Holly Energy Partners (HEP) 8 Aug 222022 Q2 Earnings call transcript

Welcome to the HF Sinclair Corporation and Holly Energy Partners Second 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; and Tim Go, President and Chief Operating Officer of HF Sinclair. At this time, all participants have been placed in a listen-only mode and the floor will be opened for your questions following the presentation. [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 issued Energy HF XX, announcing ending results welcome and morning for XXXX press second the releases Rex. Good Corporation morning and everyone call. we This June quarter to XXXX. Holly

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

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

Sinclair to items income These Good net Craig. of share. that million. HF attributable Thanks, morning, million Great. shareholders $XX decreased income or reported everyone. by collectively we special per net $X,XXX Today reflect results diluted $X.XX second-quarter

the diluted income per same XXXX. the quarter of share $XXX second was $X.X billion, $X,XXX net more increase quarter adjusted million or to of than for ‘XX. adjusted the $X.X compared current income net second items, of was Excluding quarter billion compared million for in EBITDA per to or $X.XX as the an Adjusted share, period $X.XX diluted these for

through the of benefits Ukraine both and COVID-XX the our assets. reflect product successful response and achieved synergies. within the and commercial annual years the synergies over counter-cyclical million of in suppliers picture, To quarter improvements, refined lubricant second Refinery, We're and rate our of an run have taken of the annualized operating combined working and rate pandemic due demand $XX of close by to $XXX approximately synergies and economy capital Sound to improved target to Our Puget Sinclair acquisitions related combination to pace Sinclair conflict, results optimization. two actions $XXX constrained date in global of date, the sanctions a are on the million expense we and and over reductions the acquisition of exceed million that run acquisition SG&A

$X.XX regular of per announced declared Board payable today holders XXXX, of September August Directors our also a dividend X, We share to record on of that XX.

we We repurchase million with $XXX stock, over share through During million $XXX connection to shareholders the program. quarter returned our common of repurchased and X.X totaling in share shares million dividends repurchases.

on half under million have product allocation investment-grade capital fuels, As low by to to throughout transportation we're we the our than and to shareholders of into constructive sheet to XXXX, Heading active balance year, repurchase no and committed the program healthy rating. expect of $X of later first remain global strategy of remaining for the outlook We of while half billion returning remain XXXX our second maintaining $XXX solid second to stock the June authorization we XXXX. XX, repurchase demand. quarter fully inventories up the and the supported

segment look [Dino] recently the reliable acquired of safe Sinclair, the to geographies. operations. see third -- assets of the value we initiatives. ramp XXXX. all by the complete, marketing production strategic our we of previously remain continue production grow Looking integration brand to expect end of levels as on of our program We quarter the and up great forward, We within we as while our renewables existing projects with will we will these continue from to With executing assets announced our reach focused maintaining (ph) full

realizing are As from largest of earnings fuels renewable diesel producers our one of the of customers, uplift about carbon to investments. providing our we the opportunity excited low incremental while the

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

Thank you, Mike.

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

our million Pre-tax of of quarter. table Cheyenne capital. HF $XX $X.X included Sinclair’s press in integration were to operations $XX cash acquisition second $XX Net for quarter can release. million totaled of of cost turnaround related items spending impacted to items. conversion working negatively A by decommissioning costs As sources Refinery provided these capital a which inventory, $XX a and few found previously million million market valuation charges billion, of mentioned, be $X.X lower million, totaled by from earnings million $XXX the the renewable the and of included second unusual expenditures adjustment to cash production. standalone diesel

by Transportation million Friday's standalone at HEP a total debt with HEP’s million. market to of comprised of units $X.XX billion to outstanding we with $XX undrawn Sinclair billion XX HF represents first HF billion, with of of $X facility. Partner liquidity distributions June LP the XX% acquisition received Limited our totaled had following cap XXXX, XX, HEP of a which of the ratio during of units, quarter owns approximately Sinclair value close. X%. of XX% a debt last Sinclair HF On net ratio $XX.X along billion, As as June $X.X and standalone $X.X cap $X.XX of billion stood debt Sinclair’s cash unsecured balance of credit

