Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — HollyFrontier — Investor Presentation (September 2020)
36 slides from Hf Sinclair's investor presentation, September 2020
Slide 1: HollyFrontier Investor Presentation September 2020
HOLLYFRONTIER INVESTOR PRESENTATION September 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 ri
Slide 3: Executive Summary
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
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 $20.06 $19.88 $3.00 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
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 $938.8M Value2 45.8mm HEP units1 43% LP Interest $708.2M Value2 HOLLY
Slide 15: 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 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
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
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
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 % 80 16% 20% 17% 16% 16% 16% 13% 13% 14% 14% 60 13% 15% 13% 13% 12% 12% 12% 12% 11% 10% 9% 9% 40 9% 10% 77 69 64 61 58 58 55 56 57 53 52 52 51 7% 48 47 49 45 20 38 40 5% 29 30 23 0 2 3 0% 1Q15
Slide 23: 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 MLP 6-9x Stable DKL, MPLX, PBFX, PSXP Rack Forward 10-13x Stable FPE GY, IOSP, KWR, NEU, VVV Note: Multiple repres
Slide 24: HF Lubricants & Specialty Products
HF Lubricants & Specialty Products Mid-Cycle Rack Forward EBITDA Mid-Cycle Rack Forward EBITDA ($ in millions) $265 Rack Forward Adjusted EBITDA Margin 11-16% Target Multiple 11x Annual SG&A $190 - $200MM Annual DD&A $80 - $90MM Enterprise Value ($ in millions) $2,915 Upside with Organic Gro
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: 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 29: 2020 Revised Guidance
2020 Revised Guidance Refining 2020E Capex - Capex $202 – $221 million Segment Allocation Lubricants & Specialties - Capex $30 – $45 million HEP 11% Renewables - Capex $150 – $180 million Turnarounds & Catalysts 17% Refining 36% Turnarounds & Catalysts - Capex $85 – $110 million - Turnaround
Slide 30: Strong Track Record of Cash Returns
Strong Track Record of Cash Returns • Strong track record in returning excess cash to shareholders • Committed to maintaining competitive cash yield versus peers • Share repurchase program funded by Free Cash Flow generation Regular Cash Yield1 Total Cash Yield2 % Yield % Yield 9% 15% 8.0% 7.4% 13.8
Slide 31: HollyFrontier Capital Structure
HollyFrontier Capital Structure HFC Consolidated Capital Structure HFC Standalone Capital Structure As of June 30, 2020 (US$ millions) As of June 30, 2020 (US$ millions) Cash and Short Term Marketable Securities $903 Cash and Short Term Marketable Securities $884 HOLLYFRONTIER CORPORATION HFC LONG T
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% $903 million cash as of 6/30/20 0% $1 billion outstanding debt as -5% of 6/30/20 2015 2016 2017 2018 2019 - excludes non-recourse HEP debt Standalone Peer Grou
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 34 www.HollyFrontier.com/investor-relations for most current 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
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
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