Holly Energy Partners (HEP) 24 Feb 232022 Q4 Earnings call transcript

Welcome to HF Sinclair Corporation and Holly Energy Partners Fourth 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 Tim Go, President and Chief Operating Officer of HF Sinclair. Atanas Atanasov, Chief Financial Officer of HF Sinclair and John Harrison, Chief Financial Officer of Holly Energy Partners.

At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. that follow-up. limit ask question to We one and Instructions] you yourself please one [Operator Please that Instructions] [Operator note, being recorded. this conference is

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

Rob. welcome HF Thank and Good Sinclair earnings XXXX everyone, fourth Partners Energy quarter morning, call. Corporation and you, to Holly

This December XX, ending for the morning, quarter we issued a press release announcing results XXXX.

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

Before factors be Safe summary, to under the we results please forward-looking remarks, to those Federal expectations, note the in differ today’s are Safe Harbor statement statements from proceed intended with statements expectations, Security management in covered Harbor could press it are filings. that our regarding predictions SEC These including cause of are disclosure many releases. made or noted In judgments provisions Laws. statements. There a

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

with And to will call Mike the over I that, turn Jennings.

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

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

and fourth $XXX to million period compared sales increase was our and fourth an was last same higher West primarily $X.X the of refining by fourth regions increase year. in to quarter the of XX% both of for $XXX Mid-Con businesses. million year-over-year the approximately XXXX. billion, the acquired due million increase a to $XX refined Sound and Sinclair the was segment, in refining EBITDA acquisition in In EBITDA the the refinery This products driven quarter compared of margins Adjusted Puget

charge the experienced per compared Despite the per XXXX. the day barrels crude for day to oil we impacts, fourth quarter XXX,XXX quarter fourth XXX,XXX in averaged December, winter barrels storm in of

increase XXX,XXX XXXX, year customer day allowed full and records demand focus fuels. excellence For $X.X achieved meet segment for in continued our safely operational Despite annual barrels environment EBITDA refining of to for the tight charge on crude throughputs we our billion. supply transportation of XXXX, to us per

In our driven Renewables XX segment, EBITDA we and total unplanned sales of downtime. gallons, of for negative million quarter fourth by volumes reported adjusted $X the million

at increase XXXX. second in remain DX to advantaged our on We feedstocks source for of throughput market the RIN run expect constructive achieve half renewables to renewable normalized the rates facilities on diesel continue plants. to and and We ability our our

the a volumes Our reported total gallon million gallons, marketing representing $XX sales and EBITDA fuel branded per margin. for fourth were $X.XX segment quarter of XXX

as brand business the sites March in Sinclair number make XX from our acquisition by quarter We continue XXXX. during the fourth branded branded by the DINO XX to since progress of of expanding grew the of and

was fourth from the $XX priced FIFO consumption products for Specialty quarter reported largely feedstock EBITDA EBITDA higher for and by of the compared quarter of Lubricants of the XXXX. impact XXXX. of driven of million in million fourth quarter inventory $XX decrease fourth to This

reporting mid our oils lubricants cycle of finished For million and to full above performed year guidance well due $XXX base EBITDA strong demand annual XXXX, for products.

we during in through Sinclair of in Transportation which to on in returning March period well by cash initial primarily dividends over returned the of XXXX, system. acquisition a and $X.X million end shareholders XXXX billion This returned from quarter to coupled of were $X by increase integrated million And contributions fourth $XXX of $XX first of of driven our EBITDA This repurchases our have is our quarter. quarter We last the in cash HEP record was ahead XXXX. acquired since of the billion, $XXX shareholders volumes full the fourth XX%. target share XX, million of across March the compared represents reported XXXX, closing the the year. the of same year to Sinclair assets, with return adjusted which

to payout and December we sheet authorization cash grade of while XX, million an and fully and return a XXXX, committed our strategy $XXX balance investment maintaining As credit remain ratio, our share repurchase had rating. on remaining strong

declared today acquired to to XX.X% returning increase Board's assets We shareholders. reflects our of Directors increase March excess of recently and March per from announced XX, quarterly to on $X.XX a our commitment This share X, that our constructive payable holders dividend generation Board XXXX regular on cash XXXX. record cash our on to outlook dollars also our

