HF Sinclair Corp
For the period ended Sep 30, 2026. Filed Oct 28, 2026.
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Sep 30, 2026 · Filed Oct 28, 2026
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Item 2. Results of Operations
RESULTS OF OPERATIONS
Financial Data
| Three Months Ended September 30, · Change from 2025 | ||||
|---|---|---|---|---|
| 2026 | 2025 | Change | Percent | |
| (In millions, except share and per share data) | ||||
| Sales and other revenues | $10,857 | $7,251 | $3,606 | 50% |
| Operating costs and expenses: | ||||
| Cost of sales: (1) | ||||
| Cost of materials and other (2) | 7,012 | 5,692 | 1,320 | 23% |
| Lower of cost or market inventory valuation adjustments | (30) | 66 | (96) | NM |
| Operating expenses | 723 | 590 | 133 | 23% |
| 7,705 | 6,348 | 1,357 | 21% | |
| Selling, general and administrative expenses (1) | 146 | 105 | 41 | 39% |
| Depreciation and amortization | 278 | 230 | 48 | 21% |
| Other operating expenses, net | 56 | 4 | 52 | 1,300% |
| Total operating costs and expenses | 8,185 | 6,687 | 1,498 | 22% |
| Income from operations | 2,672 | 564 | 2,108 | 374% |
| Other income (expense): | ||||
| Earnings of equity method investments | 5 | 6 | (1) | (17)% |
| Interest income | 25 | 11 | 14 | 127% |
| Interest expense | (54) | (51) | (3) | 6% |
| Other income (expense), net | 1 | (2) | 3 | NM |
| (23) | (36) | 13 | (36)% | |
| Income before income taxes | 2,649 | 528 | 2,121 | 402% |
| Income tax expense: | ||||
| Current | 622 | 74 | 548 | 741% |
| Deferred | 10 | 49 | (39) | (80)% |
| 632 | 123 | 509 | 414% | |
| Net income | 2,017 | 405 | 1,612 | 398% |
| Less: net income attributable to noncontrolling interests | 2 | 2 | — | —% |
| Net income attributable to HF Sinclair stockholders | $2,015 | $403 | $1,612 | 400% |
| Earnings per share attributable to HF Sinclair stockholders: | ||||
| Basic | $11.38 | $2.15 | $9.23 | 429% |
| Diluted | $11.38 | $2.15 | $9.23 | 429% |
| Average number of common shares outstanding (in thousands): | ||||
| Basic | 175,871 | 186,499 | (10,628) | (6)% |
| Diluted | 175,871 | 186,499 | (10,628) | (6)% |
| Nine Months Ended September 30, · Change from 2025 | ||||
|---|---|---|---|---|
| 2026 | 2025 | Change | Percent | |
| (In millions, except per share data) | ||||
| Sales and other revenues | $28,370 | $20,405 | $7,965 | 39% |
| Operating costs and expenses: | ||||
| Cost of sales: (1) | ||||
| Cost of materials and other (2) | 21,125 | 16,608 | 4,517 | 27% |
| Lower of cost or market inventory valuation adjustments | (672) | 97 | (769) | NM |
| Operating expenses | 2,001 | 1,758 | 243 | 14% |
| 22,454 | 18,463 | 3,991 | 22% | |
| Selling, general and administrative expenses (1) | 391 | 323 | 68 | 21% |
| Depreciation and amortization | 735 | 681 | 54 | 8% |
| Other operating expenses, net | 103 | 18 | 85 | 472% |
| Total operating costs and expenses | 23,683 | 19,485 | 4,198 | 22% |
| Income from operations | 4,687 | 920 | 3,767 | 409% |
| Other income (expense): | ||||
| Earnings of equity method investments | 19 | 27 | (8) | (30)% |
| Interest income | 50 | 27 | 23 | 85% |
| Interest expense | (115) | (153) | 38 | (25)% |
| Other income (expense), net | 19 | (48) | 67 | NM |
| (27) | (147) | 120 | (82)% | |
| Income before income taxes | 4,660 | 773 | 3,887 | 503% |
| Income tax expense: | ||||
| Current | 967 | 106 | 861 | 812% |
| Deferred | 133 | 54 | 79 | 146% |
| 1,100 | 160 | 940 | 588% | |
| Net income | 3,560 | 613 | 2,947 | 481% |
| Less: net income attributable to noncontrolling interests | 5 | 6 | (1) | (17)% |
| Net income attributable to HF Sinclair stockholders | $3,555 | $607 | $2,948 | 486% |
| Earnings per share attributable to HF Sinclair stockholders: | ||||
| Basic | $19.75 | $3.21 | $16.54 | 515% |
| Diluted | $19.75 | $3.21 | $16.54 | 515% |
| Average number of common shares outstanding (in thousands): | ||||
| Basic | 178,630 | 187,688 | (9,058) | (5)% |
| Diluted | 178,630 | 187,688 | (9,058) | (5)% |
(2) Exclusive of Lower of cost or market inventory valuation adjustments.
