HF Sinclair Q1 2025 Earnings Report

HF Sinclair EPS Results

• Actual EPS: -$0.27
• Consensus EPS: -$0.41
• Beat/Miss: Beat by +$0.14
• One Year Ago EPS: $0.71

HF Sinclair Revenue Results

• Actual Revenue: $6.37 billion
• Expected Revenue: $6.72 billion
• Beat/Miss: Missed by -$348.09 million
• YoY Revenue Growth: -9.30%

HF Sinclair Announcement Details

• Quarter: Q1 2025
• Date: 5/1/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 8:30AM ET

HF Sinclair (NYSE:DINO) operates as an independent energy company. The company produces and markets gasoline, diesel fuel, jet fuel, renewable diesel, specialty lubricant products, specialty chemicals, specialty and modified asphalt, and others. It owns and operates refineries located in Kansas, Oklahoma, New Mexico, Utah, Washington, and Wyoming; and markets its refined products principally in the Southwest United States and Rocky Mountains, Pacific Northwest, and in other neighboring Plains states. In addition, the company supplies fuels to approximately 1,500 independent Sinclair branded stations and licenses the use of the Sinclair brand at approximately 300 additional locations. Further, it produces base oils and other specialized lubricants; and provides petroleum product and crude oil transportation, terminalling, storage, and throughput services to the petroleum sector. HF Sinclair Corporation is headquartered in Dallas, Texas.

HF Sinclair Q1 2025 Earnings Call Transcript

Key Takeaways

• Refining delivered sequential improvements in capture and operating expenses, completing the planned Tulsa turnaround on schedule and on budget to operate at planned rates.
• In Renewables, cost reduction and low-CI feedstock optimization drove performance despite recognizing no producers’ tax credit, and the segment would have been close to breakeven EBITDA if PTC were included.
• The Marketing segment achieved a record $27 million EBITDA and its highest quarterly adjusted gross margin of $0.12 per gallon, adding 37 net branded sites with over 170 more expected online by year-end.
• Lubricants & Specialties reported $85 million EBITDA through product-mix optimization focused on high-margin specialty and finished products, with the Mississauga turnaround nearly complete.
• Midstream generated a record $119 million adjusted EBITDA underpinned by higher pipeline revenues and continued focus on optimizing the integrated value chain.

Presentation

[Operator]

Welcome to HF Sinclair Corporation's First Quarter twenty twenty five Conference Call and Webcast. Hosting the call today is Tim Goh, Chief Executive Officer of HF Sinclair. He is joined by Atanas Atanas, Chief Financial Officer Steve Ledbetter, EVP of Commercial Valerie Pompa, EVP of Operations and Matt Joyce, SVP of Lubricants and Specialties. At this time, all participants have been placed in a listen only mode and the floor will be open for your questions following the presentation. Please note that this conference is being recorded.

[Operator]

It is now my pleasure to turn the floor over to Craig Barry, Vice President, Investor Relations. Craig, you may begin.

[Craig Biery, Vice President, Investor Relations at HF Sinclair]

Thank you, Kate. Good morning, everyone, and welcome to H. F. Sinclair Corporation's first quarter twenty twenty five earnings call. This morning, we issued a press release announcing results for the quarter ending 03/31/2025.

[Craig Biery, Vice President, Investor Relations at HF Sinclair]

If you would like a copy of the earnings press release, you may find it on our website at hfsynclair.com. Before we proceed with remarks, please note the Safe Harbor disclosure statement in today's press release. In summary, it says statements made regarding management expectations, judgments or predictions are forward looking statements. These statements are intended to be covered under the Safe Harbor provisions of federal security laws. There are many factors that cause results to differ from expectations, including those noted in our SEC filings.

[Craig Biery, Vice President, Investor Relations at HF Sinclair]

The call also may include discussion of non GAAP measures. Please see the earnings press release for reconciliations to GAAP financial measures. Also, please note any time sensitive information provided on today's call may no longer be accurate at the time of any webcast replay or rereading of the transcript. And with that, I'll turn the call over to Tim.

