Slide 1: HollyFrontier Investor Presentation March 2020
HOLLYFRONTIER INVESTOR PRESENTATION March 2020
Slide 2: Disclosure Statement
Disclosure Statement Statements made during the course of this presentation that are not historical facts are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently uncertain and necessarily involve risk
Slide 3: Executive Summary
Executive Summary Positioned for Value Creation Across all Segments REFINING MIDSTREAM SPECIALTY LUBRICANTS Inland merchant refiner Operate crude and product pipelines, Integrated specialty lubricants loading racks, terminals and tanks in and producer with 34,000 barrels per day of 5 refiner
Slide 4: HollyFrontier Asset Footprint
HollyFrontier Asset Footprint 4
Slide 5: Proximity to North American Crude Production
Proximity to North American Crude Production Laid in Crude Advantage Beneficiary of inland coastal crude discount across entire refining system 2019 Average Crude Slate 100% of HFC’s purchased crude barrels are “WTI” price based 4% 7% Refinery location and configuration enables a fleet-wide cr
Slide 6: High Value Premium Product Markets
High Value Premium Product Markets Product Pricing vs. Gulf Coast Regional Gasoline Pricing vs Gulf Coast1 $/bbl 2015 2016 2017 2018 2019 Average $25 $20 $15 $12.71 $11.09 $10.75 $10 $7.25 $5 $1.86 $2.13 $- Group 3 vs GC Chicago vs GC Denver vs GC Phoenix vs GC Salt Lake vs GC Las Vegas vs GC Region
Slide 7: Refining Segment Earnings Power
Refining Segment Earnings Power HFC Consolidated 3-2-1 Index Mid-Cycle Refining EBITDA $1.0B – $1.2B $/Barrel $25 Gulf Coast 3-2-1 Crack $10.00 Brent/WTI Spread $4.00 $20.58 Product Transportation to HFC $20.06 $19.88 $3.00 Markets $20 HFC Index $17.00 $18.41 Capture Rate 75% Realized Gross Margin P
Slide 8: Renewable Diesel Project
Renewable Diesel Project Covers a majority of our annual RIN purchase obligation under current conditions HFC will process soybean oil and other renewable feedstock into renewable diesel Project Details Project Economics HFC to construct Renewable Diesel Unit (RDU) at the Estimated capital costs
Slide 9: Holly Energy Partners Business Profile
Holly Energy Partners Business Profile Operate a system of petroleum product and Consistent Distribution Despite Crude crude pipelines, storage tanks, distribution Price Volatility terminals and loading rack facilities located near HFC’s refining assets in high growth markets Distribution $/LP Unit
Slide 10: Ownership Structure
Ownership Structure Eliminated IDRs in 2017 to Simplify Structure HOLLYFRONTIER CORPORATION (HFC) 100% Interest GENERAL PARTNER (GP) HOLLY LOGISTIC SERVICES, L.L.C. PUBLIC Non-economic GP Interest 59.6mm HEP units1 57% LP Interest $866.0M Value2 45.8mm HEP units1 43% LP Interest $666.5M Value2 HOLLY
Slide 11: HEP Historical Growth
HEP Historical Growth Committed to Continuing Track Record of Increasing Distribution Holly Tulsa 50% JV with Acquired Holly Corporation dropdown of Crude gathering Plains for remaining and Frontier Oil Holly intermediate loading rack system Frontier interests in SLC / Corporation feedstock pipeline
Slide 12: HEP Avenues for Growth
HEP Avenues for Growth ORGANIC EXTERNAL TRANSACTIONS DROPDOWNS FROM HFC Leverage HEP’s existing Pursue logistics assets in HEP’s Partnering with HFC to build footprint current geographic region and/or acquire new assets / businesses Contractual PPI/FERC Replace incumbent HFC service Escala
Slide 13: Cushing Connect Joint Venture
Cushing Connect Joint Venture Asset Description Strategic Rationale HEP formed a 50/50 JV with Plains All American Pipeline, L.P. (PAA) Generates HEP growth while providing long term control of a consisting of: strategic asset • New build, 50-mile, 160 KBPD common carrier crude pipeline Insources HF
Slide 14: HF Lubricants & Specialty Products
HF Lubricants & Specialty Products Integrated Model from Crude to Finished Products • Rack Back captures the value between feedstock cost and base oil market prices (elastic index pricing) • Rack Forward captures the value between base oil market prices and product sales revenues from customers (ine
Slide 15: HF Lubricants & Specialty Products
HF Lubricants & Specialty Products Our Product Portfolio Serves a Variety of Global End Markets Adhesives Agriculture Construction Automotive Packaging Food & Beverage Forestry & Saw Mill Energy Manufacturing Health & Beauty Heavy Duty Mining Transportation Pharmaceutical Plastic Processors Railroad
Slide 16: HF Lubricants & Specialty Products
HF Lubricants & Specialty Products Operating Under a “House of Brands” Model 16
Slide 17: HF Lubricants & Specialty Products
HF Lubricants & Specialty Products Diverse Suite of Products Supplied to Major Industrial and Consumer Brands Brands • Finished Lubricants & • Finished Lubricants & • Finished Products & • Specialty Products Greases Greases Greases • Waxes Product • Specialty Products • Waxes • Base Oils Type • Waxe