Balance Sheet Data
| September 30, 2026 | December 31, 2025 | |
|---|---|---|
| (In millions) | ||
| Cash and cash equivalents | $3,333 | $978 |
| Working capital | $5,025 | $2,327 |
| Total assets | $20,697 | $16,510 |
| Total debt | $2,774 | $2,769 |
| Total equity | $11,784 | $9,249 |
Other Financial Data
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| (In millions) | ||||
| Net cash provided by operating activities | $1,784 | $809 | $3,751 | $1,307 |
| Net cash used for investing activities | $(136) | $(148) | $(416) | $(341) |
| Net cash used for financing activities | $(577) | $(84) | $(977) | $(323) |
| Capital expenditures | $137 | $121 | $357 | $318 |
| EBITDA (1) | $2,954 | $796 | $5,455 | $1,574 |
(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)Income tax expense, (ii)Interest expense, net of Interest income 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 Income from operations 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 financial indicator widely 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 2 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 18 “Segment Information” in the 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. This margin measure does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to inventory held 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 2 of Part I of this Quarterly Report on Form 10-Q.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Mid-Continent Region | ||||
| Crude charge (BPD) (1) | 250,340 | 280,240 | 262,170 | 264,580 |
| Refinery throughput (BPD) (2) | 268,820 | 296,220 | 279,420 | 280,920 |
| Sales of produced refined products (BPD) (3) | 243,520 | 281,040 | 260,900 | 265,300 |
| Refinery utilization (4) | 96.3% | 107.8% | 100.8% | 101.8% |
| Average per produced barrel sold: (5) | ||||
| Gross margin (6) | $42.47 | $8.08 | $19.68 | $4.01 |
| Adjusted refinery gross margin (7) | $53.38 | $17.50 | $24.50 | $13.71 |
| Less: operating expenses (8) | 8.59 | 6.20 | 7.65 | 6.52 |
| Adjusted refinery gross margin, less operating expenses | $44.79 | $11.30 | $16.85 | $7.19 |
| Operating expenses per throughput barrel (9) | $7.78 | $5.88 | $7.14 | $6.15 |
| Feedstocks: | ||||
| Sweet crude oil | 52% | 52% | 53% | 51% |
| Sour crude oil | 26% | 27% | 26% | 25% |
| Heavy sour crude oil | 15% | 16% | 15% | 18% |
| Other feedstocks and blends | 7% | 5% | 6% | 6% |
| Total | 100% | 100% | 100% | 100% |
| Sales of produced refined products: | ||||
| Gasolines | 50% | 50% | 50% | 51% |
| Diesel fuels | 30% | 32% | 31% | 32% |
| Jet fuels | 8% | 7% | 8% | 7% |
| Fuel oil | 1% | 1% | 1% | 1% |
| Asphalt | 5% | 4% | 4% | 3% |
| Base oils | 4% | 4% | 4% | 4% |
| LPG and other | 2% | 2% | 2% | 2% |
| Total | 100% | 100% | 100% | 100% |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| West Region | ||||
| Crude charge (BPD) (1) | 363,720 | 358,810 | 360,100 | 355,910 |
