HF Sinclair (DINO) 4 May 232023 Q1 Earnings call transcript

Welcome to HF Sinclair Corporation and Holly Energy Partners Fourth Quarter 2022 [ph] Conference Call and Webcast. Hosting the call today is Tim Go, incoming Chief Executive Officer of HF Sinclair. He is joined by Atanas Atanasov, Chief Financial Officer; Steve Ledbetter, EVP of Commercial; Valerie Pompa, EVP of Operations; and Matt Joyce, SVP of Lubricants and Specialties; along with 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 opened for your questions following the presentation. [Operator Instructions] We ask that you please limit yourself to one question and one follow-up. that is note recorded. Please Instructions] this being conference [Operator

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

Sinclair everyone, XXXX quarter call. XX, for This press welcome morning, the Partners issued earnings Good we announcing Jack. Holly Energy you, to Thank XXXX. HF releases Corporation morning, quarter and first March and results ending

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

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

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

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

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

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

$XXX to well regions, the and margins increase result year. as segment, by compared of our steady million XXXX and primarily crude same the supply Mid-Continent last as demand, was West quarter refining spreads. of million, $XXX both This in period tight EBITDA was driven In Refining first higher a favorable

day XXXX, XXX,XXX first of averaged during the on the conducted refinery am pleased XXX,XXX charge heavy of on time first the to budget. all the in barrels barrels first quarter to completed Of quarter oil we period. due three to maintenance Crude three turnaround XXXX per in of XXXX, and turnarounds the per day we quarter in report compared successfully I

end-of-cycle While the is our available accomplishment in we many this refinery that itself, during significant reliability also on a downtimes. addressed equipment was issues of these

reliability cycles. strategies built Our during that these maintenance execute improve is drive around operating the our we turnaround to

In first volume our renewables of segment, we and gallons sales million reported $X quarter for million XX the adjusted EBITDA XXXX. of of total

facilities of work advantaged will We continue optimize at expect which in to from feedstock the achieve rates XXXX, our and run to to normalized second increase utilization half pretreatment us allow our to renewables unit.

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

grow margin with business the year. continue We and more a or for we DINO uplift strong as sales per expect brand, the produced channel sites see consistent our by marketing to in our value branded provides X% to fuels,

impact to driven reported first of XXXX. for FIFO by XXXX lower-priced for $XX and of This of first quarter $XXX EBITDA of Our segment the in quarter from Lubricants of decrease million the quarter XXXX. compared feedstock million largely inventory consumption positive Products Specialty the of first the EBITDA was

finished and of performance of pleased our segment products. base We continue our focus continue strong with to Lubricants the to and optimization Products and on sales Specialty be mix oils

were by from compared in partially process Woods interest This the contributions March from of offset assets, the in increase was driven of of refinery revenues last quarter HEP as as higher to which our first units, million XXXX mainly well reported year. period higher by XXXX, in EBITDA $XX the Cross expenses. acquired Sinclair million of transportation $XX same

Overall, first quarter. returned to we $XXX million the dividends repurchases during in share shareholders cash through and

XX, our and of remaining net on We of remain March million more repurchase XXXX, of XX% return rating. have a share we cash fully credit committed strong maintaining long-term our shareholders, our authorization. or returning balance $XXX As to income strategy our to sheet while investment-grade

already believe the HF the This pursuant a HF integration Sinclair, Sinclair. all refer subsidiary acquire corporate becoming units our of an unit proposal. and Partners this nonbinding LP, in morning, Holly our portfolio. would made of Holly transaction to related merger common proposal for to optimization to HEP structure, stock not Sinclair indirect We press Energy owned of that HF to result a release reduces owned separate for costs the and the simplifies transaction proposed specifics supports of further Please by

near-term the CEO HF take Looking with my to like forward, as of this priorities company. transition the share for make I you Sinclair, time to I'd to

lower excellence. our continue the expenses. and reliability believe First, which our higher in we operations rates means advancing utilization This must and operating of result improving we plants, safety will

journey. the top earlier, will and equipment. take the to as turnaround our time system years, last guide I matter excellence recruited we few operations necessary working our it But have priority, over our make and is to to we are improvements implementing management through experts This subject mentioned many through cycles us our reliability this

have as we Sinclair those Products segment. and capture operating goal million to margin this more completed base. Lubricant acquisition, annual more acquisition, number realized portfolio as from and we of the capturing Specialty the across We our Second, continue with and opportunities on in assets transformative believe our already we of $XXX integration into efficiencies of of to a our well run the synergies and rate roughly is asset focus there from acquisitions,

investment-grade maximizing positioning over flow, I long sheet for shareholders the cash Third, an our value excess that earlier. balance maintaining term share I free fundamental strategy on and and future repurchases, while and to I'm through company Returning success. to cash cash the committed am return focused mentioned is continuing to dividends shareholder

that, over the Atanas. to me With let turn call

Thank you, Tim, and everyone. good morning,

quarter provided operations of first million, HF for quarter. the the highlights. spend by the Let's 'XX. stand-alone $XXX million HF totaled turnaround in million cash included by Net capital begin first of which Sinclair of quarter reviewing $XX expenditures for Sinclair's XXXX flows $XXX totaled financial

