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press release

Aug. 8, 2022, 6:30 a.m. EDT

HF Sinclair Corporation Reports Quarterly Results and Announces Regular Cash Dividend

Reported net income attributable to HF Sinclair stockholders of $1,221.3 million, or $5.43 per diluted share, and adjusted net income of $1,258.5 million, or $5.59 per diluted share, for the second quarter Reported EBITDA of $1,805.9 million and Adjusted EBITDA of $1,853.0 million for the second quarter Commenced production of renewable diesel at the Artesia, New Mexico renewable diesel facility Returned $200.6 million to shareholders through dividends and share repurchases in the second quarter Announced a regular quarterly dividend of $0.40 per share

DALLAS, (BUSINESS WIRE) -- HF Sinclair Corporation /zigman2/quotes/201783514/composite DINO +6.08% (“HF Sinclair” or the “Company”) today reported second quarter net income attributable to HF Sinclair stockholders of $1,221.3 million, or $5.43 per diluted share, for the quarter ended June 30, 2022, compared to $168.9 million, or $1.03 per diluted share, for the quarter ended June 30, 2021.

The second quarter results reflect special items that collectively decreased net income by a total of $37.3 million. On a pre-tax basis, these items include a lower of cost or market inventory valuation adjustment of $34.5 million, acquisition integration costs of $12.5 million and decommissioning charges of $0.5 million related to the Cheyenne Refinery conversion to renewable diesel production. Excluding these items, adjusted net income for the second quarter of 2022 was $1,258.5 million ($5.59 per diluted share) compared to $143.8 million ($0.87 per diluted share) for the second quarter of 2021, which excludes certain items that collectively increased net income by $25.1 million.

HF Sinclair’s CEO, Michael Jennings, commented, “HF Sinclair delivered strong financial results in the second quarter driven by robust performance in our refining, marketing, lubricants and midstream segments. Healthy free cash flow generation in the quarter allowed us to return cash to shareholders through dividends and share repurchases, further demonstrating the commitment to our capital return strategy. During the quarter, we also commenced start-up of the Artesia, New Mexico renewable diesel unit. With all of our previously announced renewables projects complete, we will continue to ramp up production of these assets as we expect to reach full production levels by the end of the third quarter. Looking forward, we remain focused on the integration of our newly acquired assets from Sinclair while maintaining safe and reliable operations.”

Refining segment income before interest and income taxes was $1,558.1 million for the second quarter of 2022 compared to $250.1 million in the second quarter of 2021. The segment reported EBITDA of $1,660.9 million for the second quarter of 2022 compared to $330.0 million for the second quarter of 2021. This increase was driven by higher refining indicator margins in both the West and Mid-Continent regions, which resulted in higher refining segment earnings in the quarter. Consolidated refinery gross margin was $36.36 per produced barrel, a 211% increase compared to $11.71 for the second quarter of 2021, and crude oil charge averaged 627,310 barrels per day (“BPD”) for the second quarter of 2022 compared to 416,350 BPD for the second quarter of 2021.

Renewables segment loss before interest and income taxes was $(73.2) million for the second quarter of 2022 compared to $(11.5) million in the second quarter of 2021. The segment reported EBITDA of $(62.8) million for the second quarter of 2022 compared to $(11.2) million in the second quarter of 2021. Excluding the lower of cost or market inventory valuation charge of $34.5 million, Adjusted EBITDA in the second quarter of 2022 was $(28.3) million. Total sales volumes were 26 million gallons for the second quarter of 2022. The Cheyenne renewable diesel unit (“RDU”) was mechanically complete in the fourth quarter of 2021 and fully operational in the first quarter of 2022, the pre-treatment unit (“PTU”) at our Artesia, New Mexico facility was completed and fully operational in the first quarter of 2022 and the Artesia RDU was completed and fully operational in the second quarter of 2022. Also, effective with the Sinclair acquisition that closed on March 14, 2022, the Renewables segment includes the Sinclair RDU.

Marketing segment income before interest and income taxes was $19.5 million and reported EBITDA was $23.9 million for the second quarter of 2022. Total branded fuel sales volumes were 335 million gallons for the second quarter of 2022.

Lubricants and Specialty Products segment income before interest and income taxes was $135.1 million for the second quarter of 2022 compared to $60.1 million in the second quarter of 2021. The segment reported EBITDA of $155.7 million for the second quarter of 2022 compared to $79.2 million in the second quarter of 2021. This increase was driven by strong finished product demand in our Rack Forward businesses.

