Q1 2025 HF Sinclair Corp Earnings Call

May 1, 2025

Officer of HFC and Claire.

He is joined by a tenant or tenants the chief financial Officer.

Steve Ledbetter: Steve Ledbetter EVP of commercial Valerie bumper SVP of operations, and Matt Joyce SVP of lubricants and specialties.

Speaker Change: At this time, all participants have been placed in a listen only mode and the floor will be opened for your questions. Following the presentation.

Speaker Change: If you would like to ask a question at this time. Please press star one on your Touchtone phone.

Speaker Change: If at any point. Your question has been answered you may remove yourself from the queue by pressing the pound key.

Speaker Change: If you should require operator assistance, please press star zero.

Speaker Change: We ask that you please limit yourself to one question and one follow up.

Speaker Change: Additionally, we ask that you pick up your handset to allow optimal sound quality.

Speaker Change: Please note that this conference is being recorded.

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

Craig Biery: Thank you Kate good morning, everyone and welcome to HFF Sinclair Corporation's first quarter 2025 earnings call. This morning, we issued a press release announcing results for the quarter ending March 31 2025.

Craig Biery: If you would like a copy of the earnings press release, you may find it on our website at Hff's Sinclair Dot com.

Craig Biery: Before we proceed with remarks. Please note the safe Harbor disclosure statement in today's press release.

Craig Biery: In summary, it says statements made regarding management expectations judgments or predictions are forward looking statements.

Craig Biery: These statements are intended to be covered under the safe Harbor provisions of federal security laws. There are many factors that could cause results to differ from expectations, including those noted in our SEC filings.

Craig Biery: The call also May include discussion of non-GAAP measures. Please see the earnings press release for reconciliations to GAAP financial measures also please note any time sensitive information provided on today's call.

Tim: May no longer be accurate at the time of any webcast replay or rereading of the transcript and with that I'll turn the call over to Tim.

Tim Go: today is Tim Go, Chief Executive Officer of HF Sinclair. He is joined by Atanas Atanasov, Chief Financial Officer, Steve Ledbetter, AVP of Commercial, Valerie Pompa, AVP of Operations, and Matt Joyce, SVP of Lubricants and Special Care.

Tim: Good morning, everyone for.

At least you may find it on our website at H F Sinclair Dot com.

Tim: For the first quarter, we delivered strong results in our marketing midstream and lubricants and specialties businesses.

Before we proceed with remarks. Please note that safe Harbor disclosure statement in today's press release and.

Tim: So encouraging sequential improvement in refining.

In summary, it says statements made regarding management expectations judgments or predictions are forward looking statements.

Tim: I am proud of our employees and their ability to navigate the extreme volatility and uncertainty around tariffs.

Operator: At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at this time, please press star 1 on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound If you should require operator assistance, please press star zero. We ask that you please limit yourself to one question and one follow-up. Additionally, we ask that you pick up your handset to allow optimal sound quality.

These statements are intended to be covered under the safe Harbor provisions of federal security laws. There are many factors that could cause results to differ from expectations, including those noted in our SEC filings.

Tim: Research tax credits and other market headwinds.

Tim: We remain focused on the things in our control such as commercial and operational excellence turnaround execution and capital discipline.

The call also May include discussion of non-GAAP measures. Please see the earnings press release for reconciliations to GAAP financial measures also please note any time sensitive information provided on today's call.

Tim: Now, let me cover our segment highlights.

Tim: And refining for the first quarter, we delivered sequential quarter improvements and capture and operating expenses, despite a tough economic environment across the period.

Tim: May no longer be accurate at the time of any webcast replay or rereading of the transcript and with that I'll turn the call over to Tim.

Tim: We began our planned turnaround work at our Tulsa turnaround at our Tulsa refinery, which was completed on schedule and on budget and is now operating at planned rates.

Tim: Good morning, everyone for.

Tim: For the first quarter, we delivered strong results in our marketing midstream and lubricants and specialties businesses.

Operator: Please note that this conference is being recorded.

Craig Biery: It is now my pleasure to turn the floor over to Craig Biery, Vice President, Investor Relations. Craig, you may begin. Thank you, Kate. Good morning, everyone.

Tim: In renewables for the first quarter.

Tim: So encouraging sequential improvement in refining.

Tim: We focused on lowering total operating expenses and optimizing low Ci feedstocks to help mitigate the economic impacts surrounding the uncertainty of the producers tax credit.

Tim: I am proud of our employees and their ability to navigate the extreme volatility and uncertainty around tariffs producer's tax credits and other market headwinds.

Craig Biery: And welcome to HF Sinclair Corporation's first quarter 2025 earnings call. This morning, we issued a press release announcing results for the quarter ending March 31, 2025. If you would like a copy of the earnings press release, you may find it on our website at hfsinclair.com.

Tim: At this time, we have not taken any credit for PTC and our financials.

Tim: We remain focused on the things in our control such as commercial and operational excellence turnaround execution and capital discipline.

Tim: We estimate that we would have been close to breakeven EBITDA for the quarter with the inclusion of PTC.

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

Tim: Now, let me cover our segment highlights.

Tim: Our marketing segment delivered a record quarter of $27 million in EBITDA and achieved our highest quarterly adjusted gross margin of 12 per gallon.

Tim: In refining for the first quarter, we delivered sequential quarter improvements and capture and operating expenses.

Tim: We also grew our branded supply stores by a net of 37 sites.

Tim: By the tough economic environment across the period.

Tim: We began our planned turnaround work at our Tulsa turnaround at our Tulsa refinery, which was completed on schedule and on budget and is now operating at planned rates.

Tim: Have a backlog of over 170 additional supplied branded sites signed and targeted to bring online by year end.

Craig Biery: The call also may include discussion of non-GAAP measures. Please see the earnings press release for reconciliations to GAAP financial measures.

Tim: In renewables for the first quarter, we focused on lowering total operating expenses and optimizing low Ci feedstocks to help mitigate the economic impacts surrounding the uncertainty of the producers tax credit.

Tim: In lubricants and specialties, we reported another strong quarter of $85 million and EBITDA supported by our product mix optimization efforts focused on sales of high margin specialty and finished products.

Craig Biery: Also, please note any time-sensitive information provided on today's call may no longer be accurate at the time of any webcast replay or rereading of the transcript.

Tim: At this time, we have not taken any credit for PTC and our financials.

Tim: We're in the process of completing the planned turnaround work at our Mississauga facility and expect to be back to planned operations within the week.

Tim Go: And with that, I'll turn the call over to Tim. Good morning, everyone. For the first quarter, we delivered strong results in our marketing, midstream and lubricants and specialties business. and saw encouraging sequential improvement in refining. I am proud of our employees and their ability to navigate the extreme volatility and uncertainty around tariffs, producers' tax credits, and other market hazards. We remain focused on the things in our control, such as commercial and operational.

Tim: We estimate that we would have been close to breakeven EBITDA for the quarter with the inclusion of PTC.

Tim: In our midstream business, we delivered a record quarter generating $119 million and adjusted EBITDA as we benefited from higher pipeline revenues in the period.

Tim: Our marketing segment delivered a record quarter of $27 million in EBITDA.

Tim: <unk>, our highest quarterly adjusted gross margin of 12 <unk> per gallon.

Tim: Today, we announced our board of directors declared a regular quarterly dividend of <unk> 50 per share payable on June 32025 to holders of record on May 15th 2025.

Tim: We also grew our branded supply stores by a net of 37 sites and have a backlog of over 170 additional supplied branded sites.

Tim: Find and targeted.

Tim: Online by year end.

Tim Go: turnaround execution, and capital Now let me cover our segment highlight. In refining for the first quarter, we delivered sequential quarter improvements in capture and operating expenses. Despite a tough economic environment across the period. We began the plan turnaround work at our Tulsa refinery, which was completed on schedule and on budget, and is now operating at plan. In Renewables, for the first quarter, we focused on lowering total operating expenses and optimizing low CI feedstocks to help mitigate the economic impacts surrounding the uncertain For more information visit www.FEMA.gov Producers Tax Credit. At this time, we have not taken any credit for PTC in our financials.

Tim: Looking forward, we are encouraged by the recent strength in refining margins as we head into the summer driving season and are focused on the execution of our strategic priorities to capture value across all of our business segments.

Tim: With that let me turn the call over that.

Tim: We are in the process of completing the planned turnaround work at our Mississauga facility and expect to be back to planned operations within the week.

Tim: Thank you Tim and good morning, everyone, let's begin by reviewing Hff's employers financial highlights.

Tim: In our midstream business, we delivered a record quarter generating $119 million and adjusted EBITDA as we benefited from higher pipeline revenues in the period.

Tim: Today, we reported first quarter net loss attributable to HFC Sinclair shareholders of $4 million or negative <unk> <unk> per diluted share.

Tim: These results reflect special items that collectively decreased net loss by $46 million.

Tim: Today, we announced our board of directors declared a regular quarterly dividend of <unk> 15 per share payable on June 32025 to holders of record on May 15th 2025.

Tim: Excluding these items adjusted net loss for the first quarter was $50 million or negative <unk> 27 per diluted share compared to adjusted net income of $142 million or <unk> 71 per diluted share for the same period in 2024.

