Earnings Call Transcript - DINO Q2 FY2025

Operator

Welcome to HF Sinclair Corporation's second quarter 2025 conference call and webcast. Posting the call today is Tim Goh, Chief Executive Officer of HF Sinclair. He is joined by Adniss Atanasov, Chief Financial Officer, Steve Ledbetter, EVP of Commercial, Valley of Pompa, EVP of Operations, and MetJoyce, SVP of Lubricants and Specialties. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question during that time, please press star and then one on your touch phone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. If you should require operator assistance, please press star zero. We ask that you limit your questions to one question and one follow-up. Additionally, we ask that you pick up your handset to allow optimal sound quality, and please note that this conference is being recorded. It is now my pleasure to turn the floor over to Craig Beery, Vice President, Investor Relations. Craig, you may now go ahead, please.

Craig Biery, Head of Investor Relations

Thank you, Ellie. Good morning, everyone, and welcome to HF Sinclair Corporation's second quarter 2025 earnings call. This morning, we issued a press release announcing results for the quarter ending June 30, 2025. 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, it says 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 security 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. 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 Tim.

Tim Go, CEO

Good morning, everyone. Thank you for joining our call. During the second quarter of 2025, we made strong progress against our strategic priorities to improve reliability, optimization, and integration. And I'm pleased to report we delivered sequential improvements over the last three quarters in our three key metrics, refining throughput, capture, and lower operating costs, allowing us to return $145 million to stockholders through dividend and share repurchases in the current period. Looking forward, we remain focused on advancing these priorities further, and with the majority of our turnarounds behind us in 2025, we believe we are well positioned to continue to execute our strategy and return excess cash to our shareholders. Now let me cover our segment highlights. In refining for the second quarter, we successfully completed the scheduled turnaround activities at our Tulsa and Parco refineries. We also delivered sequential quarter improvements in capture and crude throughput despite heavy maintenance, weaker crude differentials, and a rising RIN price environment. In addition, we achieved operating expense per throughput barrel of $7.32, showing significant progress again towards our near-term goal of $7.25 per barrel. Looking ahead, we have one remaining turnaround at our Puget Sound refinery scheduled to begin at the end of the third quarter. In renewables, we continue to deliver near-break-even EBITDA results in this tough economic environment as we continue to maximize our low CI feedstock mix while controlling our operating expenses. These results are indicative of how much we've improved our renewable diesel business, especially in light of the significant loss of BTC year over year. In the second quarter, we began to partially recognize some benefits from the producer's tax credit and expect to capture additional incremental BTC value in the third quarter. Our marketing segment delivered $25 million in EBITDA and achieved an adjusted gross margin of $0.10 per gallon, delivered by optimizing our business since Sinclair acquisition. We also grew our branded supplied stores by a net of 55 sites during the quarter and up a net 155 stores over the past 12 months. Both records for a quarter and for a trailing 12-month period and we have over 80 additional supplied branded sites signed and targeted to bring online over the next 6 to 12 months. In lubricants and specialties we reported $55 million in EBITDA, which includes a significant $20 million in FIFO headwinds due to falling feedstock prices. During the period, sales volumes and product mix were impacted by our Mississauga turnaround. However, we continued to execute our strategy of forward integrating our base oils into both finished and specialty businesses, most notably launching a Sinclair lubricants product offering in the United States. In our midstream business, we delivered $112 million in adjusted EBITDA as we benefited from higher pipeline revenues and lower operating costs from our focused integration efforts since the HEP buy-in. During the quarter, we returned $145 million in cash to shareholders consisting of $50 million in share repurchases and $95 million in regular dividends. Since the Sinclair acquisition in March 2022, we have returned over $4.2 billion in cash to shareholders and have reduced our share count by over 58 million shares. As of June 30, 2025, we had approximately $750 million remaining on our share repurchase authorization, and we remain committed to returning excess cash to shareholders while maintaining our investment-grade balance sheet. Also today, we announced that our Board of Directors declared a regular quarterly dividend of $0.50 per share, payable on September 4, 2025, to holders of record on August 21, 2025. Looking forward, we are encouraged by the continued strength in refining margins across our system, particularly in distillates. We believe our overall strategy is working and delivering visible, organic growth to our bottom line, both in refining and our non-refining segments. And we remain committed to executing our strategic priorities in order to continue to return cash to our shareholders. With that, let me turn the call over to Atlas.

