HF Sinclair Corporation Reports 2023 Second Quarter Results and Announces Regular Cash Dividend

  • Reported net income attributable to HF Sinclair stockholders of $507.7 million, or $2.62 per diluted share, and adjusted net income of $503.8 million, or $2.60 per diluted share, for the second quarter
  • Reported EBITDA of $872.3 million and Adjusted EBITDA of $868.2 million for the second quarter
  • Returned $87.3 million to stockholders through dividends in the second quarter
  • Announced a regular quarterly dividend of $0.45 per share
  • Repurchased approximately $411.0 million in shares from REH Company, subsequent to second quarter end

DALLAS--()--HF Sinclair Corporation (NYSE: DINO) (“HF Sinclair” or the “Company”) today reported second quarter net income attributable to HF Sinclair stockholders of $507.7 million, or $2.62 per diluted share, for the quarter ended June 30, 2023, compared to $1,221.3 million, or $5.43 per diluted share, for the quarter ended June 30, 2022. Excluding the adjustments shown in the accompanying earnings release table, adjusted net income attributable to HF Sinclair stockholders for the second quarter of 2023 was $503.8 million, or $2.60 per diluted share, compared to $1,258.5 million, or $5.59 per diluted share, for the second quarter of 2022, which excludes certain items that collectively decreased net income by $37.3 million.

HF Sinclair’s CEO, Tim Go, commented, “HF Sinclair’s strong second quarter results were driven by healthy product margins in our refining segment, coupled with solid performances from our lubricants, marketing and midstream businesses. With the majority of the planned turnaround work behind us, we believe our diversified portfolio is well positioned to capture the margins available to us for the remainder of the year. We remain focused on the reliability and integration of our asset base to further strengthen the earnings profile and free cash flow generation of HF Sinclair.”

Refining segment income before interest and income taxes was $589.8 million for the second quarter of 2023 compared to $1,558.1 million for the second quarter of 2022. The segment reported EBITDA of $702.6 million for the second quarter of 2023 compared to $1,660.9 million for the second quarter of 2022. Excluding the lower of cost or market inventory valuation charge of $26.8 million, Adjusted EBITDA in the second quarter of 2023 was $729.5 million. This decrease was principally driven by lower refining margins in both the West and Mid-Continent regions and lower refined product sales volumes, which resulted in lower refining segment earnings in the quarter. Consolidated refinery gross margin was $22.22 per produced barrel, a 39% decrease compared to $36.36 for the second quarter of 2022. Crude oil charge averaged 553,940 barrels per day (“BPD”) for the second quarter of 2023 compared to 627,310 BPD for the second quarter of 2022. This decrease was primarily a result of turnarounds at our Navajo, Parco and El Dorado refineries in the second quarter of 2023.

Renewables segment income before interest and income taxes was $4.4 million for the second quarter of 2023 compared to a loss of $(73.2) million for the second quarter of 2022. The segment reported EBITDA of $23.4 million for the second quarter of 2023 compared to $(62.8) million for the second quarter of 2022. Excluding the lower of cost or market inventory valuation adjustment, the segment reported Adjusted EBITDA of $(11.3) million for the second quarter of 2023 compared to $(28.3) million for the second quarter of 2022. Total sales volumes were 50 million gallons for the second quarter of 2023 as compared to 26 million gallons for the second quarter of 2022.

Marketing segment income before interest and income taxes was $18.6 million for the second quarter of 2023 compared to $19.5 million for the second quarter of 2022. The segment reported EBITDA of $24.6 million for the second quarter of 2023 compared to $23.9 million for the second quarter of 2022. Total branded fuel sales volumes were 364 million gallons for the second quarter of 2023 as compared to 335 million gallons for the second quarter of 2022.

Lubricants and Specialty Products segment income before interest and income taxes was $51.2 million for the second quarter of 2023 compared to $135.1 million in the second quarter of 2022. The segment reported EBITDA of $71.7 million for the second quarter of 2023 compared to $155.7 million in the second quarter of 2022. This decrease was largely driven by a lower FIFO benefit from consumption of lower priced feedstock inventory for the second quarter of 2023 of $0.5 million as compared to $71.0 million for the second quarter of 2022.

Holly Energy Partners, L.P. (“HEP”) reported EBITDA of $82.2 million for the second quarter of 2023 compared to $79.8 million for the second quarter of 2022 and Adjusted EBITDA of $102.2 million for the second quarter of 2023 compared to $104.2 million for the second quarter of 2022.

For the second quarter of 2023, net cash provided by operations totaled $490.0 million. At June 30, 2023, the Company's cash and cash equivalents totaled $1,614.6 million, a $249.7 million increase over cash and cash equivalents of $1,364.9 million at March 31, 2023. During the second quarter of 2023, the Company announced and paid a regular dividend of $0.45 per share to stockholders totaling $87.3 million. Additionally, the Company's consolidated debt was $3,196.0 million. The Company’s debt, exclusive of HEP debt, which is nonrecourse to HF Sinclair, was $1,700.6 million at June 30, 2023.

HF Sinclair also announced today that its Board of Directors declared a regular quarterly dividend in the amount of $0.45 per share, payable on September 6, 2023 to holders of record of common stock on August 17, 2023.

The Company has scheduled a webcast conference call for today, August 3, 2023, at 8:30 AM Eastern Time to discuss second quarter financial results. This webcast may be accessed at https://events.q4inc.com/attendee/369077342. An audio archive of this webcast will be available using the above noted link through August 17, 2023.

HF Sinclair Corporation, headquartered in Dallas, Texas, is an independent energy company that produces and markets high-value light products such as gasoline, diesel fuel, jet fuel, renewable diesel and other specialty products. HF Sinclair owns and operates refineries located in Kansas, Oklahoma, New Mexico, Wyoming, Washington and Utah and markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. HF Sinclair supplies high-quality fuels to more than 1,500 branded stations and licenses the use of the Sinclair brand at more than 300 additional locations throughout the country. In addition, subsidiaries of HF Sinclair produce and market base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and export products to more than 80 countries. Through its subsidiaries, HF Sinclair produces renewable diesel at two of its facilities in Wyoming and also at its facility in Artesia, New Mexico. HF Sinclair also owns a 47% limited partner interest and a non-economic general partner interest in Holly Energy Partners, L.P., a master limited partnership that provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HF Sinclair subsidiaries.

