Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — Holly — Non-Deal Roadshow (November 2003)
33 slides from Hf Sinclair's roadshow presentation, Nov 19, 2003
Slide 1: New York Investment Trip November, 2003
New York Investment Trip November, 2003
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 ris
Slide 3: Holly Corporation
Holly Corporation Quality Refining & Transportation Assets High growth Southwest & Rocky Mountain markets Strong Balance Sheet & Top Tier Financial Performance Growth & Business Opportunities in 2004 Focused on Further Growth of Shareholder Value Quality assets & management team........ .....Poised
Slide 4: Current Financial Performance
Holly Corporation Current Financial Performance 3Q 03 Y-T-D 03 (9 mos.) Gross Refining Margin $78.8 $171.5 3rd Party Transportation Revenues 3.5 11.2 Net Income 17.6 47.1 EBITDA 38.4 103.4 Cash Flow from Operations 57.6 76.3 (In millions)
Slide 5: Key Financial Ratios
Holly Corporation Key Financial Ratios Pre-tax Margin 7.3% Return on Assets 7.7% Return on Invested Capital 15.1% Debt to Total Capitalization 13.1% (based on 9 mo. y-t-d '03 financials)
Slide 6: 5-Year Financial Performance vs. Peer Group
5-Year Financial Performance vs. Peer Group SUN VLO TSO FTO GI HOC 0.027 0.022 0.007 0.028 0.005 0.036 SUN VLO TSO FTO GI HOC 0.041 0.027 0.009 0.058 0.007 0.069 SUN VLO TSO FTO GI HOC 0.089 0.046 0.013 0.095 0.009 0.148 SUN VLO TSO FTO GI HOC 0.757 0.986 1.257 1.922 2.254 0.364
Slide 7: Earnings Sensitivity to Refining Margin Changes
Earnings Sensitivity to Refining Margin Changes Total Thruput: BPD Artesia* 80,000 Woods-Cross 25,000 Montana 7,000 112,000 40.9 million bbls a year Each dollar increase/decrease in gross margin produces a $40.9mm change in pre-tax income..... Taxed at 39%, the after-tax change is $24.9mm..... With
Slide 8: Holly Mid-Cycle EBITDA Changes
Refining & 3rd Party Trans. OPI Improvements Expansion Woods-Cross P/L Sale Rio Grande Ownership Inc. Total 46 60 80 100 115 115 115 Value 14 20 20 20 5 5 5 Holly 'Mid-Cycle' EBITDA Changes In millions Mid-cycle EBITDA $60mm $120mm +$20 +$20 - -$5 +$5 +$20 $14mm 3rd Party Trans $46mm Refining Late 1
Slide 9: Company Assets
Holly Corporation Company Assets
Slide 10: Holly Asset Locations
Holly Asset Locations Holly Asset Locations
Slide 11: Refining Assets
Refining Assets New Mexico Refinery 60,000** BPD High Conversion Refinery* 100% Sour Crude Capabilities 90%+ High Value Light Product Yield Full Utilization Rates Salt Lake City Refinery 25,000 BPD High Conversion Refinery* 87% High Value Light Product Yield Niche High Growth Product Market Montana
Slide 12: Pipeline Assets
Pipeline Assets Rio Grande P/L Joint Venture 70% owned by Holly, 30% BP-Amoco Transports LPG's from West Texas to Mexico Alon Lease Alon long-term lease from Orla, TX to El Paso, TX Lease expirations from 2008-2012 Artesia to El Paso P/L System 2 Holly owned P/L's transporting product from Artesia,
Slide 13: Terminalling Assets
Terminalling Assets El Paso 100% owned. 600,000 bbls of storage. Transfer capability to Arizona, Albuquerque, Mexico Tucson 50% owned. 150,000 bbls of storage. Albuquerque 50% owned. 120,000 bbls of storage. Moriarity 100% owned. 225,000 bbls of storage. Mountain Home 100% owned. 120,000 bbls of sto
Slide 14: Competitive Position
Holly Corporation Competitive Position
Slide 15: Holly's primary markets are in premium market locations
Holly Corporation Holly's primary markets are in 'premium' market locations Holly's light product mix capitalizes on 'high-value' products in 'high-value' locations Strong strategic & geographic advantage over competitors...