Holly Energy Partners, L.P. (“HEP”) reported EBITDA of $79.8 million for the second quarter of 2022 compared to $88.1 million in the second quarter of 2021 and Adjusted EBITDA of $104.2 million for the second quarter of 2022 compared to $88.3 million in the second quarter of 2021.

For the second quarter of 2022, net cash provided by operations totaled $1,528.4 million. At June 30, 2022, the Company's cash and cash equivalents totaled $1,702.3 million, a $1,110.0 million increase over cash and cash equivalents of $592.3 million at March 31, 2022. During the second quarter of 2022, the Company announced and paid a regular dividend of $0.40 per share to shareholders totaling $90.2 million and spent $110.4 million in stock repurchases. Additionally, the Company's consolidated debt was $3,348.1 million. The Company’s debt, exclusive of HEP debt, which is nonrecourse to HF Sinclair, was $1,739.6 million at June 30, 2022.

HF Sinclair also announced today that its Board of Directors declared a regular quarterly dividend in the amount of $0.40 per share, payable on September 1, 2022 to holders of record of common stock on August 18, 2022.

As of June 30, 2022, HF Sinclair has achieved annualized run rate synergies of over $90 million related to the Sinclair acquisition and over $100 million of working capital synergies. The Company is currently on pace to exceed its target of approximately $100 million in annual run rate synergies within two years of the acquisition close date through a combination of commercial improvements, operating expense reductions and optimization of selling, general and administrative expenses.

The Company has scheduled a webcast conference call for today, August 8, 2022, at 8:30 AM Eastern Time to discuss second quarter financial results. This webcast may be accessed at https://events.q4inc.com/attendee/167295545 . An audio archive of this webcast will be available using the above noted link through August 22, 2022.

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 1,300 Sinclair 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 Company’s and HEP’s ability to successfully integrate the Sinclair Oil Corporation (now known as Sinclair Oil LLC, “Sinclair Oil”) and Sinclair Transportation Company LLC (“STC”) businesses acquired from REH Company (formerly known as The Sinclair Companies) (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 effects of the continuing coronavirus (“COVID-19”) pandemic on future demand and 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 infection in the workforce or in response to reductions in demand, accidents, unexpected leaks or spills, unscheduled shutdowns, weather 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 our suppliers, customers, or third-party service providers; the effects of current and/or future governmental and environmental regulations and policies, including the effects of current and/or future restrictions on various commercial and economic activities in response to the COVID-19 pandemic and 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 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 uncertainty regarding the timing, pace and extent of an economic recovery in the United States; a prolonged economic slowdown due to the COVID-19 pandemic, inflation and labor costs which could result in an impairment of goodwill and/or long-lived asset impairments; 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 2021
    2022       2021     Change   Percent
  (In thousands, except per share data)
Sales and other revenues $ 11,162,160     $ 4,577,123     $ 6,585,037     144 %
Operating costs and expenses:              
Cost of products sold:              
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)   8,579,915       3,825,729       4,754,186     124  
Lower of cost or market inventory valuation adjustment   34,543       (118,825 )     153,368     (129 )
    8,614,458       3,706,904       4,907,554     132  
Operating expenses (exclusive of depreciation and amortization)   606,127       334,191       271,936     81  
Selling, general and administrative expenses (exclusive of depreciation and amortization)   110,875       77,754       33,121     43  
Depreciation and amortization   164,044       124,042       40,002     32  
Total operating costs and expenses   9,495,504       4,242,891       5,252,613     124  
Income from operations   1,666,656       334,232       1,332,424     399  
               
Other income (expense):              
Earnings of equity method investments   5,447       3,423       2,024     59  
Interest income   1,844       1,029       815     79  
Interest expense   (38,961 )     (28,942 )     (10,019 )   35  
Gain (loss) on foreign currency transactions   (905 )     583       (1,488 )   (255 )
Gain on sale of assets and other   2,320       7,927       (5,607 )   (71 )
    (30,255 )     (15,980 )     (14,275 )   89  
Income before income taxes   1,636,401       318,252       1,318,149     414  
Income tax expense   383,493       123,485       260,008     211  
Net income   1,252,908       194,767       1,058,141     543  
Less net income attributable to noncontrolling interest   31,646       25,917       5,729     22  
Net income attributable to HF Sinclair stockholders $ 1,221,262     $ 168,850     $ 1,052,412     623 %
               
