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HFC HollyFrontier

Participants
Mike Jennings President and CEO
Rich Voliva EVP and CFO
Tim Go EVP and COO
Tom Creery President, Refining and Marketing
Bruce Lerner President, HollyFrontier Lubricants and Specialties
Craig Biery VP, IR
Manav Gupta Credit Suisse
Theresa Chen Barclays
Ryan Todd Simmons Energy
Paul Cheng Scotiabank
Phil Gresh JP Morgan
Neil Mehta Goldman Sachs
Jason Gabelman Cowen
Paul Sankey Sankey Research
Spiro Dounis Credit Suisse
Michael Blum Wells Fargo
Jeremy Tonet JPMorgan
Roger Read Wells Fargo
Call transcript
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Operator

Good morning, and welcome to HollyFrontier and Holly Energy Partners Investor Conference Call. [Operator Instructions] and the press release and slide presentation regarding today's announcement are available on the Investor Relations section of the HollyFrontier and Holly Energy Partners website. The archived replay can also be accessed on both websites following the call. I will now turn the call over to your host, Craig Biery, Vice President of Investor Relations. Mr. begin. now may you Biery,

Craig Biery

Thank you, joining thank for everyone, Good morning, us. and you Lauren.

call are and Executive On Executive me Financial Voliva, with the today and President Holly President Energy and Chief HollyFrontier Energy Executive Holly Vice Officer of Mike of and of of Chief HollyFrontier Officer Officer Partners; Rich President and Chief Jennings, Partners.

of of also Vice President Operating Officer Executive HollyFrontier by President and Creery, Go, HollyFrontier; Tim joined Tom We are and Renewables. Chief

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

Mike Jennings

morning, everyone. good and Craig, Thanks,

will two and I for doing Energy Energy for three. assets walk of Sinclair's agreements and little deepen questions. benefits network; financial it results to on Energy commitment we region. with light shareholders. we returns the the free mover HEP's it over turn was To they and complementary diversifies first the to expected the HFC share in first refineries for on cash In the things have for while And earnings, of will and Holly the be Sinclair sustainability. Rich it will thrilled to the to our through us morning briefly be business, Rocky quarter acquisition definitive the Rich flow call year, and put HollyFrontier we HollyFrontier, space; HollyFrontier today. within expect and differently review flow simply, brand strengthen our diesel that, and and increasing both Mountain first and renewable iconic which It ESG distribution We this before with Holly cash transformative create After will we'll a of our and integrated Sinclair's position, our the Partners the in its positioning are that, the will that the Starting its Corporation entered scales HollyFrontier's Partners into transactions addition Slide news Holly portfolio Partners. increase shareholders and companies.

strategic HEP, too, benefits. financial For this transformative transaction and provides

With Sinclair's on integrated unitholders. opportunities will and have network scale storage facilities, growth incremental of increasing the and new and power earnings the pipelines to focus to capture addition returns of HEP

Sinclair repurchases. an through growth since of Renewables merger, merger and these believe XXXX growing establishing through Energy part from Frontier. period, about and excited stake we've transaction business, respect Partners. the on spent for generations We're greater the in business Refining significant the century an family than special additional share they last over with point four. we're have interest cash the Turning Sinclair billion transactions We benefiting of know have the represent plus. our I'll $X.X billion incredibly and business family more Similar chapter our of built for our HF well in employees regular Holly and turn details $X.X a now a our and decade of company. Slide as this will our overview holding a to next and in pleased Since XXXX, and inflection to that returned the We to the our combined building Holly and dividends we brand brief transaction This beginning expanding five. Slide business, of retain a Lubricants this our follows and Sinclair. companies, of deep

create and First, holding HF million XX.X customer is the business HF Sinclair. Rocky refineries. thereto, Mountain-based commercial newly Sinclair's build and Sinclair's Sinclair Sinclair's hospitality loyalty; shareholders of equal branded diesel iconic shares exceptional stock ranching the formed also HollyFrontier XX.XX% part company. to upstream HollyFrontier transaction. XX.XX% all HollyFrontier oil transaction. of this with Sinclair's HollyFrontier's marketing company new brand will the will not are will gas related common named which shareholders equity publicly acquiring approximately Sinclair, shares and an in the approximately upon renewable Corporation. own of existing activities the business Sinclair or of million of XXX.X a and businesses traded two receive HF

has result, the has The a comes closing convert transaction call Directors mid-XXXX. will Board is right of no expected stock the of transaction the common team the to on of company, and closing, based turn the close As value nominate into closing. now HollyFrontier's Sinclair at all-stock XX, combined to share at a existing And Directors HollyFrontier's granted Rich. The on with stock price share closing. XXXX, outstanding the to July Sinclair one I'll senior each been operate two debt. Upon billion to HF Sinclair common Sinclair stock HollyFrontier will HF management and of $X.X in

Rich Voliva

everybody. Mike. you, Thank Good morning,

with storage. product integrated Sinclair's two HEP of product terminals crude barrels million terminal miles of comprised eight six. Slide pipeline X.X terminals to refined Turning operated of X,XXX acquire and and assets pipeline, crude and will

Sinclair expected on common Board of $XXX revenue Under the the product units to Over these HEP close HEP's the interest will The terms on of also also for the acquire add the significant acquisition, which existing the closing. Pioneer consideration in Director is to be this has of earnings will HEP's transaction a long-term for million commitments based is with been transaction assets the $XX pipeline, including will the senior closing at for ventures volume nominate cash minimum We HEP, million expected million UNEV management supported continue HEP transaction, joint midstream Sinclair. interest in closing of of price we Pipeline and $XXX Sinclair's operate EBITDA. already receive Flats Critically, XXXX. Powder and Pipeline, remaining shareholders will to granted team and to company, million power three total July of XX $XX HEP HEP in to of provides crude offtake, right stake. mid-XXXX. own Sinclair a the On additional XX% million on by gathering, HF XX, one to scale annual and

