HF Sinclair (DINO) Q4 2025 Earnings Transcript

Image source: The Motley Fool.

DATE

Wednesday, February 18, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Interim Chief Executive Officer and President — Franklin Myers
• Chief Financial Officer — Atanas H. Atanasov
• Executive Vice President, Commercial Operations — Steven C. Ledbetter
• Executive Vice President, Refining — Valerie Pompa
• Senior Vice President, Lubricants and Specialties — Matt Joyce
• Vice President, Investor Relations — Craig Biery

TAKEAWAYS

• Adjusted EBITDA -- $564 million for the quarter and $2.3 billion for the year, showing a substantial annual increase.
• Net income -- Fourth quarter adjusted net income was $221 million, or $1.20 per diluted share; reported net loss for the quarter was $28 million due to special items that decreased net income by $249 million.
• Refining segment EBITDA -- Fourth quarter adjusted EBITDA was $403 million, reversing a negative $169 million in fourth quarter 2024 driven by higher adjusted refinery gross margins in core West and Mid-Con regions.
• RINs waivers benefit -- Received small refinery RINs waivers from the EPA in the quarter, resulting in an adjusted refining gross margin increase of $313 million, including $43 million from prior quarter awards recognized in this period.
• Returning capital to shareholders -- Distributed $230 million to shareholders through dividends and share repurchases for the quarter, and over $724 million for the year.
• Operational records -- Achieved annual throughput of 652,000 barrels per day and reduced refining operating cost per throughput barrel to $7.67.
• Cost management -- Lowered overall refining operating costs by $87 million year over year.
• Strategic investment -- Advancing a vacuum furnace project at El Dorado refinery with a total planned capital spend of $55 million, $37 million of which was incurred during the year, and targeting an annual EBITDA uplift of $25 million–$30 million upon completion.
• Marketing segment performance -- Marketing segment delivered record annual EBITDA of $103 million, a 37% increase, and expanded supplied branded locations by a net 117 sites.
• Joint venture announcement -- Launched Green Trail Fuels LLC with U-Pop Holdings, forming a new joint venture of more than 30 retail sites in Colorado and New Mexico, with HF Sinclair holding a 50% non-operating economic interest.
• Lubricants and specialties segment -- Fourth quarter adjusted EBITDA was $43 million, down from $70 million in prior year, attributable to lower sales volumes, base oil margins, and higher operating costs.
• Midstream segment results -- Delivered record annual adjusted EBITDA of $459 million; fourth quarter adjusted EBITDA remained flat year over year at $114 million.
• Guidance: Capital expenditures -- Forecasting approximately $650 million in sustaining capital and $125 million in growth capital for 2026, with sustaining capital down $125 million from the prior year.
• Planned throughput guidance -- Projecting 585,000–615,000 barrels per day crude oil run rate in 2026, factoring in planned turnarounds at Puget Sound and Woods Cross refineries.
• Liquidity position -- Total liquidity at $3 billion as of December 31, 2025, comprised of $978 million in cash and a $2 billion undrawn unsecured credit facility.
• Leverage -- Outstanding debt of $2.8 billion at year end with a debt-to-capital ratio of 23% and net debt-to-capital ratio of 15%.
• Dividend declaration -- Board declared a regular quarterly dividend of $0.50 per share, payable March 12, 2026, to holders of record on March 2, 2026.
• Disclosure review -- Audit Committee is assessing matters related to company disclosure processes, according to interim CEO Myers, who said, "our review relates to our disclosure process and not to the numbers we released this morning."

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Interim CEO Myers announced that Chief Executive Officer Timothy Go requested a voluntary leave of absence, coinciding with an Audit Committee review of the company’s disclosure processes, and confirmed the audit's completion is pending this review, which introduces near-term uncertainty.
• Fourth quarter reported net loss attributable to shareholders was $28 million, with special items reducing net income by $249 million despite otherwise positive adjusted results.
• Quarterly net cash provided by operations totaled $8 million, with $122 million in turnaround spending impacting cash generation.
• Lubricants and specialties segment fourth quarter EBITDA declined $27 million year over year due to seasonality, lower sales, and operational disruptions at the Mississauga facility.

SUMMARY

HF Sinclair (NYSE:DINO) reported a quarter in which adjusted EBITDA and annual throughput reached record levels, while operational improvements drove significant cost reductions. Capital returns to shareholders were substantial, supported by both regular dividends and active share repurchases throughout the year. The company announced the creation of Green Trail Fuels LLC, a new retail joint venture that enhances brand footprint in the Rockies and Southwest and signals a commitment to market growth. Guidance for 2026 signals lower sustaining capital expenditures and continued focus on operational reliability, with crude throughput projections reflecting major planned turnarounds. A review of disclosure processes and related management changes was confirmed, resulting in a pending audit and adding an explicit near-term risk not previously present.