Atanas Atanasov, CFO

Thank you, Tim, and good morning, everyone. Let's begin by reviewing H.F. Sinclair's financial highlights. Today, we reported second quarter net income attributable to H.F. Sinclair shareholders of $208 million, or $1.10 per diluted share. These results reflect special items that collectively decreased net income by $114 million. Excluding these items, adjusted net income for the second quarter was $322 million, or $1.70 per diluted share, compared to adjusted net income of $150 million, or $0.78 per diluted share, for the same period in 2024. Adjusted EBITDA for the second quarter was $665 million compared to $406 million in the second quarter of 2024. In our refining segment, second quarter adjusted EBITDA was $476 million compared to $187 million in the second quarter of 2024. This increase was principally driven by higher adjusted refinery growth margins in both the west and mid-com regions, partially offset by lower refined product sales volumes. Food oil charge averaged 616,000 barrels per day for the second quarter, compared to 635,000 barrels per day for the second quarter of 2024. This decrease was primarily a result of turnaround activities at our Tulsa and Parker refineries during the second quarter of 2025. In our renewable segment, we reported adjusted EBITDA of negative $2 million for the second quarter, excluding the lower cost of market inventory valuation adjustment benefit of $24 million compared to $2 million of adjusted EBITDA for the second quarter of 2024. Our second quarter of 2025 results were impacted by lower sales volumes and margins. During the quarter, we recognized partial benefit from the producer's tax credit. total sales volumes were 55 million gallons for the second quarter of 2025 compared to 64 million gallons for the second quarter of 2024. a marketing segment reported EBITDA of 25 million for the second quarter compared to 15 million for the second quarter of 2024. this increase was primarily driven by high margins and high grading our mix of stores in the second quarter of 2025. Our lubricants and specialty segment reported EBITDA of $55 million for the second quarter compared to EBITDA of $97 million for the second quarter of 2024. This decrease was primarily driven by lower base oil margins in addition to lower sales volumes as a result of turnaround activities at our Mississauga facility. During the second quarter of 2025, we recognized a FIFO charge of $20 million in the quarter versus a FIBO charge of $14 million in the same period last year. Our midstream segment reported adjusted EBITDA of $112 million in the second quarter compared to $110 million in the same period of last year. This increase was primarily driven by higher pipeline revenues and lower operating expenses, partially offset by lower volumes in the second quarter of 2025. Net cash provided by operations totaled $587 million in the second quarter, which included $179 million of turnaround spend. HF St. Clair capital expenditures totaled $111 million for the second quarter of 2025. As of June 30th, 2025, HF St. Clair's cash balance was $874 million. As of June 30th, we have $2.7 billion of debt outstanding with a debt-to-cap ratio of 22% or net debt-to-cap ratio of 15%. Let's go through some guidance items. with respect to capital spending for full year 2025 we still expect to spend approximately 775 million in sustaining capital including turnaround and catalysts this is down 25 million from 2024 and included a non-refining lubricants and specialties turnaround in the first half of 2025. in addition we expect to spend 100 million in growth capital investments and across our business segments. For the third quarter of 2025, we expect to run between 615 and 645,000 barrels per day of crude oil in our refining segment, which reflects the planned turnaround at our Puget Sound refinery. We're now ready to take questions from the audience.

Operator

We are now opening the floor for question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. We ask that you limit to one question and one follow-up. If you have additional questions, we welcome you to rejoin the queue. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. Thank you. Our first question comes from the line of Manav Gupta of UBS. Your line is now open.

