HF Sinclair (DINO) Q1 2026 Earnings Transcript

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Date

Friday, May 1, 2026 at 8:30 a.m. ET

Call participants

• Chairman, President, and Interim CEO — Franklin Myers
• President, Commercial — Steven Ledbetter
• Acting Chief Financial Officer — Vivek Garg
• Senior Vice President, Lubricants and Specialties — Matt Joyce

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Takeaways

• Net Income Attributable to Shareholders -- $648 million, or $3.56 per diluted share, including special items that increased net income by $521 million.
• Adjusted Net Income -- $127 million, or $0.69 per diluted share, versus an adjusted net loss of $50 million in the prior year period.
• Adjusted EBITDA -- $426 million, compared to $201 million in the same period last year.
• Refining Segment Adjusted EBITDA -- $55 million, excluding $604 million lower of cost or market (LCM) inventory valuation benefit; prior year was negative $8 million.
• Renewables Segment Adjusted EBITDA -- $133 million, excluding $68 million LCM benefit, up from negative $17 million last year; included $49 million in prior year producer tax credit benefit due to a February ruling.
• Marketing Segment EBITDA -- $28 million, up from $27 million; branded fuel sales volume rose to 325 million gallons from 294 million gallons.
• Lubricants and Specialty Segment Adjusted EBITDA -- $103 million, versus $85 million; benefited from a $53 million FIFO gain compared to $8 million last year, partly offset by feedstock cost and price lag.
• Midstream Segment Adjusted EBITDA -- $111 million, compared to $119 million, due to higher operating costs from a Colorado terminal fuel contamination incident.
• Crude Charge -- Averaged 613,000 barrels per day, at the high end of guidance, despite two refinery turnarounds and harsh winter weather.
• Renewables Sales Volume -- 52 million gallons, up from 44 million gallons last year; "narrowing of Boho spread, higher RINs prices and the recognition" cited as drivers.
• Cash Returned to Shareholders -- $167 million in the quarter ($91 million dividends, $76 million share repurchases); cumulative since Sinclair acquisition: over $4.9 billion, with share count reduced by more than 66 million.
• Regular Quarterly Dividend -- $0.50 per share declared, payable June 2, 2026, to holders on record May 11, 2026.
• Total Liquidity -- $3.15 billion as of March 31, 2026, consisting of $1.15 billion cash and an undrawn $2 billion unsecured credit facility.
• Capital Expenditures -- $102 million during the quarter, with $119 million of turnaround spend included in operating cash flows.
• Debt Metrics -- $2.8 billion debt outstanding; debt-to-capital ratio 22%, net debt-to-capital ratio 13%.
• Refining Throughput Guidance -- Next quarter expected to be 600,000-630,000 barrels per day, reflecting planned and unplanned maintenance.
• Green Trail Fuels JV Progress -- 25 new branded sites added; over 100 in pipeline for 6-12 months; target 10% annual branded site growth remains.
• Operational Initiatives -- Two major refinery turnarounds completed; no additional turnaround planned until late Q3.
• Puget Sound Project -- Flexibility for approximately 7,000 barrels per day swing between diesel and jet achieved.
• El Dorado Vacuum Furnace Project -- Will allow up to 10,000 barrels per day of heavy crude intake; due online with fall turnaround.
• Lubricant Segment Cost Inflation -- "unprecedented cost inflation" managed by "multiple pricing actions" being continued into the second quarter.
• Supply Chain Status -- "able to source the necessary feedstocks to supply our customers at historical rates," with "secure" supply chain despite volatility.
• Small Refinery RIN Waiver -- EPA waiver increased adjusted refinery gross margin by $21 million this quarter.

Summary

HF Sinclair Corporation (NYSE:DINO) delivered a significant increase in adjusted EBITDA, supported by both higher sales volumes and expanded segment margins in Renewables, Lubricants, and Marketing. Strategic execution advanced through expansion projects—such as the Puget Sound flexibility upgrade and El Dorado vacuum furnace initiative—designed to optimize yields and throughput. Leadership reaffirmed ongoing commitment to growth initiatives despite executive turnover, stating, "the executive team that was here to build the strategy is still here and is executing diligently upon that." Management noted that crude supply challenges impacting peers were not a constraint for HF Sinclair due to its diversified sourcing, connectivity to multiple hubs, and asset flexibility.

• Middle East conflict-induced crude market volatility was called "substantial and material," with ongoing vigilance and company response characterized as "very nimble."
• Refining utilized capacity at the upper end of guidance despite significant maintenance, while further throughput increases are under consideration as part of longer-term planning.
• Renewables segment performance benefited from successful feedstock optimization, broader market placement beyond California, and strict operational cost discipline.
• The Board confirmed continued evaluation of permanent CEO and CFO appointments, with no change in strategic direction or capital allocation priorities during the interim period.
• Marketing outperformed broader retail fuel sales benchmarks, and the company expects to accelerate Sinclair brand growth, leveraging the Green Trails JV.
• Management stated RVO compliance costs have become "an extreme burden," and continues to pursue active petitions for Small Refinery Exemptions across five refineries.

