HF Sinclair (DINO) 7 Nov 222022 Q3 Earnings call transcript

Welcome to the HF Sinclair Corporation and Holly Energy Partners' Third Quarter 2022 Conference Call and Webcast. Hosting the call today is Mike Jennings, Chief Executive Officer of HF Sinclair and Holly Energy Partners. He’s 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. [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 XXth, announcing ending results welcome and morning, for XXXX press third the releases Rob. Good Corporation morning, and everyone call. we This September quarter to XXXX. Holly

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

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

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

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

or $XXX diluted income period these for per XXXX. items, of morning was per by attributable $XX Craig. diluted million. or third million of share $X.XX income million the everyone. reported thanks, net results we share reflect $X.XX excluding compared income And adjusted same These income adjusted share. $XXX Good Hey, million or quarter collectively that net diluted to net decreased third in shareholders quarter Sinclair for to net the per HF Today $XXX $X.XX special items

than increase compared quarter billion, an $X the quarter for was third the of current Adjusted XXXX. of billion EBITDA to $X.X more

segment third year-over-year. distillate and results from in in that operations strong XX% resulted quarter Refining a by and sales record our volumes throughputs reflect and driven safe increase reliable contributions Our gasoline

and in $XXX inventories in resulted Refining with last the to serve period in $X.X in same we regions improved Solid EBITDA million crude of the coupled low compared demand billion third year. over differentials the

Renewables in up facilities we are by our quarter diesel gallons rates with were billion the segment, strength. renewable In strong to across demand price methodically we DX quarter-over-quarter. third by solid operations Total higher XX encouraged and and margins for our continue sales utilization RIN ramp driven

quarter contribution decrease lower margins. We the from million for Products adjusted $XX impact in to was our inventory This Lubricants unit to third consumption of compared additional third driven QX. also higher-priced realize XXXX. and EBITDA the by largely pretreatment resulting expect EBITDA of of $XX quarter reported feedstock in FIFO, Specialty the for million of from

products. annual Our Lubricants strong above business fuel million segment was finished as per is a XXX $XX on base margin. of Marketing guidance oils basis, for and sales well our quarter EBITDA volumes mid-cycle representing reported $X.XX the a gallon for still branded third performing total an million gallons, demand result and were

reported adjusted primarily was of XX% transportation acquired sites HEP year. of driven million which by third XXXX. period same March the to in brand EBITDA progress continue quarter expanding last compared of our contributions DINO the This We branded third million the the grew in were to Sinclair as $XXX from increase in by during $XX number the quarter. make assets,

first which ahead by billion have we initial XXXX. quarter end another through returned XXXX, Sinclair and of acquisition the $X returned well is of repurchases of $X.X returning quarter target We during in the closing the our cash shareholders the billion to month of million in shareholders on XXX October. over XX, and dividends our $XXX the the of March of Since to our

achieved relating Sinclair and strategy capital investment-grade of To target while annualized run we fully million remain rate new $XXX over announcement of strong of With balance the synergies authorization cash working have repurchase acquisition, to synergies. our our committed an credit $X in date, million, we rating. additional share $XXX return September, maintaining sheet and ratio of payout to a billion the our

improvements, synergies We rate achieved SG&A through these a annual combination run reductions of expense operating commercial and optimization.

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

safe and constructive we're our and operations across product low through crude generate flow margins, strong focused portfolio inventories on free on opportunity product us ahead, We assets of wider diverse supported cycle. fleet the to by cash our maintaining Looking and remain differentials. provides the refined reliable

me to call let that, with turn over the And Atanas.

Thank everyone. you, Mike morning, and good

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

$XX mentioned, previously included, forma few environmental million. a a lower $XX adjustment, to Pre-tax unusual rate included of HF third pro earnings strong remediation market costs for charge As inventory items. cost our HEP's Sinclair's integration million of valuation quarter share and $XX cost Pipeline acquisition results million holding share of

press A third stand-alone found Net cash totaled totaled $XX our of $XXX $XX quarter. can expenditures which the in capital for be operations HF release. table quarter. by items million Sinclair these in spending million, million of included provided turnaround the

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

debt-to-cap billion a and net have standalone debt-to-cap ratio September X%. debt $X.XX of with XXth, ratio of of As of XX% outstanding we

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

guidance some Let's go through items.

have and the million million. to million $XXX between for range million At to HEP, corporate, $XXX million million to million to $XXX spend $XX $XX renewables, we in to the to $XX in specialty million to capital. at from to expect total of $XXX $XXX range lubricants capital million turnarounds $XX $XX in in We million We XXXX to in million guidance to previously refining million million million expected marketing, and for $XXX $XX million to million expect million million $XXX shared to $XX spending catalysts. spend and reduced $XXX $XX between products, $XXX of now slightly our $XXX

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

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

And I'll on John with this, turn over call for update an to the HEP.

