HF Sinclair (NYSE:DINO) reported first-quarter financial results on Friday. The transcript from the company's first-quarter earnings call has been provided below.
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View the webcast at https://events.q4inc.com/attendee/126280302
Summary
HF Sinclair reported first-quarter net income of $648 million, or $3.56 per diluted share, with adjusted net income of $127 million, or $0.69 per diluted share, and adjusted EBITDA of $426 million.
The company is focusing on strategic initiatives such as improving reliability and safety performance, optimizing feedstock strategies, and expanding branded sites through joint ventures like Green Trail Fuels.
Management expressed confidence in meeting challenges from geopolitical volatility and market disruptions by leveraging integrated operations and flexibility in crude and product handling.
Operational highlights include successful turnarounds at the Puget Sound and Woods Cross refineries, strong performance in the renewables segment, and the addition of 25 branded sites in marketing.
The board is actively addressing future leadership following the CEO and CFO's leaves of absence, with an emphasis on maintaining strategic focus and operational excellence.
Full Transcript
OPERATOR
EVP of Commercial Valerie Pompa, EVP of Operations, and Matt Joyce, SVP of Lubricants and Specialties at this time all participants have been placed in the listen only mode and the floor will be open for your questions following the presentation if you would like to ask a question at that 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 the pound key if you should require an 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 for optimum sound quality please note that this conference is being recorded it is now my pleasure to turn the floor over to Craig Beery, Vice President of Investor Relations craig you may begin
Craig Beery (Vice President of Investor Relations)
thank you matt good morning everyone and welcome to HF Sinclair Corporation's first quarter 2026 earnings call this morning we issued a press release announcing results for the quarter ending March 31st 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
Franklin (CEO and President)
accurate at the time of any webcast replay or re-reading of the transcript and with that I'll turn the call over to franklin Okay, thank you, Craig. let me add my welcome to all those on this call to the HF Sinclair first quarter earnings in 2026 first let me express my gratitude to over five thousand employees of the company for making the first quarter a good one as most of you know first quarters for HF Sinclair can sometimes be challenging due to weather due to softness and economic conditions in our markets and typically we have turnaround activities at some of our assets this quarter our operations ran safely in compliance and reliably which you'll hear more about in a minute this reflects the continuing improvement in our operation and is a testament to the focus on excellence by our employees so thank you employees of hs sinclair during the first quarter our ceo and cfo both took leaves of absence as previously described in our annual report on form ten k The board has the task of addressing the future leadership of the company and will do so with diligence and care in the meantime i will continue to serve as ceo and president until decisions in that regard are made in deference to the ongoing board process we will not address those events and that process today the current executive leadership team and the other employees of the companies are committed to continuing the successful performance of the company and it is performing at a very high level please keep in mind that much of the strategy of the company began in twenty twenty one and twenty two with the acquisition of our puget sound refinery and the merger with sinclair my presence as ceo is to help maintain the focus and commitment to the strategy as set by the board i'll remind you that i've been chairman through that entire time since 2019 and this is an ongoing process that we're pursuing with diligence our employees continue to work daily with a desire to operate at a high level to improve our company for the benefit of all constituencies but before moving on to the reports of the others we have to acknowledge the military conflict in the middle east our thoughts and prayers go out to members of our armed forces involved as those innocent individuals caught up in harm's way we continue to hope for a peaceful resolution the conflict though has created substantial and material disruption to the crude oil and other necessary for crude oil and other necessary products for the advancement of markets around the world this disruption creates volatility in the markets we serve the company remains focused on addressing any challenges we have to serve our customers and in that regard we remain very nimble as we see events occur because we see volatility in the markets that we've got to address on a constant basis and it's one that's not without challenge not without challenge within our industry or our company but i believe our team is up to the challenge and i think that we will see and continue to see as others have stress in the world as a result of this and we've got to just address it and make sure we do our part to try to resolve that stress with that i'll turn it over to steve to take us through some of the commercial issues thank
Steve
