Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — HollyFrontier — Merger or Acquisition (November 2018)
18 slides from Hf Sinclair's merger presentation, November 2018
Slide 1: Acquisition of Sonneborn
HOLLYFRONTIER Acquisition of Sonneborn November 2018
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: Sonneborn Transaction Overview: Financial Details
Sonneborn Transaction Overview Financial Details • $655mm purchase price • $583mm purchase price net of approximately $72mm in working capital • Purchase expected to be funded entirely with cash on hand • Immediately accretive to earnings and cash flow per share • Expect to capture ~$20mm in annual
Slide 4: Sonneborn Transaction Overview: Assets Acquired
Sonneborn Transaction Overview Assets Acquired • Differentiated specialty products portfolio • Petrolatums, White Oils, Microcrystalline Waxes, Natural Sodium Sulfonates, and Industrial Specialties • 3,300 barrel per day processing capacity in Petrolia, Pennsylvania • Among the most flexible hydrotr
Slide 5: Strategic Rationale
Strategic Rationale Downward Integration and Rack Forward Growth Significantly increases Rack Forward earnings power • 100% of Sonneborn earnings attributable to Rack Forward segment • Brings incrementally higher value products with stable margins • Expands specialty products portfolio Strengthens s
Slide 6: Sonneborn Operational Overview
Sonneborn Operational Overview World-Scale Flexible Formulation Platform Global Processing Blending & Packaging Distribution Waxes Micro Waxes Hydrotreating Formulation Petrolia Base Oils White Oils White Oils Unit Intermediates & Blending Petrolatums Direct Customer Sales & Sulfur Natural Sodium Su
Slide 7: HF LSP - Rack Back vs Rack Forward
HF LSP - Rack Back vs Rack Forward RACK BACK RACK FORWARD Base Oil Blending Distribution R&D Marketing Sales Production & Packaging Finished Lubricants & Greases VGO/HCB Petrolatums Mississauga & Tulsa Base Oil Plants Sodium Sulfonates Waxes White Oils 3rd Party Base Oil Specialty Products Base Oil
Slide 8: Sonneborn Products
Sonneborn Products Tailor Made Solutions for Specialty Applications Application Product Group End Uses Examples Product Slate by Volume1 White Oils Personal care, Lotion, lipstick, cosmetics, pharma, water bottles, drilling toothpaste Natural Sodium Industrial Sulfonates Specialties 4% Petrolatums P
Slide 9: Product Mix Shift Towards Finished Products
Product Mix Shift Towards Finished Products Diversified Specialty Product Slate HF LSP 2017 Product Slate by Volume HF LSP Pro Forma Product Slate by Volume Specialty ~29K BPD ~25K BPD Products 22% Specialty Products 24% Finished Finished Lubes & Base Oils Greases Products Finished 37% 14% Base Oils
Slide 10: Sonneborn Historical Financials
Sonneborn Historical Financials Stable Cash Generation Average EBITDA Margin of 18% Since 2015 EBITDA ($ in millions) EBITDA Margin1 % 80 25% 70 20% 60 50 15% 40 10% 30 20 5% 10 0 0% 2015 2016 2017 TTM 7/31/18 Sonneborn EBITDA Sonneborn EBITDA Margin HFLSP Rack Forward EBITDA Margin 1. EBITDA Margin
Slide 11: Synergies & Growth Opportunities
Synergies & Growth Opportunities Synergies Enhance Competitive Position Synergy estimate of $20mm annually • Significant savings in SG&A costs SG&A $5mm • Optimization of North American production facilities in Tulsa, Mississauga and Petrolia • Logistics savings through transportation and blending c
Slide 12: Accretive Transaction
Accretive Transaction Sonneborn Provides Diversification of Earnings Throughout the Cycle 2015 2016 2017 TTM 7/31/18 Sonneborn Historical EBITDA 64 52 70 66 D&A1 (33) (33) (33) (33) Interest - - - - Income Taxes2 (7) (5) (9) (8) Sonneborn Net Income 24 14 28 25 Sonneborn EPS Contribution3 .14 .08 .1
Slide 13: HollyFrontier Pro Forma Capital Structure
HollyFrontier Pro Forma Capital Structure Conservative Balance Sheet with Strong Liquidity HFC Consolidated Capital Structure HFC Standalone Capital Structure Pro Forma September 30, 2018 (US$ millions) Pro Forma September 30, 2018 (US$ millions) Cash and Cash Equivalents as of 9/30/18 1,076 Cash an
Slide 14: Rack Forward versus Public Specialty Product Peers
Rack Forward versus Public Specialty Product Peers Peers Trade at 9x – 14x Multiple Average Range of Quarterly 2019E EBITDA Margin EBITDA Margins: EV / EBITDA 1Q15 − 2Q18 1Q15 – 2Q18 Valvoline (VVV) 23% 11 – 37% 9.7 x Newmarket (NEU) 18% 14 – 22% 15.0 x1 Innospec (IOSP) 16% 11 – 27% 9.2 x Fuchs (FPE
Slide 15: HF Lubricants & Specialty Products Pro Forma Valuation
HF Lubricants & Specialty Products Pro Forma Valuation Mid-Cycle EBITDA Rack Forward EBITDA ($ in millions) $285 EBITDA Margin 11-16% Annual SG&A $145 - $155MM Target Multiple 11x Annual DD&A $40 - $50MM Upside with Organic Growth and M&A Enterprise Value ($ in millions) $3,135 Opportunities
Slide 16: HollyFrontier Asset Footprint
HollyFrontier Asset Footprint 16
Slide 17: Definitions
Definitions BPD: the number of barrels per calendar day of crude oil or petroleum products. Lubricant : A solvent neutral paraffinic product used in commercial heavy duty engine oils, passenger car oils and specialty products for industrial applications such as heat Debt-To-Capital: A measurement of
Slide 18: 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 Jared Harding | Investor Relations investors@hollyfrontier.com 214-954-6510
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