• Management emphasized that the Audit Committee review addresses only disclosure processes and has no anticipated impact on reported financial figures or disclosures.
• Marketing segment guidance targets approximately 10% annual growth in branded sites, with Green Trail Fuels LLC positioned as a growth platform in the region.
• The El Dorado refinery vacuum furnace project is on track to complete during this year's fourth quarter, targeting a notable EBITDA uplift and increased heavy crude capacity.
• Quarterly results included $313 million of EPA small refinery RINs waivers, a substantial but non-recurring benefit, with management declining to provide forward commentary on potential future impacts from such waivers.
• Cost improvement programs and ongoing throughput optimization remain strategic priorities as the company maintains its investment-grade credit metrics.

INDUSTRY GLOSSARY

• RINs (Renewable Identification Numbers): Regulatory credits used for tracking biofuel blending under the EPA’s Renewable Fuel Standard program, impacting refining margins and compliance costs.
• SREs (Small Refinery Exemptions): Temporary waivers granted by the EPA allowing small refineries to avoid certain biofuel blending obligations, providing material financial relief when awarded.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization, used as a proxy for operating performance.
• BOHO spread: A margin metric for renewable diesel production, representing the price difference between soybean oil (feedstock) and heating oil (alternatively, diesel), impacting segment profitability.
• RVO (Renewable Volume Obligation): The mandated amount of renewable fuel that petroleum refiners and importers must blend into fuel in a given year.

Full Conference Call Transcript

Craig Biery: Good morning, everyone, and welcome to HF Sinclair Corporation's fourth quarter 2025 earnings call. This morning, we issued a press release announcing results for the quarter ending December 31, 2025. If you would like a copy of the earnings press release, you may find one on our website at hfsinclair.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 securities laws. There are many factors that could cause results to differ from expectations, including those noted in our SEC filings.

The call also may include discussion of non-GAAP measures. Please see the earnings press release for reconciliations to GAAP financial measures. For any forward-looking non-GAAP measures, the company is unable to provide a reconciliation without unreasonable effort due to the unpredictability and uncertainty of certain items. 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. I will now turn the call over to Franklin. Thank you, Craig, and thank you for being part of the fourth quarter earnings call. You have seen in the release this morning, Mr.

Timothy Go, the company Chief Executive Officer and President and a member of the Board, requested a voluntary leave of absence from his duties. The Board has accepted Tim's request, electing me Chief Executive Officer and President of the company on a temporary basis. Also, the company released this morning, and announced that the Audit Committee of the Board is assessing certain matters relating to the company's disclosure processes. We are working to complete this review as soon as possible. I want to emphasize that our review relates to our disclosure process and not to the numbers we released this morning. We are comfortable with the financial statements and disclosures we released and have no expectation that they will change.

At this point, our audit is not yet complete pending completion of this review. Once we have worked through these issues, we will move forward to filing our 10-K. At present, we fully expect to make a timely filing of the 10-K. With these preliminary remarks, I will turn it over to Steven and Atanas for their remarks on the results. After the presentation, we will be happy to take questions. I want to note, though, and emphasize that this is an earnings call, and our results for Q4 and the full year of 2025. We will not be in a position to address any questions relating to the disclosure process review or on the company's leadership.

Let me turn it over to Steve. Thank you, Franklin. This morning, we reported solid full year 2025 adjusted EBITDA of $2,300,000,000 and fourth quarter adjusted EBITDA of $564,000,000. Our fourth quarter results reflect seasonal weakness in our refining business. Our fuel margins were strongest in the first half of the quarter when our throughput was the lowest, but the margins weakened significantly at the end of the quarter, especially in our core markets in the Rockies, Mid-Con, and the Southwest. This, along with the Puget Sound refinery turnaround and the unplanned Artesia refinery event, negatively impacted refining earnings for the fourth quarter.

Despite the headwinds in refining, the positive contributions from our midstream, lubricants, and marketing segments highlight the strength of our diversified portfolio. In the fourth quarter, we returned $230,000,000 through dividends and share repurchases, demonstrating our commitment to returning excess cash to shareholders. During the quarter, we received small refinery RINs waivers from the EPA, which increased adjusted refining gross margin by $313,000,000. This includes $43,000,000 of small refinery RINs waivers granted by the EPA in the third quarter but recognized in the fourth quarter.

I will now go through our full year highlights and provide an update of some of our strategic initiatives, and after that, I will turn it over to Atanas to go through our detailed fourth quarter results. For the full year 2025, I am pleased to report that our financial and operational results demonstrate significant progress we are making on our three key priorities: reliability, integration, and shareholder return. For example, in refining, in 2025, we successfully completed major turnarounds at our Tulsa, Parco, and Puget Sound refineries. We also made improvements on our operational performance, setting annual records for throughput of 652,000 barrels per day and operating expense per throughput barrel of $7.67.