guidance go items. Let's some through

$XXX to million range million during tax, expect spend $XX million $XX million million loss $XX $XX million $XXX $XX $XXX of and $XX With in $XXX the our capital million provision $XXX million for to to In HEP CARES and million in to second million $XXX turnarounds We of $XXX carryback the XXXX and guidance catalysts. between million between quarter renewable, and reduced the expected $XXX capital. have expect XXXX the Lubes refining, We spend now million Act. million received and in million, marketing, in million. and at to in Specialties, million $XX million we cash we to in for corporate, under $XX respect $XXX to total to to

of HF rate Going in expected range is corporate forward, the Sinclair the to tax to XX%. be XX%

of we refining run For second in quarter XXX,XXX XXX,XXX of our between to the day segment. oil per XXXX, barrels and crude expect

major scheduled for our refineries the of We at have no XXXX. turnarounds fuels remainder

to Energy Turning Partners. Holly

which quarter was refined $XX.X related to income a net HEP million million of compared million gain our included pipeline $X.X sale. to XXXX, $XX.X Second quarter products to attributable the in second

Excluding to period of second this second year. recently million gain, related increase adjusted year-over-year net XXXX costs. A XX primarily these is $X.XX ratio in of million adjustments found record Transportation of the of unitholders $XX.X attributable generated and be $XX.X for last release. X.X EBITDA This August can $XX.X of table million distribution Sinclair quarter a to unit, in a we quarter operating LP HEP press HEP’s compared acquired assets, million income the expense distribution offset HEP August distribution resulting to was to to distributable second as announced was earnings per coverage reconciliation paid reflecting The $XXX.X by on and times. of quarter partially interest was X. the be cash same higher XXXX. in flow

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

$XX to revised XXXX, For forecast $XX million our to capital expenditure million. slightly was

Looking framework continue committed cash remains as forward, to leverage, capital our retained HEP allocation using to flow. we reduce

by and returns of leverage in that, we expect achieve our to We take And Rex, times questions. track we're are XXXX. year-end unitholder to X.X on to ready with short-term target increase

Instructions] Gupta Credit Our for The Suisse. question floor first now is from comes open Manav with questions. [Operator

line open. Your is

Hey higher on delivering a it, have got but now pushback it's quarter, kind of this see strategy cyclical lot you operated of to synergies. question of here clearly earlier Sinclair a know what clearly My guys, you indicating like assets. results. for on assets buying you're you you congrats I counter do is,

And of and acquisition? work where this what would stronger more stage? talk positive it So area be us you Sinclair the at thought needed surprises a were is little one maybe the

let Manav, Tim. is this Group talk We're assets maybe then and a employees some the start working about very little together. I'll higher level. and especially Sinclair specifics quarter over with the of some -- Sinclair this last the with pleased

separately. run to the rates surprise and crude pleasant synergies and one we've has been at think either was on could side site higher Casper, or on Cross to us the the then see opportunities logistics running both able the product I have side throughput Woods led that

employees So because We've accomplish the the at I it's locations that. and think to that's been monthly able working together records set assets logistics exciting. only through both to be of

Manav, super our and beyond terms distribution. integrated about in product more of brand vertically we're that, opportunity the to this excited be

yet. You our it's asked there. we I'll something dreams specifically where And -- and for haven't hopes say we fulfilled

a front is approach work lot opportunity and within rack really wholesale we of is plenty to and branded downstream more We have refining branded is going opportunity converting of lot a of there adding and look are we this footprint do in forward a opportunity be as from to distribution existing us. where of to see stores, lot and that's our a within distribution of we

follow those you could trend? If the dynamics footprint you for have? a My the vision quick to like very quarter business, little business? bit things. is, for little you looking up are here grow help a driving the which about And Are also rack with it? Perfect. us strong Are your what's another talk you happy lubes understand the entire forward this

