HF Sinclair Corp

Financial Data

(2)Exclusive of Lower of cost or market inventory valuation adjustments.

Balance Sheet Data

Other Financial Data

(1)Earnings before interest, taxes, depreciation and amortization, which we refer to as “EBITDA,” is calculated as Net income attributable to HF Sinclair stockholders plus (i)Interest expense, net of Interest income, (ii)Income tax expense (benefit), and (iii)Depreciation and amortization. EBITDA is not a calculation provided for under GAAP; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants. EBITDA presented above is reconciled to net income under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

Supplemental Segment Operating Data

Our operations are organized into five reportable segments, Refining, Renewables, Marketing, Lubricants & Specialties and Midstream. See Note 16 “Segment Information” in the Notes to Consolidated Financial Statements for additional information on our reportable segments.

Refining Segment Operating Data

The disaggregation of our refining geographic operating data is presented in two regions, Mid-Continent and West, to best reflect the economic drivers of our refining operations. The Mid-Continent region is comprised of the El Dorado and Tulsa refineries. The West region is comprised of the Puget Sound, Navajo, Woods Cross, Parco and Casper refineries. The following tables set forth information, including non-GAAP performance measures, about our consolidated refinery operations. Adjusted refinery gross margin per produced barrel sold is total Refining segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of produced refined products sold. This margin measure does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(1)Crude charge represents the barrels per day of crude oil processed at our refineries.

(2)Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries.

(3)Represents barrels sold of refined products produced at our refineries (including Asphalt and intersegment sales) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold.

(4)Represents crude charge divided by total crude capacity (BPSD). Our consolidated crude capacity is 678,000 BPSD.

(5)Represents the average amount per produced barrel sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(6)Gross margin represents total Refining segment Sales and other revenues less Cost of materials and other, Lower of cost or market inventory valuation adjustments, Operating expenses and Depreciation and amortization, divided by sales volumes of refined products produced at our refineries.

(7)Adjusted refinery gross margin is a non-GAAP measure and represents total Refining segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of refined products produced at our refineries. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(8)Represents total Refining segment Operating expenses, exclusive of Depreciation and amortization, divided by sales volumes of refined products produced at our refineries.

(9)Represents total Refining segment Operating expenses, exclusive of Depreciation and amortization, divided by Refinery throughput.

Renewables Segment Operating Data

The following table sets forth information, including non-GAAP performance measures, about our renewables operations. Adjusted renewables gross margin per produced gallon sold is total Renewables segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of produced renewables products sold. This margin measure does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(1)Represents the average amount per produced gallon sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(2)Gross margin represents total Renewables segment Sales and other revenues less Cost of materials and other, Lower of cost or market inventory valuation adjustments, Operating expenses and Depreciation and amortization, divided by sales volumes of renewable diesel produced at our renewable diesel units.

(3)Adjusted renewables gross margin is a non-GAAP measure and represents total Renewables segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of renewable diesel produced at our renewable diesel units. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(4)Represents total Renewables segment Operating expenses, exclusive of Depreciation and amortization, divided by sales volumes of renewable diesel produced at our renewable diesel units.

Marketing Segment Operating Data

The following table sets forth information, including non-GAAP performance measures, about our marketing operations and includes our Sinclair branded fuel business. Adjusted marketing gross margin per gallon sold is total Marketing segment gross margin plus Depreciation and amortization, divided by sales volumes of marketing products sold. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(1)Includes non-Sinclair branded sites from legacy HollyFrontier agreements.

(2)Represents the average amount per gallon sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(3)Gross margin represents total Marketing segment Sales and other revenues less Cost of materials and other and Depreciation and amortization, divided by sales volumes of marketing products sold.

(4)Adjusted marketing gross margin is a non-GAAP measure and represents total Marketing segment gross margin plus Depreciation and amortization, divided by sales volumes of marketing products sold. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

Lubricants & Specialties Segment Operating Data

The following table sets forth information about our lubricants and specialties operations:

Midstream Segment Operating Data

The following table sets forth information about our midstream operations:

(1)Certain affiliate volumetric non-financial information has been recast to conform to current year presentation.