Our overall refining operating costs were down by $87,000,000 year over year, highlighting our improvements in both cost control and reliability. On the organic front, we are progressing a vacuum furnace project at our El Dorado refinery that will improve plant reliability, upgrade yield through gas oil recovery, and importantly, increase our heavy crude processing capability by approximately 10,000 barrels per day. The estimated capital cost of the project is approximately $55,000,000, of which $37,000,000 has already been spent in 2025, with an expected annual EBITDA uplift of between $25,000,000 and $30,000,000. The project is expected to be completed during the fourth quarter El Dorado turnaround of this year.

Our marketing segment delivered record annual EBITDA of $103,000,000 in 2025, a 37% increase over the prior record. We also grew our supplied branded footprint by a net of 117 sites, demonstrating our commitment to grow the Sinclair brand and provide a long-term outlet with margin uplift for refining barrels. Looking forward, we expect to grow our number of branded sites by approximately 10% annually. And today, HF Sinclair is pleased to announce the formation of Green Trail Fuels LLC, a new joint venture with U-Pop Holdings for which we will hold a 50% nonoperating economic interest. This joint venture will include more than 30 retail sites across Colorado and New Mexico.

As part of this partnership, HF Sinclair will supply fuel from its proximate regional refineries, strengthening the company's branded marketing footprint in the Rockies and the Southwest. This joint venture represents a strategic step forward for our marketing segment and allows us to accelerate growth of the Sinclair brand at an expedited pace and capture synergies across our integrated asset base. In lubricants and specialties, in 2025 we delivered annual EBITDA of $261,000,000, reflecting lower sales volumes and the turnaround at our Mississauga facility. Our finished and specialty business continued to deliver strong results, offset by weakness in Group II and Group III base oil margins.

Looking ahead, we are well underway in integrating our recently acquired Industrial Oils Unlimited business, which provides strong regional manufacturing capabilities to further our lubricants and specialties reach into the United States markets. Its proximity to our Tulsa refinery also provides synergy opportunities from its base oil production. We continue to look for additional bolt-on opportunities that will allow us to grow our finished and specialties business. In our midstream business, we delivered record annual adjusted EBITDA of $459,000,000.

In October, we announced the evaluation of a multiphase plan to expand our midstream refined products pipeline network to address growing supply needs in the Western U.S., and we believe our geographic reach and infrastructure provide an advantaged position to quickly and efficiently deliver refined products where market needs are most acute. We are targeting the final investment decision for phase one by the middle of this year. During 2025, we returned over $724,000,000 to shareholders through share repurchases and dividends.

Since the Sinclair acquisition in March 2022, we have returned over $4,700,000,000 in cash to shareholders and have reduced our share count by over 64,000,000 shares, which represents all of the shares we issued for Sinclair and 79% of the shares we issued for both Sinclair and the HEP transaction. We remain committed to our long-term cash return strategy and long-term payout ratio while maintaining a strong balance sheet and investment-grade credit rating. Today, we announced that our Board of Directors declared a regular quarterly dividend of $0.50 per share, payable on 03/12/2026 to holders of record on 03/02/2026.

Looking forward, we are bullish on margins in refining in 2026, and we remain focused on safe and reliable operations, continued growth in our midstream, lubricants, and marketing segments, and returning excess cash to shareholders. I will now ask Atanas to take it from here. Thank you, Steve, and good morning, everyone.

Atanas H. Atanasov: Let us begin by reviewing HF Sinclair's financial highlights. Today, we reported fourth quarter net loss attributable to HF Sinclair shareholders of $28,000,000, or negative $0.16 per diluted share. These results reflect special items that collectively decreased net income by $249,000,000. Excluding these items, adjusted net income for the fourth quarter was $221,000,000, or $1.20 per diluted share, compared to adjusted net loss of $191,000,000, or negative $1.02 per diluted share for the same period in 2024. Adjusted EBITDA for the fourth quarter was $564,000,000 compared to $28,000,000 in 2024.

In our refining segment, excluding the lower of cost or market inventory valuation adjustment charge of $313,000,000 and certain other adjustments, fourth quarter adjusted EBITDA was $403,000,000 compared to negative $169,000,000 in the fourth quarter 2024. This increase was principally driven by higher adjusted refinery gross margins in both the West and Mid-Con regions, partially offset by the Puget Sound refinery planned turnaround and the unplanned Artesia refinery event. As Steve mentioned, small refinery RINs waivers granted by the EPA in 2025 increased adjusted refinery gross margins by $313,000,000, which includes $43,000,000 of benefits related to the small refinery RINs waivers received in the third quarter but recognized in 2025.