is to or in better example. efficiencies, motor able oils that mix XX%, that and results better businesses cost SKU to the business, all Tim we're improved oils focus in really and we're --record our that as play is the rationalization, of are out, our let starting is product specifically upgrade then upgrade back costs, A driving simplify SKUs year process specialties yields think we for your again, versus I'll increase is for of and quarter take the Yeah. is us SKU business our strong we've talking had talked to the with to Despite base to keep another prices been couple Manav, encouraging. start you Forward up as the last mesh rack things about Rack pointed broader out. been this question. We of has Rack oils Mike lubes, capital, carrying mix driving I I'll or lower that the able to on which synergies quarter also reduce to helping out rationalization product over and Forward and business up, that we're in up has that us better really XX% working passenger car continue seeing. the about

integration also business, You're from finished seeing coming Tulsa with to with better between our petroleum, lubes Refinery our [indiscernible]. our tying feedstocks

to So of three strong those really are contributing these results. all

Manav, that can like Valvoline other it and own obviously from be valuation, for any to we see absolutely transaction a time higher being we're as we a take and versus but outside whether can inside bone do. markers, little terms external we we meat here We grow the business. think to pragmatic of this we the about lot on in of the business. or business particularly think we same we of and not, consider this grow the and time, level this core we At note the we

questions my great congrats taking for you on Thank and quarter. a

you. Thank

question of Cheng Your next from Scotiabank. comes Paul

Your open. is line

morning. guys, Hey good

Paul. Hi,

stronger when third end and quarter of my the were a at quarter to look billion you you Rich, expected. On much certainly than today return like capital set comparing the was second time $X

I And you the when that the Maybe what consideration looking you would so question. that are will for go to until that you the that, or first number? I answer second one. then will wait for be raise number, at criteria That's

Look, this is we're there Paul, Rich. point, morning. we'd that that At comfortable get think expect the later Yes, to achieve quarter. than very Good number. this I first no will we

Mike million X another as a million July. shares put We to did did We've dividends in got $XXX million color in little that, for the quarter. more about we mentioned, second X.X shares to around Just pays.

comfortably at we're here, towards point. your running So increasing about expect optimistic goes let's we're that see how market To point it, number. this but the that we

say, oh, be But you Rich, order you to kind share mean will need that that hit distribution? that the what you can us for or And of criteria to I can any matrix can raise with in that that anything? guys you share yeah, we

matrix. a don't So, you give know I can Paul, I if

know We less volatile say, how You doing We'd deliver markets have more. -- long speak be. I rather this, been time. these can and

margin and for this realization much -- west than was Okay. thought. we good region And stronger Tim. very maybe The that is

is margin mainly or capture Just quarter you and because recapture and any curious we just is the again? again, in there say, yet it’s a good you have one-off yet we that, that can benefit that similar the overall margin

of Yes, well of and the saw Paul, that the about And terms to the helps. contribution our lot But the as whole helped capture synergies one-offs. that capture this Rockies, then wise, that as is and Really Sinclair quarter there the first Tim. Northwest helped well. contribution in obviously cracks significantly less margins to this higher Not in or talked in capture. full becomes identify the that as Mike go exceptional had Sound percentage Puget in a this us margins -- Northwest able well. as -- at as the on was Pacific that the the West in we're we RVO in utilization capture helped running RINs that we

don't I see one-off to Paul. out, any So point really major

you. Thank great. Okay,

Your question Barclays. comes of the Theresa from line Chen next with

line is Your open.

first ask to the strategy here. wanted midstream on I morning. Good from

in versus for of year long -- we've you're talking been to this or sponsored as activity today time, bucking are acceleration has competitors of doing you're what holders their so. about them many kind increasing of your over the with contrast, past there over trend roll So MLPs, In the about HEP in XXXX. spoke choosing

to general you and through strategy it related more returns, underlies distribution? would it your to here. then be what And is, how envision just holder distribution buybacks or in? the be update keep to love when unit So it roll on higher to do first an special happening? this increases, HEP detail question I outstanding decision your midstream versus the Would hear of part compelling