Results of Operations – Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Summary

Net loss attributable to HF Sinclair stockholders for the three months ended September 30, 2024, was $(75.9) million ($(0.40) per basic and diluted share), a $866.9 million decrease compared to Net income attributable to HF Sinclair stockholdersof $790.9 million ($4.23 per basic and diluted share) for the three months ended September 30, 2023. The decrease in net income was principally driven by lower adjusted refinery gross margins in both the West and Mid-Continent regions, partially offset by higher refined product sales volumes. Lower of cost or market inventory valuation adjustments related to our refining and renewables Inventories decreased pre-tax earnings by $202.3 million for the three months ended September 30, 2024, and increased pre-tax earnings by $43.8 million for the three months ended September 30, 2023. Adjusted refinery gross margins for the three months ended September 30, 2024 decreased to $10.79 per produced barrel sold as compared to $26.27 for the three months ended September 30, 2023.

Sales and Other Revenues

Sales and other revenues decreased 19.1% from $8,905.5 million for the three months ended September 30, 2023, to $7,207.1 million for the three months ended September 30, 2024, principally due to lower refined product sales prices, partially offset byhigher refined product sales volumes. Sales and other revenues included $950.1 million, $682.6 million, $27.8 million and $160.0 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the three months ended September 30, 2024. Sales and other revenues included $1,259.2 million, $686.1 million, $29.1 million and $213.1 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the three months ended September 30, 2023.

Cost of Materials and Other

Cost of materials and other, exclusive of Lower of cost or market inventory valuation adjustments, decreased 11% from $6,935.7 million for the three months ended September 30, 2023, to $6,158.3 million for the three months ended September 30, 2024, principally due to lower crude oil costs, partially offset by higher refined product sales volumes. Within our Lubricants & Specialties segment, the FIFO impact wasa charge of $26.7 million for the three months ended September 30, 2024, compared to a benefit of $29.9 million for thethree months ended September 30, 2023.

During the third quarter of 2024, we recognized a Lower of cost or market inventory valuation adjustment charge related to our Refining and Renewables segment Inventories of $198.8 million and $3.5 million, respectively. Additionally, during the third quarter of 2023, we recognized a Lower of cost or market inventory valuation adjustment benefit related to our Refining and Renewables segment Inventories of $26.8 million and $17.0 million, respectively.

Adjusted Refinery Gross Margins

Adjusted refinery gross margin per produced barrel sold decreased 59% from $26.27 for the three months ended September 30, 2023, to $10.79 for the three months ended September 30, 2024. The decrease was due to lower average sales prices per barrel, partially offset by lower crude oil and feedstock prices during the three months ended September 30, 2024. Adjusted refinery gross margin per produced barrel sold does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period, Operating expenses, and Depreciation and amortization. See “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q for a reconciliation to the statement of operations sales price of products sold and cost of products purchased.

Operating Expenses

Operating expenses increased 1% from $622.5 million for the three months ended September 30, 2023, to $629.6 million for the three months ended September 30, 2024, primarily due to other miscellaneous costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 5% from $124.2 million for the three months ended September 30, 2023, to $118.0 million for the three months ended September 30, 2024, primarily due to lower incentive compensation and professional costs, partially offset by higher costs related to information technology. We incurred$0.1 million and $6.6 million in acquisition integration and regulatory costs during the three months ended September 30, 2024 and 2023, respectively.

Depreciation and Amortization Expenses

Depreciation and amortization increased 7% from $195.6 million for the three months ended September 30, 2023, to $209.7 million for the three months ended September 30, 2024, principally due to Depreciation and amortization attributable to additional capitalized refinery turnaround costs and capitalized improvement projects as compared to the prior period.

Asset Impairments

For the three months ended September 30, 2024, we recorded impairments totaling $10.0 million in our Midstream segment related to certain logistic assets.

Interest Income

Interest income was $18.3 million for the three months ended September 30, 2024, compared to $24.6 million for the three months ended September 30, 2023. The decrease in Interest income was primarily due to the decrease in average cash balance.

Interest Expense

Interest expense was $40.4 million for the three months ended September 30, 2024, compared to $48.7 million for the three months ended September 30, 2023. This decrease was primarily due to a reduction in total debt outstanding as compared to the prior period.

