- Reported net income attributable to HF Sinclair stockholders of
$507.7 million, or $2.62 per diluted share, and adjusted net income
of $503.8 million, or $2.60 per diluted share, for the second
quarter
- Reported EBITDA of $872.3 million and Adjusted EBITDA of $868.2
million for the second quarter
- Returned $87.3 million to stockholders through dividends in the
second quarter
- Announced a regular quarterly dividend of $0.45 per share
- Repurchased approximately $411.0 million in shares from REH
Company, subsequent to second quarter end
HF Sinclair Corporation (NYSE: DINO) (“HF Sinclair” or the
“Company”) today reported second quarter net income attributable to
HF Sinclair stockholders of $507.7 million, or $2.62 per diluted
share, for the quarter ended June 30, 2023, compared to $1,221.3
million, or $5.43 per diluted share, for the quarter ended June 30,
2022. Excluding the adjustments shown in the accompanying earnings
release table, adjusted net income attributable to HF Sinclair
stockholders for the second quarter of 2023 was $503.8 million, or
$2.60 per diluted share, compared to $1,258.5 million, or $5.59 per
diluted share, for the second quarter of 2022, which excludes
certain items that collectively decreased net income by $37.3
million.
HF Sinclair’s CEO, Tim Go, commented, “HF Sinclair’s strong
second quarter results were driven by healthy product margins in
our refining segment, coupled with solid performances from our
lubricants, marketing and midstream businesses. With the majority
of the planned turnaround work behind us, we believe our
diversified portfolio is well positioned to capture the margins
available to us for the remainder of the year. We remain focused on
the reliability and integration of our asset base to further
strengthen the earnings profile and free cash flow generation of HF
Sinclair.”
Refining segment income before interest and income taxes was
$589.8 million for the second quarter of 2023 compared to $1,558.1
million for the second quarter of 2022. The segment reported EBITDA
of $702.6 million for the second quarter of 2023 compared to
$1,660.9 million for the second quarter of 2022. Excluding the
lower of cost or market inventory valuation charge of $26.8
million, Adjusted EBITDA in the second quarter of 2023 was $729.5
million. This decrease was principally driven by lower refining
margins in both the West and Mid-Continent regions and lower
refined product sales volumes, which resulted in lower refining
segment earnings in the quarter. Consolidated refinery gross margin
was $22.22 per produced barrel, a 39% decrease compared to $36.36
for the second quarter of 2022. Crude oil charge averaged 553,940
barrels per day (“BPD”) for the second quarter of 2023 compared to
627,310 BPD for the second quarter of 2022. This decrease was
primarily a result of turnarounds at our Navajo, Parco and El
Dorado refineries in the second quarter of 2023.
Renewables segment income before interest and income taxes was
$4.4 million for the second quarter of 2023 compared to a loss of
$(73.2) million for the second quarter of 2022. The segment
reported EBITDA of $23.4 million for the second quarter of 2023
compared to $(62.8) million for the second quarter of 2022.
Excluding the lower of cost or market inventory valuation
adjustment, the segment reported Adjusted EBITDA of $(11.3) million
for the second quarter of 2023 compared to $(28.3) million for the
second quarter of 2022. Total sales volumes were 50 million gallons
for the second quarter of 2023 as compared to 26 million gallons
for the second quarter of 2022.
Marketing segment income before interest and income taxes was
$18.6 million for the second quarter of 2023 compared to $19.5
million for the second quarter of 2022. The segment reported EBITDA
of $24.6 million for the second quarter of 2023 compared to $23.9
million for the second quarter of 2022. Total branded fuel sales
volumes were 364 million gallons for the second quarter of 2023 as
compared to 335 million gallons for the second quarter of 2022.
Lubricants and Specialty Products segment income before interest
and income taxes was $51.2 million for the second quarter of 2023
compared to $135.1 million in the second quarter of 2022. The
segment reported EBITDA of $71.7 million for the second quarter of
2023 compared to $155.7 million in the second quarter of 2022. This
decrease was largely driven by a lower FIFO benefit from
consumption of lower priced feedstock inventory for the second
quarter of 2023 of $0.5 million as compared to $71.0 million for
the second quarter of 2022.
Holly Energy Partners, L.P. (“HEP”) reported EBITDA of $82.2
million for the second quarter of 2023 compared to $79.8 million
for the second quarter of 2022 and Adjusted EBITDA of $102.2
million for the second quarter of 2023 compared to $104.2 million
for the second quarter of 2022.
For the second quarter of 2023, net cash provided by operations
totaled $490.0 million. At June 30, 2023, the Company's cash and
cash equivalents totaled $1,614.6 million, a $249.7 million
increase over cash and cash equivalents of $1,364.9 million at
March 31, 2023. During the second quarter of 2023, the Company
announced and paid a regular dividend of $0.45 per share to
stockholders totaling $87.3 million. Additionally, the Company's
consolidated debt was $3,196.0 million. The Company’s debt,
exclusive of HEP debt, which is nonrecourse to HF Sinclair, was
$1,700.6 million at June 30, 2023.
HF Sinclair also announced today that its Board of Directors
declared a regular quarterly dividend in the amount of $0.45 per
share, payable on September 6, 2023 to holders of record of common
stock on August 17, 2023.
The Company has scheduled a webcast conference call for today,
August 3, 2023, at 8:30 AM Eastern Time to discuss second quarter
financial results. This webcast may be accessed at
https://events.q4inc.com/attendee/369077342. An audio archive of
this webcast will be available using the above noted link through
August 17, 2023.
HF Sinclair Corporation, headquartered in Dallas, Texas, is an
independent energy company that produces and markets high-value
light products such as gasoline, diesel fuel, jet fuel, renewable
diesel and other specialty products. HF Sinclair owns and operates
refineries located in Kansas, Oklahoma, New Mexico, Wyoming,
Washington and Utah and markets its refined products principally in
the Southwest U.S., the Rocky Mountains extending into the Pacific
Northwest and in other neighboring Plains states. HF Sinclair
supplies high-quality fuels to more than 1,500 branded stations and
licenses the use of the Sinclair brand at more than 300 additional
locations throughout the country. In addition, subsidiaries of HF
Sinclair produce and market base oils and other specialized
lubricants in the U.S., Canada and the Netherlands, and export
products to more than 80 countries. Through its subsidiaries, HF
Sinclair produces renewable diesel at two of its facilities in
Wyoming and also at its facility in Artesia, New Mexico. HF
Sinclair also owns a 47% limited partner interest and a
non-economic general partner interest in Holly Energy Partners,
L.P., a master limited partnership that provides petroleum product
and crude oil transportation, terminalling, storage and throughput
services to the petroleum industry, including HF Sinclair
subsidiaries.