Tim Go: We estimate that we would have been close to break even even for the quarter with the inclusion of Our marketing segment delivered a record quarter of $27 million in EBITDA and achieved our highest quarterly adjusted gross margin of $0.12 per year. We also grew our branded supplied stores by a net of 37 sites. and have a backlog of over 170 additional supplied branded sites signed and targeted to bring online by year end. In lubricants and specialties, we reported another strong quarter of $85 million in EBITDA. Supported by our product mix optimization efforts focused on sales of high-margin specialty and finished products.

Tim: Adjusted EBITDA for the first quarter was 201 billion compared to $399 million in the first quarter of 2024.

Tim: In our refining segment first quarter, adjusted EBITDA was negative $8 million compared to $209 million in the first quarter of 2024.

Ed: With that let me turn the call over to Ed.

Thank you Tim and good morning, everyone, let's begin by reviewing Hff's employers financial highlights.

Tim: This decrease was principally driven by lower adjusted refinery gross margins in both the west and mid con regions and lower refined product sales volumes.

Ed: Today, we reported first quarter net loss attributable to HFC Sinclair shareholders of $4 million or negative <unk> <unk> per diluted share.

Tim: Although our charge averaged 606000 barrels per day for the first quarter compared to 605000 barrels per day for the first quarter of 2024.

Ed: These results reflect special items that collectively decreased net loss by $46 million.

Ed: Excluding these items adjusted net loss for the first quarter was $50 million or negative <unk> 27 per diluted share compared to adjusted net income of $142 million or <unk> 71.

Tim Go: We are in the process of completing the planned turnaround work at our Mississauga facility and expect to be back to planned operations within a week. In our midstream business, we delivered a record quarter, generating $119 million in adjusted EBITDA, as we benefited from higher pipeline revenues in the period.

Tim: In our renewables segment, we reported adjusted EBITDA of negative $17 million for the first quarter compared to negative $18 million for the first quarter of 2024.

Ed: <unk> share for the same period in 2024.

Tim: Our first quarter of 2025 results were impacted by lower sales volumes and the absence of benefits from the producers tax credit.

Ed: Adjusted EBITDA for the first quarter was $201 million compared to $399 million in the first quarter of 2024.

Tim: Total sales volumes were 44 million gallons for the first quarter of 2025 compared to <unk> 61 billion gallons for the first quarter of 2024.

Ed: In our refining segment first quarter, adjusted EBITDA was negative $8 million compared to $209 million in the first quarter of 2024.

Tim Go: Today, we announced our Board of Directors declared a regular quarterly dividend of 50 cents per share payable on June 3rd, 2025 to holders of record on May 15th, 2025. Looking forward, we are encouraged by the recent strength of refining margins, as we head into the summer driving season, and are focused on the execution of our strategic priorities to capture value across all of our business segments.

Tim: Our marketing segment reported EBITDA of $27 million for the first quarter compared to $15 million for the first quarter of 2024.

Ed: This decrease was principally driven by lower adjusted refinery gross margins in both the west and mid con regions and lower refined product sales volumes.

Tim: This increase was primarily driven by improved execution of our business and high grading the portfolio in the first quarter of 2025.

Ed: Although our charge averaged 606000 barrels per day for the first quarter compared to 605000 barrels per day for the first quarter of 2024.

Tim: Our lubricants and specialty segment reported EBITDA of $85 million for the first quarter compared to EBITDA of 87 million for the first quarter of 2024.

Ed: With that, let me turn the call over to Ed. Thank you, Tim. And good morning, everyone.

Ed: In our renewables segment, we reported adjusted EBITDA of negative $17 million for the first quarter compared to negative $18 million for the first quarter of 2024.

Atanas Atanasov: Let's begin by reviewing HF Sinclair's financial highlights. Today we reported first quarter net loss attributable to HF Sinclair shareholders of $4 million or negative two cents per diluted share. These results reflect special items that collectively decrease net loss by 46 million. Excluding these items, adjusted net loss for the first quarter was $50 million, or negative $0.27 for diluted share, compared to adjusted net income of $142 million, or $0.71 for diluted share for the same period in 2024. Adjusted EBITDA for the first quarter was $201 million compared to $399 million in the first quarter of 2024.

Tim: Our midstream segment reported adjusted EBITDA of $119 million in the first quarter compared to $110 million in the first quarter of last year.

Ed: Our first quarter 2025 results were impacted by lower sales volumes and the absence of benefits from the producer tax credit.

Tim: This increase was primarily driven by higher pipeline revenues in the first quarter of 2025.

Ed: Total sales volumes were 44 million gallons for the first quarter of 2025 compared to <unk> 61 billion gallons for the first quarter of 2024.

Tim: Net cash used for operations totaled $89 million in the first quarter, which included $105 million.

Ed: Our marketing segment reported EBITDA of $27 million for the first quarter compared to $15 million for the first quarter of 2024.

Tim: A turnaround spend.

Tim: Sinclair capital expenditures totaled $86 million for the first quarter of 2025.

Ed: This increase was primarily driven by improved execution of our business and high grading the portfolio in the first quarter of 2025.

Tim: As of March 31, 2025, HFC <unk> cash balance was $547 million.

Tim: As of March 31, we have $2 7 billion of debt outstanding with a debt to cap ratio of 23% and net debt to cap ratio of 18%.

Ed: Our lubricants and specialty segment reported EBITDA of $85 million for the first quarter compared to EBITDA of 87 million for the first quarter of 2024.

Atanas Atanasov: In our refining segment, first quarter adjusted EBITDA was negative $8 million compared to $209 million in the first quarter of 2024. This decrease was principally driven by lower adjusted refinery gross margins in both the West and Midcon region. and Lower Refined Products Sales Vol. Rudolph charged average 606,000 barrels per day for the first quarter compared to 605,000 barrels per day for the first quarter of 2024. In our renewable segment, we reported adjusted EBITDA of negative $17 million for the first quarter compared to negative $18 million for the first quarter of 2024. The first quarter 2025 results were impacted by lower sales volumes and the absence of benefits from the producer's tax credit.

Tim: During the quarter, we executed a successful refinancing transaction.

Ed: Our midstream segment reported adjusted EBITDA of $119 million in the first quarter compared to $110 million in the first quarter of last year.

Tim: Sinclair issued an aggregate principal amount of $1 4 billion of senior notes consisting of $650 million of 575% senior notes due 2031 and $750 million of six and a quarter senior notes due 2035.

Ed: This increase was primarily driven by higher pipeline revenues in the first quarter of 2025.

Ed: Net cash used for operations totaled 89 million in the first quarter, which included the $105 million.

Tim: We used net proceeds from the notes to repay all $350 million in outstanding borrowings under the credit facility and to fund approximately $850 million in tenders and redemptions of our 2026 senior notes and $150 million in tenders of our 2020.

Ed: A turnaround spend.

Ed: Sinclair is capital expenditures totaled 86 million for the first quarter of 2025.

Ed: As of March 31, 2025, HFC and <unk> cash balance was $547 million.

Ed: As of March 31, we have $2 7 billion of debt outstanding with a debt to cap ratio of 23% and net debt to cap ratio of 18%.

Tim: Our 2027 senior notes.

Atanas Atanasov: Total sales volumes were 44 million gallons for the first quarter of 2025 compared to 61 million gallons for the first quarter of 2024. Our marketing segment reported EBITDA of $27 million for the first quarter compared to $15 million for the first quarter of 2024. This increase was primarily driven by improved execution of our business and high grading the portfolio in the first quarter of 2025. Our Lubricants and Specialties segment reported EBITDA of $85 million for the first quarter compared to EBITDA of $87 million for the first quarter of 2024. Our midstream segment reported adjusted EBITDA of $119 million in the first quarter compared to $110 million in the first quarter of last year.

Tim: This extended our debt maturity profile, while lowering our weighted average interest expense.

Ed: During the quarter, we executed a successful refinancing transaction.

Tim: On April 32025, we entered into a new $2 billion Hff's Sinclair credit facility and terminate the existing HFC and AGP credit facilities.

Ed: Sinclair issued an aggregate principal amount of $1 4 billion of senior notes consisting of $650 million of 575% senior notes due 2031 and $750 million of six and a quarter senior notes due 2035.

Tim: As of April 32025, our new five year credit facility was undrawn.

Tim: Let's go through some guidance items.

Tim: With respect to capital spending for full year 2025, we still expect to spend approximately $775 million in sustaining capital, including turnarounds and catalysts.

Ed: We used net proceeds from the notes to repay all $350 million in outstanding borrowings under the credit facility and approximately $850 million in tenders and redemptions of our 2026 senior notes and $150 million and tenders of our 2020.

Tim: This is down $25 million from 2024 and includes a non.

Atanas Atanasov: This increase was primarily driven by higher pipeline revenues in the first quarter of 2025. Net cash used for operations totaled $89 million in the first quarter, which included $105 million. turnaround spent. HF Sinclair's capital expenditure totaled $86 million for the first quarter of 2025. As of March 31, 2025, HF Sinclair's cash balance was $547 million. As of March 31st, we have $2.7 billion of debt outstanding with a debt-to-cap ratio of 23% and net debt-to-cap ratio of 18%. During the quarter, we executed a successful refinancing transaction. HF Sinclair issued an aggregate principal amount of $1.4 billion of senior notes consisting of $650 million of 5.75% senior notes due 2031 and $750 million of six and a quarter senior notes due 2035.