Industry glossary

• LCFS: Low Carbon Fuel Standard, a regulatory program aimed at reducing carbon intensity in transportation fuels.
• D4 RINs: Renewable Identification Numbers associated with biomass-based diesel under U.S. Renewable Fuel Standard.
• Boho Spread: The price differential between biodiesel and heating oil, indicating biodiesel blending economics.
• FIFO Benefit: Financial gain resulting from inventory accounting where earlier (lower-cost) feedstock is booked as cost of goods sold under "first-in, first-out" principles.
• Producers Tax Credit: U.S. government tax credit awarded to producers of qualifying renewable fuels.
• PADD 5: U.S. Petroleum Administration for Defense District 5, encompassing the West Coast region.
• RVO: Renewable Volume Obligation, mandating the volume of renewable fuel that refiners must blend into fuel.
• SRE: Small Refinery Exemption, an EPA-granted exemption from certain renewable fuel blending requirements intended for qualifying smaller refineries.

Full Conference Call Transcript

Franklin Myers: Okay. Thank you, Craig. Let me add my welcome to all those on this call to the HF Sinclair's first quarter earnings in 2026. First, let me express my gratitude to over 55,000 employees of the company for making the first quarter a good one. As most of you know, first quarter for HF Sinclair can sometimes be challenging due to weather, due to softness in the economic conditions in our markets. And typically, we have turnaround activities with some of our assets. This quarter, our operations ran safely in compliance and reliably, which you'll hear more about in a minute.

This reflects the continuing improvement in our operation and is a testament to the focus on excellence by our employees. So thank you, employees of HF Sinclair. During the first quarter, our CEO and CFO, both took leaves of absence as previously described in our annual report on Form 10-K. The Board has the task of addressing the future leadership of the company, and we'll do so with diligence and care. In the meantime, I will continue to serve as CEO and President until decisions in that regard are made. In reference to the ongoing Board process, we will not address those events in that process today.

The current executive leadership team and the other employees of the companies are committed to continuing the successful performance of the company, and it is performing at a very high level. Please keep in mind that much of the strategy of the company began in 2021 and '22 with the acquisition of our Puget Sound in the merger with Sinclair. My presence as CFO is to help maintain the focus and commitment to the strategy as set by the Board. I'll remind you that I've been Chairman through that entire time since 1990, and this is an ongoing process that we're pursuing with diligence.

Our employees continue to work daily with the desire to operate at a high level to improve our company for the benefit of all constituencies. But before moving on to the reports of the others, we have to acknowledge the military conflict in the Middle East. Our thoughts and prayers go out to members of our Armed Forces involved as those in as an individual is called up in harm's way. We continue to hope for a peaceful resolution. The conflict though has created substantial and material disruption to the crude oil and the necessary -- for crude oil and other necessary prior the advancement of markets around the world. This disruption creates volatility in the markets we serve.

The company remains focused on addressing any challenges we have to serve our customers. And in that regard, we remain very nimble as we see events occur because we see volatility in the markets that we've got to address on a constant basis, and it's one that's not without challenge within our industry or our company. But I believe our team is up to the challenge. And I think that we will see and continue to see as others have stress in the world as a result of this, and we've got to just address it to make sure we do our part to try to resolve that stress.

With that, I'll turn it over to Steve to take us through some of the commercial issues.

Steven Ledbetter: Thank you, Greg, and thank you all for joining our call. During the first quarter, we delivered strong results across each of our business segments, supported by safe and reliable operations and good commercial optimization. With our continued operational focus, we recorded an excellent safety quarter with no Tier 1 process safety events despite the heavy turnaround mode and harder weather season. We are pleased with these results and remain committed to progressing our operational initiatives. Now let me cover our business highlights. In Refining, we completed 2 turnarounds at our Puget Sound and Woods Cross refineries.

Despite the heavy turnaround in harsh winter weather we faced, we were pleased with our reliability performance, running crude charge at the upper end of our guided runs coming in at 613,000 barrels per day. We do not have any planned turnaround scheduled until the El Dorado turnaround commences towards the back end of the third quarter. We are encouraged by the refining margin strength in our regions and believe that we are well positioned to capture the current market conditions as we head into summer driving season. Our focus remains on our strategic initiatives and improving throughput, capture and operating expenses.

In our marketing segment, we're making great progress with the integration of our previously announced Green Trail Fuels JV. We believe this joint venture will allow us to accelerate growth of the Sinclair brand and expand our footprint. While growing the earnings of this business with exposure to other high-value adjacent revenue streams, we added 25 branded sites in the quarter with more than 100 sites with contracts signed and expected to come online over the next 6 to 12 months. We still expect to grow our number of branded sites by approximately 10% annually.