Slide 16: Navajo Gasoline Market Pricing vs. Spot Markets
Navajo Gasoline Market Pricing vs. Spot Markets Date Gulf Coast UNL West Coast UNL NRC Gasoline Price 1/31/2000 29.18 30.55 30.38 2/29/2000 34.31 37.92 32.64 3/31/2000 36 43.81 41.34 4/28/2000 30.75 32.87 39.72 5/31/2000 37.21 39.17 37.84 6/30/2000 40.62 42.93 39.98 7/31/2000 34.76 41.27 42.53 8/31/
Slide 17: Gasoline Market Pricing & Volume Movements
NM PMI ELP / M/O AZ (Conv) AZ (CBG) 1998 4500 3700 2700 17000 10000 PMI 3700 38.6 34.6 ELP / M/O 2700 46.9 45 AZ (Conv) 17000 AZ (CBG) 10000 1998 Current Gasoline Market Pricing & Volume Movements 17,000 3,700 4,500 10,000 3,000 2,700 3,000 7,100 18,500 11,100 4,000 3,300 14,500 40,900 BPD 61,500 BP
Slide 18: Refining Margins
Holly Corporation Refining Margins
Slide 19: Navajo Refining Margins
Navajo Refining Margins Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec East 3.07 4.49 4.72 6.46 4.92 5.11 5.5 5.53 3.72 3.86 3.88 2 West 1.68 1.43 3.12 1.08 1.13 1.37 0.54 2.05 1.38 2.78 2.32 1.41 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 1.23 1.5 3.89 5.83 6.23 4.57 1.24 2.56 5.03 3.29 1.27
Slide 20: Montana Refining Margins
Montana Refining Margins Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec East 0.06 2.96 3.92 6.41 5.59 4.95 8.73 4.11 4.95 5.15 2.04 2.94 West 5.52 3.98 4.71 1.34 2.14 3.81 0.61 5.63 3.09 2.34 5.63 3.26 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 2.24 2.5 5.16 4.88 8.62 6.76 1.29 2.31 5.47 3.01
Slide 21: Woods-Cross Refining Margins
Woods-Cross Refining Margins 1998 1999 2000 2001 2002 2003 East 0 0 0 0 0 0 West 5.72 5.32 7.35 6.95 5.23 6.55 1998-2003 Refining Gross Margin $5.72 $5.32 $7.35 $6.95 $5.23 $ per bbl $6.55 (y-t-d) 41
Slide 22: Woods-Cross Refining Margins
Woods-Cross Refining Margins Jun Jul Aug Sep East 0 0 0 0 West 4.54 2.99 9.07 9.81 $4.54 $2.99 $9.07 $9.81 $ per bbl Forecasted annual GM $6/bbl 4 mo actual EBITDA: $9.9mm 43
Slide 23: Internal / Organic Improvements
Holly Corporation Internal / Organic Improvements
Slide 24: Historical Improvement Initiatives
Historical Improvement Initiatives Increased 'higher value' gasoline production Aggressive gasoline marketing strategy Completion of northern P/L & terminals Increased 3rd party pipeline/transportation business Internal cost reduction program Low Capex process improvements
Slide 25: Recent Key Initiatives
Recent Key Initiatives Expansion / Hydrotreater completion Rio Grande P/L increased ownership Woods-Cross purchase
Slide 26: Clean Fuels Requirements
Holly Corporation Clean Fuels Requirements
Slide 27: Clean Fuels Requirements
Clean Fuels Requirements Navajo Refinery: Gasoline: requirements met with hydrotreater completion in November, 2003 Diesel: capital required expected to be modest by 2006 (approx. $3-4mm) Montana Refinery: Gasoline: already in compliance Diesel: no capital required utilizing planned approach Woods C
Slide 28: Clean Fuels Spending / Capacity
HOC TSO GI FTO VLO SUN ASH PCO West 0.24 0.24 0.32 0.38 0.47 0.48 0.72 0.94 Clean Fuels Spending / Capacity PRESENT VALUE 2003-06 CLEAN FUELS CAPEX (divided by production) $ per capacity/bbl Source: Friedman, Billings & Ramsey analysts report & HOC data 55
Slide 29: Growth / Shareholder Value Focus
Holly Corporation Growth / Shareholder Value Focus
Slide 30: Strategy / Growth Focus
Strategy / Growth Focus Grow refining businesses through acquisition (prudent & opportunistic growth) Commitment to process improvement Grow existing refining businesses Grow & enhance value of pipeline business
Slide 31: Contacts
Holly Corporation -- Contacts Holly Corporation 100 Crescent Court, Suite 1600 Dallas, Texas 75201 (214) 871-3555 Steve McDonnell (214) 871-3584 steve@hollycorp.com Neale Hickerson (214) 871-3572 neale@hollycorp.com
Slide 32: Definitions
Definitions Gross refining margin - Refining revenues less refining cost of products sold Pre-tax margin - Income before income taxes divided by sales and other revenues Return on assets - Net income divided by total assets Return on invested capital - New income divided by the sum of total stockhol
Slide 33: Definitions: EBITDA Reconciliation
Definitions Earnings Before Interest, Taxes, Depreciation and Amortization - Three and Nine Months Ended September 30, 2003 (in thousands) Net Income $17,550 $47,134 Add provision for income tax 11,104 29,343 Add interest expense 755 1,292 Subtract interest income (82) (385) Add depreciation & amort