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are “forward-looking statements” based on management’s beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission (the “SEC”). Forward-looking statements use words such as “anticipate,” “project,” “will,” “expect,” “plan,” “goal,” “forecast,” “strategy,” “intend,” “should,” “would,” “could,” “believe,” “may,” and similar expressions and statements regarding our plans and objectives for future operations. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Any differences could be caused by a number of factors, including, but not limited to, the negotiation and execution, and the terms and conditions, of a definitive agreement relating to the Company's non-binding proposal to acquire all of the outstanding common units of HEP not owned by the Company or its affiliates (the “Proposed HEP Transaction”) and the ability of the Company or HEP to enter into or consummate such agreement; the risk that the Proposed HEP Transaction does not occur; negative effects from the pendency of the Proposed HEP Transaction; failure to obtain the required approvals for the Proposed HEP Transaction; the time required to consummate the Proposed HEP Transaction; the focus of management time and attention on the Proposed HEP Transaction and other disruptions arising from the Proposed HEP Transaction; limitations on the Company's ability to effectuate share repurchases due to market conditions and corporate, tax, regulatory and other considerations; the Company’s and HEP’s ability to successfully integrate the Sinclair Oil Corporation (now known as Sinclair Oil LLC) and Sinclair Transportation Company LLC businesses acquired from The Sinclair Companies (now known as REH Company) (collectively, the “Sinclair Transactions”) with their existing operations and fully realize the expected synergies of the Sinclair Transactions or on the expected timeline; the Company's ability to successfully integrate the operation of the Puget Sound refinery with its existing operations; the demand for and supply of crude oil and refined products, including uncertainty regarding the increasing societal expectations that companies address climate change; risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products or lubricant and specialty products in the Company’s markets; the spread between market prices for refined products and market prices for crude oil; the possibility of constraints on the transportation of refined products or lubricant and specialty products; the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, whether due to reductions in demand, accidents, unexpected leaks or spills, unscheduled shutdowns, infection in the workforce, weather events, global health events, civil unrest, expropriation of assets, and other economic, diplomatic, legislative, or political events or developments, terrorism, cyberattacks, or other catastrophes or disruptions affecting our operations, production facilities, machinery, pipelines and other logistics assets, equipment, or information systems, or any of the foregoing of the Company's suppliers, customers, or third-party providers, and any potential asset impairments resulting from, or the failure to have adequate insurance coverage for or receive insurance recoveries from, such actions; the effects of current and/or future governmental and environmental regulations and policies, including increases in interest rates; the availability and cost of financing to the Company; the effectiveness of the Company’s capital investments and marketing strategies; the Company’s and HEP’s efficiency in carrying out and consummating construction projects, including the Company's ability to complete announced capital projects on time and within capital guidance; the Company's and HEP’s ability to timely obtain or maintain permits, including those necessary for operations or capital projects; the ability of the Company to acquire refined or lubricant product operations or pipeline and terminal operations on acceptable terms and to integrate any existing or future acquired operations; the possibility of terrorist or cyberattacks and the consequences of any such attacks; uncertainty regarding the effects and duration of global hostilities, including the Russia-Ukraine war, and any associated military campaigns which may disrupt crude oil supplies and markets for the Company's refined products and create instability in the financial markets that could restrict the Company's ability to raise capital; general economic conditions, including economic slowdowns caused by a local or national recession or other adverse economic condition, such as periods of increased or prolonged inflation; and other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s and HEP’s SEC filings. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

RESULTS OF OPERATIONS

Financial Data (all information in this release is unaudited)

 

Three Months Ended
June 30,

 

Change from 2022

 

2023

 

2022

 

Change

 

Percent

 

(In thousands, except per share data)

Sales and other revenues

$

7,833,646

 

 

$

11,162,160

 

 

$

(3,328,514

)

 

(30

)%

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of products sold:

 

 

 

 

 

 

 

Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

 

6,273,605

 

 

 

8,579,915

 

 

 

(2,306,310

)

 

(27

)

Lower of cost or market inventory valuation adjustment

 

(7,863

)

 

 

34,543

 

 

 

(42,406

)

 

(123

)

 

 

6,265,742

 

 

 

8,614,458

 

 

 

(2,348,716

)

 

(27

)

Operating expenses (exclusive of depreciation and amortization)

 

546,800

 

 

 

606,127

 

 

 

(59,327

)

 

(10

)

Selling, general and administrative expenses (exclusive of depreciation and amortization)

 

127,388

 

 

 

110,875

 

 

 

16,513

 

 

15

 

Depreciation and amortization

 

189,360

 

 

 

164,044

 

 

 

25,316

 

 

15

 

Total operating costs and expenses

 

7,129,290

 

 

 

9,495,504

 

 

 

(2,366,214

)

 

(25

)

Income from operations

 

704,356

 

 

 

1,666,656

 

 

 

(962,300

)

 

(58

)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Earnings of equity method investments

 

3,545

 

 

 

5,447

 

 

 

(1,902

)

 

(35

)

Interest income

 

17,591

 

 

 

1,844

 

 

 

15,747

 

 

854

 

Interest expense

 

(46,982

)

 

 

(38,961

)

 

 

(8,021

)

 

21

 

Gain (loss) on foreign currency transactions

 

748

 

 

 

(905

)

 

 

1,653

 

 

(183

)

Gain on sale of assets and other

 

1,152

 

 

 

2,320

 

 

 

(1,168

)

 

(50

)

 

 

(23,946

)

 

 

(30,255

)

 

 

6,309

 

 

(21

)

Income before income taxes

 

680,410

 

 

 

1,636,401

 

 

 

(955,991

)

 

(58

)

Income tax expense

 

145,925

 

 

 

383,493

 

 

 

(237,568

)

 

(62

)

Net income

 

534,485

 

 

 

1,252,908

 

 

 

(718,423

)

 

(57

)

Less net income attributable to noncontrolling interest

 

26,824

 

 

 

31,646

 

 

 

(4,822

)

 

(15

)

Net income attributable to HF Sinclair stockholders

$

507,661

 

 

$

1,221,262

 

 

$

(713,601

)

 

(58

)%

 

 

 

 

 

 

 

 

Earnings per share attributable to HF Sinclair stockholders:

 

 

 

 

 

 

 

Basic

$

2.62

 

 

$

5.43

 

 

$

(2.81

)

 

(52

)%

Diluted

$

2.62

 

 

$

5.43

 

 

$

(2.81

)

 

(52

)%

Cash dividends declared per common share

$

0.45

 

 

$

0.40

 

 

$

0.05

 

 

13

%

Average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

192,348

 

 

 

222,952

 

 

 

(30,604

)

 

(14

)%

Diluted

 

192,348

 

 

 

222,952

 

 

 

(30,604

)

 

(14

)%

 

 

 

 

 

 

 

 

EBITDA

$

872,337

 

 

$

1,805,916

 

 

$

(933,579

)

 

(52

)%

Adjusted EBITDA

$

868,163

 

 

$

1,853,008

 

 

$

(984,845

)

 

(53

)%

 

Six Months Ended
June 30,

 

Change from 2022

 

2023

 

2022

 

Change

 

Percent

 

(In thousands, except per share data)

Sales and other revenues

$

15,398,788

 

 

$

18,620,910

 

 

$

(3,222,122

)

 

(17

)%

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of products sold:

 

 

 

 

 

 

 

Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

 

12,377,662

 

 

 

15,081,927

 

 

 

(2,704,265

)

 

(18

)

Lower of cost or market inventory valuation adjustment

 

39,734

 

 

 

25,992

 

 

 

13,742

 

 

53

 

 

 

12,417,396

 

 

 

15,107,919

 

 

 

(2,690,523

)

 

(18

)

Operating expenses (exclusive of depreciation and amortization)

 

1,186,183

 

 

 

1,083,561

 

 

 

102,622

 

 

9

 

Selling, general and administrative expenses (exclusive of depreciation and amortization)

 

223,301

 

 

 

221,297

 

 

 

2,004

 

 

1

 

Depreciation and amortization

 

363,343

 

 

 

308,645

 

 

 

54,698

 

 

18

 

Total operating costs and expenses

 

14,190,223

 

 

 

16,721,422

 

 

 

(2,531,199

)

 

(15

)

Income from operations

 

1,208,565

 

 

 

1,899,488

 

