HF Sinclair Corp Q1 FY2026 Earnings Call

Welcome to HF Sinclair Corporation's First Quarter 2026 Conference Call and Webcast. Hosting the call today is Franklin Myers, who is serving as Chief Executive Officer of HF Sinclair. He is joined by Vivek Garg, acting Chief Financial Officer; Steve Ledbetter, EVP of Commercial; Valerie Pompa, EVP of Operations; and Matt Joyce, SVP of Lubricants and Specialties. Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Craig Biery, Vice President, Investor Relations. Craig, you may begin.

Thank you, Matt. Good morning, everyone, and welcome to HF Sinclair Corporation's First Quarter 2026 Earnings Call. This morning, we issued a press release announcing results for the quarter ending March 31, 2026. If you would like a copy of the earnings press release, you may find it on our website at hfsinclair.com. Before we proceed with remarks, please note the safe harbor disclosure statement in today's press release. In summary, the statements made regarding management expectations, judgments or predictions are forward-looking statements. These statements are intended to be covered under the safe harbor provisions of federal securities laws. There are many factors that could cause results to differ from expectations, including those noted in our SEC filings. The call also may include discussion of non-GAAP measures. Please see the earnings press release for reconciliations to GAAP financial measures. For any forward-looking non-GAAP measures, the company is unable to provide a reconciliation without unreasonable effort due to the unpredictability and uncertainty of certain items. Also please note any time-sensitive information provided on today's call may no longer be accurate at the time of any webcast replay or rereading of the transcript. And with that, I'll turn the call over to Franklin.

Okay. Thank you, Craig. Let me add my welcome to all those on this call to HF Sinclair's first quarter earnings in 2026. First, let me express my gratitude to over 55,000 employees of the company for making the first quarter a good one. As most of you know, first quarter for HF Sinclair can sometimes be challenging due to weather and softness in the economic conditions in our markets. And typically, we have turnaround activities with some of our assets. This quarter, our operations ran safely, in compliance, and reliably, which you'll hear more about in a minute. This reflects the continuing improvement in our operation and is a testament to the focus on excellence by our employees. So thank you, employees of HF Sinclair. During the first quarter, our CEO and CFO both took leaves of absence as previously described in our annual report on Form 10-K. The Board has the task of addressing the future leadership of the company, and we'll do so with diligence and care. In the meantime, I will continue to serve as CEO and President until decisions in that regard are made. In reference to the ongoing Board process, we will not address those events in that process today. The current executive leadership team and the other employees of the company are committed to continuing the successful performance of the company, and it is performing at a very high level. Please keep in mind that much of the strategy of the company began in 2021 and 2022 with the acquisition of Puget Sound and the merger with Sinclair. My presence as CEO is to help maintain the focus and commitment to the strategy as set by the Board. I'll remind you that I've been Chairman through that entire time since 1990, and this is an ongoing process that we're pursuing with diligence. Our employees continue to work daily with the desire to operate at a high level to improve our company for the benefit of all constituencies. But before moving on to the reports of the others, we have to acknowledge the military conflict in the Middle East. Our thoughts and prayers go out to members of our Armed Forces involved, as those individuals are called up and placed in harm's way. We continue to hope for a peaceful resolution. The conflict, though, has created substantial and material disruption to crude oil and other necessary products and the broader markets around the world. This disruption creates volatility in the markets we serve. The company remains focused on addressing any challenges we have to serve our customers. In that regard, we remain very nimble as we see events occur because we see volatility in the markets that we've got to address on a constant basis, and it's one that's not without challenge within our industry or our company. But I believe our team is up to the challenge. And I think that we will see and continue to see as others have stress in the world as a result of this, and we've got to just address it to make sure we do our part to try to resolve that stress. With that, I'll turn it over to Steve to take us through some of the commercial issues.