to our Looking while focus strong to ahead, to more growth a remains as downward increased a foundation integration operating base. safely business fully our strategy we've and diverse drive reliably, on with created integrated new optimize our capital asset shareholders. scale and on and executing We returns believe

let with to So Atanas. that, call the me turn

good morning, Mike, and everyone. Thank you,

spend for standalone million, highlights. totaled which million $XXX Let's reviewing of $XX Net $XX quarter. Sinclair's expenditures the provided the capital begin turnaround fourth quarter. cash million financial totaled HE by in by operations included HE Sinclair's

facility. $X.X Sinclair's $X.X XX, XXXX, cash along unsecured approximately stood a of HF liquidity As standalone balance of December credit our billion, at comprised of $X.X billion, total with undrawn

close. $XX had night's last $X.X XX.X value following As HEP and Sinclair of LP the at received HF Transportation net of totaled units debt XX% of units, XX% million. represents X%. HEP distributions we fourth a HEP's of the of by owns which billion of ratio billion debt a HF million limited acquisition Sinclair $X.X quarter to to Sinclair outstanding partner outstanding approximately with market at cap December ratio cap during debt of standalone XX,

some $XX to million $XX turnarounds and million million $XX $XX items. to respect million in expansion through to and With to lubricants $XXX to million year to and to million million million in investments. $XX to spend $XX maintenance $XX HEP, venture full spending specialty million million $XXX we million between million capital $XX marketing, million catalysts. refining, go to XXXX, million in expect in $XX $XX guidance Let's expect renewables, in for and to corporate $XX spend million At and joint between $XXX in for in products, we to million $XXX $X

per crude oil XXXX, and run of have in to of Wood our quarter expect XXX,XXX refining planned in El segment between period. Sound, our first the and For we Dorado barrels the scheduled we refineries Cross at XXX,XXX turnarounds and day Puget

call turn over an to John now me on update for HEP. Let the

fourth primarily expense The to offset million increase XXXX $XX.X Thanks, system. I'm report across Sinclair quarter attributable to HEP's the related HCP's operating fourth by higher quarter by was to volumes Partners pleased income of XXXX. strong million compared record interest earnings Holly earnings driven our Atanas. to costs. fourth Energy the Transportation and was integrated to attributable and year-over-year quarter in full net year assets, $XX.X partially

$X per investments, ratio A to in in times. and venture $XX.X we distribution fourth expansion LP adjusted adjustments during and $XX.X of approximately quarter be million, these $XXX.X CapEx, million cash million distributable in year. our X.X $X of million the flow million can reconciliation HEP's HEP of a press Capital generated in reimbursable of million table period XXXX million $X.XX resulting last announced joint CapEx. quarter venture joint found were maintenance HEP's was reflecting compared and fourth release. same unit distribution the $XX $XX investments for expenditures quarter coverage including in EBITDA

expect to $XX $XX million. total For XXXX, of we million CapEx

times. on EBITDA the good year progress made ratio a reducing we month with leverage forma of ended XX debt XXXX, ratio adjusted to our During pro trailing and X.X

X.X mid-XXXX to we strategy. reach return previously with at expect our time times of target capital incremental in announced consistent which to allocation cash our ratio leverage unitholders evaluate will We

any call operator turn We are to ready to over the now the for questions.

line today comes Teresa from from questions. the your The is [Operator And Instructions] now open Chen first floor for of question Barclays.

is open. line Your

you round of Good my questions for morning. two Thank again and taking Mike congratulations to for retirement.

out channels of at -- integration the be run have the your we Sinclair that further synergies brand time, assets the rolling following stages to $XXX had in should under legacy other view and you [HFC] What there anticipating? downstream terms in you the integration of of that do acquisition, in So are some marketing how refining synergies markets in million aspects you've and now (ph) achieved for phase umbrella rate Sinclair effort?