Tim: Non refining lubricants and specialties turnarounds in the first quarter of 2025 in the first half of 2025. In addition, we expect to spend $100 million and growth capital investments across our business segments.

Ed: Our 2027 senior notes.

Ed: This extended our debt maturity profile, while lowering our weighted average interest expense.

Ed: On April 3rd 2025, we entered into a new $2 billion Hff's Sinclair credit facility and terminated the existing HFC and AGP credit facilities.

Tim: For the second quarter of 2025, we expect to run between 600 and 630000 barrels per day of crude oil in our refining segment, which reflects the ongoing planned turnaround at our Tulsa refinery and the planned turnaround at our park refinery during the period.

Ed: As of April 32025, our new five year credit facility was undrawn.

Ed: Let's go through some guidance items.

Tim: We're now ready to take some questions from the audience and I'll turn it over to the operator.

Ed: With respect to capital spending for full year 2025, we still expect to spend approximately $775 million in sustaining capital, including turnaround and catalyst.

Tim: The floor is now open for questions. At this time, if you have questions or comments. Please press star one on your cash flow.

Ed: This is down $25 million from 2024 and includes a non.

Tim: Ask that you. Please limit to one question and one follow up if you had additional questions. We welcome you to rejoin the queue.

Ed: Non refining lubricants specialties turnarounds in the first quarter of 2025 in the first half of 2025. In addition, we expect to spend $100 million and growth capital investments across our business segments.

Tim: Andy.

Speaker Change: If at any point. Your question has been answered you may remove yourself from the queue by pressing the pound key.

Atanas Atanasov: We use net proceeds from the notes to repay all $350 million in outstanding borrowings under the HEP Credit Facility and to fund approximately $850 million in tenders and redemptions of our 2026 senior notes and $150 million in tenders of our 2027 senior notes. This extended our debt maturity profile while lowering our weighted average interest expense. On April 3, 2025, we entered into a new $2 billion HF Sinclair credit facility and terminated the existing HF Sinclair and HEP credit facility. of April 30, 2025, our new five-year credit facility was undrawn. Let's go through some guidance items. With respect to capital spending for full year 2025, we still expect to spend approximately $775 million in sustaining capital, including turnaround and capital.

Ed: For the second quarter of 2025, we expect to run between 600 and 630000 barrels per day of crude oil in our refining segment, which reflects the ongoing plant turnaround at our Tulsa refinery and the planned turnaround at our park refinery during the period.

Speaker Change: Thank you. Our first question is coming from Manav Gupta with UBS. Please go ahead.

Manav Gupta: Good morning, guys. So they are strong results considering the macro can you just wanted to start on the midstream side I think you moved some assets from the midstream ATB into refining and yet what we are seeing is like.

Ed: We're now ready to take some questions from the audience and I'll turn it over to the operator.

Ed: Oh the.

Manav Gupta: Probably one of the strongest midstream quarters that can have below what close to almost $120 million in EBITDA. So help us understand what's driving the growth in the midstream business and your outlook for continued to grow this business as we move ahead.

Ed: Florida is now open for questions. At this time, if you have questions or comments. Please press star one on your cash flow.

Ed: Ask that you. Please limit to one question and one follow up if you had additional questions. We welcome you to rejoin the queue.

Steve Ledbetter: Hey, Manav this is Steve.

Ed: Yes.

Manav Gupta: We're very excited about the midstream business and we think that it's really not fully optimized yet what drove the performance in Q1 was predominantly increased focus on our products and crude pipelines.

Ed: If at any point. Your question has been answered you may progression yourself from the queue by pressing the pound key.

Speaker Change: Thank you. Our first question is coming from Manav Gupta with UBS. Please go ahead.

Manav Gupta: And the revenue generation from our tariff situation. There. We believe that this is both an opportunity to grow the integrated value as well as a third party situations. So it's a focus area and helps us what we like to say.

Ed: Good morning, guys have very strong results considering the macro.

Atanas Atanasov: This is down $25 million from 2024 and includes a non- Non-refining lubricants and specialties turnaround in the first quarter of 2025, in the first half of 2025. In addition, we expect to spend $100 million in growth capital investments across our business segment. On the second quarter of 2025, we expect to run between 600 and 630,000 barrels per day of crude oil in our refining segment, which reflects the ongoing plant turnaround at our Tulsa refinery and the plant turnaround at our Parco refinery during the period.

Manav Gupta: Just wanted to start on the midstream side I think you moved some assets from the midstream ATB into refining and yet what we are seeing is like the property one of the strongest midstream quarters that could have been or close to almost $120 million in EBITDA. So help us understand what's driving the growth in the mid.

Manav Gupta: Unlike the integrated value chain between refining midstream and marketing and moving forward.

Kevin: Yeah. This is Kevin.

Speaker Change: I would just chime in and say we've said all along that we believed that bringing in the HCP business completely into our portfolio was the right thing to do it's going to break down.

Manav Gupta: Dream business and your outlook for continued to grow this business as we move ahead.

Manav Gupta: Hey, Manav. This is Steve we're very excited about the midstream business and we think that it's really not fully optimized yet what drove the performance in Q1 was predominantly increased focus on our products and crude pipelines and the revenue generated from our tariff situation there.

Speaker Change: Some some internal.

Speaker Change: Hurdles and it allow us to optimize the business and as Steve and his team are doing there.

Operator: We're now ready to take some questions from the audience, and I'll turn it over to the operator. The floor is now open for questions. At this time, if you have questions or comments, please press star 1 on your touchtone phone.

Speaker Change: Finding those opportunities and that's showing up in the bottom line.

Speaker Change: Okay.

Speaker Change: Perfect. My quick follow up it is newbs also very resilient.

Speaker Change: Help us understand the volatility in this business looks like it's the earnings a lot more stable than the refining so in the near term given what we're seeing in the macro your confidence level of earnings in your lubes business and again.

Manav Gupta: We believe that this is both an opportunity to grow with the integrated value as well as a third party situations. So it's a focus area and helps us what we like to say.

Operator: We ask that you please limit to one question and one follow-up. If you had additional questions, we welcome you to rejoin the queue. If at any... If at any point your question has been answered, you may remove yourself from the queue by pressing the pound Thank you.

Manav Gupta: Unlocked the integrated value chain between refining midstream and marketing and moving forward.

Kevin: Yes. This is Kevin.

Speaker Change: I think you had identified and said we're looking to grow. This business also so if you could help us understand that answer.

Speaker Change: I would just chime in and say, we said all along that we believed that bring with them. The HCP business completely into our portfolio was the right thing to do it was kind of a breakdown.

Manav Gupta: Our first question is coming from Manav Gupta with UBS. Please go ahead. Good morning, guys. A very strong result considering the macro. I actually just wanted to start on the midstream side. I think you moved some assets from the midstream HEP into refining, and yet what we are seeing is like probably one of the strongest midstream quarters that you have delivered, close to almost 120 million in EBITDA.

Sherman: Sherman of its Matt choice here.

Speaker Change: Manav, we've talked about it on the past several earnings calls we continue to execute our strategy really well, we're doubling down on our growth in the U S.

Speaker Change: Some some internal.

Speaker Change: Hurdles and allow us to optimize the business as Steve and his team are doing there.

Speaker Change: We have selected and uses that we believe have higher growth rates businesses that tend to depend on us and where we have great solutions that can win.

Speaker Change: Many of those opportunities and thats showing up in our bottom line.

Speaker Change: Okay.

Speaker Change: My quick follow up it is new also very resilient.

We're outperforming the markets in mining grade lubricants thermal management pharmaceutical and personal care just to kind of give you a sense of those high value markets. Those have the ability to weather a lot of these storms and to be continuous and consistent performing markets and we will go through those to be steady.

Steve Ledbetter: So help us understand what's driving the growth in the midstream business and your outlook for continue to grow this business as we move ahead.

Help us understand the volatility in this business looks like its earnings a lot more stable than the refining so in the near term given what we're seeing in the macro your confidence level of earnings in India business and again.

Tim Go: Hey Manav, this is Steve. We're very excited about the midstream business and we think that it's really not fully optimized yet. What drove the performance in Q1 was predominantly increased focus on our products and crude pipelines and the revenue generation from our tariff situation there. We believe that this is both an opportunity to grow the integrated value as well as a third-party situation. So it's a focus area and helps us, what we like to say, unlock the integrated value chain between refining midstream and marketing moving forward.

Speaker Change: I think you had identified and said we're looking to grow. This business also so if you could help us understand that also.

Speaker Change: On the loop side.

Speaker Change: We also enjoyed a really good mix of products. This past quarter, we had a little bit lower base oil sales. So you saw that forward integration strategy that we've talked about getting more of our base oil is placed and finished in specialty applications youre seeing that pay dividends here in these results.

Speaker Change: Sherman of its Matt choice here.

Speaker Change: Manav, we've talked about it on the past several earnings calls we continue to execute our strategy really well.

Speaker Change: Doubling down on our growth in the U S.

Speaker Change: We have selected and uses that we believe have higher growth rates businesses that tend to depend on us and where we have great solutions that can win.

Manav Gupta: Yeah as far as Manav. Your second question around bolt on opportunities I mean, what we're looking for obviously, what Matt has talked about is a primary focus on organic growth, but clearly there are some opportunities that are out there.