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

debt-to-cap $X.X had March of XX, -- a we ratio with ratio net stand-alone of of X%. of debt-to-cap As XXXX, debt-to-cap and outstanding debt ratio XX% of with billion

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

expansion venture expect to and and joint $XX million million in $XX $XXX year renewables, to Let's for expect million $XX Specialty between $XX for go $XX $XX items. million through we to $XXX Lubricants in to HEP, in capital marketing, to maintenance Products, some $XX At spend and full XXXX, million $XX to million million guidance still million turnarounds $XX corporates in spending With million investments. and million $XX in spend and Refining, we between to $XXX to million and million million back to respect million catalysts. million in $XX to $XXX in

For run crude period. XXX,XXX per and Refining the planned day XXX,XXX refineries the Navajo oil quarter during at our our turnaround expect second between we to in we to segment, XXXX, have barrels of Parco scheduled of and

to our separate refer to And public Tim specifics lastly, the acquire for units. morning this press our please proposal mentioned, to as we HEP issued outstanding release related

As we're unable Q&A. negotiations are speak ongoing, the to during specifics currently proposal to around

HEP. an John call And over on with turn that, update me let the to for

generated earnings, and first and in transportation and reliable and supported product Thanks, both solid storage our HEP quarter Atanas. safe refined strong volumes crude by operations systems.

million offset to attributable million units, income our to the interest assets related revenues transportation The Energy $XX costs. net quarter Holly higher attributable first and Woods as operating compared higher primarily $XX Cross well partially XXXX to was quarter Sinclair earnings from first year-over-year processing by XXXX. refinery Partners the of increase expense as in to was HEP's

HEP's table cash year. we first distributable and the XX period compared in a first can found HEP be was on adjusted same payable to $XX record is quarter unitholders reconciliation release. adjustments last quarter which flow unit, million these EBITDA LP of $XXX press XXXX as announced A $XX reflecting May HEP's million X. of million, per distribution generated May of to $X.XX of in

revolving expansion, $XXX $X including liquidity, credit $X.X million We million, availability with during million $X of comprised of of our billion under million and and were $X reimbursable cash CapEx. Capital million in the in million approximately $XXX of million quarter ended maintenance $X the facility. $X approximately of expenditures quarter

the For Sinclair. XXXX, safe we and we proposal operations HF focused are while from reliable on negotiate

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

now Instructions] floor for line The open is the [Operator comes question Read Securities. Wells of with Certainly. Fargo Roger from Our questions. first

open. line Your is

morning, Yeah. Tim, lead role Good welcome to here. everybody. the

it. Thanks, Roger. Appreciate

things? the give of excuse So the a a consolidation, why units can for And of in right all here or units for between with instead all determining entities me, to I two value us and the the starting of go of proposed the HEP question guess terms bit me, one you now? stock combination little back and decision forth --

also will distributions opportunity at it last proposed for to level strategy. supports you not our believe the negotiation. Yes. for just cash It public that transaction -- tell can the MLP able this it debt we Roger, long-term corporate become and and it our reduction, and is, because a being further and costs, I But an currently optimization structure, night. as our out LP unlock available talk provides as Atanas mentioned put this the earlier, DINO's of to portfolio. about we cash just integration simplifies allocation held proposal We're capital reduces it's what is

Okay. That's the issue the this -- bump just follow-up, challenges. hydrogen should be little rate of at least. you bit start-up about a What road, as unrelated say were my the the diesel run to kind the year. well full helpful. as mentioned QX in of before renewable then Obviously, of a was talked half second factors And

between two today So how are and do items solved? I'm be expect where midyear get you those you'd curious where onwards, to

Atanas. you. is thank This Roger,

EBITDA is in in On With with. them First we've respect basis, adjusted of the all, some that performance first of which talked the we a segment the positive, we're about quarter. an of pleased were -- reliability. of we're think the our past, been to which one challenges I couple, with renewables pleased has