This Teresa. is morning, Go. Good Tim

so we me quickly. pleased that were a here. first Let stab of $XXX able take very million We're synergies that to achieve the at

of to continue right HollyFrontier and for currently Sinclair- past. objectives we our That definitely merger refining the Just core the marketing more able to in the didn't our but of markets take refining of of with opportunities was wholesale to gate, portfolio, larger see get any in branded the importantly as merchant was, have us to exposure that we our advantage more you integration recall, integration too assets. really one the out be

stores think We've lot a done out interest interest -- which fourth a branded really we've lot of we couple the to bring think seeing basically our well. a with of year that's three We branded PMW really We're our value quarter, in comments, outlets the that We're integrate since will prepared XX seeing in owned beginning. had in his Southwest. us chain. just refining lot output is the the And help in for opportunities. fully Sinclair. more stores to those quarters XX were we areas, year of the the again, in additional Mike said the there

improve but see assets combining of a can are and at it. we opportunity we're after lot a to point out too, We're seeing a going also not ready I within tell just there's our you give procurement, you operating opportunity a lot there. that reliability, opportunities processes of number, this more our lot to We

Thank you and new so role. much, on Tim, the congratulations

happened result. or this course West improving quarter? over first in medium a details to sense the this refining, near of you term account Coast taking into And you capture do give you on the Turning long Just further can see downtime have on the half? of that term the what us term the

is Theresa, Tim. Yes, this

again primarily in Basically, in that heavy and about but both take higher that quarter we some impacts the barrels also portfolio, well was about due the prices occurred diesel that West. as typically X% gas than XX,XXX unplanned again. as run, natural me day across fourth yield West. primarily a And maintenance, less Let that West. lower crude to planned the were And the the impacted

we our PSR refinery. had our distiller at the at Dorado planned distiller maintenance then our maintenance had El basis, maintenance Sound So planned coker Parco refineries. on maintenance We planned planned refinery. our planned hydrotreater at we refinery had had at coker Puget We and hydrotreater

of contributed the those runs, the lower crude lower All to as distillate heavy yields. well as

our planned addition, In we at at hydrogen refinery. some both Parco and had and our Navajo refinery outages, unplanned

really that's drove So Coast lower what the productivity. West

as and timeframe. for the the about In natural gas, Henry and with really OpEx some for Lake baseline $XX though, in to if the January gross margin up looking that on we well gas above or saw Coast. high into of Hub the at MMBtu over as $XX the if natural associated The December prices gotten addition even you're price very West PNW, you're in basis Salt capture at City to had carrying looking refinery some

West prices heavy really less and So gas that natural factors, we results three had. less those weaker distill crude, explain the yield higher

Thank you.

from Your comes next Scotiabank. of Paul question line Chen from the

open. line Your is

morning. good Hi,

your [indiscernible] have start First, I you're Thank the for to you're you, and two until questions the half a plan, all saying when retirement [indiscernible], the looking in promotion. little second quarter, the the say, that in Mike, other to this actually at that Mike team, up quarter. for team the in you year, I that the take will is the the first of help. it's -- this one congratulations second one here. given and all guess Mike, surprised which bit

from we LCFS that by that now you little moving a have and a now. have for runway. why thought also what into better maybe whether operation you you learned you give think So certified far -- have And would bit lot I by would will of the people normalized so us already the the can understanding

one. that's So

than last second at question operation, If in the $XX cycle. time see year, have of on returning million The better look normalized you $XX to million much of [indiscernible] is about a acquisition you about I year the marketing. in EBITDA, at the

better still you. XX is year actually baseline is not than assuming. So it's and Thank much or just here what you that that an been business the exceptional had

with to we're Tim planned But Paul. operational split renewables resilient thing. up. it performance, this to we're Thanks, these to And not going performance the start is pretty questions. renewables and disappointing. what and candidly, date we put yes, the it's I'll fix I'll and

front of a number things. in what's us? So are of There

yields utilization First, know, process process which more And Paul, as ran run more in the the XX%. renewable optimization needs barrels up That number units a getting and and just you to getting be diesel is too XX% catalyst performance, industry, XX,XXX day, well consistently. toward new quarter. fourth that to low. is We

things processes going of So the naphtha higher in hydrogen catalyst the expense the very and terms we've importantly, at there. But and the underlying renewable of are performance reliability diesel and units of on availability dependent as two yield. these getting got yield

improve got high or distillate And but that's of margins And present. are, -- we're things they to as a base internally hydrogen reliability number use optimize across we've with also is, that production. petroleum working a as needing is to of these at that, competition First hydrogen refineries. conventional