In our Renewables segment, we were very pleased with our team's ability to optimize our business, both commercially and operationally in order to capture the favorable market conditions in the period and deliver strong financial performance. Strong delivery of our feedstock strategy, molecule high-grading and operational excellence have set our business up well to capture favorable market conditions. And we remain optimistic that the LCFS, D4 RINs and producers tax credits will continue to support the renewable diesel margins. In our lubricant segment, we have experienced unprecedented cost inflation across our product portfolio both in magnitude and the rate at which it occurred.

In response, the team moved quickly to implement multiple pricing actions aimed at recovering these higher costs in an efficient and disciplined manner. We've seen early progress from these initiatives and fully expect to continue pursuing additional price recovery actions throughout the second quarter as elevated cost pressures persist. Despite the volatility in the broader global supply environment, our supply chain currently remains secure, and we have been able to source the necessary feedstocks to supply our customers at historical rates. During the quarter, we returned $167 million in cash to shareholders, consisting of $91 million in regular dividends and $76 million in share repurchases.

Since the Sinclair acquisition in March 2022, we have returned over $4.9 billion in cash to shareholders and have reduced our share count by over 66 million shares. Today, we also announced that our Board of Directors declared a regular quarterly dividend of $0.50 per share, payable on June 2, 2026, to holders of record on May 11, 2026. On the strategic front, we continue to advance the evaluation and planning of our multiphase project to leverage our advantaged logistics and production positions in the Rockies to meet the growing needs of Western markets.

At the end of our Q4 Puget Sound turnaround, we successfully brought on another project enabling flexibility to swing approximately 7,000 barrels per day between diesel and jet, depending on the market environment. and this is paying off given the current market conditions. We continue to advance the El Dorado vacuum furnace project to provide improved reliability and yield while allowing up to an incremental 10,000 barrels per day of heavy crude into the mix. This project is expected to come online as part of the fall turnaround. In closing, our strategic priorities have not changed.

We will continue to work towards improved safety, reliability and cost efficiencies in refining and renewables and unlocking our integrated value chain while growing our marketing, midstream and lubricant segments. We expect the current favorable market environment to continue into the summer driving season, and we believe our diversified portfolio of assets is well positioned to generate strong cash flows. With that, let me turn the call over to Vivek.

Vivek Garg: Thank you, Steve. Good morning, everyone. I'm Vivek Garg, acting Chief Financial Officer, and I'm pleased to be on the call with you today. Let's begin by reviewing HF Sinclair's financial highlights. Today, we reported first quarter net income attributable to Sinclair shareholders of $648 million or $3.56 per diluted share. These results reflect special items that collectively increased net income by $521 million. Excluding these items, adjusted net income for the first quarter was $127 million, or $0.69 per diluted share compared to adjusted net loss of $50 million or a negative $0.27 per diluted share for the same period in 2025.

Adjusted EBITDA for the first quarter was $426 million compared to $201 million in the first quarter of 2025. In our refining segment, excluding the lower of cost or market inventory valuation adjustment benefit of $604 million, first quarter adjusted EBITDA was $55 million compared to negative $8 million in the first quarter of 2025. This increase was principally driven by higher adjusted refinery gross margins in the West region and increased refined product sales volume, which were partially offset by lower adjusted refinery gross margins in the Mid-Con. Small refinery RINs waiver granted by the EPA in the fourth quarter of 2025, increased adjusted refinery gross margin by $21 million in the first quarter of 2026.

Crude oil charge averaged 63,000 barrels per day for the first quarter compared to 606,000 barrels per day for the first quarter of 2025. In our Renewables segment, excluding the lower of cost or market inventory valuation adjustment benefit of $68 million, we reported adjusted EBITDA of $133 million for the first quarter compared to negative $17 million for the first quarter of 2025. This increase was principally driven by increased sales volume and higher adjusted renewable gross margins in the first quarter of 2026 as a result of the narrowing of Boho spread, higher RINs prices and the recognition of significantly more producers tax credit benefits compared to the first quarter of 2025.

First quarter results included prior year production producers tax credit benefits of $49 million that were recognized following the February 2026 proposed ruling by the United States Department of Treasury and IRS. Total sales volumes were 52 million gallons for the first quarter of 2026 as compared to 44 million gallons for the first quarter of 2025. Our Marketing segment reported EBITDA of $28 million for the first quarter compared to $27 million for the first quarter of 2025. Total branded fuel sales volume were 325 million gallons for the first quarter of 2026 compared to 294 million gallons for the first quarter of 2025.

Our Lubricants and Specialty segment reported adjusted EBITDA of $103 million for the first quarter compared to adjusted EBITDA of $85 million for the first quarter of 2025. The increase was primarily driven by a large FIFO benefit in the first quarter of 2026 as compared to the first quarter of 2025, partially offset by the dislocation between rising feedstock costs and product sales price increases. During the first quarter of 2026, we recognized a FIFO benefit of $53 million compared to $8 million in the first quarter of 2025. Our Midstream segment reported adjusted EBITDA of $111 million in the first quarter compared to $119 million in the same period of last year.

