UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________________

FORM 10-Q

_________________________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from    __________   to   ____________         

Commission File Number 001-41325

_________________________________________________________________

HF SINCLAIR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	87-2092143
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2828 N. Harwood, Suite 1300
Dallas, Texas	75201
(Address of principal executive offices)	(Zip Code)

(214) 871-3555

(Registrant’s telephone number, including area code)

_________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $0.01 par value	DINO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No  ☒

190,816,714 shares of Common Stock, par value $0.01 per share, were outstanding on July 29, 2024.

HF SINCLAIR CORPORATION

INDEX

	Page
Forward-Looking Statements	3
Definitions	5
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 2024 (Unaudited) and December 31, 2023	6
Consolidated Statements of Income (Unaudited)
Three and Six Months Ended June 30, 2024 and 2023	7
Consolidated Statements of Comprehensive Income (Unaudited)
Three and Six Months Ended June 30, 2024 and 2023	8
Consolidated Statements of Cash Flows (Unaudited)
Three and Six Months Ended June 30, 2024 and 2023	9
Consolidated Statements of Equity (Unaudited)
Three and Six Months Ended June 30, 2024 and 2023	10
Notes to Consolidated Financial Statements (Unaudited)	12
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3. Quantitative and Qualitative Disclosures About Market Risk	51
Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles	51
Item 4. Controls and Procedures	55
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	56
Item 1A. Risk Factors	57
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 5. Other Information	58
Item 6. Exhibits	59
Signatures	60

2

FORWARD-LOOKING STATEMENTS

References herein to HF Sinclair Corporation (“HF Sinclair”) include HF Sinclair and its consolidated subsidiaries. In this document, the words “we,” “our,” “ours” and “us” refer only to HF Sinclair and its consolidated subsidiaries or to HF Sinclair or an individual subsidiary and not to any other person, with certain exceptions. References herein to Holly Energy Partners, L.P. (“HEP”) with respect to time periods prior to completion of the merger of HEP with a wholly owned subsidiary of HF Sinclair on December 1, 2023 refer to HEP and its consolidated subsidiaries.

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, including, but not limited to, those under “Results of Operations,” “Liquidity and Capital Resources” and “Risk Management” in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and those in Part II, Item 1 “Legal Proceedings” are forward-looking statements. Forward-looking statements use words such as “anticipate,” “project,” “will,” “expect,” “plan,” “goal,” “forecast,” “strategy,” “intend,” “should,” “would,” “could,” “believe,” “may,” and similar expressions and statements regarding our plans and objectives for future operations. These statements are based on management’s beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties. All statements concerning our expectations for future results of operations are based on forecasts for our existing operations and do not include the potential impact of any future acquisitions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove to be correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in these statements. Any differences could be caused by a number of factors including, but not limited to:

•the demand for and supply of feedstocks, crude oil and refined products, including uncertainty regarding the increasing societal expectations that companies address climate change and greenhouse gas emissions;

•risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products or lubricant and specialty products in our markets;

•the spread between market prices for refined products and market prices for crude oil;

•the possibility of constraints on the transportation of refined products or lubricant and specialty products;

•the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, whether due to reductions in demand, accidents, unexpected leaks or spills, unscheduled shutdowns, infection in the workforce, weather events, global health events, civil unrest, expropriation of assets, and other economic, diplomatic, legislative, or political events or developments, terrorism, cyberattacks, vandalism or other catastrophes or disruptions affecting our operations, production facilities, machinery, pipelines and other logistics assets, equipment, or information systems, or any of the foregoing of our suppliers, customers, or third-party providers, and any potential asset impairments resulting from, or the failure to have adequate insurance coverage for or receive insurance recoveries from, such actions;

•the effects of current and/or future governmental and environmental regulations and policies, including compliance with existing, new and changing environmental, health and safety laws and regulations, related reporting requirements and pipeline integrity programs;

•the availability and cost of our financing;

•the effectiveness of our capital investments and marketing strategies;

•our efficiency in carrying out and consummating construction projects, including our ability to complete announced capital projects on time and within capital guidance;

•our ability to timely obtain or maintain permits, including those necessary for operations or capital projects;

•our ability to acquire complementary assets or businesses to our existing assets and businesses on acceptable terms and to integrate any existing or future acquired operations and realize the expected synergies of any such transaction on the expected timeline;

•the possibility of vandalism or other disruptive activity, or terrorist or cyberattacks, and the consequences of any such activities or attacks;

•uncertainty regarding the effects and duration of global hostilities, including shipping disruptions in the Red Sea, the Israel-Gaza conflict, the Russia-Ukraine war, and any associated military campaigns which may disrupt crude oil supplies and markets for our refined products and create instability in the financial markets that could restrict our ability to raise capital;

3

•general economic conditions, including economic slowdowns caused by a local or national recession or other adverse economic condition, such as periods of increased or prolonged inflation;

•limitations on our ability to make future dividend payments or effectuate share repurchases due to market conditions and corporate, tax, regulatory and other considerations; and

•other business, financial, operational and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings.

Cautionary statements identifying important factors that could cause actual results to differ materially from our expectations are set forth in this Quarterly Report on Form 10-Q, including without limitation the forward-looking statements that are referred to above. You should not put any undue reliance on any forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth under the heading “Risk Factors” included in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2023, and the discussion in this Quarterly Report on Form 10-Q in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Outlook” and “Liquidity and Capital Resources.” All forward-looking statements included in this Quarterly Report on Form 10-Q and all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

4

DEFINITIONS

Within this report, the following terms have these specific meanings:

“Adjusted refinery gross margin” means the difference between average net sales price and average cost per barrel sold. This calculation does not include the associated lower of cost or market inventory valuation adjustment, operating expenses, or depreciation and amortization costs.

“BPD” means the number of barrels per calendar day of crude oil or petroleum products.

“BPSD” means the number of barrels per stream day (barrels of capacity in a 24 hour period) of crude oil or petroleum products.

“Base oil” is a lubricant grade oil initially produced from refining crude oil or through chemical synthesis that is used in producing lubricant products such as lubricating greases, motor oil and metal processing fluids.

“Black wax crude oil” is a low sulfur, low gravity crude oil produced in the Uintah Basin in Eastern Utah that has certain characteristics that require specific facilities to transport, store and refine into transportation fuels.

“LPG” means liquid petroleum gases.

“Lubricant” or “lube” means a solvent neutral paraffinic product used in commercial heavy duty engine oils, passenger car oils and specialty products for industrial applications such as heat transfer, metalworking, rubber and other general process oil.

“MMBTU” means one million British thermal units.

“Renewable diesel” means a diesel fuel derived from renewable feedstock such as vegetable oil or animal fats that is produced through various processes, most commonly through hydrotreating, reacting the feedstock with hydrogen under temperatures and pressure in the presence of a catalyst.

“RINs” means renewable identification numbers and refers to serial numbers assigned to credits generated from renewable fuel production under the Environmental Protection Agency’s Renewable Fuel Standard regulations, which require blending renewable fuels into the nation’s fuel supply. In lieu of blending, refiners may purchase these transferable credits in order to comply with the regulations.

“Sour crude oil” means crude oil containing quantities of sulfur greater than 0.4 percent by weight, while “sweet crude oil” means crude oil containing quantities of sulfur equal to or less than 0.4 percent by weight.

“White oil” is an extremely pure, highly-refined petroleum product that has a wide variety of applications ranging from pharmaceutical to cosmetic products.

“WTI” means West Texas Intermediate and is a grade of crude oil used as a common benchmark in oil pricing. WTI is a sweet crude oil and has a relatively low density.