XXXX. to $XX.X Sinclair oil Transportation Thanks estimated costs earnings Atanas. to quarter decrease operating expense to $XX interest assets. income million year-over-year recently quarter share and net remediation primarily attributable was in The third compared our of release. expenses partially attributable HEP's with the Energy the third incurred acquired million XXXX Higher of the by and Holly was Partners strong crude related Osage pipeline associated to offset

per $X distribution a joint quarter X.X in will million to $XX.X $XX.X LP distributable distribution to investments November reconciliation CapEx. in $X.XX HEP's third we a ratio The cash million, adjusted in EBITDA quarter the were year. A of $XXX.X press including be the be announced million, during approximately release. and last period reflecting quarter flow same as HEP HEP's XXst. was XXth XXXX in these venture on coverage resulting adjustments unit, million $XX Capital unitholders table paid times. of record generated expenditures of compared maintenance million found third of can and distribution October of

X.X and As we our by in driven XXXX, committed our operations Safe across the we times anticipate our asset strong leverage target strategy and XXXX. short-term strong of year base utilization performance to look capital continues priority. expect to We to half the into of rates. to remainder refinery remain our highest of reliable and the first reach be allocation

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

The And the of question questions. now for your floor Paul [Operator Instructions] Thank from line open Cheng Scotiabank. is comes you. first from

is line Your open.

questions Good please. morning. Hi guys. Two

in is is incremental or or how any we your mean of how flow the the when cash that you've that CapEx for distribution, distribution, in at Sinclair top we also, buying cash to whether should ultimate what from the of in pace hint been of is it? billion stock look go intention mean, I billion faster holding. look at at past. their $X And I cash should should family, excess the going of And your the the $XXX the terms than a we assume is First, back much -- target on

mean. is Any also, discuss The understand also your quarter. in fourth the far versus learning your you change. margin curve third be and How so the question could capture and in surprises quarter help sequential may cost us Thank second the The I on to [indiscernible]. may you. margin structure that quantified

those here sitting to furiously writing we're capture down. questions trying Paul,

Let me ask to we as with generated cash here. of strategy the start out distribution Atanas

Thank you, thanks for Paul. Mike, question your and

generations, a demonstrated in our And the in And called committed we of returning periods specifically, just little to strong much is cash we've of quantify XX% flow remain ratio we this all, return term. capital as to First more past long payout to the have capital. to our priority shareholders. out the for very

respect dividend of with to is much buyback, focused to flavor this a much and Now, is robust shareholder how matter share our debate commitment how just comes, versus return. it remain that's but is what on

we continue priority in to XXXX. repurchases, most in little planned goes to play. looking us way the higher and a We've the flow terms And incremental Atanas. for Thanks, maintenance got of in same hope that. shareholders forward But 'XX into had than turnarounds we to Paul, XXXX, cash the do is of pace again, share expeditious

this and repeating, said its relationship very we've with got worth to close holding As family the that we've a family.

which of have then terms Board repurchase our have program to in amount them we terms transacted liquidity provides repurchase. own on our their with and of We a shares executing us greater of in two size, of our representatives share in

mutually So, beneficial. it's

We size. expect in to continue it

The to due just diesel. from to XQ a at perspective. unplanned utilization XX% basically during downtime obviously operations, profitability or renewable on relating Finally, ran issues so start-up created plants

this the PTU We're running higher first was for we we start-up margin and fixed expect. we generating second feedstocks gross runs really same ended relative but our is quantity, the of high-cost up would the fairly purchased OpEx, mix The obvious. to didn't benefit get RBD in that as dollars of fewer a

planned should got from ParCo fourth different significantly And we that results. we renewable to But than expect lead So, in what that the changeout. apart operating substantially for quarter we've and diesel looking in utilization the some higher at forward, profit catalyst third throughput downtime quarter. experienced

Thank you.