This decrease was primarily driven by marginally higher operating costs resulting from a fuel contamination incident at one of our product terminals in Colorado in the first quarter of 2026. Net cash provided by operations totaled $457 million in the first quarter, which included $119 million of turnaround spend. HF Sinclair's capital expenditures totaled $102 million for the first quarter. As of March 31, 2026, HF Sinclair's total liquidity stood at approximately $3.15 billion, which includes a cash balance of approximately $1.15 billion and our undrawn $2 billion unsecured credit facility. As of March 31, we had $2.8 billion debt outstanding with a debt-to-cap ratio of 22% and net debt to capital ratio of 13%.

Now let's go through some guidance items. With respect to capital spending for full year of '26 , there has been no change. For the second quarter of 2026, we expect to run between 600,000 to 630,000 barrels per day of crude oil in our refining segment. which reflects planned maintenance activities at Parco and Navajo and unplanned maintenance at El Dorado in the period. We are now ready to take questions from the audience. Matt, if you could switch over, please.

Matt Joyce: The floor is now open for questions. [Operator Instructions] Your first question is from Matthew Blair with TPH.

Matthew Blair: Thank you, and good morning, everyone. Your renewables results were quite strong, even excluding the PTC benefit that rolled through. Could you talk about some of the drivers in Q1 that helped push up profitability? And then for the second quarter, what do you think is a good target for utilization? And would you expect even stronger margins, just given that some of the indicators have really moved up in the second quarter? .

Steven Ledbetter: Matt, this is Steve. I'll take that one. We were quite pleased with the performance of our RD business. as we've been on this journey to make this business come into profitability, we've said we needed in poor market conditions to get us to breakeven or slightly positive. We achieved that coming out of 2025. And now the market has turned in our favor. I will tell you, though, that it's not all market driven as we've taken a very hard line and look at our feedstock strategy, and that's getting much closer direct to sources near our facilities and making sure that we're prompt and hedging without anything out into the future.

So from a feedstock strategy, that's working very well. I would tell you the market placement strategy we've had is working where we're finding other markets to take products to and not be completely dependent on the California market. So we're finding ways to leverage our integrated value chain, both in the Pacific Northwest as well as putting product up into Canada. And then the last one is really OpEx discipline. And that is ensuring that we've taken structural cost out. We have more of that to do, and we're seeing the results there and optimizing our catalyst to ensure that it performs on the longer runs, and we're getting the yields out of it.

All of that combined with the overall market favorability, as you know, changed in 2026 to where we are structurally more balanced with domestic feedstock and domestic demand. I would say other helps to that is that just the distillate macro, in general, has found increased value in both the regular ULSD and car market. So we're pleased with what we're doing. There's more to do there. And I think your second question was around our utilization in Q2. We're not going to guide specifics, but we do believe that we will optimize particular co-located kits to the best value, and we see that being north of 70% utilization, net of all of the planned events that we have.

So we're pretty excited about what our renewables business looks like now as well as for the rest of the year.

Matthew Blair: Sounds good. And then could you also address the lubricants market going forward? Are you seeing global supply reductions as a result of the Iran war and it looks like some of the pricing indicators have started to move up. And maybe you could just talk a little bit about your ability to capture potentially higher margins in lubricants going forward.

Matt Joyce: Yes. It's Matt Joyce. I'll take that one. We are seeing a really great market move right now as we have experienced this rapid and cost increase throughout the back end of the first quarter. We do see that being a protracted movement into the second and third quarter. And based on our locations where we produce and how we source our raw materials, we have been able to secure all of the needed raw material supply for the balance of the year.

We're able to be supplying our customers at the rates that they're requesting of us and we have seen some growing demand that we anticipate will be with us through the second and third quarters at least of the year as this crisis, it prolongs itself and until the straits open up. But we feel that we're in a really good position to take advantage of those. We've also implemented multiple pricing actions to offset those higher raw material costs and work to capture that on the bottom line. So we'll look to see that come into place later this year as well. .

Operator: Your next question comes from the line of Manav Gupta with UBS. Manav, go ahead.

Manav Gupta: My question is specifically for Steve. Look, Steve, you have been working very hard for sometime at DINO, bringing about change and we see that in the midstream results, we see that in the lubes results I'm just trying to understand with this management shakeup, has anything changed from your end? Is the strategy the same you're following? And how are you going about building those 2 businesses as you were before the management shakeup took place?