Tim Go: Yeah, this is Tim, I would just chime in and say, you know, we've said all along that we believed that bringing in the HEP business completely into our portfolio was the right thing to do, it was going to break down, you know, some some internal hurdles and allow us to optimize the business. And as Steve and his team are doing, they're, they're finding those opportunities. And that's showing up in the bottom line. Perfect.

Speaker Change: We're we're outperforming the markets in mining grade lubricants thermal management pharmaceutical and personal care just to kind of give you a sense of those high value markets. Those have the ability to weather a lot of these storms and to be continuous and consistent performing markets and we will go through those to be a steady performer.

Manav Gupta: That would allow us to continue or accelerate that growth strategy.

Manav Gupta: Nothing nothing large, but that's small that would fit nicely within our portfolio and we're continuing to look at those there is obviously nothing to talk about today.

Speaker Change: Loeb side.

Speaker Change: We also enjoyed a really good mix of products this past quarter.

Speaker Change: Thank you Sir.

Manav Gupta: My quick follow up is Lube is also very resilient.

Speaker Change: Your next question comes from the line of Ryan Todd with Piper Sandler. Please go ahead.

Speaker Change: We had a little bit lower base oil sales. So you saw that forward integration strategy that we've talked about getting more of our base oils placed and finished in specialty applications youre seeing that pay dividends here in these results.

Matt Joyce: Help us understand the volatility in this business. Looks like its earnings are a lot more stable than the refining. So in the near term, given what we're seeing in the macro, your confidence level of earnings in your Lube business. And again, I think you had identified and said, you know, we're looking to grow this business also. So if you could help us understand that also.

Ryan Todd: Great. Thanks.

Speaker Change: Maybe on the refining side can you talk about what you're seeing in terms of demand across your markets.

Speaker Change: Sales were down across your network I think year on year I'm just curious the battery.

Manav Gupta: Yes, as far as Manav. Your second question around bolt on opportunities I mean, what we're looking for obviously, what Matt has talked about is a primary focus on organic growth, but clearly there are some opportunities that are out there.

<unk> of demand or something else and maybe more broadly what are you seeing across your markets.

Steve Ledbetter: Yes, Brian This is Steve just across our markets, we're seeing demand relatively flat, we like to say for gas and distillate. What we saw in the first quarter was was positive the impact on our sales was mainly driven by turnaround aspects. The distillate demand being up we think has generated predominantly by a colder winter in <unk>.

Matt Joyce: Sure, Manav. Hey, it's Matt Joyce here. You know, Manav, we've talked about it on the past several earnings calls. We continue to execute our strategy really well. We're doubling down on our growth in the US. We have selected end uses that we believe have higher growth rates, businesses that tend to depend on us, and where we have great solutions that can win. You pharmaceutical and personal care, just to kind of give you a sense of those high value markets. Those have the ability to weather a lot of these storms and to be continuous and consistent performing markets, and we'll go through those to be a steady performance on the loop side.

Speaker Change: That would allow us to continue or accelerate and growth strategy.

Speaker Change: Nothing nothing large, but a small that would fit nicely within our portfolio and we're continuing to look those there's obviously nothing to talk about.

Steve Ledbetter: One as well as reduced R&D and BD product associated with the new 45 Z regulation that drove about 100000 barrels a day off the market, which was supplemented by petroleum demand. So we're pretty pretty excited about the demand patterns and what we're seeing and how it's showing up in the cracks moving into the driving season.

Speaker Change: Thank you Sir.

Speaker Change: Yeah.

Speaker Change: Your next question comes from the line of Ryan Todd with Piper Sandler. Please go ahead.

Ryan Todd: Great. Thanks.

Speaker Change: Maybe on the refining side.

Speaker Change: Can you talk about what you're seeing in terms of demand across your markets.

Speaker Change: <unk> product sales were down across your network I think year on year I'm just curious the battery.

Steve Ledbetter: Particularly across our regions.

Speaker Change: Selection of demand or something else and maybe more broadly what are you seeing across your markets.

Steve Ledbetter: Great. Thank you and then.

Steve Ledbetter: Maybe on the renewable diesel side.

Matt Joyce: We also enjoyed a really good mix of products this past quarter. We had a little bit lower base oil sales. So you saw that forward integration strategy that we've talked about, getting more of our base oils placed and finished in specialty applications. You're seeing that pay dividends here in these results.

Steve Ledbetter: Can you walk through I know I know first quarter was a very noisy quarter with the kind of a shift in regulatory regime can you walk through the impacts of how that impacted your business.

Speaker Change: Yes, Brian This is Steve just across our markets, we're seeing demand relatively.

Speaker Change: We like to say for gas and distillate, what we saw in the first quarter was was positive the impact on our sales was mainly driven by turnaround aspects. The distillate demand being up we think has generated predominantly by a colder winter in pad, one as well as reduced R&D and BD product.

Steve Ledbetter: How are you managing feedstock optimization.

Steve Ledbetter: Whether you were able to book any credits during during the first quarter and if you think you'll be able to book.

Tim Go: Yeah, as far as Manav, your second question around bolt on opportunities. I mean, what we're looking for, obviously, what Matt has talked about is our primary focus on organic growth. But clearly, there are some opportunities that are out there that would allow us to continue or accelerate that growth strategy. Nothing, nothing large, but small that would fit nicely within our portfolio. And we're continuing to look at those there's obviously nothing to talk about today.

Steve Ledbetter: During the second quarter or maybe any any possible tailwind as we as we look forward here.

Speaker Change: <unk> with the new 45 Z regulation that drove about 100000 barrels a day off the market, which was supplemented by petroleum demand. So we're pretty pretty excited about the demand patterns and what we're seeing and how it's showing up in X moving into the driving season, and particularly across our regions.

Steve Ledbetter: Yeah. So we did not recognize any tax credit for PTC in the first quarter just given the uncertainty of the regulation as you know there was changing regulations throughout the quarter and that caused us to run very carefully and run at reduced rates.

Steve Ledbetter: Had we been able to recognize any of the tax credit.

Speaker Change: Great. Thank you and then.

Steve Ledbetter: Under the current proposed regulations, we would've been close to breakeven for EBITDA from from our operations within the quarter. We think at very least something is going to have to give here in terms of RVO and RIN credits to go.

Speaker Change: Maybe on the renewable diesel side can.

Unknown Executive: Thank you, sir.

Speaker Change: Can you walk through I know I know first quarter was a very noisy quarter with the kind of a shift in regulatory regime can you walk through the impacts of how that impacted your business.

Ryan Todd: Your next question comes from the line of Ryan Todd with Piper Sandler. Please go ahead. Thanks.

Ryan Todd: Maybe on the refining side, can you talk about what you're seeing in terms of demand across your markets? Product sales were down across your network, I think year on year. I'm just curious, is that a reflection of demand or something else? And maybe more broadly, what are you seeing across your markets?

Steve Ledbetter: Dislocate more than the Trish traditional boho spread youre starting to see some of that support.

Speaker Change: How are you managing feedstock optimization, whether you were able to book any credits during during the first quarter and if you think you'll be able to book.

Steve Ledbetter: Clarity is really going to help but I was very proud of the team to be able to navigate the uncertainty and get to a EBITDA breakeven. If we had recognized PTC longer term. We think some of this regulation is actually good for an overall tighter supply and demand balance and we position ourselves to go capture that tailwind through.

Speaker Change: During the second quarter or maybe any any possible tailwind as we as we look forward here.

Speaker Change: Yeah. So we did not recognize any tax credit for PTC in the first quarter just given the uncertainty of the regulation as you know there was changing regulations throughout the quarter and that caused us to run very carefully and run at reduced rates.

Steve Ledbetter: Yeah, Ryan, this is Steve. Just across our markets, we're seeing demand relatively flat, we like to say for gas and distillate, what we saw in the first quarter was, was positive. The impact on our sales is mainly driven by turnaround aspects. The distillate demand being up, we think, is generated predominantly by a colder winter in Pad 1, as well as reduced RD and BD product associated with the new 45Z regulation that drove about 100,000 barrels a day off the market, which was supplemented by petroleum demand. So, we're pretty, pretty excited about the demand patterns and what we're seeing and how it's showing up in the cracks moving into the driving season, particularly across our region.

Steve Ledbetter: Through the efforts that we've made over the past nine to 12 months.

Steve Ledbetter: Yes, Ryan this is Tim what I would just say it's.

Speaker Change: Had we been able to recognize any of the tax credit.

Steve Ledbetter: All along we've said that our goal is to have our renewable diesel business be breakeven to slightly positive and these bottlenecks.

Speaker Change: Under the current proposed regulations, we would've been close to break even or EBITDA from from our operations within the quarter.

Steve Ledbetter: Market conditions and with the PTC coming on at a reduced credit rate than the BTC was previously I think the team has stepped up very nicely to continue to improve the foundation of the business to where they are.

Speaker Change: We think at very least something is going to have to give here in terms of RVO and RIN credits to go.

Speaker Change: Dislocate more than the Trish traditional boho spread youre starting to see some of that support clarity is really going to help but I was very proud of the team to be able to navigate the uncertainty and get to EBITDA breakeven. If we had recognized PTC longer term. We think some of this regulation is actually good for an overall tighter.

Steve Ledbetter: As we mentioned on the prepared remarks.

Steve Ledbetter: <unk>.

Steve Ledbetter: Still running at a basically breakeven.

Unknown Executive: Great. Thank you.

