With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Energy sector dominated this year for the first time since 2008, with 28 companies featured on the list.

100 Fastest-Growing Companies

Industries included in the sector are mining, oil and gas exploration and services, pipelines, refining, and utilities.

Fortune Sector Leaders: Energy

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

Fortune Global 500

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Industrials came out on top this year, with 22 companies featured on the list.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

Resulting from a merge of Holly Corporation and Frontier Oil in 2011, the petroleum refiner has operations in seven U.S. states.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-184-HollyFrontier

This Dallas-based oil refiner produces gasoline, diesel, jet fuel, lubricants, and asphalt.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

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This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Shale rules! That’s the lesson of the latest edition of our annual list of public companies with the most stellar three-year profit, revenue, and stock growth. 

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Oil refining and pipeline players HollyFrontier and Sinclair Oil merged in 2022, creating the combined HF Sinclair. The Dallas-based corporation maintains the legacy Sinclair apatosaurus (brontosaurus) logo that dates back nearly 100 years and the “DINO” stock ticker, harkening back to the storied history of fossil fuels. HF Sinclair processes almost 700,000 barrels of crude oil a day, counting refineries in Washington, New Mexico, Wyoming, Kansas, Oklahoma, and Utah. HF Sinclair also has lubricants and specialty products facilities in Canada and the Netherlands, and has branched out with renewable diesel production at its Wyoming and New Mexico refineries.

Q2 2026

Q1 2026

Q4 2025

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Q4 2024

Q3 2024

HF Sinclair (DINO): Company Profile, Stock Price, News, Rankings

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HF Sinclair

hf sinclair

Welcome to HF Sinclair Corporation's Q2 2026 Conference Call and Webcast. Hosting the call today is Franklin Myers, who is serving as Chief Executive Officer of HF Sinclair. He is joined by Steven Ledbetter, President and COO, Vivek Garg, Acting Chief Financial Officer, Valerie Pompa, President, Growth, Technology, and Transformation, and Matt Joyce, SVP of Lubricants and Specialties. At this time, all participants have been placed in a listen-only mode. The floor will be open for your questions following the presentation. If you would like to ask a question at this time, please press star one on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star one again. If you should require operator assistance, please press star zero. We ask that you please limit yourself to one question and one follow-up.

Additionally, we ask that you pick up your handset to allow optimal sound quality. Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Craig Biery, Vice President, Investor Relations. Craig, you may begin.

Thank you, Kelsey. Good morning, everyone. Welcome to HF Sinclair Corporation's Q2 2026 earnings call. This morning, we issued a press release announcing results for the quarter ending June 30th, 2026. If you would like a copy of the earnings press release, you may find it 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 security 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. With that, I'll turn the call over to Franklin.

Okay. Thank you, Craig. Let me start by thanking the 5,000-plus employees at HF Sinclair for delivering a really good quarter. The teams at the plants and across our businesses did an excellent job of being safe, compliant, and reliable throughout the quarter. As we know, our markets expect us to keep them supplied with the fuels and lubricants necessary to complete their own vital task of life and business, and the DINO team performed well. We'll get to the numbers in a moment or two, but let me discuss a few other matters first. You're aware of the announcement earlier this month in which we provided information about adjustments to our senior leadership responsibilities. They were made in order to align certain responsibilities toward the direct long-term goals of the company. Steven Ledbetter was appointed our President and Chief Operating Officer.

With this change, Steve will be responsible for overseeing the company's operations and commercial organizations while improving safety and reliability, enhancing cost efficiency, and unlocking value across our integrated platform. We have made several internal promotions in both the commercial and operating teams to work with Steve as he leads these efforts to continue the excellent performance we've been experiencing. Val Pompa, who's done an excellent job leading and improving our operations for the last few years, will take on the responsibility of working on the growth and organic improvement of our operating assets. She will have both information and operating technology as part of her mandate, as well as applying new technologies to our existing operations in order to improve performance.

We believe that there are technological improvements that can be brought to our assets that can advance the effectiveness of our performance in our plants and within our financial framework and commercial operations. Val is a uniquely qualified, seasoned technical executive. She has both vast experiences and thorough understanding of refining processes as well as will be key in leading this effort. She will also have executive oversight of both the retirement of the Mississauga refining assets and the build-out of our Go-West initiative, both very important to the future of the company. We certainly note that we're first out among refiners, so we'd be remiss in not making a comment on the macro environment for the refining complex.

