Oct 28, 2026 earnings call — Strong quarter and lubes spin-off progress
Reported third quarter net income attributable to HF Sinclair shareholders of $2 billion, or $11.38 per diluted share.
Revenue $10.9B (est $8.9B) · EPS $11.75 (est $7.83)
Key quotes
"During the quarter, we returned $572 million in cash to shareholders consisting of $93 million in regular dividends and $479 million in share repurchases."
"We are targeting a completion of the spin and the finalization of the shutdown in the middle of next year."
"This phase would increase the capacity to move product supply from our Rockies production into Utah and Nevada by approximately 35 thousand barrels per day and is targeted to be online in 2029."
Analyst Q&A 8
CEO vision and crude differential
Q (Neil Mehta · Goldman Sachs and Company): Analyst asked Steven to explain his vision as new CEO and whether growing ratable cash flows via marketing and midstream is important. He also asked what is driving the WCS differential widening and what percent of their crude charge is WCS.
A: Management said they will invest to grow ratable, stable cash-flow businesses in midstream and marketing to make results more consistent through the cycle. They said they run a lot of heavy crude, are exposed to WCS, and see pressure from production outpacing egress and from expensive freight and trade-flow issues. They noted differentials have widened north of $25 up to $30 and expect them to moderate but stay wider at least through 2027.
"We believe that what makes us different is that we can continue to grow our, you know, our ratable and stable cash flow businesses that improve consistency over the cycle." — Steven C. Ledbetter (COO)
Refining margins and shareholder payout
Q (Manav Gupta): Analyst asked about refinery asset performance now and when margins might normalize. He also asked if the company will stick to its shareholder payout formula and return upside to shareholders.
A: Management said they do not know how long the strong margin environment will last and pointed to a roughly 4 million barrels a day of refining production offline as tightening clean-fuels supply. They said capture is improving and that capital allocation remains unchanged, and they expect to end the year at their target payout ratio of 50%.
"All that creates a major constraint in terms of clean fuels on the market, and the inventories are at all time lows." — Steven C. Ledbetter (COO)
Westline Connect FID and 2027 CapEx
Q (Theresa Chen · Barclays): Analyst asked what gates remain before FID on Westline Connect and whether follow-on phases or scope changes are likely. She also asked for early thoughts on 2027 capex size given Westline FID and other growth projects.
A: Management said they are careful on FID and have options on route and scope, so they pushed the FID target to Q1 2021 and remain bullish on the project. On 2027 capex they said it is too early to guide, that turnaround and sustaining spend stays range bound, and they will return to the market with incremental amounts as projects reach FID.
"we are pushing that FID target to Q1 2021." — Steven C. Ledbetter (COO)
Refinery reliability and SRE cash effect
Q (Wolfe): Analyst asked how much further refinery reliability and optimization work remains and the capital implications. He also asked how the $600 million SRE benefit actually shows up as cash — selling RINs, working capital swing, or other mechanism.
A: Management said they have invested heavily in reliability but will continue baseline turnaround and sustaining investments and will evaluate incremental projects against their capital framework. They explained the SRE reduced previously recognized expense but the incremental RINs or rents remain in inventory and have not been monetized because they can be used for next year's compliance. They said the SRE benefit appears in earnings but will not flow through the cash flow statement now and is viewed as a deferred cash obligation for future years.
"While you see the benefit come through in earnings, you will actually not see any of that benefit come through cash flow statement." — Vivek Garg (CFO)
Western Gateway rationale and funding
Q (Phillip Jungwirth · BMO): Analyst asked why the company took an equity stake in Western Gateway, how it benefits the firm and how it relates to Westline. He also asked whether capital commitments for Western Gateway will be funded from operating cash flow.
A: Management said the Western Gateway equity stake fits their Go West strategy and helps connect refineries to growing markets like the Southwest, and it grows ratable, stable cash flows while backstopping placement. They said Western Gateway does not compete with Westline and that they will fund the capital commitments from normal operating cash flows and cash on the balance sheet without drawing on credit facilities.
"As far as cash goes, we will fund that out of normal operating cash flows." — Steven C. Ledbetter (COO)
Renewable diesel and refining OpEx
Q (Matthew Blair · TPH): Analyst asked why renewable diesel profitability improved, whether Q3 included one-offs, and early thoughts on Q4 capture and feedstock lag. He also asked why refining OpEx rose and whether $7.25 per barrel remains a 2027 target.
A: Management said renewable diesel improved due to feedstock strategy (direct sourcing), market placement outside California, disciplined OpEx, and improving run rates; they did not give a formal capture guide for Q4 but plan to take advantage of market conditions. For OpEx they cited one-time environmental accrual true-ups, employee benefit charges, higher catalyst/chemical costs and targeted maintenance work; they would not commit to the $7.25 target but said underlying trajectory minus one-time items shows continued efficiency.
"We do not normally guide on capture, but we have plans to take advantage of the favorable market environment for next quarter or this quarter." — Steven C. Ledbetter (COO)
Lubes separation progress and Q3 strength
Q (Piper Sandler): Analyst asked how the lubes separation will proceed and what near-term steps to expect by January. He also asked about the drivers of the strong Q3 $174 million EBITDA performance.
A: Management said the separation remains on track for the second quarter of 27 or second half of 27 and they are moving from planning into execution, working on PLR, Form 10, leadership hires, IT lift-and-shift, and operating agreements aiming to be fully operational as a standalone by early Q3. On the lubes business they said the underlying business is healthy, noted FIFO tailwinds in Q3, stronger base oils markets, disciplined pricing and portfolio management, and new longer-term contracted business wins.
"The separation is still on track the second quarter of 27 or second half of 27." — Matthew Joyce
Lubes reorg, NewCo debt, and WCS run capacity
Q (Jason Gabelman · TD Cowen): Analyst asked how the lubes business will replace lost EBITDA after closing Mississauga and what debt level the spun company will carry. He also asked whether the company can invest to run more WCS heavy crude at its refineries.
A: Management said they are changing the supply model for lubes to stop manufacturing base oils, move to a more flexible supply model with lower fixed cost, and grow finished and specialties to offset Mississauga; they are not providing detailed standalone earnings guidance now. They said NewCo will launch with a strong, flexible, underlevered balance sheet and they do not plan to load it with debt. On WCS, they said the El Dorado back tower furnace upgrade will let them run up to another 10 thousand barrels a day of heavy crude and capture more discounted heavy barrels into their complex.
"it gives us the ability to run up to another 10 thousand barrels a day of heavy crude, and then we can take further advantage of that through our heavy oil value chain and our retail asphalt business." — Steven C. Ledbetter (COO)