Earnings per share attributable to HF Sinclair stockholders:              
Basic $ 5.43     $ 1.03     $ 4.40     427 %
Diluted $ 5.43     $ 1.03     $ 4.40     427 %
Cash dividends declared per common share $ 0.40     $     $ 0.40     100 %
Average number of common shares outstanding:              
Basic   222,952       162,523       60,429     37 %
Diluted   222,952       162,523       60,429     37 %
               
EBITDA $ 1,805,916     $ 444,290     $ 1,361,626     306 %
Adjusted EBITDA $ 1,853,008     $ 334,501     $ 1,518,507     454 %
  Six Months Ended
June 30,
  Change from 2021
    2022       2021     Change   Percent
  (In thousands, except per share data)
Sales and other revenues $ 18,620,910     $ 8,081,416     $ 10,539,494     130 %
Operating costs and expenses:              
Cost of products sold:              
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)   15,081,927       6,786,034       8,295,893     122  
Lower of cost or market inventory valuation adjustment   25,992       (318,862 )     344,854     (108 )
    15,107,919       6,467,172       8,640,747     134  
Operating expenses (exclusive of depreciation and amortization)   1,083,561       734,100       349,461     48  
Selling, general and administrative expenses (exclusive of depreciation and amortization)   221,297       159,729       61,568     39  
Depreciation and amortization   308,645       248,121       60,524     24  
Total operating costs and expenses   16,721,422       7,609,122       9,112,300     120  
Income from operations   1,899,488       472,294       1,427,194     302  
               
Other income (expense):              
Earnings of equity method investments   9,073       5,186       3,887     75  
Interest income   2,841       2,060       781     38  
Interest expense   (73,820 )     (67,328 )     (6,492 )   10  
Gain on tariff settlement         51,500       (51,500 )   (100 )
Loss on foreign currency transactions   (766 )     (734 )     (32 )   4  
Gain on sale of assets and other   6,215       9,817       (3,602 )   (37 )
    (56,457 )     501       (56,958 )   (11,369 )
Income before income taxes   1,843,031       472,795       1,370,236     290  
Income tax expense   404,822       95,178       309,644     325  
Net income   1,438,209       377,617       1,060,592     281  
Less net income attributable to noncontrolling interest   56,973       60,550       (3,577 )   (6 )
Net income attributable to HollyFrontier stockholders $ 1,381,236     $ 317,067     $ 1,064,169     336 %
               
Earnings per share attributable to HollyFrontier stockholders:              
Basic $ 6.86     $ 1.92     $ 4.94     257 %
Diluted $ 6.86     $ 1.92     $ 4.94     257 %
Cash dividends declared per common share $ 0.40     $ 0.35     $ 0.05     14 %
Average number of common shares outstanding:              
Basic   199,149       162,501       36,648     23 %
Diluted   199,149       162,501       36,648     23 %
               
EBITDA $ 2,165,682     $ 725,634     $ 1,440,048     198 %
Adjusted EBITDA $ 2,229,715     $ 381,809     $ 1,847,906     484 %
Balance Sheet Data  
  June 30,   December 31,
  2022   2021
  (In thousands)
Cash and cash equivalents $ 1,702,286   $ 234,444
Working capital $ 3,636,627   $ 1,696,990
Total assets $ 19,177,854   $ 12,916,613
Long-term debt $ 3,348,103   $ 3,072,737
Total equity $ 9,874,910   $ 6,294,465

Segment Information

Effective the first quarter of 2022, we revised our reportable segments to align with certain changes in how our chief operating decision maker manages and allocates resources to our businesses. Accordingly, we created two new reportable segments, Renewables and Marketing. Our operations are now 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.

As a result of the Sinclair Transactions that closed on March 14, 2022, the operations of the acquired Sinclair businesses are reported in the Refining, Renewables, Marketing and HEP segments.

The Refining segment represents the operations of our El Dorado, Tulsa, Navajo and Woods Cross refineries and HollyFrontier Asphalt Company LLC (“HFC Asphalt”). Also, effective with our acquisition that closed November 1, 2021, the Refining segment includes our Puget Sound refinery, and effective with our acquisition that closed on March 14, 2022, includes our Sinclair 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. HFC Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma.