There's been much written, probably by even some of those of you on this call, analyzing the changes in our market as a result of both the war in Ukraine and the Middle East. I'll not repeat what's been said. What we know is there's about five to seven million barrels of refining capacity offline from where we started five months ago. The conflicts continue with no clear resolution seemingly near on either. Now we witness the damage of other infrastructure assets which would be necessary for the repairs to the damaged refining assets in order to restore their operability. We certainly have no crystal ball as to when the kinetic events in either conflict end with certainty. Therefore, we expect to have tighter refining markets as well into 2027. There is a bit of a wild card in the mix, however.

China withdrew from buying crude in typical size at the beginning of the Middle East conflict. The reduced consumption has led to stabilized prices in crude, and China has also suspended exporting products. If they reverse these decisions, products exported from China will certainly impact the products market. The canary in the coal mine to watch will be the Singapore crack spreads. They tend to react first with China increasing exports. Otherwise, we see markets being constructive for the next several quarters, potentially into 2028. These events have had similar, if not more dire effects on the lubes base oils markets as much as 20% of the world's base oil supply for lubes being offline. Which brings me to our lubes business. It has been an important and meaningful contributor to the success of Sinclair.

Today, we announce plans to pursue a separation of the segment through the capital markets, creating a new independent public company. We believe these two companies will benefit from enhanced strategic focus and operational agility, greater alignment of capital deployment within each specific growth priorities, increased ability to pursue strategic transactions independently without competing for resources within a broader portfolio, distinct and compelling investment profiles aligned with different investor bases, and dedicated leadership teams and governance structures with continued focus on driving performance. We intend that the separation will be tax efficient for HF Sinclair and our stockholders and will be executed over the next 12-18 months. Our announcement provides three important messages. First, that the base oil refining assets in Mississauga will be retired.

The team there has done an excellent and outstanding job operating the assets throughout the years, but a combination of location, size, and scope of the assets have reached a point that their long-term economic contributions to the business causes us to make this very difficult decision to retire the assets. Second, with the retirement, our finished product business will need base oils to continue the successful efforts in their market. The business will continue to deliver base oil solutions through new strategic commercial agreements with two premier global base oil manufacturers, complemented by continued access to products from our Tulsa refinery. Finally, as a potential separate organization under Matt Joyce's leadership, an independent lubes business will operate in a capital-light business model for greater financial flexibility and stronger, more consistent free cash flow while leveraging its core strength and technology, globally recognized brands, and extensive channels to market.

We are early in the separation process and will provide additional information as appropriate. It would be natural to ask about our company's plans for use of excess cash. We are mindful of our past indications for delivering a portion of free cash back to our stockholders and will endeavor to continue to do so. We also have efforts going on where we see opportunities to enhance our existing assets. In other words, we already have things in progress. We're discussing this with our Board in our upcoming Board meeting. As the Board reaches decisions and become actionable, we'll continue to share that information with our ownership community. I'm going to go off script here. Let's face it. Last fall, when all the refining complexes were putting their plans together, we had no clue that a war was going to go on in the Middle East.

We've got excess capital now. We've got to be prudent and diligent in looking at how we spend this excess capital. Nobody had a plan for what we're looking at right now. We've got to make sure that we look at it. Our organizational changes in putting Val over the growth initiatives is exactly that. We're going to look at the specifics within our organization and see where we can add value for the future. She's got that skill set and knowledge to be able to lead the team to do that while Steve runs the day-to-day operations. That's the fundamental drivers behind our changes there. I'll now turn it over to Steve for additional comments.

Thank you, Franklin. Thank you all for joining our call. I'll now cover our business highlights. During the Q2, we delivered strong financial results across each of our business segments, underpinned by solid operational and commercial execution. In refining, our crude oil charge averaged approximately 640,000 barrels per day, which exceeded our guidance range and reflects our progress towards improving operational excellence and optimization across our business. This enabled us to take advantage of the favorable market conditions as we operated well. We have a planned turnaround scheduled at El Dorado, which commences in September. In our marketing segment, we added 63 branded sites in the Q2, with more than 100 sites in the branding pipeline that are expected to come online over the next 6-12 months. We are pleased with our progress here as we continue to see year-over-year volume increases in our branded channel.

We still expect to grow the number of branded sites by approximately 10% annually. In our renewables segment, we reported another quarter of strong financial performance with $123 million in adjusted EBITDA, supported by favorable market conditions and disciplined execution of our business strategy. We believe the macroeconomic backdrop will remain favorable throughout the year and are encouraged with the recent performance of this business. We have a planned turnaround scheduled to begin in the Q3 at our Cheyenne facility. From a strategic perspective, we continue to progress the evaluation and development of our multi-phase initiative designed to leverage our strong logistics network and production advantage in the Rockies region to support increasing demand across Western markets. We expect that the first phase would increase capacity by approximately 35,000 barrels per day to move supply from Rockies production into Nevada and is targeted to be online in 2029.