| Refinery throughput (BPD) (2) | 391,160 | 384,860 | 386,610 | 381,960 |
| Sales of produced refined products (BPD) (3) | 400,020 | 380,100 | 391,880 | 378,890 |
| Refinery utilization (4) | 87.0% | 85.8% | 86.1% | 85.1% |
| Average per produced barrel sold: (5) | ||||
| Gross margin (6) | $42.29 | $9.30 | $24.47 | $4.82 |
| Adjusted refinery gross margin (7) | $54.73 | $20.38 | $33.87 | $16.02 |
| Less: operating expenses (8) | 9.91 | 8.18 | 9.08 | 8.48 |
| Adjusted refinery gross margin, less operating expenses | $44.82 | $12.20 | $24.79 | $7.54 |
| Operating expenses per throughput barrel (9) | $10.14 | $8.08 | $9.21 | $8.41 |
| Feedstocks: | ||||
| Sweet crude oil | 29% | 33% | 29% | 32% |
| Sour crude oil | 47% | 44% | 48% | 45% |
| Heavy sour crude oil | 11% | 11% | 10% | 11% |
| Wax crude oil | 6% | 5% | 6% | 5% |
| Other feedstocks and blends | 7% | 7% | 7% | 7% |
| Total | 100% | 100% | 100% | 100% |
| Sales of produced refined products: | ||||
| Gasolines | 50% | 51% | 51% | 52% |
| Diesel fuels | 30% | 32% | 30% | 33% |
| Jet fuels | 8% | 6% | 7% | 6% |
| Fuel oil | 2% | 2% | 3% | 2% |
| Asphalt | 3% | 3% | 2% | 2% |
| LPG and other | 7% | 6% | 7% | 5% |
| Total | 100% | 100% | 100% | 100% |
| Consolidated | ||||
| Crude charge (BPD) (1) | 614,060 | 639,050 | 622,270 | 620,490 |
| Refinery throughput (BPD) (2) | 659,980 | 681,080 | 666,030 | 662,880 |
| Sales of produced refined products (BPD) (3) | 643,540 | 661,140 | 652,780 | 644,190 |
| Refinery utilization (4) | 90.6% | 94.3% | 91.8% | 91.5% |
| Average per produced barrel sold: (5) | ||||
| Gross margin (6) | $42.36 | $8.78 | $22.56 | $4.49 |
| Adjusted refinery gross margin (7) | $54.22 | $19.16 | $30.12 | $15.07 |
| Less: operating expenses (8) | 9.41 | 7.34 | 8.51 | 7.67 |
| Adjusted refinery gross margin, less operating expenses | $44.81 | $11.82 | $21.61 | $7.40 |
| Operating expenses per throughput barrel (9) | $9.18 | $7.12 | $8.34 | $7.45 |
| Feedstocks: | ||||
| Sweet crude oil | 39% | 42% | 39% | 40% |
| Sour crude oil | 39% | 36% | 39% | 37% |
| Heavy sour crude oil | 12% | 13% | 12% | 14% |
| Wax crude oil | 3% | 3% | 3% | 3% |
| Other feedstocks and blends | 7% | 6% | 7% | 6% |
| Total | 100% | 100% | 100% | 100% |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Consolidated | ||||
| Sales of produced refined products: | ||||
| Gasolines | 50% | 51% | 51% | 52% |
| Diesel fuels | 30% | 31% | 31% | 31% |
| Jet fuels | 8% | 7% | 7% | 7% |
| Fuel oil | 1% | 2% | 2% | 2% |
| Asphalt | 4% | 3% | 3% | 2% |
| Base oils | 2% | 2% | 2% | 2% |
| LPG and other | 5% | 4% | 4% | 4% |
| Total | 100% | 100% | 100% | 100% |
(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 produced refined products 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 2 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 produced refined products.