5

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HF SINCLAIR CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	June 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	866,274	$	1,353,747
Accounts receivable: Product and transportation	1,498,341		1,527,950
Crude oil resales	164,274		197,169
	1,662,615		1,725,119
Inventories: Crude oil and refined products	2,883,656		2,645,724
Materials, supplies and other	276,502		276,107
	3,160,158		2,921,831
Income taxes receivable	54,274		56,528
Prepayments and other	99,695		89,229
Total current assets	5,843,016		6,146,454
Properties, plants and equipment, at cost	10,686,564		10,533,432
Less: accumulated depreciation	(4,135,103)		(3,906,600)
	6,551,461		6,626,832
Operating lease right-of-use assets	370,822		348,006
Other assets: Turnaround costs	676,037		644,957
Goodwill	2,977,432		2,977,744
Intangibles and other	962,994		972,272
	4,616,463		4,594,973
Total assets	$	17,381,762	$	17,716,265
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,172,130	$	2,205,759
Income taxes payable	16,291		8,772
Operating lease liabilities	88,933		106,973
Accrued liabilities	482,079		453,045
Total current liabilities	2,759,433		2,774,549
Long-term debt, net	2,635,719		2,739,083
Noncurrent operating lease liabilities	304,357		249,479
Deferred income taxes	1,301,423		1,297,130
Other long-term liabilities	423,716		418,726
Total liabilities	7,424,648		7,478,967
Commitments and Contingencies (see Note 13)
Equity:
HF Sinclair stockholders’ equity:
Preferred stock, $1.00 par value – 5,000,000 shares authorized; none issued	—		—
Common stock $0.01 par value – 320,000,000 shares authorized; 223,231,546 shares issued as of June 30, 2024 and December 31, 2023, respectively	2,232		2,232
Additional capital	5,996,600		5,993,661
Retained earnings	5,650,373		5,379,182
Accumulated other comprehensive loss	(27,313)		(11,784)
Common stock held in treasury, at cost – 32,416,171 and 23,235,599 shares as of June 30, 2024 and December 31, 2023, respectively	(1,731,960)		(1,194,201)
Total HF Sinclair stockholders’ equity	9,889,932		10,169,090
Noncontrolling interest	67,182		68,208
Total equity	9,957,114		10,237,298
Total liabilities and equity	$	17,381,762	$	17,716,265

See accompanying notes.

6

HF SINCLAIR CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Sales and other revenues	$	7,845,831	$	7,833,646	$	14,872,976	$	15,398,788
Operating costs and expenses:
Cost of sales (exclusive of depreciation and amortization):
Cost of materials and other (exclusive of lower of cost or market inventory valuation adjustment)	6,750,525		6,273,605		12,677,025		12,377,662
Lower of cost or market inventory valuation adjustment	(3,123)		(7,863)		(222,493)		39,734
Operating expenses (exclusive of depreciation and amortization)	591,317		546,800		1,198,429		1,186,183
	7,338,719		6,812,542		13,652,961		13,603,579
Selling, general and administrative expenses (exclusive of depreciation and amortization)	104,858		127,388		208,232		223,301
Depreciation and amortization	205,320		189,360		404,049		363,343
Total operating costs and expenses	7,648,897		7,129,290		14,265,242		14,190,223
Income from operations	196,934		704,356		607,734		1,208,565
Other income (expense):
Earnings of equity method investments	8,115		3,545		15,461		7,427
Interest income	18,495		17,591		40,674		37,526
Interest expense	(45,449)		(46,982)		(86,140)		(92,804)
Gain (loss) on foreign currency transactions	(369)		748		74		1,618
Gain (loss) on sale of assets and other	(264)		1,152		1,755		2,783
	(19,472)		(23,946)		(28,176)		(43,450)
Income before income taxes:	177,462		680,410		579,558		1,165,115
Income tax expense:
Current	28,166		100,429		98,871		184,824
Deferred	(4,184)		45,496		10,585		60,801
	23,982		145,925		109,456		245,625
Net income	153,480		534,485		470,102		919,490
Less: net income attributable to noncontrolling interest	1,692		26,824		3,650		58,563
Net income attributable to HF Sinclair stockholders	$	151,788	$	507,661	$	466,452	$	860,927
Earnings per share:
Basic	$	0.79	$	2.62	$	2.38	$	4.40
Diluted	$	0.79	$	2.62	$	2.38	$	4.40
Average number of common shares outstanding:
Basic	191,510		192,348		195,110		193,888
Diluted	191,510		192,348		195,110		193,888

See accompanying notes.

7

HF SINCLAIR CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	153,480	$	534,485	$	470,102	$	919,490
Other comprehensive income (loss):
Foreign currency translation adjustment	(5,241)		9,852		(17,847)		12,778
Hedging instruments:
Change in fair value of cash flow hedging instruments	(761)		—		(5,048)		270
Reclassification adjustments to net income on settlement of cash flow hedging instruments	305		(271)		4,592		(270)
Net unrealized loss on hedging instruments	(456)		(271)		(456)		—
Pension and other post-retirement benefit obligations:
Pension plans (gain) loss reclassified to net income	215		(45)		432		(90)
Post-retirement healthcare plans gain reclassified to net income	(935)		(918)		(1,857)		(1,836)
Retirement restoration plan loss reclassified to net income	4		3		10		6
Net change in pension and other post-retirement benefit obligations	(716)		(960)		(1,415)		(1,920)
Other comprehensive income (loss) before income taxes	(6,413)		8,621		(19,718)		10,858
Income tax expense (benefit)	(1,377)		1,777		(4,189)		2,224
Other comprehensive income (loss)	(5,036)		6,844		(15,529)		8,634
Total comprehensive income	148,444		541,329		454,573		928,124
Less: noncontrolling interest in comprehensive income	1,692		26,824		3,650		58,563
Comprehensive income attributable to HF Sinclair stockholders	$	146,752	$	514,505	$	450,923	$	869,561

See accompanying notes.

8

HF SINCLAIR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net income	$	470,102	$	919,490
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	404,049		363,343
Lower of cost or market inventory valuation adjustment	(222,493)		39,734
Earnings of equity method investments, inclusive of distributions	(1,863)		3,053
Gain on sale of assets	(834)		(504)
Deferred income taxes	10,585		60,801
Equity-based compensation expense	11,085		14,894
Change in fair value – derivative instruments	(10,222)		9,270
(Increase) decrease in current assets:
Accounts receivable	57,063		75,586
Inventories	(28,879)		(75,361)
Income taxes receivable	1,983		(57,850)
Prepayments and other	(10,668)		24,475
Increase (decrease) in current liabilities:
Accounts payable	(31,678)		(319,691)
Income taxes payable	7,548		(3,639)
Accrued liabilities	32,602		(17,498)
Turnaround expenditures	(169,270)		(347,145)
Other, net	23,706		(21,293)
Net cash provided by operating activities	542,816		667,665
Cash flows from investing activities:
Additions to properties, plants and equipment	(173,317)		(180,250)
Proceeds from sale of assets	1,180		1,682
Investment in Osage Pipe Line Company LLC	(5,000)		(3,000)
Distributions from equity method investments in excess of equity earnings	3,593		5,288
Net cash used for investing activities	(173,544)		(176,280)
Cash flows from financing activities:
Borrowings under credit agreements	—		55,000
Repayments under credit agreements	(105,500)		(117,000)
Purchase of treasury stock	(540,801)		(248,031)
Dividends	(195,261)		(175,271)
Distributions to noncontrolling interests	(4,676)		(51,285)
Payments on finance leases	(5,196)		(6,206)
Other, net	(310)		—
Net cash used for financing activities	(851,744)		(542,793)
Effect of exchange rate on cash flow	(5,001)		960
Cash and cash equivalents:
Decrease for the period	(487,473)		(50,448)
Beginning of period	1,353,747		1,665,066
End of period	$	866,274	$	1,614,618
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	(83,754)	$	(93,748)
Income taxes, net	$	(88,943)	$	(249,362)
Decrease in accrued and unpaid capital expenditures	$	(4,852)	$	(11,528)

See accompanying notes.

