's to No, is XX guidance you cash we months. I would the over of shareholders billion the next we course So of return -- the $X Rich. look, to think time

your growing we'd point, But XX reiterate cash We opportunity will accordingly. months. the to again, deploy the billion is the how next $X and over point, look at, and is of what cash

just $XXX capital And about talked million on cash, from the first Rich, quarter. in you the working

On that going in you were working the to positive about last half. call, first capital certain the earnings factors talked drive

the You also you Sinclair believe is capital a you had us piece? update tax stand on I the cash which benefit. have supposed other closed, Can where than to working just

Absolutely.

to quoted Sinclair of up about million So capital through the working recovery picked that point, about $XXX quarter. of $XXX capital million At $XXX last your of an million about at through number. our we working first I To quarter's close Phil, million year. the expectation earnings, of contributed $XX

the the legacy that's excuse or think still -- me. We business correct base business, for

got go include we've $XXX of reducing to million and So the that another here, inventory expectation assets. our $XX million of probably legacy to Sinclair would

it. question Is guidance for your or can there quarter? on go, the be going that as a start-up to say, about you we the OpEx then my quarter the modestly look quarter to fundamental on think one at second Got given in first costs the way positive the we you we target saw the think all just here EBITDA. R&D, And gallon per expect and, ultimately, is where production, just second

think That's pretty probably, bit is terms be EBITDA and little maybe going the for further, Phil, We Yes, Creery. a good to a quarter in quarter question. and next even Tom this -- even this it's production. of messy

in we of do still a what optimization operating point going have tanks. First time. at lot fill this on things We're to some across. all, is of doing There's

of up and numbers So and a to and first not the be a imagine. can well little revenues, a in some down. it's you was saw lot going cost We there as quarter of lot

short So and of that it, to carry some that's term. the impacting for see we're going over

akin LCFS crack RINs, basis point I with market sort providing we're indication, what now Transportation. you published and is. for do a renewable on is is we our number And diesel of CBOT, a do, to this based publish will out on we indicator you current what and prices index, refining that spread our quarterly margin, a we on a ULSD, BTC

I it's a like like say, X:X:X ]. So [

to we Craig and further you it on formulation the happen going talk to he afterwards, give Renewable to what's want a to of future look more guys in you If thought help can the the detail of business. little the but you this, see would

next Roger with comes Our Wells from Fargo Securities. question Read

these getting and quarter the on all Congratulations done. transactions

Thanks.

Thanks, Roger.

I mid-cycle, the that was returns get think, at, going And look $X to of now. XX on come back Manav, things kind you The along the or something over good right billion to as question. is to I to cash what the next months, is Rich, support again versus, pretty lines, you have, those have outlook trying

we and that repo? the would we're billion be between So what of share environment about $X that how looking environment think the sets expectation? at the baseline sort pace difference of And the today that should

billion is about of So point it mid-cycle it new talked to back Roger, flow. think company. and free out, the EBITDA what $X.X I'd for billion you business from $X.X about we've a cash previously earnings We

environment, of that return. support in we billion So easily can $X

over the very $XXX very with spreads look months, the XX To months, impossible with our the Again, than $X your the next balance that's billion over but it's to better at, point, we're are we currently, share they're cash reiterate environment. XX dividends feel obviously, I'd going predict comfortable ability be mid-cycle rate to what where next of when a crack XX far to -- repo. over going always It's million that return about run months. to and the like

before in poured going today. Roger, a We're in and with just raise that we're announced I'm ahead billion combination are to we this before we was the Sinclair. more But executing of bar. run, say mid-cycle we add to the to a well going start going to environment and to of when $X walk plan -- that, that we that

of No, wanted situation. rules kind to I think understand that's here totally fair. the the just I of ground

renewable things obviously, progress on secondary terms going on. think, the part, turning making you I running. But in as here all very diesel a have Second clear, are was of be profitability, factor to been units to sure

units call let's that for just and the expectations of the on kind far? us how the give or unit? RDU X actual the your, And recap turned of pieces on had versus it, you have Can quick that you've turned the have PTU so a

is is today, nameplate We're of running a a We'll real start up this running our again. tallow X,XXX [ day capacity. at which processing ]. [ mix really on both of FBO Cheyenne Roger, Tom and looks spec. Currently, It with Sure. barrels good. Cheyenne. capacity ] was It's well,

glitches. had a We've but -- few they've glitches, RDU been looking stable And short-term the it's we've there. had good Cheyenne, at really on very somewhat