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

Your open. line is

give Mike fourth curious diesel quarter. that the to you're what elevated if I to my still rest you seeing Clearly, you of for in economics refining wanted gas would Good side product and well? of XXXX. quarter between margin flavor line think you how can and into the this as be evolves the hear through significant a the And about questions. is, on strength ask express Thank breakdown helpful WCS for forward seeing following about you the and going from you're taking landscape [ph] tailwinds morning. this

going Yes. Thanks take I'm question. to Tim Theresa. this ask to

foreseeable Theresa, mid-cycle to better Yes. here see think we this will refining here deliver We're market. a where definitely scenario is returns Tim. short for above the Hi, future. We a for continue longer in structurally margins

that conflict that We couple see occurred continue over the is with disruptions. causing rationalizations of Russia-Ukraine to that last the flow refinery years, have trade

forward, of year. some refining significantly As there's the it's term. you that see hard some going that to capacity know next in changing start-up to We be look near additional

it's I Rodeo Superior they're announced but close close. Refinery think are going to the the up, be that refinery, know announced refineries Beaumont going that going also the that we starting refinery Lyondell to the has to

XXXX really transition over the the really Mexico, is So until don't change know, to see time down is the investments the green energy there in we now refinery you theme only last structural going supply-demand. start gotten of be the kind in when several is to we The longer-term short seeing into the Nigeria or some the high startup, is, to really of overall inflation think big we're whole for more a continue of proving years, slow seeing you I get right? going With a that technology. that attention a it's evolution, out right continued lot quite

right much keeping full. as for our our trouble products going inventories to see they And demand be and can continue so strong. having still now, refineries the are And to as we producing are that

mean market short, going is to future. story I So foreseeable the the Theresa, we be long strong think here refining the for

you. Thank

to fuel outages, maintenance is meet order add Theresa to high that additional trying that And been rates we create hard US in and unplanned planned have plants to running prevent run time XXXX quite that and that full will have attempted up for to And produce these show think I during the long in we to shortfalls. supply demand right? to both maintenance. that going others a think and

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

Your line is open.

you a on were Mid-Con quarter Hi. especially, a but if I in in the sequential rate I in differentials was particularly refining But lot quarter in crude pieces surprising, where results the things impacted Maybe the may capture could have decline moving of the the positive was. Thanks. of Mid-Con strong how there. some environment there operational ask there's and can side, strong Can were the in your ability performance know little -- to, given you quarter and and the of in that capture some how quarter? fourth kind of, about may the in those the talk in particular negative be trending the

impacted quarter. Mid-Con Ryan, third probably in of point in We're rates capture pleased our the we quarter. again. have this Tim, both That's capture that in West. the factor is biggest just out third that Mid-Con the Osage I'll lower and, the the the Yes, in refineries that had with did event we've an course, the rate

Of our which as well course, quarter, will rate. during third capture up obligations the were RVO impact

hand, other we that the the with Sinclair to pleased On capture. continue we're synergies

We more Mid-Con have refinery crude allowing El capture Mid-Con. to differentials to the that Dorado higher in able some our of of the Rockies are capture course, WCS and, as arb part us we're

pretty So well. quarter optimistic as about fourth capture rates we're

on the Great. as you just -- expensive business. the during RBD clarity. Thanks few see environment a you an around gave way the through question. your Maybe and next a in look have about overhang how do feedstock? all have Do going And quarters will of that follow-up quarter? still that forward, over backdrop the an fourth into then you point that you appreciate think you renewable diesel? the I the diesel Is worked color that remain maybe at you the renewable earlier

Yes, we the this issues. call I what with for Ryan margins constructive we're in The underlying that and start-up consistent historical environment right really and the now is working would is forecast business past. through

that quarter. experienced I the in we bit little We the to that of due work third through very we fourth got that said have in remaining substantially be the throughput due expect higher-cost of process. will than result a little previously, fact But the to as feedstock operating this we've largely quarter and better to

you. Thank Great.

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

Your is line open.

guys. Good Clay This morning, Hi. is on Doug. for

questions. for So thanks taking the

XXXX. to diesel to the into offer Today is and is you the macro need question this on you're on But wouldn't complex back a first setup my So other the for a gasoline. yields. view can biased those way summer? you driving back how price winter maximize swing margin obviously signal transitions Because theoretically to