The following is a “safe harbor” statement under the Private
Securities Litigation Reform Act of 1995: The statements in this
press release relating to matters that are not historical facts are
“forward-looking statements” based on management’s beliefs and
assumptions using currently available information and expectations
as of the date hereof, are not guarantees of future performance and
involve certain risks and uncertainties, including those contained
in our filings with the Securities and Exchange Commission (the
“SEC”). Forward-looking statements use words such as “anticipate,”
“project,” “will,” “expect,” “plan,” “goal,” “forecast,”
“strategy,” “intend,” “should,” “would,” “could,” “believe,” “may,”
and similar expressions and statements regarding our plans and
objectives for future operations. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that our expectations will prove
correct. Therefore, actual outcomes and results could materially
differ from what is expressed, implied or forecast in such
statements. Any differences could be caused by a number of factors,
including, but not limited to, the negotiation and execution, and
the terms and conditions, of a definitive agreement relating to the
Company's non-binding proposal to acquire all of the outstanding
common units of HEP not owned by the Company or its affiliates (the
“Proposed HEP Transaction”) and the ability of the Company or HEP
to enter into or consummate such agreement; the risk that the
Proposed HEP Transaction does not occur; negative effects from the
pendency of the Proposed HEP Transaction; failure to obtain the
required approvals for the Proposed HEP Transaction; the time
required to consummate the Proposed HEP Transaction; the focus of
management time and attention on the Proposed HEP Transaction and
other disruptions arising from the Proposed HEP Transaction;
limitations on the Company's ability to effectuate share
repurchases due to market conditions and corporate, tax, regulatory
and other considerations; the Company’s and HEP’s ability to
successfully integrate the Sinclair Oil Corporation (now known as
Sinclair Oil LLC) and Sinclair Transportation Company LLC
businesses acquired from The Sinclair Companies (now known as REH
Company) (collectively, the “Sinclair Transactions”) with their
existing operations and fully realize the expected synergies of the
Sinclair Transactions or on the expected timeline; the Company's
ability to successfully integrate the operation of the Puget Sound
refinery with its existing operations; the demand for and supply of
crude oil and refined products, including uncertainty regarding the
increasing societal expectations that companies address climate
change; risks and uncertainties with respect to the actions of
actual or potential competitive suppliers and transporters of
refined petroleum products or lubricant and specialty products in
the Company’s markets; the spread between market prices for refined
products and market prices for crude oil; the possibility of
constraints on the transportation of refined products or lubricant
and specialty products; the possibility of inefficiencies,
curtailments or shutdowns in refinery operations or pipelines,
whether due to reductions in demand, accidents, unexpected leaks or
spills, unscheduled shutdowns, infection in the workforce, weather
events, global health events, civil unrest, expropriation of
assets, and other economic, diplomatic, legislative, or political
events or developments, terrorism, cyberattacks, or other
catastrophes or disruptions affecting our operations, production
facilities, machinery, pipelines and other logistics assets,
equipment, or information systems, or any of the foregoing of the
Company's suppliers, customers, or third-party providers, and any
potential asset impairments resulting from, or the failure to have
adequate insurance coverage for or receive insurance recoveries
from, such actions; the effects of current and/or future
governmental and environmental regulations and policies, including
increases in interest rates; the availability and cost of financing
to the Company; the effectiveness of the Company’s capital
investments and marketing strategies; the Company’s and HEP’s
efficiency in carrying out and consummating construction projects,
including the Company's ability to complete announced capital
projects on time and within capital guidance; the Company's and
HEP’s ability to timely obtain or maintain permits, including those
necessary for operations or capital projects; the ability of the
Company to acquire refined or lubricant product operations or
pipeline and terminal operations on acceptable terms and to
integrate any existing or future acquired operations; the
possibility of terrorist or cyberattacks and the consequences of
any such attacks; uncertainty regarding the effects and duration of
global hostilities, including the Russia-Ukraine war, and any
associated military campaigns which may disrupt crude oil supplies
and markets for the Company's refined products and create
instability in the financial markets that could restrict the
Company's ability to raise capital; general economic conditions,
including economic slowdowns caused by a local or national
recession or other adverse economic condition, such as periods of
increased or prolonged inflation; and other financial, operational
and legal risks and uncertainties detailed from time to time in the
Company’s and HEP’s SEC filings. The forward-looking statements
speak only as of the date made and, other than as required by law,
we undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
RESULTS OF OPERATIONS
Financial Data (all information in this release is
unaudited)
Three Months Ended June
30,
Change from 2022
2023
2022
Change
Percent
(In thousands, except per share
data)
Sales and other revenues
$
7,833,646
$
11,162,160
$
(3,328,514
)
(30
)%
Operating costs and expenses:
Cost of products sold:
Cost of products sold (exclusive of lower
of cost or market inventory valuation adjustment)
6,273,605
8,579,915
(2,306,310
)
(27
)
Lower of cost or market inventory
valuation adjustment
(7,863
)
34,543
(42,406
)
(123
)
6,265,742
8,614,458
(2,348,716
)
(27
)
Operating expenses (exclusive of
depreciation and amortization)
546,800
606,127
(59,327
)
(10
)
Selling, general and administrative
expenses (exclusive of depreciation and amortization)
127,388
110,875
16,513
15
Depreciation and amortization
189,360
164,044
25,316
15
Total operating costs and
expenses
7,129,290
9,495,504
(2,366,214
)
(25
)
Income from operations
704,356
1,666,656
(962,300
)
(58
)
Other income (expense):
Earnings of equity method investments
3,545
5,447
(1,902
)
(35
)