[Timothy Go, President & CEO at HF Sinclair]

Good morning, everyone. For the first quarter, we delivered strong results in our Marketing, Midstream and Lubricants and Specialties businesses and saw encouraging sequential improvement in Refining. I am proud of our employees and their ability to navigate the extreme volatility and uncertainty around tariffs, producers' tax credits and other market headwinds. We remain focused on the things in our control such as commercial and operational excellence, turnaround execution and capital discipline. Now let me cover our segment highlights.

[Timothy Go, President & CEO at HF Sinclair]

In refining for the first quarter, we delivered sequential quarter improvements in capture and operating expenses despite a tough economic environment across the period. We began the planned turnaround work at our Tulsa refinery, which was completed on schedule and on budget and is now operating at planned rates. In renewables for the first quarter, we focused on lowering total operating expenses and optimizing low CI feedstocks to help mitigate the economic impact surrounding the uncertainty of the producers' tax credit. At this time, we have not taken any credit for PTC in our financials. We estimate that we would have been close to breakeven EBITDA for the quarter with the inclusion of PTC.

[Timothy Go, President & CEO at HF Sinclair]

Our Marketing segment delivered a record quarter of $27,000,000 in EBITDA and achieved our highest quarterly adjusted gross margin of $0.12 per gallon. We also grew our branded supplied stores by a net of 37 sites and have a backlog of over 170 additional supplied branded sites signed and targeted to bring online by year end. In Lubricants and Specialties, we reported another strong quarter of $85,000,000 in EBITDA, supported by our product mix optimization efforts focused on sales of high margin specialty and finished products. We are in the process of completing the planned turnaround work at our Mississauga facility and expect to be back to planned operations within the week. In our Midstream business, we delivered a record quarter generating $119,000,000 in adjusted EBITDA as we benefited from higher pipeline revenues in the period.

[Timothy Go, President & CEO at HF Sinclair]

Today, we announced our Board of Directors declared a regular quarterly dividend of $0.50 per share payable on 06/03/2025 to holders of record on 05/15/2025. Looking forward, we are encouraged by the recent strength of refining margins as we head into the summer driving season and are focused on the execution of our strategic priorities to capture value across all of our business segments. With that, let me turn the call over to Ed.

[Atanas Atanasov, CFO & Executive VP at HF Sinclair]

Thank you, Tim, and good morning, everyone. Let's begin by reviewing H. F. Sinclair's financial highlights. Today, we reported first quarter net loss attributable to H.

[Atanas Atanasov, CFO & Executive VP at HF Sinclair]

F. Sinclair shareholders of $4,000,000 or negative $02 per diluted share. These results reflect special items that collectively decreased net loss by $46,000,000 Excluding these items, adjusted net loss for the first quarter was $50,000,000 or negative $0.27 per diluted share compared to adjusted net income of $142,000,000 or $0.71 per diluted share for the same period in 2024. Adjusted EBITDA for the first quarter was $2.00 $1,000,000 compared to three ninety nine million dollars in the first quarter of twenty twenty four. In our refining segments, first quarter adjusted EBITDA was negative $8,000,000 compared to $2.00 $9,000,000 in the first quarter of twenty twenty four.

[Atanas Atanasov, CFO & Executive VP at HF Sinclair]

This decrease was principally driven by lower adjusted refinery gross margins in both the West And Mid Con regions and lower refined product sales volumes. Further oil charge averaged 606,000 barrels per day for the first quarter compared to 605,000 barrels per day for the first quarter of twenty twenty four. In our Renewables segment, we reported adjusted EBITDA of negative $17,000,000 for the first quarter compared to negative $18,000,000 for the first quarter of twenty twenty four. Our first quarter twenty twenty five results were impacted by lower sales volumes and the absence of benefits from the producer's tax credit. Total sales volumes were 44,000,000 gallons for the first quarter of twenty twenty five compared to 61,000,000 gallons the first quarter of twenty twenty four.

[Atanas Atanasov, CFO & Executive VP at HF Sinclair]

Our marketing segment reported EBITDA of $27,000,000 for the first quarter compared to $15,000,000 for the first quarter of twenty twenty four. This increase was primarily driven by improved execution of our business and high grading the portfolio in the first quarter of twenty twenty five. Our Lubricants and Specialty segment reported EBITDA of CAD85 million for the first quarter compared to EBITDA of CAD87 million for the first quarter of twenty twenty four. Our Midstream segment reported adjusted EBITDA of CAD119 million in the first quarter compared to CAD110 million in the first quarter of last year. This increase was primarily driven by higher pipeline revenues in the first quarter of twenty twenty five.