X,XXX over given On those PTU we of got currently, dirty. is but each barrels at one of day we've trains, had any past X which making of X one a the X,XXX one those barrels had time, or recall, a is the and both trains, at capacity course is side, the not you on-spec clean X weeks, running We've at of and the as product. trains, day,

RBD in put back into upon as turned the in and throughput, marketplace and given as into Basically, Cheyenne that's to RDU little buying our past now then well Rawlins, the bit just obligations it we've finished dependent back a for some marketplace. ability

in our filling product with holes now. own So we're the

the per behind feedstock forward the of it's us pretty not the the to is had buyer huge we're Sinclair working both given give whole was pre-treatment And flexibility. time short we've that And RBD that or a intention going I'd very unit in So se. say, up hand. and well, units well, out to going be units more

comes with next from Sachs. Our Goldman Neil Mehta question

a quarter. on good here Congrats

question EBITDA. I mid-cycle The first was had refining around

that. put out are $XX illustrative crack, mid-cycle the a $X.XX have guys but predicated and at You on billion, Gulf above Coast forwards certainly, earnings was that

should like on remember, as I the if example, of And are think in I'd XX%. quarter, second I your evolving? illustrated given think about views backwardation curious how things you then how the used the in refining all And we into we move EBITDA your be capture rate? curve,

So And evolved? any view thoughts of on the your mid-cycle market? has how

is This going Yes. Tim. perspectives. and open from maybe forward. up can But on on a on the group I hurt comment backwardation is here, capture the -- capture capture rate, certainly, take to us mid-cycle going to then the

the Anytime we always capture prices, We're to in to say, bit capture of A it's helped rates the lower distillate first improved. the gasoline is crack in A going stronger for the commodity strength ethanol us ability helped us. and course, as as have the index jet quarter, little to impact dropping our being market. what us quoted pleased markets just overall costs And improved. well.

maintenance see the -- quarter we as quarter, did first the Woods with do as of as and We quarter less and had second Cross, we first in have all, we no improving first in well. the that unplanned in downtime then as turnaround,

even quarter. second the expect we're despite So in rates, we see seeing that capture improved backwardation to steeper the some do

of group as open comment kind on that. it to mid-cycle to far the As up EBITDA, I'll

in product, and has well the for side. a out shortage and crystal reflected going lack both I product couple sell on, and of out very that's created Russia Neil, the important press are But coming the sure, refined and things finished cracks. a ball, are think of the ladies documented of the and distillate in there Break these intermediates gentlemen.

ending persists? it How see No, long I any that well. soon don't or signs of

going So strong. I to draw the refining is think very that on capacity U.S. be

has million pre-pandemic. the as know, capacity Beyond barrels of that, system exited well since you X distillation

expect, X.X% of prices commodity be the assuming supply. think we're we sort economies of That's reasonably consumption. And prices and, are can now to X.X world our going of and at high. that number. big a particularly of that So stay X relatively strong, capacity It's of products, I

customers to Unknown are a with strong, the and that, like around our pretty keep China uncertainty obviously quite purpose foreseeable try But deck, future. of margins there. demand lot and supplied, there's out an is to our good that planning for going things markets our expectation very to COVID be for run zero the and

sounds perspective. moved like maybe follow-up is have Great higher CapEx but to I relative the And just misheard CapEx. It might that. guide, previous around

And -- we as can we of just should keep think moving you through So year? pieces the go the anything in balance again? mind talk the about

