HollyFrontier Corporation

Good morning and welcome to Holly Frontier's and Holly Energy Partners investor conference call. At this time, all participants have been placed in listen only mode. The call will open for your questions following the presentation. As a reminder, this conference call is being recorded and the press release and slide presentation regarding today's announcements are available on the investor relations section of the Holly Frontier and Holly Energy Partners website. The archived replay can also be accessed on both websites following the call. I will now turn the call over to your host, Craig Beery, Vice President of Investor Relations. Mr. Beery, you may now begin.

Thank you, Lauren. Good morning, everyone, and thank you for joining us. On the call with me today are Mike Jennings, Chief Executive Officer and President of Holley Frontier and Chief Executive Officer of Holley Energy Partners. and Rich Boliva, Executive Vice President and Chief Financial Officer of Holley Frontier and President of Holley Energy Partners. We are also joined by Tim Goh, Executive Vice President and Chief Operating Officer of Holley Frontier, and Tom Curry, President of Holley Frontier Renewables. Before we proceed with remarks, please note the Safe Harbor Disclosure Statements in today's press release. In summary, if such statements are made regarding management expectations, judgments, or predictions or 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. 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 Mike Jennings.

Hey, thanks, Craig, and good morning, everyone. We are thrilled to share the news this morning that Holley Frontier Corporation and Holley Energy Partners have entered into definitive agreements with the Sinclair companies. In light of that, we'll be doing things a little differently on the call today. Rich and I will first walk through the transactions and the expected benefits they will create for Holley Frontier, Holley Energy Partners, and our shareholders. After that, Rich will briefly review HFC and AGP's results for the quarter before we turn it over for questions. Starting on slide three, to put it simply, the acquisition of Sinclair's assets will be transformative for both Holley Frontier and Holley Energy Partners. It diversifies and scales Holley Frontier's portfolio with the addition of Sinclair's iconic brand and integrated distribution network, its renewable diesel business, which was a first mover in the space, and its two complementary refineries in the Rocky Mountain region. And we expect it will strengthen our financial position, increasing our earnings, cash flow, and free cash flow within the first year, positioning us to increase returns to shareholders while we deepen our commitment to ESG and sustainability. For HEP2, this transformative transaction provides strategic and financial benefits. With the addition of Sinclair's integrated network of pipelines and storage facilities, HEP will have the scale and incremental earnings power to capture new growth opportunities and focus on increasing returns to unit holders. Turning to slide four, this transaction follows a decade of growth since the merger of Holley and Frontier. We've spent the greater part of that period expanding our refining business, building our renewables business, establishing and growing our lubricant business, and benefiting from our interest in Holley Energy Partners. Since 2011, we've returned more than $3.6 billion in cash through special and regular dividends, and an additional $2.3 billion through share repurchases. Similar to our 2011 merger, we believe these transactions with Sinclair represent an inflection point for our company. We know the Holding family well and have deep respect for the brand and the business they and generations of Sinclair employees have built over the last century plus. We're pleased that the family will retain a significant stake in our combined companies, and we're incredibly excited about beginning this next chapter as HF Sinclair. I'll turn now to a brief overview of the details of the transactions on slide five. First, the Holly Frontier transaction. Holly Frontier is acquiring Sinclair's branded marketing business and all commercial activities related thereto. which build upon an iconic brand with exceptional customer loyalty. Also, Sinclair's renewable diesel business and Sinclair's two Rocky Mountain-based refineries. Sinclair's hospitality ranching and upstream oil and gas businesses are not part of this transaction. Holly Frontier will create a new publicly traded holding company named HF Sinclair Corporation. Sinclair shareholders will receive approximately 60.2 million shares in the newly formed HF Sinclair, equal to 26.75% of the company. Holly Frontier's existing shareholders will own 73.25% of the equity, or approximately 164.9 million shares of the common stock of HF Sinclair. As a result, each outstanding share of Holley Frontier common stock will convert into one share of HF Sinclair common stock at the closing. The all-stock transaction has a value of $1.8 billion based on Holley Frontier's closing stock price on July 30, 2021, and Sinclair comes with no debt. Upon closing, Holley Frontier's existing senior management team will operate the combined company and Sinclair has been granted the right to nominate two directors to the HF Sinclair Board of Directors at the closing. The transaction is expected to close in mid-2022. And now I'll turn the call to Rich. Thank you, Mike. Good morning, everybody.