Mike Jennings

Thanks, Rich.

to turning HF Sinclair and Slide will beyond. next decade So be seven. positioned well for the

free generate enhanced earnings share increased to continued expect realizing strong per to fuel will value growth. cash shareholders underpin as as and returns cash which shareholder synergies, flow, We all of to deliver our commitment through well a

critical future. our within environmental Slide as to corporate philosophy we renewable forward will for and that common will a increase diversify scale This Moving of our a sustainability be to HollyFrontier the and transaction eight. endure governance business Sinclair Sinclair. step diesel business. stewardship, The is HF strengthened a low on carbon strong and share commitments

to to our as us deep our share also do we to a day people important which right and manage safety, is cultures put every risk. commitment communities strive Our first, by

our experience governance take the life. level, quality and and the very And the company with supplying right are provide also the shareholders for of that oversee seriously stakeholders. for to customers at We and responsibility and the mix equipped Board we delivering skills our other products ensure exceptional with of our our mobility is

Turning to Slide nine.

in combined geographies, of benefits some of help individual an channel. significant we Sinclair as sales for additional integrated On recognized addition X,XXX of with brand sales from or that range company I XX, HF two one licensing to industry's identification a grow known marketing Sinclair's over diversifying and strategic our most clearly Slide creating with with business are produced walking HF Sinclair. The manage stable card time branded gallons mind, branded geographies the network. consistent marketing footprint will consistent fit for bring see a this provides fuels provides of XXX through grow why to the existing of on have dinosaur, The You is and across and to will business branded across distribution as us represent through DINO, strong sales. businesses building business Sinclair over a will business XX some marketing discuss through our also earnings within want branded in business. states take marketing locations renewable billion products of The credit presence. distributors the integrated scale who a acquisition. can are opportunity By branded complementary business annual base as well symbols programs. how to a the and RIN brand generation a I'll team margins marketing these this the wholesale adding thrilled iconic business and board product fuel Sinclair's a significant begin brand with and our a We're compelling channel the With business, of the and and

of a Sinclair has carbon is be we gallons intensity to will first anticipated Its higher unit completed to and our mover collocated the advantage clean through annually. have energy its Turning and of mitigating on for unit recently process ESG value space. now and operational Wyoming in further an was the synergies flexibility production renewables logistical, also flexibility. XXXX while refinery mid-XXXX. to in pretreatment diesel enhance at constructing is Sinclair the operational scale a facilitate facilities pretreatment also be help will Feedstock support combined and currently been barrels The transition. XX,XXX producer U.S. leading expected a risk. since business of to produce feedstock fuel as the Together, Sinclair, three generates was feedstock approximately size per with Slide will single and million XXX lower diesel profile The diesel expanded XX. diesel renewable production in to low procurement, renewable renewable standard with in carbon allowing renewable this day. unit, we feedstock

to synergies. additional leverage we to brings significant short, fast-growing scale and part are will capture our have the procurement, Beyond this and a In the further Sinclair opportunities. to expanding With logistical, we operational facilities, is Sinclair, that transaction. and feedstock, of synergy the expertise segment, size renewables we intend key team support

Refining to Slide on the business Turning XX.

and million the barrels footprint gas Sinclair Sinclair the X.X of in are by oils and delivers per and and percentage refineries We refineries, are convert adds a HollyFrontier's the existing HollyFrontier's expanding products Like Each discounted that the company's Sinclair are City, the Rocky high-value XXX,XXX adding products of existing their to given region. crude refinery day Casper pipelines of Salt has the feedstock-advantaged complementary northern gasoline, to to Together, diesel Mountain across capacity to refinery almost tier Mountain refineries barrels South The two combined distributes refined products. storage. Canadian refinery crudes. Rocky region access and Mountain Denver the and Dakota. complexity high network, operating refineries Eastern refinery Rocky approximately into Lake other

Mid-Continent, combined Northwest our XXX,XXX processing network, day. oil with barrels Southwest, regions seven per feature the crude complex in of at refining Pacific combined Rocky and we Mountain a capacity refineries Looking will

and create significant reliability these structure. With the to through value company additions, opportunity improved Rich? increased combined an an has cost

Rich Voliva

Okay.

of the XX. the the and capacity. representing and Rockies, will including assets will these with existing with Basin Slide joint commitments, storage company Energy ventures, to distribution system through provides combined crude and Utah to Wyoming long-term business, product XX% volume will be stakes in integrated crude Powder over production expansive and Casper generated. operate million the Nevada. revenue from of Consistent XX in acquire XX network of key X,XXX acquisition crude assets also Partners and Turning barrels three of hubs by HEP's Sinclair's minimum miles serving with River HEP pipeline an of product Holly Together, in Guernsey. connectivity terminals supported

in to will million $XX million We million $XXX translate $XX EBITDA. of to annual expect million EBITDA and from grow this annually this to HEP acquisition $XXX to

to turn aspects financial these acquisitions. let's of So the

the closing a operating We years reductions, expect expense synergies two of million improvements, combination within to savings. rate SG&A of generate and post $XXX through commercial run first

multiple operating through primarily also feedstock savings traditional through On the increase million an expense commercial renewable improvements values in expect side, another opportunities corporate optimization we in improvements margin million the product from we the HollyFrontier perspective, procurement legacy of associated logistics and to From through branded gross we refined And with company's SG&A our finally, expect the $XX wholesale sale $XX as $XX such combined reductions business, diesel costs. diesel by activities. of anticipate renewable sales million cost the savings. in and

run to years to addition from generate million we $XXX rate during another onetime savings In million in $XXX first these benefits. synergies, two working expect capital to the