Thank you, Franklin, and thank you all for joining our call. During the first quarter, we delivered strong results across each of our business segments, supported by safe and reliable operations and good commercial optimization. With our continued operational focus, we recorded an excellent safety quarter with no Tier 1 process safety events despite the heavy turnaround mode and harsher weather season. We are pleased with these results and remain committed to progressing our operational initiatives. Now let me cover our business highlights. In Refining, we completed two turnarounds at our Puget Sound and Woods Cross refineries. Despite the heavy turnaround activity and harsh winter weather we faced, we were pleased with our reliability performance, running crude charge at the upper end of our guided runs, coming in at 613,000 barrels per day. We do not have any planned turnaround scheduled until the El Dorado turnaround commences towards the back end of the third quarter. We are encouraged by the refining margin strength in our regions and believe that we are well positioned to capture the current market conditions as we head into the summer driving season. Our focus remains on our strategic initiatives and improving throughput, capture, and operating expenses. In our Marketing segment, we're making great progress with the integration of our previously announced Green Trail Fuels joint venture. We believe this joint venture will allow us to accelerate growth of the Sinclair brand and expand our footprint while growing the earnings of this business with exposure to other high-value adjacent revenue streams. We added 25 branded sites in the quarter with more than 100 sites with contracts signed and expected to come online over the next six to 12 months. We still expect to grow our number of branded sites by approximately 10% annually. In our Renewables segment, we were very pleased with our team's ability to optimize our business, both commercially and operationally, in order to capture the favorable market conditions in the period and deliver strong financial performance. Strong delivery of our feedstock strategy, molecule high-grading, and operational excellence have set our business up well to capture favorable market conditions. And we remain optimistic that the Low Carbon Fuel Standard, D4 RINs, and producers tax credits will continue to support the renewable diesel margins. In our Lubricant segment, we have experienced unprecedented cost inflation across our product portfolio both in magnitude and in the rate at which it occurred. In response, the team moved quickly to implement multiple pricing actions aimed at recovering these higher costs in an efficient and disciplined manner. We've seen early progress from these initiatives and fully expect to continue pursuing additional price recovery actions throughout the second quarter as elevated cost pressures persist. Despite the volatility in the broader global supply environment, our supply chain currently remains secure, and we have been able to source the necessary feedstocks to supply our customers at historical rates. During the quarter, we returned $167 million in cash to shareholders, consisting of $91 million in regular dividends and $76 million in share repurchases. Since the Sinclair acquisition in March 2022, we have returned over $4.9 billion in cash to shareholders and have reduced our share count by over 66 million shares. Today, we also announced that our Board of Directors declared a regular quarterly dividend of $0.50 per share, payable on June 2, 2026, to holders of record on May 11, 2026. On the strategic front, we continue to advance the evaluation and planning of our multiphase project to leverage our advantaged logistics and production positions in the Rockies to meet the growing needs of Western markets. At the end of our Q4 Puget Sound turnaround, we successfully brought on another project enabling flexibility to swing approximately 7,000 barrels per day between diesel and jet, depending on the market environment, and this is paying off given the current market conditions. We continue to advance the El Dorado vacuum furnace project to provide improved reliability and yield while allowing up to an incremental 10,000 barrels per day of heavy crude into the mix. This project is expected to come online as part of the fall turnaround. In closing, our strategic priorities have not changed. We will continue to work towards improved safety, reliability and cost efficiencies in refining and renewables and unlocking our integrated value chain while growing our marketing, midstream and lubricant segments. We expect the current favorable market environment to continue into the summer driving season, and we believe our diversified portfolio of assets is well positioned to generate strong cash flows. With that, let me turn the call over to Vivek.