9

HF SINCLAIR CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands except per share data)

	Three Months Ended June 30, 2024
	Common Stock			Additional Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non-controlling Interest		Total Equity
	Shares	Amount								Shares	Amount
Balance at March 31, 2024	223,231	$	2,232	$	5,991,464	$	5,594,493	$	(22,277)	26,077	$	(1,357,594)	$	67,771	$	10,276,089
Net income	—	—		—		151,788		—		—	—		1,692		153,480
Dividends ($0.50 declared per common share)	—	—		—		(95,908)		—		—	—		—		(95,908)
Other comprehensive loss, net of tax	—	—		—		—		(5,036)		—	—		—		(5,036)
Issuance of common shares under incentive compensation plans	—	—		(569)		—		—		(11)	569		—		—
Equity-based compensation	—	—		5,705		—		—		—	—		—		5,705
Purchase of treasury stock, inclusive of excise tax	—	—		—		—		—		6,350	(374,935)		—		(374,935)
Distributions to noncontrolling interest holders	—	—		—		—		—		—	—		(2,281)		(2,281)
Balance at June 30, 2024	223,231	$	2,232	$	5,996,600	$	5,650,373	$	(27,313)	32,416	$	(1,731,960)	$	67,182	$	9,957,114

	Three Months Ended June 30, 2023
	Common Stock			Additional Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non-controlling Interest		Total Equity
	Shares	Amount								Shares	Amount
Balance at March 31, 2023	223,231	$	2,232	$	6,469,814	$	4,395,531	$	(20,223)	30,924	$	(1,576,689)	$	779,862	$	10,050,527
Net income	—	—		—		507,661		—		—	—		26,824		534,485
Dividends ($0.45 declared per common share)	—	—		—		(87,284)		—			—		—		(87,284)
Other comprehensive income, net of tax	—	—		—		—		6,844		—	—		—		6,844
Issuance of common shares under incentive compensation plans	—	—		(436)		—		—		(8)	436		—		—
Equity-based compensation	—	—		11,203		—		—		—	—		366		11,569
Purchase of treasury stock, inclusive of excise tax	—	—		—		—		—		2	(137)		—		(137)
Distributions to noncontrolling interest holders	—	—		—		—		—		—	—		(25,299)		(25,299)
Purchase of HEP units for equity grants	—	—		—		—		—		—	—		(1)		(1)
Balance at June 30, 2023	223,231	$	2,232	$	6,480,581	$	4,815,908	$	(13,379)	30,918	$	(1,576,390)	$	781,752	$	10,490,704

See accompanying notes.

10

HF SINCLAIR CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands except per share data)

	Six Months Ended June 30, 2024
	Common Stock			Additional Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non-controlling Interest		Total Equity
	Shares	Amount								Shares	Amount
Balance at December 31, 2023	223,231	$	2,232	$	5,993,661	$	5,379,182	$	(11,784)	23,236	$	(1,194,201)	$	68,208	$	10,237,298
Net income	—	—		—		466,452		—		—	—		3,650		470,102
Dividends ($1.00 declared per common share)	—	—		—		(195,261)		—		—	—		—		(195,261)
Other comprehensive loss, net of tax	—	—		—		—		(15,529)		—	—		—		(15,529)
Issuance of common shares under incentive compensation plans	—	—		(8,146)		—		—		(159)	8,146		—		—
Equity-based compensation	—	—		11,085		—		—		—	—		—		11,085
Purchase of treasury stock, inclusive of excise tax	—	—		—		—		—		9,339	(545,905)		—		(545,905)
Distributions to noncontrolling interest holders	—	—		—		—		—		—	—		(4,676)		(4,676)
Balance at June 30, 2024	223,231	$	2,232	$	5,996,600	$	5,650,373	$	(27,313)	32,416	$	(1,731,960)	$	67,182	$	9,957,114

	Six Months Ended June 30, 2023
	Common Stock			Additional Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non-controlling Interest		Total Equity
	Shares	Amount								Shares	Amount
Balance at December 31, 2022	223,231	$	2,232	$	6,468,775	$	4,130,252	$	(22,013)	26,152	$	(1,335,431)	$	773,757	$	10,017,572
Net income	—	—		—		860,927		—		—	—		58,563		919,490
Dividends ($0.90 declared per common share)	—	—		—		(175,271)		—		—	—		—		(175,271)
Other comprehensive income, net of tax	—	—		—		—		8,634		—	—		—		8,634
Issuance of common shares under incentive compensation plans	—	—		(2,370)		—		—		(46)	2,370		—		—
Equity-based compensation	—	—		14,176		—		—		—	—		718		14,894
Purchase of treasury stock, inclusive of excise tax	—	—		—		—		—		4,812	(243,329)		—		(243,329)
Distributions to noncontrolling interest holders	—	—		—		—		—		—	—		(51,285)		(51,285)
Purchase of HEP units for equity grants	—	—		—		—		—		—	—		(1)		(1)
Balance at June 30, 2023	223,231	$	2,232	$	6,480,581	$	4,815,908	$	(13,379)	30,918	$	(1,576,390)	$	781,752	$	10,490,704

See accompanying notes.

11

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1:Description of Business and Presentation of Financial Statements

References herein to HF Sinclair, “we,” “our,” “ours,” and “us” refer only to HF Sinclair and its consolidated subsidiaries or to HF Sinclair or an individual subsidiary and not to any other person, with certain exceptions. References herein to Holly Energy Partners, L.P. (“HEP”) with respect to time periods prior to the closing of the HEP Merger Transaction (as defined below) on December 1, 2023 refer to HEP and its consolidated subsidiaries.

We are an independent energy company that produces and markets high-value light products such as gasoline, diesel fuel, jet fuel, renewable diesel and other specialty products. We own and operate refineries located in Kansas, Oklahoma, New Mexico, Wyoming, Washington and Utah. We provide petroleum product and crude oil transportation, terminalling, storage and throughput services to our refineries and the petroleum industry. We market our refined products principally in the Southwest United States, the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states and we supply high-quality fuels to more than 1,500 branded stations and license the use of the Sinclair brand at more than 300 additional locations throughout the country. We produce renewable diesel at two of our facilities in Wyoming and our facility in New Mexico. In addition, our subsidiaries produce and market base oils and other specialized lubricants in the United States, Canada and the Netherlands, and export products to more than 80 countries.

On December 1, 2023, pursuant to the Agreement and Plan of Merger, dated as of August 15, 2023 (the “Merger Agreement”), by and among HEP, HF Sinclair, Navajo Pipeline Co., L.P., a Delaware limited partnership and an indirect wholly owned subsidiary of HF Sinclair (“HoldCo”), Holly Apple Holdings LLC, a Delaware limited liability company and a wholly owned subsidiary of HoldCo (“Merger Sub”), HEP Logistics Holdings, L.P., a Delaware limited partnership and the general partner of HEP (“HLH”), and Holly Logistic Services, L.L.C., a Delaware limited liability company and the general partner of HLH (the “General Partner”), Merger Sub merged with and into HEP, with HEP surviving as an indirect, wholly owned subsidiary of HF Sinclair (the “HEP Merger Transaction”).

Under the terms of the Merger Agreement, each outstanding common unit representing a limited partner interest in HEP (an “HEP common unit”), other than the HEP common units already owned by HF Sinclair and its subsidiaries, was converted into the right to receive 0.315 shares of HF Sinclair common stock and $4.00 in cash, without interest. The Merger Agreement consideration totaled $267.6 million in cash and resulted in the issuance of 21,072,326 shares of HF Sinclair common stock from treasury stock.

The HEP Merger Transaction was accounted for in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 810, “Consolidation.” Since we controlled HEP both before and after the HEP Merger Transaction, the changes in our ownership interest in HEP resulting from the HEP Merger Transaction were accounted for as an equity transaction, and no gain or loss was recognized in our consolidated statements of income. The tax effects of the HEP Merger Transaction were recorded as adjustments to deferred income taxes and additional capital consistent with ASC 740, “Income Taxes.”

For a description of our existing indebtedness, as well as associated changes in connection with the HEP Merger Transaction, see Note 9.

We have prepared these consolidated financial statements without audit. In management’s opinion, these consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of our consolidated financial position as of June 30, 2024, the consolidated results of income, comprehensive income and statements of equity for the three and six months ended June 30, 2024 and 2023, and consolidated cash flows for the six months ended June 30, 2024 and 2023 in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Although certain notes and other information required by generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted, we believe that the disclosures in these consolidated financial statements are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023, which were recast to reflect changes in our reportable segments as described in Note 14, and are included in Exhibit 99.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

12

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Accounts Receivable: Our accounts receivable primarily consist of amounts due from customers that are primarily from sales of refined products and renewable diesel. Credit is extended based on our evaluation of the customer’s financial condition, and in certain circumstances, collateral, such as letters of credit or guarantees, is required. We reserve for expected credit losses based on our historical loss experience as well as expected credit losses from current economic conditions and management’s expectations of future economic conditions. Credit losses are charged to the allowance for expected credit losses when an account is deemed uncollectible. Our allowance for expected credit losses was $3.0 million at June 30, 2024, and $3.2 million at December 31, 2023.