balance Slide and significant HollyFrontier's history, term, to the reinstate repurchases flow to XXXX. within $X increased no earnings, is strong enhanced regular to expect transaction we flow second the our first quarter quarter be the combined renewed of to able by of The environment, per to as per commitment scale and dividends In for and the part be mid-cycle billion regular company lays through businesses. In the that flow credit with be Fueled cash of year. maintain over diversification Turning intend profile near later our we shareholders Slide to to the XX. our term, shareholders. billion quarterly cash the to as cash capital of previously free will will share cash $X.X to after-tax To returning free medium by year. be billion and $X.X free $X.XX of company's the cash sheet anticipate a XX of rating. expected approximately expected In announced, end, HF support the Sinclair is credit and dividend approach cash leverage, reduced flow XXXX. shareholders. accretive capital per of investment-grade HollyFrontier's return our to year, a we to and total to return investment the we company first combined Consistent through to generation, intend share balanced EBITDA than a

returns XX%. cash For And the next a from months, represents from increase to return this XX there. XX%

both of beyond, we and XXXX Sinclair and realize as dividends we adjusted and the substantial growth of implement benefits of share Bottom Refinery income. target to and For Puget Oil. intend we repurchase in Sound ratio returns of line, payout acquisitions to committing net the comprised initiatives the are XX% our renewables of capital

and reduce of distribution generated unit. term, option target the our in HEP's. deleveraging of XX Slide with for free to we units. the leverage times maintain ratio ratio support and sustainable unitholder XXXX, to transaction of X.X maintain we the with near X.X Turning and we and our increased of leverage this distributions times times XXXX of coverage the The expect our to repurchase intend acquisition In flow units. by while and maintain strategy allowing a ratio will Inclusive to the leverage is increasing to a per three cash Sinclair Longer in quarterly below a coverage beyond, returns. $X.XX increase repurchase distribution times, goal option with term reach again, to X.X and target

and distribution funded excess unit Mike? flow. through to cash free increases quarterly repurchases We these the expect optional be that will

Mike Jennings

Thanks. Yes.

has to conditions, presented Directors XX, companies map of approved The to a Looking including ahead regulatory both closing Boards transaction clearance. the completion. unanimously certain by of been road Slide receipt is and on subject of we've

We close in expect to mid-XXXX.

will And and to Holly so results through second now Energy ask walk quarter for Partners. I HollyFrontier both the Rich financial

Rich Voliva

consolidated share to $XXX attributable are Reported per or Mike. net for $XXX adjusted EBITDA of our $XXX earnings million. the morning's adjusted and per or releases. million, you, share quarter. was and Details press $X.XX HollyFrontier income diluted stockholders Thank income reported Okay. EBITDA million was $XXX available million in second of this net of $X.XX diluted

sequential regions, which well were as as base margins, HollyFrontier of specialties strengthening the both our Our results and strong visible the West second margins refinery. on by Mid-Continent Back Refining well Tulsa improvements leads in in the as and in from the in results are driven quarter Rack as portion

approximately a the million second stood balance provided representing our operations cash XXXX, quarter the June build billion, of $XXX And cash of in million. net XX, at at For quarter. approximately $XXX by totaled $X.X

Distributable At XXXX $XX within XX reported per markets $XX a unit anticipate a crude crude continued cash of XXX,XXX XXX,XXX was record paid quarter we that, it in third of per business, attributable the for the unitholders serve. And thoughts. year. of flow million same to August by and unitholders August $X.XX of to running reported Mike we some on of to the oil. per in quarter, our For for quarter we million EBITDA and on HEP, or hand barrels $XX be period refined representing all improvement closing of million, increase distribution versus last $X.XX net day Refining to and product announced between quarterly back the X% I'll supported with income X. HEP second unit demand

Mike Jennings

Okay. Thanks Rich. for those details,

on and will The communicated all solid. XX, integrated With of Ending financially as and second drive increased synergies Shareholders was more will shareholders. believe enable very cash cash balanced for we flow to and which and today, operationally the a benefit investment we free a transaction and win. quarter diversified revenues accretion, transaction to Slide scale, this from our stakeholders. value with the is return will approach

on you. business the storage all network and with the open our going Thank And segments. confident the combination workforce that, talented a will and pipelines with many partners, will And I'm that transaction opportunities facilities. we and for customers to of of employees, For across for we're capitalize products our we strong Lauren, together, line will extend Sinclair and this adds provide. this reach questions. of

Operator

[Operator Instructions] Thank you.

from your from Sandler. now Ryan Piper Todd comes question Ryan line open. first is Our

Ryan Todd

single more outlook willing for uncertain deal. of forward couple differently Anacortes an high-level deal this, kind timing an year, Thanks talk you year? a, or environment versus in Maybe opportunistic you what's that mean the driven, guess, strategic how just timing deal, particularly more -- What of this guys. things could going of Good could now the maybe Congratulations, of how you morning. you of earlier transactions transformative from multiple environment you about And previously? position from the kind it's you the has the can does a after view view on a refining sellers the and I I whether Sinclair Great. of all? how talk yourselves

Mike Jennings

redouble months add marketing Thanks to downstream as together. and Ryan. in that our company in taken through that high-value to also at reliability response a the has major transformative our production downstream being This increase add and other absolute utilization us environment mix the and increase add this renewables Puget our is in the feedstock and call. many improve basis fuels asset Listen, differentiates a us, a past states, now a our and knits think Absolutely, quality that increase asset efforts we in. our shift investment exceptionally to network the Rocky market we're and for to economics pretreatment, of from really on worked built a exceptional Mountain very branded relative channel, strategic in our intentional we've protect Sinclair presence all XX refineries, Sound both while for logistics on adding to combining have here in businesses with now I and the it renewable our business through on products

return So that support out the alongside HF we've to a going this will capital think and place Sinclair we laid strategy deal. to that great forward-leaning work is be

availability, and build business market As sellers, to to think we be what a but I'd this is the manner for our say that rather the really to on in asset responsive going comment to on isn't your desire it durable is pertains future. willing the