We are also moving forward with the El Dorado vacuum furnace project, which is expected to enhance operational reliability and improve product yields while enabling processing of up to an additional 10,000 barrels per day of heavy crude within our feedstock slate. The project remains on track for completion during the fall turnaround. We are also encouraged by the integration and early performance of our Green Trail Fuels JV in marketing. We continue to believe this will be an accretive addition and accelerator of our brand position. Further, we are evaluating several technology investments to advance the competitiveness of our business. We continue to see opportunities for future investment across our portfolio. As we evaluate these opportunities, we're okay with carrying excess cash on our balance sheet while final investment decisions are made.

During the quarter, we returned $265 million in cash to shareholders, consisting of $89 million in regular dividends and $179 million in share repurchases. Since the Sinclair acquisition in March 2022, we've returned approximately $5.2 billion in cash to shareholders and have reduced our share count by over 68 million shares. Today, we also announced that our Board of Directors declared a regular quarterly dividend of $0.525 per share, an increase of 5% over our previous dividend of $0.50 per share. As we look ahead, our strategy remains focused on enhancing safety, reliability, and efficiency across all of our business segments, while unlocking more from our integrated value chain, including growing our marketing and midstream segments. With refining fundamentals expected to remain supportive through the fall, we're confident that our diversified asset base will continue to generate strong cash flows.

With that, let me turn the call over to Vivek.

Thank you, Steve, and good morning, everyone. Let's begin by reviewing HF Sinclair's financial highlights. Today, we reported Q2 net income attributable to HF Sinclair shareholders of $892 million or $4.93 per diluted share. These results reflect special items that collectively decrease net income by $68 million. Excluding these items, adjusted net income for the Q2 was $960 million or $5.31 per diluted share, compared to the adjusted net income of $322 million or $1.70 per diluted share for the same period in 2025. Adjusted EBITDA for the Q2 was $1.5 billion, compared to $665 million in the Q2 of 2025. In our refining segment, Q2 adjusted EBITDA was $1 billion compared to $476 million in the Q2 of 2025.

This increase was principally driven by strong refining margins and volumes in the MidCon and West regions as a result of steady demand, tight supply, and favorable crack spreads. Crude oil charge averaged 640,000 barrels per day for the Q2 compared to 616,000 barrels per day for the Q2 of 2025. Our marketing segment reported EBITDA of $28 million for the Q2 compared to $25 million for the Q2 of 2025. Total branded fuel sales volumes were 387 million gallons for the Q2 of 2026 compared to 337 million gallons for the Q2 of 2025. Our midstream segment reported adjusted EBITDA of $112 million, both in the Q2 of 2026 and the same period of last year.

In our renewables segment, excluding the lower of cost or market inventory valuation adjustment charge of $30 million and asset impairment of $47 million, we reported adjusted EBITDA of $123 million for the Q2 compared to a loss of $2 million for the Q2 of 2025. This increase was principally driven by increased RIN price, higher Producer's Tax Credit benefits, and increased volumes compared to the Q2 of 2025. Total sales volumes were 60 million gallons for the Q2 of 2026 as compared to 55 million gallons for the Q2 of 2025. Our Lubricants and Specialties segment reported adjusted EBITDA of $207 million for the Q2 compared to $55 million for the Q2 of 2025. The increase was primarily driven by higher sales volumes and product prices in the Q2 of 2026 compared to the Q2 of 2025.

During the Q2 of 2026, we recognized a FIFO benefit of $46 million, compared to a FIFO charge of $20 million in the Q2 of 2025. Net cash provided by operations totaled $1.5 billion in the Q2, which include $56 million of turnaround spend. HF Sinclair's capital expenditures totaled $118 million for the Q2. As of June 30th, 2026, HF Sinclair's total liquidity stood at approximately $4.26 billion, which includes a cash balance of approximately $2.26 billion and our undrawn $2 billion unsecured credit facility. As of June 30th, 2026, we had $2.8 billion debt outstanding, with a debt-to-cap ratio of 21% and net debt-to-cap ratio of 4%. Let's go through some guidance items.

With respect to capital spending for full year 2026, there is no change to our capital guidance at this time, but it is subject to change as we continue to progress certain projects under evaluation. For the Q3 of 2026, we expect to run between 590,000-620,000 barrels of crude oil in our refining segment, which reflects the planned turnaround at El Dorado in the period. We are now ready to take questions from the audience. Operator?