Inventories: Inventories related to our refining operations are stated at the lower of cost, using the last-in, first-out (“LIFO”) method for crude oil and unfinished and finished refined products, or market. Inventories related to our renewables business are stated at the lower of cost, using the LIFO method for feedstock and unfinished and finished renewables products, or market. In periods of rapidly declining prices, LIFO inventories may have to be written down to market value due to the higher costs assigned to LIFO layers in prior periods. In addition, the use of the LIFO inventory method may result in increases or decreases to cost of sales in years that inventory volumes decline as the result of charging cost of sales with LIFO inventory costs generated in prior periods. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and are subject to the final year-end LIFO inventory valuation.

Inventories of our Petro-Canada Lubricants and Sonneborn businesses are stated at the lower of cost, using the first-in, first-out method, or net realizable value.

Inventories consisting of process chemicals, materials and maintenance supplies and RINs are stated at the lower of weighted average cost or net realizable value.

Leases: At inception, we determine if an arrangement is or contains a lease. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our payment obligation under the leasing arrangement. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our estimated incremental borrowing rate (“IBR”) to determine the present value of lease payments as most of our leases do not contain an implicit rate. Our IBR represents the interest rate that we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We use the implicit rate when readily determinable.

Operating leases are recorded in “Operating lease right-of-use assets” and current and noncurrent “Operating lease liabilities” on our consolidated balance sheets. Finance leases are included in “Properties, plants and equipment, at cost,” “Accrued liabilities” and “Other long-term liabilities” on our consolidated balance sheets.

Our lease term includes an option to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less are not recorded on our consolidated balance sheets. For certain equipment leases, we apply a portfolio approach for the operating lease ROU assets and liabilities. Also, as a lessee, we separate non-lease components that are identifiable and exclude them from the determination of net present value of lease payment obligations. In addition, as a lessor, we do not separate the non-lease (service) component in contracts in which the lease component is the dominant component. We treat these combined components as an operating lease. We bifurcate the consideration received for sales-type lease contracts between lease and service revenue, with the service component accounted for within the scope of ASC 606, “Revenue from Contracts with Customers.”

Our consolidated statements of income reflect the lease revenue we recognize from contracts with third parties in which we are the lessor. As the lessor, we classify customer contracts that contain leases into one of three categories: operating leases, direct finance leases, or sales-type leases. This classification is determined by evaluating key factors such as the lease term, the fair value of the underlying asset, and the residual value of the underlying assets.

Revenue Recognition: Revenues on refined products, branded fuel sales, renewable diesel, and excess crude oil sales are recognized when delivered (via pipeline, in-tank or rack), and the customer obtains control of such inventory, which is typically when title passes and the customer is billed. All revenues are reported inclusive of shipping and handling costs billed and exclusive of any taxes billed to customers. Shipping and handling costs incurred are reported in cost of materials and other.

13

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Our Lubricants & Specialties business has sales agreements with marketers and distributors that provide certain rights of return or provisions for the repurchase of products previously sold to them. Under these agreements, revenues and cost of revenues are deferred until the products have been sold to end customers. Our Lubricants & Specialties business also has agreements that create an obligation to deliver products at a future date for which consideration has already been received and recorded as deferred revenue. This revenue is recognized when the products are delivered to the customer.

Our Midstream business recognizes revenues as products are shipped through its pipelines and terminals and as other services are rendered. Additionally, we have certain throughput agreements that specify minimum volume requirements, whereby we bill a customer for a minimum level of shipments in the event a customer ships below their contractual requirements. If there are no future performance obligations, we recognize these deficiency payments as revenue. In certain of these throughput agreements, a customer may later utilize such shortfall billings as credit towards future volume shipments in excess of its minimum levels within its respective contractual shortfall make-up period. Such amounts represent an obligation to perform future services, which may be initially deferred and later recognized as revenue based on estimated future shipping levels, including the likelihood of a customer’s ability to utilize such amounts prior to the end of the contractual shortfall make-up period. We recognize the service portion of these deficiency payments as revenue when we do not expect it will be required to satisfy these performance obligations in the future based on the pattern of rights exercised by the customer. Payment terms under our contracts with customers are consistent with industry norms and are typically payable within 30 days of the date of invoice.

Foreign Currency Translation: Assets and liabilities recorded in foreign currencies are translated into U.S. dollars using exchange rates in effect as of the balance sheet date. Revenue and expense accounts are translated using the weighted average exchange rates during the period presented. Foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income.

We have intercompany notes that were issued to fund certain of our foreign businesses. Remeasurement adjustments resulting from the conversion of intercompany financing amounts to functional currencies are recorded as gains and losses as a component of other income (expense) in the consolidated statements of income. Such adjustments are not recorded in the Lubricants & Specialties segment operations, but in Corporate and Other. See Note 14 for additional information on our segments.

Income Taxes: Provisions for income taxes include deferred taxes resulting from temporary differences in income for financial and tax purposes, using the liability method of accounting for income taxes. The liability method requires the effect of tax rate changes on deferred income taxes to be reflected in the period in which the rate change was enacted. The liability method also requires that deferred tax assets be reduced by a valuation allowance unless it is more likely than not that the assets will be realized. We account for U.S. tax on global intangible low-taxed income in the period in which it is incurred.

Potential interest and penalties related to income tax matters are recognized in income tax expense. We believe we have the appropriate support for the income tax positions taken and to be taken on our income tax returns and that our accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations of tax law applied to the facts of each matter.

For the six months ended June 30, 2024, we recorded income tax expense of $109.5 million compared to $245.6 million for the six months ended June 30, 2023. This decrease was principally due to lower pre-tax income during the six months ended June 30, 2024, compared to the same period of 2023. Our effective tax rates were 18.9% and 21.1% for the six months ended June 30, 2024 and 2023, respectively. The difference between the U.S. federal statutory rate and the effective tax rate for the six months ended June 30, 2024 is primarily due to the relationship between pre-tax results and non-taxable permanent differences. The difference in the U.S. federal statutory rate and the effective tax rate for the six months ended June 30, 2023 was primarily due to the impact of federal tax credits and the relationship between pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes.

Inventory Repurchase Obligations: We periodically enter into same-party sell/buy transactions, whereby we sell certain refined product inventory and subsequently repurchase the inventory in order to facilitate delivery to certain locations. Such sell/buy transactions are accounted for as inventory repurchase obligations, under which proceeds received under the initial sale are recognized as an inventory repurchase obligation that is subsequently reversed when the inventory is repurchased. For the six months ended June 30, 2024 and 2023, we received proceeds of $13.1 million and $12.3 million, respectively, and subsequently repaid $13.6 million and $13.4 million, respectively, under these sell/buy transactions.

14

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Accounting Pronouncements - Not Yet Adopted

In November 2023, Accounting Standards Update (“ASU”) 2023-07, “Improvements to Reportable Segment Disclosures” was issued. ASU 2023-07 requires, among other updates, enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This aims to provide more decision-useful information to stakeholders by giving a clearer picture of the costs incurred by each reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption is permitted. We are assessing the impact of this guidance on our disclosures.

In December 2023, ASU 2023-09, “Improvements to Income Tax Disclosures” was issued. ASU 2023-09 requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and may be adopted on a prospective or retrospective basis. Early adoption is permitted. We are assessing the impact of this guidance on our disclosures.