Thank you, Steve. Good morning, everyone. I'm Vivek Garg, acting Chief Financial Officer, and I'm pleased to be on the call with you today. Let's begin by reviewing HF Sinclair's financial highlights. Today, we reported first quarter net income attributable to Sinclair shareholders of $648 million or $3.56 per diluted share. These results reflect special items that collectively increased net income by $521 million. Excluding these items, adjusted net income for the first quarter was $127 million, or $0.69 per diluted share compared to adjusted net loss of $50 million or a negative $0.27 per diluted share for the same period in 2025. Adjusted EBITDA for the first quarter was $426 million compared to $201 million in the first quarter of 2025. In our refining segment, excluding the lower of cost or market inventory valuation adjustment benefit of $604 million, first quarter adjusted EBITDA was $55 million compared to negative $8 million in the first quarter of 2025. This increase was principally driven by higher adjusted refinery gross margins in the West region and increased refined product sales volume, which were partially offset by lower adjusted refinery gross margins in the Mid-Con. A small refinery RINs waiver granted by the EPA in the fourth quarter of 2025 increased adjusted refinery gross margin by $21 million in the first quarter of 2026. Crude oil charge averaged 613,000 barrels per day for the first quarter compared to 606,000 barrels per day for the first quarter of 2025. In our Renewables segment, excluding the lower of cost or market inventory valuation adjustment benefit of $68 million, we reported adjusted EBITDA of $133 million for the first quarter compared to negative $17 million for the first quarter of 2025. This increase was principally driven by increased sales volume and higher adjusted renewable gross margins in the first quarter of 2026 as a result of the narrowing of the Boho spread, higher RINs prices and the recognition of significantly more producers tax credit benefits compared to the first quarter of 2025. First quarter results included prior year production producers tax credit benefits of $49 million that were recognized following the February 2026 proposed ruling by the United States Department of the Treasury and IRS. Total sales volumes were 52 million gallons for the first quarter of 2026 as compared to 44 million gallons for the first quarter of 2025. Our Marketing segment reported EBITDA of $28 million for the first quarter compared to $27 million for the first quarter of 2025. Total branded fuel sales volume were 325 million gallons for the first quarter of 2026 compared to 294 million gallons for the first quarter of 2025. Our Lubricants and Specialty segment reported adjusted EBITDA of $103 million for the first quarter compared to adjusted EBITDA of $85 million for the first quarter of 2025. The increase was primarily driven by a large FIFO benefit in the first quarter of 2026 as compared to the first quarter of 2025, partially offset by the dislocation between rising feedstock costs and product sales price increases. During the first quarter of 2026, we recognized a FIFO benefit of $53 million compared to $8 million in the first quarter of 2025. Our Midstream segment reported adjusted EBITDA of $111 million in the first quarter compared to $119 million in the same period of last year. This decrease was primarily driven by marginally higher operating costs resulting from a fuel contamination incident at one of our product terminals in Colorado in the first quarter of 2026. Net cash provided by operations totaled $457 million in the first quarter, which included $119 million of turnaround spend. HF Sinclair's capital expenditures totaled $102 million for the first quarter. As of March 31, 2026, HF Sinclair's total liquidity stood at approximately $3.15 billion, which includes a cash balance of approximately $1.15 billion and our undrawn $2 billion unsecured credit facility. As of March 31, we had $2.8 billion debt outstanding with a debt-to-capital ratio of 22% and net debt to capital ratio of 13%. Now let's go through some guidance items. With respect to capital spending for full year 2026, there has been no change. For the second quarter of 2026, we expect to run between 600,000 to 630,000 barrels per day of crude oil in our refining segment, which reflects planned maintenance activities at Parco and Navajo and unplanned maintenance at El Dorado in the period. We are now ready to take questions from the audience. Matt, if you could switch over, please.

The floor is now open for questions.

Your first question is from Matthew Blair with TPH.

Thank you, and good morning, everyone. Your renewables results were quite strong, even excluding the PTC benefit that rolled through. Could you talk about some of the drivers in Q1 that helped push up profitability? And then for the second quarter, what do you think is a good target for utilization? And would you expect even stronger margins, just given that some of the indicators have really moved up in the second quarter?