The second hydrogen one availability. been has

operational assets. a -- first continue to we particularly on hydrogen So our quarter, in we've challenges, solution And work which made progress of Cheyenne very improve some helped problem. yields for respect good to in in with our the our longer-term

long-term a important on as So well us. hydrogen are for solution two process working on the optimization as priorities

of respect respect achieve we're co-located continue that we're to facilities run two we and both in and Navajo, to issues impact would that rate, made that run after quarter. think in progress, in have second our looking addressing come better second out half also to run really gives steady of to we on normalized year would point shape rates turnarounds. rates. I us have really are With these to But turnarounds to refineries, to With that which but at looking work the operational really with Parco fact opportunity an second also the attention the quarter, I your where the

chime as Roger, And in I'll Yes. well. just

but results with yet, of Just progress. are for the happy we renewable with We're some the business color. the happy not

we're right And in direction. this EBITDA so showing that is moving quarter evidence positive adjusted the

Atanas we had several this turnarounds quarter. As mentioned,

the is We the the have a utility improve of to plants. infrastructure continue in few that that around quarter second hydrogen more and these here diesel renewable the infrastructure rest will

of half, run second as in we're to what As well rate the deliver understanding better, better just how it's contribute help our that and run Atanas plants expecting. these us mentioned, going to the

a Yes. obviously, Since Fair just ask long-term clarification? hydrogen, I Could the solution. the enough. one there's

you're solution If do then? in rates, higher medium-term a going to have short- place you to does that imply run at

continue hydrogen. of just medium good optimize supplying the the the to said, I short- the assets, and longer-term is solution solution like But we've and really -- Well, It's I think the medium-term there. term we the is operation progress hydrogen -- seen supply.

that's Another of economics decisions at look just thing diesel equation. make and cracks, optimization as we obviously to our conventional is, have around we part the sometimes

talk the we then, solutions -- to And we think rate to supply normalized our solutions the of in we short-term long-term hydrogen that second issues We our in to to run course, process worked. get are get but to half, we're Yes. ready work about today, our to of that are have can not working that. being

that. you. Appreciate Thank

comes the Blair TPH. Our next from question of Matthew line with

is open. Your line

could morning, improve hoping Hi, refinery was to I the on opportunity you Tim, operations. everyone. elaborate more good

planned three then it was, finding examples you QX, the the for you're Could talk think you're to you I about and that mentioned end-of-cycle You addressed in them? turnarounds some, problems doing and any what issues. of provide fix

I'd got you've happy Yes, be I've resource improve. opportunities to and before to. capability is Tim. this Matt, that mentioned

improve. in triangle equipment to got systems the to the is the You've improve and third processes itself, we've got leg But right?

know to like I until maintenance we're actually equipment that that's not we with that those take do it. we available equipment strategies say except during to usually the have the about something -- doesn't talking And actually it turnarounds. the ability turnarounds, for affect

to operating years over her it want to bit glad and to new turnaround? me Valerie EVP our talk you really on our a more about Val, team. of let XX She So, of have we're Operations, Pompa. over has experience, little turn

Sure.

first a of specifically, examples effort on system scope going some and our Navajo reliability around improvement Navajo. in at we've amount back hydrogen are really hydrogen, hydrogen significant gained improving turnarounds, so to Our quarter our spent projects,

it to focused has our it's change and where an strategy Tim that equipment reliability that that our to meet during And whether reached our just program improvements. strategy And programs point or equipment and goes specific upgrade, PM a then for it, time higher And PM that aimed turnaround, opportunities short-term up so demand. to getting availability our the us gives from really upgrade. exchangers, mentioned, utilization on be

Matt, over think summary, turnaround. implemented the been three as turnarounds Val the very I yield a these improvement and risk-reduction job driving projects doing improvements. XX at great has We during projects large a during Yes, over

start operations here. improved we run expecting to conditions we're So, as

talk FIFO even good. index can Sounds supported quarter-over-quarter, XXXX? on you a factors that in better about profitability QX the though And side, then the lubricant there impact declined? was Thanks. lubricants material your And

This Atanas. hi is Yes, there. I'll this take one.

with there was impact, the business, to it a of about we're respect pleased was in with drivers. impact, results. you that $XX When our our mind, even couple profitability at So, really million. of But there's notable FIFO an look very FIFO the with still

product is them favorable of One the mix.

oil the really really margins that a strong into end our ends higher products is one And one market. second is The continue higher base go to third -- lot in value Group III strengthen finished uses. of the

successful But together, X take products really you when So, that three we've are really that all had those margins mix business. in the main accounts and that for quarter the drivers.

basis. FIFO Yes. record and This headwind Atanas And a million Matt, for an let me chime Without in, would that higher too. quarter impact a ex-FIFO this quarter. than number quarterly we our ex-FIFO was been is first have The mentioned XXXX. what reported us that, for $XX the on was of actually

we Last had year, which you is asked, tailwind. a FIFO what sizable

an $XX As you ex-FIFO something And lower on million, than range. mentioned, that. it basis, to was in closer would something have been it that

member industry. our base new other has Joyce, you -- million any who and XX Matt, glad the We're him. to nearly XX have But years to another oil leadership of introduce do it on to business? gives color in want provide the lubricants opportunity Matt lubes the really me team.