Rich. it's Neil,

entirely CapEx reflective went of acquisition. the yes, up, Sinclair So was which

$XXX you'll we've did rebucket notice. for capital million assets. little increased about So those account bit, to a We

out. now So marketing that's a obviously there's segment broken

which, Additionally, we've had historically, the capital, corporate we businesses. across broken allocated out

level, about little the $XXX a got to So different, at you've but a Sinclair. buckets high are bit a increase due million

Our Bank next of America. Doug Leggate question with from comes

guide for question. mid-cycle Kalei have follow-up is if Doug. that Neil's used that Wondering rails first is This to improved? the crack estimate on My to question a you mid-cycle

And ultimately I'm are incur about the nat costs refining that like consumers. capacity peers gas in international down shutdowns what structural pass their a your to and will to higher and have U.S. what thinking looks

you if wondering on guide and just mid-cycle the the rails address can that's I'm So improved? whether

definitely I of when look here capacity Well, When capacity natural of we the million that's said, the at the advantage barrels, structurally out refining United the improved. X gas, look couple States has mean last as you Mike think you U.S. competitive years. on of yes. come market the in at

cycle right mid-cycle. has in I don't of part The of necessarily say would know now. changed, definition above we mid-cycle as if as much mid-cycle and the are I

to here so the has improved over jet particular demand in last quarter. strength we as And see continue

now, part take it. going right continue refining to full But we advantage a that of continues as rebalance, to to to we definite the now. we're as that market the relative upper seeing of in grow, right We're supply think cycle we're and shortage demand normal in just

it's proves to that's that, element, beyond that and barrel inputs, the probably of the too ago. durable natural to up pick going cost margin The $X -- the but the long has not a to be fundamentals, of now, you through. versus but gas accommodate part it higher to if roll then And and

you, next My question Mike. for is

$X So and portion the wondering in was your philosophy. important be of your that talk your proposition if if part clarify target billion nondividend buybacks. will just past, can can you dividend maybe of talk the to change XXX% to cash an special return Noting value in so you the

Yes. Kalei, I don't new use the holding words element. on is all or family, strong you never, Sinclair a we always that, the through Sinclair. or large never. a owners What in our And of XXX% XX-year transaction, formerly buybacks, that's of tell would the took shareholder form I

there's And is posture not being sales want to be will their future. there those they To in one the But selling sellers. able of some expectation to be offset some that as date, we insofar come.

to I so degree. share favoring repurchase probably a with will would as that large say, be we context, And

their owners, no be activity new date, expectation is But on and to market open of part won't the near-term any. there our that

So towards keep but repurchase. share directionally, repurchase favored I the biggie. will table, share the all think on options We be

Our next Barclays. question Theresa from with comes Chen

to domestically. of flows product changing First, globally on concept the I and wanted touch

utilization your off Russian the a inventories assets, as providing there. of remain the tight product from product potentially, seems the over period supplier arb market, a be Gulf long and assets the to the compressing Mid-Con marginal global for especially increasing As tailwind distillates come Mid-Con of to Coast internationally, and

refined and premium having and both Texas to to experienced of some segment. that do flip the products announced margins New Magellan into way Mexico, into that Enterprise Colorado the side, in you compressing the as and historically you've potentially well West niche pipe On all have projects Houston-based

help you believe, about, online as macro think as early on I what as, those can the backdrop basis this net-net, me come was if for mid-next wondering just some of means projects year? could structural a I

this Theresa, Tim. is Yes.