The Renewables segment represents the operations of the Cheyenne RDU, which was mechanically complete in the fourth quarter of 2021 and fully operational in the first quarter of 2022, the PTU at our Artesia, New Mexico facility, which was completed and fully operational in the first quarter of 2022 and the Artesia RDU, which was completed and fully operational in the second quarter of 2022. Also, effective with our acquisition that closed on March 14, 2022, the Renewables segment includes the Sinclair RDU. During the construction phase of our RDUs and PTU, operating expense and capital expenditures were reported in the Corporate and Other segment, and this financial information has been retrospectively adjusted to reflect our current segment presentation.

Effective with our acquisition that closed on March 14, 2022, the Marketing segment includes branded fuel sales through more than 300 distributors to more than 1,300 branded sites in the United States and licensing fees for the use of the Sinclair brand at more than 300 additional locations throughout the country.

The Lubricants and Specialty Products segment represents Petro-Canada Lubricants, Inc.’s (“PCLI”) 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, Europe and China. 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, the Cheyenne Pipeline and Cushing Connect, 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, 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   Lubricants and Specialty Products   HEP   Corporate, Other and Eliminations   Consolidated Total
    (In thousands)
Three Months Ended June 30, 2021                    
Sales and other revenues:                        
Revenues from external customers   $ 3,887,273     $     $ 662,755   $ 27,092   $ 3     $ 4,577,123  
Intersegment revenues     205,186             6,434     99,142     (310,762 )      
    $ 4,092,459     $     $ 669,189   $ 126,234   $ (310,759 )   $ 4,577,123  
Cost of products sold (exclusive of lower of cost or market inventory)   $ 3,619,319     $     $ 491,218   $   $ (284,808 )   $ 3,825,729  
Lower of cost or market inventory valuation adjustment   $ (118,825 )   $     $   $   $     $ (118,825 )
Operating expenses   $ 231,422     $ 11,231     $ 61,310   $ 42,068   $ (11,840 )   $ 334,191  
Selling, general and administrative expenses   $ 30,136     $     $ 37,583   $ 2,846   $ 7,189     $ 77,754  
Depreciation and amortization   $ 79,938     $ 316     $ 19,152   $ 22,275   $ 2,361     $ 124,042  
Income (loss) from operations   $ 250,469     $ (11,547 )   $ 59,926   $ 59,045   $ (23,661 )   $ 334,232  
Income (loss) before interest and income taxes   $ 250,111     $ (11,547 )   $ 60,093   $ 67,911   $ (20,403 )   $ 346,165  
Net income attributable to noncontrolling interest   $     $     $   $ 1,193   $ 24,724     $ 25,917  
Earnings of equity method investments   $     $     $   $ 3,423   $     $ 3,423  
Capital expenditures   $ 33,150     $ 113,747     $ 5,614   $ 24,498   $ 5,871     $ 182,880  
    Refining   Renewables   Marketing   Lubricants and Specialty Products   HEP   Corporate, Other   Consolidated
    (In thousands)
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   Renewables   Lubricants and Specialty Products   HEP   Corporate, Other   Consolidated
    (In thousands)
Six Months Ended June 30, 2021
Sales and other revenues:                        
Revenues from external customers   $ 6,844,306     $     $ 1,184,753   $ 52,350   $ 7     $ 8,081,416  
Intersegment revenues $ 265,648 $ $ 8,999 $ 201,068 $ (475,715 )   $
  $ 7,109,954     $     $ 1,193,752   $ 253,418   $ (475,708 )   $ 8,081,416  
Cost of products sold (exclusive of lower of cost or market inventory)   $ 6,381,262     $     $ 822,741   $   $ (417,969 )   $ 6,786,034  
Lower of cost or market inventory valuation adjustment   $ (318,353 )   $     $   $   $ (509 )   $ (318,862 )
Operating expenses   $ 524,277     $ 24,052     $ 122,063   $ 83,433   $ (19,725 )   $ 734,100  
Selling, general and administrative expenses   $ 58,632     $     $ 83,136   $ 5,815   $ 12,146     $ 159,729  
Depreciation and amortization   $ 168,020     $ 658     $ 39,273   $ 45,281   $ (5,111 )   $ 248,121  
Income (loss) from operations   $ 296,116     $ (24,710 )   $ 126,539   $ 118,889   $ (44,540 )   $ 472,294  
Income (loss) before interest and income taxes   $ 295,788     $ (24,710 )   $ 127,078   $ 154,669   $ (14,762 )   $ 538,063  
Net income attributable to noncontrolling interest   $     $     $   $ 2,839   $ 57,711     $ 60,550  
Earnings of equity method investments   $           $   $ 5,186   $     $ 5,186  
Capital expenditures   $ 73,511     $ 183,969     $ 9,701   $ 57,716   $ 7,944     $ 332,841  