Rich. it's Good morning. Hi, Theresa,

our assets say, we've HEP are outstanding and important team look, HF an got those critical first critically refining those I'd those Sinclair, assets. the to So is in ownership of business operating

with outside us see we your corporate opportunities both business finance of HF do the So Sinclair really structure, about financial that question to To that's question. to grow HF like Sinclair. and

might made out per from sort and that relative far pointing has share math It's so a relatively sense roll-up HEP And HF that not that Sinclair to large, of perspective. here probably is worth any you do. affects

for thing that we'll all best to shareholders. situation, continue the look, So monitor do of our to create value

distribution to 'XX at growth, would about Looking your increasing think the point, to we this to I question urge distribution itself.

you We HEP liquid will know, is evaluate stock. not buybacks, as most the

we may that say I'd we necessarily to better it, reduce of a form do not ahead and interest it's float, distribution will in go it's but the of HEP, increases. take that's but if So the be want not going it best option now, right to the

shareholders lot term terms add And HF simply it of Sinclair via buying that toward its the related I'll to it is really that, Sinclair the in put of to to that but would criticality acquisitions. MLP. be And to true, point, is external first. growth capital Theresa, and at a and to incremental capital we holders this returned capital a in ownership compared Rich said in All of allocation, of HF terms in quite as goes near

Thank you.

question Doug Leggate. line next of comes Your from the

Your line is open.

Shell, logic the continuing got back can the your think Marathon. men they from Mike, on and being -- to PBF, obviously yields if one along of you terms Hey, MLP from about structure? XX, the ownership pristine recent restructuring to so you of Phillips your the are how of you're standing, everyone. good I what now morning offer seen we've some of an with of opinion wonder sheet obviously that and do ownerships last relative in balance you are, speak, you’ve What thinking from shape

two really And and acquisitions tried which this but our intend it back off point, I we different we last for just be patience, table. made consider We on investments. their -- high took for to pause shareholders and pay year. hit two comment, -- to those Doug, dividend of bought a to We that in we that my put one let's the a at value.

to of mother larger need the basically to take be BP our accretive we're size course. near for that returning end lot Sinclair examples. in the would lot size case, a a Shell, as we're ship, that shareholders. our allocating in time do the by depends was of term In most of math, that an earnings our relatively we'll peers and those cash the What insinuating, the relative So says being, HF and as capital do, flow and interested otherwise. probably on to Rich entities it's the versus capital of But

know perspective. on anyone's the too macro I of obvious it's I really your Mike, guess probably yet. so I think appreciate a don't asked I question,

terms you us views I question it have to I really are the course, in there. holding you you obviously, are bit and, quarter? I'll get spreads could your So you insight gasoline so in any the wonder can diesel of seeing if are seeing demand current seem pretty almost of given to halfway offer just through And wider. gasoline kind leave trends third a rolled What of there, And on system? you're are Thanks. destruction, your the quarter hard far? over What seeing how what is inevitable then, maybe there, in going that

below demand five Again strong of high in demand It's seeing Doug, with resulting inventories then weigh We're Yeah, direct still being utilization. let me product more and still our your some year Mike in is with of let questions the Tim. start this on in coupled to I'll regions, responses averages. macro. the

particular strong, We that. we good XXXX or constructive that's in levels. about Gasoline, positive and but probably demand say X% would in the specifically above within the feel all is XXXX operate. at very in of Southwest, areas very we Diesel, So our levels.