Steven Ledbetter: Thanks,. We're not going to comment necessarily on management change, but I think your point is a good one, and that is to reinforce the fact that the executive team that was here to build the strategy is still here and is executing diligently upon that. That includes making sure that we're improving and focusing on our reliability and our safety performance as well as leveraging the integrated value chain and growing those various segments. So you specifically asked about Midstream, we feel, is a key lynchpin to unlock that integrated value chain. We're bidding more value and molecules on our kit to supply our refineries as well as take products to our regions.

We've talked about our multiphase project to really unlock our Go West strategy, and we think that's just the tip of the spear here. I'll maybe ask Matt to talk a little bit about what we're doing from a lube's perspective specifically.

Matt Joyce: Yes. Manav, as you know, we've continued to high grade the molecules that we have on hand. We're moving into more specialized finished lubricants and specialties applications. We continue to execute on our plan of tucking in those opportunities for acquisition like you've seen with industrial oils unlimited over the past several months. And we're going to look for those opportunities going forward and continue to refine the business and be that value-added supplier to our customers that deliver something that's distinct and sticky as far as the value proposition is concerned.

Franklin Myers: And Manav, let me add one thing. This is Franklin. Part of the reason I'm here is to give the executive team the confidence to continue with the plan and making sure that they have the tools and the resources to continue with the actions that Steve and Matt mentioned. There is no let up on the focus of what we're trying to do here.

Manav Gupta: Perfect. My quick follow-up is a little bit on the refining macro. You saw some of the global majors report today morning and with not such good earnings on international assets and then guiding down volumes on international assets. And that's a function of crude availability. Now when we come to somebody like a DINO, I'm assuming you're not fighting those issues that crude availability is not an issue for you. So you can run hard into the second and the third quarter. And if you could talk a little bit also about your strategic asset Puget Sound because a lot of shortages are happening in California, how can you use that asset to supply to the market in California?

Because, look, your pipeline or the competitor pipelines will take time. But in the near term, you can get to California through Puget Sound. So if you could talk about some of those dynamics?

Steven Ledbetter: Okay. Thanks, Manav. From a global perspective, and a crude supply element. We don't face those challenges. As you know, the U.S. refinery complex is probably the most advantaged globally with the most secure crude supply outlets, and we're connected to multiple hubs and run various different grades of crude from Canada to the North Slope to many different types of domestic light sweet crudes at Cushing, and we gather and buy our own crude in the Southwest and use that both at our teaser refinery and moved some of that up into the Mid-Con to run at our El Dorado refinery.

So from a crude supply perspective, some of the challenges that our competitors are facing, we do not face just from a supply. Now does it impact the overall price of the crude as it looks to compete to different markets, it certainly does. We've been successful in ensuring that we have a proper approach to buying that crude and that the cracks are supportive to whatever inflationary pressures are associated with the global dynamic. So we don't feel concerned about that relatively speaking to some of the other global issues and are in a good spot to go take advantage of our position.

As far as Puget goes, as you mentioned, the West Coast has -- and PADD 5 particularly has been considerably tight. It's getting tighter. We talked about our project to go get there. And as you mentioned, it's a few years out. But you've seen imports reduce as Asian producers have had to curtail runs, and so that just continues to tighten the market. Our approach to get to California, we put in a flexibility project last year that allows us to produce and swell the gasoline pool to either make carb or sell high-valued unfinished components, which, to this point, has been more profitable. So we're moving Alkylate out of Puget into the gasoline pool in California.

It's just one element. Further, as I mentioned in my prepared remarks, we put a project into swing diesel to Jet depending on the market environment, and that's paying off greatly, not only to the West Coast, but also into markets in Latin America. So we see the West Coast as a real good opportunity. It's tightened up and we look forward to taking further advantage of that as we develop some of these projects.

Franklin Myers: And Manav, part of your question was you said run the assets hard. I want to make sure that you understand that we're going to run reliably and not push our assets -- that's more important to us to make sure we're up as opposed to trying to unduly stress our assets to increase volumes.

Manav Gupta: No. My thing was are you running them close to -- some of your peers globally are being first to run assets at 40% and 50% because of crude availability. That was my question.

Franklin Myers: Yes. That is not the case.

Operator: Your next question comes from the line of Neil Mehta with Goldman Sachs.

Neil Mehta: I just want to build on Manav's question around crude and specifically around 2 grades -- has had seen enormous volatility here. And so just how are you guys thinking about the setup for that spread in particular. And then WCS, the outlook as we think about the second quarter, but also the balance of the year. And then Franklin, I had a management question for you as a follow-up.

Steven Ledbetter: All right. So this is Steve. I'll take the first one. Franklin, to take the hard one. Okay. So TI, what we've seen is, yes, the spread is widening given the geopolitical elements. Q1, we saw quite a bit higher than $5, and we think that, that will probably continue to be the case, but the curve on TI basically remains very steeply backward dated as things change through this geopolitical event, that curve moves, and so it flattens out. But we are in a position to take -- not have an issue as far as the spread goes from a Brent TI I think the backwardation is something that is -- that we're watching very closely.