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, Sinclair and Casper refineries. The Puget Sound refinery was acquired November 1, 2021, and thus is included for the period January 1, 2022 to June 30, 2022. In addition, the refinery operations of the Sinclair and Casper refineries are included for the period March 14, 2022 (the date of acquisition) through June 30, 2022.

    Three Months Ended   Six Months Ended
      2022       2021     2022 (8)     2021  
Mid-Continent Region            
Crude charge (BPD) [(1)]     277,930       278,380       284,030       247,500  
Refinery throughput (BPD) [ (2)]     292,570       293,050       298,950       257,030  
Sales of produced refined products (BPD) [(3)]     279,170       287,680       279,710       249,400  
Refinery utilization [(4)]     106.9 %     107.1 %     109.2 %     95.2 %
                 
Average per produced barrel [(5)]                
Refinery gross margin   $ 32.53     $ 10.82     $ 20.96     $ 8.99  
Refinery operating expenses [(6)]     6.21       5.27       6.11       7.22  
Net operating margin   $ 26.32     $ 5.55     $ 14.85     $ 1.77  
                 
Refinery operating expenses per throughput barrel [(7)]   $ 5.92     $ 5.18     $ 5.72     $ 6.89  
                 
Feedstocks:                
Sweet crude oil     54 %     64 %     58 %     62 %
Sour crude oil     22 %     14 %     18 %     14 %
Heavy sour crude oil     19 %     17 %     19 %     19 %
Other feedstocks and blends     5 %     5 %     5 %     5 %
Total     100 %     100 %     100 %     100 %
                 
Sales of produced refined products:                
Gasolines     49 %     51 %     50 %     51 %
Diesel fuels     35 %     34 %     34 %     34 %
Jet fuels     5 %     4 %     6 %     5 %
Fuel oil     1 %     1 %     1 %     1 %
Asphalt     4 %     2 %     3 %     2 %
Base oils     4 %     4 %     4 %     4 %
LPG and other     2 %     4 %     2 %     3 %
Total     100 %     100 %     100 %     100 %
    Three Months Ended   Six Months Ended
      2022       2021     2022 (8)     2021  
West Region                
Crude charge (BPD) [(1)]     349,380       137,970       292,450       134,940  
Refinery throughput (BPD) [ (2)]     370,740       151,680       315,350       148,160  
Sales of produced refined products (BPD) [(3)]     376,400       156,260       309,530       150,290  
Refinery utilization [(4)]     83.6 %     95.2 %     77.6 %     93.1 %
                 
Average per produced barrel [(5)]                
Refinery gross margin   $ 39.21     $ 13.35     $ 30.42     $ 11.88  
Refinery operating expenses [(6)]     9.10       6.57       9.19       7.29  
Net operating margin   $ 30.11     $ 6.78     $ 21.23     $ 4.59  
                 
Refinery operating expenses per throughput barrel [(7)]   $ 9.24     $ 6.77     $ 9.02     $ 7.40  
                 
Feedstocks:                
Sweet crude oil     33 %     22 %     29 %     23 %
Sour crude oil     46 %     59 %     50 %     59 %
Heavy sour crude oil     10 %     %     9 %     %
Black wax crude oil     5 %     10 %     5 %     9 %
Other feedstocks and blends     6 %     9 %     7 %     9 %
Total     100 %     100 %     100 %     100 %
                 
Sales of produced refined products:                
Gasolines     53 %     52 %     53 %     53 %
Diesel fuels     33 %     37 %     31 %     37 %
Jet fuels     5 %     %     5 %     %
Fuel oil     2 %     3 %     5 %     3 %
Asphalt     3 %     5 %     2 %     4 %
LPG and other     4 %     3 %     4 %     3 %
Total     100 %     100 %     100 %     100 %
Consolidated                
Crude charge (BPD) [(1)]     627,310       416,350       576,480       382,440  
Refinery throughput (BPD) [ (2)]     663,310       444,730       614,300       405,190  
Sales of produced refined products (BPD) [(3)]     655,570       443,940       589,240       399,690  
Refinery utilization [(4)]     92.5 %     102.8 %     90.5 %     94.4 %
                 