Steve Ledbetter: <unk> EBIT with lower PTC credits that will hopefully eventually be able to book it.

Ryan Todd: And then maybe on the renewable diesel side, can you walk through, I know first quarter was a very noisy quarter with the kind of the shift in regulatory regime. Can you walk through the impacts of how that impacted your business? You know, how are you managing fee stock optimization? Whether you were able to book any credits during the first quarter? And if you think you'll be able to book any during the second quarter, or maybe any possible tail as we look forward here? Yeah, so we did not recognize any tax credit for PTC in the first quarter, just given the uncertainty of the regulation.

Steve Ledbetter: Feature.

Speaker Change: Supply and demand balance and we position ourselves to go capture that tailwind through.

Steve Ledbetter: Great. Thanks, guys.

Speaker Change: Your next question comes from the line of Doug Leggate with Wolfe Research. Please go ahead.

Speaker Change: Through the efforts that we've made over the past nine to 12 months.

Speaker Change: Yes, Ryan this is Tim what I would just say it's.

Carl: Yes. Good morning team. This is actually Carl is on for Doug.

Speaker Change: All along we've said that our goal.

Speaker Change: Is to have our renewable diesel business be breakeven to slightly positive and he has bottomed.

Speaker Change: And we as a team.

Speaker Change: It's valid to recognize first of all that it was a very solid operational quarter in an extremely tough tape, but that being said.

Speaker Change: Market conditions.

Speaker Change: And with the PTC coming on at a reduced credit rate than the BTC was previously.

Speaker Change: We'd like to take the.

Speaker Change: Team has stepped up very nicely to continue to improve the foundation of the business to where they are.

Speaker Change: Private question a step further and ask you guys at what point do you do you consider borrowing R&D facilities.

Steve Ledbetter: As you know, there was changing regulations throughout the quarter, and that caused us to run very carefully and run at reduced rates. Had we been able to recognize any of the tax credit under the current proposed regulations, we would have been close to break even for EBITDA from our operations within the quarter. You know, we think at very least something's going to have to give here in terms of RVO and RIN credits to go, you know, dislocate more than the traditional BOHO spread. You're starting to see some of that support.

Speaker Change: As we mentioned on the.

Speaker Change: The prepared remarks.

Speaker Change: Still running at a basically breakeven.

Speaker Change: <unk> versus running.

Speaker Change: The risk of negative cash and also acknowledging that the outlook for rents is unclear.

Speaker Change: <unk> EBIT with a lower PTC credits that will hopefully eventually be able to book it.

Speaker Change: Sure.

Speaker Change: Great. Thanks, guys.

Speaker Change: Yes.

Speaker Change: It's a good question, we ask ourselves that and.

Speaker Change: Your next question comes from the line of Doug Leggate with Wolfe Research. Please go ahead.

Speaker Change: All the time and have our.

Speaker Change: Conversations in the boardroom as well on those kind of <unk>.

Speaker Change: Yes. Good morning team this is actually Carlos on for Doug.

Speaker Change: <unk>.

Tim Go: Clarity is really going to help, but I was very proud of the team to be able to navigate the uncertainty and get to a EBITDA break even if we had recognized PTC. Longer term, we think some of this regulation is actually good for an overall tighter supply and demand balance, and we position ourselves to go capture that tailwind through the efforts that we've made over the past 9 to 12 months.

Speaker Change: We believe we have competitive advantage over.

Speaker Change: And we as a team.

Speaker Change: The majority of the industry and you see some of that happening.

Speaker Change: It's valid to recognize first of all there was a very solid operational quarter in an extremely tough tape, but that being said.

Speaker Change: Even during this first quarter a lot of biodiesel plants have shut down even some renewable diesel plants are shut down just as you mentioned so as long as we the reason we keep talking about we can be breakeven to slightly positive and these bottom of cycle conditions as we believe that as long as we can do that and we'll manage the cash.

Speaker Change: We'd like to take the.

Speaker Change: Private question a step further and ask you guys at what point do you do you consider borrowing R&D utilities.

Tim Go: Yeah, and Ryan, this is Tim, what I would just say is, you know, all along, we've said that our goal is to have our renewable diesel business be breakeven to slightly positive in these bottom of market conditions. And with the PTC coming on at a reduced credit rate than the BTC was previously, I think the team has stepped up very nicely to continue to improve the foundation of the business to where they are, as we mentioned on the prepared remarks, still running at a basically breakeven pace, even with the lower PTC credits that we'll hopefully eventually be able to book in the future.

Speaker Change: Versus running routes.

Speaker Change: As a result of that but as long as we can do that on it on a day in and day out basis that we believe we can continue to improve the business and be ready for when the RIN prices and I'll see if prices recover and come back to what we believe is more of a long term level. So we think right now we're at bottom of cycle.

Speaker Change: Risk of negative cash and also knowledge and that the outlook for instance, it's unclear.

Speaker Change: Yeah, it's a.

Speaker Change: Good question, we ask ourselves that and all.

Speaker Change: All the time and have our COO.

Speaker Change: Conversations in the boardroom as well on those kind of <unk>.

Speaker Change: <unk>, but will the initiatives will improve and our businesses will be profitable at that point.

Speaker Change: <unk>.

Speaker Change: We believe we have competitive advantage ofer.

Speaker Change: The majority of the industry and you see some of that happening.

Speaker Change: Okay.

Speaker Change: I appreciate the answers Tim as a follow up we'd like to ask about <unk>.

Speaker Change: Even during this first quarter a lot of biodiesel plants are shut down even some renewable diesel plants are shut down just as you mentioned so as long as we the reason we keep talking about we can be breakeven to slightly positive and these bottom of cycle conditions as we believe that as long as we can do that and we'll manage the cash.

Speaker Change: LPG and your overall midstream business, because I think we've all grown accustomed to.

Unknown Executive: Great. Thanks, guys.

Speaker Change: And experience volatility on the oil and refining market as a whole, but LPG has been a certainly a topic of debate lately with the ongoing talks with tariff. So wondering if you can perhaps walk us through that.

Doug Leggate: Your next question comes from the line of Doug Leggate with Wolf Research. Please go ahead. Yeah, good morning, team.

Carlos: This is actually Carlos on for Doug. I think that it's and we as a team think it's it's valid to recognize, first of all, that was a very solid operational coordinate in an extremely tough tape. But that being said, we'd like to take the prior question a step further, and ask you guys, at what point do you do you consider mothballing R&D facilities, versus running risk, the risk of negative cash, and also acknowledging that the outlook for rents is unclear. Yeah, it's um, it's a good question. We ask ourselves that and all the time and have our conversations at the boardroom as well on those kind of questions.

Speaker Change: As a result of that but as long as we can do that on it on a day in and day out basis.

Speaker Change: Any.

Speaker Change: So opportunity for you given the dislocation in the market and the uncertainty around that or.

Speaker Change: We believe we can continue.

Speaker Change: Continue to improve the business and be ready for when the RIN prices and I'll see if prices recover and come back to what we believe is more of a long term level. So we think right now we're at bottom of cycle conditions, but the.

Speaker Change: If you think there is anything noteworthy for investors to know regarding that specific segment.

Yes. This is Steve I'll take that one we don't have a concentration in our midstream space around LPG its not just part of our core business.

Speaker Change: The initiatives will improve our businesses will be profitable at that point.

Speaker Change: Okay.

Speaker Change: I appreciate the answer Tim as a fall.

Speaker Change: We don't know that that's an area we'd go invest in over integrating and more concentration of getting crude and light products molecules on our system and taking full advantage of that having said that and we always look at multiple opportunities and if there was something that was very accretive to the enterprise, we would put it in our funnel and evaluated.

Speaker Change: So we'd like to ask about <unk>.

Speaker Change: LPG and your overall midstream business because.

Speaker Change: I think we've all grown accustomed to.

Speaker Change: Volatility on the oil and refining market as a whole, but LPG has been a certainly a topic of debate lately.

Speaker Change: The ongoing talks with terrorists I'm wondering if you can perhaps walk us through.

Speaker Change: At that time, but at this point, we don't have a lot of exposure and are not using that as one of our growth platforms in the midstream space associated with <unk>.

Tim Go: We believe we have competitive advantage over the majority of the industry and you see some of that happening. Even during this first quarter, a lot of biodiesel plants have shut down, even some renewable diesel plants have shut down, just as you mentioned. So, as long as we, the reason we keep talking about we can be break-even, slightly positive in these bottom of cycle conditions, is we believe that as long as we can do that, and we'll manage the cash as a result of that, but as long as we can do that on a day-in and day-out basis, that we believe we can...

Speaker Change: If there is any potential opportunity.

Speaker Change: <unk> for you given the dislocation in the market and the uncertainty around that or.

Speaker Change: Thank you Tim I appreciate it.

Speaker Change: Your next question comes from the line of Joe <unk> with Morgan Stanley. Please go ahead.

Speaker Change: If you think there is anything noteworthy for investors to know regarding that.

Speaker Change: Segment.

Joe: Hey, good morning, Tim and team Thanks for taking my questions. So.

Speaker Change: Yes. This is Steve I'll take that one we don't have a concentration in our midstream space around LPG its not just part of our core business.

Joe: So let me start on refining and tie a couple of strong weekly demand numbers for gasoline inventories are pretty tight, particularly on the west coast.

Joe: Talked about the project that expands your ability to make car gasoline.