And been presence expansion natural good We that, we've successful. introduced targeted further today. value markets. into sure. end-use Tim. new meet in are seen markets higher positioned really and has off-highway, mentioned, you. space, some key on enjoy construction, certain seeing a what well Matt, markets And geographic Yes, those some going to we're we're well, the where Thanks, markets, that into nice That's mining, in we're focused after to objectives us that products team situated those We've on some gas. Building many Atanas really and of results.

prior product very not into has That mentioned finally, That's And Tim design. Atanas the mentioned that that is and something calls, mix in earnings just intentional. it. by that's stumbling was

possible. result, We you're there robust as at our we're a to user trend story excited have make really in about and our get proposition that. as the that to customers and seeing value purpose end as range, higher-than-mid-cycle to and returns continue get our this value and And

comments there. for the Thanks all Great.

You bet.

comes Cheng Scotiabank. question next Paul Our from with

Your line open. is

Thank improve turnaround since you. and questions, you're the opportunity you're Tim, saying to going the you please. Two the Good asset. that take morning. during

So that's expense three the three be two or assume over if can should going that next you or usual? the how years? provide, years, case, higher a turnaround we two have to the the over And is next than like do you that range looks

the for company said who in HF may think with the more is, in the worth not lubricant And past, the the I people Sinclair. money haul be second long other has maybe together question

that that's what the is precondition if if make you And view, that the be to wondering or still So will criteria view. for the decision?

for questions. your thanks Paul, Okay,

comment Val turnaround. Let me ask on to the

Yes.

the So our We turnaround. -- with those. optimized new has all turnaround -- year acquired several, And really year turnaround we're driven We've implemented spend by as for spent working an schedule. came know, this this really been is last we you acquisitions. of towards ready sites, refineries

of catch-up all the So run that this a rate us address that we on those -- I'll our concerns to really in, saw and call for kind now bring acquisitions reliability year turnaround. get

me take let Paul, this.

lubricants question second to is on respect The with how…

you do the over that, expense before next look several have Atanas, turnaround may actually, years? what range like the a of And

year, we've Casper the Paul, and the turnarounds. portfolio. on year full still you and new that's land told Remember, we the this No, the three first assets next years. All was case running Sound this Parco that year had the we peak Puget spending believe a turnaround and of the

the And range, that. if of believe and a capital the word right turnaround $XXX will million of believe we was level. We in on use, be this expenses. still rate to the million $XXX in that the kind to total watermark, a that's years we high kind run guidance have right than -- to past So that's guided lower future right

you. Thank Okay.

Paul, to in Thank business this business. specialty the back Obviously, we as very of and you, very last Tim. months. business integrated last especially continue a couple the over to as valuable lubricants, lubricants view Yes. pleased questions on that the years, the we our fully operations We're -- portfolio. with just your to XX-plus running

asked that of this the to boils a could is that better of owner someone preconditions business all lead you possibly valuation. some determining to down And that about,

portfolio. credit moment. undervalued we the at any the Currently, business we -- is is given so lot to it. We're and that cash more bone, And our of a It believe on this free flow meat we not believe within there vastly have that draws still for speak. still

course, lubricants markers of when the We have the further overall will integrating are there you're done there Pennsylvania as be That, gained time. the looking could over there And over specialty a significantly in Petrolia, higher that at that business, of in of accrete But value lot we assets are still couple cases. that some valuation. in are synergies in of last believe more terms in work years double-digit well the as again, that into Europe, good some Mississauga. out is multiples

extracting synergies. when this near-term, compelling the of the and But type moment, perhaps focusing for midterm, not And market. testing on so the leveraging we over shrink we more test valuation of the are market. the those presents And from itself, will in

our the lubes are we Yes. show our results. you specialties progress you the Paul, execution business. past, And you deliver I have of me evidence ability improved to rest we shareholders rightly our what the making And and that can and and to point asked in in

it the in our in we have three made we've to we've years, a change really and value last way we delivered on way big the -- Over the shareholders. and focused made really operated

and then ways that our for portfolio. improve maximum the involve look But to will price have We hope be, that the and see share shareholder in to it value the mentioned. doesn't continue better Atanas And continue continue to things other shareholders it, we actually give it the could give as reflect catalyst provides, would as than holding that the value. us the the value business at to that we to obviously

Thank you.