Interest income
17,591
1,844
15,747
854
Interest expense
(46,982
)
(38,961
)
(8,021
)
21
Gain (loss) on foreign currency
transactions
748
(905
)
1,653
(183
)
Gain on sale of assets and other
1,152
2,320
(1,168
)
(50
)
(23,946
)
(30,255
)
6,309
(21
)
Income before income taxes
680,410
1,636,401
(955,991
)
(58
)
Income tax expense
145,925
383,493
(237,568
)
(62
)
Net income
534,485
1,252,908
(718,423
)
(57
)
Less net income attributable to
noncontrolling interest
26,824
31,646
(4,822
)
(15
)
Net income attributable to HF Sinclair
stockholders
$
507,661
$
1,221,262
$
(713,601
)
(58
)%
Earnings per share attributable to HF
Sinclair stockholders:
Basic
$
2.62
$
5.43
$
(2.81
)
(52
)%
Diluted
$
2.62
$
5.43
$
(2.81
)
(52
)%
Cash dividends declared per common
share
$
0.45
$
0.40
$
0.05
13
%
Average number of common shares
outstanding:
Basic
192,348
222,952
(30,604
)
(14
)%
Diluted
192,348
222,952
(30,604
)
(14
)%
EBITDA
$
872,337
$
1,805,916
$
(933,579
)
(52
)%
Adjusted EBITDA
$
868,163
$
1,853,008
$
(984,845
)
(53
)%
Six Months Ended June
30,
Change from 2022
2023
2022
Change
Percent
(In thousands, except per share
data)
Sales and other revenues
$
15,398,788
$
18,620,910
$
(3,222,122
)
(17
)%
Operating costs and expenses:
Cost of products sold:
Cost of products sold (exclusive of lower
of cost or market inventory valuation adjustment)
12,377,662
15,081,927
(2,704,265
)
(18
)
Lower of cost or market inventory
valuation adjustment
39,734
25,992
13,742
53
12,417,396
15,107,919
(2,690,523
)
(18
)
Operating expenses (exclusive of
depreciation and amortization)
1,186,183
1,083,561
102,622
9
Selling, general and administrative
expenses (exclusive of depreciation and amortization)
223,301
221,297
2,004
1
Depreciation and amortization
363,343
308,645
54,698
18
Total operating costs and
expenses
14,190,223
16,721,422
(2,531,199
)
(15
)
Income from operations
1,208,565
1,899,488
(690,923
)
(36
)
Other income (expense):
Earnings of equity method investments
7,427
9,073
(1,646
)
(18
)
Interest income
37,526
2,841
34,685
1,221
Interest expense
(92,804
)
(73,820
)
(18,984
)
26
Gain (loss) on foreign currency
transactions
1,618
(766
)
2,384
(311
)
Gain on sale of assets and other
2,783
6,215
(3,432
)
(55
)
(43,450
)
(56,457
)
13,007
(23
)
Income before income taxes
1,165,115
1,843,031
(677,916
)
(37
)
Income tax expense
245,625
404,822
(159,197
)
(39
)
Net income
919,490
1,438,209
(518,719
)
(36
)
Less net income attributable to
noncontrolling interest
58,563
56,973
1,590
3
Net income attributable to HF Sinclair
stockholders
$
860,927
$
1,381,236
$
(520,309
)
(38
)%
Earnings per share attributable to HF
Sinclair stockholders:
Basic
$
4.40
$
6.86
$
(2.46
)
(36
)%
Diluted
$
4.40
$
6.86
$
(2.46
)
(36
)%
Cash dividends declared per common
share
$
0.90
$
0.40
$
0.50
125
%
Average number of common shares
outstanding:
Basic
193,888
199,149
(5,261
)
(3
)%
Diluted
193,888
199,149
(5,261
)
(3
)%
EBITDA
$
1,525,173
$
2,165,682
$
(640,509
)
(30
)%
Adjusted EBITDA
$
1,572,916
$
2,229,715
$
(656,799
)
(29
)%
Balance Sheet Data
June 30,
December 31,
2023
2022
(In thousands)
Cash and cash equivalents
$
1,614,618
$
1,665,066
Working capital
$
3,804,909
$
3,502,790
Total assets
$
18,197,005
$
18,125,483
Total debt
$
3,196,023
$
3,255,472
Total equity
$
10,490,704
$
10,017,572
Segment Information
Our operations are organized into five reportable segments,
Refining, Renewables, Marketing, Lubricants and Specialty Products
and HEP. Our operations that are not included in one of these five
reportable segments are included in Corporate and Other.
Intersegment transactions are eliminated in our consolidated
financial statements and are included in Eliminations. Corporate
and Other and Eliminations are aggregated and presented under the
Corporate, Other and Eliminations column.
The Refining segment represents the operations of our El Dorado,
Tulsa, Navajo, Woods Cross and Puget Sound refineries and HF
Sinclair Asphalt Company LLC (“Asphalt”). Effective with the
Sinclair Transactions that closed on March 14, 2022, the Refining
segment includes our Parco and Casper refineries. Refining
activities involve the purchase and refining of crude oil and
wholesale marketing of refined products, such as gasoline, diesel
fuel and jet fuel. These petroleum products are primarily marketed
in the Mid-Continent, Southwest and Rocky Mountains extending into
the Pacific Northwest geographic regions of the United States.
Asphalt operates various asphalt terminals in Arizona, New Mexico
and Oklahoma.
The Renewables segment represents the operations of our Cheyenne
renewable diesel unit (“RDU”), which was mechanically complete in
the fourth quarter of 2021 and operational in the first quarter of
2022, the pre-treatment unit at our Artesia, New Mexico facility,
which was completed and operational in the first quarter of 2022
and the Artesia RDU, which was completed and operational in the
second quarter of 2022. Also, effective with the Sinclair
Transactions that closed on March 14, 2022, the Renewables segment
includes the Sinclair RDU.
Effective with that Sinclair Transactions that closed on March
14, 2022, the Marketing segment represents branded fuel sales to
Sinclair branded sites in the United States and licensing fees for
the use of the Sinclair brand at additional locations throughout
the country. The Marketing segment also includes branded fuel sales
to non-Sinclair branded sites from legacy HollyFrontier agreements
and revenues from other marketing activities. Our branded sites are
located in several states across the United States with the highest
concentration of the sites located in our West and Mid-Continent
regions.
The Lubricants and Specialty Products segment represents
Petro-Canada Lubricants Inc.’s production operations, located in
Mississauga, Ontario, that includes lubricant products such as base
oils, white oils, specialty products and finished lubricants, and
the operations of our Petro-Canada Lubricants business that
includes the marketing of products to both retail and wholesale
outlets through a global sales network with locations in Canada,
the United States and Europe. Additionally, the Lubricants and
Specialty Products segment includes specialty lubricant products
produced at our Tulsa refineries that are marketed throughout North
America and are distributed in Central and South America and the
operations of Red Giant Oil Company LLC, one of the largest
suppliers of locomotive engine oil in North America. Also, the
Lubricants and Specialty Products segment includes Sonneborn, a
producer of specialty hydrocarbon chemicals such as white oils,
petrolatums and waxes with manufacturing facilities in the United
States and Europe.