you franklin and thank you all for joining our call during the first quarter we delivered strong results across each of our business segments supported by safe and reliable operations and good commercial optimization with our continued operational focus we recorded an excellent safety quarter with no tier one process safety events despite the heavy turnaround load and harsh winter weather season we are pleased with these results and remain committed to progressing our operational initiatives now let me cover our business highlights in refining we completed two turnarounds at our Puget Sound and Woods Cross refineries despite the heavy turnaround and harsh winter weather we faced we were pleased with our reliability performance running crude charge at the upper end of our guided runs coming in at six hundred thirteen thousand barrels per day we do not have any planned turnarounds scheduled until the el dorado turnaround commences towards the back end of the third quarter we are encouraged by the refining margin strength in our regions and believe that we are well positioned to capture the current market conditions and as we head into summer driving season our focus remains on our strategic initiatives and improving throughput capture and operating expenses in our marketing segment we're making great progress with the integration of our previously announced green trail fuels jv we believe this joint venture will allow us to accelerate growth of the sinclair brand and expand our footprint while growing the earnings of this business with exposure to other high value adjacent revenue streams we added twenty five branded sites in the quarter with more than one hundred sites with contracts signed and expected to come online over the next six to twelve months we still expect to grow our number of branded sites by approximately ten percent annually in our renewable segment we were very pleased with our team's ability to optimize our business both commercially and operationally in order to capture the favorable market conditions in the period and deliver strong financial performance strong delivery of our feedstock strategy molecule high grading and operational excellence have set our business up well to capture favorable market conditions and we remain optimistic that the lcfs d four rins and producers tax credits will continue to support the renewable diesel margins in our lubricant segment we have experienced unprecedented cost inflation across our product portfolio both in magnitude and the rate at which it occurred in response the team moved quickly to implement multiple pricing actions aimed at recovering these higher costs in an efficient and disciplined manner we've seen early progress from these initiatives and fully expect to continue pursuing additional price recovery actions throughout the second quarter as elevated cost pressures persist despite the volatility in the broader global supply environment our supply chain currently remains secure and we have been able to source the necessary feedstocks to supply our customers at historical rates during the quarter we returned one hundred sixty seven million dollars in cash to shareholders consisting of ninety one million in regular dividends and seventy six million in share repurchases since the sinclair acquisition in march twenty twenty two we have returned over four point nine billion in shareholders in cash to shareholders and have reduced our share count by over sixty six million shares today we also announced that our board of directors declared a regular quarterly dividend of fifty cents per share payable on june second twenty twenty six to holders of record on may eleventh twenty twenty six on the strategic front we continue to advance the evaluation and planning of our multiphase project to leverage our advantaged logistics and production positions and in the rockies to meet the growing needs of western markets at the end of our q four Puget Sound turnaround we successfully brought on another project enabling flexibility to swing approximately seven thousand barrels per day between diesel and jet depending on the market environment and this is paying off given the current market conditions we continue to advance the el dorado vacuum furnace project to provide improved reliability and yield while allowing up to an incremental ten thousand barrels per day of heavy crude into the mix this project is expected to come online as part of the fall turnaround in closing our strategic priorities have not changed we will continue to work towards improved safety reliability and cost efficiencies in refining and renewables and unlocking our integrated value chain while growing our marketing midstream and lubricant segments we expect the current favorable market environment to continue into the summer driving season and we believe our diversified portfolio of assets is well positioned to generate strong cash flows with that let me turn the call over to vivek thank you, Steve good
Vivek Garg (Acting Chief Financial Officer)
morning everyone i'm vivek garg acting chief financial officer and i'm pleased to be on the call with you today let's begin by reviewing HF Sinclair's financial highlights today we reported first quarter net income attributable to hf sinclair shareholders of six hundred forty eight million or three dollars fifty six cents per diluted share these results reflect special items that collectively increased net income by five hundred twenty one million excluding these items adjusted net income for the first quarter was one hundred twenty seven million or sixty nine cents per diluted share compared to adjusted net loss of fifty million on negative twenty seven cents per diluted share for the same period in 2025 adjusted ebitda for the first quarter was four hundred twenty six million compared to two hundred one million in the first quarter of 2025 in our refining segment excluding the lower of cost or market inventory valuation adjustment benefit of six hundred four million first quarter adjusted ebitda was fifty five million compared to negative eight million in the first quarter of 2025 this increase was principally driven by higher adjusted refinery gross margins in the west region and increased refined product sales volume which were partially