Manav Gupta, Analyst — UBS

Hey, team. Very strong performance and refining. Captures across both refining systems very strong. just trying to understand is this a function of something which happened during the quarter or is it also somewhere I mean you took over Tim you had this policy that you want the most competitive refining system in the business is this also a function of you kind of getting there where now your capture rates are matching some of the best in the business so if you could help us understand the very strong capture rates in both regions. Hey Manav

Steve Ledbetter, Other

this is Steve Ledbetter thanks for the question and we are quite proud of the performance and capture sequentially as Tim mentioned quarter over quarter for the past three quarters you know despite what we saw in terms of headwinds as far as heavy diffs narrowing ans getting more expensive as well as the backwardation in the role we continued to improve our overall late in crude performance and that is really improving by creating flexibility of our crude slate and improving the mode of transportation how we get that crude into our systems and on our integrated midstream assets so it helps both ways i think larger than that you know we ran very well we produced and finished the products that we wanted our distillate production was up quarter over quarter over 10 000 barrels a day we're continuing to focus on premium and i think we're looking down the road and around the bend and we're putting barrels in the markets that we see are coming short and taking advantage of those arbs we're just getting better at this and making some substantial different changes in how we take more nimble and accurate decisions. And we see that continuing as we move forward.

Manav Gupta, Analyst — UBS

My follow-up quick here is, look, there were some buybacks and the quarter margins are stronger. If things stay where they are, should we expect you to probably increase the pace of buybacks? But also, you know, there are a number of bolt-on opportunities out there in terms of both lubes in marketing so how should we think about shareholder returns versus smaller bolt-on opportunities which historically you have done very well in acquiring stuff uh and how should we think about the balance between those two for the cash that you are generating

Atanas Atanasov, CFO

thanks manav this is a great question um we've reiterated our strong commitment to our shareholder returns as you can see this past quarter you know we're looking at eight nine percent if margins continue to be where they are we anticipate to continue to execute on that priority history is a good indicator of how we've done we've delivered historically double digit returns and we remain committed to that with respect to how do we balance between organic growth versus capital returns organic we believe we can achieve both successfully given the cash flow generations in the business and as we look at capital uh as we look at returns on organic projects those are highly accretive at 20 plus percent irs and multiples of around four times so we believe we can achieve both and uh and reward our shareholders with that success

Manav Gupta, Analyst — UBS

thank you so much and congrats on a very strong quarter thanks enough your next question comes

Operator

from the line of Ryan Todd of Piper Chandler. Your line is still open.

Ryan Todd, Analyst — Piper Sandler

Great. Thanks. Maybe a question for you on renewable diesel. How much, if any of the 45Z credits, were you able to accrue in the quarter? And how should we think about that pace changing going forward? And then maybe more broadly on the RD side, can margins continue to struggle to fight some positive steps on the regulatory front you know can you can you maybe talk about what uh we need to see change um for a more constructive macro backdrop there yeah ryan this

Steve Ledbetter, Other

is steve um so we we were able to begin recognizing ptc in second quarter not fully uh in the in the third quarter we've worked through a number of uh appropriate contractual rain arrangements that will allow us to begin recognizing even more of that. We're not coming in on the exact number, but we've worked through the complexity and difficulty of this legislation and think we have a path forward to where we can capture the most value possible out of the PTC. When you think about the overall structure of the proposed legislation, the impacts from 45Z and as well as rvo you know like everyone else we've been negatively impacted by the ptc versus the briar btc framework but we believe that this structure is supportive to our business relatively speaking you know we're 100 domestic feedstock driven for our production which gives us more qualified value both for lcfs as as well as the rim value the the ilup provision eliminations is helpful it's helpful to us as we do run some vegetable where it's advantaged in our certain markets you know the carve lcfs amendments now been passed that we should see that step up moving forward and then this large increase in the d4 rvo should be supportive to the entire renewable market structure as a whole however we do think that the ren and the lcf values are going to have to do further work to cover that structural gap between ptc and btc but we like our position as