NOTE 2:Cushing Connect Joint Venture

In 2019, HEP Cushing LLC (“HEP Cushing”), then a wholly owned subsidiary of HEP and now a wholly owned subsidiary of HF Sinclair, and Plains Marketing, L.P., a wholly owned subsidiary of Plains All American Pipeline, L.P. (“Plains”), formed a 50/50 joint venture, Cushing Connect Pipeline & Terminal LLC (“Cushing Connect”), for (i) the development, construction, ownership and operation of a new 160,000 barrel per day common carrier crude oil pipeline (the “Cushing Connect Pipeline”) that connects the Cushing, Oklahoma crude oil hub to our Tulsa refineries and (ii) the ownership and operation of 1.5 million barrels of crude oil storage in Cushing, Oklahoma (the “Cushing Connect Terminal” and together with Cushing Connect and the Cushing Connect Pipeline, the “Cushing Connect Joint Venture”). The Cushing Connect Terminal was fully in service beginning in April 2020, and the Cushing Connect Pipeline was placed in service during the third quarter of 2021. Long-term commercial agreements were entered into to support the Cushing Connect assets. Cushing Connect entered into a contract with an affiliate of HEP, now a subsidiary of HF Sinclair, to manage the operation of the Cushing Connect Pipeline and with an affiliate of Plains to manage the operation of the Cushing Connect Terminal. The total investment in Cushing Connect was generally shared proportionately among the partners. However, HEP was solely responsible for any Cushing Connect Pipeline construction costs that exceeded the budget by more than 10%. HEP’s share of the cost of the Cushing Connect Terminal contributed by Plains and Cushing Connect Pipeline construction costs was approximately $74.0 million.

Cushing Connect and its two subsidiaries, Cushing Connect Pipeline and Cushing Connect Terminal, are variable interest entities (“VIE”) as defined under GAAP. A VIE is a legal entity whose equity owners do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the equity holders lack the power, through voting rights, to direct the activities that most significantly impact the entity’s financial performance, the obligation to absorb the entity’s expected losses or rights to expected residual returns. Cushing Connect and its two subsidiaries are VIEs because they did not originally have sufficient equity at risk to finance their activities without additional financial support. We are the primary beneficiary of two of these entities as HEP constructed and operates the Cushing Connect Pipeline, and we have more ability to direct the activities that most significantly impact the financial performance of Cushing Connect and Cushing Connect Pipeline. Therefore, we consolidate these two entities. We are not the primary beneficiary of Cushing Connect Terminal, which we account for using the equity method of accounting. Our maximum exposure to loss as a result of our involvement with Cushing Connect Terminal is not expected to be material due to the long-term terminalling agreements in place to support operations.

15

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

With the exception of the assets of HEP Cushing, creditors of the Cushing Connect Joint Venture legal entities have no recourse to our assets. Any recourse to HEP Cushing would be limited to the extent of HEP Cushing’s assets, which other than its investment in the Cushing Connect Joint Venture, are not significant. Furthermore, our creditors have no recourse to the assets of the Cushing Connect Joint Venture legal entities. The most significant assets of Cushing Connect and Cushing Connect Pipeline that are available to settle only their obligations, along with their most significant liabilities for which their creditors do not have recourse to our general credit, were:

	June 30, 2024		December 31, 2023
	(In thousands)
Cash and cash equivalents	$	1,486	$	1,536
Properties, plants and equipment, at cost	$	102,977	$	102,936
Less: accumulated depreciation	$	(9,794)	$	(8,022)
Intangibles and other	$	30,856	$	32,473

NOTE 3:Revenues

Substantially all revenue-generating activities relate to sales of refined products, branded fuel, renewable diesel and excess crude oil inventories sold at market prices (variable consideration) under contracts with customers. Additionally, we have revenues attributable to our logistics services provided under petroleum product and crude oil pipeline transportation, processing, storage and terminalling agreements with third parties.

Disaggregated revenues were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(In thousands)
Revenues by type
Refined product revenues
Transportation fuels (1)	$	5,005,535	$	4,725,169	$	9,634,166	$	9,233,063
Specialty lubricant products (2)	644,163		635,375		1,258,384		1,315,237
Asphalt, fuel oil and other products (3)	568,960		572,520		1,052,276		1,012,859
Total refined product revenues	6,218,658		5,933,064		11,944,826		11,561,159
Excess crude oil revenues (4)	436,796		621,750		703,892		1,332,647
Renewable diesel revenues (5)	190,137		175,063		369,806		377,476
Transportation and logistics services	27,094		29,833		50,193		56,249
Marketing revenues (6)	942,362		1,040,933		1,718,169		1,978,318
Other revenues (7)	30,784		33,003		86,090		92,939
Total sales and other revenues	$	7,845,831	$	7,833,646	$	14,872,976	$	15,398,788

16

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(In thousands)
Refined product revenues by market
United States:
Mid-Continent	$	2,409,853	$	2,276,837	$	4,625,694	$	4,283,993
Southwest	1,082,895		890,586		2,058,597		1,723,288
Rocky Mountains	2,155,871		2,207,770		4,144,362		4,405,597
Northeast	212,722		233,695		432,069		497,599
Canada	288,276		254,952		544,048		505,676
Europe, Asia and Latin America	69,041		69,224		140,056		145,006
Total refined product revenues	$	6,218,658	$	5,933,064	$	11,944,826	$	11,561,159

(1)Transportation fuels revenues are attributable to our Refining segment’s wholesale marketing of gasoline, diesel and jet fuel.

(2)Specialty lubricant products consist of base oil, waxes, finished lubricants and other specialty fluids.

(3)Revenues from asphalt, fuel oil and other products include amounts attributable to our Refining and Lubricants & Specialties segments of $488.1 million and $80.9 million, respectively, for the three months ended June 30, 2024, $910.1 million and $142.1 million, respectively, for the six months ended June 30, 2024, $522.2 million and $50.3 million, respectively, for the three months ended June 30, 2023, and $909.0 million and $103.8 million, respectively, for the six months ended June 30, 2023.

(4)Excess crude oil revenues represent sales of purchased crude oil inventory that at times exceeds the supply needs of our refineries.

(5)Renewable diesel revenues are principally attributable to our Renewables segment.

(6)Marketing revenues consist primarily of branded gasoline and diesel fuel.

(7)Other revenues are principally attributable to our Refining segment.

Our consolidated balance sheets reflect contract liabilities related to unearned revenues attributable to future service obligations under our third-party transportation agreements and production agreements from our Sonneborn operations. The following table presents changes to our contract liabilities:

	Six Months Ended June 30,
	2024		2023
	(In thousands)
Balance at January 1	$	7,533	$	10,722
Increase	10,936		9,547
Recognized as revenue	(11,666)		(10,986)
Balance at June 30	$	6,803	$	9,283

As of June 30, 2024, we have long-term contracts with customers that specify minimum volumes of gasoline, diesel, lubricants and specialties to be sold ratably at market prices through 2034. Future prices are subject to market fluctuations and therefore, we have elected the exemption to exclude variable consideration under these contracts under ASC 606-10-50-14A. Aggregate minimum volumes expected to be sold (future performance obligations) under our long-term product sales contracts with customers are as follows:

Contractual Minimum	Remainder of 2024	2025	2026	Thereafter	Total
	(In thousands)
Refined product sales volumes (barrels)	16,254	26,553	18,852	46,690	108,349

17

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Additionally, we have long-term contracts with third-party customers that specify minimum volumes of product to be transported through our pipelines and terminals that result in fixed-minimum annual revenues through 2033. Annual minimum revenues attributable to our third-party contracts as of June 30, 2024, are presented below:

Contractual Minimum	Remainder of 2024		2025		2026		Thereafter		Total
	(In thousands)
Midstream operations revenues	$	10,426	$	11,242	$	7,782	$	43,308	$	72,758

NOTE 4:Fair Value Measurements

Fair value measurements are derived using inputs (assumptions that market participants would use in pricing an asset or liability, including assumptions about risk). GAAP categorizes inputs used in fair value measurements into three broad levels as follows:

•(Level 1) Quoted prices in active markets for identical assets or liabilities.

•(Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data.

•(Level 3) Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs.