Average per produced barrel [(5)]                
Refinery gross margin   $ 36.36     $ 11.71     $ 25.93     $ 10.07  
Refinery operating expenses [(6)]     7.87       5.73       7.73       7.25  
Net operating margin   $ 28.49     $ 5.98     $ 18.20     $ 2.82  
                 
Refinery operating expenses per throughput barrel [(7)]   $ 7.77     $ 5.72     $ 8.25     $ 7.07  
                 
Feedstocks:                
Sweet crude oil     42 %     50 %     43 %     48 %
Sour crude oil     36 %     30 %     34 %     30 %
Heavy sour crude oil     14 %     11 %     14 %     12 %
Black wax crude oil     3 %     3 %     3 %     3 %
Other feedstocks and blends     5 %     6 %     6 %     7 %
Total     100 %     100 %     100 %     100 %
    Three Months Ended   Six Months Ended
    2022   2021   2022 (8)   2021
Consolidated                
Sales of produced refined products:                
Gasolines   51 %   51 %   51 %   52 %
Diesel fuels   34 %   35 %   32 %   35 %
Jet fuels   5 %   3 %   6 %   3 %
Fuel oil   2 %   1 %   3 %   1 %
Asphalt   3 %   3 %   3 %   3 %
Base oils   2 %   3 %   2 %   3 %
LPG and other   3 %   4 %   3 %   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 HFC Asphalt and inter-segment 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). As a result of our acquisition of the Puget Sound Refinery on November 1, 2021, and the Sinclair and Casper Refineries on March 14, 2022, our consolidated crude capacity increased from 405,000 BPSD at June 30, 2021 to 678,000 BPSD at June 30, 2022.
(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 Sinclair 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 Sinclair 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.

    Three Months Ended   Six Months Ended
Renewables        
Sales volumes (in thousand gallons)     25,688       30,632  
Average per produced gallon [ (1)]        
Renewables gross margin   $ 0.07     $ 0.16  
Renewables operating expense [(2)]     1.14       1.84  
Net operating margin   $ (1.07 )   $ (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 business for the period March 14, 2022 (the date of acquisition) through June 30, 2022.

    Three Months Ended   Six Months Ended
Marketing        
Number of branded sites at period end     1,329     1,329
Sales volumes (in thousand gallons)     335,106     420,019
Margin per gallon of sales [ (1)]   $ 0.07   $ 0.07
(1)   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,
    2022   2021   2022   2021
Lubricants and Specialty Products                
Throughput (BPD)   20,260     19,310     19,800     19,860  
Sales of produced products (BPD)   34,000     36,670     34,510     34,630  
                 
Sales of produced products:                
Finished products   53 %   51 %   52 %   52 %
Base oils   27 %   29 %   29 %   27 %
Other   20 %   20 %   19 %   21 %
Total   100 %   100 %   100 %   100 %

Supplemental financial data attributable to our Lubricants and Specialty Products segment is presented below:

    Rack Back (1)   Rack Forward (2)   Eliminations (3)   Total Lubricants and Specialty Products
    (In thousands)
Three months ended June 30, 2022                
Sales and other revenues   $ 358,628   $ 754,442   $ (263,129 )   $ 849,941
Cost of products sold   $ 249,095   $ 590,462   $ (263,129 )   $ 576,428
Operating expenses   $ 38,073   $ 36,397   $     $ 74,470
Selling, general and administrative expenses   $ 5,636   $ 37,919   $     $ 43,555
Depreciation and amortization   $ 7,712   $ 12,893   $     $ 20,605
Income from operations   $ 58,112   $ 76,771   $     $ 134,883
Income before interest and income taxes   $ 58,131   $ 76,985   $     $ 135,116
EBITDA   $ 65,843   $ 89,878   $     $ 155,721
                 