Tim Go, CEO

this is currently structured. Yeah, and Ryan, this is Tim. I'll just echo what Steve went through here. You know, our strategy has always been to keep this renewable diesel business at, you know, break even if slightly positive in these, what we consider to be trough and bottom of cycle conditions. And you can see we've done a good job of that over the last year or two. And just waiting for really the market structure to improve. i do think as you pointed out that the market structure will improve as we look forward uh you know you saw the the carb uh group um roll out their uh their lcfs tightening and while the credits bank is still in excess it is starting to shrink and we expect the lcf prices to continue to to grow uh in in the price as the as the bank continues to whittle down You saw the RBO proposed numbers come out. Those numbers are very high, and we think the RINs prices have to go up as a result of those RBO numbers if those RBO numbers are finalized as they were proposed. So we do think the market structure itself of the renewable diesel business will continue to improve, and we think we're positioned well to take advantage of it. And then the last thing I'll just mention, Steve and Atnis both mentioned this in their remarks, but we only partially recognize PTC so far. We do think we're positioning our contracts and doing the work to be able to recognize more of the PTC in the third quarter, and we think that will also help our renewables of this piece of business.

Ryan Todd, Analyst — Piper Sandler

Thank you. Maybe one follow-up on the refiner, on the overall, but certainly the refining side. I think if you look at operational performance and the capital number in the quarter, despite some turnaround activity there, it seems like turnarounds, again, went very smoothly. Can you talk about how this fits into your efforts on operational improvement, where you think you are in the process of kind of getting refinery, reliability, operations, turnaround, et cetera?

Valerie Pompa, Other

Yeah, this is Valerie Pompa. Once we complete the turnarounds this year, we have completed all of one cycle, if you will, of the assets in the last five years. So, our turnaround performance, you know, we will have, I'll say, caught up on our turnarounds coming out of COVID, coming out of the acquisitions. So, we believe that we're positioned well going into the next five-year cycle around turnarounds. We have continued to improve our, you know, turnaround structure, how we execute in the field, and bringing in more and more technology to, you know, drive consistent performance. So, what you're seeing is, you know, the work and the strategy that we've put in place continuing to pay dividends in our reliability. And I think we're going to see that into the future.

Tim Go, CEO

Yeah, and Ryan, this is Tim. You know, we've said this before, maybe on the last call, I can't remember. But, you know, we think we're in the, call it the fifth inning of our operational excellence journey, having been through this first turnaround cycle that Val just mentioned. And you really are starting to see some of the inflection in the results that we're seeing. Reliability, much improved. You're seeing that in throughput. Capture, much improved. You're seeing that as we continue to optimize and integrate these businesses. It's no coincidence that it's been a couple years now since the Puget Sound, the Sinclair, and the HEP acquisitions, and the fruits of those labors are really starting to show up in the results now. You're seeing it in OPEX per barrel as we continue to show that improvement going forward, now getting close to our near-term target, and that's both a numerator and a denominator impact that you're seeing in that OPEX per barrel number. And then lastly, as you point out our capex is starting to uh show that as well we had a heavy turnaround in the second quarter uh as we as we showed but as we look into next year and we talked about this earlier we do think that our maintenance capital um takes a significant significant step change down and uh and you'll start to see that again in our capex guidance when we issue that uh at the end of the year but all of those all of those proof points that our strategy that we've been preaching on and have been uh talking about for the last uh year or two is really working and starting to

Operator

deliver uh bottom line results great thanks your next question comes from the line philip

Philip, Analyst — BMO

of fbmo your line is now open thanks good morning and lubricants uh beyond the plan turnaround and the FIFO headwind can can you talk about the margin trajectory for this business in the quarter uh how much of that that weakness was April driven and how are things how are you