 

 

(690,923

)

 

(36

)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Earnings of equity method investments

 

7,427

 

 

 

9,073

 

 

 

(1,646

)

 

(18

)

Interest income

 

37,526

 

 

 

2,841

 

 

 

34,685

 

 

1,221

 

Interest expense

 

(92,804

)

 

 

(73,820

)

 

 

(18,984

)

 

26

 

Gain (loss) on foreign currency transactions

 

1,618

 

 

 

(766

)

 

 

2,384

 

 

(311

)

Gain on sale of assets and other

 

2,783

 

 

 

6,215

 

 

 

(3,432

)

 

(55

)

 

 

(43,450

)

 

 

(56,457

)

 

 

13,007

 

 

(23

)

Income before income taxes

 

1,165,115

 

 

 

1,843,031

 

 

 

(677,916

)

 

(37

)

Income tax expense

 

245,625

 

 

 

404,822

 

 

 

(159,197

)

 

(39

)

Net income

 

919,490

 

 

 

1,438,209

 

 

 

(518,719

)

 

(36

)

Less net income attributable to noncontrolling interest

 

58,563

 

 

 

56,973

 

 

 

1,590

 

 

3

 

Net income attributable to HF Sinclair stockholders

$

860,927

 

 

$

1,381,236

 

 

$

(520,309

)

 

(38

)%

 

 

 

 

 

 

 

 

Earnings per share attributable to HF Sinclair stockholders:

 

 

 

 

 

 

 

Basic

$

4.40

 

 

$

6.86

 

 

$

(2.46

)

 

(36

)%

Diluted

$

4.40

 

 

$

6.86

 

 

$

(2.46

)

 

(36

)%

Cash dividends declared per common share

$

0.90

 

 

$

0.40

 

 

$

0.50

 

 

125

%

Average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

193,888

 

 

 

199,149

 

 

 

(5,261

)

 

(3

)%

Diluted

 

193,888

 

 

 

199,149

 

 

 

(5,261

)

 

(3

)%

 

 

 

 

 

 

 

 

EBITDA

$

1,525,173

 

 

$

2,165,682

 

 

$

(640,509

)

 

(30

)%

Adjusted EBITDA

$

1,572,916

 

 

$

2,229,715

 

 

$

(656,799

)

 

(29

)%

Balance Sheet Data

 

June 30,

 

December 31,

 

2023

 

2022

 

(In thousands)

Cash and cash equivalents

$

1,614,618

 

$

1,665,066

Working capital

$

3,804,909

 

$

3,502,790

Total assets

$

18,197,005

 

$

18,125,483

Total debt

$

3,196,023

 

$

3,255,472

Total equity

$

10,490,704

 

$

10,017,572

Segment Information

Our operations are organized into five reportable segments, Refining, Renewables, Marketing, Lubricants and Specialty Products and HEP. Our operations that are not included in one of these five reportable segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under the Corporate, Other and Eliminations column.

The Refining segment represents the operations of our El Dorado, Tulsa, Navajo, Woods Cross and Puget Sound refineries and HF Sinclair Asphalt Company LLC (“Asphalt”). Effective with the Sinclair Transactions that closed on March 14, 2022, the Refining segment includes our Parco and Casper refineries. Refining activities involve the purchase and refining of crude oil and wholesale marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountains extending into the Pacific Northwest geographic regions of the United States. Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma.

The Renewables segment represents the operations of our Cheyenne renewable diesel unit (“RDU”), which was mechanically complete in the fourth quarter of 2021 and operational in the first quarter of 2022, the pre-treatment unit at our Artesia, New Mexico facility, which was completed and operational in the first quarter of 2022 and the Artesia RDU, which was completed and operational in the second quarter of 2022. Also, effective with the Sinclair Transactions that closed on March 14, 2022, the Renewables segment includes the Sinclair RDU.

Effective with that Sinclair Transactions that closed on March 14, 2022, the Marketing segment represents branded fuel sales to Sinclair branded sites in the United States and licensing fees for the use of the Sinclair brand at additional locations throughout the country. The Marketing segment also includes branded fuel sales to non-Sinclair branded sites from legacy HollyFrontier agreements and revenues from other marketing activities. Our branded sites are located in several states across the United States with the highest concentration of the sites located in our West and Mid-Continent regions.

The Lubricants and Specialty Products segment represents Petro-Canada Lubricants Inc.’s production operations, located in Mississauga, Ontario, that includes lubricant products such as base oils, white oils, specialty products and finished lubricants, and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States and Europe. Additionally, the Lubricants and Specialty Products segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America and the operations of Red Giant Oil Company LLC, one of the largest suppliers of locomotive engine oil in North America. Also, the Lubricants and Specialty Products segment includes Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

The HEP segment includes all of the operations of HEP, which owns and operates logistics and refinery assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units in the Mid-Continent, Southwest and Rocky Mountains geographic regions of the United States. The HEP segment also includes 50% ownership interests in each of the Osage Pipeline (“Osage”), the Cheyenne Pipeline and Cushing Connect, and effective with the Sinclair Transactions that closed on March 14, 2022, a 25.06% ownership interest in the Saddle Butte Pipeline and a 49.995% ownership interest in the Pioneer Pipeline. Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations. Due to certain basis differences, our reported amounts for the HEP segment may not agree to amounts reported in HEP’s periodic public filings.

 

 

Refining

 

Renewables

 

Marketing

 

Lubricants and Specialty Products

 

HEP

 

Corporate, Other and Eliminations

 

Consolidated Total

 

 

(In thousands)

Three Months Ended June 30, 2023

Sales and other revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

5,901,713

 

$

175,063

 

 

$

1,040,933

 

$

686,104

 

$

29,833

 

$

 

 

$

7,833,646

 

Intersegment revenues

 

 

1,137,669

 

 

98,122

 

 

 

 

 

4,529

 

 

109,922

 

 

(1,350,242

)

 

 

 

 

 

$

7,039,382

 

$

273,185

 

 

$

1,040,933

 

$

690,633

 

$

139,755

 

$

(1,350,242

)

 

$

7,833,646

 

Cost of products sold (exclusive of lower of cost or market inventory)

 

$

5,829,898

 

$

258,806

 

 

$

1,008,306

 

$

509,724

 

$

 

$

(1,333,129

)

 

$

6,273,605

 

Lower of cost or market inventory valuation adjustment

 

$

26,842

 

$

(34,705

)

 

$

 

$

 

$

 

$

 

 

$

(7,863

)

Operating expenses

 

$

426,942

 

$

24,373

 

 

$

 

$

64,034

 

$

53,142

 

$

(21,691

)

 

$

546,800

 

Selling, general and administrative expenses

 

$

53,038

 

$

1,336

 

 

$

8,127

 

$

44,914

 

$

5,512

 

$

14,461

 

 

$

127,388

 

Depreciation and amortization

 

$

112,877

 

$

18,968

 

 

$

6,016

 

$

20,544

 

$

26,540

 

$

4,415

 

 

$

189,360

 

Income (loss) from operations

 

$

589,785

 

$

4,407

 

 

$

18,484

 

$

51,417

 

$

54,561

 

$

(14,298

)

 

$

704,356

 

Income (loss) before interest and income taxes

 

$

589,769

 

$

4,429

 

 

$

18,582

 

$

51,202

 

$

58,206

 