offset by lower adjusted refinery gross margins in the mid con small refinery rents waiver granted by the epa in the fourth quarter of 2025 increase adjusted refinery gross margin by twenty one million in the first quarter of 2026 crude oil charge averaged six hundred thirteen thousand barrels per day for the first quarter compared to six hundred six thousand barrels per day for the first quarter of 2025 in our renewables segment excluding the lower of cost or market inventory valuation adjustment benefit of sixty eight million we reported adjusted ebitda of one hundred thirty three million for the first quarter compared to negative seventeen million for the first quarter of 2025 this increase was principally driven by increased sales volume and higher adjusted renewable growth gross margins in the first quarter of 2026 as a result of the narrowing of boho spread higher rinse prices and the recognition of significantly more producers tax credit benefits compared to the first quarter of 2025 first quarter results included prior year production producers tax credit benefits of forty nine million that were recognized following the february 2026 proposed ruling by the united states department of treasury and irs total sales volumes were fifty two million gallons for the first quarter of 2026 as compared to forty four million gallons for the first quarter of 2025 our marketing segment reported ebitda of twenty eight million for the first quarter compared to twenty seven million for the first quarter of 2025 total branded fuel sales volume were three hundred twenty five million gallons for the first quarter of 2026 compared to two hundred ninety four million gallons for the first quarter of 2025 our lubricants and specialty segment reported adjusted ebitda of one hundred three million for the first quarter compared to adjusted ebitda of eighty five million for the first quarter of 2025 the increase was primarily driven by a large fifo benefit in the first quarter of 2026 as compared to the first quarter of 2025 partially offset by the dislocation between rising feedstock costs and and product sales price increases during the first quarter of 2026 we recognized a fifo benefit of fifty three million compared to eight million in the first quarter of 2025 our midstream segment reported adjusted ebitda of one hundred eleven million in the first quarter compared to one hundred nineteen million in the same period of last year this decrease was primarily driven by marginally higher operating costs resulting from of fuel contamination incident at one of our product terminals in colorado in the first quarter of 2026 net cash provided by operations totaled four hundred fifty seven million in the first quarter which included one hundred nineteen million of turnaround spend hf sinclair's capital expenditures total one hundred two million for the first quarter as of march thirty first 2026 hf sinclair's total liquidity stood at approximately three point one five billion which includes a cash balance of approximately one point one five billion and our undrawn two billion unsecured credit facility as of march twenty first we had two point eight billion debt outstanding with a debt to cap ratio of twenty two percent and net debt to cap ratio of thirteen percent now let's go through some guidance items with respect to capital spending for full year of twenty six there's been no change for the second quarter of 2026 we expect to run between six hundred to six hundred thirty thousand barrels per day of crude oil in our refining segment which reflects planned maintenance activities at parco and navajo and unplanned maintenance at el dorado in the period we are now ready to take questions from the audience matt if you could switch over please the
OPERATOR
floor is now open for questions please limit yourself to one question and one follow up at this time if you have questions or comments please press star one on your touch tone phone to withdraw your question press star one again 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 the pound key we ask that you pick up your handset when asking a question to allow for optimum sound quality if you're muted locally please remember to unmute your device please stand by while we compile the Q&A roster your first question is from matthew blair with tph matthew your line is open please go ahead
Matthew Blair (Equity Analyst at TPH)
thank you and good morning everyone your renewables results were quite strong even excluding the PTC benefit that rolled through could you talk about some of the drivers in Q1 that helped push that profitability and then for the second quarter what do you think is a good target for utilization and would you expect you know even stronger margins just given that some of the indicators have really moved up in the second quarter thank you hey
Steve
matt this is steve i'll take that one we were quite pleased with the performance of our renewable diesel business as we've been on this journey to make this business come into profitability we've said we needed in poor market conditions to get it to break even or slightly positive we achieved that coming out of 2025 and now the market has turned in our favor i will tell you though that is not all market driven as we've taken a very hard line and look at our feedstock strategy and that's getting much closer direct to sources near our facilities and making sure that we're prompt and hedging without anything out into the future so from a feedstock strategy that's working very well i would tell you that the market placement strategy we've had is working where we're finding other markets to take products to and not be completely dependent on the california market so we're finding ways to leverage our integrated value chain both in the pacific northwest as well as putting product up into canada and then the last one is really