Goldman Neil Mehta Sachs. with

Your line is open.

Team. morning, Yes. Good morning, Good Tim.

Good Neil. morning,

those My is share the these your thoughts just repurchase where were? thinking margin Sinclair terms And lower seeing first environment ability in capital. in could return than of to the latest related we question to market? a provide come to the your And shares bilaterally family of the repurchase through in program open you from as and latest opposed

for the thanks start strategy like Atanas. as on long-term our paid your to and capital that as question. I'd we're return Neil, of all, This indicated. well with, ratio, of a capital. as our return Tim out And we're committed both is to first business, capital return

committed and really still but that we're with strategy, no could our on pace, we to ongoing, strategy, that remain While and this pace, committed guide impact there. transaction while is don't there's change HEP we to

Yes.

is quarter, look buybacks. and returned translates to. our You through cash of at XX% first dividends that our return XX% our and share what income Neil we net

the purchases We similar arise. pointed So for we long-term, be continue as like market. we've over mentioned, done year believe feel are with that on family, strong on a this done just we'll good another pace as buybacks you pace. to do going and But comment Atanas and is direct us. the year don't the things out, we We in amounts. We've as to opportunities open

we then And time lot this call. the a about on talking of spent fair. That's haven't macro refining

your progression you you some of just the maybe you margins what of and the think of how the we've the perspective it. share do year. your of Tim, do make So on volatility that about seen, end through can team And

see country will expecting of of from We up this believe United China true. We're were most we'll I up quarter, a the increased in States. local of China. less still lot those soak the the the the barrels, But will then from demand we the higher embargoes. the demand over that course of that rest that see opens you impact that's coming as Yes. that And year always Russian and into we China obviously, from more the would exports thought and more tell -- first volatility. We

to definitely it stay And the in China additional open But -- expected will first peak. will to supply believe the as saw China we that quarter, we up, or we will imports. in area. again, continues now some So demand

We think West. especially in the and summer that about the normally we're in demand we excited the see, Rockies

ask know that You demand, up. didn't about specifically question always I but comes

it year, about believe, So what still gasoline we XXX% our we we of it's was is And demand, of last higher demand, was about the higher I'll to this strong, think just has last X% of really, of saw mention, higher year. year, our first than that's been year. year versus in quarter and some Diesel surprise drive last in And was demand areas. distillate last was that diesel demand but and versus XXX% jet. Jet well. quarter first areas continuing the as the

always that that and And US closer kind a is the economics, starting capacity there's world. the get some cost macro advantage a you to breakeven the we're as to marginal the European of we're in Europe where of at and terms curves still expected the seeing We've of starting refining out over $X see in basis run has their Asia believe margins. macro cuts said are We look to there. that the to $X

example, Coast in drive or we in that And the profitability differentials sorry, in region, HF in -- at, advantage Coast. Gulf than the and Denver demand When we're And believe Southwest, but the over this the before, in saw East this you an for this we year continues especially product where Rockies, which you in demand our West Sinclair's our about see, often overlooked, portfolio, certainly and the seeing quarter look what region. our is we even higher West then talked Phoenix think has to that the advantages we've in with that.

Tim. you, Thank color. Great

Our comes JPMorgan. question line from the of John with Royall next

is line open. Your

morning. question. Thanks good Hi, for taking my

follow-up So one is in refining. my the first on just turnarounds a

interested So I'm in cadence. quarterly more the

that mentioned but would peak maintenance think I and with be the certainly throughputs activity. of XQ utilizations for still kind some additional guide higher, turnaround mid-XXs XQ You've is

rates half? minimal maintenance should and guys any And on of run in you full? second we can utilization a the running thoughts expect give relatively following So amount XQ

am the two at the for turnarounds we that up. is Navajo I second turnaround have Navajo John, Parco. and report in and one Yes. thanks at got question. one the to quarter, We've started pleased complete,

on and very that's on So gone budget. well, time

turnaround, everything we're in and is very there. of The going middle Parco the smoothly

start So that we of will the a after level the rest think to be that couple more in rest in carry of the going of we low kind at maintain up have utilization. year. run be for to anticipate to utilization the We the Parco, we're through of We think XXs the but do to year. turnarounds we able still able fall,