[Atanas Atanasov, CFO & Executive VP at HF Sinclair]

Net cash used for operations totaled $89,000,000 in the first quarter, which included 105,000,000 of turnaround spend. HF Sinclair's capital expenditures totaled 86,000,000 for the first quarter of twenty twenty five. As of 03/31/2025, HF Sinclair's cash balance was $547,000,000. As of March 31, we have $2,700,000,000 of debt outstanding with a debt to cap ratio of 23% and net debt to cap ratio of 18%. During the quarter, we executed a successful refinancing transaction.

[Atanas Atanasov, CFO & Executive VP at HF Sinclair]

HF Sinclair issued an aggregate principal amount of $1,400,000,000 of senior notes consisting of $650,000,000 of 5.75% senior notes due 2,031 and $750,000,000 of 6.5% senior notes due 02/1935. We use net proceeds from the notes to repay all $350,000,000 in outstanding borrowings under the HEP credit facility and to fund approximately $850,000,000 in tenders and redemptions of our twenty twenty six senior notes and 150,000,000 in tenders of our 2027 senior notes. This extended our debt maturity profile while lowering our weighted average interest expense. On 04/03/2025, we entered into a new $2,000,000,000 HF Sinclair credit facility and terminated the existing HF Sinclair and HEP credit facilities. As of 04/30/2025, our new five year credit facility was undrawn.

[Atanas Atanasov, CFO & Executive VP at HF Sinclair]

Let's go through some guidance items. With respect to capital spending for full year 2025, we still expect to spend approximately $775,000,000 in sustaining capital, including turnaround and catalysts. This is down 25,000,000 from 2024 and includes a non non refining lubricants and specialties turnaround in the first quarter of twenty twenty five in the first half of twenty twenty five. In addition, we expect to spend $100,000,000 in growth capital investments across our business segments. For the second quarter of twenty twenty five, we expect to run between 1,230,000 barrels per day of crude oil in our refining segment, which reflects the ongoing planned turnaround at our Tulsa refinery and the planned turnaround at our Parkour refinery during the period.

[Atanas Atanasov, CFO & Executive VP at HF Sinclair]

We're now ready to take some questions from the audience, and I'll turn it over to the operator.

[Operator]

The floor is now open for questions. We ask that you please limit to one question and one follow-up. Thank you. Our first question is coming from Manav Gupta with UBS. Please go ahead.

[Manav Gupta, Executive Director at UBS Group]

Good morning, guys. Very strong results considering the macro. I actually just wanted to start on the midstream side. I think you moved some assets from the midstream HEP into refining. And yet what we are seeing is like probably one of the strongest midstream quarters that you have delivered close to almost $120,000,000 in EBITDA.

[Manav Gupta, Executive Director at UBS Group]

So help us understand what's driving the growth in the midstream business and your outlook for continue to grow this business as we move ahead?

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

Hey, Manav, this is Steve. We're very excited about midstream business and we think that it's really not fully optimized yet. What drove the performance in Q1 was predominantly increased focus on our products and crude pipelines and the revenue generation from our tariff situation there. We believe that this is both an opportunity to grow the integrated value as well as the third party, situation. So it's a focus area and helps us what we like to say unlock the integrated value chain between refining, midstream and marketing moving forward.

[Timothy Go, President & CEO at HF Sinclair]

Manav, this is Tim. I would just chime in and say, we've said all along that we believed that bringing in the HEP business completely into our portfolio was the right thing to do. It was gonna break down, you know, some some internal, hurdles and allow us to optimize the business. And as Steve and his team are doing, they're finding those opportunities and that's showing up in the bottom line.

[Manav Gupta, Executive Director at UBS Group]

Perfect. My quick follow-up is lubes also very resilient. Help us understand the volatility in this business. Looks like its earnings are lot more stable than the refining. So in the near term, given what we're seeing in the macro, your confidence level of earnings in your lubes business.

[Manav Gupta, Executive Director at UBS Group]

And again, I think you had identified and said, you know, we're looking to grow this business also. So if you could help us understand that also.