Ryan Todd

for near-term, metrics going returns. Can I the the earlier? maybe reinstate allocation. there an could of of the allow dividend of there kind underlying is that is on environment, what further? What slip support the later bit of you the you cash mentioned on dividend either could kind And strategy a buyback? -- risk to XXXX. and cash how and And no buyback. for that the the You you Is Maybe it to than $X quarter drive mean environment in reinstatement of swing the a cash laid the out return that of the way? same midterm long-term a billion to XXXX expected a reinstatement an would flow you've is second there capital would talk that allow maybe and Depending little on outlook kind questions follow-up of that buyback? the about

Rich Voliva

Ryan, it's Rich.

same the depending second So the with dramatically we, to buyback, to will come With obviously, we optimistic as it And back will respect can Sinclair. be expect renewables, next cash time, to absolutely, you be earlier that lot of can your XXXX. And than that. flow Sound the quarter again, the reinstated of XXXX. to the respect to than dividend, our months markets, XX and on no six falling we're point, look, between versus XXXX a at tell, in in add Puget capital then expenditures the later

free So to we dramatically, go up the going return here generation that to flow intend and cash to shareholder. is

Ryan Todd

you so Thank much. Great,

Operator

Chen Theresa question next Theresa Barclays. comes line is now open. your from Our from

Theresa Chen

Thank underlie you and expectation target. the these has get capture? What that follow the last targets? flow, What achieve I target environment of question. my taking capital to just allocation that Ryan EBITDA assumptions that just underlies are macro about able that morning, to you'll if benchmark not free on Good also broad-based your to asked Maybe terms up to your and can in question cracks, be happen assumptions but the the the cash for differentials your

Rich Voliva

Rich. terribly it's They're Theresa, not call I would them not -- aspirational.

not Our dissimilar consensus. very are internal from estimates

You're a touch probably lower.

If it exotic again, to just or order get assuming sort be recovery macro numbers. But these And better. environment of under really, we're it we that that, better to worse. get large So gets than not amount to even not expect generate in to really, dramatic we free will anything need a of scenario. cash some the

Mike Jennings

it been COVID, aspects our a recovered it now. Theresa, order very out. despite I and solid in We renewable are working what punch the these diesel, that we're looking but able the you were in we've think to know, in business is state healthy all as isn't if laying of as forward well, you business gut to base example, has returns take meet step quarter be forward where pretty big a Really, right from to doesn't well. targets second take a an the

Theresa Chen

And the Got of just acquired. to in two refineries it. terms be

In terms Rocky a between crudes, of the breakdown WCS, other provide range percentage each? you can sweet of and

Mike Jennings

on Yes. remainder neighborhood to in The XX,XXX a and Casper otherwise, runs Canadian barrels all refinery, refinery barrels XX,XXX with Sinclair, the sweet, principally crudes. the day. day we're Rocky XX,XXX, a that's of the is heavy being more of in sweet XX,XXX

Theresa Chen

much. Thank you very

Operator

Our next open. question comes Scotiabank. your is from from Paul Paul Cheng line

Paul Cheng

gave Thank [indiscernible] any we Just you, can the can wondering, Rich, and a mid-cycle some or there use? morning. marketing comparison compared mid-cycle, that provide things, you how maybe first result renewable. us, that to Is this number those the of actual expectation for give Can you refining, half tell XXXX? year Hey guys. midterm you -- Good in

Rich Voliva

X:X some I Paul, a laid in materials of But Gulf at similar of cracks historic cleaning... our IR we're roughly this a So on looking think really, historic $XX Coast barrel, out basis we've assumptions.

Paul Cheng

Coast in right? But the Gulf here, work doesn't

Rich Voliva

Pardon, Paul?

Paul Cheng

It Coast I say is really the really matter doesn't the Rocky on in more No, Gulf Mountain. here.

Rich Voliva

Right.

Coast that sets trade mentioned, to history. the we going day, do assume on. you're Gulf to we those product market Gulf at those mid-cycle to the the we that numbers the historic be similar end premiums but I So of the across believe the that marginal at assume Obviously, barrel. to And that Does have help? we crude our Paul, advantages differentials fleet Coast,

Paul Cheng

about the and How marketing renewable? on the

Rich Voliva

now what with to wholesale. looks are traded that see publicly So there that Paul, respect companies very business to the do similar in this marketing, out you

your pennies a few economics to time. made not dramatically, to license around turn What your With in that see much into think in respect Mike be point is wholesale in obviously, typically a gallon high-grade of are There's to are cards oil about broader branding today as ability process the the to ability and made moving feeds, renewable over and question, very money we soybean renewables, things the well, discounted stable take brand some You I to really pretreatment. see diesel. it so margin. -- credit and

that, around and feedstock expect kind of we're the day. having time, that's on move of We that'll at why consistent that flexibility the over end

Paul Cheng

us business And generates? can with question second is Okay. the the that, how much that marketing you share RIN

Rich Voliva

or So RINs. DX and Sinclair are on that more basically, DX is fuels balanced RINs less they've long the the They Paul, long got. via renewable basis business

pro transaction... So forma

Paul Cheng

you is actually us that how tell Can January? much in

Rich Voliva

Well, answer excuse basically say, the forma, think probably HF or better me, balanced. I here, Paul, Sinclair should HollyFrontier transaction, be I is will the pro

Paul Cheng

And that's two balanced. including you're own right, say your your renewable you -- diesel when two plant, renewable

Rich Voliva

Yes.

Paul Cheng

you're a I DX your when and RIN you total And balanced, balanced say, say or on mean balanced, let's individually, DX on individually in and DX?