Three months ended June 30, 2021                
Sales and other revenues   $ 254,485   $ 629,211   $ (214,507 )   $ 669,189
Cost of products sold   $ 163,280   $ 542,445   $ (214,507 )   $ 491,218
Operating expenses   $ 29,106   $ 32,204   $     $ 61,310
Selling, general and administrative expenses   $ 5,914   $ 31,669   $     $ 37,583
Depreciation and amortization   $ 6,230   $ 12,922   $     $ 19,152
Income from operations   $ 49,955   $ 9,971   $     $ 59,926
Income before interest and income taxes   $ 49,955   $ 10,138   $     $ 60,093
EBITDA   $ 56,185   $ 23,060   $     $ 79,245
    Rack Back (1)   Rack Forward (2)   Eliminations (3)   Total Lubricants and Specialty Products
    (In thousands)
Six months ended June 30, 2022                
Sales and other revenues   $ 637,214   $ 1,442,389   $ (474,653 )   $ 1,604,950
Cost of products sold   $ 427,634   $ 1,128,024   $ (474,653 )   $ 1,081,005
Operating expenses   $ 68,887   $ 71,584   $     $ 140,471
Selling, general and administrative expenses   $ 11,843   $ 73,461   $     $ 85,304
Depreciation and amortization   $ 15,269   $ 25,930   $     $ 41,199
Income from operations   $ 113,581   $ 143,390   $     $ 256,971
Income before interest and income taxes   $ 116,181   $ 143,636   $     $ 259,817
EBITDA   $ 131,450   $ 169,566   $     $ 301,016
                 
Six months ended June 30, 2021                
Sales and other revenues   $ 427,927   $ 1,112,457   $ (346,632 )   $ 1,193,752
Cost of products sold   $ 295,812   $ 873,561   $ (346,632 )   $ 822,741
Operating expenses   $ 57,727   $ 64,336   $     $ 122,063
Selling, general and administrative expenses   $ 12,653   $ 70,483   $     $ 83,136
Depreciation and amortization   $ 13,535   $ 25,738   $     $ 39,273
Income from operations   $ 48,200   $ 78,339   $     $ 126,539
Income before interest and income taxes   $ 48,200   $ 78,878   $     $ 127,078
EBITDA   $ 61,735   $ 104,616   $     $ 166,351
(1)   Rack Back consists of the PCLI base oil production activities, by-product sales to third parties and intra-segment base oil sales to Rack Forward.
(2)   Rack Forward activities include the purchase of base oils from Rack Back and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties.
(3)   Intra-segment sales of Rack Back produced base oils to Rack Forward are eliminated under the “Eliminations” column.

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) severance costs, (iii) restructuring charges, (iv) Cheyenne refinery LIFO inventory liquidation costs, (v) decommissioning costs, (vi) acquisition integration and regulatory costs and (vii) gain on tariff settlement.

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   Six Months Ended
      2022       2021       2022       2021  
    (In thousands)
Net income attributable to HF Sinclair stockholders   $ 1,221,262     $ 168,850     $ 1,381,236     $ 317,067  
Add interest expense     38,961       28,942       73,820       67,328  
Subtract interest income     (1,844 )     (1,029 )     (2,841 )     (2,060 )
Add (subtract) income tax expense (benefit)     383,493       123,485       404,822       95,178  
Add depreciation and amortization     164,044       124,042       308,645       248,121  
EBITDA   $ 1,805,916     $ 444,290     $ 2,165,682     $ 725,634  
Subtract lower of cost or market inventory valuation adjustment     34,543       (118,825 )     25,992       (318,862 )
Add severance costs           194             708  
Add restructuring charges                       7,813  
Add Cheyenne refinery LIFO inventory liquidation costs                       923  
Add decommissioning costs     512       8,096       1,469       16,347  
Add acquisition integration and regulatory costs     12,037       746       36,572       746  
Subtract gain on tariff settlement                       (51,500 )
Adjusted EBITDA   $ 1,853,008     $ 334,501     $ 2,229,715     $ 381,809  

EBITDA and Adjusted EBITDA attributable to our Refining segment is presented below:

    Three Months Ended   Six Months Ended
Refining Segment   2022     2021     2022     2021  
    (In thousands)
Income before interest and income taxes [(1)]   $ 1,558,120   $ 250,111     $ 1,671,171   $ 295,788  
Add depreciation and amortization     102,780     79,938       197,461     168,020  
EBITDA     1,660,900     330,049       1,868,632     463,808  
Subtract lower of cost or market inventory valuation adjustment         (118,825 )         (318,353 )
Adjusted EBITDA   $ 1,660,900   $ 211,224     $ 1,868,632   $ 145,455  
(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   Six Months Ended
Renewables Segment     2022       2021       2022       2021  
    (In thousands)
Loss before interest and income taxes [(1)]   $ (73,202 )   $ (11,547 )   $ (95,304 )   $ (24,710 )
Add depreciation and amortization     10,371       316       16,171       658  
EBITDA     (62,831 )     (11,231 )     (79,133 )     (24,052 )
Subtract lower of cost or market inventory valuation adjustment     34,543             25,992        
Adjusted EBITDA   $ (28,288 )   $ (11,231 )   $ (53,141 )   $ (24,052 )
(1)   Loss before interest and income taxes of our Renewables segment represents loss plus (i) interest expense, net of interest income and (ii) income tax provision.