So nameplate that they wise we're longer high at were to not perform expected availability purity the capacity of need we the term, these there. and hydrogen feeds increase found that plants, to we

optimization So longer the within gross some working hydrogen. we improve that initiatives have refinery of improve to availability the term, and

operationally pathway yields toward achieved is these current in throughputs months we've yet So do but to no, not plants. and there's And lot get that, in profitability. here considerably these the a that to to six higher

integration This for is very the with we're pleased Tim. second core your our side. again, on we've that objectives been I'll far Again, This on focused reason take seen the as marketing results the on for one and marketing. we've is, question that of the Sinclair-HollyFrontier again Paul, as merger.

and we're think are that's say at change country if probably we $XX we operating demand being particular, the the asked right type would our our case now. not with because above to brand Rockies, We're mid tell year would that we areas maybe which that demand. premium more the get to little have being mid-cycle, low across high point, bit million our than in but we mid-cycle fairly during I high, environment. You've and ready you in especially this what in, operate low inventories I'd inventories able from in cycle And a

and XXXX, a market saw that to stores rate And last continue More we're fact, a year that to the we going in end hoping towards our of the that rate it think range. importantly XX% of though, X% year-over-year. see to we growth X% will in number in we be we're have upper growth wholesale branded in

So be cycle that do we mid standpoint, in there'll growth from think number. our

back I you can that? LCFS, have achieved Mike, Tim. you, circle Thank certification about that on the the

get for we provisional first Paul, and we're Artesia with facility certification. the still operating that expect quarter we'll the in permanent the

Thank you. Okay.

for CI, yes. being That

of line the from Todd comes question next Ryan Piper from Your Sandler.

line Your open. is

to a run versus forward? balance is forward? this building of quarter Or that for how retirement to to to say On be about how on that aggressive promotion. expect earlier impressive additional well obviously, Mike of and on to you Tim run $XXX you're can one, shareholders about Can And rate the talk million should and a the maybe and all, how I excess bookend while? return type cash Great. the of sheet? first you there on continue congratulations, us return kind cash may cash shareholders, guidance. thinking really Thanks. we which you going going think look can couple of you about rate Maybe general, and, -- -- be your in guess in How a to the

Atanas. question. This you morning. thank your And for good is Yes,

in to cracks. a And fully With nice in [all-in] remain for Mike is remarks, far committed remain healthy. his XXXX, prepared indicated XXXX As for return fully we our year XX% we what capital committed have to return we strategy. of to be out, we respect up doing. as capital XXXX return (ph) terms pointed very been so shaping And to is

can So look we're pace, previously. shy when in talked the not we're that payout to XX% you of have ratio with target that going dividends. in the buybacks and Both about to we respect not to but we obviously say to guide pace, exceed terms

a also on privilege year cash. billion represent And $X.X starting with that we're and the we've from Ryan, sheet, of excess the which does position some began balance itself

to of Is there on on appropriate an we is -- you level there should on cash the balance expect that cash going sheet of balance kind the sheet, carry that forward?

talked as the immediate write our $XXX the But a fast our of our And our we'll release not focused through got hard robust into we've return, about around in take at We indicated press early which that's very we capital some obviously, account and number. as on cash Previously, pretty to million, looking in remarks, we but large balance. at and and range year, cash we've year. checks look the again balance progress shareholder includes needs.

maybe a challenges diesel feedstock And kind little talk mix you into product on I what placing there? the renewable any Great. and clarity terms year diesel about you the renewable been the on the you've and about acquisition? have in Outside as operational from earlier the appreciate on learned feedstock of running? follow-up Or acquisition market type Outside Thank bit operations product you're -- on operational of Have expected? Maybe nearly of sales can you of issues. feed and -- seen a the you. a of question issues, the what of business.

Yes.

we think of many certainly this and that ability about marketplace you with that these tell some the LCFS there California we more markets we've are product just -- profitably, low become we've okay? the are price, with and to in outside issues, in barrels of operational but I for And So a place see we're wiser involved I'd the doors what lot. So respect opens placing current that other and otherwise. learned older optimistic to