Speaker Change: It sound is that online and then could you also just talk to your leverage to the west coast market.

Tim Go: we're just going to continue to improve the business and be ready for when the RIN prices and LCFS prices recover and come back to what we believe is more of a long-term level. So we think right now we're at the bottom cycle conditions but conditions will improve and our businesses will be profitable at that point.

Speaker Change: The unplanned downtime recently as well as the announced closure of two refineries upcoming.

Steve Ledbetter: Hey, Joe I'll take that one Steve.

Speaker Change: At that time, but at this point, we don't have a lot of exposure are not using that as one of our growth platforms in the midstream space associated with <unk>.

Speaker Change: I'll ask answer it I'll answer the question in the order I think they were asked and that was the project that we had mentioned around our ability to.

Unknown Executive: Appreciate the answer Tim.

Steve Ledbetter: As a follow up, we'd like to ask about LPG and your overall midstream business because I think we've all grown accustomed to and experienced volatility on the oil and refining market as a whole. But LPG has been a certainly a topic of debate lately with the ongoing talks with Terry. So wondering if you can perhaps walk us through if there's any potential opportunity for you, given the dislocation in the market and the uncertainty around that, or if you think there's anything noteworthy for investors to know regarding that specific segment.

Steve Ledbetter: So we get more involved in the car gas.

Speaker Change: Thank you Tim I appreciate it.

Steve Ledbetter: Project those tanks will be coming online soon now we will be staging them over the next couple of months to be able to make a decision whether we move unfinished products into the carb, California market or we swelled volume pool and move gasoline.

Speaker Change: Your next question comes from the line of Joe <unk> with Morgan Stanley. Please go ahead.

Speaker Change: Yeah.

Speaker Change: Hey, good morning, Tim and team Thanks for taking my questions. So.

Speaker Change: So let me start on refining type of strong weekly demand numbers for gasoline inventories are pretty tight, particularly on the west coast.

Steve Ledbetter: There, but we're almost at the point, where we will have those ready for.

Speaker Change: You've talked about the project that expands your ability to make car gasoline.

Steve Ledbetter: For use in our portfolio and given the headwinds that we see with the announced recent announcements as well as current unplanned events. We think that is a benefit not only to getting into California, but also tightening up the market in the Pacific northwest relative to the overall pad five tightness, we took advantage of this quarter of moving.

Speaker Change: It sound is that online and then could you also just talk to your leverage to the west coast market.

Speaker Change: Unplanned downtime recently as well as the announced closure of two two refineries upcoming.

Steve: Hey, Joe I'll take that one Steve.

Steve Ledbetter: Yeah, this is Steve. I'll take that one. You know, we don't have a concentration in our midstream space around LPG. It's not just part of our core business. We don't know that that's an area we go invest in over integrating and more concentration of getting crude and light products molecules on our system and taking full advantage of that. Having said that, you know, we always look at multiple opportunities. And if there was something that was very accretive to the enterprise, we would put it in our funnel and evaluate it at that at that time. But at this point, we don't have a lot of exposure or not using that as one of our growth platforms in the midstream space associated with LPG.

I'll ask answer I'll answer the question in the order I think they were asked and that was the project that we had mentioned around our ability to.

Steve Ledbetter: More molecules and playing the arb between what was getting short and stronger.

Speaker Change: So we get more involved in the car gas.

Steve Ledbetter: Demand and margin picture in Las Vegas, and we think that that is part of the advantage of our footprint both in the midstream and our production throughout the Rockies, we like to say, we can move barrels out of the group into the into the front range and from the Rockies all the way up to the Pacific Northwest and down into southern pad five we think that all bodes well for us moving forward.

Speaker Change: Project those tanks will be coming online soon now we will be staging them over the next couple of months to be able to make decision, whether we move unfinished products into the car, our California market or we swelled volume pool and move gasoline.

Speaker Change: There, but we're almost at the point, where we will have those ready for.

Steve Ledbetter: Third not only this year, but as as it continues to play out over the next two years with the announced.

Speaker Change: For use in our portfolio and given the headwinds that we see with the announced <unk>.

Steve Ledbetter: Shuttering of various facilities.

Unknown Executive: Thank you, team. Appreciate it.

Steve Ledbetter: And Joe This is Jim I would just point out that the west coast wasn't the only.

Speaker Change: <unk> announcements as well as current unplanned events, we think that is a benefit not only to getting into California, but also tightening up the market in the Pacific northwest relative to the overall pad five tightness now we took advantage of this quarter of moving more molecules and playing the arb between what was getting short and stronger demand in March.

Joe Litz: Your next question comes from the line of Joe Litz with Morgan Stanley. Please go ahead. Hey, good morning, Tim and team. Thanks for taking my questions. So I want to start on refining. We've had a couple of strong weekly demand numbers for gasoline and inventories are pretty tight, particularly on the West Coast. I know you've talked about the project that expands your ability to make car gasoline at Puget Sound. Is that online? And then could you also just talk to your leverage to the West Coast market, given the unplanned downtime recently, as well as the announced closure of two refineries upcoming?

Steve Ledbetter: Region that we saw strength.

Steve Ledbetter: Demand.

Steve Ledbetter: The mid Con the group itself was strong.

Steve Ledbetter: We entered the first quarter.

Steve Ledbetter: Pretty much.

Steve Ledbetter: Hi, its on inventories and we exited the first quarter pretty much lows.

Speaker Change: Picture in Las Vegas, and we think that that is part of the advantage of our footprint both in the midstream and our production throughout the Rockies, we like to say, we can move barrels out of the group into the into the front range and from the Rockies all the way up the Pacific northwest and down into southern pad five we think that all bodes well for us moving forward not only.

Steve Ledbetter: In the group and I think that just bodes to the strength of demand.

Steve Ledbetter: It also talks about some of them any capacity that was offline during turnarounds and is really the.

Steve Ledbetter: The source of the strength and cracks that we see across the country.

Steve Ledbetter: Hey, Joe, I'll take that one, Steve. I'll answer the question in the order I think they were asked. And that was the project that we had mentioned around our ability to potentially get more involved in the carb gas project. Those tanks will be coming online soon. Now we will be staging them over the next couple of months to be able to make a decision whether we move unfinished products into the carb or California market, or we swell the volume pool and move gasoline. But we're almost at the point where we'll have those ready for use in our portfolio.

Steve Ledbetter: Great Thanks for that.

Speaker Change: This year, but as as it continues to play out over the next two years with the announced.

Steve Ledbetter: Follow up is on marketing segment, which had a really strong quarter, particularly for <unk>, which is typically a weaker period seasonally Oh did you.

Speaker Change: Shuttering of various facilities.

Speaker Change: Yes, Joe This is Jim I would just point out that the west coast wasn't the only.

Steve Ledbetter: Talk to some of the drivers during the quarter. The repeatability of it and then any change to the $75 million to $80 million annual EBIT run rate that you've talked about in past on that thank you. Yes. Yes. This is Steve we're very excited about.

Speaker Change: Region that we saw strength.

Speaker Change: And demand.

Speaker Change: Mid Con group itself was strong we entered the first quarter.

Speaker Change: Pretty much.

Steve Ledbetter: The marketing business and the performance that we had in the first quarter record EBITDA and that was largely driven by optimizing our underlying business. We're starting to see the results of high grading our portfolio, making sure that our brand standard is applied to the new sites that we're bringing on and to be honest, calling some of the portfolio that doesn't make sense.

Speaker Change: Hi, its on inventories and we exited the first quarter it pretty much lows.

Speaker Change: In the in the group and I think that just bodes to the strength of demand.

Steve Ledbetter: And given the headwinds that we see with the recent announcements as well as current unplanned events, we think that is a benefit not only to getting into California, but also tightening up the market in the Pacific Northwest relative to the overall Pad 5 tightness. Now, we took advantage this quarter of moving more molecules and playing the arb between what was getting short and stronger demand and margin picture in Las Vegas. And we think that that is part of the advantage of our footprint, both in the midstream and our production throughout the Rockies. We like to say we can move barrels out of the group into the front range and from the Rockies all the way up the Pacific Northwest and down into Southern Pad 5.

Speaker Change: It also talks about some of them needed capacity that was offline during turnarounds and is really the.

Speaker Change: The source of the strength and cracks that we see across the country.

Steve Ledbetter: But then also I would tell you getting the full value of the brand, where we haven't done that in the past and so strategically making moves and growing in the right markets is all playing out in our underlying execution of our business is starting to yield results. As we look forward, we think that our that our run rate is still between 75 and 85 million.

Speaker Change: Great Thanks for that and my.

Speaker Change: Follow up is on marketing segment, which had a really strong quarter, particularly for <unk>, which is typically a weaker period seasonally Oh did you.

Speaker Change: Talk to some of the drivers during the quarter. The repeatability of it and then any change to the $75 million to $80 million annual EBIT run rate that you've talked about in past on that thank you. Yeah. Yeah. This is Steve we're very excited about.

Steve Ledbetter: Annually, and we see upward progression as we continue to go build out our network moving forward.

Steve Ledbetter: Yes, and Joe I would just say we haven't changed our.

Speaker Change: The marketing business and the performance that we had in the first quarter record EBITDA largely driven by optimizing our underlying business. We're starting to see the results of high grading our portfolio, making sure that our brand standard is applied to the new sites that we're bringing on and to be honest, calling some of the portfolio that doesn't make sense.