Crude oil charge averaged 556,000 barrels per day for the fourth quarter compared to 562,000 barrels per day for 2024. In our renewables segment, excluding the lower of cost or market inventory valuation adjustment charge of $7,000,000, we reported adjusted EBITDA of negative $6,000,000 for the fourth quarter compared to negative $9,000,000 for 2024. In 2025, we recognized incrementally more in value from the producer's tax credit. Total sales volumes were 57,000,000 gallons in 2025 as compared to 62,000,000 gallons for 2024. Our marketing segment reported EBITDA of $22,000,000 in the fourth quarter, compared to $21,000,000 in 2024. This increase was primarily driven by higher margins and high-grading our mix of stores throughout 2025.

Total branded sales fuel volumes were 337,000,000 gallons for 2025, compared to 333,000,000 gallons for 2024. Our lubricants and specialty segment reported adjusted EBITDA of $43,000,000 for the fourth quarter compared to adjusted EBITDA of $70,000,000 for 2024. This decrease was primarily driven by lower finished and specialty product sales volumes, lower base oil margins, and higher operating costs. Our midstream segment reported adjusted EBITDA of $114,000,000 in the fourth quarter compared to $114,000,000 in the same period of last year. Net cash provided by operations totaled $8,000,000 in the fourth quarter, which included $122,000,000 of turnaround spend. HF Sinclair's capital expenditures totaled $131,000,000 in the fourth quarter.

As of 12/31/2025, HF Sinclair's total liquidity stood at approximately $3,000,000,000, which includes a cash balance of $978,000,000 and our undrawn $2,000,000,000 unsecured credit facility. As of December 31, we have $2,800,000,000 of debt outstanding with a debt-to-capital ratio of 23% and net debt-to-capital ratio of 15%. Let us go through some guidance items. With respect to capital spending for full year 2026, we expect to spend approximately $650,000,000 in sustaining capital including turnarounds and catalyst. This is down $125,000,000 from 2025 due to the completion of the heavy maintenance cycle of our assets, and we expect our sustaining capital to continue to trend below the high catch-up maintenance levels of the past years.

In addition, we expect to spend $125,000,000 in growth capital investments across our segments. For 2026, we expect to run between 585,000–615,000 barrels per day of crude oil in our refining segment, which reflects the planned turnarounds at our Puget Sound and Woods Cross refineries. We will now open for questions.

Operator: The floor is now open for questions. At this time, if you have questions or comments, please press 1 on your touchtone phone. We ask that you please limit to one question and one follow-up. If you have additional questions, we welcome you to rejoin the queue. At any point your question has been answered, you may remove yourself from the queue by pressing 1 again. Our first question comes from Neil Singhvi Mehta from Goldman Sachs. Please go ahead. Your line is open.

Craig Biery: Yes. Good morning, team. Franklin, I recognize you are limited in terms of what you can say here, but the stock is down a lot in the premarket. So I do think the story could benefit from some color. Anything you can share about the management change and the audit to provide a little bit more color? Because I think a number of folks are confused this morning, and is there any relationship between these two items? Neil, I appreciate the question, but you have to understand the circumstances that we are in. We have no further comment today. Personally, I view this as a buying opportunity.

If and when we have additional information, we will give you updates as we are able to do so. Thank you for your questions. Thank you for letting us clear that up. Alright. My follow-up is just on small refinery exemptions. In the quarter, they were pretty significant. Just

Steven C. Ledbetter: any color in terms of the path of converting that over to cash and perspectives on the 2026 outlook?

Craig Biery: For SREs.

Atanas H. Atanasov: Neil, thank you for the question. We intend to continue to participate in this program and appreciate the EPA is now following a formulaic approach. We cannot comment on any further benefit from SREs. However, we did benefit in this quarter and this year in a significant way, both in terms of EBITDA and cash.

Operator: Our next question comes from Ryan M. Todd from Piper Sandler. Please go ahead. Your line is open.

Atanas H. Atanasov: Good, thanks. Maybe

Craig Biery: first one on the refining side. I mean, the headline refining results were strong, but if we exclude the SRE tailwind, I mean, you had strong throughput, you had good OpEx, but the gross margin contribution looked a little lower without the SRE.

Atanas H. Atanasov: You maybe talk about

Craig Biery: what some of the headwinds might have been on the quarter that would have led to lower capture across the regions? And maybe if you can disclose any, you know, on a regional breakdown, what the gross margins would have looked like without the SRE?

Steven C. Ledbetter: Hey, Ryan. This is Steve. I will take that. Look, when you think about the quarter, the crack environment was very strong in the first half of the quarter, but then it took a precipitous fall beginning in the second half, really November, coming off around 15%, and then December dropped another 48% to 50%. So from a timing perspective, that was what the market looked like in our regions. And our planned and unplanned maintenance happened in the first half of the quarter when the margins were much stronger. So, finally, following our maintenance events, we needed to liquidate inventory positions, and that happened in a lower market environment.

