01—Abstract
Summary
Summary of the 10-K filed February 21, 2024. Cited figures are marked; the original filing is the authoritative source.
HF Sinclair Corporation (NYSE: DINO) reported net income attributable to HF Sinclair stockholders of $1,589.7 milliona, or $8.29 per diluted share, for 2023, compared with $2,922.7 million ($14.28 per share) in 2022.
Sales and other revenues were $31.96 billionb, down from $38.20 billion, principally due to lower refined product sales prices and volumes. Gross refinery margin per produced barrel sold fell to $21.39 from $26.78, and income from operations was $2.20 billion versus $4.05 billion. Operating cash flow was $2.30 billion, compared with $3.78 billion in 2022, reflecting higher turnaround spending of $555.7 million.
The company ended 2023 with liquidity of approximately $3.75 billionc, including cash and cash equivalents of $1.35 billion and an undrawn $1.65 billion revolving credit facility. The company completed the HEP Merger Transaction on December 1, 2023, acquiring all remaining Holly Energy Partners units for $267.6 million in cash and 21,072,326 shares of common stock from treasury. During 2023 it repurchased 18,779,880 shares for $974.5 million, and in February 2024 declared a quarterly dividend of $0.50 per share, up from $0.45.
Remaining repurchase authorization was $591.4 milliond as of February 15, 2024. The filing also highlights risks including Renewable Fuel Standard compliance costs, which were $790.8 million for 2023, the EPA's denial of small refinery exemption petitions, pending Oregon Climate Protection Program rulemaking, and REH Company's approximately 13.3% ownership stake. Goodwill totaled $2.98 billion, and the auditor identified goodwill impairment testing for the El Dorado Refinery reporting unit as a critical audit matter.
02—Key points
Key Highlights
- Net income attributable to HF Sinclair stockholders was $1,589.7 million ($8.29 per diluted share) in 2023, down from $2,922.7 million ($14.28 per share) in 2022.
- Sales and other revenues were $31.96 billion in 2023, down 16% from $38.20 billion, principally due to lower refined product sales prices and volumes.
- Gross refinery margin per produced barrel sold decreased 20% to $21.39 from $26.78, and income from operations fell to $2.20 billion from $4.05 billion.
- Liquidity was approximately $3.75 billion at December 31, 2023, including $1.35 billion of cash and an undrawn $1.65 billion HF Sinclair revolving credit facility.
- The company repurchased 18,779,880 shares for $974.5 million in 2023 and declared a quarterly dividend of $0.50 per share in February 2024, up from $0.45.
- RINs costs totaled $790.8 million in 2023, and the EPA denied all pending small refinery exemption petitions, creating exposure to higher compliance costs.
- Turnaround expenditures rose to $555.7 million from $144.8 million, contributing to operating cash flow of $2.30 billion versus $3.78 billion in 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, HF Sinclair kept $0.05.
- Revenue$31.96B100.0%
- Cost of revenue−$25.78B80.7%
- Gross profit$6.18B19.3%
- Operating costs−$3.98B12.4%
- Operating income$2.20B6.9%
- Interest, other & tax−$613.0M1.9%
- Net income$1.59B5.0%
Where FY2023 revenue went
$31.96B- Cost of revenue: $25.78B, 81% of revenue
- Net income: $1.59B, 5.0% of revenue
- SG&A: $497.0M, 1.6% of revenue
- Other operating costs: $3.48B, 11% of revenue
- Interest, other & tax: $613.0M, 1.9% of revenue
Kept 5.0% as net incomeNet income $1.59B · 5.0%SG&A $497.0M · 1.6%Interest, other & tax $613.0M · 1.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 21, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $31.96B$38.20B | −16.3% |
| Cost of Revenue | $25.78B$30.68B | −16.0% |
| Gross Profit | $6.18B$7.52B | −17.9% |
| SG&A Expenses | $497.00M$427.00M | +16.4% |
| Operating Expenses | $29.76B$34.15B | −12.9% |
| Operating Income | $2.20B$4.05B | −45.7% |
| Interest Expense | $190.80M$175.63M | +8.6% |
| Net Income | $1.59B$2.92B | −45.6% |
| EPS (Basic) | $8.29$14.28 | −41.9% |
| EPS (Diluted) | $8.29$14.28 | −41.9% |
| Shares Outstanding (Basic) | 190.03M202.57M | −6.2% |
| Shares Outstanding (Diluted) | 190.03M202.57M | −6.2% |
05—Questions
Frequently Asked Questions
How did HF Sinclair's profitability change in 2023?
Net income attributable to HF Sinclair stockholders fell to $1,589.7 million ($8.29 per diluted share) from $2,922.7 million ($14.28 per share) in 2022. The decrease was principally driven by lower refinery gross margins and lower refined product sales volumes, along with a $270.4 million lower of cost or market inventory charge.
What did the HEP Merger Transaction involve?
On December 1, 2023, Holly Energy Partners, L.P. (HEP) merged with a subsidiary of HF Sinclair, with HEP surviving as a wholly owned subsidiary. Each HEP common unit not already owned was converted into 0.315 shares of HF Sinclair common stock and $4.00 in cash. The consideration totaled $267.6 million in cash and 21,072,326 shares issued from treasury stock.
What is the company's capital return posture?
In 2023 the company repurchased 18,779,880 shares for $974.5 million, including $810.6 million from REH Company. It paid $340.7 million in dividends in 2023. As of February 15, 2024, $591.4 million remained under its share repurchase authorization, and the Board declared a $0.50 quarterly dividend payable March 5, 2024.
What are the main regulatory risks highlighted in the filing?
The filing cites Renewable Fuel Standard obligations, with RINs costs of $790.8 million in 2023, and the EPA's denial of small refinery exemption petitions. It also notes Oregon's Climate Protection Program rules were declared invalid by the Court of Appeals of Oregon in December 2023 and ODEQ plans to re-adopt them, and that Washington's Climate Commitment Act remains subject to a potential ballot initiative.
Who is REH Company and why does it matter to investors?
REH Company, formerly The Sinclair Companies, received 60,230,036 shares of HF Sinclair common stock in the Sinclair Transactions closed March 14, 2022. As of February 15, 2024, it owned approximately 13.3% of the common stock. The filing notes that potential sales by REH Company could affect the market price of the stock, and REH holders are entitled to nominate one director while owning at least 5%.
06—Continue