HF Sinclair Corp

Previous wording

This Item 2 contains “forward-looking” statements. See “Forward-Looking Statements” at the beginning of Part I of this Quarterly Report on Form 10-Q. In addition, this Item 2 should be read in conjunction with the accompanying consolidated financial statements and notes, as well as our consolidated financial statements and notes within our Annual Report on Form 10-K for the year ended December 31, 2023 and Exhibit 99.1 to this Quarterly Report on Form 10-Q as discussed in Part II, Item 5 “Other Information”. In this document, the words “we,” “our,” “ours” and “us” refer only to HF Sinclair Corporation ("HF Sinclair") and its consolidated subsidiaries or to HF Sinclair or an individual subsidiary and not to any other person with certain exceptions. References herein to Holly Energy Partners, L.P. (“HEP”) with respect to time periods prior to the closing of the HEP Merger Transaction (as defined below) on December 1, 2023, refer to HEP and its consolidated subsidiaries.

Current wording

This Item 2 contains “forward-looking” statements. See “Forward-Looking Statements” at the beginning of Part I of this Quarterly Report on Form 10-Q. In addition, this Item 2 should be read in conjunction with the accompanying consolidated financial statements and notes, as well as our consolidated financial statements and notes within our Annual Report on Form 10-K for the year ended December 31, 2023, and Exhibit 99.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. In this document, the words “we,” “our,” “ours” and “us” refer only to HF Sinclair Corporation (“HF Sinclair”) and its consolidated subsidiaries or to HF Sinclair or an individual subsidiary and not to any other person with certain exceptions. References herein to Holly Energy Partners, L.P. (“HEP”) with respect to time periods prior to the closing of the HEP Merger Transaction (as defined below) on December 1, 2023, refer to HEP and its consolidated subsidiaries.

Previous wording

For the three months ended March 31, 2024, net income attributable to HF Sinclair stockholders was $314.7 million compared to $353.3 million for the three months ended March 31, 2023.

Current wording

For the three months ended June 30, 2024, net income attributable to HF Sinclair stockholders was $151.8 million compared to $507.7 million for the three months ended June 30, 2023. For the six months ended June 30, 2024, net income attributable to HF Sinclair stockholders was $466.5 million compared to $860.9 million for the six months ended June 30, 2023.

Previous wording

Our results for the first quarter of 2024 were impacted by seasonal demand weakness for transportation fuels, partially offset by constrained refined product supply. We continue to adjust our operational plans to evolving market conditions. The extent to which our future results are affected by volatile regional and global economic conditions will depend on various factors and consequences beyond our control.

Current wording

Our results for the second quarter of 2024 were primarily impacted by high utilization rates in the refining industry. We continue to adjust our operational plans to evolving market conditions. The extent to which our future results are affected by volatile regional and global economic conditions will depend on various factors and consequences beyond our control.

Previous wording

In the Refining segment, we saw lower refining margins in both the West and Mid-Continent regions in the first quarter of 2024 as a result of seasonal demand weakness in gasoline and diesel sales during the period. Additionally, we began planned maintenance activities for the year during the first quarter of 2024 at our Puget Sound refinery. For the second quarter of 2024, we expect to run between 620,000 – 650,000 barrels per day of crude oil. This guidance reflects the completion of ongoing planned maintenance activities at our Puget Sound refinery as well as planned maintenance at our Parco refinery during the second quarter. Refined product margins are expected to strengthen in the second quarter of 2024 as a result of increased demand heading into the summer driving season.

Current wording

In the Refining segment, we saw lower refining margins in both the West and Mid-Continent regions in the second quarter of 2024 principally as a result of high utilization rates across the industry. Additionally, we completed planned maintenance activities at our Parco refinery during the period. For the third quarter of 2024, we expect to run between 570,000 – 600,000 barrels per day of crude oil, which reflects planned maintenance at our Parco and El Dorado refineries.

Previous wording

In the Renewables segment, weakened RINs and Low Carbon Fuel Standard (“LCFS”) prices impacted renewable diesel margins in the first quarter of 2024. For the second quarter of 2024, we expect planned maintenance at our renewable diesel unit (“RDU”) within our Parco co-located refinery and continued weakness in RINs and LCFS prices to impact renewable diesel margins.

