HF Sinclair Corporation

Welcome to HF Sinclair Corporation and Hawley Energy Partners' fourth quarter 2022 conference call and webcast. Hosting the call today is Mike Jennings, Chief Executive Officer of HF Sinclair and Hawley Energy Partners. He is joined by Tim Goh, President and Chief Operating Officer of HF Sinclair. Atanasia Tanisov, Chief Financial Officer of HF Sinclair. And John Harrison, Chief Financial Officer of Hawley Energy Partners. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that 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 again pressing the star 1. If you should require operator assistance, please press star 0. 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. Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Craig Beery, Vice President of Investor Relations. Craig, you may begin.

Thank you, Rob. Good morning, everyone, and welcome to HF Sinclair Corporation and Holley Energy Partners' fourth quarter 2022 earnings call. This morning, we issued a press release announcing results for the quarter ending December 31, 2022. If you would like a copy of the press release, you may find them on our websites at hfsinclair.com and hollyenergy.com. Before we proceed with remarks, please note the safe harbor disclosure statement in today's press releases. 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 filings. The call also may include discussion of non-GAAP measures. Please see the earnings press releases for reconciliations to GAAP financial measures. 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. And with that, I'll turn the call over to Mike Jennings.

Thanks, Craig. Good morning, everyone. Today we reported the fourth quarter net income attributable to HF Sinclair shareholders of $587 million, or $2.92 per diluted share. These results reflect special items that collectively decreased net income by $11 million. Excluding the items, adjusted net income for the fourth quarter was $598 million, or $2.97 per diluted share, compared to adjusted net loss of $18 million or negative 11 cents per diluted share for the same period in 2021. Adjusted EBITDA for the fourth quarter was $1.0 billion, an increase of approximately $878 million compared to the fourth of 2021. In our refining segment, fourth quarter EBITDA was $864 million compared to $25 million in the same period last year. This increase was primarily driven by higher refining margins in both the west and mid-con regions and a 39% increase in sales of refined products year over year due to the acquisition of the Puget Sound Refinery and the acquired Sinclair businesses. Despite the winter storm impacts we experienced in December, crude oil charge averaged 628,000 barrels per day for the fourth quarter compared to 421,000 barrels per day in the fourth quarter of 21. For full year 2022, we achieved records for annual crude charge of 607,000 barrels per day and refining segment EBITDA of $4.2 billion. Despite the tight supply environment in 2022, our continued focus on operational excellence allowed us to safely increase throughputs to meet customer demand for our transportation fuels. In our renewable segment, we reported adjusted EBITDA of negative 7 million for the fourth quarter and total sales volumes of 54 million gallons, driven by unplanned downtime. We continue to increase throughput at our renewables facilities and expect to achieve normalized run rates in the second half of 2023. We remain constructive on the D4 RIN market and on our ability to source advantage feedstocks for our renewable diesel plants. Our marketing segment reported EBITDA of $23 million for the fourth quarter, and total branded fuel sales volumes were 336 million gallons, representing a $0.07 per gallon margin. We continue to make progress expanding the Dyno brand as our number of branded sites grew by 24 during the fourth quarter and by 81 since the acquisition of the branded business from Sinclair in March of 22. Lubricants and specialty products reported EBITDA of $67 million for the fourth quarter, compared to EBITDA of $75 million for the fourth quarter of 2021. This decrease was largely driven by FIFO impact from consumption of higher-priced feedstock inventory in the fourth quarter of 2022. For full year 22, lubricants performed well above our mid-cycle guidance, reporting annual EBITDA of $382 million due to strong demand for base oils and finished products. HEP reported adjusted EBITDA of $116 million in the fourth quarter compared to $80 million in the same period of last year. This increase was primarily driven by contributions from the Sinclair transportation assets, which were acquired in March of 2022, coupled with record volumes across our integrated system. We returned $475 million in cash to shareholders through share repurchases and dividends during the foreign quarter. And since the closing of the Sinclair acquisition on March 14, 2022, we have returned over $1.6 billion, which is well ahead of our initial target of returning $1 billion to our shareholders by the end of the first quarter of 23. This represents a 2022 full-year cash return of 16%. As of December 31, 2022, we have $662 million remaining on our share repurchase authorization and remain fully committed to our cash return strategy and payout ratio while maintaining a strong balance sheet and an investment-grade credit rating. We also announced today that our Board of Directors declared a regular quarterly dividend increase to $0.45 per share payable on March 17, 2023 to our holders of record on March 7, 2023. This 12.5% increase reflects our constructive outlook on cash generation from our recently acquired assets and our board's commitment to returning excess cash to shareholders. Looking ahead, our focus remains on operating safely and reliably while executing on our integration strategy to fully optimize our new and more diverse asset base. We believe we've created a strong foundation as a downward integrated business with increased scale to drive growth and capital returns to shareholders. So with that, let me turn the call to Agnes.