Matt, this is Steve. I'll take that one. We were quite pleased with the performance of our renewable diesel business. As we've been on this journey to make this business come into profitability, we've said we needed, in poor market conditions, to get us to breakeven or slightly positive. We achieved that coming out of 2025, and now the market has turned in our favor. I will tell you, though, that it's not all market driven as we've taken a very hard line on our feedstock strategy, and that's getting much closer direct to sources near our facilities and making sure that we're prompt and not hedging out into the future. So from a feedstock strategy, that's working very well. I would tell you the market placement strategy we've had is working where we're finding other markets to take products to and not be completely dependent on the California market. So we're finding ways to leverage our integrated value chain, both in the Pacific Northwest as well as putting product up into Canada. And then the last one is really OpEx discipline. That is ensuring that we've taken structural cost out. We have more of that to do, and we're seeing the results there and optimizing our catalyst to ensure that it performs on the longer runs, and we're getting the yields out of it. All of that combined with the overall market favorability, as you know, changed in 2026 to where we are structurally more balanced with domestic feedstock and domestic demand. I would say other helps to that is that just the distillate macro, in general, has found increased value in both the regular ULSD and the car market. So we're pleased with what we're doing. There's more to do there. And I think your second question was around our utilization in Q2. We're not going to guide specifics, but we do believe that we will optimize particular co-located units to the best value, and we see that being north of 70% utilization, net of all of the planned events that we have. So we're pretty excited about what our renewables business looks like now as well as for the rest of the year.

Sounds good. And then could you also address the lubricants market going forward? Are you seeing global supply reductions as a result of the Iran war and it looks like some of the pricing indicators have started to move up. And maybe you could just talk a little bit about your ability to capture potentially higher margins in lubricants going forward.

Yes. It's Matt Joyce. I'll take that one. We are seeing a really strong market move right now as we have experienced rapid cost increases throughout the back end of the first quarter. We do see that being a protracted movement into the second and third quarter. And based on our locations where we produce and how we source our raw materials, we have been able to secure all of the needed raw material supply for the balance of the year. We're able to be supplying our customers at the rates that they're requesting of us and we have seen some growing demand that we anticipate will be with us through the second and third quarters at least, as this crisis prolongs itself until shipping routes normalize. But we feel that we're in a really good position to take advantage of those dynamics. We've also implemented multiple pricing actions to offset those higher raw material costs and work to capture that on the bottom line. So we'll look to see that come into place later this year as well.

Your next question is from the line of Manav Gupta with UBS.

My question is specifically for Steve. Look, Steve, you have been working very hard for some time at DINO, bringing about change and we see that in the midstream results, we see that in the lubes results. I'm just trying to understand with this management shakeup, has anything changed from your end? Is the strategy the same you're following? And how are you going about building those two businesses as you were before the management shakeup took place?

Thanks. We're not going to comment necessarily on management change, but I think your point is a good one, and that is to reinforce the fact that the executive team that was here to build the strategy is still here and is executing diligently upon that. That includes making sure that we're improving and focusing on our reliability and our safety performance as well as leveraging the integrated value chain and growing those various segments. So you specifically asked about Midstream — we feel it is a key lynchpin to unlock that integrated value chain. We're bidding more value and molecules on our units to supply our refineries as well as take products to our regions. We've talked about our multiphase project to really unlock our Go West strategy, and we think that's just the tip of the spear here. I'll maybe ask Matt to talk a little bit about what we're doing from a lubricants perspective specifically.

Yes, Manav. As you know, we've continued to high-grade the molecules that we have on hand. We're moving into more specialized finished lubricants and specialties applications. We continue to execute on our plan of tucking in acquisition opportunities, like you've seen with Industrial Oils Unlimited over the past several months. We're going to look for those opportunities going forward and continue to refine the business and be that value-added supplier to our customers that delivers something that's distinct and sticky as far as the value proposition is concerned.