Rich Voliva

Paul. We'll be RINs, on our total balanced

Paul Cheng

DX, about specifically? how And

Rich Voliva

aggregate. in short So long DX and imbalanced directionally, DX we'll and be

Paul Cheng

all you. [indiscernible]. right Thank Okay,

Operator

Paul have Sankey Paul is now Sankey open. your line from a question from Research. We

Paul Sankey

All. morning Good

the continue I Just question. if could EBITDA on

a sort on of Can be billion before run that would we of of below Gulf So company? Coast, you just the crack only the much based this we're about if given about to combined distance on like for on HFC, you the your it refining would that the and you that about about is assumption. where talked XX% what you you're travel the said feels mid-cycle mid-cycle EBITDA $XX through you've $X saying we to be some billion for $X.X that that of elements there EBITDA report how get made just want and

Rich Voliva

we HollyFrontier, $X think, flagged this I EBITDA $XXX quarter, billion refining right? Paul, for of So In legacy look, million. we printed about

little a your offset. we're point, So to just

a home. we get probably fuel bridges that just directionally, in us think market, if more little improvement I jet

Paul Sankey

Sinclair Yes. I was breakdown. really thinking more about the

Rich Voliva

going it's to Paul. Well, be similar,

the apples-to-apples Sound day, HollyFrontier the at of are together, all these add assumptions Puget think end you across these where Sinclair. and legacy, I

Mike Jennings

what you're is... I Paul, seeing think Beyond that,

Paul Sankey

guess I -- ahead. go

Mike Jennings

seeing what last you're in the Rockies to margins. and was couple years in ahead I the going really of say is mid-cycle earnings of

And puts in wind so the continues, that sales. the extent to that

Paul Sankey

Great.

taking I important and to well you the project the years, time to you've What are tough had be guys question that thing, answer, on to and the that's for as over with then you your a right thing budget. diesel is to can you've operational a a be us renewable you're for ask do one footprint number some assets sit far have tough it. give much most and bigger you one to And efficiently? way you but that is And as which -- the and over it's in run I you able had going behind that the know that with Okay. some issues criticisms conviction

Timothy Go

Paul, tough question. it's a Tim. is This

try me Let operating want see X.X But build our trying start capability, focused implementing year to been operating and really, this if in. with really discipline it. we've programs. years grow a We've last and others chime been the on to two to

trying safety you're environment not integrity, earnings on Puget the We've the a out. fruits product as have to got the quarterly we've we've will laid of in years the some just turnaround able with the us crude it's the I One on in understand you Sinclair serve We that going last the update. refining operational been here that up capability We be excellence Rockies. shore see strengthen system and the leadership. improve operating starting that. in to is the resources operations to last help management implemented. We familiarity Sound that even which our assets. We internal this process markets. for labor But side, few of capability understand on just mechanical with with We've to operating bringing foundation the markets. build to for to the our some an team we've additional understand I tell got [indiscernible] existing overall We management both think spent side, process to operations, thing

have quarter, We this in and mid we to plenty to we're of close and the to integration. time, transaction plan scheduled or mind close which give to acquisition Sinclair, XXXX. believe, anticipated the of Sound anticipating plan plenty is to Puget which execute in us here will Keep time continue of the integrate in fourth

this able transaction. to resources and build we have think So think integrate to we time, have we we and the be

Thomas Creery

Tom is Creery... this Paul,

Paul Sankey

sorry. Yes,

Thomas Creery

Sorry, go ahead.

Paul Sankey

go. you No,

Thomas Creery

to is terms I just Creery of this renewables. was going say, in Tom

at at Things critical update heavily we last I still been in point are Nothing are looks as at been schedule. schedule in items phase talked manpower and shortages All RDU terms quick plants still well. long being we Their really the in path like reported. good two track changed. or on ordered we earnings as Artesia. as a call. items. where the of since have locations, three We're cost We're else. both No last has have track last time. on lead are the the going PTU anything construction And well on that this into as the the say, all Just

Mike Jennings

here can them budget is critical, according would nearing our bring get Paul, highlight a we're big out. diesel, sometimes we've time and delivered. that, we to got it's project, the on mean particularly I And the laid on took that projects, we to execution renewable during think we're you from we when Yes, about absolutely and end But With of it. add pizza hard a Tom's I and it. respect schedule these excited to really a

like in feel good a we spot So we're there.

Paul Sankey

at Yes, feels things morning's that and you the this make? way -- well you'd are a Is you level. it HollyFrontier everything now? point want operating to and right say Is this would statement like it can running result the result

Thomas Creery

Absolutely.

Mike Jennings

Yes.

Paul Sankey

Thank Ok, you. Great.

Operator

from have question We Phil from JPMorgan. Gresh a open. line now now your is Phil

Phil Gresh

morning. Good

the talking you were refining the think, is side You on Sinclair that operating. EBITDA,

the would how you through some we about you said wondering try that this. the of you right not unit renewable a $XXX walk pretreatment think of to in have ahead currently? does given could now, there I business I as think performance was it we diesel mid-cycle. million kind EBITDA assumptions model the get to your could to of if that of then And characterize

Rich Voliva

months. Phil, But their they're an be unit they last we doing given just again, of up the that completed to a the a it's investing morning, the XX have been that they Rich. for right do pretreatment before running here a six unit pretreatment So at in tough close. it's plant, Good to thing moment, and and given expansion expect not little

I that's we've made So here. to essential assumptions think the

expect to LCFS assumed. continue probably somewhat to tax credits $X extended expect get do it expect will DX out credit, north to and then what the higher over we we XXXX. expecting forward, we're Going be is But RINs than long be phased now longer Blender's in of run. time we've

Phil Gresh

feedstock have And mix rough do a PTU? post you for

Rich Voliva

maybe higher probably be little high-grade bean XX-XX, oil. feed will a There roughly versus on low CI

Phil Gresh

Okay.