So we see catch gasoline up? diesel robust remains do if

for summer max diesel. certainly this that you tell are all of to most cracks is to diesel dieselization Clay, Yes, mode maximize in during this continue Even Yes, we're refineries I'll year. incentivize saw max -- But stronger our in been mode much they've Tim. us dieselization the pretty today. we

the in to from and mode summer back that year max-diesel the will increase be as strength gasoline to next gasoline incentives this the start continue switching even back at and the transition time. see into So this will gasoline that have mode we may to we again to to and winter same spring that summer anticipate then both the people in we some next incentivize diesel

there recently because it appreciate touched second and takeaway the I fixed that. it. is get Waha the very situation tight My half to on benchmarks gas, is XXXX. so second until the question Got zero, doesn't

the cost. with So, means hydrotreating cost I'm and that wondering for Navajo operating what for also

prices us gas go definitely pleased in pretty in earlier natural We're high differential It's country natural Southwest helps we've down. We've costs, the seen across on operating Yes. it. with gas as the the much come year. watched that It for surprising.

we see of Overall, to our or dollar in an happy EBITDA I a these we're every normally made before, So think, that. fleets. our gas, change see million across all minus $XX basis we've comments in on about plus for overall annual but natural

energy watch we So pretty prices carefully.

you. that. appreciate Thank I

Your Stanley. the from of Morgan Lynagh next question Connor from comes line

Your is open. line

Yes. Thanks.

a think to XXXX little wanted bit Just about here.

on higher talking also I'm a turnarounds, reduced but thinking were through, obviously, cost renewables. You about then

the year? you think can cost help how us walk items on those about big should just -- puts and we next CapEx and takes So through big for

Yes.

we're at as turnarounds, around roll into obviously, the to guidance we a offset. maintenance we'll going for frame. providing planned Those again, And but year, level, specific CapEx think, time high be expense, come I higher renewables. guidance February lower the on coming largely probably maintenance update

Okay.

the XXXX XXXX of there? place kind you're net-net, as So same versus about the takeaway

Maybe little higher, roughly. a but

lot see a Okay. Got one. being set niche markets? where obviously, Where pricing sort core if you off it. You makes in do of you level your higher Maybe that have see market of one just exposure, structural sense. of, do guys, pricing

basically Do mid-cycle being transportation you a that's coastal more feel think So on off you're your you markets? plus a that you the priced right you like crack Coast do go-forward previously way think pointed Do in forecast to about How costs. to Gulf basis? of it? think about

shot a Yes, Connor. that I'll at take

believe we trade through are the So the the East have that shift the given seeing Russia-Ukraine the natural has historically that would changed of set marginal over there, increases conflict. -- flows that imports the refining of part occurred price come that in. Coast conflict, they're Coast Clearly, gas economics off European East the that

cost and are set We from more Asia, And coming Coast Mid-Con really, really into believe Gulf price of are off which refineries mechanism Gulf setting the us. some of more are marginal East a set Coast structure, the higher basically our Coast creates the Coast. off the actually then now of for that barrels East coming a is the

today that today which marginal versus Coast Gulf price today coming we we advantage have we structural a then think Coast have we mechanism, setting the versus and versus barrels is So East the really we think Asia import have think, in. we we that the see the

all cost of know the we QTI structural with and advantage from there. from believe as op structure, we we that the seeing those a we a standpoint at we we're So, have and Brent look standpoint strength know gas things natural we that at both the advantage have are right and a crude looking WCS differential a you're now

marginal the niche product diesel we a gasoline, our where for when products for both market producer. again And over and advantages for see you look we advantage, strong think a have we then at placement

Thank it It's helpful. back. I'll turn you.

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

Your line is open.

morning. good Hey,

you're the you talk wider Could heavy quarter. driving in what in about is your what's outlook and think forward? barrels XX% WCS currently I going

Yes, Matthew, this is Tim.

definitely normal and pleased WCS with are We some a return as wider spreads. to production of of the seeing result in Canada. seeing We're that the

crudes. choices lowering are the right of competing I associated of the But demand now the of barrels WCS/WTI for unplanned fuel oil that quality the what is with quarter would surprised have are spread for think that the that in thought occurring right of the as for that the as course, some always impacted we WCS are as well overall think some spread that that I fourth demand now is the and weak well Naphtha, weak WCS here widen. us occurred events as widen some causing in that very has to demand Mid-Con that.

differential we we from of the We than see that. as still call that see into to we'll production some dynamics of We benefit and the as what the kind think able quality transportation well higher driving differentials going be maybe forward XXXX.

ran we that associated Osage bit less with quarter, little third the that was event heavy a In occurred. the mostly

you business. million $X heard barrel We increase thumb production change, for our all typically about to EBITDA in annual WCS every we of have as a impact our the rule economic and a incentives see $XX a WCS as may have

well nice And there. flat from QX blending so butane the tailwinds Do the basically then be work a good. like little rate just rate quarter-over-quarter wider Sounds and at capture held you as actually things think spreads? capture octane WCS might higher given outlook bit dips for your as XX%, QX

utilization Matthew. go some that of would capture generally all get we're we tend higher. goes rates of Yes, percentage down that's the winter to down, our RVO I that encouraged typically but the of gross because into is months, say by of margin because as

the quarter. the But pointed in in you as as you -- the out think pointed point certainly we are And stay in wider this is higher we're here you stronger into November, out strength we're looking the with we high. capture cracks, fourth Utilization fourth out, going -- quarter. diesel as crude here do rates diffs certainly should with the

Thank Okay. you.

