HollyFrontier Corporation

Welcome to Holy Frontier Corporation's third quarter 2021 conference call and webcast. Hosting the call today from Holy Frontier is Mike Jennings, President and Chief Executive Officer. He's joined with Rich Boliba, Executive Vice President and Chief Financial Officer. Tim Goh, Executive Vice President and Chief Operating Officer. Tom Creary, President Refining and Marketing. and Bruce Lerner, President, Holy Frontier Lubricants and Specialties. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your question following the presentation. If you would like to ask a question at that time, please press star 1 on your touchtone telephone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. If you should require operator assistance, please press star zero. We ask that you limit yourself to one question and one follow-up.

Thank you, Rain. Good morning, everyone, and welcome to Holley Frontier Corporation's third quarter 2021 earnings call. This morning, we issued a press release announcing results for the quarter ending September 30th, 2021. If you would like a copy of the press release, you may find one on our website at hollyfrontier.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 law. There are many factors that could cause results to differ from expectations 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 Mike Jennings.

Mike Jennings Hey, thanks, Craig. Good morning, everyone. Today we reported a third quarter net income attributable to Holly Frontier shareholders of $281 million, or $1.71 per diluted share. These results reflect special items that collectively increased net income by $71 million. Excluding these items, adjusted net income for the third quarter was $210 million, or $1.28 per diluted share. versus an adjusted net loss of $67 million, or negative 41 cents per diluted share, for the same period in 2020. Adjusted EBITDA for the period was $408 million, an increase of $342 million compared to the third quarter of 2020. The refining segment reported EBITDA of $295 million compared to a $39 million loss for the third quarter of 2020, and consolidated refinery gross margin was $14.87 per produced barrel, a 140% increase compared to the same period last year. This increase was primarily due to stronger product demand across the markets we serve. Third quarter crude throughput was approximately 416,000 barrels per day, above our guidance of 380,000 to 400,000. We recently completed planned turnaround work at our Tulsa refinery, which was on time and on budget. At the beginning of October, we began a significant turnaround at the Navajo refinery, which is scheduled to be completed in mid-November. Our lubricants and specialty product segment reported EBITDA of $168 million for the third quarter versus $61 million reported in the same period last year. Excluding an $86 million gain on the sale of property at our Mississauga plant, adjusted EBITDA was $82 million. The RAC back portion of this business continues to see outstanding margins and earnings driven by a combination of strong demand and limited global base oil supply due to a number of factors. In the RAC forward portion, despite strong sales volumes and price increases, the continued rapid rise in base oil prices through the quarter compressed margins. Overall, we're encouraged by the consolidated earnings performance of the lubricants and specialties business this year, and we're optimistic that we'll see a solid finish to the year as demand for both base oils and finished products remains strong. Poly Energy Partners reported adjusted EBITDA of $83 million for the third quarter, compared to $86 million in the third quarter of last year. HEP delivered solid results in the quarter, supported by record volumes on the Salt Lake City and Frontier pipelines in the Rockies region. During the quarter, we completed the Cushion Connect pipeline project, which will replace third-party providers as the primary source of crude supply for our Tulsa refinery. Now I'd like to update on strategic business initiatives. Earlier this week, we closed on our previously announced acquisition of the Puget Sound refinery for aggregate cash consideration of $613.6 million, which consisted of a base cash price of $350 million, hydrocarbon inventory with an estimated closing value of $266.2 million, and other closing adjustments and accrued liabilities of $2.6 million. This purchase price represents an attractive acquisition multiple of 1.5 to 2 times EBITDA net of inventory based on the refinery's historical financial performance. The Puget Sound Reclinery has a strong record of financial and operational performance that we believe will complement our existing refining business. The refinery supplies transportation fuels into the premium Pacific Northwest region and sources advantaged Canadian crude, further enhancing and diversifying our refining asset base. We're committed to the continued safe and environmentally responsible operations of the facility and I'd really like to welcome Puget Sound's highly skilled workforce to the Holly Frontier family. In our renewable segment, I'm pleased to announce that we're progressing ahead of schedule on the Cheyenne Renewable Diesel Conversion Project. The 6,000-barrel-per-day renewable diesel unit is expected to be mechanically complete later this week, and we expect to run our first batch of feed by the end of the year. Given current economics between refined soybean oil and other feedstocks, We've prioritized completion of the pretreatment unit located at the Artesia New Mexico facility, and we now expect to complete the PTU in the first quarter of 2022, a full quarter ahead of schedule, allowing us to run a more favorable mix of feedstocks. The Artesia Renewable Diesel Unit is now expected to be completed in the second quarter of 2022. We are still on budget and expect to spend a total of $800 million to $900 million for all three projects. In regard to our previously announced acquisition of assets from Sinclair, we still expect to close in mid-2022, subject to regulatory clearance and the satisfaction or waiver of all other closing conditions. We look forward to further diversifying our asset base with Sinclair's branded marketing, renewable diesel, refining and refining, and logistics businesses. Looking forward, we remain focused on executing these strategic initiatives, which we believe will allow us to reward our shareholders through the capital return plans we previously announced in August. With that, let me turn the call over to Rich.