Slide 18: Opportunity Across the Value Chain
Opportunity Across the Value Chain Upgrade Existing Base Oils into Finished Products Converting one barrel of Base Oil sales into Finished Product sales results in a margin uplift of ~$50/bbl Margin Value $/bbl 2019 Product Slate by Volume Finished Lubricants & Greases Coproducts Base Oils 24% 27% P
Slide 19: Rack Forward EBITDA Margin Stability
Rack Forward EBITDA Margin Stability 2020 Rack Forward – EBITDA Margin1 EBITDA Margin % Guidance EBITDA ($ in millions) 80 20% EBITDA $250 – 275MM EBITDA Margin 60 15% 11-16% 40 10% 69 64 61 58 58 55 56 57 53 52 52 51 48 47 49 45 20 38 40 5% 29 30 0 2 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Slide 20: Rack Forward Multiple Up-Lift
Rack Forward Multiple Up-Lift Segment(s) Multiple Margin Profile Peer Group Integrateds: BP, CVX, RDS, XOM Refining & 5-7x Variable Rack Back Refiners: CLMT, CVI, DK, MPC, PBF, PSX, VLO Rack Forward 10-13x Stable FPE GY, IOSP, KWR, NEU, VVV MLP 8-13x Stable DKL, MPLX, PBFX, PSXP Note: Multiple repre
Slide 21: HF Lubricants & Specialty Products
HF Lubricants & Specialty Products Mid-Cycle EBITDA Rack Forward EBITDA ($ in millions) $265 EBITDA Margin 11-16% Annual SG&A $190 - $200MM Target Multiple 11x Annual DD&A $80 - $90MM Upside with Organic Growth and M&A Enterprise Value ($ in millions) $2,915 Opportunities 11x multiple in-lin
Slide 22: Environmental, Social, and Governance (ESG)
Environmental, Social, and Governance (ESG) Environmental Social 33% reduction in NOX, SO2, CO, PM2.5 20% reduction in Tier 1 & 2 process Board leadership provides significant and VOC emissions since 2011 safety incidents vs 2017 industry expertise, alongside diverse business, financial and EHS expe
Slide 23: Appendix
APPENDIX
Slide 24: Capital Allocation Strategy
Capital Allocation Strategy New Growth Opportunity and Shareholder Return Initiatives Reinvest & Maintain our Existing Assets Promote safe and reliable operations Maintain a Healthy Balance Sheet & Investment Grade Credit Profile Target ~$500 million minimum cash balance Investment grade ratin
Slide 25: Cash From Operations
Capital Allocation Strategy Disciplined Approach to Capital Allocation to Create Shareholder Value 2019A Cash from Ops $1.5B Cash From Operations Non-Discretionary Share Repurchases Growth: $225mm Acquisitions Organic projects $375mm Regular Dividend Capital Discretionary Investments1: Sustaining ma
Slide 26: 2020 Guidance
2020 Guidance Refining & Marketing - Capex $270 – $300 million 2020E Capex Segment Allocation Lubricants & Specialties HEP 6% - $250 – $275 million Rack Forward EBITDA - Capex $40 – $60 million Renewables Turnarounds & R&M Catalysts 16% 32% - Capex $130 – $150 million Turnarounds & Catalysts
Slide 27: Strong Track Record of Cash Returns
Strong Track Record of Cash Returns • Strong track record in returning excess cash to shareholders • Committed to maintaining competitive cash yield versus peers • Share repurchase program funded by Free Cash Flow generation Regular Cash Yield1 Total Cash Yield2 % Yield % Yield 7% 15% 5.8% 6.0% 13.8
Slide 28: HollyFrontier Capital Structure
HollyFrontier Capital Structure HFC Consolidated Capital Structure HFC Standalone Capital Structure As of December 31, 2019 (US$ millions) As of December 31, 2019 (US$ millions) Cash and Short Term Marketable Securities $885 Cash and Short Term Marketable Securities $872 HOLLYFRONTIER CORPORATION HF
Slide 29: HollyFrontier Credit Profile
HollyFrontier Credit Profile Investment Grade Rating Peer Group Debt Metrics − 12/31/19 - S&P BBB- Debt Ratio % - Moody’s Baa3 50% - Fitch BBB- $885 million cash as of 12/31/19 40% $1 billion outstanding debt as of 12/31/19 - excludes non-recourse HEP debt 30% Total debt to capital ratio 14%
Slide 30: Definitions
Definitions BPD: the number of barrels per calendar day of crude oil or petroleum products. Free Cash Flow: Calculated by taking operating cash flow and subtracting capital CAGR: The compound annual growth rate is calculated by dividing the ending value by expenditures. the beginning value, raise th
Slide 31: HollyFrontier Index
HollyFrontier Index Please see p. 35 for disclaimer and www.HollyFrontier.com/investor-relations for most current version. 31 31
Slide 32: HFC Index Disclosure
HFC Index Disclosure HFC's actual pricing and margins may differ from benchmark indicators due to many factors. For example: Crude Slate differences – HFC runs a wide variety of crude oils across its refining system and crude slate may vary quarter to quarter. Product Yield differences – HFC’s p
Slide 33: HollyFrontier Corporation
HollyFrontier Corporation (NYSE: HFC) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyfrontier.com Craig Biery | Director, Investor Relations investors@hollyfrontier.com 214-954-6510 Trey Schonter | Investor Relations investors@hollyfrontier.com 214-954-6510