So initially much more opportunity we than place understood. to barrels the

profitability. think more in the relative side, conservative found the up to Beyond probably warn a operational maybe a issues, little that that's that spot And periods on pushing strategy right of for of we really is given and into terms of excess we've in forward in further us feedstock remainder being a market scars the I volumes backward structure. picking the market our cost piece inventory big the

different front. little strategy that a on probably So

to to plants, downstream gem. what of right strategic venture say With the game feeds the like in a on is really the that done, more we'll are new great. is ability higher is us. a that going PTU that. feedstocks is be off to but respect that's it lower something yields the But and a The to are at working fix really units, having CI of there I the bit get PTU. changer heavily is can but we can't disclose, for can't about, we our if reliability of good. is We're unit same operating on present dependent the put anticipated the And important coming and PTU strategically we than The a but

market of of prices bridges [Ag] price kind The into down has recently I'd have the RIN overall, the the say, terms and that that gap. come overall as So gets oils diesel softened (ph) structure and well in profitability.

the happen will the for or structure, improved will, margin generation hydrogen feel is availability like through feedstocks. you optimization greater structure operations, and us, we new the if market second So there

Thanks, Mike.

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

open. is line Your

morning, Good guys.

again. other a just each coffee we taken there, mid apologize. only Mike, guess time caught I and I You me short you're recently off see to got

to what here. congratulations to forward to seeing And both to guys. of Tim, you're looking going So do you

first if And that I kind really of my is may. question,

-- integrated Just what continuity The you to bought you be at of -- a at one. in part That’ll part high maybe forward the of, or potential lubricants forward? different? me as the how level, portfolio, does should you look is, to and Mike, number seems. we it part position at A part into a it never lease two going this. strategy there's How expect we the this questions. company do my something A I really look monetization? a [indiscernible] Could seems guess we of B And were as That's a part

now of this business but legacy And the number portfolio there. kind forward? thing structurally can the in always reliability same can the What standalone happening Sinclair those peers. on say, somehow the is, relative, one, of are the it work that the And business or kind you HollyFrontier is portfolio endemic you. guess, of let's is to to assurances [indiscernible] the it seems two and market to this leave liabilities tough the acquired on you the I'll was your a not heel I assets. give going that actually And Thank

once them a recall, was as out and of the $XX in money Those of And who lubricants to optimizing been many kicking company. you. month the for clarity, of nice Doug. no Tim Thank going questions, Yes. losing take contributor But There's to it. portfolio. were commitment well, specialties the bought I EBITDA. million lubricants lack bulk on is steady COVID, refining wasn't businesses. a during to growing are the businesses say, would a you They've while one I been those

well Tim's stewardship. has has business that performed So significantly and been under improved

future I'll this your pitch really do to and vision going is the with Tim, because business. it about what you're to So you,

as Mike years XX the as it. Well, good opportunity to addition has really the well ahead. combination such setting success, years, Puget done I -- up excited the this the the for that Mike. Sinclair Sound XX occurred thanks, ago then to addition and mean, challenge of I the company now with am and with it job about HollyFrontier a starting

really with bright and really future nice assets, capability some some us. a nice set of ahead up are and We people

So about very that. excited

safety, cash really demonstrated more last Mike as we long Mike you in there shown and I change shareholder, return and to the three demonstrated competition. head. to hit again tell things term of over guess, some last the that And from focus won't few up reliability, at the on the here least nail been more that commitment been growth, behind, can I we've to been go want of, really excellence. that's years years. has on on really that Things point has operations catch That forward more that you a focus clearly an progress, area the which has We our I've trying we've are need the we here been coming which the and up.

I a on going to And take trying to bit that's leverage to to more next little think my skill that, us experience the trying set and my focus level.

think mandate my we've I the I fact, from In but almost that's good some progress. Board, made think

annual will the assets. production. And terms not prepared because the assets about I terms Sinclair that tell talked we throughput, also in crude added of records and of in the and Mike so you we Sound gasoline some set additional but remarks Puget how of in diesel just that's not on just in

crude a records, El most individual we're Woods records in plants, those XXXX. production of gasoline I in records throughput set right legacy that's production individual heading think plants, Cross the sign Our that direction. distillate Dorado, Tulsa and And and

that in of direction. performance right the things We we're as doing kind kind see the chart on operations and be an to excellence. higher But like to us into deliver down up continuing confidence the the we say we're standpoint. right, journey heading reliability gives we as underlying I as right that And go and to long from have and it's going of rise, safety, that up capability It along. a