And believe We rest Let the the talked about cost at U.S. to terms you we the in global me result is and advantaged industry from of take flows. of about world that, in refining that. that's just structure. going world rest a trade more how as the U.S. the talk exports shot the versus of to

And can that other home the world, being these exported barrels produced cost. the the supply they are of it coast are parts to natural that for to like feels at be lower where the on

have these announcements, obviously, with pipeline watched We interest.

at typical just When different Gulf those the we to look the markets seasonality all the the that of shipping look low we of required, for Coast see look at out. and that the we into in dips, of long-term at dips volumes economics it's these those look us at regions, hard demand, commitments we terms in are play

to So will watch But it's that with just not obvious those us that go forward. obviously, interest. we'll

in to what date would on return invested also you And complete to get to What your that? to you circumstances PTU. that's And take decided market it? under on to wanted And why observed the you have you have the defer led CapEx this change? how much

Tom. Theresa, Yes. is this

look said, current market a And options as our future the took As it at take idea given well to economics, we've we good this, we pause our thought be project might at look a acquired alternative a the at Sinclair, we PTU. look outlook. when as the on

here us to to allows cohesive across goal up optimize Our come operation main the that is the with system.

allocate you can so want be profitability. imagine, to in to that And market And capital well got responsive as we and we've to way going smartest plants, maximize that sure PTU the conditions plants. forward going can RDU possible make and numerous we have numerous we're we

over pass I'm to so spend it Rich. of going terms to In far,

on he's got better the update I think numbers a do. than I

Sure.

Tom the going budget So decision that's is Theresa, at to we've going pause or as million look $XX the in alternatives what about best to and really And here. associated then our PTU, got a bringing in right, revised of an we're it system integrated the with all so of capital take see to mentioned, forward.

The otherwise, a PTU, the Rawlins get make the Sinclair sense it the reasons of we the It's step in that's important ability productive, addition that large getting we've on a gives to can. us to scale market. and built And point. back very deployment additional we're efficient really optimize. this more Artesia. ensure a additional of And Yes, of in add to PTU whether we're exclusion really obviously capital might the taking to have there, that one is bargain just best that that's we most

from Your Lynagh with next comes Morgan Stanley. question Connor

go Lubes to business. Obviously, wanted there. back a the great to I quarter

expectation compression the not your you been think but Forward. to you Back, that some saw Rack were the in It expansion going had see seems with Rack former. like I in latter,

give and sustainability could relative some curious there you the of Just market if those in in color the dynamics? what's happening

Yes. This is Tim.

comments make Let in the our demand up that. a catch supply early oil couple on first quarter. to me saw definitely of base We

saw oil our put index. cracks, of that Group You and we the as oil the weakening geo cracks in area. did posted some especially base a And cracks, that result in our see in we Group the base X out X

the quarter, that's oil dip had up, business At oil base on light gave first globally. it in opportunity strengthened the a the see in availability and why lubes our big to base finished oil conflict. Russian-Ukraine again base overall well. The those and lubes cracks of business the Obviously, cracks do finished the just end of geo you impact catch balances the

were X just Group base able time, X primarily than index. in our stickier Group a be saw posted same what the are as the oils At that oils specialty and Group reminder, process oils I, you to a little

quarter we in time. so of Rack by were Rack having kind the same And an first Forward hitting at excellent Back the able to, had contributions quarter, and we

want the to of than impacts, more just market point I kind out. It's just though,

year course, well. and record last If of you as Specialty a quarter first EBITDA. was our had a we terms at look in back of business, record And this Lubes year

the results that first here higher of lower back the the in On see. higher costs, all quarter that of margins, throughput, to contributed you

All up to of supply all being the that about extreme A disruptions, in of price with being deliver the hear despite what quarter. and for able shut to still Specialties especially in keep to employees first the world. real did that. our they still chain mobility and those course, the results challenges through out manage Lubes and try you and volatility to impacting additive COVID, able

it. Appreciate

any us should into Is just the so, about you Just watermark? first whether much? here. what give for year? second the this EBITDA by directionally, quarter rest of full broadly could how year business on you for If or sequentially it basis expect we the steer high quarter think speaking, If the a

it think them think Depending quarter. base view a see this oil year. our what was Connor, constructive. now favorable on very look now Russia-Ukraine we earlier I than with positive more it so on And was very the I obviously conflict, is the markets