The floor is now opened for questions. At this time, if you have questions or comments, please press star one on your touch-tone phone. We ask that you please limit yourself to one question and one follow-up. If you have additional questions, we welcome you to rejoin the queue. If at any point your question has been answered, you may remove yourself from the queue by pressing star one again. Your first question comes from the line of Manav Gupta with UBS. Your line is open, Manav. Please go ahead.

Good morning. Congrats on a very strong beat. My first question is a little bit on the refining macro. You know, the last time when Russia-Ukraine conflict started, diesel was moving up. Gasoline wasn't really participating to these levels. This time, we are seeing a very strong gasoline crack out there. I'm just trying to understand from the perspective of HF Sinclair, how this benefits the company, and if you could specifically talk about your two regions, MidCon and West, what you are seeing in terms of gasoline margins as well as diesel.

Thanks, Manav. This is Steve. Yeah. It's mainly been a distillate story from a global geopolitical scenario, both in the Middle East, heavy distillate producers. Now Russia that used to export quite a bit in distillate, and now is even importing some. Yes, the overall flows in terms of gasoline have been tight, and there's some export capability that's happening out of both regions in the Gulf and the West Coast, or to the West Coast from the Gulf. In the overall market environment on cracks, we're seeing tighter cracks, particularly in the MidCon and gas, as you see more things move south. Less barrels are getting up into the MidCon, and so that structure's tightening up. We've seen in the quarter, the demand picture look relatively healthy for not only the U.S., but our regions.

I think our regions have fared a little bit better, both in gas and diesel, in both regions. Now, on the West, we have a little bit of softness in diesel. We think that that is factored into more the bio and the RD coming online with the incentive structure that has been generated there. Overall, our markets look pretty strong, and we think that the tightness is further because our inventories on a U.S. and a regional basis have been below the five-year average. As Franklin mentioned earlier, it starts from a global perspective, and stocks are very low, and it's going to take a while to replenish those. That just comes back into the U.S. market, with the overall market structure. The export values are attributing to lower supply that is on the market. Naturally, that creates a tighter structure with supportive crack environment.

Perfect. My second question is more for Frank. I'm just trying to understand, A, the timing on the lubes, why now? Some of the key benefits, if you could reiterate. One of the questions we are understanding is, when something like this happens, you need the buy-in of the senior management. Is there a buy-in from the senior management in terms of are you still looking for an external CEO? And if you could help us understand how those dynamics are playing out, because something as big as this would definitely need the buy-in of the incoming CEO and CFO.

We've never indicated we were looking for an external CEO. I'd dissuade you of thinking about that. Secondly, senior management on both sides are very bought into this. Remember, I guess, if you think about it, the board owns the business, and all we're doing is separating it so that they can both flourish. We have a good senior team at the lubes business under Matt's leadership, and that will develop and build out as we get closer to the time of whatever transaction we decide to go with, because there's a lot of work to be done in deciding what's best for our stockholders. We're not losing something. We're just splitting it among the stockholders to where value is being created and let them run independently.

Note, the team is aligned in this, the board is aligned in this, and we see this as the best direction for the lubes business.

Thank you. Congrats, Steve, again, on being promoted to the CEO. Congratulations.

Your next question comes from the line of Matthew Blair with TPH. Your line is open, Matthew. Please go ahead.

Great. Thank you, and good morning, and congrats on the lubricants spin. Do you have an estimate of what mid-cycle EBITDA for lubricants would look like going forward, and what kind of leverage could a standalone lubricants business support? Then also, is there any estimate yet on potential synergies from spinning out lubes?

I'll turn over some of the synergy to Vivek in a second. Yes, whenever you stand up a public company, there's always some public cost that we will be identified, separate company audit, some additional fees that associated with that. They're usually more than offset by having kind of the spotlight on the business. Let's take a step back. The refining business dominates our franchise as it currently exists. Because of the volatility of the franchise that we have, that all refining assets have, all franchises have, you tend to have a discounted value on multiples of EBITDA. Lubes is a more stabilized business, and it's in different markets than the refining assets. Typically, they would run the lubricants business with a higher multiple. We would expect a step up in value as we take it out the door.

In terms of gearing, we haven't reached that point. We're not going to over-lever this thing going out. We want to make sure it has the flex. Look at our own balance sheet. We're not what I would call an over-levered company. We were not going to treat them any different than we would be treating ourselves. In terms of estimates, Vivek, I don't know what guidance we have in there, if any.

I think that's right, Franklin. There will be additional costs associated with separating Lubricants and Specialties as an independent public company. We're kind of early in the separation planning process. We'll provide estimated costs as time progresses.