Joe: Guidance in terms of run rates, but obviously the first quarter.

Tim Go: We think that all bodes well for us moving forward, not only this year, but as it continues to play out over the next two years with the announced shuttering of various facilities.

Joe: Results are very positive we do think that are going to be sustainable and so we'll we'll update you guys as we as we continue to play that out but we.

Tim Go: Yeah, and Joe, this is Tim, I would just point out that the West Coast wasn't the only region that we saw strength in demand. I mean, the mid-con, the group itself was strong. We entered the first quarter at pretty much, you know, highs on inventories. And we exited the first quarter at pretty much lows in the group. And I think that just boasts the strength of demand. And it also talks about some of the capacity that was offline during turnarounds. And it's really the. source of the strength and cracks that we see across the country.

Joe: We don't think there was an anomaly if that's what you're asking or any type of special items in the first quarter for marketing.

Speaker Change: But then also I would tell you are getting the full value of the brand where we haven't done that in the past, it's a strategically making moves and growing in the right markets is all playing out in our underlying execution of our business is starting to yield results. As we look forward, we think that our that our run rate is still between 75 and 85 million.

Joe: Additional stores I mean, we're up over 100 stores a year over year versus where we were in the first quarter of last year. All of that is driving the growth that youre seeing we've talked about how.

Joe: The branded play.

Joe: For our barrels is our key strategy that we.

Speaker Change: Annually, and we see upward progression as we continue to go build out our network moving forward.

Joe: <unk> that we were focused on coming out of the Sinclair acquisition and now Youre really starting to see.

Speaker Change: Yes, and Joe I would just say we haven't changed our.

Joe: The results starting to play out on the bottom line. We still think there is a lot of opportunity to go.

Joe: Guidance in terms of run rates, but obviously in the first quarter.

Joe Litz: Great, thanks for that. And my follow-up is on marketing segment, which had a really strong quarter, particularly for 1Q, which is typically a weaker period seasonally. Could you talk to some of the drivers during the quarter, the repeatability of it, and then any change to the $75 to $80 million annual EBITDA run rate that you've talked about and passed on that?

Joe: Results are very positive, we do think they're going to be sustainable and so we'll we'll update you guys as we as we continue to play that out.

Joe: And we're driving towards that in terms of what youre going to see more stores, we can see higher volumes and then youre going to see higher EBITDA coming out of our marketing segment.

Joe: We don't think there was an anomaly if that's what you're asking or any type of special items in the first quarter for marketing.

Speaker Change: That's great. It sounds like you all have solid momentum in that segment. Thank you often time I appreciate it.

Joe: The additional stores I mean, we're up over 100 stores a year over year versus where we were in the first quarter of last year all of that is driving the growth that youre seeing.

Steve Ledbetter: Thank you. Yeah, yeah, this is Steve. We're very excited about the marketing business and the performance that we had in the first quarter record EBITDA. And that was largely driven by, you know, optimizing our underlying business. We're starting to see the results of high grading our portfolio, making sure that our brand standard is applied to the new sites that we're bringing on. And to be honest, calling some of the portfolio that doesn't make sense. But then also I would tell you, getting the full value of the brand where we haven't done that in the past.

Speaker Change: Your next question comes from the line of Jason Kopelman with Cowen. Please go ahead.

Jason Kopelman: Yeah, Hey, good morning, Thanks for taking my questions.

Joe: We've talked about how the branded play.

Jason Kopelman: The first one I wanted to ask is just the outlook for turnarounds on the year and wondering kind of what the cadence is quarter to quarter <unk> you add some activity <unk>.

Joe: For our barrels is our key strategy.

Joe: That we were focused on coming out of the Sinclair acquisition.

Joe: And now you are really starting to see.

Jason Kopelman: <unk>. It seems like you have a bit more wondering if <unk> kind of a peak turnaround quarter for the year and then how that kind of informs your.

The results starting to play out on the bottom line. We still think there is a lot of opportunity to go.

Tim Go: And so strategically making moves and growing in the right markets is all playing out and our underlying execution of our business is starting to yield results. As we look forward, we think that our run rate is still between $75 and $85 million annually, and we see upward progression as we continue to go build out our network moving forward. Yeah, and Joe, I would just say, you know, we haven't changed our guidance in terms of run rates. But obviously, the first quarter results are very positive. We do think they're going to be sustainable. And so we'll, we'll update you guys as we as we continue to play that out.

Joe: And we're driving towards that in terms of what youre going to see more stores, we can see higher volumes and then you're going to see higher EBITDA coming out of our marketing segment.

Jason Kopelman: Our cash management strategy and.

Jason Kopelman: Potentially.

Jason Kopelman: Ability and desire to buy back shares.

Jason Kopelman: We can debate here.

Joe: That's great. It sounds like you all have solid momentum in that segment. Thank you all some time I appreciate it.

Jason Kopelman: Yeah.

Jason Kopelman: So I'll take the first part this is Valerie and our turnaround performance continues to be a highlight for US first quarter is the heavier quarter with our lubricants Tulsa and barcode turnarounds.

Speaker Change: Your next question comes from the line of Jason Kopelman with TD Cowen. Please go ahead.

Jason Kopelman: Yeah, Hey, good morning, Thanks for taking my questions.

Jason Kopelman: And we have one turnaround remaining for the year that will fall in the third quarter.

Jason Kopelman: The first one I wanted to ask is just the outlook for turnarounds on the year and wondering kind of what the cadence is quarter to quarter <unk> you add some activity too.

Jason Kopelman: And that's really the end of our annual our season for the year, we Directionally expect our turnarounds.

Steve Ledbetter: But we don't think there was an anomaly, if that's what you're asking, or any type of special items in the first quarter for marketing. The additional stores, I mean, we're up over 100 stores year over year, versus where we were in the first quarter of last year. All that is driving the growth that you're seeing. We've talked about how the branded put for our barrels is our key strategy that we that we were focused on coming out of the Sinclair acquisition. And now you're really starting to see the results starting to really play out on the bottom line.

Jason Kopelman: Anticipate that those are going to continue to level out.

Jason Kopelman: <unk>. It seems like you have a bit more wondering if <unk> kind of the peak turnaround quarter for the year and then how that kind of informs your.

Jason Kopelman: And to 'twenty, six 'twenty seven and beyond.

Jason Kopelman: Jason I'll take the second question with respect to how this informs our.

Jason Kopelman: Your cash management strategy.

Jason Kopelman: Our cash.

Jason Kopelman: Potentially.

Jason Kopelman: Cash management strategy.

Jason Kopelman: The ability and desire to buy back shares.

Jason Kopelman: Buybacks.

Jason Kopelman: Obviously this quarter with the turnarounds.

Jason Kopelman: <unk>.

Jason Kopelman: We can debate here.

Jason Kopelman: Net cash draw for us.

Jason Kopelman: So I'll take the first part this is Valerie and our turnaround performance continues to be and a highlight for US first quarter is the heavier quarter with our lubricants Tulsa and barcode turnarounds.

Jason Kopelman: As we progress into the into the balance of the year with.

Jason Kopelman: A line of sight of better cracks so we believe that.

Unknown Executive: We still think there's a lot of opportunity to go. And we're driving towards that in terms of what you're going to see more stores, we're going to see higher volumes, and then you're going to see higher EBITDA coming out of our marketing segment. That's great. Sounds like you all are solid in that segment.

Jason Kopelman: Any excess cash flow that we generate we should be able to return to our ship to our shareholders and just to remind everyone just with our dividend.

Jason Kopelman: We have one turnaround remaining for the year that will fall in the third quarter.

Jason Kopelman: And that's really the end of our annual our season for here are we directionally expect our turnarounds.

Jason Kopelman: Our run rate now at 6%.

Jason Kopelman: So our strategies too.

Jason Kopelman: Anticipate that those are going to continue to level out.

Unknown Executive: Thank you all for your time.

Jason Kopelman: Returned any of that excess cash to our shareholders.

Jason Gabelman: I appreciate it. Your next question comes from the line of Jason Gabelman with TD Common. Please go ahead. Yeah, hey, morning. Thanks for taking my questions.

Jason Kopelman: And to 'twenty, six 'twenty seven and beyond.

Jason Kopelman: And Jason This is Tim let me just add one more thing.

Jason Kopelman: Jason I'll take the second question with respect to how this informs our.

Jason Kopelman: During <unk> prepared remarks, he mentioned that.

Jason Kopelman: Our turnaround guidance is still.

Jason Kopelman: Our cash.

Jason Kopelman: Cash management strategy.

Valerie Pompa: The first one I wanted to ask is, is just the outlook for turnarounds on the year and wondering kind of what the cadence is quarter to quarter, 1Q you add some activity, 2Q it seems like you have a bit more, wondering if 2Q is kind of the peak turnaround quarter for the year, and then how that kind of informs your cash management strategy and and potentially the ability and desire to buy back shares as they've weakened a bit here. So I'll take the first part. This is Valerie. Our turnaround performance continues to be a highlight for us.

Jason Kopelman: Unchanged for this year and that's because our turnaround execution continue to go.

Jason Kopelman: Buybacks.

Jason Kopelman: Obviously this quarter with the turnarounds.

Jason Kopelman: That continues to go as planned.

Jason Kopelman: Net cash draw for us.