XX quarter. mention see that into as to progress side, still in more marketing to we We've see added markets. in Mike here strength second at mentioned the the of retail new continuing we're good the on to got So We brand I than some strong these would also XX sites brand. for the expand we're our look Sinclair continuing demand there. that beginning,

to from a continuing well. strong we're standpoint, marketing as pull there So see

more on A little bit that.

that off. right? demand, that's aggregate price like I was think July, little late in of anything bit see don't We clearly early fall a that the think sort there DOE of June, in industry elastic I And saw some the implied the demand XX% numbers.

so, just markets this distribution that behavior. excise rack More products and now above at costs aren't And seeing of that, kind tax the not retail levels. traded our think I you're range at $X.XX, XXXX $X.XX than that as much adding

economy, given that back elastic quickly. numbers expectation labor probably So the is, that we're that strong seeing the comes price demand pretty

do but hit have I the that? the are point, Any Guys, you what is it explanation showing an why [indiscernible] EIA showing? to on data thoughts

No.

are see happy We it Wednesday. to every

the fellows. answers. appreciate Thanks I

comes Neil of next line with question Sachs. from Mehta Goldman the Your

Your line is open.

quarter good taking time. the here. for guys, Hey Thanks

a is In question this of renewable the strong on a just first set quarter. The outlier, diesel came diesel. bit results, softer renewable was in

also talk you of margins long-term profitability the business? blenders thereof, Thank the rest you. the just the tracking support for the of and And tax So and the extension credit because then see are outlook about how about that could the talk year?

really RDU Artesia diesel anything, just low is margins earnings this on from gain renewable stream much reflect quarter its project our coming as to revenue recognize just now. the And that throughput Certainly, in sale. beginning and as

of lot feedstock of [indiscernible] feedstock will is oil our think PTU, as and high a is the will. we've sort know, Ukraine our gallon RBD a as much bought is toward of our the you that with something for utilization, economics economies, significantly a the through if I So per progressing unit in low relatively disruption poor you veg feed example respect going while $X.XX. initially today on invested of RBD throughputs, RBD versus like spread But this in and slate of to start-ups, we to we're and diverse pre-treatment heels improve which cost and own

a So in that's as significant you see, uplift can margins.

expects production, we Looking still what by quarter, in -- third very through the Artesia period called the terms in is much not we've forward, of of a quarter. really but out start-up for ramp have, rate is that to the achieve because and quarter our the full still end it's

to of here. of going little terms bit headwind costs that's a a So favor otherwise earnings feedstock in are margins performance. and our be But in

So we're than utilization made. investments the say affected that else what more And still very anything I'd that's it's and is, on margins. start-up we've constructive

fuels reduction to contribution terms certainty that yes, you solidifies inflation BTC margins more act, an of some through us makes CI-driven a all know the of producers' that provide certainly the credit. in optimistic. converts to and LCFS margin As sort XXXX thereafter clean it terms that of outlook, and as But in

the XXXX. Our initial the at of economics BTC anticipated expiring end through

got we've years then two that. Now based after of expectations benefit very a and solid CI

sense economics the the WTI and spreads? and is in SPR with that wider that of then transport year, good differentials some makes in with sustainability underlying think TIWCS, time widening and it's the is would follow-up of there. And side both also the do a of turnarounds is those a about of the Brent the just the reflection half Okay, fewer of around support wider back equation just you something there that or the crude how

Hi, is Brent certainly SPR Neil, the Yes, it's Yes. impacting the Tim. TI spread.

out a WTI also but I a very Permian brent you providing more Europe. on got is natural uncertainty coming Certainly, demand bit look a from more higher gas think you've driving there, if strong side, in and a the scarce. brent volumes stable little some making perspective, production

creating that's for a You got those brent crude drive barrels. Russian cargo the and

going probably you driving look scarcity really in the near while that spread. So is change now right to at TI term. range, not by been set think between that dynamics it's we -- We kind X not normally the Brent to Brent side. of transportation if in that in the the that, setting the think anytime are transportation think spread basis think And X.XX of I we

of you TI the we time to crude So $X $X our long you see couple refineries over It's portfolio. in a going kind strip at and good what additional the obviously, to, think the refining look to be next of that's on forward here that spread in inland Brent happen have and years. range