The HEP segment includes all of the operations of HEP, which
owns and operates logistics and refinery assets consisting of
petroleum product and crude oil pipelines, terminals, tankage,
loading rack facilities and refinery processing units in the
Mid-Continent, Southwest and Rocky Mountains geographic regions of
the United States. The HEP segment also includes 50% ownership
interests in each of the Osage Pipeline (“Osage”), the Cheyenne
Pipeline and Cushing Connect, and effective with the Sinclair
Transactions that closed on March 14, 2022, a 25.06% ownership
interest in the Saddle Butte Pipeline and a 49.995% ownership
interest in the Pioneer Pipeline. Revenues from the HEP segment are
earned through transactions with unaffiliated parties for pipeline
transportation, rental and terminalling operations as well as
revenues relating to pipeline transportation services provided for
our refining operations. Due to certain basis differences, our
reported amounts for the HEP segment may not agree to amounts
reported in HEP’s periodic public filings.
Refining
Renewables
Marketing
Lubricants and Specialty
Products
HEP
Corporate, Other and
Eliminations
Consolidated Total
(In thousands)
Three Months Ended June 30,
2023
Sales and other revenues:
Revenues from external customers
$
5,901,713
$
175,063
$
1,040,933
$
686,104
$
29,833
$
—
$
7,833,646
Intersegment revenues
1,137,669
98,122
—
4,529
109,922
(1,350,242
)
—
$
7,039,382
$
273,185
$
1,040,933
$
690,633
$
139,755
$
(1,350,242
)
$
7,833,646
Cost of products sold (exclusive of lower
of cost or market inventory)
$
5,829,898
$
258,806
$
1,008,306
$
509,724
$
—
$
(1,333,129
)
$
6,273,605
Lower of cost or market inventory
valuation adjustment
$
26,842
$
(34,705
)
$
—
$
—
$
—
$
—
$
(7,863
)
Operating expenses
$
426,942
$
24,373
$
—
$
64,034
$
53,142
$
(21,691
)
$
546,800
Selling, general and administrative
expenses
$
53,038
$
1,336
$
8,127
$
44,914
$
5,512
$
14,461
$
127,388
Depreciation and amortization
$
112,877
$
18,968
$
6,016
$
20,544
$
26,540
$
4,415
$
189,360
Income (loss) from operations
$
589,785
$
4,407
$
18,484
$
51,417
$
54,561
$
(14,298
)
$
704,356
Income (loss) before interest and income
taxes
$
589,769
$
4,429
$
18,582
$
51,202
$
58,206
$
(12,387
)
$
709,801
Net income attributable to noncontrolling
interest
$
—
$
—
$
—
$
—
$
1,539
$
25,285
$
26,824
Earnings of equity method investments
$
—
$
—
$
—
$
—
$
3,545
$
—
$
3,545
Capital expenditures
$
45,187
$
3,537
$
6,200
$
5,734
$
8,650
$
10,873
$
80,181
Three Months Ended June 30,
2022
Sales and other revenues:
Revenues from external customers
$
8,839,662
$
115,939
$
1,336,302
$
845,024
$
25,233
$
—
$
11,162,160
Intersegment revenues
1,448,919
78,639
—
4,917
110,537
(1,643,012
)
—
$
10,288,581
$
194,578
$
1,336,302
$
849,941
$
135,770
$
(1,643,012
)
$
11,162,160
Cost of products sold (exclusive of lower
of cost or market inventory)
$
8,119,285
$
192,662
$
1,311,333
$
576,428
$
—
$
(1,619,793
)
$
8,579,915
Lower of cost or market inventory
valuation adjustment
$
—
$
34,543
$
—
$
—
$
—
$
—
$
34,543
Operating expenses
$
469,304
$
29,273
$
—
$
74,470
$
53,899
$
(20,819
)
$
606,127
Selling, general and administrative
expenses
$
39,123
$
1,001
$
1,049
$
43,555
$
4,683
$
21,464
$
110,875
Depreciation and amortization
$
102,780
$
10,371
$
4,418
$
20,605
$
26,371
$
(501
)
$
164,044
Income (loss) from operations
$
1,558,089
$
(73,272
)
$
19,502
$
134,883
$
50,817
$
(23,363
)
$
1,666,656
Income (loss) before interest and income
taxes
$
1,558,120
$
(73,202
)
$
19,502
$
135,116
$
56,309
$
(22,327
)
$
1,673,518
Net income attributable to noncontrolling
interest
$
—
$
—
$
—
$
—
$
1,929
$
29,717
$
31,646
Earnings of equity method investments
$
—
$
—
$
—
$
—
$
5,447
$
—
$
5,447
Capital expenditures
$
36,711
$
87,525
$
5,309
$
8,026
$
9,100
$
12,773
$
159,444
Refining
Renewables
Marketing
Lubricants and Specialty
Products
HEP
Corporate, Other
and Eliminations
Consolidated
Total
(In thousands)
Six Months Ended June 30, 2023
Sales and other revenues:
Revenues from external customers
$
11,566,927
$
377,476
$
1,978,318
$
1,419,818
$
56,249
$
—
$
15,398,788
Intersegment revenues
2,191,070
193,725
—
10,325
226,800
(2,621,920
)
—
$
13,757,997
$
571,201
$
1,978,318
$
1,430,143
$
283,049
$
(2,621,920
)
$
15,398,788
Cost of products sold (exclusive of lower
of cost or market inventory)
$
11,447,809
$
521,544
$
1,932,355
$
1,047,727
$
—
$
(2,571,773
)
$
12,377,662
Lower of cost or market inventory
valuation adjustment
$
26,842
$
12,892
$
—
$
—
$
—
$
—
$
39,734
Operating expenses
$
944,762
$
55,744
$
—
$
127,627
$
105,284
$
(47,234
)
$
1,186,183
Selling, general and administrative
expenses
$
92,116
$
2,251
$
15,090
$
84,178
$
10,147
$
19,519
$
223,301
Depreciation and amortization
$
216,000
$
38,942
$
11,887
$
40,454
$
51,005
$
5,055
$
363,343
Income (loss) from operations
$
1,030,468
$
(60,172
)
$
18,986
$
130,157
$
116,613
$
(27,487
)
$
1,208,565
Income (loss) before interest and income
taxes
$
1,030,773
$
(60,127
)
$
19,084
$
129,742
$
124,314
$
(23,393
)
$
1,220,393
Net income attributable to noncontrolling
interest
$
—
$
—
$
—
$
—
$
3,291
$
55,272
$
58,563
Earnings of equity method investments
$
—
$
—
$
—
$
—
$
7,427
$
—
$
7,427
Capital expenditures
$
112,961
$
8,381
$
11,455
$
14,383
$
16,264
$
16,806
$
180,250
Six Months Ended June 30, 2022
Sales and other revenues:
Revenues from external customers
$
15,211,556
$
144,252
$
1,613,343
$
1,598,582
$
53,177
$
—
$
18,620,910
Intersegment revenues
1,583,192
97,693
—
6,368
202,791
(1,890,044
)
—
$
16,794,748
$
241,945
$
1,613,343
$
1,604,950
$
255,968
$
(1,890,044
)
$
18,620,910
Cost of products sold (exclusive of lower
of cost or market inventory)
$
14,028,895
$
236,933
$
1,582,464
$
1,081,005
$
—
$
(1,847,370
)
$
15,081,927
Lower of cost or market inventory
valuation adjustment
$
—
$
25,992
$
—
$
—
$
—
$
—
$
25,992
Operating expenses
$
824,276
$
56,369
$
—
$
140,471
$
96,523
$
(34,078
)
$
1,083,561
Selling, general and administrative
expenses
$
73,005
$
1,873
$
1,189
$
85,304
$
8,995
$
50,931
$
221,297
Depreciation and amortization
$
197,461
$
16,171
$
4,919
$
41,199
$
47,957
$
938
$
308,645
Income (loss) from operations
$
1,671,111
$
(95,393
)
$
24,771
$
256,971
$
102,493
$
(60,465
)
$
1,899,488
Income (loss) before interest and income
taxes
$
1,671,171
$
(95,304
)
$
24,771
$
259,817
$
111,712
$
(58,157
)
$
1,914,010
Net income attributable to noncontrolling
interest
$
—
$
—
$
—
$
—
$
5,192
$
51,781
$
56,973
Earnings of equity method investments
$
—
$
—
$
—
$
—
$
9,073
$
—
$
9,073
Capital expenditures
$
66,631
$
186,294
$
5,309
$
14,395
$
23,246
$
21,865
$
317,740
Refining Segment Operating Data
The following tables set forth information, including non-GAAP
(generally accepted accounting principles) performance measures
about our refinery operations. Refinery gross and net operating
margins do not include the non-cash effects of lower of cost or
market inventory valuation adjustments and depreciation and
amortization. Reconciliations to amounts reported under GAAP are
provided under “Reconciliations to Amounts Reported Under Generally
Accepted Accounting Principles” below.
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 refinery operations of the Parco and
Casper refineries are included for the period March 14, 2022 (date
of acquisition) through June 30, 2023.
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022 (8)
Mid-Continent Region
Crude charge (BPD) (1)
228,300
277,930
219,890
284,030
Refinery throughput (BPD) (2)
246,570
292,570
238,960
298,950
Sales of produced refined products (BPD)
(3)
240,550
279,170
222,880
279,710
Refinery utilization (4)
87.8
%
106.9
%
84.6
%
109.2
%
Average per produced barrel (5)
Refinery gross margin
$
19.55
$
32.53
$
19.91
$
20.96
Refinery operating expenses (6)
6.51
6.21
7.82
6.11
Net operating margin
$
13.04
$
26.32
$
12.09
$
14.85
Refinery operating expenses per throughput
barrel (7)
$
6.35
$
5.92
$
7.30
$
5.72
Feedstocks:
Sweet crude oil
59
%
54
%
62
%
58
%
Sour crude oil
17
%
22
%
16
%
18
%
Heavy sour crude oil
16
%
19
%
14
%
19
%
Other feedstocks and blends
8
%
5
%
8
%
5
%
Total
100
%
100
%
100
%
100
%
Sales of produced refined products:
Gasolines
49
%
49
%
49
%
50
%
Diesel fuels
31
%
35
%
30
%
34
%
Jet fuels
6
%
5
%
7
%
6
%
Fuel oil
1
%
1
%
1
%
1
%
Asphalt
5
%
4
%
4
%
3
%
Base oils
4
%
4
%
5
%
4
%
LPG and other
4
%
2
%
4
%
2
%
Total
100
%
100
%
100
%
100
%
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022 (8)
West Region
Crude charge (BPD) (1)
325,640
349,380
306,480
292,450
Refinery throughput (BPD) (2)
352,400
370,740
339,710
315,350
Sales of produced refined products (BPD)
(3)
357,630
376,400
334,420
309,530
Refinery utilization (4)
77.9
%
83.6
%
73.3
%
77.6
%
Average per produced barrel (5)
Refinery gross margin
$
24.01
$
39.21
$
24.90
$
30.42
Refinery operating expenses (6)
8.74
9.10
10.40
9.19
Net operating margin
$
15.27
$
30.11
$
14.50
$
21.23
Refinery operating expenses per throughput
barrel (7)
$
8.87
$
9.24
$
10.23
$
9.02
Feedstocks:
Sweet crude oil
30
%
33
%
31
%
29
%
Sour crude oil
44
%
46
%
42
%
50
%
Heavy sour crude oil
13
%
10
%
11
%
9
%
Black wax crude oil
6
%
5
%
6
%
5
%
Other feedstocks and blends
7
%
6
%
10
%
7
%
Total
100
%
100
%
100
%
100
%
Sales of produced refined products:
Gasolines
54
%
53
%
55
%
53
%
Diesel fuels
28
%
33
%
30
%
31
%
Jet fuels
6
%
5
%
5
%
5
%
Fuel oil
1
%
2
%
2
%
5
%
Asphalt
3
%
3
%
2
%
2
%
LPG and other
8
%
4
%
6
%
4
%
Total
100
%
100
%
100
%
100
%
Consolidated
Crude charge (BPD) (1)
553,940
627,310
526,370
576,480
Refinery throughput (BPD) (2)
598,970
663,310
578,670
614,300
Sales of produced refined products (BPD)
(3)
598,180
655,570
557,300
589,240
Refinery utilization (4)
81.7
%
92.5
%
77.6
%
90.5
%
Average per produced barrel (5)
Refinery gross margin
$
22.22
$
36.36
$
22.90
$
25.93
Refinery operating expenses (6)
7.84
7.87
9.37
7.73
Net operating margin
$
14.38
$
28.49
$
13.53
$
18.20
Refinery operating expenses per throughput
barrel (7)
$
7.83
$
7.77
$
9.02
$
8.25
Feedstocks:
Sweet crude oil
42
%
42
%
44
%
43
%
Sour crude oil
33
%
36
%
32
%
34
%
Heavy sour crude oil
14
%
14
%
12
%
14
%
Black wax crude oil
3
%
3
%
3
%
3
%
Other feedstocks and blends
8
%
5
%
9
%
6
%
Total
100
%
100
%
100
%
100
%
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022 (8
)
Consolidated
Sales of produced refined products:
Gasolines
52
%
51
%
53
%
51
%
Diesel fuels
29
%
34
%
30
%
32
%
Jet fuels
6
%
5
%
6
%
6
%
Fuel oil
1
%
2
%
1
%
3
%
Asphalt
4
%
3
%
3
%
3
%
Base oils
2
%
2
%
2
%
2
%
LPG and other
6
%
3
%
5
%
3
%
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 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 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”
below.