opex discipline and that is ensuring that we've taken structural costs out we have more of that to do and we're seeing the results there and optimizing our catalyst to ensure that it performs on the longer runs and we're getting the yields out of it all of that combined with the overall market favorability as you know changed in 2026 to where we are structurally more balanced with domestic feedstock and domestic demand i would say other helps to that is that just the distillate macro in general has found increased value in both the regular ulsd and carb market so we're pleased with what we're doing there's more to do there and i think your second question was around our utilization in q two and we're not going to guide specifics but we do believe that we will optimize particular co located kits to the best value and we see that being north of seventy percent utilization net of all the planned events that we have so we're pretty excited about what our renewables business looks like now as well as for the rest of the year year
Matthew Blair (Equity Analyst at TPH)
sounds good and then could you also address the lubricants market going forward are you seeing global supply reductions as a result of the iran war and you know it looks like some of the pricing indicators have started to move up and maybe you could just talk a little bit about you know your ability to capture potentially higher margins in lubricants going forward yeah hey matt it's matt
Matt Joyce (SVP of Lubricants and Specialties)
joyce i'll take that one we are seeing a really great market move right now as we have experienced this rapid and sharp cost increase throughout the back end of the first quarter we do see that being a protracted movement into the second and third quarter and based on our locations where we produce and how we source our raw materials we have been able to secure all of the needed raw material supply for the balance of the year we're able to be supplying our customers at the rates that they're requesting of us and we have seen some growing demand that we anticipate will be with us through the second and third quarters at least of the year as this crisis it prolongs itself and until the straits open up but we feel that we're in a really good position to take advantage of those we've also implemented multiple pricing actions to offset those higher raw material costs and work to capture that on the bottom line so we'll look to see that come into place later this year
OPERATOR
as thank you your next question comes from the line of Manav Gupta with UBS manav your line is open please go ahead
Manav Gupta (Equity Analyst at UBS)
good morning my question is specifically for steve look steve you have been working very hard for some time at Dyno bringing about change and we see that in the midstream results we see that in the lubricants results and i'm just trying to understand with this management shakeup has anything changed from your end is the strategy the same you're following and how are you going about building those two businesses as you were before the management shakeup took place thanks
Steve
manav we're not going to comment necessarily on management change but i think your point's a good one and that is to reinforce the fact that the executive team that was here to build the strategy is still here and is executing diligently upon that that includes making sure that we're improving and focusing on our reliability and our safety performance and as well as leveraging the integrated value chain and growing those various segments so you specifically asked about midstream midstream we feel is a key linchpin to unlock that integrated value chain and we're putting more value and molecules on our kit to supply our refineries as well as take products to our regions we've talked about our multi phase project to really unlock our go west strategy and we think that's just the tip of the tip of the spear here i'll maybe ask matt to talk a little bit about what we're doing from a lubes perspective
Matt Joyce (SVP of Lubricants and Specialties)
specifically yeah manav as you know we've continued to high grade the molecules that we have on hand we're moving into more specialized finished lubricants and specialties applications we continue to execute on our plan of tucking in those opportunities for acquisition like you've seen with industrial oils unlimited over the past several months and we're going to look for those opportunities going forward and continue to refine the business and be that value added supplier to our customers that deliver something that's distinct and sticky as far as a value
Franklin (CEO and President)
proposition is concerned and manav let me add one thing this is franklin part of the reason i'm here is to give the executive team the confidence to continue with the plan and making sure that they have the tools and the resources to continue with the actions that steve and matt mentioned there is no let up on the focus of what we're trying to do here
Manav Gupta (Equity Analyst at UBS)
perfect my quick follow up is a little bit on the refining macro you saw some of the global majors report today morning and with not such good earnings on international assets and then guiding down volumes on international assets and that's a function of crude availability now when we come to somebody like a dyno i'm assuming you are not fighting those issues the crude avail is not an issue for you so you can run hard into the second and the third quarter and if you could talk a little bit also about your strategic asset fugitive sound because a lot of shortages are happening in california how can you use that asset to supply to the market in california because look your pipeline or the competitor pipelines will take time but in the near term you can get to california through puget sound so if you could talk about some of those dynamics