higher think rates Rockies people optimization we still a terms like area in and I synergy going Sound of that think a we're we're I what integration to for we've lot particular, a Christmas. capture of new more whole trying standpoint, the that West our real an new got mentioned new from opportunities, better in more opportunities lot and going there, almost going area, lot -- opportunities is go Puget lower We've see kid and tapped haven't the into to of feel earlier we as costs, and capability with fertile grounds optimize, got after. assets, Southwest, we've utilization, more at which of fully forward and of a to

lubes more that, there's opportunities business operations focused focus value. the another But Lubes working more has And testament last that really maximize our shareholder with we're look for profitability then in last to business opportunities performed years. Specialty over are very yes, consider improve the term, and hard can of more at Doug, point, set how that doors three That's there more third a I'm that I'd And We've that after we we the be we're pleased business. going and and is, the that that. say With And the in think the our record on pleased set see Lubes in a year opened. still fact our short better we out performance, strategic we're to a year record and may And on pleased improve. to we last to we've improvement. improving and on excellence. say row margin that been business. to I'd say the But earnings with to Specialties there yes, mid-term,

to you thanks see -- And questions, guys see answers That virtually much week. Mike, very Terrific. my and Tim. for Thanks will you you so next much.

Excellent. Doug. Thank you,

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

open. Your is line

Hi, my taking question. good morning. for Thanks

more refining progress year, looks how any half like early guidance year. as might anything the granular wise? you've throughout XQ the about think your a maintenance year versus or timing in in just But So throughput heavy of maintenance heavy guide with we in and maintenance maybe guidance first pretty terms full year out half called the second

a this John, to is XXX,XXX XXX,XXX Tim. day quarter. guidance first barrels put of Yes, We the in out the

in prepared impacts range think type on well -- is mentioned and sorry, mid is impact XX% what here be quarter is That winter back we front combination more first end -- I'm utilization you the have believe work but some the storm of and look the will turnaround a as that as remarks. in of utilization We'll course, year, the I as at the normally well turnaround on first clearly Atanas impact the into rate as effects, than weighted turnarounds. in the the quarter throughout That, lingering the into do lower the utilization quarter. the quarter. that get through as on first still low a the second crude if We we run.

that's really So rest what produce of if think the normal terms year. in typically in utilization, we you of to about low-XXs the back

Brent the relatively I even just could think with how Okay. you drivers on SPR XXXX? progress in Can WTI, And your the wide about view wondering Thank it and your remains there that talk release was you there, then you. ending. given exposure

Yes, there's be the drivers, But is to rates one Brent just impact high freight biggest a course, TI of spread. the rates, the right I freight of now seems the taking dirty lot think that globally. in

spread Russia-Ukraine we're that think of shipping that shipping created that more world. you're seeing wide. has always said that keeping And the the determined rest play rates. rates TI I seeing, spread the conflict And the TI higher into now out basically we've is even what with Brent on of pressure TI by freight rates Brent

we that to also with WCS/WTI continue spread pretty see. We're happy the

that And seen think in pretty to out bullish (ph) here the $XX crude few I'll discount that's it's Brent North advantage Puget WCS/WTI here to has of fairly last Now spread it a think [ANS] our jumped rest come year thing with continue $XX point at But we the wise the discount feels that that's fourth and quarter then That Sound in since Slope. months. over up And are just so is, good the ANS us. the a dollars we've off to in still $XX, pricing associated the location. out for then. the higher that a We last going production we to coming refinery. PMW of been big impact or has

Thank you.

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

is open. Your line

both capital know the and in been as and on notwithstanding. of things a one the had they've of but Yes, position question of family Mike and to comment is, congrats that's year December stock position, down you. Tim monetizing the I take a been intentions, congrats return if Sinclair some nice their you've the you don't follow-up over on I last to even been can

to can So you be your and capacity views over on the any outflows wall from whether just your to mitigate continue them?

know to thanks as Neil, the We very question. are individuals. the close So, you for

their of Board our family frequently. we representatives, on member speak two that have We one

an So notwithstanding, interesting yes, which December was trade.

