HF Sinclair Corporation (DINO) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents a mixed picture. Financial performance and market strategy show optimism, with positive outlooks for refining margins and the midstream expansion. However, uncertainties exist in management changes, audit inquiries, and unclear responses on CapEx and SRE benefits. The sentiment from the Q&A section reflects cautious optimism but also highlights concerns, particularly around financial transparency and guidance. Without clear guidance or new partnerships, and considering the market's cautious stance, a neutral stock price movement is expected over the next two weeks.
Key Financial Performance
Full Year 2025 Adjusted EBITDA $2.3 billion, reflecting solid financial performance.
Fourth Quarter Adjusted EBITDA $564 million, reflecting seasonal weakness in refining business and impacts from refinery events.
Refining Operating Costs Down by $87 million year-over-year, due to improvements in cost control and reliability.
Marketing Segment Annual EBITDA $103 million, a 37% increase over the prior record, driven by growth in branded sites.
Lubricants and Specialties Annual EBITDA $261 million, reflecting lower sales volumes and turnaround at Mississauga facility.
Midstream Business Annual Adjusted EBITDA $459 million, a record performance.
Fourth Quarter Net Loss $28 million or negative $0.16 per diluted share, impacted by special items decreasing net income by $249 million.
Fourth Quarter Adjusted Net Income $221 million or $1.20 per diluted share, compared to adjusted net loss of $191 million in the same period of 2024.
Fourth Quarter Adjusted Refining EBITDA $403 million, compared to negative $169 million in the same period of 2024, driven by higher adjusted refinery gross margins.
Renewables Segment Fourth Quarter Adjusted EBITDA Negative $6 million, compared to negative $9 million in the same period of 2024, with improvements from producer's tax credit.
Marketing Segment Fourth Quarter EBITDA $22 million, compared to $21 million in the same period of 2024, driven by higher margins.
Lubricants and Specialties Fourth Quarter Adjusted EBITDA $43 million, compared to $70 million in the same period of 2024, due to lower sales volumes and higher operating costs.
Midstream Segment Fourth Quarter Adjusted EBITDA $114 million, consistent with the same period of 2024.
Net Cash Provided by Operations in Fourth Quarter $8 million, including $122 million of turnaround spend.
Capital Expenditures in Fourth Quarter $131 million.
Total Liquidity as of December 31, 2025 Approximately $3 billion, including $978 million in cash and $2 billion in undrawn credit facility.
Debt Outstanding as of December 31, 2025 $2.8 billion, with a debt-to-cap ratio of 23% and net debt-to-cap ratio of 15%.
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Operating Highlights
Value Furnace Project: Progressing at El Dorado refinery to improve plant reliability, upgrade yield through gas oil recovery, and increase heavy crude processing capability by approximately 10,000 barrels per day. Estimated capital cost is $55 million, with $37 million spent in 2025 and an expected annual EBITDA uplift of $25-$30 million. Completion expected during Q4 2026.
Industrial Oils Unlimited Integration: Integration of recently acquired Industrial Oils Unlimited business is underway, providing strong regional manufacturing capabilities and synergies with Tulsa refinery's base oil production.
Green Trail Fuels LLC Joint Venture: Formation of a joint venture with UPOP Holdings, including over 30 retail sites across Colorado and New Mexico. HF Sinclair holds a 50% non-operating economic interest, strengthening branded marketing footprint in the Rockies and Southwest.
Branded Footprint Expansion: Grew supplied branded footprint by a net of 117 sites in 2025, with plans to grow branded sites by approximately 10% annually.
Refining Operational Improvements: Set annual records for throughput of 652,000 barrels per day and operating expense per throughput barrel of $7.67. Overall refining operating costs reduced by $87 million year-over-year.
Midstream Expansion Plan: Evaluating a multiphase plan to expand midstream refined products pipeline network to address growing supply needs in the Western U.S. Targeting final investment decision for Phase 1 by mid-2026.
Shareholder Returns: Returned over $724 million to shareholders in 2025 through share repurchases and dividends. Since March 2022, returned over $4.7 billion in cash to shareholders and reduced share count by over 64 million shares.
Long-term Cash Return Strategy: Maintaining a strong balance sheet and investment-grade credit rating while focusing on long-term payout ratio.
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Risk or Challenges
Disclosure Process Review: The Audit Committee is assessing certain matters related to the company's disclosure processes, which could indicate potential governance or compliance risks.
Seasonal Weakness in Refining Business: The refining business experienced seasonal weakness, with fuel margins weakening significantly at the end of the quarter, particularly in core markets like the Rockies, Mid-Con, and Southwest.
Unplanned Refinery Events: An unplanned event at the Artesia refinery and a planned turnaround at the Puget Sound refinery negatively impacted refining earnings for the fourth quarter.
Lower Base Oil Margins: The Lubricants and Specialties segment faced challenges due to lower base oil margins and higher operating costs, which reduced EBITDA.