(6)
Represents total Refining segment
operating expenses, exclusive of depreciation and amortization,
divided by sales volumes of refined products produced at our
refineries.
(7)
Represents total Refining segment
operating expenses, exclusive of depreciation and amortization,
divided by refinery throughput.
(8)
We acquired the Parco and Casper
refineries on March 14, 2022. Refining operating data for the six
months ended June 30, 2022 includes crude oil and feedstocks
processed and refined products sold at our Parco and Casper
refineries for the period March 14, 2022 through June 30, 2022
only, averaged over the 181 days in the six months ended June 30,
2022.
Renewables Segment Operating Data
The following table sets forth information about our renewables
operations and includes our Sinclair RDU for the period March 14,
2022 (date of acquisition) through June 30, 2023. The renewables
gross and net operating margins do not include the non-cash effects
of lower of cost or market inventory valuation adjustments and
depreciation and amortization. Reconciliations to amounts reported
under GAAP are provided under “Reconciliations to Amounts Reported
Under Generally Accepted Accounting Principles” below.
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Renewables
Sales volumes (in thousand gallons)
50,159
25,688
97,987
30,632
Average per produced gallon (1)
Renewables gross margin
$
0.29
$
0.07
$
0.51
$
0.16
Renewables operating expense (2)
0.49
1.14
0.57
1.84
Net operating margin
$
(0.20
)
$
(1.07
)
$
(0.06
)
$
(1.68
)
(1)
Represents average amount per produced
gallons 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”
below.
(2)
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 about our marketing
operations and includes our Sinclair branded fuel business for the
period March 14, 2022 (date of acquisition) through June 30, 2023.
The marketing gross margin does not include the non-cash effects of
depreciation and amortization. Reconciliations to amounts reported
under GAAP are provided under “Reconciliations to Amounts Reported
Under Generally Accepted Accounting Principles” below.
Three Months Ended June
30,
Six Months Ended June
30,
2023 (1)
2022
2023 (1)
2022
Marketing
Number of branded sites at period end
1,520
1,329
1,520
1,329
Sales volumes (in thousand gallons)
364,409
335,106
692,816
420,019
Margin per gallon of sales (1)
$
0.09
$
0.07
$
0.07
$
0.07
(1)
Includes non-Sinclair branded sites from
legacy HollyFrontier agreements.
(2)
Represents 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” below.
Lubricants and Specialty Products Segment Operating
Data
The following table sets forth information about our lubricants
and specialty products operations.
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Lubricants and Specialty
Products
Sales of produced products (BPD)
29,140
34,000
30,460
34,510
Sales of produced products:
Finished products
53
%
53
%
52
%
52
%
Base oils
26
%
27
%
27
%
29
%
Other
21
%
20
%
21
%
19
%
Total
100
%
100
%
100
%
100
%
Effective the first quarter of 2023, management views the
Lubricants and Specialty Products segment as an integrated business
of processing feedstocks into base oils and processing base oils
into finished lubricant products along with the packaging,
distribution and sales to customers.
Reconciliations to Amounts Reported Under Generally Accepted
Accounting Principles
Reconciliations of earnings before interest, taxes,
depreciation and amortization (“EBITDA”) and EBITDA excluding
special items (“Adjusted EBITDA”) to amounts reported under
generally accepted accounting principles (“GAAP”) in financial
statements.
Earnings before interest, taxes, depreciation and amortization,
referred to as EBITDA, is calculated as net income attributable to
HF Sinclair stockholders plus (i) interest expense, net of interest
income, (ii) income tax provision and (iii) depreciation and
amortization. Adjusted EBITDA is calculated as EBITDA plus or minus
(i) lower of cost or market inventory valuation adjustments, (ii)
decommissioning costs, (iii) HF Sinclair's pro-rata share of HEP's
share of Osage environmental remediation costs and (iv) acquisition
integration and regulatory costs.
EBITDA and Adjusted EBITDA are not calculations provided for
under accounting principles generally accepted in the United
States; however, the amounts included in these calculations are
derived from amounts included in our consolidated financial
statements. EBITDA and Adjusted EBITDA should not be considered as
alternatives 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 and Adjusted EBITDA are not
necessarily comparable to similarly titled measures of other
companies. These are presented here because they are widely used
financial indicators used by investors and analysts to measure
performance. EBITDA and Adjusted EBITDA are also used by our
management for internal analysis and as a basis for financial
covenants.
Set forth below is our calculation of EBITDA and Adjusted
EBITDA.
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
(In thousands)
Net income attributable to HF Sinclair
stockholders
$
507,661
$
1,221,262
$
860,927
$
1,381,236
Add interest expense
46,982
38,961
92,804
73,820
Subtract interest income
(17,591
)
(1,844
)
(37,526
)
(2,841
)
Add income tax expense
145,925
383,493
245,625
404,822
Add depreciation and amortization
189,360
164,044
363,343
308,645
EBITDA
$
872,337
$
1,805,916
1,525,173
2,165,682
Add (subtract) lower of cost or market
inventory valuation adjustment
(7,863
)
34,543
39,734
25,992
Add decommissioning costs
—
512
—
1,469
Add HF Sinclair's pro-rata share of HEP's
share of Osage environmental remediation costs
165
—
575
—
Add acquisition integration and regulatory
costs
3,524
12,037
7,434
36,572
Adjusted EBITDA
$
868,163
$
1,853,008
$
1,572,916
$
2,229,715
EBITDA attributable to our Refining segment is presented
below:
Three Months Ended
June 30,
Six Months Ended
June 30,
Refining Segment
2023
2022
2023
2022
(In thousands)
Income before interest and income taxes
(1)
$
589,769
$
1,558,120
$
1,030,773
$
1,671,171
Add depreciation and amortization
112,877
102,780
216,000
197,461
EBITDA
702,646
1,660,900
1,246,773
1,868,632
Add lower of cost or market inventory
valuation adjustment
26,842
—
26,842
—
Adjusted EBITDA
$
729,488
$
1,660,900
$
1,273,615
$
1,868,632
(1)
Income before interest and income taxes of
our Refining segment represents income plus (i) interest expense,
net of interest income and (ii) income tax provision.