I helpful. in the but on of That's marketing around right off came big Okay. then a basis And coming breakeven quarter not know it's most material XQ. your EBIT in segments, an and

So any the drivers would particular you there that call of out weakness in XQ?

referred your in really I'll our is weakness, things. noticed question. results, to as John, this couple point What you as for of Atanas. Thank you a you is

of margins. component over time Executive this branded And turn some you're But on call pricing, where quarter. the is result why Steve, dislocation the a very new over Commercial. -- and our First of good business. that who like this two, a President feel seeing and Phoenix, add that's about Denver unbranded to over could if and results color. Ledbetter, year, to of And as Steve tightness squeeze seasonal I'll we've more $X.XX the in margins. you'd we number markets sometimes the in our being view Vice in business, all, between such that supply, in a to first this temporary there's which the And seen

about Sinclair as was absolutely. And you Atanas. I interestingly, excited know, the excited very about excited the Yes, was made Thanks, John, about decision things we the join thanks were to family. brand, the for We're question. which, Sinclair one very the still I acquisition. HF the of something as during

and strong and look the compete lot interest we in markets, to in integrated We that see full take our proposition value well where a is will we business. think We of branded of the wholesale year-over-year. and chain of advantage forward And markets in the operate. value and branded we Rockies the business West, looking that XX% on X% between then and in growth we're to Southwest suggested, marketing pace to wholesale the our targets meet those the growing

Thank you.

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

Your line is open.

we Hey actually first capture of good expected. me, Doug. morning a guys. quick bit better the on on ones This Kalei little for in the rate one so couple for is West, than it A came on had

is Just little want detail going get there. estimate us for bit rate for region. what can And help to maybe understand capture good a a more you forward that

were capture is some this our also in we Denver had dips us. the West. Kalei, us rate that stronger We with with as capture Obviously, pleased shortages The Tim. well. Yeah. helped helped crude

But also hurt going in that honestly, West, standpoint. a turnarounds capture with quite the on rate on us

room think we to the there for season through. summer to So as the comes especially continue improve, do for is

some inventories we're We we think able and first to the built also in that, those down inventories during quarter, think turnarounds, going be second to the with we draw intermediate associated quarter. the

think we you guide some that are we think rate the to the So actual as there'll on quarter. But just capture be capture look going we itself. factors we're Those improved don't there. into second

you guys is one balance is guys Post-merger, that. I HEP more in the on are I HEP. the you can't mechanical this second talk about appreciate nature. a negotiation, know requiring My bit sheet. but And

I'm what target the wondering forward. going is So, consolidated leverage

Yeah. This question. for is Atanas. your Thanks

we everyone of one a now, within rating as at around I agencies consolidate leverage. we're looking all, currently, you And because of remind folks Sinclair turn HEP and it. at as like go-forward that look First consolidated basis, the on

Sorry, that includes HEP?

Yeah.

you. Thank Awesome, I appreciate that.

next Gupta from comes UBS. Our question with Manav

line open. Your is

guys. Hey

the what have quite over acquired Help assets. us First positive and particular question, it's since surprises upside were year acquired time understand these a from Sinclair. or so some you you been since Sound Puget

So them. acquire expected to what better you you something than decided which when came in,

to we Yeah. just Manav, last it's on. We a weeks X-year that one-year Sinclair good the question a really Puget November, back Sound celebrated reflect celebrated of And well. and then few as their obviously, ago. had anniversary anniversary

faster have course, how very the gone. those just we that of captured about we pleased of really very, synergies So million we've, would. talked I'll we $XXX than ever thought with say

be would And a so surprise. I that think

We've supply. help terms able away. that our our making up back in backup customer the of we like things sure are now got have think stations improve to refineries I each to keep ability other reliability to

I think surprise. that's been a pleasant

of synergies, our Cross at refinery. refinery. Parco long We at of short we some octane examples were the Woods our octane Some were

pools able our So higher-cost two octane in combine order optimize components those to back some to together out we and there. were operations