Renewables Segment Losses: The Renewables segment reported negative adjusted EBITDA, reflecting ongoing challenges in this area.
Turnaround and Maintenance Costs: High turnaround and maintenance costs, including $122 million in the fourth quarter, impacted cash flow and operational efficiency.
Debt Levels: The company has $2.8 billion in debt, with a net debt-to-capital ratio of 15%, which could pose financial risks if not managed effectively.
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Guidance & Outlook
Refining Margins: HF Sinclair is optimistic about refining margins in 2026 and is focused on safe and reliable operations.
Capital Spending for 2026: The company expects to spend approximately $650 million in sustaining capital, including turnaround and catalyst, which is $125 million less than in 2025. Additionally, $125 million is expected to be spent on growth capital investments across segments.
Crude Oil Throughput for Q1 2026: The company expects to run between 585,000 and 650,000 barrels per day of crude oil in its refining segment, reflecting planned turnarounds at the Puget Sound and Woods Cross refineries.
Marketing Segment Growth: HF Sinclair plans to grow its number of branded sites by approximately 10% annually.
Midstream Expansion: The company is targeting a final investment decision for Phase 1 of its midstream refined products pipeline network expansion by mid-2026.
El Dorado Refinery Project: The value furnace project at the El Dorado refinery is expected to be completed during the fourth quarter of 2026, with an estimated annual EBITDA uplift of $25 million to $30 million.
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Shareholder Return Plan
Dividends returned in Q4 2025: $230 million
Regular quarterly dividend declared for March 2026: $0.50 per share
Share repurchases in Q4 2025: Part of the $230 million returned to shareholders
Total cash returned to shareholders in 2025: Over $724 million
Shares repurchased since Sinclair acquisition in March 2022: Over 64 million shares, representing 79% of shares issued for Sinclair and HEP transactions
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Key Q&A
Q:Can you share more details about the management change and the audit? Is there any relationship between these two items?
A:Franklin Myers stated that they have no further comment on the matter at this time. He views the situation as a buying opportunity and assured updates will be provided when available.
Q:What is the outlook for small refinery exemptions (SREs) and their impact on cash and 2026 perspectives?
A:Atanas Atanasov mentioned that they intend to continue participating in the program and appreciate the EPA's formulaic approach. However, they cannot comment on further benefits from SREs. The quarter and year saw significant contributions to EBITDA and cash.
Q:What were the headwinds in the refinery results excluding the SRE tailwind? Can you provide a regional breakdown of gross margins without the SRE?
A:Steven Ledbetter explained that the crack environment was strong in the first half of the quarter but dropped significantly in November and December. Maintenance occurred during the stronger margin period, and inventory liquidation happened in a lower market environment. He did not provide a regional breakdown but emphasized bullish refining outcomes and performance improvement plans.
Q:What are the tangible benefits of the newly announced marketing JV?
A:Steven Ledbetter highlighted that the JV accelerates growth and unlocks the potential of the Sinclair brand. It provides exposure to attractive margins and synergies with integrated refining and midstream assets. It is seen as a significant growth platform for the DINO brand in core markets.
Q:Will the management change lead to a strategic review of operations or changes in strategy?
A:Franklin Myers clarified that it is business as usual, and there are no changes to the strategy. He declined to comment further on the management change or CEO replacement.
Q:What is the SRE impact on margins for the quarter? Can you provide a regional breakdown?
A:Steven Ledbetter suggested taking the question offline and offered a follow-up call with Craig Biery for detailed breakdowns.
Q:What is the outlook for the refining business in the Mid-Con region, considering economic recovery and crack spreads?
A:Steven Ledbetter expressed optimism, stating that tightness will return and normalize over the year. Diesel remains strong, and jet fuel appears durable. Mid-Con may be softer early in the year but should normalize by driving season.
Q:What are the expected CapEx and earnings contributions from the Green Trail Fuels JV?
A:Atanas Atanasov did not provide exact investment details but mentioned efficient capital use resulting in attractive multiples. The JV is expected to deliver accretive retail economics and benefits from branded wholesale and retail synergies.
Q:What is the cumulative SRE benefit, and how does it impact cash flow?
A:Atanas Atanasov stated that the total year cash flow impact of SREs was just under $300 million, with $313 million in EBITDA impact for Q4 and $485 million for the full year. He did not provide specific guidance for ongoing benefits.
Q:What were the drivers of weaker lubricant segment results in Q4, and what is the outlook?
A:Matt Joyce attributed the weakness to seasonality, higher operational expenditures, energy and feedstock costs, and weather-related disruptions. He expects steady demand but will monitor impacts on specialty products and base oil production.
Q:What is the status of the westward expansion pipeline project?
A:Steven Ledbetter stated that the project is progressing through economic and execution assessments. It is expected to be accretive to the value chain, with more updates likely by midyear.
