Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — HollyFrontier — Investor Presentation (November 2020)
36 slides from Hf Sinclair's investor presentation, Nov 13, 2020
Slide 1: HollyFrontier Investor Presentation November 2020
HOLLYFRONTIER INVESTOR PRESENTATION November 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: Positioned for Value Creation Across all Segments
Executive Summary Positioned for Value Creation Across all Segments REFINING MIDSTREAM SPECIALTY LUBRICANTS RENEWABLES . Inland merchant refiner . Operate crude and product . Integrated specialty . Construction of 9,000 BPD pipelines, loading racks, lubricants producer with Renewable Diesel Unit at
Slide 4: HollyFrontier Asset Footprint
HollyFrontier Asset Footprint 4
Slide 5: Proximity to North American Crude Production Laid in Crude Advantage
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 $/Barrel $25 Gulf Coast 3-2-1 Crack $10.00 Brent/WTI Spread $4.00 $20.58 Product Transportation to HFC $3.00 $20.06 $19.88 Markets $20 HFC Index $17.00 $18.41 Capture Rate 75% Realized Gross Margin Per Barrel $12.
Slide 8: HollyFrontier Renewables
HollyFrontier Renewables Renewables Business Profile Strategic Rationale Expected capacity to produce over 200 million . Plan to expand the renewables segment to gallons per year of renewable diesel with become a meaningful part of HollyFrontier’s feedstock flexibility cash flow and diversify from t
Slide 9: HollyFrontier Renewable Diesel
HollyFrontier Renewable Diesel HollyFrontier is expected to produce over 200 million gallons per year of renewable diesel Renewable Diesel Defined . Renewable diesel is a cleaner burning fuel with over 50% lower greenhouse (GHG) emissions than conventional diesel . Renewable diesel is not biodiesel
Slide 10: Artesia Renewable Diesel Unit
10 Artesia Renewable Diesel Unit Expected capacity to produce ~120 million gallons per year of renewable diesel Project Details . HFC to construct greenfield Renewable Diesel Unit (RDU) co-located at the Navajo refinery . Includes rail infrastructure and storage tanks . Existing hydrogen and utiliti
Slide 11: Cheyenne Renewable Diesel Unit
Cheyenne Renewable Diesel Unit Expected capacity to produce ~90 million gallons per year of renewable diesel Project Details . HFC to convert existing hardware to produce renewable diesel . Ceased crude refining operations in early August 2020 . Utilizing existing infrastructure allows for shorter t
Slide 12: Pre-Treatment Unit Feedstock Flexibility
Pre-Treatment Unit Feedstock Flexibility Pre-treatment capacity allows our renewable diesel plants to process a variety of feedstock Project Details . HFC to construct pre-treatment unit to provide flexibility and upgrade of feedstock . Designed to treat degummed “unrefined” soybean oil, bleachable
Slide 13: Holly Energy Partners Business Profile
Holly Energy Partners Business Profile Operate a system of petroleum product and crude pipelines, storage tanks, distribution terminals and loading rack facilities located near HFC’s refining assets in high growth markets . Revenues are nearly 100% fee-based with de minimus commodity risk . Customer
Slide 14: 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 $706.9M Value2 45.8mm HEP units1 43% LP Interest $543.2Value2 HOLLY E
Slide 15: HEP Historical Growth
HEP Historical Growth 50% JV with Acquired Holly Tulsa Holly Corporation Plains for remaining dropdown of and Frontier Oil Crude gathering Frontier interests in SLC / Holly intermediate loading rack Corporation system pipeline Frontier pipelines feedstock pipeline (Tulsa West) complete merger expans
Slide 16: 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 17: 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 18: HF Lubricants & Specialty Products: Integrated Model from Crude to Finished 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 19: HF Lubricants & Specialty Products: Product Portfolio and End Markets
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 20: HF Lubricants & Specialty Products: Diverse Suite of 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 21: 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 $/bbl 2019 Product Slate by Volume Finished Lubricants & Greases Coproducts Base Oils 24% 27% P