Steve
okay thanks manav the from a global perspective and a crude supply element we don't face those challenges as you know you know the us refinery complex is probably the most advantaged globally with the most secure crude supply outlets and we're connected to multiple hubs and run various different grades of crude from canada to the north slope to many different types of domestic light sweet crudes at cushing and we we gather and buy our own crude in the southwest and use that both at our artesia refinery and move some of that up into the mid con to run at our el dorado refinery so from a crude supply perspective some of the challenges that our competitors are facing we do not face just from a supply now does it impact the overall price of the crude as it looks to compete to different markets it certainly does we've been successful in ensuring that we have a proper approach to buying that crude and that the cracks are supportive to whatever inflationary pressures are associated with the the global dynamics so we don't feel concerned about that relatively speaking to some of the other global issues and are in a good spot to go take advantage of our position as far as Puget goes as you mentioned you know the west coast has PADD 5 particularly has been considerably tight it's getting tighter we we talked about our project to go get there and as you mentioned it's it's a few years out but you've seen imports reduce asian producers have had to curtail runs and so that just continues to tighten the market our approach to get to california we put in a flexibility project last year that allows us to produce and swell the gasoline pool to either make carb or sell high valued unfinished components which to this point has been more profitable so we're moving alkylate out of Puget into the gasoline pool in california is just one element further as i mentioned in my prepared remarks we put a project in to swing diesel to get to jet depending on the market environment and that's paying off greatly not only to the west coast but also into markets in latin america so we see the west coast as a real good opportunity it's tightened up and we'll look forward to taking further advantage of that as we develop
Franklin (CEO and President)
some of these projects and manob part of your question was you said run the assets hard i want to make sure that you understand that we're going to run reliably and not push our assets that's more important to us to make sure we're up as opposed to trying to unduly stress our assets to
Manav Gupta (Equity Analyst at UBS)
increase volumes now my point was are you running them close to some of your peers globally are being forced to run assets at forty percent and fifty percent because of crude availability that was my question yeah that is not the
OPERATOR
your next question comes from the line of neil metna with golden foch neil your line is open
Neil Mehta
please go ahead yeah thanks i just want to build on mana's question around crude and specifically around two grades brent ti has seen enormous volatility here and so just how are you guys thinking about the setup for that spread in particular and then wcs the outlook as we think about the second quarter but also the balance of the year and then franklin i had a management question for you as a follow up
Steve
all right so steve i'll take the first one franklin take the hard one okay so WTI what we've seen is yeah spread is widening given the geopoliWTIcal elements q one we saw quite a bit higher than five dollars and we think that that will probably conWTInue to be the case but the curve on WTI basically remains very steeply backwardated as things change through this geopoliWTIcal event that curve moves and so it flattens out but we are in a posiWTIon to take that you know not have an issue as far as the spread goes from a from a from a brent WTI i think the backwardaWTIon is something that is that we're watching very closely as you know we pay a role in steep recordaWTIon and that will impact our latent crude but we're managing that carefully to go get into the right market to ensure we can get the margin coverage for that increased cost you asked about WCS i think WCS has been a bit wider you know some of the pipes coming out of canada have shown some apporWTIonment and i think ulWTImately egress will become a problem i think some of that is also compeWTIng with the venezuelan crude that is now on the market and that will that will keep some of the width there but we see that you know from a q one to q two we're looking at a fourteen ish dollar spread and remember we've connected with pipe space right out of Hardisty all the way into our assets in the mid con and we take advantage of that but it'll depend on you know what happens longer term as you've seen probably as recently as last night the presidenWTIal permit signed so there are mulWTIple projects being contemplated to bring addiWTIonal crude out of canada either for domesWTIc use or export and so as that happens that could force some pressure on the differenWTIals longer term but there's a lot of WTIme between now and then many things can happen on what project goes or what doesn't but we're evaluaWTIng all of them and i think we're in a really good posiWTIon to to go take advantage of our heavy oil value chain at mulWTIple
Neil Mehta
that's really clear thanks you have a question for me yeah yeah yes sir so my follow up is just on just how you're thinking about the process by which identifying the permanent ceo and cfo i know there's sensitivity around this and we don't want to litigate the past but just you know how is the board approaching this what are the characteristics you're looking for in a long term leader are you looking internal you're looking external it's just anything you can provide the market would be great
Franklin (CEO and President)