[Matt Joyce, Senior Vice President of Lubricants & Specialties at HF Sinclair]

Sure, Manav. Hey. It's Matt Joyce here. You know, Manav, we've talked about it on the past, several earnings calls. We continue to execute our strategy really well.

[Matt Joyce, Senior Vice President of Lubricants & Specialties at HF Sinclair]

We're doubling down on our growth in The US. We have selected end users that we believe have higher growth rates, businesses that tend to depend on us and where we have great solutions that can win. You know, we we're we're outperforming the markets in mining, food grade lubricants, thermal management, pharmaceutical and personal care, just to kind of give you a sense of those high value markets. Those have the ability to weather a lot of these storms and to be continuous and consistent performing markets, and we'll go through those to be a steady performance on the lube side. We also enjoyed a really good mix of products this past quarter.

[Matt Joyce, Senior Vice President of Lubricants & Specialties at HF Sinclair]

We had a little bit lower base oil sales. So you saw that forward integration strategy that we've talked about getting more of our base oils placed in finished and specialty applications. You're seeing that pay dividends here in these results.

[Timothy Go, President & CEO at HF Sinclair]

Yeah. As as far as Manav, your second question around bolt on opportunities, I mean, we're looking for, obviously, what Matt has talked about is our primary focus on organic growth. But clearly, there are some opportunities that are out there that would allow us to continue or accelerate that growth strategy. Nothing large, but small that would fit nicely within our portfolio. We're continuing to look at those.

[Timothy Go, President & CEO at HF Sinclair]

There's obviously nothing to talk about today.

[Manav Gupta, Executive Director at UBS Group]

Thank you, sir.

[Operator]

Your next question comes from the line of Ryan Todd with Piper Sandler. Please go ahead.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Great. Thanks. Maybe on the refining side, can you talk about what you're seeing in terms of demand across your markets? Product sales were down across your network, I think year on year. I'm just curious, is that a reflection of demand or something else?

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

And maybe more broadly, what are you seeing across your markets?

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

Yes, Ryan, this is Steve. Just across our markets, we're seeing demand relatively flat, we like to say, for gas and distillate. What we saw in the first quarter was positive. The impact on our sales was mainly driven by turnaround aspects. But distillate demand being up, we think, is generated predominantly by a colder winter in PADD one as well as reduced RD and BD product associated with the new 45Z regulation.

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

That drove about 100,000 barrels a day off the market, which was supplemented by petroleum demand. So we're pretty excited about the demand patterns and what we're seeing and how it's showing up in the cracks moving into the driving season and particularly across our regions.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Great. Thank you. And then maybe on the renewable diesel side, can you walk through I know first quarter was a very noisy quarter with the kind of the shift in regulatory regime. Can you walk through the impacts of how that impacted your business? How are you managing fee stock optimization?

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Whether you were able to book any credits during the first quarter? And if you think you'll be able to book, any during the second quarter or maybe any possible tailwinds as we look forward here?

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

Yes. So we did not recognize any tax credit for PTC in the first quarter just given the uncertainty of the regulation. As you know, there was changing regulations throughout the quarter, that caused us to run very carefully and run at reduced rates. Had we been able to recognize any of the tax credit under the current proposed regulations, we would have been close to breakeven for EBITDA from our operations within the quarter. We think at very least something's going to have to give here in terms of RVO and RIN credits to go, you know, dislocate more than the traditional BOHO spread.

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

You're starting to see some of that support. Clarity is really going to help, but I was very proud of the team to be able to navigate the uncertainty and get to a EBITDA breakeven if we had recognized PTC. Longer term, we think some of this regulation is actually good for an overall tighter supply and demand balance and we position ourselves to go capture that tailwind through the efforts that we've made over

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

the past nine to twelve months.

[Timothy Go, President & CEO at HF Sinclair]

Yes. And Ryan, this is Tim. What I would just say is, all along we've said that our goal is to have our renewable diesel business be breakeven to slightly positive at these bottom of market conditions. And with the PTC coming on at a reduced credit rate than the PTC was previously, I think the team has stepped up very nicely to continue to improve the the foundation of the business to where they are, as we mentioned on the, prepared remarks, still running at a basically breakeven pace even with the lower PTC credits that will hopefully eventually be able to book in the future.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Great. Thanks guys.