Gabelman And your question from Jason Cowen. the of comes next line from

line is Your open.

for ask renewable questions. taking wanted Thanks the my business. on diesel I Hey. to first

downtime. was diesel it out in think, I may a You missed change but mentioned I it planned, renewable have that some, due unplanned business. to if catalyst

issues catalyst And okay so, And or the in quickly. is the hands terms types catalyst had has that of industry come quite going a operational that that, I some know any if change everything during or through have Was out in do other issues? your that segment? around start-ups of of through result wrapped have the you

A big my order other on and business? lubricants higher was business. for question just then in of inventory I discuss are where maybe magnitude know takes, impact that some just kind Can the that trending to of puts that feedstocks. accounting margins And and of you the Thanks. of decline. the quarter-over-quarter due was

hands the And the think than of Jason, question. plant at change renewables the units. a we around start distillate a of was October normal month the and hydrotreating are operation little and and that catalyst with we they that scheduled units Yes, Parco have these in planned different very a our We much I'll referenced do catalyst outage.

been But catalyst date good to and has to relative activity. life catalyst pretty experience our

lot So, of some issues XQ, but problem. we, referenced, as catalyst a have I start-up related in did not

speak lubes, can that? As to Tim you to the

associated $XX lubes ran. quarter. that feedstocks quarter It higher-priced million Yes, due the third the to Jason. whole was in unfavorable the was we in Sure, FIFO, impact third

business we're first without there. Even So really and here. quarter the see delivered so to FIFO record with nothing would quarter impact and pleased earnings the have very we still second

time it will over unwinds. We as know FFO out even

lubes for when impacts. of above mid-cycle we're XXXX, in take still you here EBITDA FIFO for the the $XXX still million And expecting performance We're even all in consideration on XXXX. range something pace so, into

Great. Thanks.

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

line open. is Your

Good Yes. morning, team.

The on EBITDA. the just question mid-cycle first adjusted

billion well that. this with out very free obviously come to trending and of is relative $X.X You've number $X.X the flow cash and billion business

So, think just do as of different -- you upside downside? where equation, the the see adjusted about curious parts EBITDA that biases to you what or

morning. good is a to us. in environment Neil, little Yes, change the in to the currently Whether a And Look to is foreign mid-cycle obviously we're operating really impute that generation hard earnings and say. extraordinary. economics, cash immediately

We believe refining there's shortfall in a domestic supply capacity.

principally taking industry of we've yet it doesn't And try to cash and in a bit, we're absorb the watch back this current that's going adjust expectations, we higher higher. with our important just with it after I heels So EBITDA mid-cycle in having real that on deal. our to probably terms We that, what that obviously that terms a those focus EBITDA levers distribution to as two little yet suggest? do whether deck, first and million closing structure were of a what's the is, front in does slide the it to I refining to affect opportunity more the what on But being here are chosen that just our Sinclair well, months mean, go would seven There's that more the number. synergies un-quantified. But say of completed $XXX our not related refining. on suggests shareholders. of to

and the Do of were market? And bolt-on is lot and that potentially of just then sense. consolidator upside. a coming be to see of to makes been Puget capture retrospect additional follow-up proven Sinclair strategy. That the Both lot M&A you've a logical assets Holly in into Yeah. around And you timed well a the assets? is able

Yeah.

our So but first and say, out for it I necessarily well planned the timing. has way, it we shareholders. that very thanks for worked compliment wouldn't on us

on As We're burden the standard. opportunistic. of consolidator, hold to that blessing the ourselves taking we being to don't the and

our looking of to assets unit that plate combined Holly. geography and we're acquisition full that make company defined of historical our an present, and really of We really for. have is the out excellent and in quality Sinclair is respect the At goal

of more wholesale months us some us of all ahead have. terms got into we of integrating downstream in ahead bought network frankly, aspire the years that And opportunity that We've into. in we that realizing to branded

So already. there's to realize we've what to plenty do, purchased

future, we on will take believe transition, But the at the yes, redeploying We'll oil renewable that principally more of consolidator. don't a that assets because opportunistic. net be towards strategy we focusing energy there of on be portfolio. of sellers As being necessarily a the larger companies present, to are more

Thanks, Mike.