i appreciate your question we're not going to get into that we do have a process ongoing when we're in a position to share that we will me just make a comment quickly on our board we have a very experienced very high functioning board that i've been in communication with them regularly about this very question and so when we've got something we'll tell you in the meantime let me assure you and some of you don't know my background i spent twenty one years in the c suite at two different s and p five hundred companies at all different levels i'm not a paper ceo with this group they know i'm here every day making sure it's going forward so i don't know that that reassures you but the strategy we put in we're executing on and there's no let up and the process will go forward and we will find an excellent leader for this company in due course and we're not going to dawdle on it we are looking at it very seriously
Neil Mehta
all right thanks franklin
OPERATOR
your next question comes from the line of joe leitch with morgan stanley joe your line is open please go
Joe Leitch (Equity Analyst at Morgan Stanley)
ahead hey good morning team and thanks for taking my questions so i wanted to go back to the macro and just given where product prices are today can you talk a bit about the demand trends that you're seeing within your system are you seeing any signs of demand destruction on gasoline or diesel and then maybe stepping back in more broadly how are you viewing the balances today from both the supply and demand perspective in the mid con and the rockies
Steve
all right i'll take that one joe this is steve as far as demand goes what we saw in the us just for the quarter knew us demand was down in gas around two percent but distillate was up around four in our regions that we operate in bit more favorable gas was slightly up and diesel was also up i'll tell you that given the prices one thing that we're watching i think you're intimating is price elasticity and so if you look at through our service centers we're down year over year same store sales around two percent but that's against the backdrop that you'll see in some of the consultants reports in OPIS down about four and a half percent so our portfolio high grading is working and we're outperforming that we have started to see some cuts in terms of travel particularly as jet continues to price up as you know the global dimension is heavy distillate supply shortage so they were low both diesel and jet and they're getting lower and most of the disruption in the middle east they're very much heavy distillate producers so on the backdrop that paints a favorable margin picture but it also create some concern on what permanent demand structure demand destruction may actually happen so we're watching that very closely it's still a bit too early to tell but we are seeing some slight consumer softness as we head into the driving season as people are going to go make those decisions and we'll just see how that plays out but i do believe a prompt resolution is going to be more beneficial for the global energy complex than a lingering one as far as it goes with regards to the mid con as you know in q one we had we had winter storm storm which somewhat put a pin in the demand bubble and created a massive supply glut and so prices were quite low which led to us rationalizing crude runs and economic sparing in the mid con as it got toward the latter half or latter part of march and what we're seeing in q two that that inventory picture is really tightening up and i think us exports of clean product hit a record so there's products moving into the gulf to go back supply where they can't get the supply and their current inventory stocks are very low so rockies is a little bit of a different story it's relatively balanced to tight i will tell you that we have a light planned maintenance schedule across the complex in the us between q two and q three so any major disruption will further create a whipsaw in terms of total product supply and demand imbalances so it's a pretty tight situation but we look forward to the strength of the mid con and the rockies in our regions for the balance of
Joe Leitch (Equity Analyst at Morgan Stanley)
thanks steve that's helpful and then following up on your comments on marketing that segment continues to string together some pretty nice quarters could you just talk about some of the outperformance during one q and how you see the segment shaping up for the rest of
Steve
the year here yeah you know our marketing businesses as we talked about one of the untapped values of the sinclair acquisition has been really leveraging that brand and the strength and we had another good quarter in q one you know twenty eight million plus of ebitda we brought on another new set of sites but this is the value associated with that brand is by getting the full share of what the brand should command we're growing volume we saw our volume grow year over year ten percent plus which is good we're seeing that we've talked about high grading the portfolio we're beating the same store sales versus what the market has so we're taking the portfolio approach of getting to the right areas and maybe culling some of the assets that maybe don't fit with our overall brand premise moving forward and there's growth in our license business as well Dyno has a significant pull on it and we've yet to go fully develop that our Green Trails JV is just the first step of where we think that's truly going to accelerate our growth in the brand but also the adjacencies of the higher valued revenue streams we're excited about so you know it's really just blocking and tackling and being very purposeful about where we're strategically placing our bets and we see more upside as we move forward and our business is becoming a material business to the to
Franklin (CEO and President)