Matt Joyce, Other

seeing things shape up so far in the third quarter hey Phil this is Matt Joyce thanks for the question yeah I think if we look at the the overall performance you're absolutely right FIFO headwinds and our planned turnaround at Mississauga which was safely completed but we did We did come into some weather and found some work there that caused us to just take a little bit longer to get back to where we wanted to be versus our scheduled plan. But the culmination of that, along with base oil margins, there was a big turnaround quarter for the industry, but what we saw is that group twos and group threes continue to be a bit long and we foresee that continuing to be the case into quarter three which has put some pressure on our base roles along the way and and if you look at the results um with that little bit less volume and and the product mix uh that has a lower profit margin profile it culminated in the results we saw for the lns business for the quarter yeah and phil i would just chime in

Tim Go, CEO

This is Tim. You know, a few years ago, you know, base oil tightness, a major turnaround, FIFO headwinds, that would have created some significant fluctuations in our quarterly results. And again, the work that Madness team has done to really smooth that out, stabilize the business. You see the fluctuations in the market just don't have nearly the same fluctuations that you see in our results now because of the integration work that the loops business has been able to do.

Philip, Analyst — BMO

Okay, great. And then I know you don't have direct exposure to California, but I was wondering if you had any thoughts on the proposed Senate Bill 237, more so on the Energy Commission and CARB engaging with Western states on a more uniform gasoline spec. maybe this doesn't have any traction but just wondering if you had any thoughts on potential market impact and how HF and clever navigate this yeah this is this is Steve I think it's an

Steve Ledbetter, Other

interesting one the proposals that are out there you know there's a lot of rumors and I know that there's been some things to get to a regional spec I don't know that that is going to be successful and ultimately if it is extended out from California's debase I don't think it's going to be good for supply and so ultimately I don't know that that's where it will land regardless of that I think our capability to go make the various grades and get into southern pad 5 are extended both from our Navajo refining complex as well as our Rockies complex and we have the ability to flex and take advantage of whatever the spec change may be at the time but my personal opinion is I don't know that that is going to to land in a regional spec that is more stringent than what

Tim Go, CEO

the current specs of the various regions are yeah and so i'll just chime into you know we'll we continue to watch um all the activities and all the changes that are occurring in california for sure but our strategy as we've talked about before is to continue to directly supply more carb and more carb components through our puget sound refinery which we are taking advantage of the project that we talked about over the last call uh to to be able to uh supply even more barrels to that region and then two to indirectly supply the neighboring states whether it be nevada whether it be arizona through our existing infrastructure and through our existing refineries in the west and as you can see from our results our west region is performing very well uh taking advantage of some of the opportunities that are presented there. And if you look at demand in general, the West diesel demand, quite honestly, is above five-year highs right now. And that's because of some of the dynamics we just talked about, and of course, renewable diesel production being down. And with that higher petroleum diesel demand that we're seeing in the West, we're able to take full advantage of that.

Philip, Analyst — BMO

Great, thanks.

Operator

This question comes from the line of Joe Leach of Morgan Stanley. Your line is now open.

Joe Leach, Analyst — Morgan Stanley

Hey, good morning, all. Thanks for taking my questions. So I wanted to start with the refining macro and your views on supply and demand here. Margin is approved in the second quarter and remains supported in July. How are you viewing the balances today from both a supply and demand perspective in the MidCon and Rockies?

Steve Ledbetter, Other

Yeah, Joe, this is Steve. i think from a macro perspective we would say you know the supply is more balanced than it was if you look at the supply same period uh personally last year it's actually down due to your utilization but overall in terms of the balance and the demand aspects we look at gas as relatively flat and our distillate demand as as being up and that's partially driven by some of the things Tim mentioned with lower RD and bioproduction and lower imported as well as the export economics on distillate and so that looks like that's a good story longer term as well as we're about to jump into the harvest season and then step right into a heating oil season so longer kind of through the year we see that diesel is going to be strong we're very bullish on that and gas will be uh trying to get to the end of the driving season and then tail off but we're roughly net balanced in our uh in our regions given current utilization and current demand patterns yeah and joe i would