Gain (loss) on Foreign Currency Transactions

Remeasurement adjustments resulting from the foreign currency conversion of the intercompany financing notes payable by Petro-Canada Lubricants Inc. net of mark-to-market valuations on foreign exchange forward contracts with banks which hedge the foreign currency exposure on these intercompany notes were a net gain of $1.4 million and $0.9 million for the three months ended September 30, 2024 and 2023, respectively. For the three months ended September 30, 2024 and 2023, the change in foreign currency transactions included a loss of $4.1 million and a gain of $10.2 million, respectively, on foreign exchange forward contracts (utilized as an economic hedge).

Income Taxes

For the three months ended September 30, 2024, we recorded an income tax benefit of $57.3 million compared to $235.0 million of tax expense for the three months ended September 30, 2023. This decrease was principally due to decreased earnings during the three months ended September 30, 2024, compared to the same period of 2023. Our effective tax rates were 43.6% and 22.2% for the three months ended September 30, 2024 and 2023, respectively. The difference between the U.S. federal statutory rate and the effective tax rate for the three months ended September 30, 2024, is primarily due to the relationship between pre-tax results and non-taxable permanent differences. The difference in the U.S. federal statutory rate and the effective tax rate for the three months ended September 30, 2023, was primarily due to the impact of federal tax credits and the relationship between pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes.

Results of Operations – Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Summary

Net income attributable to HF Sinclair stockholders for the nine months ended September 30, 2024 was $390.5 million ($2.01 per basic and diluted share), a $1,261.3 million decrease compared to $1,651.8 million ($8.57 per basic and diluted share) for the nine months ended September 30, 2023. The decrease in Net income attributable to HF Sinclair stockholders was principally driven by lower adjusted refinery gross margins in both the West and Mid-Continent regions, partially offset by higher refined product sales volumes. Lower of cost or market inventory adjustments related to our Refining and Renewables segments’ inventories increased pre-tax earnings by $20.2 million and $4.1 million for the nine months ended September 30, 2024 and 2023, respectively. Adjusted refinery gross margins for the nine months ended September 30, 2024 decreased to $11.59 per produced barrel sold as compared to $23.91 for the nine months ended September 30, 2023.

Sales and Other Revenues

Sales and other revenues decreased 9% from $24,304.3 million for the nine months ended September 30, 2023 to $22,080.1 million for the nine months ended September 30, 2024, principally due to decreased refined product sales prices and lower excess crude oil sales volumes as a result of fewer planned maintenance activities in 2024, partially offset by higher refined product sales volumes. Sales and other revenues included $2,668.2 million, $2,084.2 million, $77.9 million and $519.9 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the nine months ended September 30, 2024. Sales and other revenues included $3,237.5 million, $2,105.9 million, $85.3 million and $590.6 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the nine months ended September 30, 2023.

Cost of Materials and Other

Cost of materials and other, exclusive of Lower of cost or market inventory valuation adjustments, decreased 2% from $19,313.3 million for the nine months ended September 30, 2023 to $18,835.3 million for the nine months ended September 30, 2024, principally due to lower excess crude oil sales volumes as a result of fewer planned maintenance activities in 2024, partially offset by higher refined product sales volumes. Within our Lubricants & Specialties segment, FIFO impact was a charge of $42.4 million and a benefit of $16.4 million for the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, we recognized a Lower of cost or market inventory valuation adjustment benefit related to our Refining segment inventories of $21.8 million. Additionally, during the nine months ended September 30, 2024, we recognized a Lower of cost or market inventory valuation adjustment charge related to our Renewables segment inventories of $1.6 million as compared to a benefit of $4.1 million during the nine months ended September 30, 2023.

Adjusted Refinery Gross Margins

Adjusted refinery gross margin per produced barrel sold decreased 52% from $23.91 for the nine months ended September 30, 2023 to $11.59 for the nine months ended September 30, 2024, principally due to lower average sales prices per barrel during the nine months ended September 30, 2024. Adjusted refinery gross margin per produced barrel sold does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period, Operating expenses, and Depreciation and amortization. See “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q for a reconciliation to the statement of operations sales price of products sold and cost of products purchased.

