HollyFrontier Corporation

Welcome to HF Sinclair Corporation and Holley Energy Partners third quarter 2022 conference call and webcast. Hosting the call today is Mike Jennings, Chief Executive Officer of HF Sinclair and Holley Energy Partners. He is joined by Tim Goh, President and Chief Operating Officer of HF Sinclair. Atanas Atanasoff, Chief Financial Officer of HF Sinclair. And 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 point your question has been answered, you may remove yourself from the queue by again pressing star one. 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 Beery, Vice President, Investor Relations. Craig, you may begin.

Thank you, Rob. Good morning, everyone, and welcome to HF Sinclair Corporation and Holley Energy Partners' third quarter 2022 earnings call. This morning, we issued press releases announcing results for the quarter ending September 30th, 2022. If you would like a copy of the press releases, you may find them on our website 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, the 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. Hey, thanks, Craig. Good morning, everyone.

Today, we reported third quarter net income attributable to H.F. Sinclair shareholders of $954 million, or $4.45 per diluted share. These results reflect special items that collectively decreased net income by $29 million. And excluding these items, adjusted net income for the third quarter was $983 million, or $4.58 per diluted share, compared to adjusted net income of $210 million, or $1.28 per diluted share for the same period in 2021. Adjusted EBITDA for the current quarter was $1.5 billion, an increase of more than a billion dollars compared to the third quarter of 2021. Our third quarter results reflect strong contributions from our refining segment driven by safe and reliable operations that resulted in record throughputs and a 65 percent increase in gasoline and distillate sales volumes year over year. Solid demand in the regions we serve, coupled with low inventories and improved crude differentials, resulted in a refining EBITDA of over $1.4 billion in the third quarter, compared to $295 million in the same period last year. In our renewable segment, we continue to methodically ramp up operations across our facilities with higher utilization rates quarter over quarter. Total sales were 52 million gallons in the third quarter, and we're encouraged by strong demand for renewable diesel and solid margins driven by D4 rent price strength. We also expect to realize additional contribution from our pretreatment unit in Q4. Lubricants and specialty products recorded EBITDA of 15 million for the third quarter, compared to adjusted EBITDA of 82 million for the third quarter of 2021. This decrease was largely driven by FIFO impact from the consumption of higher-priced feedstock inventory, resulting in lower margins. Our lubricants business is still performing well above our mid-cycle guidance on an annual basis as a result of strong demand for base oils and finished products. Marketing segment reported EBITDA was $10 million for the third quarter, and total branded fuel sales volumes were 362 million gallons. representing a $0.03 per gallon margin. We continue to make progress expanding the Dyno brand as our number of branded sites grew by 29 during the third quarter. HEP reported adjusted EBITDA of $110 million in the third quarter, compared to $83 million in the same period last year. This increase was primarily driven by contributions from the Sinclair transportation assets, which were acquired in March of 2022. We returned 952 million in cash to our shareholders through repurchases and dividends during the quarter, and another 152 in the month of October. Since the closing of the Sinclair acquisition on March 14th, 2022, we have returned over 1.1 billion, which is well ahead of our initial target of returning a billion dollars to our shareholders by the end of the first quarter of 23. With the announcement of our new billion dollar share repurchase authorization in September, we remain fully committed to our cash return strategy and payout ratio, while maintaining a strong balance sheet and investment grade credit rating. To date, we've achieved our target of annualized run rate synergies of over 100 million relating to the Sinclair acquisition, an additional 100 million of working capital synergies. We achieved these annual run rate synergies through a combination of commercial improvements, operating expense reductions, and SG&A optimization. We also announced today that our board of directors declared a regular quarterly dividend of 40 cents per share payable on December 5th, 2022 to holders of record November 21st, 2022. Looking ahead, we're constructive on refined product margins supported by low product inventories and wider crude differentials. We remain focused on maintaining safe and reliable operations across our fleet, and our diverse portfolio of assets provides us the opportunity to generate strong free cash flow through the cycle. And with that, let me turn the call over to Atnas.