And Manav, let me add one thing. Part of the reason I'm here is to give the executive team the confidence to continue with the plan and making sure that they have the tools and the resources to continue with the actions that Steve and Matt mentioned. There is no let up on the focus of what we're trying to do here.

Perfect. My quick follow-up is a little bit on the refining macro. You saw some of the global majors report this morning with not such good earnings on international assets and then guiding down volumes on international assets. That's a function of crude availability. Now when we come to somebody like DINO, I'm assuming you're not fighting those issues that crude availability is not an issue for you. So you can run hard into the second and the third quarter. And if you could talk a little bit also about your strategic asset Puget Sound because a lot of shortages are happening in California, how can you use that asset to supply the market in California? Because your pipeline or competitor pipelines will take time. But in the near term, you can get to California through Puget Sound. So if you could talk about some of those dynamics?

Okay. Thanks, Manav. From a global perspective and a crude supply element, we don't face those challenges. As you know, the U.S. refinery complex is probably the most advantaged globally with the most secure crude supply outlets, and we're connected to multiple hubs and run various different grades of crude from Canada to the North Slope to many different types of domestic light sweet crudes at Cushing. We gather and buy our own crude in the Southwest and use that both at our Parco refinery and move some of that up into the Mid-Con to run at our El Dorado refinery. So from a crude supply perspective, some of the challenges that our competitors are facing, we do not face, relatively speaking. Now does it impact the overall price of the crude as it looks to compete in different markets? It certainly does. We've been successful in ensuring that we have a proper approach to buying that crude and that the cracks are supportive to whatever inflationary pressures are associated with the global dynamic. So we don't feel concerned about that relatively speaking to some of the other global issues and are in a good spot to go take advantage of our position. As far as Puget goes, as you mentioned, the West Coast and PADD 5 particularly has been considerably tight. It's getting tighter. We talked about our project to get there. And as you mentioned, it's a few years out. But you've seen imports reduce as Asian producers have had to curtail runs, and so that just continues to tighten the market. Our approach to get to California: we put in a flexibility project last year that allows us to produce and swell the gasoline pool to either make components or sell high-valued unfinished components, which, to this point, has been more profitable. So we're moving alkylate out of Puget into the gasoline pool in California. It's just one element. Further, as I mentioned in my prepared remarks, we put a project into swing diesel to jet depending on the market environment, and that's paying off greatly, not only to the West Coast, but also into markets in Latin America. So we see the West Coast as a real good opportunity. It's tightened up and we look forward to taking further advantage of that as we develop some of these projects.

And Manav, part of your question was you said run the assets hard. I want to make sure that you understand that we're going to run reliably and not push our assets — that's more important to us to make sure we're up as opposed to trying to unduly stress our assets to increase volumes.

No. My thing was are you running them close to — some of your peers globally are being forced to run assets at 40% and 50% because of crude availability. That was my question.

Yes. That is not the case.

Your next question is from the line of Neil Mehta with Goldman Sachs.

I just want to build on Manav's question around crude and specifically around two grades — Brent-TI has seen enormous volatility here. So how are you guys thinking about the setup for that spread in particular? And then WCS, the outlook as we think about the second quarter, but also the balance of the year. And then Franklin, I had a management question for you as a follow-up.