We expect shares at a to And will they buying don't to market. from to liquidity. And as but think any sell stretch, zero I to and has an of shareholders. intention some position. buy some to to our down they chunky continue synergistic they want them you relationship their liquidate fairly by as that benefits discount quantities do it us that we're in been have

assuming to willing. they're more So we still of would that expect do

Okay. terms we love and in markets, set on up terms the your of into perspective to seeing diesel own of but weekly Mike. these And markets. in lot data, of And the gasoline a through -- sense demand? in It little the make days, both way your about summer? think then how retail That's of the seems about crude product influence you channels helpful, are channels the that but a there's talked and the bit wholesale you the hard noise. way It's does what EIA are

I to this the out. in interesting What Neal, is is every we're is confusing EIA it our data product on you tell Tim. how seeing can Yes, demand side, week. The It's see strong markets. plays just

our in the XXXX. were. XXXX, seeing down maybe versus And Southwest I gas and what but the versus up It's would so the Rockies. X% demand XXXX about the say of That's for example, on we're XX% side, peaks that's Mid-Con,

On the XXXX the in. we of COVID operate very been that that been maybe jet at -- about where And side, in We're I guess, of we has in operated higher in saw the has seeing XX% areas we on demand which side, the the what diesel most than seeing lagging, XXXX. through we're peak XX% period. at which

demand jet to is as continue continue year going out, So that climb. to to think we this that plays

some that shaping in We products more situation up the there'll of for think strong also the be rest China most for that these that pull as terms global opening and we're of refining. demand do another up people with back year really

anything look to about if a you macro more you for about that rest there's here that. have the lot is industry. and that, the drivers But factors advantages, add been something talk excited don't of And at And really year. our I can that is refining tell I the regional we're to really what of

think you our the us regional on in above Southwest, about. the even at position asset at that and gives talking advantage we PMW look our at macro look in up we've step you If a presence West drivers in been Rockies, our the Coast that you especially the the look

growing, these of really to with of advantage in And in the travel. that activity each PADD of lot up crudes product overall the Southwest. those a we're on markets in are demand in talked And continues fuels a the local Our we've locations. so got the transportation earlier we've demographics there's course, that about, demographics. West access going for excited IV We've especially months that to about when and those strong got at and areas there's still lot go summer of just Coast

pretty we're year. markets year. despite the on Neil, areas and to think a We still shaping reports have nice are our So this that that our bullish up EIA

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

open. is line Your

improved Hey, demand on though market? your good and weaker current the on I was was congrats production like was morning you And What impact to hoping moved EBITDA was a little volume even lubricants that the to, the more role down? in due Why that and FIFO in like, levels just walk Or your base new on in did back the rack indicators QX. demand side? Mike through Tim oil or on parts retirement. then the could the maintenance seemed moving quarter? Thanks. due to and turnarounds matching the the low, the

this Matt, Yes, is Tim.

importantly, again, in quarter. fourth demand seasonal results of business. just been as we our were prices me a softer very that lower for pleased combination we just dropping, Lubes see and we've quarter. quarter. slowing play also some some areas. down fourth We've low rationalizing of out a drop many customers we opportunity about quarters prices in saw SKU have But put now, in profit We talked for with the more But been waiting the to fourth That's the Specialty's of those volumes orders. their they Let our did before say lot to the that typically just continue see in rationalization

low trying or We areas are to that shed barrels of gallons are we focusing margin. are that on the favor margin in higher purposefully think

higher you we see but gross think as for that's see per well our focus out, gallon, see quarter That's continue as you'll you'll streamline on in And to what is margin which the pointed profitability. you'll year. we business as going to lower continue purpose. out So fourth really a volumes, the play and and on

FIFO million mention, quarter. was I'll thing It the headwind. other about in had The fourth million headwinds we impacts, $X $X.X

a onto first you strength. back the for of want show lubes. the in that better $XX of add continue kind we run for business to numbers. half the year always So get million of to a Seasonally underlying little you is believe We'll but can quarter, first feel the that rate still kind headwinds bit if will see

here continue we of play back in margins. we $XXX million we're finally, would roughly out And here as rack that pointed Group The in think I you quarter, tell what X really as fourth rate the run will seeing the that is strength you out the then business XXXX. is on

base stayed margins specifically is So Group and true, X oil robust. margins have overall down comment actually about X to fairly X. it coming Group applies your Group but

in You quarter first second our We still. take the as $XXX probably will continue at And of that about see our we continue that indexes, least think in through here full barrels published business. that advantage rack back to quarter, the well.