the company and everybody loves the green dinosaur it's a great brand you need
Joe Leitch (Equity Analyst at Morgan Stanley)
to join in definitely agreed thanks for the time appreciate it
OPERATOR
your next question comes from the line of philip jugworth with bmo philip your line is open please go ahead
Philip Jugworth
thanks good morning i did want to ask about the bridger pipeline expansion which you referenced earlier with the approval news yesterday so this goes right down to guernsey assuming this gets built how fall would you expect this to change feedstock sourcing for your refineries or impact crude diffs and separately just anything to note on market impact from the double age conversion from crude to ngls that follows a similar route
Steve
yeah i'll talk a little bit about the Bridger Pipeline of course bringing more crude into guernsey will allow some more flexibility into the hub whether it goes or not or the level and we don't know and so we're not going to speculate on that necessarily but one thing that we've been focused on in terms of our crude slate flexibility is widening the crude basket which allows us to go take advantage of dislocated crudes when they present themselves and as you know we're connected to the hub that connects both all to our some of our rockies kit as well down to the midcon and so to the extent that we see market opportunity we'll evaluate whether we participate or not we think we're in a good position because of the flexibility that we put into place to widen our crude basket as well as our crude and your other question was on sorry that could repeat that one double age conversion from crude to ngls yeah i don't know that it has a relevant impact on our specific crude supply set does it do something to the overall market differentials we'll just have to see when we contemplate some of these other projects coming up online i don't think it's a material impact to us either way
Philip Jugworth
okay great and then you did repurchase some shares in the quarter just how are you thinking about capital returns going forward until you have more permanent leadership in place and should we just stick with the historical framework and just how tactical do you plan to be just given the strength and the equities here in the second quarter
Vivek Garg (Acting Chief Financial Officer)
yeah that's a good question thank you i'll take that this is vivek so so in terms of our share repurchases we'll continue to execute on our capital allocation strategy we'll opportunistically repurchase shares under our twenty twenty four share repurchase program we don't typically guide on the pace or the amount of buybacks but as we've always shared with everyone that we'll continue to execute on our capital allocation strategy which is driven by free cash flow capital returns and balanced capital allocation
OPERATOR
your next question comes from the line of doug legate with wolff research doug your line is open please go
Doug Legate (Equity Analyst at Wolff Research)
ahead hey good morning everyone thanks for taking my questions so two things guys if you don't mind first of all srest there's the new rvo is i think due to be confirmed here in the next several weeks just want to get your perspective as to given where rins are currently what that might mean for you guys if there's some way to quantify that and expectations of duration at least through the trump administration if that's possible and then my follow up is really on product swings i think in your backyard gasoline has started to get you know the whole slate appears to be getting better jet fuel has obviously been extraordinary what kind of flex do you have to move towards you know where the advantage products might be today and what you know what does that look like for you guys in terms of incremental yield
Steve
all right doug this is steve i'll take that one so from an SRE perspective as you mentioned the RVO being finalized what is our viewpoint you've seen the wren and the RVO run to unprecedented recorenewable diesels this year we believe that the RVO is becoming an extreme burenewable dieselen it's now projected to be fifty billion dollars a year or equivalent of thirty cents per gallon don't know that the latest rpo is helpful to energy costs for either the industry or the consumer and so you know what that valuation really looks like for us we're not going to guide you know we believe in the SRE and the SRE was contemplated as part of the original rfs for a reason and that's to help the smaller refineries who are disproportionately advantaged here and you know we believe in that program we're not going to speculate you know we have petitions out currently for five of our refineries that we think qualify under the contemplated plan we're not going to talk about value necessarily but we do believe that it could be a material relief to the burenewable dieselen that we're facing how long this thing goes and the duration you know there's considerable fight going on associated with the validity legitimacy the frame and the shape of the program moving forwarenewable diesel but we're actively involved and our interest will be measured and our interest will be part of the discussion and the solution moving forwarenewable diesel so that's generally our thinking on the RVO but again the SRE piece is something we believe in and we will continue to advance and go after that under the current framework of the program as far as product swings go yeah i think you're right we mentioned the psr project to be able to move and swing between distillate and jet now both of those products are quite good so the difference between jet and market versus distillate on the west coast those are somewhat at parity jet has been very very strong we have the ability to swing anywhere from ten percent between gas and distillate across the entire fleet and we're in a max distillate mode now having said that we also believe that our value chain will allow us to run heavier heavier oil and take care of our retail asphalt business which enhances our overall margin production and then we're going and trying to ensure that we're at the top end of those yield curves and running as much premium as we can so we have the ability to go flex right now it's a max distillate mode but we are we're watching it watching it very carefully great thank