As you know, we pay a role in separation, and that will impact our late in crude, but we're managing that carefully to go get into the right markets to ensure we can get the margin coverage for that increased cost. You asked about WCS. I think WCS has been a bit better. Some of the pipes coming out of Canada have shown some apportionment -- and I think ultimately, egress will become a problem. I think some of that is also competing with the Venezuelan crude that is now on the market, and that will keep some there, but we see that from Q1 to Q2, we're looking at a $14-ish spread.

And remember, we have connected with pipe space right out of Hardisty all the way into our assets in the Mid-Con, and we take advantage of that. But it will depend on what happens longer term as you've seen probably as recently as last night, the presidential permit signed. So there are multiple projects being contemplated to bring additional crude out of Canada either for domestic use or export. And so as that happens, that could force some pressure on the differentials longer term. But there's a lot of time that we want now and then many things can happen on what project goes or what doesn't. But we're evaluating all of them.

And I think we're in a really good position to go take a bit of our heavy oil value chain at multiple sites.

Neil Mehta: That's really clear.

Franklin Myers: You have a question for me.

Neil Mehta: Yes, sir. So my follow-up is just on just how you're thinking about the process by which I defined the permanent CEO and CFO. I know there's sensitivity around this and I don't want to litigate the past, but just how is the Board approaching this? What are the characteristics you're looking for over a long-term leader? Are you looking internally, you're looking at external? And just anything you can provide the market would be great. .

Franklin Myers: I appreciate your question. We're not going to get into that. We do have a process ongoing. When we're in a position to share that, we will. Let me just make a comment quickly on our Board. We have a very experienced, very high functioning board that I have been in communication with them regularly about this very question and so when we've got something, we'll tell you in the meantime, let me assure you, and some of you don't know my background, I spent 21 years in the C-suite at 2 different S&P 500 companies at all different levels. I'm not a paper CEO with this group. They know I'm here every day, making sure it's going forward.

So I don't know that, that reassures you, but the strategy we put in, we're executing on, and there's no let up. And the process will go forward and we will find an excellent leader for this company in due course and we're not going to bottle on it. We are looking at it very seriously.

Operator: Your next question comes from the line of Joe Laetsch with Morgan Stanley.

Joseph Laetsch: So I wanted to go back to the macro and just given where product prices are today, can you talk about the demand trends that you're seeing within your system? Are you seeing any signs of demand destruction on gasoline or diesel. And then maybe stepping back more broadly, how are you viewing the balances today from both the supply and demand perspective in the Mid-Con and the Rockies.

Steven Ledbetter: All right. I'll take that one, Joe, Steve. As far as demand goes, what we saw in the U.S. just for the quarter, U.S. demand was down and gas around 2%, but distillate was up around 4% in our regions that we operate in that more favorable gas was slightly up and diesel was also up. I'll tell you that in the prices, one thing that we're watching, I think you're intimating is price elasticity. And so if you look at through our service centers, we're down year-over-year same-store sales around 2%, but that's against the backdrop that you'll see in some of the consultants' reports in OPUS down about 4.5%.

So our portfolio high grading is working, and we're outperforming that. We have started to see some cuts in terms of travel, particularly as jet continues to price up. As you know, the global dimension is heavy distillate supply shortage. So -- they were low, both diesel and jet and they're getting lower. And most of the disruption in the Middle East, they're very much heavy distillate producers. So on the backdrop, that paints a favorable margin picture, but it also creates some concern on what permanent demand structure demand disruption may actually happen. So we're watching that very closely.

It's still a bit too early to tell, but we are seeing some slight consider softness as we head in the driving season as people are going to go make those decisions, and we'll just see how that plays out. But I do believe a prompt resolution is going to be more beneficial for the global energy complex than a lingering one. As far as it goes with regards to the Mid-Con, as you know, in Q1 we had Winter Storm firm, which somewhat put a pin in the demand bubble and created a massive supply glut.

And so prices were quite low, which led to us rationalizing crude runs and economic sparing in the Mid-Con as it got towards the latter half or latter part of March and what we're seeing in Q2, that inventory picture is really tightening up. And I think U.S. exports of clean product hit a record. So there's products moving into the Gulf to go back supply where they can't get the supply and their current inventory stocks are very low. So Rockies is a little bit of a different story. It's relatively balanced to tight. I will tell you that we have a light planned maintenance schedule across the complex in the U.S. between Q2 and Q3.

So any meter disruption will further create a whipsaw in terms of total product supply and demand imbalances. So it's a pretty tight situation but we look forward to the strength of the Mid-Con and the Rockies and our regions for the balance of the year.

Joseph Laetsch: Steve, that's helpful. And then following up on your comments on marketing. That segment continues to string together some pretty nice quarters. Could you just talk about some of the outperformance during 1Q and how you see the segment shaping up for the rest of the year here?