The carrying amounts of derivative instruments and RINs credit obligations at June 30, 2024 and December 31, 2023 were as follows:

			Fair Value by Input Level
	Carrying Amount		Level 1		Level 2		Level 3
	(In thousands)
June 30, 2024
Assets:
Commodity forward contracts	$	574	$	—	$	574	$	—
Foreign currency forward contracts	3,261		—		3,261		—
Total assets	$	3,835	$	—	$	3,835	$	—
Liabilities:
NYMEX futures contracts	$	4,674	$	4,674	$	—	$	—
Commodity price swaps	1,495		—		1,495		—
Commodity forward contracts	738		—		738		—
Foreign currency forward contracts	51		—		51		—
RINs credit obligations (1)	22,745		—		22,745		—
Total liabilities	$	29,703	$	4,674	$	25,029	$	—

18

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

			Fair Value by Input Level
	Carrying Amount		Level 1		Level 2		Level 3
	(In thousands)
December 31, 2023
Assets:
NYMEX futures contracts	$	836	$	836	$	—	$	—
Commodity forward contracts	2,908		—		2,908		—
Total assets	$	3,744	$	836	$	2,908	$	—
Liabilities:
Commodity price swaps	$	7,808	$	—	$	7,808	$	—
Commodity forward contracts	1,848		—		1,848		—
Foreign currency forward contracts	7,893		—		7,893		—
Total liabilities	$	17,549	$	—	$	17,549	$	—

(1)Represent obligations for RINs credits for which we did not have sufficient quantities at June 30, 2024 to satisfy our Environmental Protection Agency (“EPA”) regulatory blending requirements.

Level 1 Fair Value Measurements

Our New York Mercantile Exchange (“NYMEX”) futures contracts are exchange-traded and are measured and recorded at fair value using quoted market prices, a Level 1 input.

Level 2 Fair Value Measurements

Derivative instruments consisting of foreign currency forward contracts, commodity price swaps and forward sales and purchase contracts are measured and recorded at fair value using Level 2 inputs. The fair value of the commodity price swap contracts is based on the net present value of expected future cash flows related to both variable and fixed rate legs of the respective swap agreements. The measurements are computed using market-based observable input and quoted forward commodity prices with respect to our commodity price swaps. The fair value of the forward sales and purchase contracts is computed using quoted forward commodity prices. The fair value of foreign currency forward contracts is based on values provided by a third party, which were derived using market quotes for similar type instruments, a Level 2 input. RINs credit obligations are valued based on quoted prices from an independent pricing service.

19

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5:Earnings Per Share

Basic earnings per share is calculated as net income attributable to HF Sinclair stockholders, adjusted for participating securities’ share in earnings divided by the average number of shares of common stock outstanding. Diluted earnings per share includes the incremental shares resulting from certain share-based awards. The following is a reconciliation of the denominators of the basic and diluted per share computations for net income attributable to HF Sinclair stockholders:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(In thousands, except per share data)
Net income attributable to HF Sinclair stockholders	$	151,788	$	507,661	$	466,452	$	860,927
Participating securities’ share in earnings (1)	841		4,411		2,754		7,304
Net income attributable to common shares	$	150,947	$	503,250	$	463,698	$	853,623
Average number of shares of common stock outstanding	191,510		192,348		195,110		193,888
Average number of shares of common stock outstanding assuming dilution	191,510		192,348		195,110		193,888
Basic earnings per share	$	0.79	$	2.62	$	2.38	$	4.40
Diluted earnings per share	$	0.79	$	2.62	$	2.38	$	4.40

(1)Unvested restricted stock unit awards and unvested performance share units that settle in HF Sinclair common stock represent participating securities because they participate in nonforfeitable dividends or distributions with the common stockholders of HF Sinclair. Participating earnings represent the distributed and undistributed earnings of HF Sinclair attributable to the participating securities. Unvested restricted stock unit awards and performance share units do not participate in undistributed net losses as they are not contractually obligated to do so.

NOTE 6:Stock-Based Compensation

We have a principal share-based compensation plan, the HF Sinclair Corporation Amended and Restated 2020 Long Term Incentive Plan (the “2020 Plan”). The 2020 Plan provides for the grant of unrestricted and restricted stock, restricted stock units, other stock-based awards, stock options, performance awards, substitute awards, cash awards and stock appreciation rights. The restricted stock unit awards generally vest over a period of one to three years. Upon vesting, restrictions on the restricted stock units lapse at which time they convert to common shares or cash. The performance share units generally vest over a period of three years and are payable in stock or cash upon meeting certain financial and performance criteria. The number of shares ultimately issued or cash paid for the performance share units can range from zero to 200% of target award amounts. The holders of unvested restricted stock units and performance share units have the right to receive dividends. We also have a stock compensation deferral plan that allows non-employee directors to defer settlement of vested stock granted under our share-based compensation plan.

The compensation cost for these plans was $5.8 million and $11.3 million for the three months ended June 30, 2024 and 2023, respectively, and $11.6 million and $14.6 million for the six months ended June 30, 2024 and 2023, respectively.

Additionally, prior to the HEP Merger Transaction, HEP maintained an equity-based compensation plan for the General Partner’s non-employee directors and certain executives and employees. Compensation costs attributable to HEP’s equity-based compensation plan was $0.4 million and $0.7 million for the three and six months ended June 30, 2023, respectively.

20

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A summary of restricted stock units and performance share units activity during the six months ended June 30, 2024, is presented below:

	Restricted Stock Units		Performance Share Units
Outstanding at January 1, 2024	1,102,755		485,531
Granted (1)	3,268		1,248
Vested	(156,949)		(1,859)
Forfeited	(198,404)		(59,740)
Outstanding at June 30, 2024	750,670		425,180
(1) Weighted average grant date fair value per unit.	$	57.19	$	53.43

NOTE 7:Inventories

Inventories consist of the following components:

	June 30, 2024		December 31, 2023
	(In thousands)
Crude oil	$	829,845	$	858,411
Other raw materials and unfinished products (1)	736,298		683,066
Finished products (2)	1,426,590		1,435,817
Lower of cost or market reserve	(109,077)		(331,570)
Process chemicals (3)	48,713		50,917
Repair and maintenance supplies and other (4)	227,789		225,190
Total inventory	$	3,160,158	$	2,921,831

(1)Other raw materials and unfinished products include feedstocks and blendstocks, other than crude.

(2)Finished products include gasolines, jet fuels, diesels, renewable diesels, lubricants, asphalts, LPG’s and residual fuels.

(3)Process chemicals include additives and other chemicals.

(4)Includes RINs.

At June 30, 2024, the LIFO value of our Refining segment inventories was equal to cost. The December 31, 2023 market reserve of $220.6 million reversed resulting in a decrease to cost of sales totaling $220.6 million for the six months ended June 30, 2024. The effect of the change in the lower of cost or market reserve was an increase to cost of sales totaling $26.8 million for both the three and six months ended June 30, 2023.

Our Renewables segment inventories that are valued at the lower of LIFO cost or market reflect a valuation reserve of $109.1 million and $111.0 million at June 30, 2024 and December 31, 2023, respectively. A new market reserve of $109.1 million as of June 30, 2024 was based on market conditions and prices at that time. The effect of the change in the lower of cost or market reserve was a decrease to cost of sales totaling $3.1 million and $34.7 million for the three months ended June 30, 2024 and 2023, respectively. The effect of the change in the lower of cost or market reserve was a decrease to cost of sales totaling $1.9 million and an increase to cost of sales totaling $12.9 million for the six months ended June 30, 2024 and 2023, respectively.

NOTE 8:Environmental

Environmental costs are charged to operating expenses if they relate to an existing condition caused by past operations and do not contribute to current or future revenue generation. We have ongoing investigations of environmental matters at various locations and routinely assess our recorded environmental obligations, if any, with respect to such matters. Liabilities are recorded when site restoration, environmental remediation, cleanup and other obligations are known or considered probable and can be reasonably estimated. Such estimates are undiscounted and require judgment with respect to costs, time frame and extent of required remedial and cleanup activities and are subject to periodic adjustments based on currently available information. Recoveries of environmental costs through insurance, indemnification arrangements or other sources are included in other assets to the extent such recoveries are considered probable.

21

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We incurred expenses of $0.7 million and $2.2 million for the three months ended June 30, 2024 and 2023, respectively, and $2.4 million and $15.4 million for the six months ended June 30, 2024 and 2023, respectively, for environmental remediation obligations. The accrued environmental liability reflected on our consolidated balance sheets was $188.4 million and $195.4 million at June 30, 2024 and December 31, 2023, respectively, of which $161.2 million and $161.4 million, respectively, were classified as other long-term liabilities. These accruals include remediation and monitoring costs expected to be incurred over an extended period of time. Estimated liabilities could increase in the future when the results of ongoing investigations become known, are considered probable and can be reasonably estimated.