I heavy heavy crude extra line a it -- think had we on Sinclair was space short of. crude standpoint, was that HollyFrontier --

by, were to into barrels day heavy it, day we so call the on a Parco And crude able one. refinery XX,XXX increase

deal another with. So pleasant that that to we had was surprise

talk Another makes about don't of lot is one we asphalt Asphalt. components. Parco that a much

asphalt business surprising We the Parco that's into that's in two the able think those been very based we have for our asphalt profitable consuming all and of an integrate production very Southwest, and business. businesses, I basically were to And us. asphalt

a number it. So wouldn't I I we're found tell of lot think are tell some those there there's believe you a that plenty we we after opportunities. you and we Manav, away, but you, have opportunity would for going things that right there's I'll today, but more out

is Steve and Commercial portfolio went remits terms synergies as with the of to try at the assets with to look the and and just our do same assets Sound, to of whole the the for now here margin at that the did we thing overall improvement that look take EVP Sinclair One we to for have with actually opportunities look the to Puget of projects. capture just expand portfolio Sinclair we Southwest, at in that process the look through Mid-Con and that

investors. stock asking to us is we very you. good one we have morning, today? acquire trigger ask question, I'm HEP, Since this got and question, we when super you question why and you this of trigger you because from is are pull the transactions understand pull repeated of a news that were have trying This This the why $XX, a And No. but the for announced was to got just not for going that those logic agreed, repeatedly the helpful. your that Thank lot is in investors that.

taken integration office. being But office, on Yeah, a keep thing able in and across XXX% on organization. again. effort -- one back synergies to And, $XXX the took efforts, tremendous obviously, Atanas hi were -- million achieve lot the of was the that I focused has integration. there. primarily focus is resources, time, of we mind which of the This front almost Sinclair, our to is

is priorities. So that it HEP. integration attention to as this And of matter a pointing our was almost complete, we're with strategic more --

say negotiations just HEP. with we again, would just I And started that, Manav,

is careful we say. go, time we're where a be firmly believe to good this and going. And so But we've obviously, to that's we what got

so sense. answers. Thank much you your perfect Thank for you. Makes

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

Your line is open.

Thanks.

follow-up HEP it. on question the leave last we before one Sorry,

take of position are outweigh potential HEP number favor. wouldn't math For cost a until your there? enough that works the out the the in company there shares benefits, think accretion is or still enough the strategic there years, dilution in of savings, terms case, Is was to I you any the long-running of

This Yeah. is Atanas.

earlier, well. Tim to and offer just made comment transaction on as obviously As indicated that negotiation. we to remarks, for it's indicated under And the indicated his also value under going of we're I us point not will flow our as and a on over it believe the is consideration the create in specifics -- the as that, we've you But shareholders. obviously, cash Tim time, we'll

priorities flow. this. of doing just priorities business We our I would in HEP integrating three and are Ryan, simplifying, consistent; buying Yeah. put cash believe three I out why That's all addresses near-term mention, prepared my remarks. in the we're that

maybe Thanks. then And on just Perfect. the one, side. different

additional at or Trans Mountain in up to that could or the economics As pipeline you the the start-up Puget comments Does all crude XXXX, impact Sound refinery? business? improve of on there crudes access dynamics look the Canadian change at access to your how any ahead

the WCS/WTI over WTF TMX we that it the dynamics. as Obviously, do But in. two that's three change line goes of that will think quarter will pipe years years the does long line fill line spread they that tighten that the it the tighter, to Ryan, the maybe capacity provides. start-up. as supply/demand. of stay Yeah, a that on of takeaway kind capacity, couple fill the WCS, and later, WTI, first increase the we think extra first will back Canada We're into and because now term, do sorry, -- before we're type once we'll right will and looking situation think some in of XXXX We again diff that, at change do production takeaway We think that in that the on, early the of exceed same be today.

keep can our refinery also in few mind of are that Sound said water. crude That that, can that Puget that the one that. do the from ANS area XXX% Having run we in refineries

gives the have advantage doubt ability of that this between back which and crudes no we'll the we take to So see years. us these flexibility next Canadian of ANS switch to couple over volatility extra

makes optimize make as can. so as bring portfolio. can crude and it today, But future, more sense And bring that it we as to more our and sense in Canadian we ANS, the share to of much the in try in to may do

follow-up make the market? you those their of think I way some may up as ANS there. probably soften Canadian a guess, volumes to as California, do mean I down that

Far market, able crude us since market. gives between doubt that go and going likely are to arb some put on put advantage The be pressure the again, no that ships two. to and But California, will East. play are to barrels dynamics they're of the yes, which, to ANS There's on the that will Westridge, ANS run head can in maybe either to to they're going the going Yeah. we

Thanks Great. guys.

our is TD with Cowen. next Jason And question from Gabelman

open. Your line is

I morning. returns good go shareholder back for second. Hi, want related for a Two Thanks to that. my questions on of questions. taking to kind

Board starting continue Thanks. that ownership want of chunk the in Does them to they two about family indication guided how payout somewhat And then you previously this the know think to environment, that, with related seats thinking buybacks hold gives Sinclair of that I on differently? two with hold hold levels -- that are those you -- XX% they you are cash to still need. that about to a or XQ. ratio that would had in decent Any First, seats. still owns if a and