$

(12,387

)

 

$

709,801

 

Net income attributable to noncontrolling interest

 

$

 

$

 

 

$

 

$

 

$

1,539

 

$

25,285

 

 

$

26,824

 

Earnings of equity method investments

 

$

 

$

 

 

$

 

$

 

$

3,545

 

$

 

 

$

3,545

 

Capital expenditures

 

$

45,187

 

$

3,537

 

 

$

6,200

 

$

5,734

 

$

8,650

 

$

10,873

 

 

$

80,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2022

Sales and other revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

8,839,662

 

$

115,939

 

 

$

1,336,302

 

$

845,024

 

$

25,233

 

$

 

 

$

11,162,160

 

Intersegment revenues

 

 

1,448,919

 

 

78,639

 

 

 

 

 

4,917

 

 

110,537

 

 

(1,643,012

)

 

 

 

 

 

$

10,288,581

 

$

194,578

 

 

$

1,336,302

 

$

849,941

 

$

135,770

 

$

(1,643,012

)

 

$

11,162,160

 

Cost of products sold (exclusive of lower of cost or market inventory)

 

$

8,119,285

 

$

192,662

 

 

$

1,311,333

 

$

576,428

 

$

 

$

(1,619,793

)

 

$

8,579,915

 

Lower of cost or market inventory valuation adjustment

 

$

 

$

34,543

 

 

$

 

$

 

$

 

$

 

 

$

34,543

 

Operating expenses

 

$

469,304

 

$

29,273

 

 

$

 

$

74,470

 

$

53,899

 

$

(20,819

)

 

$

606,127

 

Selling, general and administrative expenses

 

$

39,123

 

$

1,001

 

 

$

1,049

 

$

43,555

 

$

4,683

 

$

21,464

 

 

$

110,875

 

Depreciation and amortization

 

$

102,780

 

$

10,371

 

 

$

4,418

 

$

20,605

 

$

26,371

 

$

(501

)

 

$

164,044

 

Income (loss) from operations

 

$

1,558,089

 

$

(73,272

)

 

$

19,502

 

$

134,883

 

$

50,817

 

$

(23,363

)

 

$

1,666,656

 

Income (loss) before interest and income taxes

 

$

1,558,120

 

$

(73,202

)

 

$

19,502

 

$

135,116

 

$

56,309

 

$

(22,327

)

 

$

1,673,518

 

Net income attributable to noncontrolling interest

 

$

 

$

 

 

$

 

$

 

$

1,929

 

$

29,717

 

 

$

31,646

 

Earnings of equity method investments

 

$

 

$

 

 

$

 

$

 

$

5,447

 

$

 

 

$

5,447

 

Capital expenditures

 

$

36,711

 

$

87,525

 

 

$

5,309

 

$

8,026

 

$

9,100

 

$

12,773

 

 

$

159,444

 

 

 

Refining

 

Renewables

 

Marketing

 

Lubricants and Specialty Products

 

HEP

 

Corporate, Other

and Eliminations

 

Consolidated

Total

 

 

(In thousands)

Six Months Ended June 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

11,566,927

 

$

377,476

 

 

$

1,978,318

 

$

1,419,818

 

$

56,249

 

$

 

 

$

15,398,788

Intersegment revenues

 

 

2,191,070

 

 

193,725

 

 

 

 

 

10,325

 

 

226,800

 

 

(2,621,920

)

 

 

 

$

13,757,997

 

$

571,201

 

 

$

1,978,318

 

$

1,430,143

 

$

283,049

 

$

(2,621,920

)

 

$

15,398,788

Cost of products sold (exclusive of lower of cost or market inventory)

 

$

11,447,809

 

$

521,544

 

 

$

1,932,355

 

$

1,047,727

 

$

 

$

(2,571,773

)

 

$

12,377,662

Lower of cost or market inventory valuation adjustment

 

$

26,842

 

$

12,892

 

 

$

 

$

 

$

 

$

 

 

$

39,734

Operating expenses

 

$

944,762

 

$

55,744

 

 

$

 

$

127,627

 

$

105,284

 

$

(47,234

)

 

$

1,186,183

Selling, general and administrative expenses

 

$

92,116

 

$

2,251

 

 

$

15,090

 

$

84,178

 

$

10,147

 

$

19,519

 

 

$

223,301

Depreciation and amortization

 

$

216,000

 

$

38,942

 

 

$

11,887

 

$

40,454

 

$

51,005

 

$

5,055

 

 

$

363,343

Income (loss) from operations

 

$

1,030,468

 

$

(60,172

)

 

$

18,986

 

$

130,157

 

$

116,613

 

$

(27,487

)

 

$

1,208,565

Income (loss) before interest and income taxes

 

$

1,030,773

 

$

(60,127

)

 

$

19,084

 

$

129,742

 

$

124,314

 

$

(23,393

)

 

$

1,220,393

Net income attributable to noncontrolling interest

 

$

 

$

 

 

$

 

$

 

$

3,291

 

$

55,272

 

 

$

58,563

Earnings of equity method investments

 

$

 

$

 

 

$

 

$

 

$

7,427

 

$

 

 

$

7,427

Capital expenditures

 

$

112,961

 

$

8,381

 

 

$

11,455

 

$

14,383

 

$

16,264

 

$

16,806

 

 

$

180,250

Six Months Ended June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

15,211,556

 

$

144,252

 

 

$

1,613,343

 

$

1,598,582

 

$

53,177

 

$

 

 

$

18,620,910

Intersegment revenues

 

 

1,583,192

 

 

97,693

 

 

 

 

 

6,368

 

 

202,791

 

 

(1,890,044

)

 

 

 

 

$

16,794,748

 

$

241,945

 

 

$

1,613,343

 

$

1,604,950

 

$

255,968

 

$

(1,890,044

)

 

$

18,620,910

Cost of products sold (exclusive of lower of cost or market inventory)

 

$

14,028,895

 

$

236,933

 

 

$

1,582,464

 

$

1,081,005

 

$

 

$

(1,847,370

)

 

$

15,081,927

Lower of cost or market inventory valuation adjustment

 

$

 

$

25,992

 

 

$

 

$

 

$

 

$

 

 

$

25,992

Operating expenses

 

$

824,276

 

$

56,369

 

 

$

 

$

140,471

 

$

96,523

 

$

(34,078

)

 

$

1,083,561

Selling, general and administrative expenses

 

$

73,005

 

$

1,873

 

 

$

1,189

 

$

85,304

 

$

8,995

 

$

50,931

 

 

$

221,297

Depreciation and amortization

 

$

197,461

 

$

16,171

 

 

$

4,919

 

$

41,199

 

$

47,957

 

$

938

 

 

$

308,645

Income (loss) from operations

 

$

1,671,111

 

$

(95,393

)

 

$

24,771

 

$

256,971

 

$

102,493

 

$

(60,465

)

 

$

1,899,488

Income (loss) before interest and income taxes

 

$

1,671,171

 

$

(95,304

)

 

$

24,771

 

$

259,817

 

$

111,712

 

$

(58,157

)

 

$

1,914,010

Net income attributable to noncontrolling interest

 

$

 

$

 

 

$

 

$

 

$

5,192

 

$

51,781

 

 

$

56,973

Earnings of equity method investments

 

$

 

$

 

 

$

 

$

 

$

9,073

 

$

 

 

$

9,073

Capital expenditures

 

$

66,631

 

$

186,294

 

 

$

5,309

 

$

14,395

 

$

23,246

 

$

21,865

 

 

$

317,740

Refining Segment Operating Data

The following tables set forth information, including non-GAAP (generally accepted accounting principles) performance measures about our refinery operations. Refinery gross and net operating margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.

