01—Abstract
Summary
Summary of the 10-Q filed May 8, 2024. Cited figures are marked; the original filing is the authoritative source.
HF Sinclair Corporation reported net income attributable to HF Sinclair stockholders of $314.7 milliona, or $1.57 per basic and diluted share, for the three months ended March 31, 2024, compared to $353.3 million, or $1.79 per share, in the prior-year quarter.
Sales and other revenues fell 7% to $7.03 billionb from $7.57 billion. The company attributed the decline in net income principally to lower refinery gross margins in both the West and Mid-Continent regions, partially offset by higher refined product sales volumes. Refinery gross margin per produced barrel fell to $12.70 from $23.20, and a $219.4 million pre-tax lower of cost or market inventory benefit (versus a $47.6 million charge a year earlier) cushioned results.
Income from operations declined 19% to $410.8 millionc. Cash flow from operations improved to $316.9 million from $177.7 million, driven mainly by working capital changes and lower turnaround spending ($70.4 million versus $163.7 million). Cash and cash equivalents ended the quarter at $1.24 billion, and liquidity was approximately $3.70 billion, including undrawn availability under the $1.65 billion HF Sinclair Credit Agreement.
Total debt was $2.68 billiond. The company repurchased $169.6 million of stock and paid $99.4 million in dividends during the quarter. Subsequent to quarter-end, the company repurchased 5,000,000 shares from REH Company for $296.1 million on April 1, 2024, and on May 7, 2024, the Board approved a new $1.0 billion share repurchase program.
The Board also declared a regular quarterly dividend of $0.50 per share, payable June 5, 2024. Management expects second-quarter 2024 crude throughput of 620,000 to 650,000 barrels per day, with refined product margins expected to strengthen and renewable diesel margins expected to remain pressured by weak RINs and LCFS prices.
02—Key points
Key Highlights
- Net income attributable to HF Sinclair stockholders was $314.7 million ($1.57 per share) versus $353.3 million ($1.79 per share) a year earlier.
- Sales and other revenues decreased 7% to $7,027.1 million, principally due to lower refined product sales prices and lower excess crude oil sales volumes.
- Refinery gross margin per produced barrel sold decreased to $12.70 from $23.20, reflecting lower average sales prices in both the West and Mid-Continent regions.
- Lower of cost or market inventory valuation adjustment added $219.4 million to pre-tax earnings in the quarter, compared with a $47.6 million charge in the prior-year period.
- Renewables segment posted an operating loss of $40.0 million, with renewable diesel margins weakened by lower RINs and LCFS prices.
- Operating cash flow rose to $316.9 million from $177.7 million, with turnaround expenditures falling to $70.4 million from $163.7 million.
- After quarter-end, the company repurchased 5,000,000 shares from REH Company for $296.1 million and the Board approved a new $1.0 billion share repurchase program on May 7, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, HF Sinclair kept $0.04.
- Revenue$7.03B100.0%
- Cost of revenue−$5.93B84.3%
- Gross profit$1.10B15.7%
- Operating costs−$689.5M9.8%
- Operating income$411.0M5.8%
- Interest, other & tax−$96.0M1.4%
- Net income$315.0M4.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 8, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $7.03B$7.57B | −7.1% |
| Cost of Revenue | $5.93B$6.10B | −2.9% |
| Gross Profit | $1.10B$1.46B | −24.7% |
| SG&A Expenses | $103.00M$95.91M | +7.4% |
| Operating Expenses | $6.62B$7.06B | −6.3% |
| Operating Income | $411.00M$504.21M | −18.5% |
| Interest Expense | $40.69M$45.82M | −11.2% |
| Net Income | $315.00M$353.27M | −10.8% |
| EPS (Basic) | $1.57$1.79 | −12.3% |
| EPS (Diluted) | $1.57$1.79 | −12.3% |
| Shares Outstanding (Basic) | 198.71M195.44M | +1.7% |
| Shares Outstanding (Diluted) | 198.71M195.44M | +1.7% |
05—Questions
Frequently Asked Questions
What drove the decline in HF Sinclair's first-quarter 2024 earnings?
The company principally attributed the decrease in net income to lower refinery gross margins in both its West and Mid-Continent regions, partially offset by higher refined product sales volumes. Refinery gross margin per produced barrel fell from $23.20 to $12.70, mainly because of lower average sales prices. Income from operations fell 19% to $410.8 million.
How did the lower of cost or market inventory adjustment affect results?
The adjustment increased pre-tax earnings by $219.4 million in the first quarter of 2024, primarily from a $220.6 million benefit in the Refining segment. In the prior-year quarter, it reduced pre-tax earnings by $47.6 million. Without this swing, the year-over-year comparison of earnings would look considerably weaker.
What is the company's liquidity position?
Liquidity was approximately $3.70 billion at March 31, 2024, consisting of $1.24 billion in cash and cash equivalents, an undrawn $1.65 billion HF Sinclair Credit Agreement, and $806.0 million of remaining availability under the HEP Credit Agreement. Total debt was $2.68 billion.
What are the company's capital return plans?
The Board declared a regular quarterly dividend of $0.50 per share, payable June 5, 2024. On May 7, 2024, it approved a new $1.0 billion share repurchase program, replacing the approximately $214.2 million remaining under the August 2023 program. The company expects to continue repurchasing shares in the second quarter of 2024, with timing dependent on market and other conditions.
What does management expect for the second quarter of 2024?
Management expects to run between 620,000 and 650,000 barrels per day of crude oil, reflecting completion of planned maintenance at the Puget Sound refinery and planned maintenance at the Parco refinery. Refined product margins are expected to strengthen with summer driving demand, while renewable diesel margins are expected to remain pressured by weak RINs and LCFS prices.
06—Continue