And or does some of blender's so not the saying include credit? $XXX million amount of renewables that EBITDA, are tax you does

Rich Voliva

some tax blender's amount yes. include credit, of does It

Phil Gresh

I'm the looks Holly cash of be of -- a share dilutive on per Rich, stand-alone flow and free little then, per just kind running And numbers on like forma, pro free to OK. cash flow just bit versus Okay, it share.

general, Sinclair guess I'm a do has mix comment? you than Obviously, stand-alone think the I But how curious in different Holly. paid? And So you about how if agree the valuation with you valuation. think just just about my

Rich Voliva

actually, in and flow of metrics, and expect, be those per the as per come the will time all per So frankly, we cash look, call flow share will digits, tune cash it, now, across synergies over mid-single that earnings share accretive free to Phil, in. share, increase year, dramatically that first

now substantial some at. accretion expecting conventional all we're kind across would you metrics the look So of

Phil Gresh

Thank Alright. you. Ok,

Operator

comes now next Manav open. Suisse. Credit from from Our is line your question Gupta Manav

Manav Gupta

if your competitors. diversified so XQ look Hey, Rich and more out-earning we just earnings, you competitors right, at bigger the Mike, are and

is massive And stock so XX. a I it only stock mean your think on if right? you your about in dislocation there's basis, PE price, a

and XX are peers bigger Your XX.

to trying from you And sure understand, year, there There's EBITDA for billion out are all is execution of works when that could you'll $X.X an make be to just actually nicely so perspective, a everything so And you. things, go basis? Again, out, why to on but Puget take stand-alone if lot doing risk change right. and a transformation, Sound, are here. much Sinclair. well have I'm push you're this so renewable your next which And for actually very things working diesel about

Mike Jennings

is good the point, we a business is foresee, good a branded doesn't with more that on and gross RFS the good really say quarter would It's Manav. What that into chain integration comprise the and generation. to both at those basis wholesale, of conservative I we compliance that Yes. see margin out, strategy. us And the environment help believe going value and looking serving customers downstream with branded a controlling

move. a So we it's think that smart

is as the our optimize see Mountains experience opportunity renewable the earnings across high Rocky smart to an also to addition diesel sets finally, as try we We plants. in to exposure two that and gain adding have of and And and business us important do. thing expand the given a in geography that synergies to

two for we guess but enough to years build not I alone, next five So this the leave could XX quarters. well forward, for the we're trying and

Manav Gupta

[indiscernible]? a cases, bean renewable because to That's quarter. fair the one design because diesel is actually in trying that same, is question during a like escalation quarter? that [indiscernible]. My was that you one. that oil I'm but bean that lower-quality was the of the the the still did it's CAPEX to pretty discounts is CAPEX reasons oil should one up somewhere more guidance your again, last the was quality made renewable trading some up use -- also And went that make would to reason CAPEX side see did soya of change went be So the there understand, on diesel soya your lot And positive actually a you lower second allow process $X.XX versus your last

Thomas Creery

as Tom went of Tallo PTU our in with bring well an scope well. is flexibility, at feedstock us some Yes, for to changes feedstocks, did predominantly going low Refinery, repurposed it refinery. along up CI we the accommodate Creery. you and Cheyenne we make also Manav, lot to point. the excellent as It's a terms do That works at Artesia

or think us a well flexibility dependence be value out we'll get we going feedstocks play to and run soybean to of it's the oil. RBD our And that up. move forward refined give amount upon a reduces of it to maximum able So great we as variety

Manav Gupta

quarter on Thank to forward great Congrats deal. and the the look you.

Operator

Spiro We Spiro from question Credit now line the Dounis your have is open. Suisse. from

Spiro Dounis

if legacy $XX the that guys, on any little assets HEP expand these you could, talk curious assets at First morning some versus million the of integration level? just more on and of assets opportunities some these to million provide bit more Thanks. Can $XX strategy for Rich, you growth And for maybe a question, synergy opportunities HEP. synergies? there? EBITDA just contemplates Good for if And the why your about

Rich Voliva

sense of well as a in way of refinery the fit. customers Sure, Spiro. steady around Look, cultural and of complementary operate, very being culture it's a in we set the assets, sense a both based as

colleagues excited some really new we're So welcome to here.

opportunities growth, -- about certain level I corporate scale at have the point on markets had we've look, your and able not think we'll organic going think we're a crude I to real think gathering we'll to side. to in find where some be I historically, that achieve particularly

does number a So a synergy, a to of on forward To million going going forward to it a we're looking really few be little your question, grow not the bit huge year. be side. dollars to assume It's able here. HEP

Spiro Dounis

Got Rich. it. That's a couple,

seems could in outlook drop Sound maybe anything reaching of kind of miss coverage you make just capital if all? And mechanics imply distribution that pretty growth. sort I that downs HEP. healthy The ratio right. double-digit want contemplated around for if about guess, of allocation the And question in once again asset are reduction reading I that to much, goal. to Second didn't then sure the just in just a if Puget at that how talk any, outlook, I

Rich Voliva

Yes.

So is you a in correct where growth rate you are getting your math on basis.

here probably transportation It's It's worth in the a here that. is any the $X million-ish on not There don't that. HEP Sinclair today be think capital I it'll very change. step think probably I side, consistent you with phase maintenance is into at embedded highlighting Puget Sound we low. will see in range. what

the right share per distributable So through cash that to going flow cash flow EBITDA is and flow.

Spiro Dounis

Alright, Congrats.

Rich Voliva

you. Thank

Operator

We America. of Legate now is from Bank open. line a Doug from now Doug question your have

Unidentified Analyst

guys. Hey, Doug. is for Kalei Good on morning This

me. from a couple Just questions of

issues see assets So would firstly, of of anyone But the the think the if I don't scale wondering FTC strategic argue any building Rockies. you logic on concentration in guys

Mike Jennings

it We believe our FTC. by we the don't and it's this a marketers, good that we transaction reviewed employees serve, customers, to competition. thoroughly have and reducing communities as expect see we the No, for transaction

are of we that's point. kind this at where So

Unidentified Analyst

Got it.

wondering Second fairly the breakdown can the on concentration overlap. conservative the the robust. And you given you're how purchasing I'm It's and operation synergy? being the question, us just remind of of power

Rich Voliva

Sure.

you give me there, Kalei. more a Let detail little

So is million using feeds, again, operating really, There's here expense in obviously renewable margin some a the scale transportation, the the in in example, $XX gross we'll big opportunity in also well space. the sourcing which that tremendous our a see of is opportunity procurement. space as lower-cost as on again, we renewables. it the plenty ability way consolidate side, to side, of opportunities about renewable In see deal side. By in

from organization has Our obtain be lot Sinclair group. we'll $XX to real years, can as mentioned, opportunities last value a able and delivered in G&A, realize again, And we're to that with five procurement of million us there. comfortable we the that some

comfortable rate to synergies run us. very So these like feel

Unidentified Analyst

tax there just can Got in. it. from sneak Sinclair? any for Are one, And I in considerations net asset last if launches it operating

Rich Voliva

No.

