HF Sinclair Corporation

joined by Atenasov, Chief Financial Officer, Steve Ledbetter, EVP of Commercial, Valerie Pompea, EVP of Operations, and Matt Joyce, SVP of Lubricants and Specialties, along with John Harrison, Chief Financial Officer of Holley 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 one on your touch tone phone. If at any time your questions have been answered, you may remove yourself from the queue by pressing star one again. 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 Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Craig Berry, Vice President, Investor Relations. Craig, you may begin.

Thank you, Krista. Good morning, everyone, and welcome to HF Sinclair Corporation and Holley Energy Partners' third quarter 2023 earnings call. This morning, we issued press releases announcing results for the quarter ending September 30, 2023. If you would like a copy of the earnings press releases, 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 Tim Goh.

Good morning. I am pleased to report strong third quarter results driven by solid execution of safe and reliable operations across our refining, lubricants, HEP, and marketing segments. We continue to progress our strategic initiatives of integrating and optimizing our portfolio, along with delivering strong cash return to shareholders. Today, we reported third quarter 2023 net income attributable to H.F. Sinclair shareholders of $791 million, or $4.23 per diluted share. These results reflect special items that collectively increased net income by $31 million. Excluding these items, adjusted net income for the third quarter was $760 million, or $4.06 per diluted share. compared to adjusted net income of $983 million, or $4.58 per diluted share for the same period in 2022. Adjusted EBITDA for the third quarter was $1.2 billion, a 20% decrease compared to the third quarter of 2022. In our refining segment, third quarter 2023 adjusted EBITDA contributed $1 billion compared to $1.4 billion in the same period last year. This decrease was primarily driven by lower refining margins in both the West and MidCon regions and lower refined product sales volumes due to higher maintenance activity. Operating expenses were $496 million in the third quarter of 2023 versus the $475 million recorded in the same period last year, as lower natural gas costs were offset by higher maintenance costs. Crude oil charge averaged 602,000 barrels per day in the third quarter of 2023, compared to 646,000 barrels per day in the third quarter of 2022. The decrease was primarily due to higher maintenance activity during the period. I'm pleased to report that the turnaround in the third quarter at our Casper Refinery was completed on time and on budget, and at Tulsa, we are in the process of ramping up normal operations after the successful turnaround at that refinery. With all of our major turnarounds behind us for the year, we remain focused on executing our strategy to improve reliability and operating costs across our refining portfolio. In our renewable segment, we reported adjusted EBITDA of positive $5 million for the third quarter of 2023, compared to negative $14 million for the third quarter of 2022. Total sales volumes were 55 million gallons for the third quarter of 2023 as compared to 52 million gallons for the third quarter of 2022. We continue to make progress towards our target of achieving normalized run rates by the end of 2023 through improved reliability and feedstock optimization. Our marketing segment reported EBITDA of $21 million for the third quarter of 2023. compared to $10 million in the third quarter of 2022. And total branded fuel sales volumes set another quarterly record of 398 million gallons. Gross margin per gallon was 7 cents in the third quarter, supported by strong demand in our regions. During the quarter, we added 15 new branded sites, and we expect to continue to grow our branded sites by 5% or more per year. Our lubricants and specialty product segment reported EBITDA of $118 million for the third quarter of 2023, compared to EBITDA of $15 million for the third quarter of 2022. This increase was largely driven by a $30 million FIFO benefit from consumption of lower priced feedstock inventory for the third quarter of 2023, compared to a $44 million charge in the third quarter of 2022. Despite weakening base oil prices during the period, Continued efforts to improve sales mix optimization across our finished products portfolio resulted in strong earnings contribution from our lubricants business. HEP reported EBITDA of $94 million in the second quarter of 2023, compared to $66 million in the same period of last year. This increase was mainly driven by tariff increases that went into effect on July 1, 2023. On August 15, 2023, we entered into a definitive merger agreement with HEP, and we expect the proposed transaction to close in the fourth quarter of this year, subject to the satisfaction of closing conditions. During the third quarter, we announced and paid a regular quarterly dividend of 45 cents per share to stockholders totaling $84 million and spent $586 million on share repurchases. Year to date, as of September 30th, our total cash return, including dividends and share repurchases, is over $1.09 billion, and we have reduced our share count by 8%. In closing, our third quarter results highlight the diversification of our portfolio and quality of our assets. Our strong cash return during the period demonstrates our continued commitment to our long-term cash return strategy and long-term payout ratio while maintaining an investment-grade rating. Looking forward, we remain focused on executing our strategy of safe and reliable operations as we continue to integrate and optimize our assets across our portfolio. With that, let me turn the call over to Agnes.