Steven Ledbetter: Yes. Our marketing businesses, as we've talked about, one of the untapped values of the Sinclair acquisition has been really leveraging that brand and the strength. And we had another good quarter in $2 million plus of the EBITDA. We brought on another new set of sites. But this is -- the value associated with that brand is by getting the full share of what the brand should command. We're growing volume. We saw our volume grow year-over-year 10% plus, which is good. We're seeing that. We've seen about high grading the portfolio. We're beating the same-store sales versus what the market has.

So we're taking the portfolio approach of getting to the right areas and maybe pulling some of the assets maybe don't fit with our overall brand promise moving forward. And there's growth in our licensed businesses. DINO has a significant pull on it. and we've yet to go fully develop that. Our Green Trails JV is just the first step of where we think that's truly going to accelerate our growth in the brand. But the adjacencies of the higher-valued revenue streams we're excited about. So it's really just blocking and tackling and being very purposeful about where we're strategically placing our bets, and we see more upside as we move forward.

And our business is becoming a material business to the company.

Franklin Myers: And everybody loves the green dinosaur. It's a great van. You need to join.

Operator: Your next question comes from the line of Phillip Jungwirth with BMO.

Phillip Jungwirth: I did want to ask about the Bridger Pipeline expansion, which you referenced earlier with the approval news yesterday. So this goes right down to Guernsey, assuming this gets built, how a fall would you expect this to change feedstock sourcing for your refineries or impact crude diffs. And separately, just anything to note on market impact from the double edge conversion from crude to NGL follows a similar route?

Steven Ledbetter: Yes, I'll talk a little bit about the Bridger pipeline. Of course, bringing more crude in the Guernsey will allow some more flexibility into the hub. Whether it goes or not or the level, and we don't know. And so we're not going to speculate on that necessarily, but one thing that we've been focused on in terms of our crude slate flexibility is widening the crude basket, which allows us to go take advantage of dislocated crudes when they present themselves. And as you know, we're connected to the hub that connects both all to our -- some of our Rockies as well down to the Mid-Con.

And so to the extent that we see market opportunity, we'll evaluate whether we participate or not, we think we're in a good position because of the flexibility that we put into place to widen our crude basket as well as our connectivity. And your other question was on -- sorry, could you repeat that one?

Phillip Jungwirth: Double edge conversion from crude to NGLs.

Steven Ledbetter: Yes. I don't know that it has a relevant impact on our specific crude supply set it to something to the overall market differentials. We'll just have to see when we contemplate some of these other projects coming online, I don't think it's a material impact to us either way. .

Phillip Jungwirth: Okay. Great. And then you did repurchase some shares in the quarter. Just how are you thinking about capital returns going forward until you have more permanent leadership in place? And should we just stick with the historical framework? And just how tactical do you plan to be, just given the strength in the equities here in the second quarter?

Vivek Garg: Yes, that's a good question. Thank you. I'll take that. This is Vivek. So in terms of our share repurchases, we'll continue to execute on our capital allocation strategy. We'll opportunistically repurchase shares under our 2024 share repurchase program. We don't typically guide on the pace or the amount of buybacks. But as we've always shared with the with everyone that we'll continue to execute on our capital allocation strategy, which is driven by free cash flow, capital returns and balanced capital allocation.

Operator: Your next question comes from the line of Doug Leggate with Wolfe Research.

Douglas George Blyth Leggate: Two things, guys, if you don't mind. First of all, SREs, there's -- the new RVO is, I think, here to be confirmed here in the next several weeks. Just want to get your perspective as to given where RINs are currently, what that might mean for you guys, if there's some way to quantify that and expectations of duration, at least through the Trump administration, if that's possible. And then my follow-up is really on product swings. I think in your backyard gasoline has started to get -- the whole slate appears to be getting better. Jet fuel has obviously been extraordinary. What kind of flex do you have to move towards where the advantage products might be today?

And what does that look like for you guys in terms of incremental yield.

Steven Ledbetter: Doug, this is Steve. I'll take that one. So from an SRE perspective, as you mentioned, the RVO being finalized. What is our viewpoint. I mean you've seen the RIN run to unprecedented records this year. We believe that the RVO is becoming an extreme burden. It's now projected to be $50 billion a year or an equivalent of $0.30 per gallon. Don't know that the latest RVO is helpful to energy cost for either the industry or the consumer. And so what that valuation really looks like for us, we're not going to guide, we believe in the and the SRE was contemplated as part of the original RFS for a reason.

And that's to help the smaller refineries who are disproportionately advantaged here. And we believe in that program. We're not going to speculate. We have petitions out currently for 5 of our refineries that we think qualify under the contemplated plan. We're not going to talk about value necessarily, but we do believe that it could be a material relief to the burden that we're facing. How long this thing goes and the duration, there's considerable fight going on associated with the validity, legitimacy, the frame and the shape of the program moving forward, but we're actively involved and our interest will be measured and our interest will be part of the discussion on the solution moving forward.