EBITDA attributable to our Marketing segment is set forth below:

Marketing Segment   Three Months Ended   Six Months Ended
    (In thousands)
Income before interest and income taxes [(1)]   $ 19,502   $ 24,771
Add depreciation and amortization     4,418     4,919
EBITDA   $ 23,920   $ 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 and Adjusted EBITDA attributable to our Lubricants and Specialty Products segment is set forth below.

Lubricants and Specialty Products Segment   Rack Back   Rack Forward   Total Lubricants and Specialty Products
    (In thousands)
Three months ended June 30, 2022            
Income before interest and income taxes [ (1)]   $ 58,131   $ 76,985   $ 135,116
Add depreciation and amortization     7,712     12,893     20,605
EBITDA   $ 65,843   $ 89,878   $ 155,721
             
Three months ended June 30, 2021            
Income before interest and income taxes [(1)]   $ 49,955   $ 10,138   $ 60,093
Add depreciation and amortization     6,230     12,922     19,152
EBITDA     56,185     23,060     79,245
Lubricants and Specialty Products Segment   Rack Back   Rack Forward   Total Lubricants and Specialty Products
    (In thousands)
Six months ended June 30, 2022            
Income before interest and income taxes [(1)]   $ 116,181   $ 143,636   $ 259,817
Add depreciation and amortization     15,269     25,930     41,199
EBITDA     131,450     169,566     301,016
             
Six months ended June 30, 2021            
Income before interest and income taxes [(1)]   $ 48,200   $ 78,878   $ 127,078
Add depreciation and amortization     13,535     25,738     39,273
EBITDA     61,735     104,616     166,351
Add restructuring charges     1,079     6,734     7,813
Adjusted EBITDA   $ 62,814   $ 111,350   $ 174,164
(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 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.

Below are reconciliations to our consolidated statements of income for refinery net operating and gross margin and operating expenses, in each case averaged per produced barrel sold. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of average Refining segment net operating margin per produced barrel sold to refinery gross margin to total sales and other revenues

    Three Months Ended   Six Months Ended
      2022       2021       2022       2021  
    (Dollars in thousands, except per barrel amounts)
Consolidated                
Net operating margin per produced barrel sold   $ 28.49     $ 5.98     $ 18.20     $ 2.82  
Add average refinery operating expenses per produced barrel sold     7.87       5.73       7.73       7.25  
Refinery gross margin per produced barrel sold     36.36       11.71       25.93       10.07  
Times produced barrels sold (BPD)     655,570       443,940       589,240       399,690  
Times number of days in period     91       91       181       181  
Refinery gross margin     2,169,124       473,067       2,765,498       728,503  
Add rounding     172       73       355       189  
Total Refining segment gross margin     2,169,296       473,140       2,765,853       728,692  
Add Refining segment cost of products sold     8,119,285       3,619,319       14,028,895       6,381,262  
Refining segment sales and other revenues     10,288,581       4,092,459       16,794,748       7,109,954  
Add Renewables segment sales and other revenues     194,578             241,945        
Add Marketing segment sales and other revenues     1,336,302             1,613,343        
Add Lubricants and Specialty Products segment sales and other revenues     849,941       669,189       1,604,950       1,193,752  
Add HEP segment sales and other revenues     135,770       126,234       255,968       253,418  
Subtract corporate, other and eliminations     (1,643,012 )     (310,759 )     (1,890,044 )     (475,708 )
Sales and other revenues   $ 11,162,160     $ 4,577,123     $ 18,620,910     $ 8,081,416  

Reconciliation of average Refining segment operating expenses per produced barrel sold to total operating expenses

    Three Months Ended   Six Months Ended
      2022       2021       2022       2021  
    (Dollars in thousands, except per barrel amounts)
Consolidated                
Average operating expenses per produced barrel sold   $ 7.87     $ 5.73     $ 7.73