[Operator]

Your next question comes from the line of Doug Leggate with Wolfe Research. Please go ahead.

[Carlos Escalante, Senior Associate at Wolfe Research LLC]

Yeah. Good morning team. This is actually Carlos on for Doug. I think that it's and we as a team think that it's valid to recognize, first of all, that it was a very solid operational quarter in an extremely tough tape. But that being said, we'd like to take the prior question a step further and ask you guys, at what point do you consider mothballing R and D facilities versus running risk the risk of negative cash and also acknowledging that the outlook for rents is is is unclear?

[Timothy Go, President & CEO at HF Sinclair]

Yeah. It's a it's a good question. We ask ourselves that and all the time and have our conversations at the boardroom as well on those kind of questions. We believe we have competitive advantage over the majority of the industry, and you see some of that happening even during this first quarter. A lot of biodiesel plants have shut down.

[Timothy Go, President & CEO at HF Sinclair]

Even some renewable diesel plants have shut down, just as you mentioned. So as long as we and the reason we keep talking about we can be breakeven to slightly positive in these bottom of cycle conditions is we believe that as long as we can do that, and we'll manage the cash as a result of that. But as long as we can do that on a day in and day out basis, that we believe we can continue to improve the business and be ready for when the RIN prices and LCFS prices recover and come back to what we believe is more of a long term level. So we think right now we're at bottom of conditions, but we'll the conditions will improve and our businesses will be profitable at that point.

[Carlos Escalante, Senior Associate at Wolfe Research LLC]

Appreciate the answer, Tim. As a follow-up, we'd like to ask about LPG and your overall midstream business because I think we've all grown accustomed to have an experienced volatility on the oil and refining market as a whole. But LPG has been a certainly a topic of debate lately with the ongoing talks with tariffs. So wondering if you can perhaps walk us through if there's any potential opportunity for you given the dislocation in the market and the uncertainty around that or if you think that there's anything noteworthy for investors to know regarding that specific segment?

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

Yes. This is Steve. I'll take that one. We don't have a concentration in our midstream space around LPG. It's not just part of our core business.

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

We don't know that that's an area we go invest in over integrating and more concentration of getting crude and light products molecules on our system and taking full advantage of that. Having said that, we always look at multiple opportunities. And if there was something that was very accretive to the enterprise, we would put it in our funnel and evaluate it at that time. But at this point, we don't have a lot of exposure and are not using that as one of our growth platforms in the midstream space associated with LPGs.

[Carlos Escalante, Senior Associate at Wolfe Research LLC]

Thank you, team. Appreciate it.

[Operator]

Your next question comes from the line of Joe Lids with Morgan Stanley. Please go ahead.

[Joe Laetsch, Analyst at Morgan Stanley]

Hey, good morning, Tim and team. Thanks for taking my questions. So I want to start on refining. We've had a couple of strong weekly demand numbers for gasoline and inventories are pretty tight, particularly on the West Coast. I know you've talked about the project that expands your ability to make car gasoline at Puget Sound.

[Joe Laetsch, Analyst at Morgan Stanley]

Is that online? And then could you also just talk to your leverage to the West Coast market given the unplanned downtime recently as well as the announced closure of two refineries upcoming?

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

Joe. I'll take that one. This is Steve. I'll answer the question in the order I think they were asked and that was the project that we had mentioned around our ability to potentially get more involved in the carb gas project. Those tanks will be coming online soon.

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

Now we will be staging them over the next couple of months to be able to make decision whether we move unfinished products into the California market or we swell the volume pool and move gasoline there. But we're almost at the point where we'll have those ready for use in our portfolio. And given the headwinds that we see with the announced recent announcements as well as current unplanned events, we think that is a benefit not only to getting into California, but also tightening up the market in the Pacific Northwest. Relative to the overall PADD five tightness, we took advantage this quarter of moving more molecules and playing the arb between what was getting short and stronger demand and margin picture in Las Vegas. And we think that that is part of the advantage of our footprint both in the midstream and our production throughout the Rockies.