The disaggregation of our refining geographic operating data is presented in two regions, Mid-Continent and West, to best reflect the economic drivers of our refining operations. The Mid-Continent region is comprised of the El Dorado and Tulsa refineries. The West region is comprised of the Puget Sound, Navajo, Woods Cross, Parco and Casper refineries. The refinery operations of the Parco and Casper refineries are included for the period March 14, 2022 (date of acquisition) through June 30, 2023.

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022 (8)

Mid-Continent Region

 

 

 

 

 

 

Crude charge (BPD) (1)

 

 

228,300

 

 

 

277,930

 

 

 

219,890

 

 

 

284,030

 

Refinery throughput (BPD) (2)

 

 

246,570

 

 

 

292,570

 

 

 

238,960

 

 

 

298,950

 

Sales of produced refined products (BPD) (3)

 

 

240,550

 

 

 

279,170

 

 

 

222,880

 

 

 

279,710

 

Refinery utilization (4)

 

 

87.8

%

 

 

106.9

%

 

 

84.6

%

 

 

109.2

%

 

 

 

 

 

 

 

 

 

Average per produced barrel (5)

 

 

 

 

 

 

 

 

Refinery gross margin

 

$

19.55

 

 

$

32.53

 

 

$

19.91

 

 

$

20.96

 

Refinery operating expenses (6)

 

 

6.51

 

 

 

6.21

 

 

 

7.82

 

 

 

6.11

 

Net operating margin

 

$

13.04

 

 

$

26.32

 

 

$

12.09

 

 

$

14.85

 

 

 

 

 

 

 

 

 

 

Refinery operating expenses per throughput barrel (7)

 

$

6.35

 

 

$

5.92

 

 

$

7.30

 

 

$

5.72

 

 

 

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

 

Sweet crude oil

 

 

59

%

 

 

54

%

 

 

62

%

 

 

58

%

Sour crude oil

 

 

17

%

 

 

22

%

 

 

16

%

 

 

18

%

Heavy sour crude oil

 

 

16

%

 

 

19

%

 

 

14

%

 

 

19

%

Other feedstocks and blends

 

 

8

%

 

 

5

%

 

 

8

%

 

 

5

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

Sales of produced refined products:

 

 

 

 

 

 

 

 

Gasolines

 

 

49

%

 

 

49

%

 

 

49

%

 

 

50

%

Diesel fuels

 

 

31

%

 

 

35

%

 

 

30

%

 

 

34

%

Jet fuels

 

 

6

%

 

 

5

%

 

 

7

%

 

 

6

%

Fuel oil

 

 

1

%

 

 

1

%

 

 

1

%

 

 

1

%

Asphalt

 

 

5

%

 

 

4

%

 

 

4

%

 

 

3

%

Base oils

 

 

4

%

 

 

4

%

 

 

5

%

 

 

4

%

LPG and other

 

 

4

%

 

 

2

%

 

 

4

%

 

 

2

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022 (8)

West Region

 

 

 

 

 

 

 

 

Crude charge (BPD) (1)

 

 

325,640

 

 

 

349,380

 

 

 

306,480

 

 

 

292,450

 

Refinery throughput (BPD) (2)

 

 

352,400

 

 

 

370,740

 

 

 

339,710

 

 

 

315,350

 

Sales of produced refined products (BPD) (3)

 

 

357,630

 

 

 

376,400

 

 

 

334,420

 

 

 

309,530

 

Refinery utilization (4)

 

 

77.9

%

 

 

83.6

%

 

 

73.3

%

 

 

77.6

%

 

 

 

 

 

 

 

 

 

Average per produced barrel (5)

 

 

 

 

 

 

 

 

Refinery gross margin

 

$

24.01

 

 

$

39.21

 

 

$

24.90

 

 

$

30.42

 

Refinery operating expenses (6)

 

 

8.74

 

 

 

9.10

 

 

 

10.40

 

 

 

9.19

 

Net operating margin

 

$

15.27

 

 

$

30.11

 

 

$

14.50

 

 

$

21.23

 

 

 

 

 

 

 

 

 

 

Refinery operating expenses per throughput barrel (7)

 

$

8.87

 

 

$

9.24

 

 

$

10.23

 

 

$

9.02

 

 

 

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

 

Sweet crude oil

 

 

30

%

 

 

33

%

 

 

31

%

 

 

29

%

Sour crude oil

 

 

44

%

 

 

46

%

 

 

42

%

 

 

50

%

Heavy sour crude oil

 

 

13

%

 

 

10

%

 

 

11

%

 

 

9

%

Black wax crude oil

 

 

6

%

 

 

5

%

 

 

6

%

 

 

5

%

Other feedstocks and blends

 

 

7

%

 

 

6

%

 

 

10

%

 

 

7

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

Sales of produced refined products:

 

 

 

 

 

 

 

 

Gasolines

 

 

54

%

 

 

53

%

 

 

55

%

 

 

53

%

Diesel fuels

 

 

28

%

 

 

33

%

 

 

30

%

 

 

31

%

Jet fuels

 

 

6

%

 

 

5

%

 

 

5

%

 

 

5

%

Fuel oil

 

 

1

%

 

 

2

%

 

 

2

%

 

 

5

%

Asphalt

 

 

3

%

 

 

3

%

 

 

2

%

 

 

2

%

LPG and other

 

 

8

%

 

 

4

%

 

 

6

%

 

 

4

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

Consolidated

 

 

 

 

 

 

 

 

Crude charge (BPD) (1)

 

 

553,940

 

 

 

627,310

 

 

 

526,370

 

 

 

576,480

 

Refinery throughput (BPD) (2)

 

 

598,970

 

 

 

663,310

 

 

 

578,670

 

 

 

614,300

 

Sales of produced refined products (BPD) (3)

 

 

598,180

 

 

 

655,570

 

 

 

557,300

 

 

 

589,240

 

Refinery utilization (4)

 

 

81.7

%

 

 

92.5

%

 

 

77.6

%

 

 

90.5

%

 

 

 

 

 

 

 

 

 

Average per produced barrel (5)

 

 

 

 

 

 

 

 

Refinery gross margin

 

$

22.22

 

 

$

36.36

 

 

$

22.90

 

 

$

25.93

 

Refinery operating expenses (6)

 

 

7.84

 

 

 

7.87

 

 

 

9.37

 

 

 

7.73

 

Net operating margin

 

$

14.38

 

 

$

28.49

 

 

$

13.53

 

 

$

18.20

 

 

 

 

 

 

 

 

 

 

Refinery operating expenses per throughput barrel (7)

 

$

7.83

 

 

$

7.77

 

 

$

9.02

 

 

$

8.25

 

 

 

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

 

Sweet crude oil

 

 

42

%

 

 

42

%

 

 

44

%

 

 

43

%

Sour crude oil

 

 

33

%

 

 

36

%

 

 

32

%

 

 

34

%

Heavy sour crude oil

 

 

14

%

 

 

14

%

 

 

12

%

 

 

14

%

Black wax crude oil

 

 

3

%

 

 

3

%

 

 

3

%

 

 

3

%

Other feedstocks and blends

 

 

8

%

 

 

5

%

 

 

9

%

 

 

6

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022 (8

)

Consolidated

 

 

 

 

 

 

 

 

Sales of produced refined products:

 

 

 

 

 

 

 

 

Gasolines

 

52

%

 

51

%

 

53

%

 

51

%

Diesel fuels

 

29

%

 

34

%

 

30

%

 

32

%

Jet fuels

 

6

%

 

5

%

 

6

%

 

6

%

Fuel oil

 

1

%

 

2

%

 

1

%

 

3

%

Asphalt

 

4

%

 

3

%

 

3

%

 

3

%

Base oils

 

2

%

 

2

%

 

2

%

 

2

%

LPG and other

 

6

%

 

3

%

 

5

%

 

3

%

Total

 

100

%

 

100

%

 

100

%

 

100

%

(1)

Crude charge represents the barrels per day of crude oil processed at our refineries.