Operating Expenses

Operating expenses increased 1% from $1,808.7 million for the nine months ended September 30, 2023, to $1,828.0 million for the nine months ended September 30, 2024, primarily due to increased maintenance and other miscellaneous costs, partially offset by lower natural gas costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 6% from $347.5 million for the nine months ended September 30, 2023, to $326.2 million for the nine months ended September 30, 2024, primarily due to lower professional costs, a decrease in acquisition integration and regulatory costs, and lower incentive compensation, partially offset by higher costs related to information technology. We incurred $2.0 million and $14.1 million in acquisition integration and regulatory costs during the nine months ended September 30, 2024 and 2023, respectively.

Depreciation and Amortization Expenses

Depreciation and amortization increased 10% from $558.9 million for the nine months ended September 30, 2023, to $613.8 million for the nine months ended September 30, 2024, principally due to additional capitalized refinery turnaround costs and capitalized improvement projects as compared to the prior period.

Asset Impairments

For the nine months ended September 30, 2024, we recorded impairments totaling $10.0 million in our Midstream segment related to certain logistic assets.

Interest Income

Interest income was $59.0 million for the nine months ended September 30, 2024, compared to $62.1 million for the nine months ended September 30, 2023. The decrease in Interest income was primarily due to the decrease in average cash balance.

Interest Expense

Interest expense was $126.5 million for the nine months ended September 30, 2024, compared to $141.5 million for the nine months ended September 30, 2023. This decrease was primarily due to a reduction in total debt outstanding as compared to the prior period.

Gain on Foreign Currency Transactions

Remeasurement adjustments from the foreign currency conversion of the intercompany financing note payable by Petro-Canada Lubricants Inc. resulted in a net gain of $1.5 million and $2.5 million for the nine months ended September 30, 2024 and 2023, respectively. Utilized as an economic hedge to mitigate foreign currency exposure, the intercompany note is net of mark-to-market valuations on foreign exchange forward contracts. For the nine months ended September 30, 2024 and 2023, foreign currency transactions included a gain of $9.5 million and a gain of $1.6 million, respectively, on foreign exchange forward contracts.

Income Taxes

For the nine months ended September 30, 2024, we recorded Income tax expense of $52.2 million compared to $480.6 million for the nine months ended September 30, 2023. This decrease was principally due to lower pre-tax income during the nine months ended September 30, 2024, compared to the same period of 2023. Our effective tax rates were 11.6% and 21.6% for the nine months ended September 30, 2024 and 2023, respectively. The difference between the U.S. federal statutory rate and the effective tax rate for the nine months ended September 30, 2024 is primarily due to the relationship between pre-tax results and non-taxable permanent differences. The difference in the U.S. federal statutory rate and the effective tax rate for the nine months ended September 30, 2023 was primarily due to the impact of federal tax credits and the relationship between pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

HF Sinclair and HEP Credit Agreements

We have a $1.65 billion senior unsecured revolving credit facility maturing in April 2026 (the “HF Sinclair Credit Agreement”). The HF Sinclair Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes. At September 30, 2024, we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling$0.2 million under the HF Sinclair Credit Agreement.

Additionally, our wholly owned subsidiary, HEP, has a $1.2 billion senior secured revolving credit facility maturing in July 2025 (the “HEP Credit Agreement” and, together with the HF Sinclair Credit Agreement, the “Credit Agreements”). In connection with the consummation of the HEP Merger Transaction, we amended the HEP Credit Agreement to, among other things, (a) provide a guaranty from us and terminate all guaranties from subsidiaries of HEP, (b) amend the definition of “Investment Grade Rating” (as defined in the HEP Credit Agreement) to reference the credit rating of our senior unsecured indebtedness, (c) eliminate the requirement to deliver separate audited and unaudited financial statements for HEP and its subsidiaries and only provide certain segment-level reporting for HEP with any compliance certificate delivered in accordance with the HEP Credit Agreement and (d) amend certain covenants to eliminate certain restrictions on (i) amendments to intercompany contracts, (ii) transactions with us and our subsidiaries and (iii) investments in and contributions, dividends, transfers and distributions to us and our subsidiaries.