But I would also like to say that we are very bullish in refining outcomes, and we believe in the underlying business performance improvement plans that we have underway. I think that has been demonstrated by capture improvement year over year, the underlying reliability trends contributing to lower OpEx and increased full year throughput.

Atanas H. Atanasov: Great. Thanks. And then maybe

Craig Biery: separately on, you know, congratulations on the marketing JV that you announced. Can you provide some color on what you see as potentially the tangible benefits of the partnership, what the platform may allow you to do in terms of driving additional growth in the region or elsewhere?

Steven C. Ledbetter: Yeah. We are very excited to be able to announce that. I think it is truly a new avenue to really accelerate the growth and unlock the full potential of

Craig Biery: the Sinclair brand, which we think is still an untapped resource for our company.

Steven C. Ledbetter: What this allows us to do is to accelerate the branded put. It gives us exposure to what we believe is attractive margins in the rack-to-retail and even the backcourt. And then finally, it allows us to capture synergies with our integrated asset base in both refining and midstream. This is a template that I think we can use in other places. We look to really accelerate the growth of the Dyno brand in our core markets, and this is the first one where we are signaling that we are serious about this, and we see this as a significant platform for growth. Thanks.

Operator: Our next question comes from Paul Cheng from Scotiabank. Please go ahead. Your line is open.

Steven C. Ledbetter: Hi, good morning. Franklin, can you maybe clarify that with the management change, is the company going to conduct a strategic review on the operation

Paul Cheng: or to look at different assets, whether they fit into long-term portfolio, or is it business as usual and none of the strategy and anything will be changed? And because I know you are not going to comment on Timothy Go, the reason behind, but can you clarify that when you say it is a voluntary leave of absence, does that mean that he will come back at some point, or is this a permanent— in other words, that you guys will be looking for a permanent replacement of the CEO? That is the first question.

Atanas H. Atanasov: Okay, Paul. I heard two questions there, and I will answer both of them.

Craig Biery: The first question on strategic review: it is business as usual within the company, and we will keep going forward on the plans that we have. In terms of your question with respect to Tim and the other matters, we have no further comments today. I just want to turn your follow-up question back to the earnings call, please. If and as we have additional information, we will alert the public in the appropriate way. I think you may have a follow-up question.

Paul Cheng: Okay. The follow-up question is on the SRE impact on the margin for the quarter. Is that just because it depends on where you receive? Do you have a breakdown by region, what the SRE impact is? Thank you. Hey, Paul. This is Steve. Why do we not take that one offline, and I

Steven C. Ledbetter: would offer up Craig Biery on a follow-up call to show the breakdowns to you.

Paul Cheng: Alright. Will do. Thank you.

Operator: Next question comes from Theresa Chen from Barclays. Hey, Steve, follow-up on your comments about the bullishness on the outlook for the refining business. Curious how you see the path of economic recovery, how that will go for the Mid-Con region. Particularly in light of the weakness in Group III RIN-adjusted crack spreads and still elevated utilization rates across the region, how do you see the path to a more sustainable profitability environment from here?

Steven C. Ledbetter: Yeah. It is a good question. Thanks, Theresa. Of course, we look at things on a longer-cycle basis. As we look across the cycle, we see that tightness will return and be constructive, including in the Mid-Con. We think what we see right now is directly associated with winter storm Fern really taking the demand

Craig Biery: bubble and popping it.

Steven C. Ledbetter: And high inventories and now converting into the RVP. But we think that is temporary and normalizes out over the year. On the back of that—and it is really on gas—we believe that diesel continues to remain very strong, and jet appears to be durable. It is a bit of a timing issue. Mid-Con will be a little softer early in the year, but we feel like that will normalize as we step into driving season.

Operator: That is helpful. Thank you. And on the Green Trail Fuels JV, any color or details on the expected CapEx net to Dyno and the build multiples associated with the incremental retail sites? Do you have any quantitative color at all on how we should think about the contribution of this investment to earnings on a go-forward basis?

Atanas H. Atanasov: Yeah. Thanks, Theresa. This is Atanas. We are not going to comment on the exact investment. However, I would say that we are funding this JV through a very efficient use of capital, which ultimately results in very attractive multiples to the corporation, to the point that it is competing with any of our other projects. What it also does—any of our other marketing projects—the incremental benefit there is not only the branded footprint that you have on the wholesale side, but also our access for very accretive rack-to-retail economics. So this is efficiently funded by the corporation and results in a relatively low multiple to us. Thank you.

Steven C. Ledbetter: Of course.

Operator: Our next question comes from Doug Leggate from Wolfe Research. Please go ahead. Your line is open.