prices bounced the On back Forward up. side, Rack right, obviously, have

base second of So we've been quarter. very probably keeping up and little price But price here margin we'll the holding oil. a in see successful compression with bit

in we're expecting So optimistic general this We're very year. a year. good

Our Matthew comes from next Blair with TPH. question

to ask efforts. the the on renewables result. about I strong wanted Congrats

the markets? have Now the end that are And your product Do Gulf about now? have you any California you so, to or if a to geographical plant Or you Cheyenne all Coast? that Canada California talk RDU could pathway? you up, you LCFS sending railing are

answer out I'll a automatically. get you you Tom. start plant, pathway Like that. a it's everybody else, don't Yes. Matthew, when

product destined So CARB a towards, we're contingency California. now. our on lot is right A of with basis

it the well As other say we're market. biggest not to is imagine, But not you markets. could at looking that that's

more looking is and more attractive. Canada

time, it's all point to even information understanding some East a going RFS In than completely fact, what Canadian or in look the California. netback is better that's equivalent like. program And without the offering getting at as

that or So Canada. the And we're and or market the may see best move netback, we'll out is Portland even it best starting of gives Canada. chase potentially be, we'll more Oregon, to United States do offshore including California, products what us towards the that's wherever

So to our we're and maximize everything at looking returns. anything

to on take long given through? that how Have California indication come might you pathway any been

then get provisional think of X they give come we number them, us with they have data into And and months number. We to the than typically, us. it's lower to their back that

do So way you that market. the that it's just in to business have

you to then looking were barrels have Got you able in between spreads QX. capitalize looks been on Las on like opportunity QX? might to and you gasoline, has side, in it that it. an QX? could about the Las And that gasoline the something talk Refining And at Vegas? Just and persisted in to that for Vegas opportunities send Rockies Was --

quarter. -- some The some Vegas California, a Yes, the market of as Vegas lot is where into the became more has the strong Tim. A Las would here been Las outages of in shortages some of there. pretty first in the of typically of Yes. This that barrels market we because Vegas overflow result Las short.

gives We molecules portfolio area, maximizing barrels, our to now, City opportunity have did. from in Sinclair those the spilling us Lake where Las into it here the And the Vegas area Rockies then really put in the into the which in ability ability over addition allows. we Salt to optimize usually and Vegas ship we barrels with Las as

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

Puget early I of into from Maybe the a first had on Sound quarter some and operational you over, of quarter. time had, a bubbles the Refinery the the just earlier. fourth early the commentary know took couple follow-up in

the is then -- Any Sinclair the what time your yet under the in seeing on Western the a assets of Rockies? lot in with And out running with you're assets. How maybe from Refinery I Sound and now? comments belt the Any haven't Puget thoughts outlook had there terms here? you opportunities with know of

the Yes. with We rebounded, our Sound Puget March. we're how significantly -- line. there's had the contributed bottom with a Puget back has into very But quarter. quarter spilled we to pleased doubt fourth over in Sound rough and That start very strong first a no

changed. seeing and the second well. in advantage Puget with as that the in We're March. a Sound take talent hasn't strong We're asset ability We of quarter view long-term believe of saw that that with very to it's competitive we strong -- Our market. seeing

as will the do to a same Sound full have on. are capture that maintenance quite continue that the the planned We turn, provide of summer. planned for the to but some going ability rest Not maintenance Puget the activities margin

the them days pleased to contributions of quarter. have strong. out bottom been the gate sizable our We've only hand, very second They really the excited made to them. Sinclair. came for have very XX Sinclair, in to had other We on line, and we're

region. there's to to tremendous opportunity optimize think the continue a We across just Rockies

have Cross demands parts talked are country various refineries about into the as the for most. X we the to as Sinclair that where asking us We earlier, Refinery barrels, of the well as the move Woods allow barrels

talked about because Mid-Con us access because one And things have Las little barrels PADD Coast, a to arb West to lot. We we -- a that's it the move we allows take But the of the quarter. geography in that saw have that see. some that opening you'll We access first to X, up. bit have of Vegas areas we the Mid-Con the the opportunities them in where these to are in and even