(2)

Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries.

(3)

Represents barrels sold of refined products produced at our refineries (including Asphalt and intersegment sales) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold.

(4)

Represents crude charge divided by total crude capacity (BPSD). Our consolidated crude capacity is 678,000 BPSD.

(5)

Represents average amount per produced barrel sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.

(6)

Represents total Refining segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes of refined products produced at our refineries.

(7)

Represents total Refining segment operating expenses, exclusive of depreciation and amortization, divided by refinery throughput.

(8)

We acquired the Parco and Casper refineries on March 14, 2022. Refining operating data for the six months ended June 30, 2022 includes crude oil and feedstocks processed and refined products sold at our Parco and Casper refineries for the period March 14, 2022 through June 30, 2022 only, averaged over the 181 days in the six months ended June 30, 2022.

Renewables Segment Operating Data

The following table sets forth information about our renewables operations and includes our Sinclair RDU for the period March 14, 2022 (date of acquisition) through June 30, 2023. The renewables gross and net operating margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

2022

 

2023

 

2022

Renewables

 

 

 

 

 

 

 

 

Sales volumes (in thousand gallons)

 

 

50,159

 

 

 

25,688

 

 

 

97,987

 

 

 

30,632

 

Average per produced gallon (1)

 

 

 

 

 

 

 

 

Renewables gross margin

 

$

0.29

 

 

$

0.07

 

 

$

0.51

 

 

$

0.16

 

Renewables operating expense (2)

 

 

0.49

 

 

 

1.14

 

 

 

0.57

 

 

 

1.84

 

Net operating margin

 

$

(0.20

)

 

$

(1.07

)

 

$

(0.06

)

 

$

(1.68

)

(1)

Represents average amount per produced gallons sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.

(2)

Represents total Renewables segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes of renewable diesel produced at our renewable diesel units.

Marketing Segment Operating Data

The following table sets forth information about our marketing operations and includes our Sinclair branded fuel business for the period March 14, 2022 (date of acquisition) through June 30, 2023. The marketing gross margin does not include the non-cash effects of depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023 (1)

 

2022

 

2023 (1)

 

2022

Marketing

 

 

 

 

 

 

 

 

Number of branded sites at period end

 

 

1,520

 

 

 

1,329

 

 

1,520

 

 

 

1,329

Sales volumes (in thousand gallons)

 

 

364,409

 

 

 

335,106

 

 

692,816

 

 

 

420,019

Margin per gallon of sales (1)

 

$

0.09

 

 

$

0.07

 

$

0.07

 

 

$

0.07

(1)

Includes non-Sinclair branded sites from legacy HollyFrontier agreements.

(2)

Represents average amount per gallon sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.

Lubricants and Specialty Products Segment Operating Data

The following table sets forth information about our lubricants and specialty products operations.

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

2022

 

2023

 

2022

Lubricants and Specialty Products

 

 

 

 

 

 

 

 

Sales of produced products (BPD)

 

29,140

 

 

34,000

 

 

30,460

 

 

34,510

 

 

 

 

 

 

 

 

 

 

Sales of produced products:

 

 

 

 

 

 

 

 

Finished products

 

53

%

 

53

%

 

52

%

 

52

%

Base oils

 

26

%

 

27

%

 

27

%

 

29

%

Other

 

21

%

 

20

%

 

21

%

 

19

%

Total

 

100

%

 

100

%

 

100

%

 

100

%

Effective the first quarter of 2023, management views the Lubricants and Specialty Products segment as an integrated business of processing feedstocks into base oils and processing base oils into finished lubricant products along with the packaging, distribution and sales to customers.

Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA excluding special items (“Adjusted EBITDA”) to amounts reported under generally accepted accounting principles (“GAAP”) in financial statements.

Earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, is calculated as net income attributable to HF Sinclair stockholders plus (i) interest expense, net of interest income, (ii) income tax provision and (iii) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA plus or minus (i) lower of cost or market inventory valuation adjustments, (ii) decommissioning costs, (iii) HF Sinclair's pro-rata share of HEP's share of Osage environmental remediation costs and (iv) acquisition integration and regulatory costs.

EBITDA and Adjusted EBITDA are not calculations provided for under accounting principles generally accepted in the United States; however, the amounts included in these calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. These are presented here because they are widely used financial indicators used by investors and analysts to measure performance. EBITDA and Adjusted EBITDA are also used by our management for internal analysis and as a basis for financial covenants.

Set forth below is our calculation of EBITDA and Adjusted EBITDA.

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

(In thousands)

Net income attributable to HF Sinclair stockholders

 

$

507,661

 

 

$

1,221,262

 

 

$

860,927

 

 

$

1,381,236

 

Add interest expense

 

 

46,982

 

 

 

38,961

 

 

 

92,804

 

 

 

73,820

 

Subtract interest income

 

 

(17,591

)

 

 

(1,844

)

 

 

(37,526

)

 

 

(2,841

)

Add income tax expense

 

 

145,925

 

 

 

383,493

 

 

 

245,625

 

 

 

404,822

 

Add depreciation and amortization

 

 

189,360

 

 

 

164,044

 

 

 

363,343

 

 

 

308,645

 

EBITDA

 

$

872,337

 

 

$

1,805,916

 

 

 

1,525,173

 

 

 

2,165,682

 

Add (subtract) lower of cost or market inventory valuation adjustment

 

 

(7,863

)

 

 

34,543

 

 

 

39,734

 

 

 

25,992

 

Add decommissioning costs

 

 

 

 

 

512

 

 

 

 

 

 

1,469

 

Add HF Sinclair's pro-rata share of HEP's share of Osage environmental remediation costs

 

 

165

 

 

 

 

 

 

575

 

 

 

 

Add acquisition integration and regulatory costs

 

 

3,524

 

 

 

12,037

 

 

 

7,434

 

 

 

36,572

 

Adjusted EBITDA

 

$

868,163

 

 

$

1,853,008

 

 

$

1,572,916

 

 

$

2,229,715

 

EBITDA attributable to our Refining segment is presented below:

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

Refining Segment

 

2023

 

2022

 

2023

 

2022

 

 

(In thousands)

Income before interest and income taxes (1)

 

$

589,769

 

$

1,558,120

 

$

1,030,773

 

$

1,671,171

Add depreciation and amortization

 

 

112,877

 

 

102,780

 

 

216,000

 

 

197,461

EBITDA

 

 

702,646

 

 

1,660,900

 

 

1,246,773

 

 

1,868,632

Add lower of cost or market inventory valuation adjustment

 

 

26,842

 

 

 

 

26,842

 

 

Adjusted EBITDA

 

$

729,488

 

$

1,660,900

 

$

1,273,615

 

$

1,868,632

(1)

Income before interest and income taxes of our Refining segment represents income plus (i) interest expense, net of interest income and (ii) income tax provision.