Yep.

question And our next follow-up line comes Cheng the from of Paul from Scotiabank.

Your is open. line

Hey, you. guys. Thank

Just – Sinclair the terms a already. synergy, achieved of that, mentioned in a quick you follow million you $XXX Mike,

biggest piece going from? point for if where where there's the you this it's from So on, do there's opportunity to first come if that -- see any that is question. That's Where incremental opportunity the that benefit? synergy

question, that into And of second $XX back million impact. Tim the to go want mentioned Lubricant, I you

the throughput that's on based on barrel So per third your about $XX quarter.

that, And market that, other we low. that I actually should an go back – from they when your reconcile to your we mean, accounting indicator has the talk still of up. actually FIFO be people we're that look also oil at utilize something that trying is to we in indicate also why So, outside standpoint even you if need that aware. is the I so margins up, to added And the been Exxon very it's base when XX%, margin like gross say

Tim. is this Paul, Yes,

hit those Let me questions. of both try to

side, you into synergies. focus Certainly, on. to but think the and with that integrate mix, just there's Mike the there's synergy that continue can Sinclair still, the opportunity Sound mentioned, as Puget Sinclair, capture all to add believe lot of a the On I for benefits us we we lot opportunity a we more also organically of as

think in into supply given putting examples, we Casper a Rockies Cross opportunities we're deliveries product Rollins chain various of transportation by a pipeline there's optimize the and just trucking the and our Couple our chain savings of our and the between to be supply savings, Woods area, presence just and continues of managing savings logistics. there how markets tariff to us refinery optimizing logistics, pipeline refinery refinery, and the truck lot our lot for

we our standpoint, terms in the across standpoint, lift be procurement opportunities continue bar procurement but we refineries, our there. going whole scale a we a reliability to our we've continue as going in From From knowledge captured to and leverage share continue utilization. seven portfolio now to savings to we to some have reliability more procurement and we across as that portfolio already, there's we're leverage believe our refineries performance the of think

at finally, the then products especially us opportunities that refineries, that Mountain again that to we Rocky going of and generate make in we the some for of integrate to oil optimization opportunities like amongst, some more asphalt future. are think there's fuel these as refineries in intermediate things And the

you estimate Do do XX you may your for months the incremental next target capture? an the sorry, synergy able have of to have estimate you over benefit -- that be

estimates have time. share after, but -- we there's nothing this we and going initiatives with we're you have that do to Paul, internally at

list first next the We chunk had opportunities Paul, as on gotten felt and we to the they just next up and where how like that through are. building big we're quantify the are we're next going quarter's call. to

of Paul, the FIFO, associated what that $XX million question say if Lubes EBITDA. apply with million we your to talked million reported $XX take On you just is, mean, you $XX would the that about I I

You stronger number rate. seasonally half mid-cycle with the in talked of of weaker. that get we year, of that always half first terms We've about said is our is consistent a the year a second run our estimate year that's

quarter And we're the kind headwinds, think quarter have think be of will run at continue good that's so to similar. to but run we we We'll for mid-cycle our run for able be kind here to and the FIFO third fourth pretty to business. run a We rates of rate. being able mid-cycle going think at

-- overall look just is, a just year-to-date impact only the with add in headwind -- If And it's overall if important quarter Paul, is on I the the FIFO this I for even this could not because not vacuum, at positive. is look quarter if also basis, can It's to Atanas. you negative. this

out. over Tim time kind evens as indicated so FIFO earlier And of

But is above timing this mid-cycle. year on a more we're So basis in or full year-to-date at a of thing.

All see. right. I you. Thank

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

This great Rob. tell Mike you Sinclair Jennings. the really shareholders. financial And made of strategic into our value and really just the our In Thanks we've company. to I'd closing, is combination becoming the apparent is that bringing progress businesses

that we'll five that per we're as here on is area as through our up call. focus full we we businesses is plan start-up. segments, base I've renewables more capture estimate these to rate operating adding we're bringing that go our articulate said the Synergy and in well. of Across next obviously to forward and anticipate really And plants

efforts. margins for despite persist higher today's macro market due expect to resolve difficult be industry the best are in We will that refining to our to run factors the really short supply challenging in going

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So, with the call. speaking look all to that, you again we on with next forward

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