The HEP Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments, working capital and for general corporate purposes. It is also available to fund letters of credit up to a $50 million sub-limit and has an accordion feature that allows us to increase the commitments under the HEP Credit Agreement up to a maximum amount of $1.7 billion. At September 30, 2024, we were in compliance with all of its covenants, had outstanding borrowings of $350.0 millionand no outstanding letters of credit under the HEP Credit Agreement.

Indebtedness under the Credit Agreements bears interest, at our option, for borrowings in U.S. dollars at either (a) a base rate equal to the sum of (1) the highest of (i) the prime rate (as publicly announced from time to time by the applicable administrative agent), (ii) the Federal Funds Effective Rate (as defined in the HF Sinclair Credit Agreement and as defined as the “Federal Funds Rate” in the HEP Credit Agreement) plus 0.5%, and (iii) Spread Adjusted Term SOFR (as defined in the HF Sinclair Credit Agreement and as defined as “Adjusted Term SOFR” in the HEP Credit Agreement) for a one-month interest period plus 1%, plus (2) an applicable margin for base rate loans ranging from 0.25% to 1.125%, or (b) the sum of (1) Spread Adjusted Term SOFR (as defined in the HF Sinclair Credit Agreement and as defined as “Adjusted Term SOFR” in the HEP Credit Agreement) for the applicable interest period, plus (2) an applicable margin for term SOFR loans ranging from 1.25% to 2.125%. The HF Sinclair Credit Agreement allows for borrowings in Sterling and Euros with similar interest rates. In each case and each Credit Agreement, the applicable margin is based on HF Sinclair’s debt rating assigned by Standard & Poor’s Rating Services and Moody’s Investors Service, Inc. The weighted average interest rate in effect under the HEP Credit Agreement on our borrowings was 6.58% as of September 30, 2024.

During the nine months ended September 30, 2024, we had net repayments of $105.5 million under the HEP Credit Agreement.

Restricted HF Sinclair Senior Notes Exchange

On December 4, 2023, we completed our offers to exchange any and all outstanding HEP 5.000% senior notes maturing February 2028 (the “HEP 5.000% Senior Notes”) and HEP 6.375% senior notes maturing April 2027 (the “HEP 6.375% Senior Notes” and, together with the HEP 5.000% Senior Notes, the “HEP Senior Notes”) for HF Sinclair 5.000% senior notes maturing February 2028 (the “HF Sinclair 5.000% Senior Notes”) and HF Sinclair 6.375% senior notes maturing April 2027 (the “HF Sinclair 6.375% Senior Notes”and, together with the HF Sinclair 5.000% Senior Notes, the “Restricted HF Sinclair Senior Notes”) to be issued by HF Sinclair with registration rights and cash. In connection with the exchange offers, we amended the indenture governing the HEP Senior Notes to eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events which may lead to an “Event of Default,” (iii) the SEC reporting covenant and (iv) the requirement of HEP to offer to purchase the HEP Senior Notes upon a change of control. The Restricted HF Sinclair Senior Notes were issued in exchange for the HEP Senior Notes pursuant to a private exchange offer exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). This exchange was part of a broader corporate strategy, including the HEP Merger Transaction.

On May 10, 2024, HF Sinclair filed a registration statement, as amended, which was declared effective on August 5, 2024, to exchange the Restricted HF Sinclair Senior Notes for an equal principal amount of each respective series of the Restricted HF Sinclair Senior Notes (such notes offered in exchange, the “Registered HF Sinclair Senior Notes”). The Registered HF Sinclair Senior Notes are substantially identical to the Restricted HF Sinclair Senior Notes in all material respects except the Registered

HF Sinclair Senior Notes are registered under the Securities Act and are not subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with the Registration Rights Agreement, dated December 4, 2023, and do not have the registration rights applicable to the Restricted HF Sinclair Senior Notes. On September 5, 2024, HF Sinclair completed its offers to exchange the Restricted HF Sinclair Senior Notes for the Registered HF Sinclair Senior Notes.

The Registered HF Sinclair Senior Notes are unsecured and unsubordinated obligations of ours and rank equally with all our other existing and future unsecured and unsubordinated indebtedness. Each series of the Registered HF Sinclair Senior Notes has the same interest rate, interest payment dates, maturity date and redemption terms as the corresponding series of Restricted HF Sinclair Senior Notes.

