Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — HollyFrontier — Investor Presentation (September 2019)
32 slides from Hf Sinclair's investor presentation, Sep 4, 2019
Slide 1: HollyFrontier Investor Presentation September 2019
HOLLYFRONTIER INVESTOR PRESENTATION September 2019
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 . 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: 15% Increase in Refining Capacity Since 2015
15% Increase in Refining Capacity Since 2015 Mid-Con Southwest Rockies CRUDE CHARGE CAPACITY CRUDE CHARGE CAPACITY CRUDE CHARGE CAPACITY Barrels Per Day Barrels Per Day Barrels Per Day 350,000 120,000 100,000 115,000 95,000 300,000 300,000 110,000 90,000 260,000 83,000 100,000 250,000 100,000 80,000
Slide 6: 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 2018 Average Crude Slate . 100% of HFC’s purchased crude barrels are “WTI” price based 4% 6% . Refinery location and configuration enables a fleet-wide cr
Slide 7: 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 Average $20 $15 $10.75 $11.42 $8.93 $10 $6.07 $5 $1.80 $2.17 $- Group 3 vs GC Chicago vs GC Denver vs GC Phoenix vs GC Salt Lake vs GC Las Vegas vs GC Regional ULSD Pr
Slide 8: 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 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 Barr
Slide 9: Holly Energy Partners Business Profile
Holly Energy Partners Business Profile Operate a system of petroleum product and Consistent Distribution Growth Despite crude pipelines, storage tanks, distribution Crude Price Volatility terminals and loading rack facilities located near HFC’s refining assets in high growth markets Distribution $/L
Slide 10: Ownership Structure
Ownership Structure IDR Simplification Provides Lower Cost of Capital for HEP 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 $1.7B Value2 45.8mm HEP units1 43% LP Interest $1.3B Valu
Slide 11: HEP Historical Growth
HEP Historical Growth Committed to Continuing Track Record of Increasing Distribution 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
Slide 12: HEP Avenues for Growth
HEP Avenues for Growth ORGANIC ACQUISITIONS DROPDOWNS FROM HFC . Leverage HEP’s existing . Pursue logistics assets in HEP’s . Partnering with HFC to build footprint, specifically in current geographic region and/or acquire new assets / Permian Basin businesses . Replace incumbent HFC service . Diese
Slide 13: 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 14: Our Product Portfolio Serves a Variety of Global 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 15: Operating Under a House of Brands Model
HF Lubricants & Specialty Products Operating Under a “House of Brands” Model 15
Slide 16: Diverse Suite of Products Supplied to Major Industrial and Consumer Brands
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 17: 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 HF LSP Pro Forma Margin Value $/bbl Product Slate by Volume Finished Lubricants & Greases Coproducts 19% Bas
Slide 18: Rack Forward EBITDA Margin Stability
Rack Forward EBITDA Margin Stability 2019 Rack Forward – EBITDA Margin1 Guidance2 EBITDA ($ in millions) EBITDA Margin % EBITDA 80 20% $240 – 260MM 17% 16% 16% 16% 13% EBITDA Margin 14% 60 14% 13% 15% 11-16% 13% 13% 12% 12% 12% 12% 10% 9% 40 9% 9% 10% 69 64 58 58 57 55 53 56 52 49 52 45 48 47 20 38
Slide 19: Sonneborn Transaction Overview
Sonneborn Transaction Overview Financial Details • $663mm final purchase price • $585mm purchase price net of approximately $78mm in working capital • Purchase was funded entirely with cash on hand • Immediately accretive to earnings and cash flow per share • Expect to capture ~$20mm in annual syner
Slide 20: Strategic Rationale: Downward Integration and Rack Forward Growth
Strategic Rationale Downward Integration and Rack Forward Growth Significantly increases Rack Forward Synergy estimate of $20mm annually earnings power • Significant savings in SG&A costs • Optimization of North American production facilities in Tulsa, • 100% of Sonneborn earnings attributable to Ra
Slide 21: 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 Rack Forward 10-13x Stable FPE GY, IOSP, KWR, NEU, VVV MLP 8-13x Stable DKL, MPLX, PBFX, PSXP Note: Multiple repre
Slide 22: HF Lubricants & Specialty Products Pro Forma Valuation
HF Lubricants & Specialty Products Pro Forma Valuation Rack Forward EBITDA Mid-Cycle EBITDA $285 ($ in millions) . EBITDA Margin 11-16% . Annual SG&A $170 - $180MM Target Multiple 11x . Annual DD&A $70 - $80MM Enterprise Value . Upside with Organic Growth and M&A $3,135 ($ in millions) Opportunities
Slide 23: Appendix
APPENDIX
Slide 24: Capital Allocation Strategy
Capital Allocation Strategy Disciplined Approach to Capital Allocation to Create Shareholder Value 2018A Cash from Ops $1.6B Non-Discretionary Share Repurchases Growth: $225mm Acquisitions Organic projects CashOperations From $375mm Regular Dividend Capital Discretionary Investments: Sustaining main
Slide 25: 2019 Guidance
2019 Guidance . Refining & Marketing 2019E Capex - $5.50 - $6.00 Opex/bbl Segment Allocation - Turnaround Schedule - Tulsa East – 1Q19 HEP 6% - Cheyenne – 4Q19 HF LSP R&M 8% 86% - El Dorado – 4Q19 - Capex $470 – $510 million . HF LSP - $275 – 300 million Rack Forward EBITDA - Capex $40 – $50 million
Slide 26: Strong Track Record of Cash Returns
Strong Track Record of Cash Returns Since the July 2011 merger HFC has returned approximately $5.4 billion, or approximately $32 per share1 to shareholders • Strong track record in returning excess cash to shareholders • Committed to maintaining competitive cash yield versus peers • Share repurchase
Slide 27: HollyFrontier Capital Structure
HollyFrontier Capital Structure HFC Consolidated Capital Structure HFC Standalone Capital Structure As of June 30, 2019 (US$ millions) As of June 30, 2019 (US$ millions) Cash and Short Term Marketable Securities $915 Cash and Short Term Marketable Securities $908 HOLLYFRONTIER CORPORATION HFC LONG T
Slide 28: HollyFrontier Credit Profile
HollyFrontier Credit Profile . Investment Grade Rating Peer Group Debt Metrics − 8/1/19 - S&P BBB- Debt Ratio % - Moody’s Baa3 50% - Fitch BBB- . $908 million cash as of 6/30/19 40% . $1 billion outstanding debt as of 6/30/19 - excludes non-recourse HEP debt 30% . Total debt to capital ratio 14% as
Slide 29: 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 30: HollyFrontier Index
HollyFrontier Index Please see p. 31 for disclaimer and www.HollyFrontier.com/investor-relations for most current version. 30 30
Slide 31: 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 32: HollyFrontier Corporation contact details
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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