(7)Adjusted refinery gross margin 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 2 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 produced refined products.
(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. 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 2 of Part I of this Quarterly Report on Form 10-Q.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Renewables | ||||
| Sales of produced renewables products (in thousand gallons) | 63,195 | 57,159 | 175,548 | 156,408 |
| Average per produced gallon sold: (1) | ||||
| Gross margin (2) | $1.97 | $(0.94) | $2.19 | $(0.61) |
| Adjusted renewables gross margin (3) | $2.11 | $0.18 | $2.48 | $0.24 |
| Less: operating expenses (4) | 0.37 | 0.39 | 0.39 | 0.43 |
| Adjusted renewables gross margin, less operating expenses | $1.74 | $(0.21) | $2.09 | $(0.19) |
(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 2 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 produced renewables products.
(3)Adjusted renewables gross margin 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 2 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 produced renewables products.
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. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 2 of Part I of this Quarterly Report on Form 10-Q.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Marketing | ||||
| Number of branded sites at period end (1) | 1,852 | 1,705 | 1,852 | 1,705 |
| Sales of refined products (in thousand gallons) | 420,175 | 360,482 | 1,131,454 | 991,494 |
| Average per gallon sold: (2) | ||||
| Gross margin (3) | $0.10 | $0.09 | $0.09 | $0.09 |
| Adjusted marketing gross margin (4) | $0.12 | $0.11 | $0.11 | $0.11 |
(1)Includes certain non-Sinclair branded sites.
(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 2 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.
(4)Adjusted marketing gross margin 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 2 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.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Lubricants & Specialties | ||||
| Sales of produced refined products (BPD) | 30,190 | 32,008 | 34,361 | 30,981 |
| Sales of produced refined products: | ||||
| Finished products | 52% | 49% | 48% | 51% |
| Base oils | 26% | 26% | 27% | 25% |
| Other | 22% | 25% | 25% | 24% |
| Total | 100% | 100% | 100% | 100% |
Midstream Segment Operating Data
The following table sets forth information about our midstream operations.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Midstream | ||||
| Volumes (BPD) | ||||
| Pipelines: | ||||
| Affiliates—refined product pipelines | 143,063 | 141,617 | 155,762 | 150,434 |
| Affiliates—intermediate pipelines | 133,405 | 139,868 | 140,469 | 137,194 |
| Affiliates—crude pipelines | 474,504 | 464,323 | 463,941 | 424,426 |
| 750,972 | 745,808 | 760,172 | 712,054 | |
| Third parties—refined product pipelines | 40,435 | 37,754 | 33,451 | 39,981 |
| Third parties—crude pipelines | 208,209 | 195,994 | 190,379 | 194,882 |
| 999,616 | 979,556 | 984,002 | 946,917 | |
| Terminals and loading racks: | ||||
| Affiliates | 965,323 | 1,045,066 | 1,008,989 | 1,002,107 |
| Third parties | 33,598 | 39,705 | 29,109 | 38,643 |
| 998,921 | 1,084,771 | 1,038,098 | 1,040,750 | |
| Total for pipelines and terminal assets (BPD) | 1,998,537 | 2,064,327 | 2,022,100 | 1,987,667 |
Results of Operations – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
Summary
Net income attributable to HF Sinclair stockholders for the three months ended September 30, 2026 was $2,015 million ($11.38 per basic and diluted share), a $1,612 million increase compared to $403 million ($2.15 per basic and diluted share) for the three months ended September 30, 2025. The increase in Net income attributable to HF Sinclair stockholders was principally driven by higher adjusted refinery gross margins in both the West and Mid-Continent regions. Adjusted refinery gross margin per produced barrel sold for the three months ended September 30, 2026 increased to $54.22 as compared to $19.16 for the three months ended September 30, 2025, primarily due to higher average sales prices per barrel and small refinery RINs waivers granted by the EPA, partially offset by higher crude oil and feedstock prices per barrel. Lower of cost or market inventory valuation adjustments decreased $96 million from a $66 million charge related to our Refining and Renewables segments’ inventories for the three months ended September 30, 2025, to a $30 million benefit related to our Renewables segment inventories for the three months ended September 30, 2026.
