HF Sinclair Corporation Q2 FY2025 earnings call

• Tim Go noted strong progress against strategic priorities of improving reliability, optimization, and integration, with sequential improvements in key metrics over 3 quarters and returning $145 million to stockholders.
• Atanas Atanasov discussed financial highlights including net income, adjusted EBITDA by segment, capital expenditures, cash balance, and debt metrics.
• Emphasized progress in Refining with turnarounds completed, Renewables near breakeven despite PTC loss, Marketing growth in stores, Lubes & Specialties EBITDA, and Midstream adjusted EBITDA.

Refining

• Second quarter: Completed scheduled turnarounds at Tulsa and Parco refineries. Delivered sequential quarter improvements in capture and crude throughput despite maintenance, weaker crude differentials, and rising RIN prices. Achieved operating expense per throughput barrel of $7.32, near the near-term goal of $7.25 per barrel. One remaining turnaround at Puget Sound Refinery scheduled for end of third quarter.

Renewables

• Near breakeven EBITDA in tough economic environment, maximizing low CI feedstock mix while controlling operating expenses. Began partial recognition of producers tax credit in second quarter, expect additional incremental PTC value in third quarter. Second quarter sales volumes 55 million gallons vs. 64 million gallons in second quarter 2024.

Marketing

• Delivered $25 million in EBITDA, achieved adjusted gross margin of $0.10 per gallon delivered by optimizing business since Sinclair acquisition. Grew branded supplied stores by a net of 55 sites during the quarter and a net 155 over past 12 months, with over 80 additional supplied branded sites signed for next 6-12 months.

Lubricants & Specialties

• Reported $55 million in EBITDA, including $20 million in FIFO headwinds due to falling feedstock prices. Sales volumes and product mix impacted by Mississauga turnaround, but continued to execute on forward integration strategy, launching Sinclair lubricants product offering in the US.

Midstream

• Delivered $112 million in adjusted EBITDA, benefited from higher pipeline revenues and lower operating costs from focused integration efforts since HEP buy-in.

• Full year 2025 capital spending expected to be approximately $775 million in sustaining capital (including turnaround and catalysts), down $25 million from 2024, and $100 million in growth capital investments.
• Third quarter 2025 Refining segment expected to run between 615,000 and 645,000 barrels per day of crude oil, reflecting the planned turnaround at Puget Sound Refinery.

Q: Very strong performance in Refining. Is the strong capture rates a function of getting to competitive levels?

A: Steve Ledbetter said it's due to improving crude slate flexibility, integrated Midstream assets, and producing desired products, putting barrels in short markets and taking advantage of arbs.

Q: How much PTC was accrued in the quarter for renewable diesel and future pace?

A: Steve Ledbetter said partial PTC recognized in second quarter, worked through contractual arrangements to recognize more in third quarter, and legislation structure is supportive relatively speaking.

Q: Thoughts on proposed Senate Bill 237 for uniform gasoline spec?

A: Steve Ledbetter said proposals are uncertain, but capability to make grades and get into Southern PADD 5 is extended, but not sure it will land successfully.