Current wording

In the Renewables segment, we saw improved performance as a result of increased sales volumes and feedstock optimization despite continued weakness in RINs and Low Carbon Fuel Standard (“LCFS”) prices and planned maintenance at our renewable diesel unit (“RDU”) within our Parco co-located refinery impacted renewable diesel margins in the second quarter of 2024. For the third quarter of 2024, we expect continued weakness in RINs and LCFS prices to impact renewable diesel margins.

Previous wording

In the Marketing segment, we saw strong value in the Sinclair branded sites during the first quarter of 2024 as the marketing business continued to provide a consistent sales channel with margin uplift for our produced fuels. We continue to target 5% or more annual growth in the number of branded sites.

Current wording

In the Marketing segment, we continued to see strong value in the Sinclair branded sites during the second quarter of 2024 as the marketing business continued to provide a consistent sales channel with margin uplift for our produced fuels. We expect to grow the number of branded sites by approximately 10% over the next six to twelve months.

Previous wording

In the Lubricants & Specialties segment, during the first quarter of 2024, despite weakening base oil prices during the period, we continued to see strong performance, driven by sales mix optimization across our portfolio.

Current wording

In the Lubricants & Specialties segment, during the second quarter of 2024, we continued to see strong performance, driven by increased sales volumes, sales mix optimization and base oil integration across our portfolio.

Previous wording

In the Midstream segment, our results benefited from higher revenues from tariff increases during the first quarter of 2024.

Current wording

In the Midstream segment, our results benefited from higher revenues from increased sales volumes and higher tariffs in the second quarter of 2024.

Previous wording

In August 2023, our Board of Directors authorized a $1.0 billion share repurchase program, and we continued to repurchase shares in the first and second quarter of 2024 under this program. On May 7, 2024, our Board of Directors authorized a new $1.0 billion share repurchase program, and we expect to continue to repurchase shares in the second quarter of 2024. The timing and amount of share repurchases under the new repurchase program, including those from REH Company, will depend on market conditions and corporate, tax, regulatory and other relevant conditions. On May 8, 2024, our Board of Directors announced that it declared a regular quarterly dividend in the amount of $0.50 per share. The dividend is payable on June 5, 2024 to holders of record of common stock on May 22, 2024.

Current wording

In August 2023, our Board of Directors authorized a $1.0 billion share repurchase program, and we continued to repurchase shares in the first and second quarter of 2024 under this program. On May 7, 2024, our Board of Directors authorized a new $1.0 billion share repurchase program (the “May 2024 Share Repurchase Program”), and we continued to repurchase shares this quarter under the May 2024 Share Repurchase Program. The timing and amount of share repurchases under the May 2024 Share Repurchase Program, including those from REH Company (“REH Company” and together with its affiliate REH Advisors Inc., “REH”), will depend on market conditions and corporate, tax, regulatory and other relevant conditions. On August 1, 2024, our Board of Directors announced that it declared a regular quarterly dividend in the amount of $0.50 per share. The dividend is payable on September 5, 2024 to holders of record of common stock on August 21, 2024.

Previous wording

Pursuant to the 2007 Energy Independence and Security Act, the Environmental Protection Agency (“EPA”) promulgated the Renewable Fuel Standard (“RFS”) regulations, which increased the volume of renewable fuels mandated to be blended into the nation’s fuel supply. The regulations, in part, require refiners to add annually increasing amounts of “renewable fuels” to their petroleum products or purchase credits, known as RINs, in lieu of such blending. Compliance with RFS regulations significantly increases our cost of products sold, with RINs costs totaling $106.6 million for the three months ended March 31, 2024. At March 31, 2024, our open RINs credit obligations were $29.6 million.

Current wording

Pursuant to the 2007 Energy Independence and Security Act, the Environmental Protection Agency (“EPA”) promulgated the Renewable Fuel Standard (“RFS”) regulations, which increased the volume of renewable fuels mandated to be blended into the nation’s fuel supply. The regulations, in part, require refiners to add annually increasing amounts of “renewable fuels” to their petroleum products or purchase credits, known as RINs, in lieu of such blending. Compliance with RFS regulations significantly increases our cost of materials and other, with RINs costs totaling $107.6 million and $214.1 million for the three and six months ended June 30, 2024, respectively, compared to $200.8 million and $358.3 million for the three and six months ended June 30, 2023, respectively. At June 30, 2024, our open RINs credit obligations were $22.7 million.

Previous wording

A more detailed discussion of our financial and operating results for the three months ended March 31, 2024 and 2023 is presented in the following sections.

Current wording

A more detailed discussion of our financial and operating results for the three and six months ended June 30, 2024 and 2023 is presented in the following sections.