EBITDA and Adjusted EBITDA attributable to our Renewables
segment is set forth below:
Three Months Ended
June 30,
Six Months Ended
June 30,
Renewables Segment
2023
2022
2023
2022
(In thousands)
Income (loss) before interest and income
taxes (1)
$
4,429
$
(73,202
)
$
(60,127
)
$
(95,304
)
Add depreciation and amortization
18,968
10,371
38,942
16,171
EBITDA
23,397
(62,831
)
(21,185
)
(79,133
)
Add (subtract) lower of cost or market
inventory valuation adjustment
(34,705
)
34,543
12,892
25,992
Adjusted EBITDA
$
(11,308
)
$
(28,288
)
$
(8,293
)
$
(53,141
)
(1)
Income (loss) before interest and income
taxes of our Renewables segment represents income (loss) plus (i)
interest expense, net of interest income and (ii) income tax
provision.
EBITDA attributable to our Marketing segment is set forth
below:
Three Months Ended
June 30,
Six Months Ended
June 30,
Marketing Segment
2023
2022
2023
2022
(In thousands)
Income before interest and income taxes
(1)
$
18,582
$
19,502
19,084
24,771
Add depreciation and amortization
6,016
4,418
11,887
4,919
EBITDA
$
24,598
$
23,920
$
30,971
$
29,690
(1)
Income before interest and income taxes of
our Marketing segment represents income plus (i) interest expense,
net of interest income and (ii) income tax provision.
EBITDA attributable to our Lubricants and Specialty Products
segment is set forth below.
Three Months Ended
June 30,
Six Months Ended
June 30,
Lubricants and Specialty Products
Segment
2023
2022
2023
2022
(In thousands)
Income before interest and income taxes
(1)
$
51,202
$
135,116
129,742
259,817
Add depreciation and amortization
20,544
20,605
40,454
41,199
EBITDA
$
71,746
$
155,721
$
170,196
$
301,016
(1)
Income before interest and income taxes of
our Lubricants and Specialty Products segment represents income
plus (i) interest expense, net of interest income and (ii) income
tax provision.
Reconciliations of refinery operating information (non-GAAP
performance measures) to amounts reported under generally accepted
accounting principles in financial statements.
Refinery gross margin and net operating margin are non-GAAP
performance measures that are used by our management and others to
compare our refining performance to that of other companies in our
industry. We believe these margin measures are helpful to investors
in evaluating our refining performance on a relative and absolute
basis. Refinery gross margin per produced barrel sold is total
Refining segment revenues less total Refining segment cost of
products sold, exclusive of lower of cost or market inventory
valuation adjustments, divided by sales volumes of produced refined
products sold. Net operating margin per barrel sold is the
difference between refinery gross margin and refinery operating
expenses per produced barrel sold. These two margins do not include
the non-cash effects of lower of cost or market inventory valuation
adjustments or depreciation and amortization. Each of these
component performance measures can be reconciled directly to our
consolidated statements of income. Other companies in our industry
may not calculate these performance measures in the same
manner.
Reconciliation of average refining net
operating margin per produced barrel sold to refinery gross margin
to refining sales and other
revenues
Three Months Ended
June 30,
Six Months Ended June
30,
2023
2022
2023
2022
(Dollars in thousands, except per
barrel amounts)
Consolidated
Refining segment sales and other
revenues
$
7,039,382
$
10,288,581
$
13,757,997
$
16,794,748
Refining segment cost of products sold
(exclusive of lower of cost or market inventory adjustment)
5,829,898
8,119,285
11,447,809
14,028,895
Lower of cost or market inventory
adjustment
26,842
—
26,842
—
1,182,642
2,169,296
2,283,346
2,765,853
Add lower of cost or market inventory
adjustment
26,842
—
26,842
—
Refinery gross margin
$
1,209,484
$
2,169,296
$
2,310,188
$
2,765,853
Refining segment operating expenses
$
426,942
$
469,304
$
944,762
$
824,276
Produced barrels sold (BPD)
598,180
655,570
557,300
589,240
Refinery gross margin per produced barrel
sold
$
22.22
$
36.36
$
22.90
$
25.93
Less average refinery operating expenses
per produced barrel sold
7.84
7.87
9.37
7.73
Net operating margin per produced barrel
sold
$
14.38
$
28.49
$
13.53
$
18.20
Reconciliation of renewables operating information (non-GAAP
performance measures) to amounts reported under generally accepted
accounting principles in financial statements.
Renewables gross margin and net operating margin are non-GAAP
performance measures that are used by our management and others to
compare our renewables performance to that of other companies in
our industry. We believe these margin measures are helpful to
investors in evaluating our renewables performance on a relative
and absolute basis. Renewables gross margin per produced gallon
sold is total Renewables segment revenues less total Renewables
segment cost of products sold, exclusive of lower of cost or market
inventory valuation adjustments, divided by sales volumes of
produced renewables products sold. Net operating margin per
produced gallon sold is the difference between renewables gross
margin and renewables operating expenses per produced gallon sold.
These two margins do not include the non-cash effects of lower of
cost or market inventory valuation adjustments and depreciation and
amortization. Each of these component performance measures can be
reconciled directly to our consolidated statements of income. Other
companies in our industry may not calculate these performance
measures in the same manner.