If I can just jump in, Matt. This is Matt Joyce. We've typically looked at trailing 12 months as our rough guesstimate and guidance for $300-$350 on an EBITDA basis. We're looking to execute that business in a way that we can continue to deliver those types of performance results on a go-forward basis, with a capital light structure in mind.

Okay. My follow-up was on this capital light structure. I guess, could you talk a little bit about the impacts of shutting the Mississauga base oil refinery? In the slides, it mentions it would reduce volatility, also reduce your working capital needs. Maybe you could expand on that a little bit. What kind of EBITDA impacts would you expect from shutting these assets? Does this take you on vertical integration? Does this take you to essentially 100%? I believe previously it was roughly closer to 2/3 or so. Thank you.

Yeah. Sure. This is Matt Joyce. The way that we're looking at it is we've gone out and sourced a competitive offer from these global premier base oil manufacturers for both our own internal supply, but as well as distribution agreements where we are going to represent their oils in the market so that we will have and continue to have that full suite of products with our continued production out of Tulsa for our Group I and our specialties. We'll also have Group II and Group III to offer to the marketplace on a third-party basis. As a distribution partnership. We'll then use those same sources for our own internal consumption. As such, we expect that the L&S business on a go-forward basis is really going to lean into a free cash flow improvement on the financial profile.

What I can say today is that exiting the base oil production is also expected to materially lower our capital intensity as well as net working capital. We can continue to provide you updates as and when the process progresses, but suffice it to say, we're pretty comfortable with where the financial position of the business on a go-forward basis is going to be.

Your next question comes from the line of Neil Mehta with Goldman Sachs. Your line is open, Neil. Please go ahead.

Yeah. Congrats. A strong quarter. All the updates and of course, some of the promotions here. Two more day-to-day questions here. The Go-West pipeline initiative that you guys were talking about, it's an important part of building out the midstream effort, but I think you've also alluded to important part of cleaning up PADD 4 and potentially even into PADD 5 balances. Can you just talk about where you stand on that initiative and what do you think the economic implications are, not just for the midstream business, but also for your refining segment?

Yeah, Neil, this is Steve. Let me talk a little bit on Go-West. It is a very strategic project for us that we announced several quarters ago. The project continues to advance in terms of determining the right economic balance and the execution capability. We're still advancing towards taking FID on Phase 1 this year. Ultimately we do see that the reason we're doing this is the tightness in PADD 5 that's continuing to get short, and we have advantages logistically in terms of production in the Rockies and our integrated midstream assets where we can unlock more of that and supply the needed fuels that are growing in terms of an imbalance out in PADD 5. We think that this is just Phase 1, as we talked about.

It's a multi-phase approach that we'll continue to evaluate after we get past this initial phase, which brings us to approximately 35,000 west into Nevada. Longer term, we think we can hit larger markets out on the West, including California. We're not guiding on economics at this point. When we get into the phase of taking FID that the Board will opine on, we'll come to the market with guidance and estimates at that point.

Thanks, Steve. Just the return of capital can be enormous at its current margin environment, even in the forward curve. Of course, can you comment on just the capacity for share buybacks, the willingness to lean into repurchases even though the stock has done exceptionally well in the last year? On slide five, you talk about opportunistic M&A. Maybe Franklin, you could talk about how that fits into your thinking here. What gaps, if any, are you trying to solve for, and what segments should we think about M&A being appropriate to look at?

Yeah. Let's take them in order. Number one, we have implied and indicated and actually acted on about a 50% distribution of capital back to our stockholders since spring of 2022. Steve mentioned that's $5.2 billion in a franchise that's currently valued at about $15 billion or $16 billion. We've been dedicated to that. We will continue that emphasis as we go forward. Secondly, all my comments with respect to management and how the leadership shifted around

A lot of refining assets across the country, not just ours, but across the country, to some degree have been a little under-invested in technology. We're going to look at that real hard to make sure we have some of the technological advances to make sure we stay. If you've heard our mantra of safe, compliant, reliable, make sure we are standing up when others might have problems, that we're the ones that folks can count on. In terms of M&A, I wouldn't go broad with this. We're not going to go on a shopping spree or anything. I don't read anything to that. Marketing has a lot of opportunities where they can do some things. Midstream has what I'll call tuck-in opportunities within fields to where pipes can be laid as opposed to putting them in trucks.

We're going to look at a lot of that because eating crawfish sometimes will fill you up just as much as eating a big steak. It's going to be smaller things where we're going to put money to work. I think you'll see the benefits because the paybacks on those things, the returns are in that mid-20s%. You can't do that on big deals. It's work, but you can get it done.

The next question comes from Joe Laetsch with Morgan Stanley. Joe, your line is open. Please go ahead.