OPERATOR
your next question comes from the line of jason gableman with td cohen jason your line is open please
Jason Gableman (Equity Analyst at TD Cohen)
go ahead yeah hey thanks for taking my questions franklin you you mentioned running your refineries responsibly which is prudent given the margin environment in the past dyno has talked about unlocking an additional capacity within the system that would be worth an additional refinery in terms of size is that still an aspiration for the company or is the six hundred thousand barrel a day to six hundred thirty range kind of the upper end of where you expect to run
Steve
had recent and active conversations of reinvestment into some of our assets to try to increase the throughput over time not immediately and so it is something where let's think about the sustainability of dyno we have to look at these assets and understand what our markets demand today but what they will demand in the future and as we look at that and we have free cash flow some goes back to the shareholders but some will need to be reinvest not just for maintenance but for improving the complex of our assets and so yes the board will take that up in fact it's an item we're going to take up here as we look at the long term planning now to be held to a volume of where we get to you know that's going to depend on a lot of planning but if there is opportunity we believe to increase yeah maybe just a follow on to that from an overall value we launched you know a few business improvement programs we've said our key imperatives are to improve reliability and our ehss performance we're seeing that quarter over quarter so we're starting to see the green shoots as well as unlocking the value of the integrated value chain and we're starting to see that so some of the projects that we've invested in we talked about the psr project we talked about the back tower project at el dorado both of those are going to improve our yield as well as capture in terms of generating more value for the same throughput that we're putting through our kits so crude flexibility all of those things that we've talked about in the past in terms of optimization we believe there's value to be had there and we're seeing some benefits start to show up as a result
Jason Gableman (Equity Analyst at TD Cohen)
great my follow up is just on m and a or a and d i should say the renewable segment certainly had a strong quarter the margin environment is more constructive you've seen peers sell down stakes of their renewable diesel businesses is that something that you could see doing in the future and then i guess more broadly just m and a comments on the refining landscape would be welcomed as well thanks sure let me let
Franklin (CEO and President)
me handle that one number one as a management team and as a board we're charged with looking at the allocation of capital to the assets that we have and trying to determine which ones pay back the best and lean into those and the ones that are more mature take cash flow and lean into opportunities and then see opportunistically you've seen in our past and thank you for this it gives you me a good segue into what i was going to say to wrap up going back in time when we did the acquisitions of psr and sinclair we subsequently did the acquisition of the reacquisition of our midstream business they're collectively working together as steve has talked about the entire value chain when doing that if you think about what the company has done in grade our report card we've distributed four point nine billion dollars billion dollars and our market cap today is twelve billion so think about the the ratio of that in four years and in addition to that our share price has gone from thirty to sixty something so you look at a rate of return on a company compared to most any other investment you have not in our complex but broadly in the mid cap space or the energy space we compare favorably with what we've given back and what's happened what's happened is we've leaned into marketing which steve has indicated as we've been growing and it adds to of the value proposition of what we've had we've waited out on the renewable space for the weak players to die during weak markets and that's what you do in a capitalistic market you let the weak hands die and you let the strong ones survive we're not going to be knee jerk just because we had one good quarter say let's go run and do something we've waited through the hard times let's go harvest these good times in midstream we felt like we needed opportunity to manage midstream more tighter we've talked about some initiatives there's some others going on we're going to look at that we've done acquisitions in both marketing and in lubes we're going to lean into where we see opportunity and value with our free cash flow and we see bright days ahead for the sinclair franchise when i say love the green dinosaur it's an affinity brand that people can come to really enjoy and it's one that our employees are proud to wear on their shirts and uniforms every day and so thank you for this question giving me a chance to talk about the successes of our company and how we're going to move forward in the future with this craig do we have anything else i think that concludes
Craig Beery (Vice President of Investor Relations)
our call for today thank you all
OPERATOR
for being part of our call
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