Atanas H. Atanasov: Hi. Good morning, everyone. I am going to avoid

Doug Leggate: the main topic that seems we are going to have to wait on your review there, but I do have a couple of questions, Atanas. Small refinery exemptions and cash flow, if I may. It is part A and B, perhaps, but can you just confirm that the SRE benefit you took was cumulative, and if so, over what period? And how that leads through to how we should think about the ongoing benefit going forward. That is my first question. Then my second question is, can you offer any color on the underlying free cash flow excluding the SREs?

I do not know what the cash flow impact was this quarter from the SREs, and we also do not know what the working capital move was. Can you give us a breakdown of what you see as the underlying cash flow and free cash flow excluding working capital and any contribution from SREs, please? Thank you.

Atanas H. Atanasov: Yeah. Thank you for your question, Doug. So for the total year, the cash flow impact of the SREs was just under $300,000,000. It was over $280,000,000.

Doug Leggate: So

Atanas H. Atanasov: obviously, it represents a significant amount of our free cash flow in the fourth quarter. However, I remind you that we had a lot of capital outlays in the fourth quarter. You should focus on total free cash flow for the full year, which was very robust, just almost $900,000,000, just under $870,000,000. Now, when you look at an ongoing basis, we are not going to provide any guidance because that is really out of our hands, and we appreciate the EPA's formulaic approach, but we are going to limit our comments to our actuals.

So $313,000,000 in total EBITDA impact for the fourth quarter, $485,000,000 for the full year, and significant cash flow contribution just under $300,000,000 for the fourth quarter.

Doug Leggate: So for the full year—can you give the working—sorry. Can you just focus, please, after this, on the fourth quarter, the SRE after-tax contribution and the working capital move? I am just trying to get an underlying cash flow number excluding those two issues.

Atanas H. Atanasov: When you look at our total working capital movement for the fourth quarter—and you will be able to analyze this later—the total working capital was a headwind. There are really two items when you exclude SREs. Number one, when you build inventory, that is a headwind. Number two is in a declining price environment, accounts payable is a headwind. Those are the two main drivers that you see that were impacting our net working capital for the quarter. But then for the full year, like I said, our total cash flow from operations and free cash flow was pretty robust, as evidenced by our return of capital to shareholders.

Doug Leggate: I will take it offline. Thank you, guys.

Operator: Our next question comes from Joseph Gregory Laetsch from Morgan Stanley. Please go ahead. Your line is open.

Atanas H. Atanasov: Great. Thanks. Good morning. Thanks for taking my questions. So I wanted to ask on lubricants. It was a bit weaker than we had expected in fourth quarter. I know there was some seasonality to that business. But could you just unpack some of the drivers

Steven C. Ledbetter: of the fourth quarter results? And as part of that, how do you see the segment progressing throughout the year? Thank you.

Matt Joyce: Thanks, Joe. It is Matt Joyce here. You nailed it. The seasonality was, of course, a big driver for us. Fourth quarter always tends to be a time of the year where our customers are destocking and managing inventory. We saw a similar trend. This was no exception. But the other part of this was we also encountered some higher operational expenditures in the quarter. Energy costs and feedstock costs and feedstock quality in particular in our Mississauga facility impacted our overall performance of base oil production as well as the margins that we could achieve.

We also got caught out with some pretty poor weather in the Mississauga area when we rely heavily on that Seaway for our supply chain, and so that also impacted some of our production and our costs throughout the quarter. From the finished and specialty side of it, I had alluded to it in earlier quarters on the specialty side where we had seen some slowdown in our process oils that go into the rubber and tire industry based on new cars being built at a slower rate. That is still the case.

We saw a little bit of a slowdown that was tracking a little bit lower than what we would like to have seen, and that was a continuing trend at about 10% lower than what we would anticipate. But our finished business remained pretty healthy, and we have put on some new volumes and new business at very nice margins. In balance, when we look at it, quarter four was generally driven by base oil production costs and operational expenditures as well as the pricing we were able to achieve in the quarter. Looking forward, we see steady demand for our products.

We will obviously be watching out for any impacts or continuing impacts on the slowdown in our specialty side, and base oils will be the one that we are working to solve in the future. And then on the midstream side, could you just give us an update on where we are with the westward expansion pipeline project? I know there are several phases under— I think phase one is targeted by midyear. Thank you.

Valerie Pompa: Yeah. So,

Steven C. Ledbetter: we are progressing both the midstream and refining aspects through our project delivery framework, and as we talked about earlier, we think that this project is really complementary to whatever other projects may come to fruition. We are working through not only the economic assessment, but also to make sure we can execute appropriately and with accurate cost assessments, which get us to the point of taking FID. We believe very strongly in this project, and we think that this will be very accretive to the entire value chain under HF Sinclair. So stay tuned. More to come likely midyear.

Valerie Pompa: Great. Thank you.

Operator: Our next question comes from Manav Gupta from UBS. Please go ahead. Your line is open.