All right. So this is Steve. I'll take the first one. What we've seen is, yes, the Brent-TI spread is widening given the geopolitical elements. In Q1, we saw quite a bit higher than $5, and we think that that will probably continue to be the case, but the curve on Brent-TI basically remains very steeply backward dated. As things change through this geopolitical event, that curve moves, and so it flattens out. But we are in a position to manage the impact as far as the spread goes from a Brent-TI perspective. I think the backwardation is something that we're watching very closely. As you know, we pay a role in separation, and that will impact our crude economics, but we're managing that carefully to get into the right markets to ensure we can get the margin coverage for that increased cost. You asked about WCS. I think WCS has been a bit better. Some of the pipelines coming out of Canada have shown some apportionment — and I think ultimately egress will become a problem. I think some of that is also competing with the Venezuelan crude that is now on the market, and that will keep some supply in place, but we see that from Q1 to Q2 we're looking at a $14-ish spread. Remember, we have connected pipe space right out of Hardisty all the way into our assets in the Mid-Con, and we take advantage of that. But it will depend on what happens longer term as you've seen recently, the presidential permit signed. So there are multiple projects being contemplated to bring additional crude out of Canada either for domestic use or export. And so as that happens, that could force some pressure on the differentials longer term. But there's a lot of time and many things can happen on what project goes or what doesn't. We're evaluating all of them, and I think we're in a really good position to take advantage of our heavy oil value chain at multiple sites.

That's really clear. Franklin, I had a management question for you as a follow-up. How are you thinking about the process by which the Board will define the permanent CEO and CFO? I know there's sensitivity around this and I don't want to litigate the past, but just how is the Board approaching this? What are the characteristics you're looking for in a long-term leader? Are you looking internally, externally? Anything you can provide the market would be great.

I appreciate your question. We're not going to get into that. We do have a process ongoing. When we're in a position to share that, we will. Let me just make a comment quickly on our Board. We have a very experienced, very high-functioning board that I have been in communication with regularly about this very question and so when we've got something, we'll tell you. In the meantime, let me assure you, and some of you don't know my background, I spent 21 years in the C-suite at two different S&P 500 companies at all different levels. I'm not a paper CEO with this group. They know I'm here every day, making sure it's going forward. So I don't know that that reassures you, but the strategy we put in, we're executing on, and there's no let up. The process will go forward and we will find an excellent leader for this company in due course and we're not going to stall on it. We are looking at it very seriously.

Your next question is from the line of Joe Laetsch with Morgan Stanley.

So I wanted to go back to the macro and just given where product prices are today, can you talk about the demand trends that you're seeing within your system? Are you seeing any signs of demand destruction on gasoline or diesel? And then maybe stepping back more broadly, how are you viewing the balances today from both the supply and demand perspective in the Mid-Con and the Rockies?

All right. I'll take that one, Joe. As far as demand goes, what we saw in the U.S. for the quarter, U.S. gasoline demand was down around 2%, but distillate was up around 4% in our regions that we operate in. Gasoline in our regions was slightly up and diesel was also up. I'll tell you that when we look at price elasticity, through our service centers, we're down year-over-year same-store sales around 2%, but that's against the backdrop that you'll see in some consultants' reports showing broader declines of about 4.5%. So our portfolio high-grading is working, and we're outperforming the market there. We have started to see some cuts in terms of travel, particularly as jet continues to price up. As you know, the global dimension is a heavy distillate supply shortage. Distillate and jet were low and they're getting lower. And most of the disruption in the Middle East affects heavy distillate producers. So on that backdrop, it paints a favorable margin picture, but it also creates some concern on what permanent demand structure disruption may actually happen. So we're watching that very closely. It's still a bit too early to tell, but we are seeing some slight softness as we head into the driving season as people make spending decisions, and we'll just see how that plays out. I do believe a prompt resolution is going to be more beneficial for the global energy complex than a lingering one. As for the Mid-Con, we had a winter storm in Q1 which put a pin in the demand picture and created a massive supply glut. Prices were quite low, which led to rationalizing crude runs and economic sparing in the Mid-Con as it got toward the latter part of March. What we're seeing in Q2 is that inventory picture is really tightening up. U.S. exports of clean product hit a record, so products are moving into the Gulf to supply regions where inventories are very low. The Rockies is a little bit of a different story — relatively balanced to tight. We have a light planned maintenance schedule across the U.S. between Q2 and Q3, so any meter disruption will further create whipsaws in product supply and demand balances. So it's a pretty tight situation and we look forward to the strength of the Mid-Con and the Rockies and our regions for the balance of the year.