quarter that barrels a seeing the the some PADD where, creating We're good a move Mid-Con are and structural in good. rebounded the significantly needs logistics margins were to ago, going that was everyone it it. worried be of We've way here that little X of X starting Mid-Con, where PADD for certainly to move where from to just crafts there bit barrels to opportunity of now, that down because

logistics the And that. running you're of maybe the some getting as and terms are accessing in start-up learning of in feedstock the you And up diesel. -- in of seeing you've you know I think about What PTU a through of that follow-up Any market? running the terms to, both you that feedstock. been renewable and the talked curve on process feedstock, there,

the get for rest seeing you're just to one it year? looking Are any and units another. contracts that partially you for feedstock the in dynamics as the feedstocks that been markets Or as needed? all on seeing general, you you over look in the has tight? what Any you fully terms of those? easy you comments, of maybe for the originally believe for contracted to I having some of this year had of feedstock feed Are -- issues? increase for contracted you Are

that in any in the the problems now, buying X We market. just Ryan. had Right problems. haven't I'll run feedstock statement, Sure, just we've into make

year You're correct puts we've right the through a got in fair that in us amount now. secured position of a volume pretty which XXXX, good

forward, at a buying as in optimize to trying advance to move more And spot is basis. what of do we we're looking and

tell, prices wide. can you like pretty everything is ag are going on Differentials volatile are Flat the up. now. times As right else, products,

forward. we that in move the best looking have as get values, And at the So ones the at price feedstock incentive we're feedstocks having -- netback do possibly factors a run optimization that best yield. we model best pick said to we can LP or various that, looking we out an such as

of includes and we things like facilities we're and a options, plant that crush to good in further as upstream So pretty position comes think looking lots it that. There's feedstocks. at

So in anything not we're at this time. excluding point

open, looking options So at and that Rawlins. encompasses our optimization part we're which this forward, at we're of that's moving process PTU keeping the

Gabelman with Our Jason Cowen. next from question comes

rates? portfolio? then guidance capacity then PTU has your at depreciation I Or you forward to if on at I OpEx some now Can you follow-up. corporate Sinclair that refining And And on or assets? give entire wanted renewable per SG&A Sinclair line some XXX% with have quarter? either it goes the Sinclair diesel, hopefully to relative within ask to the items and can a -- What indication run assets your on to what expect first you to the per a guide that any barrel, is moving in acquisition is lower, the closed. on level line

OpEx back details, why those you through offline questions you and we've well. you can needed. and lot views of there. have contributions can that But as probably Puget I go you look you back if a put there, look would some Sinclair, I that tell you is would and out and Sound are and work perspective long-term of at long-term there Jason, take on as to don't what probably go What Craig, guys also the D&A refer we at with is

Okay. Well, -- way, it this is let you me ask yes.

Sorry.

now, in in and we towards any volumes right to can, wherever using volumes, as PTU got But that's it's and Artesia, ability as was at economic, to is wherever fill going to to our committed will to the bring we marketplace running we going that, off the then to having maximum still which the holes. But buy unit that that's feedstocks. well have RDU to on to run impact talk just big I make section. been and No, one saying just renewables a on, be

as much potentially we So unless dictate will as can. economic run, through we we shouldn't the conditions RDU that segment running be

very right But to it. think there's I to next returning there's about another strong Rockies the Got year. on as of forward, that now. refinery second region, be been product is And product which then import pipeline to region. question And market, my is early then another into believe, I refining moving going discussion

evolve those you how EBITDA? mid-cycle in think embedded to discuss about just you Xexpect time, in How you're the that premiums you market? what's over can product your So receiving and

So Jason, -- it's me Rich. let

a me at Let crack take that.