So that's generally our thinking on the RVO, but again, the SRE piece is something we believe in and we will continue to advance and go after that under the current framework of the program. As far as product swings go, yes, I think you're right. we mentioned the PSR project to be able to move and swing between distillate and jet and both of those products are quite good. So the difference between jet and market versus distillate on the West Coast, those are -- some -- each at has been very, very strong. We have the ability to swing anywhere from 10% between gas and distillate across the entire fleet. And we're in a max distillate mode now.

Having said that, we also believe that our value chain will allow us to run heavier oil and take care of our retail asphalt business, which enhances our overall margin production. And then we're going and trying to ensure that we're at the top end of those yield curves and running as much premium as we can. So we have the ability to go flex right now at a max distillate mode, but we're watching it and watching it very carefully.

Operator: Your next question comes from the line of Jason Gabelman with TD Cowen.

Jason Gabelman: Franklin, you mentioned running your refineries responsibly, which is prudent given the margin environment. In the past, DINO has talked about unlocking in addition capacity within the system that would be worth an additional refinery in terms of size. Is that still an aspiration for the company? Or is the 600,000 barrel a day to 630,000 range kind of the upper end of where you expect to run? .

Franklin Myers: We have had recent and active conversations of reinvestment into some of our assets to try to increase the throughput over time, not immediately. And so it is something where -- let's think about the sustainability of DINO. We have to look at these assets and understand what our markets demand today, but what they will demand in the future. And as we look at that, and we have free cash flow, some goes back to the shareholders, but some will need to be reinvested not just for maintenance but for improving the complex of our assets. And so yes, the Board will take that up.

In fact, it's an item we're going to take up here as we look at the long-term planning. Now I don't want to be held to a volume on where we get to that's going to depend on the -- a lot of planning and -- but if there is opportunity, we believe, to increase.

Steven Ledbetter: Yes, maybe just a follow on to that. From an overall value, we launched a few business improvement programs. We've said our key imperatives are to improve reliability and our HSS performance. We're seeing that quarter-over-quarter. So we're starting to see the green shoots as well as unlocking the value of the integrated value and we're starting to see that. So some of the projects that we've invested in, we talked about the PSR project, we talked about the back tower project at El Dorado. Both of those are going to improve our yield as well as capture in terms of generating more value for the same throughput that we're putting through our kits. So crude flexibility.

All of those things that we've talked about in the past in terms of optimization, we believe there's value to be had there, and we're seeing some benefits start to show up as a result.

Jason Gabelman: Great. My follow-up is just on M&A or A&D, I should say. The Renewable segment certainly had a strong quarter. The margin environment is more constructive. You've seen peers sell down stakes of their renewable diesel businesses. Is that something that you could see doing in the future? And then, I guess, more broadly, just M&A comments on the refining landscape would be welcomed as well. .

Franklin Myers: Sure. Let me handle that one. Number one, as a management team, and as a Board, we're charged with looking at the allocation of capital to the assets that we have and trying to determine which ones pay back the best and lean into those and the ones that are more mature take cash flow and lean into opportunities. And then see opportunistically, you've seen in our past, and thank you for this, it gives you a good segue into what I was going to say to wrap up. Going back in time, when we did the acquisitions of PSR and St. Clair. We subsequently did the acquisition -- the reacquisition of our midstream business.

They're collectively working together as Steve has talked about the entire value chain. When doing that, if you think about what the company has done and read our report card, we've distributed $4.9 billion, and our market cap today is $12 billion. So think about the ratio of that in 4 years. And in addition to that, our share price has gone from 30 to 60 something. So you look at a rate of return on a company compared to most any other investments you have, not in our complex, but broadly in the mid-cap space or the energy space. We compare favorably with what we've given back.

And what's happened is we've leaned into marketing, which Steve has indicated as we've been growing and it adds to the value proposition of what we've had. We've weighted out on the renewable space for the weak players to die during weak markets. And that's what you do in a capitalistic market. You let the weak ones die and you let the strong ones survive. We're not going to be knee-jerk just because we had 1 good quarter and say let's go run and do something. We've waited through the hard times. Let's go harvest these good times. In midstream, we felt like we needed opportunity to manage midstream more tighter. We've talked about some initiatives.

There are some others going on. We're going to look at that. We've done acquisitions in both marketing and in lubes, we're going to lean into where we see opportunity and value with our free cash flow. And we see bright days ahead for the Sinclair franchise. When I say love the green dinosaur, it's an affinity brand that people can come to really enjoy and it's 1 that our employees are proud to wear on their shirts and uniforms every day. And so thank you for this question, given me a chance to talk about the successes of our company and how we're going to move forward in the future with this. Greg, do we have anything else?

Vivek Garg: Not. I think that concludes our call for today.

Franklin Myers: Thank you all for being part of our call.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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