• Net Loss: $76 million, or negative $0.40 per diluted share.
• Adjusted Net Income: $97 million, or $0.51 per diluted share.
• Adjusted EBITDA: $316 million.
• Refining Segment Adjusted EBITDA: $110 million.
• Renewables Segment Adjusted EBITDA: $2 million.
• Marketing Segment EBITDA: $22 million.
• Lubricants and Specialties Segment EBITDA: $76 million.
• Midstream Segment Adjusted EBITDA: $112 million.
• Net Cash Provided by Operations: $708 million.
• Capital Expenditures: $124 million.
• Total Liquidity: Approximately $3.7 billion.
• Debt Outstanding: $2.7 billion.
• Dividend: $0.50 per share.
• Store Count Increase: 22 net new branded sites in Q3; 46 net new branded sites year-to-date.

• Warning! GuruFocus has detected 3 Warning Sign with DINO.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• HF Sinclair Corp (NYSE:DINO) returned $222 million in cash to shareholders and announced a $0.50 quarterly dividend, demonstrating a strong commitment to shareholder returns.
• The company achieved a quarterly record for jet production and premium production at its Woods Cross refinery, highlighting operational efficiency.
• HF Sinclair Corp (NYSE:DINO) reported strong performance in its Marketing, Midstream, and Lubricants and Specialties segments, showcasing the benefits of a diversified portfolio.
• The company set a record for the highest quarterly sales volumes of renewable diesel and achieved the lowest operating expenses per gallon in its Renewables segment.
• HF Sinclair Corp (NYSE:DINO) added 22 net new branded sites in the third quarter and has plans to convert 168 stores to branded wholesale, targeting 10% annual growth for branded sites.

Negative Points

• HF Sinclair Corp (NYSE:DINO) reported a third-quarter net loss of $76 million, or negative $0.40 per diluted share, reflecting special items that decreased net income by $172 million.
• The Refining segment's adjusted EBITDA dropped significantly to $110 million from $1 billion in the same quarter of 2023, primarily due to lower adjusted refinery gross margins.
• The Renewables segment's adjusted EBITDA decreased to $2 million from $5 million in the third quarter of 2023, despite increased sales volumes.
• The Lubricants and Specialties segment faced a $27 million FIFO charge due to high-priced feedstock inventory, impacting EBITDA.
• HF Sinclair Corp (NYSE:DINO) faces challenges from weak RINs and LCFS credit prices, which continue to pressure the Renewables segment.

Q & A Highlights

Q: How does HF Sinclair plan to manage its balance sheet and shareholder returns if margins remain weak? A: Atanas Atanasov, CFO, stated that despite a weakened crack environment, HF Sinclair maintains a strong balance sheet with net leverage under one times. The company is committed to its dividend and buybacks, ensuring competitive cash returns to shareholders while maintaining an investment-grade rating.

Q: What efforts have been made to improve operational reliability in refining operations? A: Valerie Pompa, EVP of Operations, highlighted that HF Sinclair has focused on heavy turnarounds and technology-driven efficiency improvements. These efforts have led to improved reliability, lower operating costs, and better turnaround performance.

Q: Why is HF Sinclair focused on growing its marketing business? A: Steven Ledbetter, EVP of Commercial, explained that increasing the branded put offers logistical advantages and brand value. The company aims to exploit these advantages, with significant interest and demand for the DINO brand, leading to increased value for the enterprise.

Q: What measures have been taken to achieve a run rate of $350 million EBITDA in the lubricants business? A: Matt Joyce, SVP of Lubricants and Specialties, noted that operational efficiencies, digital tools, and new product offerings have driven growth. The business has focused on optimizing sales mix and operational efficiency, contributing to strong performance despite FIFO headwinds.

Q: How does HF Sinclair view its lubricants business in the long term? A: CEO Timothy Go stated that the company is satisfied with the lubricants business and sees it as a potential core business long-term. The focus is on growing the business and ensuring shareholders appreciate its value within HF Sinclair's portfolio.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.