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

We like to say we can move barrels out of the group into the front range and from the Rockies all the way up to Pacific Northwest and down into Southern PADD 5. We think that all bodes well for us moving forward, not only this year, but as it continues to play out over the next two years with the announced

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

shuttering of various facilities.

[Timothy Go, President & CEO at HF Sinclair]

Yes. And Joe, this is Tim. I would just point out that the West Coast wasn't the only region that we saw strength in demand. I mean, Mid Con, the group itself was strong.

[Timothy Go, President & CEO at HF Sinclair]

We we entered the first quarter at pretty much, you know, highs on inventories, and we exited the first quarter pretty much lows at in the in the group. And I think that just bodes to the strength of demand. It also talks about some of the maybe capacity that was offline during turnarounds and is, really the the source of the strength and and cracks that we see across the country.

[Joe Laetsch, Analyst at Morgan Stanley]

Great. Thanks for that. And my follow-up is on marketing segment, which had a really strong quarter, particularly for 1Q, which is typically a weaker period seasonally. Could you talk to some of the drivers during the quarter, the repeatability of it? And then any change to the 75,000,000 to $80,000,000 annual EBITDA run rate that you talked about in the past on that?

[Joe Laetsch, Analyst at Morgan Stanley]

Thank you.

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

Yes. This is Steve. We're very excited about the marketing business and the performance that we had in the first quarter record EBITDA. And that was largely driven by optimizing our underlying business. We're starting to see the results of high grading our portfolio, making sure that our brand standard is applied to the new sites that we're bringing on and to be honest, calling some of the portfolio that doesn't make sense.

[Steven Ledbetter, Executive Vice President of Commercial at HF Sinclair]

But then also, would tell you getting the full value of the brand where we haven't done that in the past. And so strategically making moves and growing in the right markets is all playing out and our underlying execution of our business is starting to yield results. As we look forward, we think that our run rate is still between 75,000,000 and $85,000,000 annually and we see upward progression as we continue to go build out our network moving forward.

[Timothy Go, President & CEO at HF Sinclair]

Yes. And Joe, I would just say, we haven't changed our guidance in terms of run rates. But obviously, the first quarter results are very positive. We do think they're going to be sustainable. And so we'll update you guys as we continue to play that out.

[Timothy Go, President & CEO at HF Sinclair]

But we don't think there was an anomaly, if that's what you're asking or any type of special items in the first quarter for marketing. The additional stores, I mean, we're up over a hundred stores year over year versus where we were in the first quarter of last year. All that is driving the growth that you're seeing. We've talked about how the branded put for our barrels is our key strategy that we were focused on coming out of the Sinclair acquisition. And now you're really starting to see the results starting to really play out on the bottom line.

[Timothy Go, President & CEO at HF Sinclair]

We still think there's a lot of opportunity to go, and we're driving towards that in terms of what you're going to see more stores, you're going to see higher volumes, and then you're going to see higher EBITDA coming out of our marketing segment.

[Joe Laetsch, Analyst at Morgan Stanley]

That's great. Sounds like you all have solid momentum in that segment. Thank you all for the time. I appreciate it.

[Operator]

Your next question comes from the line of Jason Gabelman with TD Cowen. Please go ahead.

[Jason Gabelman, Analyst at Cowen]

Yes. Hey, good morning. Thanks for taking my questions. The first one I wanted to ask is just the outlook for turnarounds on the year and wondering kind of what the cadence is quarter to quarter. 1Q, you had some activity.

[Jason Gabelman, Analyst at Cowen]

2Q, it seems like you have a bit more. Wondering if 2Q is kind of the peak turnaround quarter for the year and then how that kind of informs your cash management strategy and potentially the ability and desire to buy back shares as they've weakened a bit here?

[Valerie Pompa, EVP, Operations at HF Sinclair]

So I'll take the first part. This is Valerie. Our turnaround performance, continues to be, a highlight for us. First quarter is the heavier quarter with our lubricants, Tulsa, and Park Road turnarounds. We, we have one turnaround remaining for the year that will fall in the third quarter, and those that's really the the end of our, annual season for the year.

[Valerie Pompa, EVP, Operations at HF Sinclair]

We directionally expect our turnarounds as we've, anticipate that those are gonna continue to level out, as we move into '26, '20 '7, and beyond.