Tim, relative What's color. spreads on you mentioned Mountain Trans spreads, for your all bright And Thanks forward that It then, been a especially this have given spot. going WCS sounds think outlook expansion? pipeline I the good. WCS

speculation lot happen starts when Trans there's on Yes, Mountain a up. of will what

Of is quarter that is going, year, the we that try that to start happen. in There'll planning tighten course, thing in there line still the impacts as of the it some published are for barrels this has some be past, to possibility the but fourth that date could slip line they further start will the course. in fill spread which to of put a as

We seasonal in spring there when tend come to activity Canada. spread spring WCS/WTI that see into full the the in up in maintenance activities tightening also

for $XX would to expect off the in now. call area we that we're next we're quarters. diff spread couple to So the dollars of hold the not at come that WCS $XX, diff surprised kind to from see to this the, $XX $XX it, here And of right

you. Great. Thank

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

Your line is open. Jason Gabelman.

And the from is open. the from line next Irwin on to move Your line Doug of we'll Citi. question

Your line is open.

the for Thanks question. everyone. Hey,

Just had midstream one on the side.

maintain bit guess times of distribution versus Just target being wondering thinking capital almost strategy I to that your covered kind just flexibility also you're the achieve if two increase, a a around kind leverage could the you and being HEP? expand allocation on at of able specifically going potential And about balancing how of forward?

Sure. Thanks, is Doug. This Harrison. John

here. remains same Our strategy allocation the really capital

and X.X really mid-XXXX. times to the Happy basis. times on leverage So we at to X.X form a We at we've to longer we then pro we're made with of that there. times and have a to leverage in X.X pleased And leverage while we've we're hit plan short with progress times. report X.X ratio that do the X.X flat in distribution maintain kept reduced we've a coverage term target least that term, expect that of times

terms we'll incremental what we're to do as next to shareholders. target our leverage And mind fair cash the incremental over So return of quarters, of couple approach top communicate to is say for of in cash going return us. we

outlined I then you're in mean, kind guess of takes about acquisition. and the low the bit you of after of kind you of already the ability Sinclair ATP it. squarely some Got the outlook. maybe range year? the on forma for half I that And range pro of maybe higher just a to your this kind the puts talk and towards of end push little XXXX Can

Sure.

So in middle of the in we are the range that already.

of includes, Transportation assets. Sinclair pleased that with obviously, that. only So we're three really the And quarters

have inflation to contracts HEP to also also, applicable And we is our adders that have revenue HEP. we there. our at of for really all room some So

for HEP tailwind So business inflation piece the here. a definitely of can the be

have. That's the Got time. all it. I Thanks for

turn at call over closing will for no the Berry questions And final there further time. are back now Craig to I this some remarks.

in with want This was couple downstream year our HEP-Sinclair Rob. company wrap integrated established the for ourselves further the acquisition the year. Sinclair, our Puget points. been a done and income the a same dramatic full customers to time Jennings. Sound at obviously needs tremendous really well our up a is previous to and the and just Mike I Really and serve that returns shareholders. of acquisition to pivotal just own company we our and generating completed HF Thanks, integrated XXXX had operating as business as in changes and

proving billion We integrated, on it really synergies, cash of some and well. done importantly, our included getting million realizing we get that So early. key to get which frankly commitment have initial diesel $XXX our of acquisitions start-ups executed $X.X these done owners, renewable points, returning executed over this to completing would and within our up

investment this well and, the Moving we portfolio, sector they this improving to our the out cash equation accelerator continuing for of company. and important get returns has called priorities obviously, and maintaining fundamentally include reliability our terms it in think to I on of shareholders, Tim within optimize that's that this foot forward, part a

Tim tremendous come important right President multiyear a working publicly company's I've for our company retain culminates Board to improve admire with develop an pleasure up the with to passion finish of for and the operations, him knowledge our future. note I a planning want business, for to the congratulate the three desire announced HF for his the of almost to on Sinclair. to for and little had years and and and going to succession strong of and and ability our I'm have process job. of now find then key and to part his for great appointment our leader attract on CEO optimize Tim roles talent This

of rest past job to done for great onboard the some with that and our Tim people fortunate simply get the I love Get at I committed regret sentimentality. be with team And the this We're are great that will this have down to in will because success. they and it stepped and together well, work working our I So, really this industry company to engaged. believe who the owners.

So thanks a lot.

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