Slide 22: Rack Forward Adjusted EBITDA Margin Stability
Rack Forward Adjusted EBITDA Margin Stability Rack Forward – Adjusted EBITDA Margin1 ($ in millions) Margin % 19% 80 16% 20% 17% 16% 16% 16% 13% 13% 14% 14% 60 13% 15% 13% 13% 12% 12% 11% 12% 12% 10% 9% 40 9% 10% 9% 77 79 69 64 61 58 58 57 55 53 56 52 49 52 51 7% 45 48 47 20 38 40 5% 29 30 23 0 2 3
Slide 23: Rack Forward Multiple Up-Lift
Rack Forward Multiple Up-Lift Segment(s) Multiple Margin Profile Peer Group Integrateds: Refining & BP, CVX, RDS, XOM 5-7x Variable Rack Back Refiners: CLMT, CVI, DK, MPC, PBF, PSX, VLO MLP 6-9x Stable DKL, MPLX, PBFX, PSXP Rack Forward 10-13x Stable FPE GY, IOSP, KWR, NEU, VVV Note: Multiple repres
Slide 24: Mid-Cycle Rack Forward EBITDA
HF Lubricants & Specialty Products Mid-Cycle Rack Forward EBITDA Mid-Cycle Rack Forward Adjusted EBITDA ($ in millions) $265 . RF 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) $2,91
Slide 25: Environmental, Social, and Governance (ESG)
Environmental, Social, and Governance (ESG) Environmental Social Governance Reduction in GHG emissions Annual Corporate Citizenship Report Board leadership provides significant highlighting ESG efforts1 industry expertise, alongside diverse • Significant investment in 2 Renewable business, financial
Slide 26: Appendix
APPENDIX
Slide 27: 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 28: Capital Allocation Strategy: Disciplined Approach
Capital Allocation Strategy Disciplined Approach to Capital Allocation to Create Shareholder Value 2019A Cash from Ops $1.5B Non-Discretionary Share Repurchases Growth: $225mm Acquisitions Organic projects Cash From Operations $375mm Regular Dividend Capital Discretionary Investments1: Sustaining ma
Slide 29: 2020 Revised Guidance
2020 Revised Guidance . Refining 2020E Capex - Capex $187 – $212 million Segment Allocation . Lubricants & Specialties - Capex $30 – $35 million HEP 10% . Renewables - Capex $130 – $145 million Turnarounds & Catalysts 18% Refining . Turnarounds & Catalysts 39% - Capex $85 – $100 million - Turnaround
Slide 30: Strong Track Record of Cash Returns
Strong Track Record of Cash Returns • Strong track record in returning excess cash to shareholders • Committed to maintaining competitive cash yield versus peers • Share repurchase program funded by Free Cash Flow generation Regular Cash Yield1 Total Cash Yield2 % Yield % Yield 9% 15% 7.8% 13.8% 8%
Slide 31: HollyFrontier Capital Structure
HollyFrontier Capital Structure HFC Consolidated Capital Structure HFC Standalone Capital Structure As of September 30, 2020 (US$ millions) As of September 30, 2020 (US$ millions) Cash and Short Term Marketable Securities $1,525 Cash and Short Term Marketable Securities $1,507 HOLLYFRONTIER CORPORAT
Slide 32: HollyFrontier Credit Profile
HollyFrontier Credit Profile HFC Standalone Debt Profile . Investment Grade Rating 20% - S&P BBB- 15% - Moody’s Baa3 10% - Fitch BBB- 5% . $1.5 billion cash as of 9/30/20 0% . $1.75 billion outstanding debt as of 9/30/20 -5% 2015 2016 2017 2018 2019 - excludes non-recourse HEP debt Standalone Peer G
Slide 33: Definitions
Definitions BPD: the number of barrels per calendar day of crude oil or petroleum products. Non GAAP measurements: We report certain financial measures that are not prescribed or authorized by U. S. generally Blenders Tax Credit (BTC): Federal tax credit where qualified biodiesel blenders are eligib
Slide 34: HollyFrontier Index
HollyFrontier Index Please see p. 35 for disclaimer and www.HollyFrontier.com/investor-relations for most current 34 34 version.
Slide 35: 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 36: HollyFrontier Corporation contact details
HollyFrontier Corporation (NYSE: HFC) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyfrontier.com Craig Biery | Vice President, Investor Relations investors@hollyfrontier.com 214-954-6510 Trey Schonter | Investor Relations investors@hollyfrontier.com 214-954-6510
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