NOTE 9:Debt

HF Sinclair Credit Agreement

We have a $1.65 billion senior unsecured revolving credit facility maturing in April 2026 (the “HF Sinclair Credit Agreement”). The HF Sinclair Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes. At June 30, 2024, we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $0.3 million under the HF Sinclair Credit Agreement.

Indebtedness under the HF Sinclair Credit Agreement bears interest, at our option, based on the currency of such indebtedness at either (a) a base rate equal to the highest of the Federal Funds Effective Rate (as defined in the HF Sinclair Credit Agreement) plus 0.5%, Spread Adjusted Term SOFR (as defined in the HF Sinclair Credit Agreement) for a one-month interest period plus 1% and the prime rate (as publicly announced from time to time by the administrative agent), as applicable, plus an applicable margin (ranging from 0.25% to 1.125%), (b) the CDOR Rate (as defined in the HF Sinclair Credit Agreement) plus an applicable margin (ranging from 1.25% to 2.125%), (c) the Spread Adjusted Term SOFR (as defined in the HF Sinclair Credit Agreement) plus an applicable margin (ranging from 1.25% to 2.125%) or (d) the Daily Simple RFR (as defined in the HF Sinclair Credit Agreement) plus an applicable margin (ranging from 1.25% to 2.125%). In each case, the applicable margin is based on HF Sinclair’s debt rating assigned by Standard & Poor’s Financial Services LLC and Moody’s Investors Service, Inc.

HEP Credit Agreement

Our wholly owned subsidiary, HEP, has a $1.2 billion senior secured revolving credit facility maturing in July 2025 (the “HEP Credit Agreement”). In connection with the consummation of the HEP Merger Transaction, we amended the HEP Credit Agreement to, among other things, (a) provide a guaranty from us and terminate all guaranties from subsidiaries of HEP, (b) amend the definition of “Investment Grade Rating” (as defined in the HEP Credit Agreement) to reference the credit rating of our senior unsecured indebtedness, (c) eliminate the requirement to deliver separate audited and unaudited financial statements for HEP and its subsidiaries and only provide certain segment-level reporting for HEP with any compliance certificate delivered in accordance with the HEP Credit Agreement and (d) amend certain covenants to eliminate certain restrictions on (i) amendments to intercompany contracts, (ii) transactions with us and our subsidiaries and (iii) investments in and contributions, dividends, transfers and distributions to us and our subsidiaries.

The HEP Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments, working capital and for general corporate purposes. It is also available to fund letters of credit up to a $50 million sub-limit and has an accordion feature that allows us to increase the commitments under the HEP Credit Agreement up to a maximum amount of $1.7 billion. At June 30, 2024, we were in compliance with all of its covenants, had outstanding borrowings of $350.0 million and no outstanding letters of credit under the HEP Credit Agreement.

Prior to the Investment Grade Date (as defined in the HEP Credit Agreement), indebtedness under the HEP Credit Agreement bears interest, at our option, at either (a) the Alternate Base Rate (as defined in the HEP Credit Agreement) plus an applicable margin (ranging from 0.75% to 1.75%) or (b) Adjusted Term SOFR (as defined in the HEP Credit Agreement) plus an applicable margin (ranging from 1.75% to 2.75%). In each case, the applicable margin is based upon the Total Leverage Ratio (as defined in the HEP Credit Agreement). The weighted average interest rate in effect under the HEP Credit Agreement on our borrowings was 7.07% as of June 30, 2024.

22

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Senior Notes

Our unsecured senior notes and unsubordinated obligations (as set forth in the table below under “HF Sinclair Financing Arrangements”) rank equally with all future unsecured and unsubordinated indebtedness.

Further, we may from time to time seek to retire some or all of our outstanding debt or debt agreements through cash purchases, and/or exchanges, open market purchases, privately negotiated transactions, tender offers or otherwise. Such transactions, if any, may be material and will depend on prevailing market conditions, our liquidity requirements and other factors.

HF Sinclair Financing Arrangements

Certain of our wholly owned subsidiaries entered into financing arrangements whereby such subsidiaries sold a portion of their precious metals catalyst to a financial institution and then leased back the precious metals catalyst in exchange for cash. The volume of the precious metals catalyst and the lease rate are fixed over the term of each lease, and the lease payments are recorded as interest expense. The current leases mature in one year or less. Upon maturity, we must either satisfy the obligation at fair market value or refinance to extend the maturity. These financing arrangements are recorded at a Level 2 fair value totaling $35.6 million and $37.0 million at June 30, 2024 and December 31, 2023, respectively, and are included in “Accrued liabilities” on our consolidated balance sheets. See Note 4 for additional information on Level 2 inputs.

HF Sinclair may, from time to time, issue letters of credit pursuant to uncommitted letters of credit facilities with its lenders. At June 30, 2024, there were no letters of credit outstanding under such credit facilities.

The principal and carrying amounts of long-term debt are as follows:

		Carrying Amount (1)
	Maturity Date	June 30, 2024		December 31, 2023
HollyFrontier Corporation Senior Notes:
5.875% Senior Notes	April 2026	$	202,900	$	202,900
4.500% Senior Notes	October 2030	74,966		74,966
		277,866		277,866
HF Sinclair Senior Notes:
5.875% Senior Notes	April 2026	797,100		797,100
4.500% Senior Notes	October 2030	325,034		325,034
5.000% Senior Notes	February 2028	498,879		498,879
6.375% Senior Notes	April 2027	399,875		399,875
		2,020,888		2,020,888
HEP Senior Notes:
5.000% Senior Notes	February 2028	1,121		1,121
6.375% Senior Notes	April 2027	125		125
		1,246		1,246
Total Senior Notes		2,300,000		2,300,000
HEP Credit Agreement	July 2025	350,000		455,500
HF Sinclair Credit Agreement	April 2026	—		—
Total Credit Agreements		350,000		455,500
Unamortized discount and debt issuance costs		(14,281)		(16,417)
Total long-term debt, net		$	2,635,719	$	2,739,083

(1)As of June 30, 2024 and December 31, 2023, the carrying amounts of our Senior Notes equaled the principal amounts.

The fair values of the senior notes are as follows:

	June 30, 2024		December 31, 2023
	(In thousands)
HollyFrontier Corporation, HF Sinclair and HEP Senior Notes	$	2,261,980	$	2,271,856

These fair values are based on a Level 2 input. See Note 4 for additional information on Level 2 inputs.

23

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We capitalized $0.8 million and $1.2 million for the three months ended June 30, 2024 and 2023, respectively, and $1.5 million and $2.5 million for the six months ended June 30, 2024 and 2023, respectively, of interest attributable to construction projects.

NOTE 10:Derivative Instruments and Hedging Activities

Commodity Price Risk Management

Our primary market risk is commodity price risk. We are exposed to market risks related to the volatility in crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations. We periodically enter into derivative contracts in the form of commodity price swaps, collar contracts, forward purchase and sales and futures contracts to mitigate price exposure with respect to our inventory positions, natural gas purchases, sales prices of refined products and crude oil costs.

Foreign Currency Risk Management

We are exposed to market risk related to the volatility in foreign currency exchange rates. We periodically enter into derivative contracts in the form of foreign exchange forward contracts to mitigate the exposure associated with fluctuations on intercompany notes with our foreign subsidiaries that are not denominated in the U.S. dollar.

Accounting Hedges

We periodically have swap contracts to lock in basis spread differentials on forecasted purchases of crude oil and forward sales contracts that lock in the prices of future sales of crude oil and refined product. These contracts have been designated as accounting hedges and are measured at fair value with offsetting adjustments (gains/losses) recorded directly to other comprehensive income (loss). These fair value adjustments are later reclassified to earnings as the hedging instruments mature.