WTI, on WCS? Tim And

Yes.

widening the you advantage be second spread able again, think On in WCS previous taking the more the more we in out than is we third noticed have may ran of that to that in we of spread there have quarter WCS quarters, to take advantage quarter.

the year we You starting that and We up the see and was to some some in WCS production that the out coming again of is seeing going of online takeaway the think of again think fill pressure on that's complete, going end start being pipeline occurring Canada, maintenance the put back to some by we're allocated pipeline to spreads. capacity. WTI

able a to think we allocation those here we're enjoy and is that's spreads. going So come our to think we be for as look back sustainable. we at forecast, that to while going Really

Thank you, guys.

The next the question Tudor, of & Holt line comes Matthew Company. with Blair Pickering, from

is line open. Your

expecting. results. on Congrats in things profitability marketing about this morning. how than And QX? segment drivers better talk good Hey, so The the you are progressing far here? was we in the Can were

is this Matt, Tim. Yes,

and is We're than traction Our of that's Mike new pointed branded marketing we better segment, lot seeing all performing a encouraging. expected earlier, on very our Sinclair to as brand.

XX the here we’ll it end range are bring of the we're sites the think very in to is X% in progress alone. reachable. at. quarter hoping just retail XX in Growth can here that be we here year. targets, looking growth what another before, able in X% second got We before be we're think that I to mentioned we've that As We've added

have -- Our supply our would convert sites, good previous that that in sites we we several now. licensed retail right you place doing Clearly start some of to seen into if and license have be are those sites we guys strategy a is as can disclosures.

we're PMW of region growing brand markets Southwest and have of in region, our legacy assets been Some HollyFrontier the And at lot seeing there. our a new the where interest incremental grow where a markets, in we to well. there of Sinclair as established, then lot lastly, continue in seeing we're our Rockies, well the already mature the to brand have pull Sinclair

going exciting for Matthew, a and So that important very for the think we business to portfolio our is long-term. be branded time us, in

markets have And markets It rail equally you as sounds or the your are then, you talk that production you end to Do could appealing? found California other off that RDE for about good. geographical today?

We Yeah. we're just as but California. the as states specific won't Canada not be throughout working value, to but as to well pursuing trying areas, those best quantities, then markets western and find through

Great. Thank you.

Yeah.

the Next Gabelman line question Jason comes from of Cowen. with

Your is line open.

Hi, good taking morning. Thanks for my questions.

basis? maybe First, as just debt terms the West indicative go-forward forward, Thanks. expect related go-forward the is about for be us levels? remind buyback couple where you What's quarter's And basis? be to it we refining if would balance targets region moving then, sheet it And think could SGA just your OpEx your maybe a helpful in this of both a and of of cash a questions. modeling on you other on

it's Hey Rich. Jason,

We've balance sheet our leverage. debt a and in investment grade trough got perspective. times to debt So respect EBITDA the from consolidated is the start two or guided balance rating. a metric sort committed look very We're to been three of let's at to times we at repurchase, a the to with mid sheet cycle to

of we're know, will inside there, that we're You now. right

got capacity. we've So

to So no cash repurchase at to debt there point. this preserve or repay need is

you And a minimum think got think look and the adjustments to if the continue if out -- here. rate. XQ called of expenses, for It's a that make repurchase operating we appropriate to we've West balance powder, or of $XXX adjust run or some to quarter target at this costs with is run cash then respect M&A good will good rate. sort you I SG&A, plenty our dry as at million I share We this point.

Thanks. Great.