Q:What is the outlook for refining margins and differentials?
A:Steven Ledbetter expressed bullishness due to global supply-demand balance, strong diesel and jet demand, and structural changes in differentials. Exposure to PADD 5 is seen as advantageous due to regional refinery closures.
Q:Is the audit inquiry internal or involves external agencies like the SEC or DOJ?
A:Franklin Myers declined to comment but assured that the Audit Committee and Board are comfortable with the disclosures and financial statements.
Q:What is the status of SRE petitions for various refineries?
A:Steven Ledbetter confirmed that petitions have been submitted for all refineries, including 2025, and they are awaiting EPA decisions.
Q:What is the progress on refining reliability and cost improvement strategies?
A:Valeria Pompa stated that strategies are reflected in reduced OpEx per barrel, with $87 million saved this year. Steven Ledbetter highlighted commercial improvements, including midstream projects, crude strategies, and capture rate enhancements.
Q:What is the outlook for the renewable diesel (RD) business?
A:Steven Ledbetter noted improvements in feedstock strategy, operational efficiency, and market access. He expects a more constructive financial outcome but did not comment on specific EBITDA margins.
Q:What is the company's stance on the proposed Utah tax changes affecting refineries?
A:Steven Ledbetter stated that they are actively engaging with legislators and do not believe taxing is the solution. They are exploring projects to address supply and cost concerns.
Q:Does the company capture any RIN value in the crack spread?
A:Steven Ledbetter mentioned that while oversupplied markets make it difficult, integrated blending capabilities and branded put provide some benefit. The RVO remains a headwind.
Q:Why is there another turnaround at Puget Sound in Q1 after a recent one?
A:Valeria Pompa explained that it is part of the normal cycle, with turnarounds split for better execution and capacity management.
Q:Review of Unclear Management Responses
A:Management avoided direct answers or provided insufficient details on the following questions: 1. Details about the management change and audit relationship. 2. Regional breakdown of SRE impact on margins. 3. Exact CapEx and earnings contributions from the Green Trail Fuels JV. 4. Specific guidance on ongoing SRE benefits. 5. Details on whether the audit inquiry involves external agencies like the SEC or DOJ.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Atanas result
Audit Committee
Colorado New
Commercial result
Committee matter
Con Southwest
Dorado turnaround
El Dorado
Group
Officer President
RINs waiver
Tulsa
brand
capability
commitment
disclosure process
dividend share
footprint
fuel
harbor
lubricant marketing
marketing segment
midstream lubricant
need
position
process review
project El
result weakness
return
share Sinclair
share repurchase
throughput
venture
waiver EPA
DINO Transcript
HF Sinclair Corporation (DINO) Q4 2025 Earnings Call Transcript
Unknown2-18
The earnings call summary presents a mixed picture. Financial performance and market strategy show optimism, with positive outlooks for refining margins and the midstream expansion. However, uncertainties exist in management changes, audit inquiries, and unclear responses on CapEx and SRE benefits. The sentiment from the Q&A section reflects cautious optimism but also highlights concerns, particularly around financial transparency and guidance. Without clear guidance or new partnerships, and considering the market's cautious stance, a neutral stock price movement is expected over the next two weeks.
HF Sinclair Corporation (DINO) Q3 2025 Earnings Call Transcript
Positive10-30
The earnings call reveals strong financial performance with significant cash flow and a manageable debt level. The company has optimistic guidance on refining margins and future benefits from small refinery exemptions. There is a clear strategy for capital returns to shareholders and plans for expansion in high-value markets. While some details were withheld, the overall sentiment from management is positive, supported by bullish market conditions and strategic advantages in infrastructure expansion. Despite some uncertainties, the positive outlook on margins and strategic growth initiatives suggest a positive stock movement.
HF Sinclair Corporation (DINO) Q2 2025 Earnings Call Transcript
Positive7-31
The earnings call showed strong financial performance with a successful turnaround execution, increased branded supply, and debt refinancing. Despite a drop in EBITDA in the Specialties Segment, the Midstream Segment saw an increase. The Q&A highlighted strong capture rates, commitment to buybacks, and positive growth strategies. Although some concerns exist regarding renewable diesel margins and legislative impacts, the overall sentiment is positive, supported by organic growth plans and a balanced approach to shareholder returns. The company's ability to adapt to changing conditions and focus on high-margin products further supports a positive outlook.
HF Sinclair Corporation (DINO) Q1 2025 Earnings Call Transcript
Unknown5-1
The earnings report shows a significant decline in financial performance, with net losses and decreased EBITDA across several segments. The Q&A reveals flat demand and regulatory uncertainties impacting the renewable diesel business. While there are some positive signs in the midstream and marketing segments, the overall sentiment is negative due to financial losses and unclear guidance on key issues. The absence of tax credits and heavy turnaround spending further contribute to a negative outlook, suggesting a stock price decline.
DINO Report
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