Great. Good morning, team, and thanks for taking my questions, and congrats to Steve and Val on your new roles. I wanted to follow-up on the lubricant separation. Could you just talk about the thought process between a capital market separation and an outright sale?

Sure. That's easy. You're doing the same thing, but you're giving up value if you go to a sale process. Somebody's trying to either over-lever or maximize something for their own benefit, and we're taking that benefit to our own stockholders. You add on the effect that doing a sale means the United States government probably ends up with $200 million-$400 billion of tax payments that gets no value to any of our stockholders. We save that by doing a tax-efficient transaction, and we basically capture the gains that a third party may want to have. Now, could a strategic come in and look at some synergies and all like that? Possibly. That's trying to mind-read what's in the heads of some strategics, and a lot of times it's a waste of effort to do that. Obviously, we're commercial.

If somebody wanted to pay a big number for lubes, I can't say that that would be out of the question, but that's not our intent. That is not what we're looking at. It is looking at having a business that can be valued properly in the public markets and capture that value for our stockholders through one of these distributions.

Yep, that makes a lot of sense. Shifting over to refining. Just from a throughput standpoint, looked like the system ran well overall. Crude oil charge came in above the top of the guidance range in 2Q. Can you just talk about what went well during the quarter? And then maybe more broadly, can you talk about where we are in the refining improvement process and that target of 640,000 barrels a day on average? Thank you.

Sure, yeah. What went well? I think what we've begun to do is really work in terms of leveraging our underlying reliability and operational improvements optimizing our kit. To the extent that we have limitations, whether it be finishing into premium products or we have excess intermediates, we've been able to optimize moving those molecules to different locations. To be honest, it's looking more at our kit like an integrated kit, where instead of standalone fence line balance, we're finding ways to move products and take advantage of markets or fill gaps while some of our fleet gets healthy on certain areas. Running 640 in this quarter, as you mentioned, that is something that we aspire to do where the market is there, and certainly the market was there.

Doing that while we had already talked about last quarter having a few unplanned maintenance elements at El Dorado, I think we were able to demonstrate our flexibility and capability to do that. We still have a ways to go, part of what we've talked about in terms of the organizational structure and change is really to look at not only growth, but optimizing inside of the integrated value chain. We think there's more to gain there.

Your next question comes from the line of Theresa Chen with Barclays. Your line is open, Theresa. Please go ahead.

Thank you. First of all, I'd like to offer my congratulations to Steve and Val for your new roles as well. In turning to some of the midstream commentary, stepping back, when we look at the compelling long-term supply and demand economics across PADD 4 and PADD 5 that underpins your Go-West opportunity, even beyond the initial phase, can you remind us how much of incremental phases do you think you will need the support of third-party shippers versus volumes from your own facilities? As you evaluate and commercialize incremental phases, how are you thinking about potential competition from other refined products projects taking MidCon and Gulf Coast products targeting Western markets, including Phillips and Kinder's Western Gateway delivering to PADD 5, as well as existing expansions plus expandable assets from ONEOK and Enterprise targeting PADD 4 markets, including Denver, Grand Junction, Salt Lake, and so on?

All right, Theresa. Thanks. This is Steve. I'll try to break that down a little bit. The first part was on PADD 4, PADD 5, multiple phases. We've said the first phase is right at 35,000 in terms of unlocking Rockies production move west. The full phase, and whether we go to a mid-phase or the final phase, it gets upwards to up to 140,000-150,000 barrels per day. We think that given our proximity, both our owned midstream position as well as our logistics proximity in the Rockies production, we will be able to fill a large portion of that. On larger phases, we will have the ability to connect some of our own production, but we think we would offer a compelling value proposition to move barrels out of the MidCon right into PADD 5.

Not going to comment on exactly how much is owned equity production versus third party. We'll commercialize that in due course, but we think we'll have the ability to go do that. Then as you asked about competing projects, we've said that the Western Gateway project is not a competitive project. When you look at the total balance structure in PADD 5 and you think about it from an imports, PADD 5 and California import quite a bit of product. You've had two major refineries that have shuttered. We think the regulatory environment in California continues to be difficult to operate in, and therefore you're going to need more supply. We don't think these projects are necessarily competitive.

We think they are complementary to each other, but we clearly wanted to advance our project given our footprint, and make sure that whatever the opportunities are to go into Western PADD 4 and PADD 5, that we are the ones to take advantage of that. Which is why we announced and why we're advancing the project to move to FID by end of this year.

[crosstalk] I don't know if I got all your questions. I might have missed one there. Go ahead, Theresa.