[Multiple Speakers] there. a fly big wheel

Yeah. Understood. Got it.

things Couple to of the West. call out on

[indiscernible] Just that Puget maintenance normal. add some be but We've to may bit did impacts bonus elevated. Rich's higher a be well, comments, natural some little we as got than at at Sound gases accrual just have continues and planned to

So to forward. looking bring down we're that looking

Any for quantify Understood. way quarter? that Okay. the to

it's are to and -- not takes, No, those puts be honest.

think a be going can being, end that I forecast, at driver So Natural the number don't again day. around. of really gas, that it's we they move the big to can’t one the thing

then diesel just on business. the Got it. And other question renewable my

As of up you expect what you production we is the but much you platform, RBD running the running just in get the run in think unit and XQ? about fully mentioned now as portion platform Thanks. RBD pre-treatment the how you're early this up, do -- of ramp-up, once the to

will obviously half, I'd dependent RBD or versus other less depending be That than half degummed but economics, on say, economics. and on around

So math me some Jason add there. let

pre-treatment kind of percent straight well. the other will we feeds call of as the our then do ability production renewable some pro diesel capacity units of run XX to it, forma have Our everything and and transaction into plus be, the

This the got day not run we've percent economic Mike is flexibility though. to the XX non-RBD going of plus end right. So mentioned, at as the be to driven

Thanks great. answers. Okay, the for

Cheng, the question comes from of line Your Scotiabank. Paul next

Your line open. is

Thank Hey, guys. you.

in a I quick per gross in margin, us in trying that two follow-up. business that dynamic on so mean, the understand the gallon Maybe is Just have help this in $X.XX quarter. understanding or you Tim, the how fluctuation to much can [indiscernible] marketing that. margin better the

again put margin We're The that. Paul. had we We're branded gross Yeah, higher Sinclair guided the strengthened pleased to when than out what seeing businesses. we is performance. with originally $X.XX

we've sustainable it As we know going gasoline third that prices real we for seeing higher you quarter. demand, widening enough between and think know to a in spread not, to experience branded are and yet. and we it's and look here that's continue be strength to Don't if of I or seen unbranded. but that We the think have don't see higher

in additional Maybe contract then, whatever let In the me more a with is ask signed it sort that margin is way. or margin. another you those less the or of is fixed or that [indiscernible] [indiscernible],

to trying how are? Just those that contract on the pricing understand

we don't all how there, we sign up with based posted that. and a price on no, It's that's prices on Yes, fixed Paul. for work the [indiscernible] any really

Mike. maybe -- for And this just is Okay. that curious

that directly said change you the marketing? the interest you that have the think I operate. and in now getting thought no store, into own you have retail past you have the in that And business the that brand

the no channel, that be to wholesalers. very that's our We set skill We to to those staffing to manage change That's strong branded retailers a thought, but is a We want there brand. volume Paul. presence, in branded with add that support different distribution want intend contribution. No, level. and

Right. you. Thank

John Your comes next from Morgan. with the of JP line Royall question

is line open. Your

taking mine I my guys. morning been asked. just good Hey, had for Most question. one. have Thanks of

that generally, guidance, $X.XX synergies a EBITDA maybe where just -- this just upwards? had you your sticky wondering is -- refining, for about know have you from is and number the environment pointed there, adjusted I but billion you what mid-cycle billion anything bit You $X.XX are just at think looking guided upwards a biased that

crude adding then I'd Gulf is, our feel cracks Coast there say probably Hi, notice build-up say John, we differentials. the I'd product the to it's get it's taking Rich. one structurally better point reflected markets that the right adding by we thing about in differentials differentials, there. in that you'll to we product number,

there's think probably do some upside from we that So perspective.

got You there market know due a right, much good itself. opportunity in you've geography growth to just to supply fuels constrained really Rockies petroleum and very economic there. you've There's is substitute the demographics and got not particular, very where

do that build-up. to a upside So see that's we mid-cycle place

much. Okay. Thanks very

are turn to no questions time. Craig, There I over at further the call this you. back

today's you time everyone. the join on call. We to Thanks, appreciate taking us

to questions, with follow-up results reach any as sharing we to Relations. always, look out forward November. Investor you have quarter third in you If our Otherwise,

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