• Net Income: $315 million, or $1.57 per diluted share.

• Adjusted Net Income: $142 million, or $0.71 per diluted share.

• Adjusted EBITDA: $399 million.

• Refining Segment Adjusted EBITDA: $209 million.

• Renewables Segment Adjusted EBITDA: Negative $19 million.

• Marketing Segment EBITDA: $16 million.

• Lubricants and Specialties Segment EBITDA: $87 million.

• Midstream Segment EBITDA: $111 million.

• Net Cash from Operations: $317 million.

• Capital Expenditures: $89 million.

• Total Liquidity: Approximately $3.7 billion.

• Debt Reduction: Reduced by approximately $62 million.

• Debt-to-Cap Ratio: 21%.

• Net Debt-to-Cap Ratio: 11%.

• Dividend: Quarterly dividend declared at $0.50 per share.

• Share Repurchase: $269 million returned to shareholders; new $1 billion authorization announced.

• Warning! GuruFocus has detected 3 Warning Sign with DINO.

Release Date: May 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• HF Sinclair Corp (NYSE:DINO) reported a strong commitment to shareholder returns, announcing a new $1 billion share repurchase authorization and a regular quarterly dividend of $0.50 per share.

• The company demonstrated operational excellence with improved reliability and successful execution of planned maintenance, which contributed to solid financial performance in the Refining segment.

• HF Sinclair Corp (NYSE:DINO) achieved significant progress in integrating the HEP assets into its consolidated portfolio, enhancing the Midstream segment's performance.

• The Marketing segment saw growth, driven by strong value in Sinclair branded sites and consistent sales channel with margin uplift for branded fuels.

• HF Sinclair Corp (NYSE:DINO) maintained a robust balance sheet with total liquidity of approximately $3.7 billion, including a cash balance of $1.2 billion.

Negative Points

• The Renewables segment faced challenges with a 16% decline in the renewable diesel indicator due to weakened RINs and LCFS credit prices.

• Adjusted EBITDA for Q1 2024 was $399 million, a decrease from $705 million in Q1 2023, primarily due to lower refinery gross margins and seasonal demand weakness for transportation fuels.

• The Lubricants and Specialties segment experienced a decrease in EBITDA, largely driven by lower base oil prices in the first quarter of 2024.

• Despite operational improvements, the renewable diesel operations were not profitable, continuing to face economic headwinds and market volatility.

• HF Sinclair Corp (NYSE:DINO) faced increased operating costs, which led to an update in mid-cycle guidance to reflect higher expected OpEx in the near term.

Q & A Highlights

Q: Neil Mehta from Goldman Sachs asked about the performance and potential monetization of HF Sinclair's lubricants business. A: Timothy Go, President and CEO, highlighted the strong performance and integration of the lubricants business, emphasizing its resilience despite market challenges. Matt Joyce, SVP of Lubricants & Specialties, detailed operational improvements and strategic initiatives contributing to the business's success. No updates were provided on potential monetization.

Q: Ryan Todd from Piper Sandler inquired about the refining market dynamics in the Rockies and West Coast, and HF Sinclair's strategy in these regions. A: Steven C. Ledbetter, EVP of Commercial, explained the initial weakness in the Rockies market and subsequent strengthening. He discussed the strategic flexibility in product placement and optimization across the value chain, particularly in response to market dynamics in the West Coast following refinery closures.

Q: Manav Gupta from UBS asked about the integration and future strategy of HF Sinclair's Midstream segment, particularly after the integration of HEP assets. A: Steven C. Ledbetter described the successful integration and ongoing efforts to identify synergies and optimize operations. He emphasized the strategic importance of the Midstream segment to HF Sinclair's overall business strategy.

Q: Theresa Chen from Barclays questioned the company's strategy regarding premium fuel sales and the impact of octane spreads on gasoline margins. A: Steven C. Ledbetter acknowledged the underrepresentation in premium fuel sales and outlined strategies to enhance margin capture through better market positioning and integrated value chain management.

Q: Jason Gabelman from TD Cowen sought clarification on the updated mid-cycle refining EBITDA and operational cost assumptions. A: Timothy Go explained the adjustments were based on performance insights from newly integrated assets, leading to an updated operational cost framework and an increased gross margin per barrel estimate reflecting higher earnings potential.

Q: Paul Cheng from Scotiabank asked about the impact of the TMX pipeline startup on HF Sinclair's operations at Puget Sound. A: Timothy Go and Steven C. Ledbetter discussed the strategic benefits of increased crude availability and flexibility, enabling optimized crude slate and product yield at the Puget Sound refinery.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.