EBITDA and Adjusted EBITDA attributable to our Renewables segment is set forth below:

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

Renewables Segment

 

2023

 

2022

 

2023

 

2022

 

 

(In thousands)

Income (loss) before interest and income taxes (1)

 

$

4,429

 

 

$

(73,202

)

 

$

(60,127

)

 

$

(95,304

)

Add depreciation and amortization

 

 

18,968

 

 

 

10,371

 

 

 

38,942

 

 

 

16,171

 

EBITDA

 

 

23,397

 

 

 

(62,831

)

 

 

(21,185

)

 

 

(79,133

)

Add (subtract) lower of cost or market inventory valuation adjustment

 

 

(34,705

)

 

 

34,543

 

 

 

12,892

 

 

 

25,992

 

Adjusted EBITDA

 

$

(11,308

)

 

$

(28,288

)

 

$

(8,293

)

 

$

(53,141

)

(1)

Income (loss) before interest and income taxes of our Renewables segment represents income (loss) plus (i) interest expense, net of interest income and (ii) income tax provision.

EBITDA attributable to our Marketing segment is set forth below:

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

Marketing Segment

 

2023

 

2022

 

2023

 

2022

 

 

(In thousands)

Income before interest and income taxes (1)

 

$

18,582

 

$

19,502

 

 

19,084

 

 

24,771

Add depreciation and amortization

 

 

6,016

 

 

4,418

 

 

11,887

 

 

4,919

EBITDA

 

$

24,598

 

$

23,920

 

$

30,971

 

$

29,690

(1)

Income before interest and income taxes of our Marketing segment represents income plus (i) interest expense, net of interest income and (ii) income tax provision.

EBITDA attributable to our Lubricants and Specialty Products segment is set forth below.

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

Lubricants and Specialty Products Segment

 

2023

 

2022

 

2023

 

2022

 

 

(In thousands)

Income before interest and income taxes (1)

 

$

51,202

 

$

135,116

 

 

129,742

 

 

259,817

Add depreciation and amortization

 

 

20,544

 

 

20,605

 

 

40,454

 

 

41,199

EBITDA

 

$

71,746

 

$

155,721

 

$

170,196

 

$

301,016

(1)

Income before interest and income taxes of our Lubricants and Specialty Products segment represents income plus (i) interest expense, net of interest income and (ii) income tax provision.

Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis. Refinery gross margin per produced barrel sold is total Refining segment revenues less total Refining segment cost of products sold, exclusive of lower of cost or market inventory valuation adjustments, divided by sales volumes of produced refined products sold. Net operating margin per barrel sold is the difference between refinery gross margin and refinery operating expenses per produced barrel sold. These two margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments or depreciation and amortization. Each of these component performance measures can be reconciled directly to our consolidated statements of income. Other companies in our industry may not calculate these performance measures in the same manner.

Reconciliation of average refining net operating margin per produced barrel sold to refinery gross margin to refining sales and other revenues

 

 

Three Months Ended

June 30,

 

Six Months Ended
June 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

(Dollars in thousands, except per barrel amounts)

Consolidated

 

 

 

 

 

 

 

 

Refining segment sales and other revenues

 

$

7,039,382

 

$

10,288,581

 

$

13,757,997

 

$

16,794,748

Refining segment cost of products sold (exclusive of lower of cost or market inventory adjustment)

 

 

5,829,898

 

 

8,119,285

 

 

11,447,809

 

 

14,028,895

Lower of cost or market inventory adjustment

 

 

26,842

 

 

 

 

26,842

 

 

 

 

 

1,182,642

 

 

2,169,296

 

 

2,283,346

 

 

2,765,853

Add lower of cost or market inventory adjustment

 

 

26,842

 

 

 

 

26,842

 

 

Refinery gross margin

 

$

1,209,484

 

$

2,169,296

 

$

2,310,188

 

$

2,765,853

 

 

 

 

 

 

 

 

 

Refining segment operating expenses

 

$

426,942

 

$

469,304

 

$

944,762

 

$

824,276

 

 

 

 

 

 

 

 

 

Produced barrels sold (BPD)

 

 

598,180

 

 

655,570

 

 

557,300

 

 

589,240

 

 

 

 

 

 

 

 

 

Refinery gross margin per produced barrel sold

 

$

22.22

 

$

36.36

 

$

22.90

 

$

25.93

Less average refinery operating expenses per produced barrel sold

 

 

7.84

 

 

7.87

 

 

9.37

 

 

7.73

Net operating margin per produced barrel sold

 

$

14.38

 

$

28.49

 

$

13.53

 

$

18.20

Reconciliation of renewables operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Renewables gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our renewables performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our renewables performance on a relative and absolute basis. Renewables gross margin per produced gallon sold is total Renewables segment revenues less total Renewables segment cost of products sold, exclusive of lower of cost or market inventory valuation adjustments, divided by sales volumes of produced renewables products sold. Net operating margin per produced gallon sold is the difference between renewables gross margin and renewables operating expenses per produced gallon sold. These two margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments and depreciation and amortization. Each of these component performance measures can be reconciled directly to our consolidated statements of income. Other companies in our industry may not calculate these performance measures in the same manner.

Reconciliation of renewables gross margin and operating expenses to gross margin per produced gallon sold and net operating margin per produced gallon sold

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

(In thousands, except for per gallon amounts)

Renewables segment sales and other revenues

 

$

273,185

 

 

$

194,578

 

 

$

571,201

 

 

$

241,945

 

Renewables segment cost of products sold (exclusive of lower of cost or market inventory adjustment)

 

 

258,806

 

 

 

192,662

 

 

 

521,544

 

 

 

236,933

 

Lower of cost or market inventory adjustment

 

 

(34,705

)

 

 

34,543

 

 

 

12,892

 

 

 

25,992

 

 

 

 

49,084

 

 

 

(32,627

)

 

 

36,765

 

 

 

(20,980

)

Add (subtract) lower of cost or market inventory adjustment

 

 

(34,705

)

 

 

34,543

 

 

 

12,892

 

 

 

25,992

 

Renewables gross margin

 

$

14,379

 

 

$

1,916

 

 

$

49,657

 

 

$

5,012

 

 

 

 

 

 

 

 

 

 

Renewables segment operating expense

 

$

24,373

 

 

$

29,273

 

 

$

55,744

 

 

$

56,369

 

 

 

 

 

 

 

 

 

 

Produced gallons sold (in thousand gallons)

 

 

50,159

 

 

 

25,688

 

 

 

97,987

 

 

 

30,632

 

 

 

 

 

 

 

 

 

 

Renewables gross margin per produced gallon sold

 

$

0.29

 

 

$

0.07

 

 

$

0.51

 

 

$

0.16

 

Less average renewables operating expense per produced gallon sold

 

 

0.49

 

 

 

1.14

 

 

 

0.57

 

 

 

1.84

 

Net operating margin per produced gallon sold

 

$

(0.20

)

 

$

(1.07

)

 

$

(0.06

)

 

$

(1.68

)

Reconciliation of marketing operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Marketing gross margin is a non-GAAP performance measure that is used by our management and others to compare our marketing performance to that of other companies in our industry. We believe this margin measure is helpful to investors in evaluating our marketing performance on a relative and absolute basis. Marketing gross margin per gallon sold is total Marketing segment revenues less total Marketing segment cost of products sold divided by sales volumes of marketing products sold. This margin does not include the non-cash effects of depreciation and amortization. This component performance measure can be reconciled directly to our consolidated statements of income. Other companies in our industry may not calculate these performance measures in the same manner.