HF Sinclair Financing Arrangements

Certain of our wholly owned subsidiaries entered into financing arrangements whereby such subsidiaries sold a portion of their precious metals catalyst to a financial institution in exchange for cash and then financed the use of the precious metals catalyst for a term not to exceed one year. The volume of the precious metals catalyst and the interest rate are fixed over the term of each agreement, and the payments are recorded as Interest expense. Upon maturity of the financing arrangement, we must either satisfy the obligation at fair market value or refinance to extend the maturity.

HF Sinclair may, from time to time, issue letters of credit pursuant to uncommitted letters of credit facilities with its lenders. At September 30, 2024, there were no letters of credit outstanding under such credit facilities.

See Note 11 “Debt” in the Notes to Consolidated Financial Statements for additional information on our debt instruments.

Liquidity

We believe our current Cash and cash equivalents, along with future internally generated cash flow and funds available under our credit facilities, will provide sufficient resources to fund currently planned capital projects and our liquidity needs for the foreseeable future. We expect that, to the extent necessary, we can raise additional funds from time to time through equity or debt financings in the public and private capital markets. Further, we may, from time to time, seek to retire some or all of our outstanding debt agreements through cash purchases, and/or exchanges, open market purchases, privately negotiated transactions, tender offers or otherwise. Such transactions, if any, may be material and will depend on prevailing market conditions, our liquidity requirements and other factors. In addition, components of our long-term growth strategy include the optimization of existing units at our facilities and the selective acquisition of complementary assets for our operations intended to increase earnings and cash flow. We also expect to use cash for payment of cash dividends, which are at the discretion of our Board of Directors, and for the repurchase of common stock under the May 2024 Share Repurchase Program.

Our liquidity was approximately$3.7 billion at September 30, 2024, consisting of Cash and cash equivalents of $1.2 billion, an undrawn $1.65 billion credit facility under the HF Sinclair Credit Agreement and $850.0 million remaining availability under the HEP Credit Agreement.

We consider all highly liquid instruments with a maturity of three months or less at the time of purchase to be cash equivalents. These primarily consist of investments in conservative, highly rated instruments issued by financial institutions, government and corporate entities with strong credit standings and money market funds. Cash equivalents are stated at cost, which approximates market value.

On May 7, 2024, our Board of Directors approved the May 2024 Share Repurchase Program, which replaced all existing share repurchase programs, including the approximately $214.2 million remaining underthe share repurchase program approved by our Board of Directors in August 2023 (the “August 2023 Share Repurchase Program”). The May 2024 Share Repurchase Program authorizes us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH are also authorized under the May 2024 Share Repurchase Program, subject to REH’s interest in selling its shares and other limitations. The timing and amount of share repurchases, including those from REH, will depend on market conditions and corporate, tax, regulatory and other relevant considerations. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs. The May 2024 Share Repurchase Program may be discontinued at any time by our Board of Directors.

During the nine months ended September 30, 2024, we made open market and privately negotiated purchases of 7,930,742 shares for $462.2 million under the August 2023 Share Repurchase Program, of which 6,516,326 shares were repurchased for $381.1 million pursuant to privately negotiated repurchases from REH Company. During the nine months ended September 30, 2024, we made open market and privately negotiated purchases of 4,013,435 shares for $201.5 million under the May 2024 Share Repurchase Program, of which 1,348,435 shares were repurchased for $75.0 million pursuant to privately negotiated repurchases from REH Company.

Cash Flows – Operating Activities

Net cash flows provided by operating activities were $1,250.4 million for the nine months ended September 30, 2024, compared to $2,066.6 million for the nine months ended September 30, 2023, a decrease of $816.2 million primarily driven by a decrease in net income, partially offset by changes in working capital combined with lower turnaround spend during the nine months ended September 30, 2024. Changes in working capital increased operating cash flows by$545.1 million for thenine months ended September 30, 2024, andincreased operating cash flows by $144.0 million for the nine months ended September 30, 2023. Additionally, for the nine months ended September 30, 2024, Turnaround expenditures were $258.8 million compared to $471.1 million for the nine months ended September 30, 2023.