to have seeing the I mentioned these projects. we time hard a logic that pipeline of some think earlier Tim

think particular, regions But would these continue that the has we've will in -- I given. the we seasonally to right, -- Rockies, these the expect on folded So mid-cycle strong. this the seasonal, guidance all be very again, into emphasis

changes no or in So our expectations terms capture of there regional in basis.

with Our next question comes Scotiabank. Paul from Cheng

used that if mid-cycle they curve probably capture maybe the margin. on In to call back it rate. your I We because apologize, capture first, a hurt say, it, but past backwardation the that as we X so rate, you or have to talk understand look illustrative want the your the about XX% example, over only, X% probably about quarters, in, rate. called XX% capture but I roughly

right what drive back So capture that first basis, do should that could or you you you're so, down That's will that on rate XX% you into if the use that level? you And that think improvement ultimately is kind that? think a the believe going-forward we still settle of expecting question.

it's Paul, Rich.

-- accurate. believe that still XX% I yes, So number think we is

in larger magnitude had our you're capture months order number quoting. in the we the of think operational I the X last problems than impacted

run study looking the and plant of long appropriate. at, XX% we markets we're So as is kind I as think the

it is plan how I you Mike, mean, you marketing, making want on where want your you're plan larger platform further can that that integrate? And any stick was I that And That the in that think with your maybe business? -- than great that, is have. to is going now what expand in that see, operating? Or to refinery are? how and business So there substantially where that a reach Okay. game to you you geographic guys I

and what in the benefit operating long of during expect? operationally And should be wintertime, talking to it region supply. during the Because, that wintertime, tends financially your mean, I perhaps you also that type

your can problem some understand with region. for lot causing outlet, imagine for typically I us that you have of better? But financially we little would also? a you help But the so maybe operational benefit maybe that own And and a bit

thanks I appreciate for me. Paul, up that Yes, teeing it. for

bed that's to You're absolutely and your of through the and you outlets, at your consistent, right, important go own day branded following night it's an right. When confidence more the with you've most easier that products sold regime, point. marketing

these We market in every to existing that's the time want effectively converting going by our do. supply branded unbranded branding intention But to branded work day as happen And more often supplying be to footprint, at these sales things is to a stations reliably, X, stations. within X, our and customers. XX sales our

to market, margin it's and very our productive its consistency We're think to about channel itself But having think structure. that marketing a And it and we in possibilities. to provides excited our the some more super terms channel. we brand of

real works well, wintertime, as in you that suggest, summertime. the So

just all I it's think about consistency.

you stick expand will Mike, beyond market region? region? to Or current market the you're existing to the going

a as it insofar appealing real our there, starting nationally But are we take brand, further. molecules with saturated And Paul. a certainly It's best get the economics -- we'll the as own point.

Blair question Our Matthew from TPH. with next comes

to want the as confirm Sinclair net RINs? with just long you well now RDU as marketing startup, I are

basis, once we'll rate, we're run run balanced. a be about on up in rate Matthew, So

alluded the RDU Tom up the right, to second quarter. we as got ramp in still here to, Artesia So

we're line here So within be but as year. little short, got sight we've a today, we to of sit still the in here balance

back call further closing I'll There over time. are at this remarks. no Jennings questions turn the for Mike to

Thanks, Chantal.

I'll close So you of participating today. all just thank for with a us thoughts. couple with

medium prepared should supply term. that to and shortfalls the be is in And team of of in market really quite the assets capacity financially us. production because I first that productive. that strategic very be will really we've our that meet high members, Europe, the a sits believe through We and from front Russia group demand we're opportunity then assembled of that and believe The

and going just in integration well. I or respects, activities the see Our operations many venture are in months in Sinclair. than progress opportunity a that, couple I HF that is, of for less great a and appreciate fact, new the and what teamwork a in And new

generation it's to to always in on business they've is reward focus us safe serve owners. shareholders on capital focus engineered to And entrusted finally, the manage. And customers our that we're our capital returns our and cash while and to is intense, day-to-day execution, our and

forward joining and thank soon. you to speaking for again to look on So us call, you the we

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