Reconciliation of marketing gross margin to gross margin per gallon sold

 

 

Three Months Ended
June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

(In thousands, except for per gallon amounts)

Marketing segment sales and other revenues

 

$

1,040,933

 

$

1,336,302

 

$

1,978,318

 

$

1,613,343

Marketing segment cost of products sold

 

 

1,008,306

 

 

1,311,333

 

 

1,932,355

 

 

1,582,464

Marketing gross margin

 

$

32,627

 

$

24,969

 

$

45,963

 

$

30,879

 

 

 

 

 

 

 

 

 

Sales volumes (in thousand gallons)

 

 

364,409

 

 

335,106

 

 

692,816

 

 

420,019

 

 

 

 

 

 

 

 

 

Marketing segment gross margin per gallon sold

 

$

0.09

 

$

0.07

 

$

0.07

 

$

0.07

Reconciliation of net income attributable to HF Sinclair stockholders to adjusted net income attributable to HF Sinclair stockholders

Adjusted net income attributable to HF Sinclair stockholders is a non-GAAP financial measure that excludes non-cash lower of cost or market inventory valuation adjustments, decommissioning costs, HEP's share of Osage environmental remediation costs and acquisition integration and regulatory costs. We believe this measure is helpful to investors and others in evaluating our financial performance and to compare our results to that of other companies in our industry. Similarly titled performance measures of other companies may not be calculated in the same manner.

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

(In thousands, except per share amounts)

Consolidated

 

 

 

 

 

 

 

 

GAAP:

 

 

 

 

 

 

 

 

Income before income taxes

 

$

680,410

 

 

$

1,636,401

 

$

1,165,115

 

$

1,843,031

Income tax expense

 

 

145,925

 

 

 

383,493

 

 

245,625

 

 

404,822

Net income

 

 

534,485

 

 

 

1,252,908

 

 

919,490

 

 

1,438,209

Less net income attributable to noncontrolling interest

 

 

26,824

 

 

 

31,646

 

 

58,563

 

 

56,973

Net income attributable to HF Sinclair stockholders

 

 

507,661

 

 

 

1,221,262

 

 

860,927

 

 

1,381,236

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments to arrive at adjusted results:

 

 

 

 

 

 

 

 

Lower of cost or market inventory valuation adjustment

 

 

(7,863

)

 

 

34,543

 

 

39,734

 

 

25,992

Decommissioning costs

 

 

 

 

 

512

 

 

 

 

1,469

HEP's share of Osage environmental remediation costs

 

 

350

 

 

 

 

 

1,220

 

 

Acquisition integration and regulatory costs

 

 

3,524

 

 

 

12,451

 

 

7,434

 

 

37,482

Total adjustments to income before income taxes

 

 

(3,989

)

 

 

47,506

 

 

48,388

 

 

64,943

Adjustment to income tax expense (1)

 

 

(302

)

 

 

9,832

 

 

10,794

 

 

11,107

Adjustment to net income attributable to noncontrolling interest

 

 

185

 

 

 

414

 

 

645

 

 

910

Total adjustments, net of tax

 

 

(3,872

)

 

 

37,260

 

 

36,949

 

 

52,926

 

 

 

 

 

 

 

 

 

Adjusted results - Non-GAAP:

 

 

 

 

 

 

 

 

Adjusted income before income taxes

 

 

676,421

 

 

 

1,683,907

 

 

1,213,503

 

 

1,907,974

Adjusted income tax expense (2)

 

 

145,623

 

 

 

393,325

 

 

256,419

 

 

415,929

Adjusted net income

 

 

530,798

 

 

 

1,290,582

 

 

957,084

 

 

1,492,045

Less net income attributable to noncontrolling interest

 

 

27,009

 

 

 

32,060

 

 

59,208

 

 

57,883

Adjusted net income attributable to HF Sinclair stockholders

 

$

503,789

 

 

$

1,258,522

 

$

897,876

 

$

1,434,162

Adjusted earnings per share - diluted (3)

 

$

2.60

 

 

$

5.59

 

$

4.59

 

$

7.12

(1)

Represents adjustment to GAAP income tax expense to arrive at adjusted income tax expense, which is computed as follows:

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

(In thousands)

Non-GAAP income tax expense (2)

 

$

145,623

 

 

$

393,325

 

$

256,419

 

$

415,929

Add GAAP income tax expense

 

 

145,925

 

 

 

383,493

 

 

245,625

 

 

404,822

Non-GAAP adjustment to income tax expense

 

$

(302

)

 

$

9,832

 

$

10,794

 

$

11,107

(2)

Non-GAAP income tax expense is computed by (a) adjusting HF Sinclair’s consolidated estimated Annual Effective Tax Rate (“AETR”) for GAAP purposes for the effects of the above Non-GAAP adjustments, (b) applying the resulting Adjusted Non-GAAP AETR to Non-GAAP adjusted income before income taxes and (c) adjusting for discrete tax items applicable to the period.

 

 

(3)

Adjusted earnings per share - diluted is calculated as adjusted net income attributable to HF Sinclair stockholders divided by the average number of shares of common stock outstanding assuming dilution, which is based on weighted-average diluted shares outstanding as that used in the GAAP diluted earnings per share calculation. Income allocated to participating securities, if applicable, in the adjusted earnings per share calculation is calculated the same way as that used in GAAP diluted earnings per share calculation.

Reconciliation of effective tax rate to adjusted effective tax rate

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

(Dollars in thousands)

GAAP:

 

 

 

 

 

 

 

 

Income before income taxes

 

$

680,410

 

 

$

1,636,401

 

 

$

1,165,115

 

 

$

1,843,031

 

Income tax expense

 

$

145,925

 

 

$

383,493

 

 

$

245,625

 

 

$

404,822

 

Effective tax rate for GAAP financial statements

 

 

21.4

%

 

 

23.4

%

 

 

21.1

%

 

 

22.0

%

Adjusted - Non-GAAP:

 

 

 

 

 

 

 

 

Effect of Non-GAAP adjustments

 

 

0.1

%

 

 

%

 

 

%

 

 

(0.2

)%

Effective tax rate for adjusted results

 

 

21.5

%

 

 

23.4

%

 

 

21.1

%

 

 

21.8

%

 

Contacts

Atanas H. Atanasov, Executive Vice President and Chief Financial Officer
Craig Biery, Vice President, Investor Relations
HF Sinclair Corporation
214-954-6510

Contacts

Atanas H. Atanasov, Executive Vice President and Chief Financial Officer
Craig Biery, Vice President, Investor Relations
HF Sinclair Corporation
214-954-6510