Cash Flows – Investing Activities and Planned Capital Expenditures

For the nine months ended September 30, 2024, our Net cash flows used for investing activities were $294.6 million. Cash expenditures for Properties, plants and equipment for the nine months ended September 30, 2024, were $296.9 million.

For the nine months ended September 30, 2023, our Net cash flows used for investing activities were $247.7 million. Cash expenditures for Properties, plants and equipment for the nine months ended September 30, 2023, were $261.4 million.

Each year, our Board of Directors approves our annual capital budget, which includes specific projects that management is authorized to undertake. When conditions warrant or as new opportunities arise, additional projects may be approved. The funds appropriated for a particular capital project may be expended over a period of several years, depending on the time required to complete the project. Therefore, our planned capital expenditures for a given year consist of expenditures appropriated in that year’s capital budget plus expenditures for projects appropriated in prior years that have not yet been completed. Refinery turnaround spending is amortized over the useful life of the turnaround.

The refining industry is capital-intensive and requires ongoing investments to sustain our refining operations. This includes the replacement of, or rebuilding, refinery units and components that extend their useful life. We also invest in projects that improve operational reliability and profitability via enhancements that improve refinery processing capabilities as well as production yield and flexibility. Our capital expenditures also include projects related to renewable diesel, environmental, health and safety compliance and include initiatives as a result of federal and state mandates.

Our refinery operations and related emissions are highly regulated at both federal and state levels, and we invest in our facilities as needed to remain in compliance with these standards. Additionally, when faced with new emissions or fuel standards, we seek to execute projects that facilitate compliance and also improve the operating costs and/or yields of associated refining processes.

Expected capital and turnaround cash spending for 2024 is as follows:

Cash Flows – Financing Activities

For the nine months ended September 30, 2024, our Net cash flows used for financing activities were $1,078.7 million. During the nine months ended September 30, 2024, we repurchased $667.3 million of our Common stock, paid $290.5 million in Dividends and had net repayments of$105.5 million under the HEP Credit Agreement.

For the nine months ended September 30, 2023, our Net cash flows used for financing activities were $1,268.3 million. During the nine months ended September 30, 2023, we repurchased $833.6 million of our Common stock, paid $258.9 million in Dividendsand had net repayments of$89.5 million under the HEP Credit Agreement.

Contractual Obligations and Commitments

During the nine months ended September 30, 2024, we had net repayments of $105.5 million, resulting in $350.0 million of outstanding borrowings under the HEP Credit Agreement.

There were no other significant changes to our long-term contractual obligations during this period.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023. Certain critical accounting policies that materially affect the amounts recorded in our consolidated financial statements include assessing the possible impairment of certain Assets and Goodwill and assessing contingent liabilities for probable losses.

Goodwill and Asset Impairments

As of September 30, 2024, our Goodwill balance was $3.0 billion, with goodwill assigned to our Refining, Renewables, Marketing, Lubricants & Specialties and Midstream segments. Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired and liabilities assumed. Goodwill is not subject to amortization and is tested annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our goodwill impairment testing first entails either a quantitative assessment or an optional qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine that based on the qualitative factors that it is more likely than not that the carrying value of the reporting unit is greater than its fair value, a quantitative test is performed in which we estimate the fair value of the related reporting unit. If the carrying amount of a reporting unit exceeds its fair value, the goodwill of that reporting unit is impaired, and we measure goodwill impairment as the excess of the carrying amount of reporting unit over the related fair value.

We performed our annual goodwill impairment testing quantitatively as of July 1, 2024, and determined there was no impairment of goodwill attributable to our reporting units. The estimated fair values of our reporting units were derived using a combination of income and market approaches. The income approach reflects expected future cash flows based on estimated forecasted production levels, selling prices, gross margins, operating costs and capital expenditures. Our market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions and other market data of other like-kind assets. The fair values of the reporting units over their respective carrying values exceeded 10%. Increasing the discount rate by 1.0% or reducing the terminal cash flow growth rate by 1.0% would not have changed the results of our annual goodwill testing.