No, we're good. Maybe turning to refining, can you just give us an update about the status of your SRE applications? Would you expect continued RIN relief for the applications that you filed?

You guys probably know as well as we do. We are daily on the phone with Washington and various constituents. We have put in our 2025 petitions for Tulsa, Artesia, Parco, Casper and Woods Cross. They are in pending status. There are a few historical petitions for 2023 and 2024 that we're waiting on. You'll note that the D.C. court has recently ruled in our favor on the EPA's decision to exclude Parco's eligibility for 2024, and we're expecting relief and results soon. We were hearing weeks, not months. We're hearing days, not weeks. We need to get an answer. As you know, the compliance deadline is September 1st, and as those SREs are delayed to us, it has an impact in terms of how we can leverage those to offset a material burden.

As far as the overall RIN bank goes, which I think is part of this question, something is going to have to be done. At the end of the day, the RIN bank is projected to go negative or only into a slightly balanced position by the end of the year. If there's not some level of relief legislatively, I fear that it is a race to the top in terms of pricing. Through our advocacy networks and our trade organization associations, we are engaged in the conversation. We expect to get relief from the SREs imminently. We just need it to happen soon.

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

Hey, good morning, everyone. Let me also offer my congrats to Steve and Val. Franklin, I appreciate the very candid assessment of the current refining environment. I wanted to kind of try and parse some of your comments about how you manage this windfall, I guess you could call it. It sounds like you might be opportunistic [crosstalk]

Doug, I would not characterize it as a windfall. It's just the rebalancing of the market based on an external. Windfall makes me shudder because I don't believe in a windfall.

Let me pick up on that then. Do you think mid-cycle has changed in perpetuity, Franklin?

Well, it's just rebalancing. It's profits from someone else that came our way that would've gone elsewhere. Semantics aside, we don't know what's going to happen with those refining assets. What we do know is that if you look back in history to the 1970s, the fuels market is not as impactful on the overall economy. The dire comments made by certain members of executives of international oil companies. The end of June came and went, and we didn't fall off a cliff. The fact is that we do need liquid fuels around the world. The free market forces are balancing that out to where, yes, we are having greater crack spreads now, but it's a function of what's going to happen to those refineries that are offline, and it's just going to take them for a while.

We'll benefit from that for a while. We're going to have to look and make sure that we're going to have to take advantage of the opportunity, is what I would say. The opportunity gives us a chance to reinvest into an industry that had under-invested for a while based on economic issues. We're going to reinvest to where we're more efficient and hopefully more profitable for a longer period of time. You look at Sinclair, and since the merger through the end of June, I'm looking at Craig here, I think our annualized rate of return has been 20% since 2022. We're working real hard to use what assets we have. I don't want to be argumentative with you at all. That was not my intent, and I apologize for that. We're given something to deal with, and we're going to deal with it.

In terms of taking advantage of the opportunity to make this company and franchise better and making it a great opportunity for our stockholders.

No, I think it's fair to look at the extended duration of all these disruptions. We were published at TheStreet's earnings for 2026, 2027 and 2028 just for context. We're there with you. The question we're trying to debate is what is discounted in perpetuity in the sector, in your stock? It really goes back to the cash return question, which is where I was going. Are you prepared to build cash in this environment, build net cash as opposed to the formulaic share buyback? That was really where I was going with this windfall comment.

Okay. Would not be our intent, no. This gets into asset allocation, which is really right in the heart of where our Board and our senior management team should focus their efforts. It goes into how do we allocate assets doing the lubes transaction. Cash on a balance sheet with no particular place to go is not a very smart thing for any management or board to do. Would we lean into buying more shares? Sure, if we don't see opportunities to have reasonable returns on that, of course. We're not here to just roll around in a room full of cash just for the benefit of having the cash on the balance sheet. That is not Steve's got a comment.

Yeah. Just as we talked about the structure, my role and Val's role, we saw our ability to go defend and take offense of the markets. We've been evaluating several major projects. The business is now set up to go execute upon those with efficiency and make sure that we can allocate those dollars. While to Franklin's comments, having cash sitting on the balance sheet with nowhere to go, we are evaluating a number of large projects that we think would be accretive to the business and return very good value to the shareholder that we're just not ready to talk about.

Yeah. We're not ready to go live with that. You have to look at the legacy of this company, that we have been good managers of the capital given to the company, and we hope to continue to be.

I'd also add that we're tracking well against our target of 50% payout ratio so far during the year. We're close to 40%, and we still have six more months to go.

All right, guys. I've taken enough time. Thanks so much.

The next question is from the line of Phillip Jungwirth with BMO. Your line is open, Phillip. Please go ahead.