Speaker Change: But Valerie mentioned that we have a loops turnaround this year, which is what kept our overall turnaround spend at these levels next year, we won't have that.

Jason Kopelman: As we progress into the into the balance of the year with.

Jason Kopelman: A line of side of better.

Jason Kopelman: Cracks so we believe that.

Jason Kopelman: Loops.

Jason Kopelman: Any excess cash flow that we generate we should be able to return to our ship to our shareholders and just to remind everyone just with our dividend.

Jason Kopelman: Plant in our turnaround schedule and as we talked about in the past we are starting to get past the peak in terms of our catch up capital required for turnarounds and we are anticipating that the turnaround workload and starting next year and then in the years after that will be significantly lower than what <unk> seen over the last couple of years and turnarounds.

Jason Kopelman: Our run rate <unk>, 6%.

Jason Kopelman: So our strategies.

Jason Kopelman: Return on any of that excess cash to our shareholders.

Jason Kopelman: And Jason This is Tim let me just add one more thing.

Jason Kopelman: Got it.

Speaker Change: During <unk> prepared remarks, he mentioned that.

Valerie Pompa: The first quarter is the heavier quarter with our lubricants, Tulsa and Parco turnarounds. We have one turnaround remaining for the year that will fall in the third quarter. And that's really the end of our annual or season for the year. We directionally expect our turnarounds as we anticipate that those are going to continue to level out as we move into 26, 27 and beyond.

Jason Kopelman: Great color. Thanks, and then my follow up is just on tariffs and the trade war as it relates to the lubes business.

Jason Kopelman: Our turnaround guidance is still.

Jason Kopelman: Unchanged for this year and that's because our turnaround execution continue to go.

Jason Kopelman: A bit less familiar on the dynamics. So I was hoping you could just talk about if there is any tailwind or a headwind.

Jason Kopelman: That continues to go as planned.

Jason Kopelman: But Valerie mentioned that we havent loops turnaround this year, which is what kept our overall turnaround spend at these levels next year, we won't have that additional loops.

Jason Kopelman: From some of the trade limitations in tariffs that are being put in place.

Jason Kopelman: As it relates to your.

Speaker Change: Lubricants business yeah.

Atanas Atanasov: Jason, I'll take the your second question with respect to how this informs our our cash, cash management strategy and, and buybacks. Obviously, this quarter with with a turnaround was a net cash draw for us. As we progress into the balance of the year with the line-up side, it's better. Cracks, we believe that. Any excess cash flow that we generate, we should be able to return to our share to our shareholders. And just to remind everyone, just with our dividend, our run rate now at 6%. So our strategy is. to turn any of that excess cash to our shareholders.

Jason Kopelman: Yeah.

Jason Kopelman: Yes. Thanks for the question this is Matt choice.

Jason Kopelman: With regards specifically to the lubes piece on tariffs, we have been working to tariff proof the business and <unk>.

Jason Kopelman: Our business is largely 95 plus percent U S. MCA compliant with the materials that we bring in and out of the country.

Jason Kopelman: And we've been evaluating some of the production of our finished products and specialties and looking at.

Jason Kopelman: Got it.

Jason Kopelman: Great color. Thanks, and then my follow up is just on tariffs and the trade war as it relates to the lubes business.

Jason Kopelman: Ensuring that they are in the best supply chain locations to provide a solution to our customer basis.

Jason Kopelman: A bit less familiar on the dynamic. So I was hoping you could just talk about if there is any tailwind or a headwind.

Jason Kopelman: As far as specific.

Jason Kopelman: On costs from either additive companies or other suppliers were monitoring that cost of goods very closely and taking any required action in the market Pat marketplace as a pass through should we require it.

Jason Kopelman: From some of the trade limitations in tariffs that are being put in place.

Jason Kopelman: As it relates to your.

Tim Go: And Jason, this is Tim. Let me just add one more thing. You know, during Atanas' prepared remarks, he mentioned that our turnaround guidance is still unchanged for this year. And that's because our turnaround execution continues to go as that continues to go as planned. But Valerie mentioned that we have a LOOPS turnaround this year, which is what kept our overall turnaround spend at these levels next year. We won't have that additional LOOPS. Plante in our turnaround schedule. And as we talked about in the past, we are starting to get past the peak in terms of our catch-up capital required for turnarounds.

Jason Kopelman: Lubricants business. Thanks.

Jason Kopelman: Yeah. Thanks for the question this is Matt choice.

Jason Kopelman: Alright, great. Thanks for the answers.

Jason Kopelman: With regards specifically to lubes piece on tariffs, we've been working to tariff proof the business and.

Jason Kopelman: And Jason just to make it clear.

Jason Kopelman: We do have a facility up in Canada and as.

Jason Kopelman: Our business is largely 95 plus percent U S. MCA compliant with the materials that we bring in and out of the country.

Speaker Change: Matt talked about.

Speaker Change: The team has done a great job of managing.

Speaker Change: Through the different tariff regulations.

Speaker Change: Most of our products actually do qualify for U S. MCA on the loop side and these guys have done a great job of mapping that so that we can avoid the tariffs.

Jason Kopelman: And we've been evaluating some of the production of our finished products and specialties and looking at.

Jason Kopelman: Ensuring that they are in the best supply chain locations to provide a solution to our customer basis.

Tim: I will now turn the call back to Tim for closing remarks.

Jason Kopelman: As far as specific.

Tim: Thank you Kate.

Jason Kopelman: On costs from either additive companies or other suppliers were monitoring that cost of goods very closely and taking any required action in the market that marketplace as a pass through should we require it.

Jason Gabelman: And we are anticipating that the turnaround workload in starting next year and then in the years after that will be significantly lower than what we've seen over the last couple of years in turnarounds. Got it. That's a great color. Thanks.

Tim: Before we close I want to emphasize that our first quarter performance represented improved financials quarter over quarter overall.

Tim: And especially for our refining midstream marketing and lubes and specialties segments.

Jason Kopelman: Alright, great. Thanks for the answers.

Jason Gabelman: And then my follow up or just on tariffs and the trade war as it relates to the lubes business, a bit less familiar on the dynamics. So I was hoping you could just talk about if there's any tailwinds or headwinds from some of the trade limitations and tariffs that are being put in place as it relates to your lubricants business. Thanks. Yeah. Yeah, thanks for the question.

Tim: Delivering these stronger results despite all of the challenging market conditions and headwinds we faced as a proof point that our strategy is working.

Speaker Change: And Jason just to make it clear.

Jason Kopelman: We do have a facility up in Canada and as.

Speaker Change: Matt talked about.

Tim: In addition, these results demonstrate the earnings power of our diversified portfolio.

Speaker Change: The team has done a great job of managing.

Speaker Change: Through the different tariff regulations.

Tim: Looking ahead, our priorities remain the same to one improve our reliability.

Speaker Change: Most of our products actually do qualify for U S. MCA on the loop side and these guys have done a great job of mapping that so that we can avoid the tariffs.

Tim: To integrate and optimize our portfolio of assets.

Tim: And three return excess cash to shareholders. Thank.

Matt Joyce: This is Matt Joyce. With regards specifically to the lubes piece on tariffs, we've been working to tariff proof the business and our business is largely 95 plus percent USMCA compliant with the materials that we bring in and out of the country. And we've been evaluating some of the production of our finished products and specialties and looking at ensuring that they're in the best supply chain locations to provide a solution to our customer bases. And as far as specific on costs from either additive companies or other suppliers. We're monitoring that cost of goods very closely and taking any required action in the marketplace as a pass-through should we require it.

Tim: I will now turn the call back to Tim for closing remarks.

Tim: Thank you for joining our call and have a great day.

Tim: Thank you Kate.

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

Tim: Before we close I want to emphasize that our first quarter performance represented improved financials quarter over quarter overall.

Tim: And especially our refining midstream marketing and lubes and specialties segments.

Tim: Delivering these stronger results despite all of the challenging market conditions and headwinds we faced as a proof point that our strategy is working.

Tim:

Tim: Demonstrating the earnings power of our diversified portfolio.

Tim: Looking ahead, our priorities remain the same to one improve our reliability.

Tim: To integrate and optimize our portfolio of assets and three returning excess cash to shareholders.

Jason Gabelman: All right, great. Thanks for the answers.

Tim Go: Yeah, and Jason, just to make it clear, you know, we do have a facility up in Canada. And as Matt talked about, the team has done a great job of managing through the different tariff regulations. Most of our products actually do qualify for USMCA on the loop side, and these guys have done a great job of mapping that so that we can avoid the tariff.

Tim: Thank you for joining our call and have a great day.

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

Tim: Yeah.

Speaker Change: [music] them.

Tim: Yeah.

Tim Go: I will now turn the call back to Tim for closing remarks. Thank you, Kate. Before we close, I want to emphasize that our first quarter performance represented improved financials quarter over quarter overall, and especially for our refining, midstream, marketing, and moves and specialty segments. Delivering these stronger results, despite all the challenging market conditions and headwinds we faced, is a proof point that our strategy is working. In addition, these results demonstrate the earnings power of a diversified portfolio.

Tim: Yeah.

Tim:

Tim: Okay.

Tim Go: Looking ahead, our priorities remain the same. To one, improve our reliability. to integrate and optimize our portfolio of assets. 3, return excess cash to show.

Operator: Thank you for joining our call and have a great day. Thank you.

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

Q1 2025 HF Sinclair Corp Earnings Call

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