Unidentified Analyst

Ok, Thank you.

Operator

line Our open. Wells now Michael Blum Fargo. your is next from Michael from question comes

Michael Blum

Thank taking for you my question.

with any or Sinclair? CAPEX associated acquired there first the growth assets from maintenance is That's question. the One, HEP. on follow-ups two Just

Rich Voliva

capital, Michael, in to be particularly a Flats and growth for going be these well but that there's $X growth the maintenance area. that's is with million roughly to going There year joint venture, rig of driven by I count think opportunity Power capital So in assets. the

Michael Blum

from will then clarify Or Is leverage. sort do on plan of things pushing distribution simultaneously? to just And that to anticipate to and times sequence Great. you X.X happen X.X Okay. first start leverage going coverage? to to on then the toward the the those of growth be three and get

Rich Voliva

this. Michael. into happen these So stair way Again, I our simultaneously, work things don't step want We change think a I will expect here. to

Michael Blum

Great, very much Thank you

Rich Voliva

Thank you.

Operator

lines go ahead. Jeremy open. your a We question is from now Please Jeremy have from Tonet JPMorgan.

Jeremy Tonet

morning. Good Hi,

Rich Voliva

Jeremy. morning Good

Jeremy Tonet

to from to level follow this maybe here level fairly of HEP wondering just where on into wanted similar Just the little the bit HEP that in achieving you the with at what that, a accretion. so more regards up on on if EBITDA the transaction because timing goes to HEP -- dive perspective in and accretion looks accretion terms trade transaction the could maybe and

Rich Voliva

Jeremy. Yes,

directionally, you're So correct.

low be I very So we'll HEP earlier, these consistent capital helps. marginally assets. leverage side, think talking more in with we're what maintenance at about mentioned And using which the I

this flow So per will share basis. through on cash flow really a

Jeremy Tonet

it. Got

really So leverage we is think just how it's here, should about i

Rich Voliva

G&A. not add again, any going we're to And

get some we'll operating there. So leverage

Jeremy Tonet

you. it, leave there. Thank it Got I'll

Operator

Our next Jason question comes from Jason Gabelman from Cowen. ahead. go please

Jason Gabelman

some And the the debt to that the first offset Thanks provide the get target then question. the the you rationale number that. issued what understanding just And you ask the any to color period where or I strategic buyback Can on wanted and to? is to intention HFC, taking on deal. back couple out? buyback for of my on maybe debt-to-EBITDA going on over just want outlook further shares time, Just is next years once of the the just of to couple for the next years. closes, acquisition

HFC You that think mentioned is years? in in do to more durable acquisition, create the the now the post to see to get Sinclair the place following Do Sinclair be five a a you durable anything you business you Or a over position business. else wanted do XX you need to wanted? next to

Mike Jennings

anything do there? as will model our Jason, Do satisfied hit launchpad. excited else first, Rich and and financial returns. mind, it We've it run next the short emphasized and got and being our it we what integrate period very a we're we're of to it for focus have. about But business be to, and time going cash is together comes on This basically and optimize really the I'll get as obviously plate. we answer on OK? execution question a third answer to critical, leverage, metrics then We've the the lot no. is The need to

Rich Voliva

expect EBITDA. this your X.X se. would net do the financial I closing an and the expect when wouldn't Oil question being to do to to on respect market sellers say do selling. forward right market. a consolidated foresee We times Jason, that they're investment-grade in expect well clearly per with going debt be forward, then we your expect in repurchases, participate questions, down leverage Sinclair that whittling over we the will And around and range be sheet. have target We targets, And with respect within we yes, look to the to time, on absolutely. be We balance to of shareholders to able the

Operator

from comes please Our Fargo. next go Wells from question Roger Read Roger ahead.

Roger Read

morning. Good

question and I kind on CAPEX back on what question TI One, And on diffs the expectations predominantly, to Brent Just side. getting the couple the to is the then your various guess, other items. of my up are LLSTI that catch crude WCS? wanted a or for of mid-cycle, the

segments And is look believe, in I a company of million as and refining, gave, of Or renewable included You leads just $XXX what maintenance level? kind all we business. a the Any by consolidated the that breakdown CAPEX. is at there?

Rich Voliva

diff year on is the differential actual Brent that WCS a so we prices with kind these CAPEX, expect freely shown we've embedded the of for the Midland differential capital crude admitting -- Roger, $X, And mid-cycle capital assumptions what no a future. with crude in no it's TI spending. you consistent are previously. number, Really, there a is in maintenance again, it's mid-cycle respect is foreseeable to number that diff that in of that to there see. $X And low a mid-teens. barrel. With

and is the lion's turnaround. is share refineries As imagine, in that the you in can of

[indiscernible]. So there that will volatility be around

Roger Read

then of kind modeling-type other And Okay. one question.

sort a the Just of a the run curious for mid-cycle, diesel Or you mentioned what you look $X.XX possible of you stays call are using -- assumptions well, gallon? period assuming $X.XX? a mentioned Are and on -- at we I'm BTC math. of extension it time. the a What As it mentioned, analysis. you kind your assuming the for you're but you the was your sorry, renewable of

Thomas Creery

at the used the given in XX, -- we unchanged we Creery. absence firm is point XX in at this this five and we over What way BTC then continue time. we down Well, it XXXX of the information any that on X. then through that analysis XX, next -- to Tom years in our expected ratchet and at modeled That's

we what that's used. So

Roger Read

Thank you fine just using. curious No, I'm me. with were what that's you.

