01—Abstract
Summary
Summary of the 10-Q filed August 1, 2024. Cited figures are marked; the original filing is the authoritative source.
HF Sinclair Corporation reported a sharp earnings decline for the second quarter of 2024.
Net income attributable to HF Sinclair stockholders was $151.8 milliona ($0.79 per share) for the three months ended June 30, 2024, down $355.9 million from $507.7 million ($2.62 per share) a year earlier. For the six months, net income attributable to stockholders was $466.5 million ($2.38 per share) versus $860.9 million ($4.40 per share). Management attributed the decline principally to lower adjusted refinery gross margins in both the West and Mid-Continent regions, partially offset by higher refined product sales volumes.
Adjusted refinery gross margin per produced barrel sold fell to $11.33b for the quarter from $21.99, and high industry refinery utilization was cited as a factor. Consolidated refinery utilization was 93.6% in the quarter versus 81.7% a year earlier. Cash generation and capital returns remained substantial.
Net cash provided by operating activities was $542.8 millionc for the six months, compared with $667.7 million, and the company repurchased $540.8 million of common stock and paid $195.3 million in dividends during the period. Cash and cash equivalents declined to $866.3 million at June 30, 2024, and total liquidity was approximately $3.37 billion. Management approved a new $1.0 billion share repurchase program in May 2024, with $925.0 million remaining at quarter end, and declared a regular quarterly dividend of $0.50 per share on August 1, 2024.
The filing also disclosed a favorable July 26, 2024 D.C. Circuit decision vacating the EPA's denial of the company's small refinery exemption petitions, which the company said is still subject to appeal and whose final impact it cannot yet determine. Ongoing environmental matters at the Navajo and Puget Sound refineries remain open, with no penalties demanded to date.
02—Key points
Key Highlights
- Net income attributable to HF Sinclair stockholders fell to $151.8 million ($0.79 per diluted share) in Q2 2024 from $507.7 million ($2.62) in Q2 2023, a decrease of $355.9 million.
- Adjusted refinery gross margin per produced barrel sold declined to $11.33 from $21.99 year over year, principally due to lower sales prices and higher crude and feedstock costs.
- Consolidated refinery utilization rose to 93.6% in Q2 2024 from 81.7% in Q2 2023, and refined product sales volumes increased.
- Six-month operating cash flow was $542.8 million versus $667.7 million, with turnaround expenditures reduced to $169.3 million from $347.1 million.
- The company repurchased $540.8 million of common stock and paid $195.3 million in dividends for the six months ended June 30, 2024; a new $1.0 billion repurchase program was approved May 7, 2024, with $925.0 million remaining.
- Liquidity was approximately $3.37 billion at June 30, 2024, including $866.3 million of cash and an undrawn $1.65 billion HF Sinclair Credit Agreement.
- On July 26, 2024, the D.C. Circuit vacated the EPA's denial of the company's small refinery exemption petitions, a decision still subject to appeal.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 1, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $7.85B$7.83B | +0.2% |
| SG&A Expenses | $104.00M$127.39M | −18.4% |
| Operating Income | $197.00M$704.36M | −72.0% |
| Net Income | $152.00M$507.66M | −70.1% |
| EPS (Basic) | $0.79$2.62 | −69.8% |
| EPS (Diluted) | $0.79$2.62 | −69.8% |
| Shares Outstanding (Basic) | 191.51M192.35M | −0.4% |
| Shares Outstanding (Diluted) | 191.51M192.35M | −0.4% |
05—Questions
Frequently Asked Questions
Why did HF Sinclair's earnings decline so significantly in the second quarter of 2024?
Management said the decrease was principally driven by lower adjusted refinery gross margins in both the West and Mid-Continent regions. Adjusted refinery gross margin per produced barrel sold fell to $11.33 from $21.99, due to lower average sales prices and higher crude oil and feedstock prices, partially offset by higher refined product sales volumes.
How did the company's cash flow and capital returns trend in the first half of 2024?
Net cash provided by operating activities was $542.8 million for the six months ended June 30, 2024, compared with $667.7 million a year earlier, driven mainly by lower net income partly offset by working capital changes and lower turnaround spending. The company repurchased $540.8 million of common stock and paid $195.3 million in dividends during the period.
What are the company's share repurchase and dividend plans?
On May 7, 2024, the Board approved a new $1.0 billion share repurchase program, with $925.0 million remaining as of June 30, 2024. On August 1, 2024, the Board declared a regular quarterly dividend of $0.50 per share, payable September 5, 2024 to holders of record on August 21, 2024.
What is the company's near-term operating outlook?
For the third quarter of 2024, the company expects to run between 570,000 and 600,000 barrels per day of crude oil, reflecting planned maintenance at its Parco and El Dorado refineries. It also expects continued weakness in RINs and Low Carbon Fuel Standard prices to affect renewable diesel margins.
What legal and regulatory developments could affect the company?
On July 26, 2024, the D.C. Circuit vacated the EPA's denial of all of the company's small refinery exemption petitions and remanded them to the EPA, but the decisions remain subject to appeal and the company said it is too early to determine their final impact. Environmental matters at the Navajo and Puget Sound refineries are ongoing, and no penalties have been demanded to date.
06—Continue