Tim Go, CEO

just chime in this is tim that that that macro view has improved over the course of this year there was a lot of concern earlier in the year that uh capacity growth would out shine demand growth and really what we've seen play out over this year is that uh that uh that's not happening that demand growth is still ahead of if not just break even with capacity growth and that's favorable to uh refining uh perspectives and outlook and i would just say that you know if look longer term the the policies of this new administration are are also strengthening the outlook for for the refining industry the the CRA bill that basically are eliminated or reversed the ban on internal combustion engines in California the big beautiful bill that is taking away some of the artificial incentives for some of the EV vehicles, at least in my opinion. That's really creating more of a global landscape that's more favorable to our refining industry as well. So the factors that Steve just mentioned, I think, have support from just overall

Joe Leach, Analyst — Morgan Stanley

policy as well. Thanks, Tim. Thanks, Steve. That's helpful. And then on the crude side, Ed, there's several moving pieces between OPEC unwinds, Venezuela barrels coming back to the market, Canada wildfires, then Mexico oil production. I could just talk to what you're seeing from a light-heavy crude differential and availability standpoint currently as well as expectations going forward.

Steve Ledbetter, Other

Yeah, sure. Our view, obviously, where the differentials are quite a bit more narrow than we've experienced in the past, and that stemmed kind of mid last year for tmx coming online and those barrels supporting a stronger um or a narrow differential finding homes and in uh abroad what what we're seeing in terms of the forward curve you know we're still looking in q3 around a nine to ten dollar differential but with further strengthening out in q4 around 13. um and then i think longer term in the next sometime in 2026, we're seeing a potential diff widening. We haven't really seen the OPEC expansion do much in terms of support or widening those differentials yet. We think that longer term, it will coupled with the production outrunning egress in Canada. But we found and have been nimble in our ability to go get more and different prudes into our kit because we're We're connected to many hubs, and I think that's one of the underlying reasons we mentioned earlier about our improved late-end crude, specifically in the mid-con, with our ability to touch those different barrels. But, yeah, looking forward, it looks like we'll get some help in Q4, but not to the level that we've seen in the past couple of years before the TMX expansion.

Joe Leach, Analyst — Morgan Stanley

Great. That's helpful. Thanks for taking my questions.

Operator

Next question comes from the line of Neil Mehta of Goldman Sachs, Airlines.

Neil Mehta, Analyst — Goldman Sachs

I understand. Well, thank you. Yeah. Good morning, Tim. Would just love your updated perspective on M&A on the refining landscape. I think we all saw the Reuters reporting, which is speculative around Venetia, but just your perspective on the bar, how high is it for you to do M&A? You've done really good deals over the last five to six years. So do you think you have the license in the market to go out and do more bolt-on, less transformative, but bolt-on type of asset?

Tim Go, CEO

Yeah, good morning, Neil. As you know, we do not comment on market rumors, and those are market rumors in terms of what you saw in the past week or so. And I've already told you kind of what our focus is and our strategy is on the West and how we want to benefit and capture the opportunities that are out there. But in terms of M&A, you know, we have done well in the past on M&A. We typically work counter-cyclically and look for value in terms of refining inorganic opportunities. That hasn't changed, and we will continue to look for those opportunities on a value perspective. I would just say today that bid-ask spread is still very, very wide. And you don't see a lot of refining deals happening over the last few years, and I think that's a result of that refining bid-ask spread. So we'll continue to be open to those opportunities, but it has to be, as you pointed out, at the right value at the right time and be the right asset. And at this point, we haven't found anything that we think will actually improve our portfolio at the right price and at the right time. I will tell you that we do think there are better inorganic opportunities to bolt on in both our marketing and our lubes businesses right now. And so that's what we're continuing to look at. We do think that the opportunity is there. We're not looking for anything huge or transformational. We're looking for things that will bolt on and help us accelerate the organic strategy of growth that we've already got going, both in marketing and in lubes. And as we've talked about before, we're very pleased with the progress that we're making in both of those businesses. And to the extent that there is something out there that can help us accelerate that progress, we do think there's opportunities out there that we'll continue to look at.