Thanks. Good morning. Just wanted to ask on the market environment for lubes. First, last quarter, you mentioned cost inflation headwinds. Just what's the latest here in success of pricing actions to offset this? Are you seeing much demand sensitivity due to price? Second, just coming back to a comment you made earlier about 20% of global base oil capacity being offline. Roughly, what's the breakdown here across these different areas where you're seeing unplanned downtime due to conflict or China export policy? Just because some of these could take longer to normalize than others.

Correct. Thanks for the question. This is Matt. Just looking at the Q2 performance, we had an exceptional quarter. We saw that driven by higher volumes, we took multiple pricing actions throughout the quarter. We did, were able to get through pricing in base oils that allowed for us to have some margin expansion. Of course, you saw that we had some favorable FIFO impacts. We had a bit of a tailwind behind us. We've exhausted quite a lot of that inventory, and that's worked its way through. We are going to see in the Q3, we will see some more higher-cost inventories that we'll be managing through. The team is doing an exceptional job of going out and getting those costs recovered as we progress.

What we've also seen is that the demand for our finished lubricants business has also been really stable and as well as our specialties business. We've had a good performance there. It's important, though, we have been watching very carefully cost discipline. When we look for the future, we have to go out and get as much as we can from the markets, and in particular, the base oil markets that are in that short supply. We talked about the 20%. Those are primarily Group III base oils that are offline at this stage. Our team have done a nice job of sourcing our feedstocks, both from the Gulf Coast as well as from overseas, to continue to maintain our production in our Mississauga facility at a ratable event. That we're able to provide our customers with the products that they require.

We do see that this is going to be a near-term opportunity for us, and it's a benefit that we're taking advantage of in the market today. With the separation and what we're looking at for the business, we are looking at this business for the longer term. The strategic rationale behind that is that the L&S business can create even more value through a focused, capital-light specialty products model. The access to the sources of base oils that we have been able to negotiate is a much better position for us than the ownership of these refining assets. We're excited about having that distinct strategy, capital allocation that's really, truly ours, and some exciting jumping-off points for growth in the portfolio of products that we offer to the market.

Okay, great. Refining capture was stronger than anticipated. You didn't get a whole lot of help from crude diffs either. I was just hoping you could talk about the tailwinds improvements to this metric in the quarter. While we're only a month into 3Q, just how are you viewing the puts and takes so far around refining capture?

Yeah, thanks. This is Steve. I'll take that one. Capture was, again, I think, a positive. We've talked about what we've been doing in terms of our underlying ability to get more value out of the molecule through extending value chains and our heavy oil value chain and our retail asphalt. Producing more jet, the jet flexibility projects that we put into Puget that came online in Q4, and really getting the molecules in the right space. Our light product yield improved. It was mainly both in distillate, we had 11,000 barrels a day more year-over-year in distillate. That was a good thing given the pricing environment, and we also were able to generate more premium in the quarter.

Extending the value chain, getting our crude slate flexibility in place across all of the facilities that can run different crude slates and have access to different crudes, that's been a focus of ours. We also ran well. When you're running and you're finishing the product, you're able to sell the higher value products into the market and not have to downgrade things. Against us, to the point you made, our Laid-in crude was our largest drag inside the quarter, and that was associated with the massive volatility and what was happening on the geopolitical stage, and steep backwardation only to flatten out, and more steep backwardation only to flatten out. You had some regional crudes that were priced out wide. Fortunately, the crack environment covered that.

It continues to be the game of taking waste out of the value chain and getting more value for all the molecules and higher grading the product and taking advantage of feedstock through the kit. Those themes won't change, and as we look into Q3, we see another strong quarter for us. We do have the turnaround at El Dorado that commences in September. Aside from that, I think we're looking at another strong quarter as we continue to advance our reliability and our optimization initiatives.

The final question comes from the line of Jason Gabelman with TD Cowen. Your line is open, Jason. Please go ahead.

Yeah. Hey, thanks for taking my questions. I wanted to circle back to the Lubes spin announcement that you made this morning and just trying to make sure I'm understanding correctly the EBITDA from what the RemainCo or the SpinCo will be. Historically, if I look back and it seems like you're spinning out what historically has been called the Rack forward business. You retired that language in 2022, and then you're shutting down most of the Rack back business. If I look back to what those businesses earned in 2021 and 2022, it was about even split on average between the two subsegments at about $350 million of EBITDA. Is what you're keeping moving forward half of that $350 million or around $175 million, $200 million, or do I have that math wrong? Thanks.

HF Sinclair (DINO) Q2 2026 Earnings Call Transcript

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