Adjusted renewables gross margin for the three months ended September 30, 2026 increased to $2.11 per produced gallon sold as compared to $0.18 for the three months ended September 30, 2025 primarily due to higher RINs prices and PTC benefits. These favorable impacts were partially offset by a $509 million increase in Income tax expenseand $109 million of additional costs and incremental accelerated depreciation and amortization charges recorded in relation to the Mississauga Asset Retirement.
Sales and Other Revenues
Sales and other revenues increased $3,606 million, or 50%, from $7,251 million for the three months ended September 30, 2025, to $10,857 million for the three months ended September 30, 2026, principally due to higher average refined product sales prices, partially offset by lower product sales volumes and higher crude oil and feedstock prices. Revenues from external customers during the third quarter of 2026 include $182 million, $1,576 million, $924 million and $34 million related to our Renewables, Marketing, Lubricants & Specialties and Midstream segments, respectively. Revenues from external customers included $163 million, $898 million, $654 million and $29 million related to our Renewables, Marketing, Lubricants & Specialties and Midstream segments for the three months ended September 30, 2025.
Cost of Materials and Other
Cost of materials and other, exclusive of Lower of cost or market inventory valuation adjustments, increased $1,320 million, or 23%, from $5,692 million for the three months ended September 30, 2025, to $7,012 million for the three months ended September 30, 2026, principally due to higher crude oil and feedstock costs which were offset by lower product sales volumes and the grant of small refinery RINs waivers. Within our Lubricants & Specialties segment, the FIFO impact resulted in a benefit of $22 million and $2 million for the three months ended September 30, 2026 and 2025, respectively.
During the third quarter of 2026, we recognized a lower of cost or market inventory valuation adjustment benefit of $30 million compared to a charge of $66 million during the third quarter of 2025.
Adjusted Refinery Gross Margin
Adjusted refinery gross margin per produced barrel sold increased $35.06, or 183%, from $19.16 for the three months ended September 30, 2025, to $54.22 for the three months ended September 30, 2026. The increase was primarily driven by improved crack spreads on refined products in both the Mid-Continent and West regions and the grant of small refinery RINs waivers, partially offset by lower product sales volumes for the three months ended September 30, 2026.
Adjusted refinery gross margin per produced barrel sold is a non-GAAP measure and excludes the non-cash effects of Lower of cost or market inventory valuation adjustment, Operating expenses, and Depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 2 of Part I of this Quarterly Report on Form 10-Q.
Operating Expenses
Operating expenses increased $133 million, or 23%, from $590 million for the three months ended September 30, 2025, to $723 million for the three months ended September 30, 2026, primarily due to higher employee benefits, maintenance, environmental remediation and other miscellaneous costs, partially offset by lower electricity and natural gas costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $41 million, or 39%, from $105 million for the three months ended September 30, 2025, to $146 million for the three months ended September 30, 2026, primarily due to higher employee benefits, professional services and other miscellaneous costs.
Depreciation and Amortization Expenses
Depreciation and amortization increased $48 million, or 21% from $230 million for the three months ended September 30, 2025 to $278 million for the three months ended September 30, 2026, primarily due to $54 million of incremental accelerated depreciation and amortization in connection with the Mississauga Asset Retirement. See Note 2 “Lubricants & Specialties Planned Separation and Mississauga Asset Retirement” in the Consolidated Financial Statements for information regarding the Mississauga Asset Retirement.
Other Operating Expenses, Net
Other operating expenses, net increased $52 million, or 1,300% from $4 million for the three months ended September 30, 2025, to $56 million for the three months ended September 30, 2026, primarily due to the abandonment of certain assets under construction at the Mississauga Refinery and severance costs in connection with the Mississauga Asset Retirement. See Note 2 “Lubricants & Specialties Planned Separation and Mississauga Asset Retirement” in the Consolidated Financial Statements for information regarding the Mississauga Asset Retirement.