Steve, that's helpful. And then following up on your comments on marketing. That segment continues to string together some pretty nice quarters. Could you just talk about some of the outperformance during 1Q and how you see the segment shaping up for the rest of the year?

Yes. Our marketing business, as we've talked about, is one of the untapped values of the Sinclair acquisition — leveraging that brand and its strength. We had another good quarter with about $28 million of EBITDA. We brought on another set of sites. The value associated with that brand is in getting the full share of what the brand should command. We're growing volume — volume grew year-over-year over 10%, which is good. We're high-grading the portfolio. We're beating same-store sales versus the market. So we're taking the portfolio approach of getting to the right areas and maybe pulling some assets that don't fit with our overall brand promise. There's growth in our licensed businesses. The Green Trails JV is just the first step of where we think that's truly going to accelerate our growth in the brand. The adjacencies of higher-valued revenue streams are exciting. So it's really just blocking and tackling and being very purposeful about where we're strategically placing our bets, and we see more upside as we move forward. Our marketing business is becoming a material business to the company.

And everybody loves the green dinosaur. It's a great brand. You need to join.

Your next question is from the line of Phillip Jungwirth with BMO.

I did want to ask about the Bridger Pipeline expansion, which you referenced earlier with the approval news yesterday. This goes right down to Guernsey; assuming this gets built, how and when would you expect this to change feedstock sourcing for your refineries or impact crude differentials? And separately, anything to note on market impact from the double-edge conversion from crude to NGL follows a similar route? Also, you did repurchase some shares in the quarter. How are you thinking about capital returns going forward until you have more permanent leadership in place? Should we stick with the historical framework? And how tactical do you plan to be, given the strength in equities here in the second quarter?

Yes, I'll talk a little bit about the Bridger pipeline. Bringing more crude into Guernsey will allow more flexibility into the hub. Whether it goes or not, and to what level, we don't know, and so we're not going to speculate on that. One thing we've been focused on in terms of our crude slate flexibility is widening the crude basket, which allows us to take advantage of dislocated crudes when they present themselves. As you know, we're connected to the hub that connects our Rockies into the Mid-Con. To the extent we see market opportunity, we'll evaluate whether to participate. We think we're in a good position because of the flexibility we've put into place to widen our crude basket as well as our connectivity. On the conversion from crude to NGLs, I don't know that it has a relevant impact on our specific crude supply set — it's something to watch for overall market differentials. We'll just have to see when contemplating other projects coming online; I don't think it's a material impact to us either way.

Yes, that's a good question. In terms of our share repurchases, we'll continue to execute on our capital allocation strategy. We'll opportunistically repurchase shares under our 2024 share repurchase program. We don't typically guide on the pace or the amount of buybacks. But as we've always shared, we'll continue to execute on our capital allocation strategy, which is driven by free cash flow, balanced capital allocation, and returning capital to shareholders.

Your next question is from the line of Doug Leggate with Wolfe Research.

Two things, if you don't mind. First, on small refinery exemptions, the RVO is expected to be confirmed in the next several weeks. Given where RINs are currently, what might that mean for you guys? Is there any way to quantify that and expectations of duration, at least through the current administration? And then my follow-up is on product swings. In your backyard gasoline has started to get better and the whole slate appears to be getting better. Jet fuel has obviously been extraordinary. What kind of flex do you have to move toward the advantaged products today? And what does that look like in terms of incremental yield?