Valeria Pompa: Good morning. I wanted to go back. It seemed from your earlier comments that you were

Manav Gupta: relatively bullish on refining margins. I am just trying to understand: are the cracks what you are bullish on, or do you see widening differentials? I think Brent–WTI is a little wider. WCS is a little wider. If you could talk about your relatively more bullish view on refining.

Steven C. Ledbetter: Hey, Manav. This is Steve. I think we talk about our belief on a constructive margin environment and being bullish for a number of different areas. One, when you think about the global supply-demand balance, looking 2026 versus 2025, we see it to be short 100,000 to 200,000 barrels a day, demand net of additional capacity. When you look at the U.S., we think that there is still tightness in the market. We have seen the demand for diesel be very strong as well as jet. Some of the underlying things that you already mentioned—the Venezuelan announcement had a shock to the system in terms of the differentials, and we saw that immediately pop.

We think that is probably another $1.00 to $1.50, which is very good for us. As you know, we can run up to 100,000 barrels a day of heavy crude, and that results in anywhere from $30,000,000 to $35,000,000. The other piece is what is happening to the pressure of WTS

Doug Leggate: versus

Steven C. Ledbetter: WTI, and we think that is structural as those barrels have to compete to get south. We are taking advantage of that now, and we see that strong in Q1 and onward. It is really a combination of everything. We do not see a lot of additional capacity. One other point is our exposure to PAD 5 is an enviable position with what is happening there. That market is getting tighter with two announced refinery closures, and we think we have regional efficiencies to get there and take advantage of that both in the Pacific Northwest as well as in the southern PAD 5. All in all, for Dyno, we think our refining structure looks pretty bullish through 2026.

Manav Gupta: Perfect. My quick follow-up, and I understand the limit here. The number one question we are getting is the parallels are being drawn a little bit to ADM. Is this an internal inquiry, or at this point is there involvement of SEC or Department of Justice? Again, I am asking because a number of people have asked us, is this something similar to ADM, or is this something internal? We cannot comment on it right now. I can tell you that, and again, I will refer you back to the press release if that will give you information that is material. As it and when it becomes available.

I will emphasize, though, the Audit Committee and the Board are fully comfortable with the disclosures that we have made today.

Craig Biery: And the financial statements both with respect to the results of operation and condition of the company. If we were not comfortable, we would not be having this call.

Doug Leggate: I want to provide you with that assurance.

Operator: Thank you. Our next question comes from Phillip J. Jungwirth from BMO. Please go ahead. Your line is open.

Steven C. Ledbetter: Yes. Thanks. Good morning. Coming back to SREs, can you level-set us just on where you sit now for Woods Cross, Parco, Casper, Tulsa, and Artesia? Not looking for guidance but just what has been submitted or resubmitted, and what are we still waiting on decisions from? Yeah. Phillip, this is Steve. We have submitted petitions for all of those and already submitted petitions for 2025, and we are waiting for the EPA to deliberate on granting the award. We have done everything that we can at this point to make sure that we are not the constraint or the bottleneck, and we anticipate hearing something in short order. Okay. Great.

And then, the company has talked about being in the fifth inning of its refining reliability, integration, operating cost improvement journey. Just wondering if you still think that is the case today. How do you see the progression trending this year? And then is there the ambition or ability to do more on the commercial side too, just in order to improve capture rate?

Operator: Yeah. This is Valerie Pompa. The strategies we have been talking about for the last few years continue to be reflected in our OpEx per barrel. We are continuing to, ahead of headwinds on natural gas, manage to improve the underlying base business and our controllable costs and still take $87,000,000 out this year. We anticipate and expect that we are going to continue those strategies towards our $7.25 goal that we put out there over the last few years.

Steven C. Ledbetter: Yeah. Maybe from a commercial perspective, of course there is always opportunity to do more, which is why we are doing some of the things that we have already announced, including announcing the multiphase project, the joint venture that we just announced, and the optimization of our midstream assets, which really takes advantage of the integrated nature of our business.

Doug Leggate: that also does

Steven C. Ledbetter: the same thing of taking advantage of our integrated footprint. We talked about the El Dorado project, where we are making investments that we think are accretive. That one is an important one in terms of product yield as well as running more heavy and then taking advantage of our retail asphalt business, so that heavy oil value chain. We have made progress both in the jet value chain as well as the premium value chain in taking middle pieces out that do not add value to us or where we have efficiencies to make that work. The final piece is our light and crude structure.

We have taken a very aggressive approach in making sure that we can qualify more and different crudes that allow us to take advantage of differentials or dislocations at different times, and we are starting to see that show up in our light and crude underlying numbers. I would just point back to our year-over-year capture improvement of 6% excess ROE and 9% excess RE in the RVO. Not done yet, not calling this victory, but what we are seeing in terms of the trajectory is encouraging, and we are going to continue to aggressively pursue that.