Thanks, Jason.

on don't board. seats know is Let when their the their can on two me question we the the has share to what But your Board goes to for take it. can't we seat speak this or their tell and if been down count documents Obviously, that one the in able I drops published you be on XX%, below what first the wouldn't family. family. is, speak We intent for

over just about to question. is so that the deal. talk turn I'll return into it to capital So know And built Atanas the you

but Yeah. answer XX%. on negotiation, ratio Jason, don't We we're our we payout with are strategy this return overall guide target pace, change I with XX%. is our capital on still strategy guess with periods the go blacked short the of there ongoing. transaction endorse to obviously, out, And no our and

then And refining just on dynamics. follow-up, Okay. my

what's that? your in in do region. you couple driven then outlook price remain bit you there? to And forward? And product seen separately, Rockies getting expect a coming a you're the come noted it going here. seen impact back on plants Have that TI? What's of tighter premiums You that We've online Brent Thanks.

in seen the unplanned the have seen out strong in occurring same thing watching very Phoenix you, that while earlier. we're actually, cracks Phoenix they're Coast strong plants they're first planned and Yeah. seeing still there's events, cracks. high for the cracks And still that We mentioned those coming unplanned example, online, Denver. But stronger cracks of mean, in last went I certainly I And tell right regional point from I'll And impact than definitely area. premium the a very Phoenix. attractive downtime see down the still very and back now over has the levels. that still very with lot Gulf and several planned given as cracks we've the both in in and markets, been Jason, from everyone come months, I'll quarter. high there has

running So very we're still even Jason this us. very continue that. will these the attractive with to markets and pleased all markets with the Rockies plants summer, We Southwest be and strong very for very, think that

the at still published gross margin in beginning the latest the here that see very of month, strong. margins the we West being can see you has indicators we As

OPEC cuts On TI. Brent on in. the has come put Brent TI, some the it Obviously, pressure

use you dated talk that to also is think saw Brent. about included in they that being I TI basket the now the

TI has I think little on on $X on a a But transportation. that we still rates, that's We the an think still to that $X Brent spread. is barrel freight bit based to going impact long-term. be spread of narrowing think

there. no So, change

it. for Thanks Great.

a Paul question follow-up have Scotiabank. we with And Cheng from

Your line is open.

secondly, number you you in loss where have secondly, and in already you. for could you cost the about opportunity first the Tim, Thank and -- quarter of the downtime, update us terms you it? both due received Have a you to an And pathway guys give share can do LCFS? Hey. the that the unplanned? planned

the validation you, LCFS visits, Paul on thanks Those can actual have quarter. in all depending I the three at of renewable CIs. our the for provisional follow-up of we your the will CIs That scheduled validation. tell could second to we move question. be And those from diesel outcome plants. is

third So, hopeful the that the from we're benefit from in seeing -- we'll and that occur, start benefits quarter. that will we'll

But we that that number have of on opportunities unplanned to guidance. it's why can and don't one turnaround from improve. results. impact that's a safety see we a assets provide our tell you an is level And opportunity can reliability We biggest this the basis, from lot company's improving and I an Cap From of we the Paul, cost believe our priority. standpoint, of

good we've got Again, the also diesel as focus the as happening see can the on happening is that that of how that journey I'll well. progress then say journey news an well. it. business, the renewal done the is as control Pointing as that. lubes of we've same and to side over on we've And those. the the got business point work we've and determination we to to I got And have people, example processes you refining And

Great. Thank right. All you.

are this now further back comments. for There call I to at the turn no Go would like to Tim final questions time. over

points. with I want to you, of a just wrap-up Jack. Thank couple

like would Jennings has that recognize our Mike I made on to company. impact First, the

personally. Oil a pandemic, global scratch, three last Puget through the leadership, at me the forgotten. Sinclair. a His Company Sound business the company years, employees legacy to a into led missed, Over top will us this from the he and bought but compassion has his the mentor his be and and great he HF be new Mike built for to been acquired tone will dedication refinery has set transform Sinclair renewable diesel never our has

challenge to ahead. want company about excited and forward. their Board I thank me going this I'm the for Second, confidence in to the lead opportunity

like things have won't to renewable Some change, to our like refineries our some to things need the and of will performance long-term change, our but to business. our cash commitment return improve shareholders; diesel our operational

together, I'm of pleased welcome employees. today. our new and our shareholders, very our we additional much to members And leadership thank to the time for to look that, communities With value team. forward your this our growing creating and you business

call. conference today's concludes you thank This participation. for We your

You may now disconnect.