Interest Income
Interest income increased $14 million, or 127%, from $11 million for the three months ended September 30, 2025, to $25 million for the three months ended September 30, 2026, primarily due to higher cash balances.
Interest Expense
Interest expense increased $3 million, or 6%, from $51 million for the three months ended September 30, 2025, to $54 million for the three months ended September 30, 2026, primarily due to unrealized losses on precious metals financing arrangements during the period.
Income Taxes
For the three months ended September 30, 2026, Income tax expense of $632 million was recorded on pre-tax income of $2,649 million, compared to Income tax expense of $123 million on pre-tax income of $528 million for the three months ended September 30, 2025. The increase was primarily due to higher pre-tax earnings year-over-year. For the three months ended September 30, 2026, the effective tax rate of 23.8% was higher than the statutory rate of 21.0%, primarily due to state and local income taxes on pre-tax earnings, partially offset by the benefits of nontaxable renewable fuel incentives. For the three months ended September 30, 2025, the effective tax rate was higher than the statutory rate of 21.0%, primarily due to pre-tax results and the effects of state and local income tax.
Results of Operations – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Summary
Net income attributable to HF Sinclair stockholders for the nine months ended September 30, 2026, was $3,555 million ($19.75 per basic and diluted share), a $2,948 million increase compared to $607 million ($3.21 per basic and diluted share) for the nine months ended September 30, 2025. The increase in Net income attributable to HF Sinclair stockholders was principally driven by higher adjusted refinery gross margins in both the West and Mid-Continent regions. Adjusted refinery gross margin per produced barrel sold for the nine months ended September 30, 2026 increased to $30.12 as compared to $15.07 for the nine months ended September 30, 2025, primarily due to higher average sales prices per barrel and small refinery RINs waivers granted by the EPA, partially offset by higher crude oil and feedstock prices per barrel. Lower of cost or market inventory valuation adjustments related to our Refining and Renewables segments’ inventories decreased by $769 million, from a $97 million charge for the nine months ended September 30, 2025, to a $672 million benefit for the nine months ended September 30, 2026.
Adjusted renewables gross margin for the nine months ended September 30, 2026 increased to $2.48 per produced gallon sold as compared to $0.24 for the nine months ended September 30, 2025 primarily due to higher RINs pricing, PTC benefits and higher sales volumes, compared to the nine months ended September 30, 2025. These favorable impacts were partially offset by a $940 million increase in Income tax expense and $109 million of additional costs and incremental accelerated depreciation and amortization charges recorded in relation to the Mississauga Asset Retirement.
Sales and Other Revenues
Sales and other revenues increased 39% from $20,405 million for the nine months ended September 30, 2025, to $28,370 million for the nine months ended September 30, 2026, principally due to higher average refined product sales prices, partially offset by lower product sales volumes and higher crude oil and feedstock prices. Revenues from external customers during the nine months ended September 30, 2026, include $633 million, $3,738 million, $2,575 million, and $97 million related to our Renewables, Marketing, Lubricants & Specialties, and Midstream segments, respectively. Revenues from external customers included $388 million, $2,410 million, $1,932 million, and $87 million related to our Renewables, Marketing, Lubricants & Specialties and Midstream segments, for the nine months ended September 30, 2025.
Cost of Materials and Other
Cost of materials and other, exclusive of Lower of cost or market inventory valuation adjustments, increased 27% from $16,608 million for the nine months ended September 30, 2025, to $21,125 million for the nine months ended September 30, 2026, principally due to higher crude oil and feedstock costs which were offset by lower product sales volumes and the grant of small refinery RINs waivers. Within our Lubricants & Specialties segment, the FIFO impact resulted in a benefit of $121 million and a charge of $10 million for the nine months ended September 30, 2026 and 2025, respectively.
During the nine months ended September 30, 2026, we recognized a lower of cost or market inventory valuation adjustment benefit of $672 million compared to a charge of $97 million.