Neil Mehta, Analyst — Goldman Sachs

Okay, that's really helpful, Tim. And then I just wanted to follow up on your comments around return of capital. I think the buyback was a little bit higher than most of us expected. in the quarter. The stock is still trading, even after the bounce here, below book value. Balance sheet's in pretty good shape. Is it fair to assume that you can kind of keep this run rate

Atanas Atanasov, CFO

up at the forward curve? And could there even be upsides? Neil, this is Antnis. Thanks for the follow-up question. Our goal is, again, to continue to meet and exceed expectations with respect to capital returns. We've got strong cash flow generation this quarter. As you can see, we you know we were not looking to hoard cash so we're we're returning it back uh back back to you

Tim Go, CEO

the shareholders yeah and you know like you know and as mentioned uh earlier in the call you know we've got a history of uh returning cash to our shareholders and i think that's what we can point to is is our history and our focus and our commitment to do that will continue you know uh I think I said this in my prepared remarks, but if you think about it, in terms of the 60 million of shares that we issued when we bought Sinclair, we have now bought back in 98% of those 60 million shares. And if you add back the shares that we issued as part of HEP, we have bought back a total of 72% of those total shares that we issued back then. so that's clearly you know one of our ways to to add shareholder value and and get cash back to our shareholders is to buy back those shares and we continue to be committed uh to doing that uh

Operator

with our excess cash thank you tim next question comes from the line of theresa chen of bar place

Theresa Chen, Analyst — Barclays

your line is now open good morning um i have a follow-up question um on the indirect exposure to pad five. Setting Puget aside for a minute, just given the visible capacity reduction in California, from your Navajo facility, in terms of the refined product placement, how much and how far west can you take that barrel? Is it largely to Phoenix? And then from SLC, how much space can you actually utilize on your UNF type line? Can you regularly use there since there are shippers on that line your neighboring slc refiners i imagine just wanted to understand how much can this realistically move the needle on capture in the west segment as these california facilities close over the next 12 months hey tracy this is steve i think you've

Steve Ledbetter, Other

hit on exactly one of our key what we believe is one of our key strategic advantages from our navajo complex we can take a good portion of our light products make there into the phoenix market that's that's as far as it goes out of the navajo refinery but out of the the rockies complex not only from our salt lake city which cross refinery but the other wyoming refineries we can take and optimize kind of upgrade barrels right through the valley up north and then south into Las Vegas. And we have ample space in terms of going and leveraging that integrated asset of UNEV, which we think provides a differentiation for us. And as you rightly call out, that continues to be a hunting ground that we look to go capture moving forward and all the market fundamentals and dynamics point to us being in a leading space there. So we'll look forward to capturing that as

Tim Go, CEO

it continues to play out and teresa i would just say that you know pipeline that steve mentioned you know we have spare capacity on that today but we also have you know opportunities to de-bottleneck that fairly simply and fairly straightforward when that time comes so we believe there's uh still plenty of opportunity there and yes we think it can be meaningfully

Theresa Chen, Analyst — Barclays

impactful to our west capture understood and on the um comment on inorganic opportunities in the marketing and LSP segments. Just curious how fragmented are the markets in your areas of specific interest, either by product or by region? How much realistic runway do you have on this inorganic strategy?