Operator

now We have Cheng Paul Scotiabank. question follow-up a Paul open. from is from line your now

Paul Cheng

Thank long it. say Did is guys I you you. the missed maybe how lockup? Hey,

Rich Voliva

period. over the month a So Paul, unlocked of the phases to closing, going then first quarter at unlocked is the XX-month mark. be there'll six quarter XX-month and lockup and a a mark the through in worked XX-month stock Basically, the will mark, be be

Paul Cheng

Okay.

So yes, unlocked. three XX% every months

Rich Voliva

months or so. six Every

Paul Cheng

months. six Every Okay.

months? So XX% six unlocked every

Rich Voliva

at close months six So at little months last at is and and XX XX then the one a shorter months.

Paul Cheng

see. I

Okay.

Sorry.

XX months, XX months, all and six months So right. then

the CAPEX on $X that Rich, brand high. is million, marketing million, million. $XX it's for XX $X can't Probably with Page so $XX logistic more that I $XX you wholesale, it's million, And since probably think, asset on of -- Renewable mentioned than $XXX maybe only marketing its million. a be Sinclair the On the million. not

-- Is high. seems may math that $XXX million So really million it the to That my done seems something $XXX to out refining about back suggest be have range. wrong?

Rich Voliva

saying. think, to capital think are I saying, a refining be I pretty capital little No, the be renewals But we've be marketing to going higher with think conservative probably numbers higher little side. Paul, margin, you're going the than the the the a honest, in you're on to than are I yes, and been probably

Paul Cheng

in barrels is because I Yes, capacity. total per barrels that day XX,XXX XXX,XXX day a mean and

than, CAPEX have one the would $XX for million should there say, not So so. maintenance be or thought more

surprised a that. I'm So bit

could be potentially that think number that, you conservative? So

Rich Voliva

Yes.

Mike Jennings

asset you planning have capital we want on to sufficient modeling to and be heard Tim, we we reliability, laser-focused Yes. deliver able our in our are as to Paul, from and execution results. ensure those that and

for across help really intentional in do about what more achieve But going we higher understand to conservative. it's to to we're it's yes, want system. to So the reliability until and now, get

Paul Cheng

those not comparing daily Yes, U.S. that's that their other and on in to make per totally CAPEX to fine. facilities the speculations higher be I two as the much assets barrel such to capacity that of maintenance it's just want something of sure will related a

that's... So

Mike Jennings

It's and conservatism question, we is deliver that ensure promises. our fair a can our That's to on own no. Paul. question, the answer fair a That's

Timothy Go

just I investing as Yes. -- And Sinclair just to has completed the infrastructure. in I is in that improve just refineries would would in last modernize Tim. years $X a their several over chime in and two fact, capital way Paul, their this billion

on So undercapitalized are taking these not facilities here. we're that

Paul Cheng

facilities outstanding spend should any there next meaningful, need emission spending to tie-up I those years? the that and And regulation say. two is over five in pending environmental or they Oh,

Mike Jennings

reduce I try spending. environmental grow, to It's normal as our emissions. a to continues our The footprint spending say exceed desire normal regulations improve would we to and so and and it's environmental those

Paul Cheng

Ok, Thank you.

Mike Jennings

you, Thank Paul.

Operator

question from your Sachs. comes from Goldman now Mehta next line Neil Our Neil open. is

Unidentified Analyst

Good is morning. This Hi, on the Carly question. Thanks taking for Neil. for

kind in quick margins one here, were be the quarter. continue oil Just quarter. the HFLSP of robust results strong a on and Base history relative to to

you're the you around views half in base the on supply/demand back real time? what oil your just and can margins So talk oil base about in just seeing

Bruce Lerner

Sure. Bruce This is speaking.

is way the environment see the So continuing the balance through we the it year. of

three more oil in particularly as well Our favorable. Group supply, global remains basis but Group still base Two a that. and domestic And little pretty balanced, is a indicates on tight, forward as forecast in general, one.

been that continuation So we for metrics we've of seeing. would same look the

Unidentified Analyst

the Thank That's Great. And you. a just then follow-up around helpful. point. capital returns

the a known So and been strong has capital. dividends years Holly of special return for over

returns So you would consider the over if dividend would there regular the and curious But addition. means buybacks. you in other of time just that be capital any reinstatement mentioned

Rich Voliva

be cash Obviously, the stable No. we'll stable business a Carly, source two in at our but focus buyback still the look as the return flows. forward, capital those of going the treat and and more we'll We dividend we'll volatility as have would really on. the have variable.

Unidentified Analyst

Thank Great, you.

Operator

There are questions. no further

you for will over to remarks. back I Craig So any closing now hand

Craig Biery

We of Thanks the transformative think integrated that DINO step name. country, brand, its to enough it's excited an been brands take to built centered and this you for and incredibly so the time much, the we're strategic really Lauren, all as Obviously, our joining business about thank most recognizable us. has transaction. which into and company downstream petroleum one important we're for through around in willing we

an to long returns So company this have two those for their has also to the to going our we petroleum And engine One people and is careers, and what crude product incredibly opportunity to cash us. in for is that's space. for comes things. to every all this renewable on customers from supply big has is really what Sinclair our have is our day going employees on the system. add of markets of that do together enjoy it. to that thing. forward It's understand, doing we The high well we're And stable fit right and and finally, drive to investors the and within a built is really looking business and to going second that intent earnings productive diesel in refining and

participation So and thank so today, support forward you next your to you we'll much for quarter. your talking look and to

Operator

Thank you. day. disconnect conference This Please today’s concludes call. have your lines. And wonderful a