Adjusted Refinery Gross Margin
Adjusted refinery gross margin per produced barrel sold increased 100% from $15.07 for the nine months ended September 30, 2025, to $30.12 for the nine months ended September 30, 2026. The increase was primarily driven by improved crack spreads for refined products in both the Mid-Continent and West regions and the grant of small refinery RINs waivers, partially offset by lower product sales volumes for the nine months ended September 30, 2026.
Adjusted refinery gross margin per produced barrel sold is a non-GAAP measure and excludes the non-cash effects of Lower of cost or market inventory valuation adjustment, Operating expenses, and Depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 2 of Part I of this Quarterly Report on Form 10-Q.
Operating Expenses
Operating expenses increased 14% from $1,758 million for the nine months ended September 30, 2025, to $2,001 million for the nine months ended September 30, 2026, primarily due to higher employee benefits, maintenance, environmental remediation and other miscellaneous costs, partially offset by lower natural gas costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 21% from $323 million for the nine months ended September 30, 2025, to $391 million for the nine months ended September 30, 2026 primarily due to higher employee benefits, professional services and other miscellaneous costs.
Depreciation and Amortization Expenses
Depreciation and amortization increased 8% from $681 million for the nine months ended September 30, 2025, to $735 million for the nine months ended September 30, 2026, primarily due to $54 million of incremental accelerated depreciation and amortization in connection with the Mississauga Asset Retirement. See Note 2 “Lubricants & Specialties Planned Separation and Mississauga Asset Retirement” in the Consolidated Financial Statements for information regarding the Mississauga Asset Retirement.
Other Operating Expenses, Net
Other operating expenses, netincreased $85 million, or 472% from $18 million for the nine months ended September 30, 2025, to $103 million for the nine months ended September 30, 2026, primarily due to $74 million of impairment charges from the abandonment of certain assets under construction and $28 million of severance costs in connection with the Mississauga Asset Retirement. See Note 2 “Lubricants & Specialties Planned Separation and Mississauga Asset Retirement” in the Consolidated Financial Statements for information regarding the Mississauga Asset Retirement. For the nine months ended September 30, 2025 Other operating expenses, netprimarily relates to decommissioning and closure costs of $8 million in our Refining segment.
Interest Income
Interest income increased $23 million, or 85%, from $27 million for the nine months ended September 30, 2025 to $50 million for the nine months ended September 30, 2026, primarily due to higher cash balances.
Interest Expense
Interest expense decreased $38 million, or 25%, from $153 million for the nine months ended September 30, 2025, to $115 million for the nine months ended September 30, 2026, primarily due to unrealized gains on precious metals financing arrangements during the period.
Other Income (Expense), Net
Other income (expense), net was $19 million of income for the nine months ended September 30, 2026, compared to $48 million of expense for the nine months ended September 30, 2025. The income for the nine months ended September 30, 2026 was primarily due to a $14 million gain on settlement of precious metals. The expense for the nine months ended September 30, 2025, was primarily due to a $40 million loss on sale of equity method investment in Cheyenne Pipeline, LLC, and a $24 million loss on the early extinguishment of debt, inclusive of unamortized discount and debt issuance costs.
Income Taxes
For the nine months ended September 30, 2026, Income tax expense of $1,100 million was recorded on pre-tax income of $4,660 million, compared to Income tax expense of $160 million on pre-tax income of $773 million for the nine months ended September 30, 2025. The increase was primarily due to higher pre-tax earnings year-over-year. For the nine months ended September 30, 2026, the effective tax rate of 23.6% was higher than the statutory rate of 21.0% primarily due to state and local income taxes on pre-tax earnings, partially offset by the benefits of nontaxable renewable fuel incentives. For the nine months ended September 30, 2025, the effective tax rate was lower than the statutory rate of 21.0%, primarily due to pre-tax results and the benefits of nontaxable renewable fuel incentives and a discrete benefit associated with the revaluation of deferred tax liabilities from state tax law changes enacted in the second quarter of 2025.
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