Reconciliation of renewables gross margin
and operating expenses to gross margin per produced gallon sold and
net operating margin per produced gallon sold
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
(In thousands, except for per
gallon amounts)
Renewables segment sales and other
revenues
$
273,185
$
194,578
$
571,201
$
241,945
Renewables segment cost of products sold
(exclusive of lower of cost or market inventory adjustment)
258,806
192,662
521,544
236,933
Lower of cost or market inventory
adjustment
(34,705
)
34,543
12,892
25,992
49,084
(32,627
)
36,765
(20,980
)
Add (subtract) lower of cost or market
inventory adjustment
(34,705
)
34,543
12,892
25,992
Renewables gross margin
$
14,379
$
1,916
$
49,657
$
5,012
Renewables segment operating expense
$
24,373
$
29,273
$
55,744
$
56,369
Produced gallons sold (in thousand
gallons)
50,159
25,688
97,987
30,632
Renewables gross margin per produced
gallon sold
$
0.29
$
0.07
$
0.51
$
0.16
Less average renewables operating expense
per produced gallon sold
0.49
1.14
0.57
1.84
Net operating margin per produced gallon
sold
$
(0.20
)
$
(1.07
)
$
(0.06
)
$
(1.68
)
Reconciliation of marketing operating information (non-GAAP
performance measures) to amounts reported under generally accepted
accounting principles in financial statements.
Marketing gross margin is a non-GAAP performance measure that is
used by our management and others to compare our marketing
performance to that of other companies in our industry. We believe
this margin measure is helpful to investors in evaluating our
marketing performance on a relative and absolute basis. Marketing
gross margin per gallon sold is total Marketing segment revenues
less total Marketing segment cost of products sold divided by sales
volumes of marketing products sold. This margin does not include
the non-cash effects of depreciation and amortization. This
component performance measure can be reconciled directly to our
consolidated statements of income. Other companies in our industry
may not calculate these performance measures in the same
manner.
Reconciliation of marketing gross margin
to gross margin per gallon sold
Three Months Ended June
30,
Six Months Ended
June 30,
2023
2022
2023
2022
(In thousands, except for per
gallon amounts)
Marketing segment sales and other
revenues
$
1,040,933
$
1,336,302
$
1,978,318
$
1,613,343
Marketing segment cost of products
sold
1,008,306
1,311,333
1,932,355
1,582,464
Marketing gross margin
$
32,627
$
24,969
$
45,963
$
30,879
Sales volumes (in thousand gallons)
364,409
335,106
692,816
420,019
Marketing segment gross margin per gallon
sold
$
0.09
$
0.07
$
0.07
$
0.07
Reconciliation of net income attributable
to HF Sinclair stockholders to adjusted net income attributable to
HF Sinclair stockholders
Adjusted net income attributable to HF Sinclair stockholders is
a non-GAAP financial measure that excludes non-cash lower of cost
or market inventory valuation adjustments, decommissioning costs,
HEP's share of Osage environmental remediation costs and
acquisition integration and regulatory costs. We believe this
measure is helpful to investors and others in evaluating our
financial performance and to compare our results to that of other
companies in our industry. Similarly titled performance measures of
other companies may not be calculated in the same manner.
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
(In thousands, except per share
amounts)
Consolidated
GAAP:
Income before income taxes
$
680,410
$
1,636,401
$
1,165,115
$
1,843,031
Income tax expense
145,925
383,493
245,625
404,822
Net income
534,485
1,252,908
919,490
1,438,209
Less net income attributable to
noncontrolling interest
26,824
31,646
58,563
56,973
Net income attributable to HF Sinclair
stockholders
507,661
1,221,262
860,927
1,381,236
Non-GAAP adjustments to arrive at
adjusted results:
Lower of cost or market inventory
valuation adjustment
(7,863
)
34,543
39,734
25,992
Decommissioning costs
—
512
—
1,469
HEP's share of Osage environmental
remediation costs
350
—
1,220
—
Acquisition integration and regulatory
costs
3,524
12,451
7,434
37,482
Total adjustments to income before income
taxes
(3,989
)
47,506
48,388
64,943
Adjustment to income tax expense (1)
(302
)
9,832
10,794
11,107
Adjustment to net income attributable to
noncontrolling interest
185
414
645
910
Total adjustments, net of tax
(3,872
)
37,260
36,949
52,926
Adjusted results - Non-GAAP:
Adjusted income before income taxes
676,421
1,683,907
1,213,503
1,907,974
Adjusted income tax expense (2)
145,623
393,325
256,419
415,929
Adjusted net income
530,798
1,290,582
957,084
1,492,045
Less net income attributable to
noncontrolling interest
27,009
32,060
59,208
57,883
Adjusted net income attributable to HF
Sinclair stockholders
$
503,789
$
1,258,522
$
897,876
$
1,434,162
Adjusted earnings per share - diluted
(3)
$
2.60
$
5.59
$
4.59
$
7.12
(1)
Represents adjustment to GAAP income tax
expense to arrive at adjusted income tax expense, which is computed
as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
(In thousands)
Non-GAAP income tax expense (2)
$
145,623
$
393,325
$
256,419
$
415,929
Add GAAP income tax expense
145,925
383,493
245,625
404,822
Non-GAAP adjustment to income tax
expense
$
(302
)
$
9,832
$
10,794
$
11,107
(2)
Non-GAAP income tax expense is computed by
(a) adjusting HF Sinclair’s consolidated estimated Annual Effective
Tax Rate (“AETR”) for GAAP purposes for the effects of the above
Non-GAAP adjustments, (b) applying the resulting Adjusted Non-GAAP
AETR to Non-GAAP adjusted income before income taxes and (c)
adjusting for discrete tax items applicable to the period.
(3)
Adjusted earnings per share - diluted is
calculated as adjusted net income attributable to HF Sinclair
stockholders divided by the average number of shares of common
stock outstanding assuming dilution, which is based on
weighted-average diluted shares outstanding as that used in the
GAAP diluted earnings per share calculation. Income allocated to
participating securities, if applicable, in the adjusted earnings
per share calculation is calculated the same way as that used in
GAAP diluted earnings per share calculation.
Reconciliation of effective tax rate to
adjusted effective tax rate
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
(Dollars in thousands)
GAAP:
Income before income taxes
$
680,410
$
1,636,401
$
1,165,115
$
1,843,031
Income tax expense
$
145,925
$
383,493
$
245,625
$
404,822
Effective tax rate for GAAP financial
statements
21.4
%
23.4
%
21.1
%
22.0
%
Adjusted - Non-GAAP:
Effect of Non-GAAP adjustments
0.1
%
—
%
—
%
(0.2
)%
Effective tax rate for adjusted
results
21.5
%
23.4
%
21.1
%
21.8
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803517992/en/
Atanas H. Atanasov, Executive Vice President and Chief Financial
Officer Craig Biery, Vice President, Investor Relations HF Sinclair
Corporation 214-954-6510
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