Atanas H. Atanasov: Great. Thanks.

Operator: Our next question comes from Matthew Blair from TPH. Please go ahead. Your line is open.

Atanas H. Atanasov: Great. Thanks and good morning, everyone. Can you talk about how your RD business is trending so far in the first quarter? Just given this increase in D4 RIN prices, do you think that EBITDA margins above $0.25 a gallon

Craig Biery: is realistic so far for Q1, and also, have you been increasing your operating rates of your RD facilities? Thanks.

Steven C. Ledbetter: Maybe I will take that one just at a high level. We have worked extremely hard in our renewable diesel business to get to the point of it being at or around breakeven in terrible market conditions in preparation for what we expected to come, which is what we are seeing in the underlying market. You are seeing the BOHO spread work. You are seeing the RIN values jump, and we have a forward view that business is more constructive than it was. Finalization of RVO is going to help. I think 45Z finalization was also a big help. We have done some meaningful improvements to our base business.

We talk about it in feedstock strategy, and that is really getting closer to where the feedstock is produced and taking a middle part out of that value chain, and then high-grading our molecules, getting into different markets. We are now finding homes in attractive markets in Canada and the Pacific Northwest, differently than just California. I think we have made great strides in the underlying operational efficiency in terms of operating costs as well as catalyst change. We see the economic incentives to run

Atanas H. Atanasov: higher,

Steven C. Ledbetter: and we will do that and are doing that. Having said that, we did have an end-of-life catalyst change at Artesia that has been now completed. That was done in January. It is a long way of saying we are finally seeing some benefit for our current setup. The structure in the market is telling us that we are encouraged about the outcomes financially. Not going to comment on the $0.25 per gallon EBITDA at this point, but we do see this more constructive than we probably ever have since we stepped into this business.

Doug Leggate: Sounds good. And then there is also a proposal in Utah to reduce taxes on retail gasoline, but then

Atanas H. Atanasov: implement a new tax directly on refiners in the state. Could you talk about where you stand on this proposal and the implications if it passes? Thanks.

Steven C. Ledbetter: Yep. We are actively working with the various legislatures up in that region. The issue is wanting to make sure that security of supply is there and bringing down overall fuel cost. I am not going to comment necessarily on that proposal, but we do not believe taxing is the way forward. We are in active conversations around that. In fact, part of our whole project to move more barrels west is potentially part of the solution. We are talking about how we can get support to accelerate getting that delivered and solve the need, which is underlying what this proposal is trying to accomplish.

Operator: Our next question comes from Jason Gabelman from TD Cowen. Please go ahead. Your line is open.

Craig Biery: Yeah. Hey, good morning. Thanks for taking my questions. Wanted to

Doug Leggate: ask a question about the

Craig Biery: RVO in the crack, and it is kind of a few dollars a barrel,

Doug Leggate: approaching $9 a barrel, and

Craig Biery: I think historically you have not really captured any of that, but I wonder

Steven C. Ledbetter: following the Sinclair acquisition's expansion of the marketing business,

Craig Biery: if that has changed at all, if your blending

Atanas H. Atanasov: capabilities on the ethanol side

Craig Biery: enable you to capture any of that

Doug Leggate: RIN that is in the crack? Thanks.

Steven C. Ledbetter: Hey, Jason. Yeah. We watch this pretty closely. I would tell you that in an oversupplied market, you are less able to pass that through to the customers in how you are getting rid of the product, and you eat more of that. As we have gone and moved more into an integrated view on our blending capabilities and our branded put, we do see some benefit from that. But it is a headline, and the RVO, as it climbs, continues to be something that we look at as a headwind. I think as we evolve here and things tighten up, we will begin to see more of this play out to where it does show up in the crack.

For now, it is a wait and see. We are trying to make sure that we can pass as much of that along, but in an oversupplied market, that becomes more and more difficult to do.

Doug Leggate: Okay. And my follow-up is just on Puget Sound because

Steven C. Ledbetter: I was a bit surprised, I think, to see another turnaround announced

Doug Leggate: in 1Q just given the turnaround you recently had. So can you just talk about if there is anything specifically going on with the asset? Did you find something during the work in 4Q that resulted in you accelerating work

Craig Biery: into 1Q, or is it just kind of normal

Doug Leggate: turnaround cycles and a bit of bunching up? Thanks.

Operator: Yeah. This is Valerie. It is just our normal cycle. We split the turnaround units for capability and capacity of the site, historically, to ensure turnaround success and that we can execute well. We have right-sized the turnaround, which units we take together. This is just a normal cycle. The turnaround in the fall was executed successfully to a lot of our objectives. This small turnaround—a coker and a reformer—will close all of those north side units up this year.

Atanas H. Atanasov: Thanks.

Operator: We have no further questions. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.