Steve Ledbetter, Other

Yeah, so we look to focus our branded put growth in the areas where we have logistic parity and can produce and get it on our midstream assets. That's where we have significant advantages. So you can imagine Pacific Northwest, you can imagine Southern Pad 5 in Vegas and the Rockies. When you think about, you know, fragmented market, there's larger players that are coming in, but there's still a lot to do in terms of, you know, 10 to 15 site chains that are looking to go simplify or have an exit route. And our brand brings something very strong in those markets. brand recognition and awareness right through the rockies into pad five is quite strong and it's something that is yet untapped so the fragmentation is an aspect but there's not been enough consolidation to take some of those opportunities off the table and we look to go take advantage of

Tim Go, CEO

some of that in our core markets and and i would just say teresa that you know the dino brand has has really been taking off here you can see that in our organic growth results both the record uh number of new stores we've added uh in the second quarter as well as under the last rolling 12 months and so we're very pleased with the organic pace of growth that we've got going on but as steve mentioned we do think there's even more opportunities to accelerate that through some inorganic opportunities which we'll continue to look at along the way you also asked about lube, so I'll ask Matt to comment on that. Yeah, Teresa, it's Matt here. You know, we have

Matt Joyce, Other

over 300 lubricant marketers and manufacturers in the United States, and those brands often have, and those businesses have often had a heritage and a long history of great products, solutions, and offerings that could be very complementary to our business. And so we mentioned it earlier. We're really focused on looking at those opportunities when they become known to us and then whether or not they can help us accelerate our growth into these higher value established markets or some new adjacencies that we don't participate in today. And in all cases, we're looking to use those to further develop our capabilities and competencies, whether that be through technology or supply chain, in different markets that allow for us to get better reach to our customers and to serve the markets where we believe that we can win.

Tim Go, CEO

Yeah, and, Teresa, we do think the loops and specialties industry is fairly fragmented still. We have been a consolidator in that industry when we put PetroCanada, Sonoboran, and Red Giant together, and we do think there are more opportunities to do that. But, you know, our strategy overall in lubes is to continue to grow that finished lubes put, to soak up our excess base oils, and to basically drive a multiple expansion in our lubes business as we continue to integrate that base oil and finished lubes business.

Theresa Chen, Analyst — Barclays

Thank you so much.

Operator

This one comes from the line of Doug Legas of Wolf Research. Your line is now open.

Doug Legas, Analyst — Wolfe Research

Hey, guys. I apologize for being a little late on. And you managed to clash with our cousins over in London. So thanks for taking my questions. Tim, I wonder if I could ask two related questions related to the renewables business. Frankly, you actually missed our refining number, but you really kicked our ass on the renewable diesel EBITDA this quarter. And I'm trying to understand how much of that is repeatable and put differently. Can you offer any kind of thoughts on what the sustainable EBITDA or the renewable diesel business could be, assuming the user's tax credit continues? The second part of my question, I'm going to roll it in, is related to SREs, because obviously you guys are exposed to that. And my understanding is that the comment period is due on the 8th of August. But if SREs are granted, that's presumably negative for RINs, which is presumably negative for renewable diesel. So I'm wondering if you can reconcile those two things, how you see the sustainable operating income or EBITDA for renewable diesel, and what your stance is on SREs. I'll leave it there.

Tim Go, CEO

Yeah, Doug, thanks for the question. And I know today was a busy day. so thank you guys for for running around and and participating in all these calls um i'm disappointed we missed your refining number but we'll do better next time but uh but it's a great question yeah it's very close on renewable diesel is my point yeah no i no i i'm just i'm just giving a hard time doug and uh we're very pleased with our refining results and uh but we do know there's always we have more room for improvement and we we do have our sights to continue to improve and our refining business and we think uh next quarter will be uh will show even that more improvement as we continue this journey if there are no further questions we

Operator

will now turn the call back over to tim for any closing remarks thank you ellie and before we

Tim Go, CEO

close i want to give a shout out to all of our employees who rolled up their sleeves and put on the rally caps this quarter to deliver these strong results refining throughput capture and operating costs are all trending in the right direction thanks to their hard work and dedication and our non-refining segments continue to shine with our marketing and midstream businesses on pace for another record performance this year all of these are indicators that our strategy is working. Looking ahead, we are constructive on the fundamentals of each of our businesses, including refining, and as always, our priorities remain the same. To improve our reliability, two, integrate and optimize our portfolio of assets, and three, return excess cash to our shareholders. Thank you for joining our call and have a great day.