HF Sinclair Corporation

Welcome to H.F. Sinclair Corporation's fourth quarter 2024 conference call and webcast. Hosting the call today is Tim Goh, Chief Executive Officer of H.F. Sinclair. He is joined by Atanas Atanasov, Chief Financial Officer, Steve Ledbetter, EVP of Commercial, Valerie Pompa, EVP of Operations, and Matt Joyce, SVP of Lubricants and Specialties. 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 touch-tone phone. If at any point your questions have been answered, you may remove yourself from the queue by pressing star 1 again. 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 optimum sound quality. Please note that this conference is being recorded. And it is now my pleasure to turn the floor over to Craig Fiery, Vice President, Investor Relations. Craig, you may begin.

Thank you, Krista. Good morning, everyone, and welcome to HF Sinclair Corporation's fourth quarter 2024 earnings call. This morning, we issued a press release announcing results for the quarter ending December 31st, 2024. If you would like a copy of the earnings press release, you may find it on our website at hfsinclair.com. 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 filings. 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 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.

Good morning, everyone. Our full year 2024 financial and operational results highlight the strength and resiliency of our diversified portfolio. And 2024 was a good year to prove that out as we navigated challenging macroeconomic conditions and refining. Our results also demonstrate the success we are delivering on executing our three key strategic priorities. First, On improving reliability, our heavy turnaround workload in 2024 was completed on schedule and on budget, leading to increased utilization and higher refinery throughputs year over year. I am also pleased to report that we achieved our best ever results for personal safety in 2024, beating our old record by over 40% and positioning all of our assets to continue operating safely and reliably. Optimization and integration helped us achieve record EBITDA in both our marketing and midstream businesses, and our lubricants and specialties business generated another strong year of earnings. We also benefited from lower SG&A expenses year over year. Third, our commitment to shareholder returns. We managed our portfolio of assets to generate strong cash flows through the cycle and are pleased to have returned over $1 billion to shareholders in 2024 through both dividends and share repurchases, all while maintaining a strong balance sheet and liquidity position. All of these examples are proof points that our strategy is working. Now let me cover our segment highlights. In refining for 2024, our annual adjusted operating expenses were lowered to $7.98 per throughput barrel through lean efforts and improved reliability. a reduction of 37 cents per barrel year over year, and setting us on the path towards achieving our target of $7.25 per throughput barrel. We set annual records for premium gasoline production at Woods Cross, jet production at Puget Sound, and hydrogen production at Artesia, amongst other individual site records. In renewables for 2024, we achieved significant milestones reducing our annual operating expenses per gallon 24% year over year, while increasing our utilization and sales volumes by 19% year over year through improved reliability and optimization efforts. Excluding the $20 million end of year charge related to drawdown of higher cost inventory, our renewables business would have achieved significant positive fourth quarter EBITDA. While the margin environment was challenging in 2024, We focused on the things we could control, such as increasing our low-CI feedstock mix through our pretreatment unit, improving our hydrogen availability through our reliability efforts, and leveraging our commercial strategy to strengthen the earnings power of the business. Our marketing segment for 2024 delivered record annual EBITDA of $75 million, a 23% increase over 2023. We also grew our supplied branded footprint by a net of 87 sites during 2024, demonstrating our commitment to grow this business and increase the percentage of branded wholesale volumes across our refining system. We continue to see strategic value in growing and integrating the Dyno brand into our portfolio as it provides a long-term outlet with margin uplift for our refining barrels. Looking forward, we expect to grow our number of branded sites by 10% annually. In lubricants and specialties, we delivered another strong year of earnings with $330 million of adjusted EBITDA, even with 45 million of FIFO headwinds. Our results were driven by strong sales volumes, product mix optimization across our finished products portfolio, and continued base oil integration. In our midstream business, we delivered record annual adjusted EBITDA of $447 million, up 14% year-over-year and record total volumes up 7% year-over-year, highlighting the value of simplifying our corporate structure and capturing synergies from the buy-in of HEP. Looking forward, we remain committed to growing this business and believe there is more low-hanging fruit for integrating and optimizing our midstream and refining businesses. The strong performances of these three non-refining segments demonstrate the strength and resiliency of our diversified portfolio. During 2024, we returned over $1 billion to shareholders through share repurchases and dividends. Since the Sinclair acquisition in March 2022, we have returned over $4 billion in cash to shareholders and have reduced our share count by over 57 million shares, which represents 71% of the shares we issued for both the Sinclair and HEP transactions. As of December 31, 2024, we had approximately $800 million outstanding on our share repurchase authorization, and we remain committed to our long-term cash return strategy and long-term payout ratio while maintaining a strong balance sheet and investment-grade credit rating. Today, we also announced that our Board of Directors declare a regular quarterly dividend of 50 cents per share payable on March 20, 2025, to holders of record on March 6, 2025. Looking forward, we remain focused on our strategies to improve reliability, optimize and integrate our portfolio, and return capital to shareholders, which we believe will drive continued profitable growth and value creation for our shareholders. We are also encouraged by the recent uptick in our refining indicator margins and believe we are well positioned to capture the anticipated rebound and cracks during this draining season. With that, let me turn the call over to Addis.