[Atanas Atanasov, CFO & Executive VP at HF Sinclair]

Jason, I'll take the your second question with respect to how this informs our our cash cash management strategy and and buybacks. Obviously, this quarter with the with the turnarounds was a a net cash draw for us. As we progress into the balance of the year with line of sight of better cracks, we believe that any excess cash flow that we generate, should be able to return to our shareholders. And just to remind everyone, just with our dividend, our run rate now is 6%. So our our strategy is to return any of that excess cash to our shareholders.

[Timothy Go, President & CEO at HF Sinclair]

And Jason, this is Tim. Let me just add one more thing. You know, during Atanas' prepared remarks, he mentioned that, our turnaround guidance is still, unchanged for this year, and that's because our turnaround execution continues to go as planned. Valerie mentioned that we have a loops turnaround this year, which is what kept our overall turnaround spend at these levels. Next year, we won't have that, additional loops, plant in our turnaround schedule.

[Timothy Go, President & CEO at HF Sinclair]

And as we talked about in the past, we are starting to get past the peak in terms of our catch up capital required for turnarounds, and we are anticipating that the turnaround workload in starting next year and then in the years after that will be significantly lower than what we've seen over the last couple of years in turnarounds.

[Jason Gabelman, Analyst at Cowen]

Got it. That's great color. Thanks. And then my follow-up is just on tariffs and the trade war as it relates to the lubes business. A bit less familiar on the dynamics.

[Jason Gabelman, Analyst at Cowen]

So I was hoping you could just talk about if there's any tailwinds or headwinds from some of the trade limitations and tariffs that are being put in place as it relates to your lubricants business. Thanks.

[Matt Joyce, Senior Vice President of Lubricants & Specialties at HF Sinclair]

Yeah. Thanks for the question. This is Matt Joyce. With regards specifically to lubes piece on tariffs, we've been working to tariff proof the business. And our business is largely 95 plus percent USMCA compliant with the materials that we bring in and out of the country.

[Matt Joyce, Senior Vice President of Lubricants & Specialties at HF Sinclair]

And we've been evaluating some of the production of our finished products and specialties and looking at ensuring that they're in the best supply chain locations to provide a solution to our customer bases. And as far as specific on costs from either additive companies or other suppliers. We're monitoring that cost of goods very closely and taking any required action in the market marketplace as a pass through should we require it.

[Jason Gabelman, Analyst at Cowen]

Alright. Great. Thanks for the answers.

[Timothy Go, President & CEO at HF Sinclair]

Yeah. And and, Jason, just to make it clear, you know, we do have a facility up in Canada. And as, Matt talked about, they the team has done a great job of managing, through the different tariff regulations. Most of our products actually do qualify for USMCA on the loop side, and these guys have done a great job of mapping that so that, we can avoid the tariffs.

[Operator]

I will now turn the call back to Tim for closing remarks.

[Timothy Go, President & CEO at HF Sinclair]

Thank you, Kate. Before we close, I want to emphasize that our first quarter performance represented improved financials quarter over quarter overall and especially in our Refining, Midstream, Marketing and Lubes and Specialty segments. Delivering these stronger results despite all the challenging market conditions and headwinds we faced is a proof point that our strategy is working. In addition, these results demonstrate the earnings power of our diversified portfolio. Looking ahead, our priorities remain the same: to one, improve our reliability two, integrate and optimize our portfolio of assets and three, return excess cash to shareholders.

[Timothy Go, President & CEO at HF Sinclair]

Thank you for joining our call, and have a great day.

[Operator]

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.

Participants

Executives

• Craig Biery, Vice President, Investor Relations
• Timothy Go, President & CEO
• Atanas Atanasov, CFO & Executive VP
• Steven Ledbetter, Executive Vice President of Commercial
• Matt Joyce, Senior Vice President of Lubricants & Specialties
• Valerie Pompa, EVP, Operations

Analysts

• Manav Gupta, Executive Director at UBS Group
• Ryan Todd, Senior Research Analyst at Piper Sandler Companies
• Carlos Escalante, Senior Associate at Wolfe Research LLC
• Joe Laetsch, Analyst at Morgan Stanley
• Jason Gabelman, Analyst at Cowen