In performing our impairment test of goodwill, we developed cash flow forecasts for each of our reporting units. Significant judgment is involved in performing these fair value estimates since the results are based on forecasted financial information. The cash flow forecasts include significant assumptions such as planned utilization, end-user demand, selling prices, gross margins, operating costs and capital expenditures. Other key assumptions applied to these forecasts to determine the fair value of a reporting unit are the discount rate and terminal cash flow growth rate. The discount rate is intended to reflect the weighted average cost of capital for a market participant and the risks associated with the realization of the estimated future cash flows. Our fair value estimates are based on projected cash flows, which we believe to be reasonable.

We continually monitor and evaluate various factors for potential indicators of goodwill and asset impairments. A reasonable expectation exists that further deterioration in our operating results or overall economic conditions could lead to goodwill and / or asset impairments at some point in the future. Future impairment charges could be material to our results of operations and financial condition.

Contingencies

We are subject to proceedings, lawsuits and other claims related to environmental, labor, product and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy when dealing with these matters.

RISK MANAGEMENT

We use certain strategies to reduce some commodity price and operational risks. We do not attempt to eliminate all market risk exposures when we believe that the exposure relating to such risk would not be significant to our future earnings, financial position, capital resources or liquidity or that the cost of eliminating the exposure would outweigh the benefit.

Commodity Price Risk Management

Our primary market risk is commodity price risk. We are exposed to market risks related to the volatility in crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations. We periodically enter into derivative contracts in the form of commodity price swaps, collar contracts, forward purchase and sales and futures contracts to mitigate price exposure with respect to our inventory positions, natural gas purchases, sales prices of refined products and crude oil costs.

Foreign Currency Risk Management

We are exposed to market risk related to the volatility in foreign currency exchange rates. We periodically enter into derivative contracts in the form of foreign exchange forward contracts to mitigate the exposure associated with fluctuations on intercompany notes with our foreign subsidiaries that are not denominated in the U.S. dollar.

As of September 30, 2024, we have the following notional contract volumes related to all outstanding derivative instruments used to mitigate commodity price and foreign currency risk:

(1)Represents an embedded derivative within our precious metals catalyst financing arrangements, which may be refinanced or require repayment under certain conditions. See Note 11 “Debt” in the Notes to Consolidated Financial Statements for additional information on these financing arrangements.

The following sensitivity analysis provides the hypothetical effects of market price fluctuations to the commodity hedged under our derivative contracts:

Interest Rate Risk Management

The market risk inherent in our fixed-rate debt is the potential change arising from increases or decreases in interest rates, as discussed below.

For the fixed rate HF Sinclair Senior Notes, HollyFrontier Senior Notes and HEP Senior Notes (each as set forth in Note 11 “Debt” in the Notes to Consolidated Financial Statements), changes in interest rates will generally affect the fair value of the debt, but not earnings or cash flows. The outstanding principal, estimated fair value and estimated change in fair value (assuming a hypothetical 10% change in the yield-to-maturity rates) for this debt as of September 30, 2024, is presented below:

For the variable rate HF Sinclair Credit Agreement and HEP Credit Agreement, changes in interest rates would affect cash flows, but not the fair value. At September 30, 2024, outstanding borrowings under the HEP Credit Agreement were $350.0 million, and no borrowings were outstanding under the HF Sinclair Credit Agreement. A hypothetical 10% change in interest rates applicable to the HEP Credit Agreement would not materially affect cash flows.

Our operations are subject to catastrophic losses, operational hazards and unforeseen interruptions, including but not limited to fire, explosion, releases or spills, cyberattacks, weather-related perils, vandalism, power failures, mechanical failures and other events beyond our control. We maintain various insurance coverages, including general liability, property damage, business interruption and cyber insurance, which are subject to certain deductibles and insurance policy terms and conditions. We are not fully insured against certain risks because such risks are not fully insurable, coverage is unavailable, or premium costs, in our judgment, do not justify such expenditures.

Financial information is reviewed on the counterparties in order to review and monitor their financial stability and assess their ongoing ability to honor their commitments under the derivative contracts. We have not experienced, nor do we expect to experience, any difficulty in the counterparties honoring their commitments.

We have a risk management oversight committee consisting of members from our senior management. This committee oversees our risk enterprise program, monitors our risk environment and provides direction for activities to mitigate identified risks that may adversely affect the achievement of our goals.