Doug, this is Steve. From an SRE perspective and the RVO being finalized, what is our viewpoint? You've seen RINs rise to unprecedented records this year. We believe the RVO is becoming an extreme burden. It's now projected to be, in aggregate, a very material cost. We don't know that the latest RVO is helpful to energy costs for either the industry or the consumer. The SRE was contemplated as part of the original Renewable Fuel Standard for a reason — to help smaller refineries who are disproportionately affected. We believe in that program. We're not going to speculate on value, but we have petitions out currently for five of our refineries that we think qualify under the contemplated plan. We're not going to talk about value necessarily, but we do believe that it could be material relief to the burden we're facing. How long this thing goes and the duration — there's considerable debate associated with the framework and shape of the program moving forward, but we're actively involved and our interest will be measured and part of the discussion on the solution. As far as product swings, yes, we mentioned the Puget Sound project to be able to move and swing between distillate and jet and both of those products are quite strong. The difference between jet and distillate on the West Coast has been very strong. We have the ability to swing anywhere from roughly 10% between gasoline and distillate across the fleet, and we're in a max distillate mode now. Having said that, we also believe that our value chain will allow us to run heavier oil and serve our retail asphalt business, which enhances overall margin production. We're trying to ensure that we're at the top end of those yield curves and running as much premium product as we can. So we have the ability to flex toward distillate and jet at present, but we're watching it carefully.

Your next question is from the line of Jason Gabelman with TD Cowen.

Franklin, you mentioned running your refineries responsibly, which is prudent given the margin environment. In the past, DINO has talked about unlocking incremental capacity within the system that would be worth an additional refinery in terms of size. Is that still an aspiration for the company? Or is the 600,000 to 630,000 barrel-per-day range kind of the upper end of where you expect to run?

We have had recent and active conversations about reinvestment into some of our assets to try to increase throughput over time, not immediately. It is something where we need to think about the sustainability of DINO. We have to look at these assets and understand what our markets demand today and what they will demand in the future. As we look at that, and we have free cash flow, some goes back to shareholders, but some will need to be reinvested not just for maintenance but for improving the complex of our assets. So yes, the Board will take that up. In fact, it's an item we're going to take up here as we look at the long-term planning. Now I don't want to be held to a specific volume — where we get to will depend on a lot of planning — but if there is opportunity to increase capacity, we believe there is potential.

Maybe just a follow-on to that. From an overall value perspective, we launched a few business improvement programs. Our key imperatives are to improve reliability and our HSS performance. We're seeing that quarter-over-quarter, so we're starting to see the green shoots, and we're starting to see the value of the integrated value chain. Some of the projects we've invested in — like the Puget Sound flexibility project and the back tower project at El Dorado — are going to improve yield as well as capture in terms of generating more value for the same throughput. Crude flexibility and other optimizations we've talked about in the past — we believe there's value to be had there, and we're starting to see some benefits.

Great. My follow-up is just on M&A or A&D. The Renewables segment certainly had a strong quarter and the margin environment is more constructive. You've seen peers sell down stakes of their renewable diesel businesses. Is that something you could see doing in the future? And then more broadly, any comments on M&A in the refining landscape would be welcomed as well.

Sure. As a management team and as a Board, we're charged with looking at the allocation of capital to the assets that we have and determining which ones pay back the best and leaning into those while allowing mature assets to generate cash flow. We act opportunistically. Looking back, when we did the acquisitions of Puget Sound and Sinclair and later made moves on midstream and other tuck-ins, those decisions were deliberate to create an integrated value chain. We've returned $4.9 billion to shareholders and our market cap today is roughly $12 billion; our share price has roughly doubled over the period. We compare favorably to many mid-cap energy investments. We've leaned into marketing, which Steve indicated we've been growing, and we've leaned into renewables when the weak players exited during weak markets. We're not going to be knee-jerk just because we had one good quarter. We've waited through the hard times; now we can harvest these good times. In midstream, we felt the need for tighter management and we'll evaluate initiatives there. We've done tuck-in acquisitions in both marketing and lubes and we'll continue to lean into where we see opportunity and value with our free cash flow. We see bright days ahead for the Sinclair franchise. The brand is an affinity brand our employees are proud of and it contributes meaningfully to the company.

No, I think that concludes our call for today.

Thank you all for being part of our call.

This concludes today's call. Thank you for attending. You may now disconnect.