The following tables present the pre-tax effect on other comprehensive income (“OCI”) and earnings due to fair value adjustments and maturities of hedging instruments under hedge accounting:

	Net Unrealized Loss Recognized in OCI					Gain (Loss) Reclassified into Earnings
Derivatives Designated as Cash Flow Hedging Instruments	Three Months Ended June 30,				Income Statement Location	Three Months Ended June 30,
	2024		2023			2024		2023
	(In thousands)					(In thousands)
Commodity contracts	$	(456)	$	(271)	Sales and other revenues	$	(305)	$	271
Total	$	(456)	$	(271)		$	(305)	$	271

	Net Unrealized Loss Recognized in OCI					Gain (Loss) Reclassified into Earnings
Derivatives Designated as Cash Flow Hedging Instruments	Six Months Ended June 30,				Income Statement Location	Six Months Ended June 30,
	2024		2023			2024		2023
	(In thousands)					(In thousands)
Commodity contracts	$	(456)	$	—	Sales and other revenues	$	(4,592)	$	270
Total	$	(456)	$	—		$	(4,592)	$	270

Economic Hedges

We have commodity contracts, including NYMEX futures contracts, to lock in prices on forecasted inventory purchases and sales. We have basis swap contracts to mitigate exposure to natural gas price volatility. We periodically have forward purchase and sale contracts to lock in basis spread differentials on forecasted crude oil and refined products purchases. We use collar contracts to mitigate exposure to natural gas price volatility; these contracts serve as economic hedges (derivatives used for risk management but not designated as accounting hedges). We also have forward currency contracts to fix the rate of foreign currency. In addition, our precious metals catalyst financing arrangements discussed in Note 9 could require repayment under certain conditions based on the future pricing of platinum, which is an embedded derivative. These contracts are measured at fair value with offsetting adjustments (gains/losses) recorded directly to earnings.

24

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents the pre-tax effect on income due to maturities and fair value adjustments of our economic hedges:

		Gain (Loss) Recognized in Earnings
Derivatives Not Designated as Hedging Instruments	Income Statement Location	Three Months Ended June 30,				Six Months Ended June 30,
		2024		2023		2024		2023
		(In thousands)
Commodity contracts	Cost of materials and other	$	1,538	$	13,154	$	(19,127)	$	19,902
	Operating expenses	(1,665)		3,648		(1,878)		(10,410)
	Interest expense	(3,993)		2,514		(1,230)		4,920
Foreign currency contracts	Gain (loss) on foreign currency transactions	3,540		(8,716)		13,671		(8,602)
	Total	$	(580)	$	10,600	$	(8,564)	$	5,810

As of June 30, 2024, we have the following notional contract volumes related to outstanding derivative instruments:

		Notional Contract Volumes by Year of Maturity
	Total Outstanding Notional	2024	2025	Unit of Measure
Derivatives Designated as Hedging Instruments
Forward diesel contracts - short	125,000	125,000	—	Barrels
Derivatives Not Designated as Hedging Instruments
NYMEX futures (WTI) - short	1,790,000	1,790,000	—	Barrels
Forward gasoline and diesel contracts - long	150,000	150,000	—	Barrels
Foreign currency forward contracts	385,904,193	177,833,367	208,070,826	U.S. dollar
Forward commodity contracts (platinum)	34,628	2,047	32,581	Troy ounces
Natural gas price swaps (basis spread) - long	2,208,000	2,208,000	—	MMBTU

The following tables present the fair value and balance sheet locations of our outstanding derivative instruments. These amounts are presented on a gross basis with offsetting balances that reconcile to a net asset or liability position in our consolidated balance sheets. We present on a net basis to reflect the net settlement of these positions in accordance with provisions of our master netting arrangements.

	Derivatives in Net Asset Position						Derivatives in Net Liability Position
	Gross Assets		Gross Liabilities Offset in Balance Sheet		Net Assets Recognized in Balance Sheet		Gross Liabilities		Gross Assets Offset in Balance Sheet		Net Liabilities Recognized in Balance Sheet
			(In thousands)
June 30, 2024
Derivatives designated as cash flow hedging instruments:
Commodity forward contracts	$	—	$	—	$	—	$	210	$	—	$	210
	$	—	$	—	$	—	$	210	$	—	$	210
Derivatives not designated as cash flow hedging instruments:
NYMEX futures contracts	$	—	$	—	$	—	$	4,674	$	—	$	4,674
Commodity price swap contracts	—		—		—		1,495		—		1,495
Commodity forward contracts	574		—		574		528		—		528
Foreign currency forward contracts	4,169		(908)		3,261		51		—		51
	$	4,743	$	(908)	$	3,835	$	6,748	$	—	$	6,748
Total net balance					$	3,835					$	6,958
Balance sheet classification:	Prepayment and other				$	3,835	Accrued liabilities				$	6,958

25

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Derivatives in Net Asset Position						Derivatives in Net Liability Position
	Gross Assets		Gross Liabilities Offset in Balance Sheet		Net Assets Recognized in Balance Sheet		Gross Liabilities		Gross Assets Offset in Balance Sheet		Net Liabilities Recognized in Balance Sheet
			(In thousands)
December 31, 2023
Derivatives not designated as cash flow hedging instruments:
NYMEX futures contracts	$	836	$	—	$	836	$	—	$	—	$	—
Commodity price swap contracts	—		—		—		7,808		—		7,808
Commodity forward contracts	2,908		—		2,908		1,848		—		1,848
Foreign currency forward contracts	—		—		—		7,893		—		7,893
	$	3,744	$	—	$	3,744	$	17,549	$	—	$	17,549
Total net balance					$	3,744					$	17,549
Balance sheet classification:	Prepayment and other				$	3,744	Accrued liabilities				$	17,549

NOTE 11:Stockholders’ Equity

On April 1, 2024, we repurchased 5,000,000 shares of our outstanding common stock from REH Company (“REH Company” and together with its affiliate REH Advisors Inc., “REH”) in a privately negotiated transaction under the share repurchase program approved by our Board of Directors in August 2023 (the “August 2023 Share Repurchase Program”) and pursuant to the Stock Purchase Agreement, dated April 1, 2024 (the “April 2024 Stock Purchase Agreement”), between us and REH Company. The price paid under the April 2024 Stock Purchase Agreement was $59.22 per share resulting in an aggregate purchase price of $296.1 million. The purchase price was funded with cash on hand. As of May 7, 2024, we had repurchased $785.8 million under the August 2023 Share Repurchase Program.

On May 7, 2024, our Board of Directors approved a new $1.0 billion share repurchase program (the “May 2024 Share Repurchase Program”), which replaced all existing share repurchase programs, including the approximately $214.2 million remaining under the August 2023 Share Repurchase Program. The May 2024 Share Repurchase Program authorizes us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH are also authorized under the May 2024 Share Repurchase Program, subject to REH’s interest in selling its shares and other limitations. The timing and amount of share repurchases, including those from REH, will depend on market conditions and corporate, tax, regulatory and other relevant considerations. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs. The May 2024 Share Repurchase Program may be discontinued at any time by our Board of Directors.

On May 14, 2024, we repurchased 1,348,435 shares of our outstanding common stock from REH Company in a privately negotiated transaction under the May 2024 Share Repurchase Program and pursuant to the Stock Purchase Agreement, dated May 14, 2024 (the “May 2024 Stock Purchase Agreement”), between us and REH Company. The price paid under the May 2024 Stock Purchase Agreement was $55.62 per share resulting in an aggregate purchase price of $75.0 million. The purchase price was funded with cash on hand.

As of June 30, 2024, we had remaining authorization to repurchase up to $925.0 million under the May 2024 Share Repurchase Program.

26

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents the total open market and privately negotiated purchases of shares under our share repurchase programs for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Number of shares repurchased (1)	6,348,435		—		9,279,177		4,793,857
Cash paid for shares repurchased (in thousands)	$	371,100	$	—	$	537,228	$	240,323

(1)During the six months ended June 30, 2024, 7,864,761 shares were repurchased for $456.1 million, pursuant to privately negotiated repurchases from REH Company. During the six months ended June 30, 2023, 1,969,279 shares were repurchased for $100.0 million pursuant to privately negotiated repurchases from REH Company.

During the six months ended June 30, 2024 and 2023, we withheld 59,626 and 18,349 shares, respectively, of our common stock under the terms of stock-based compensation agreements to provide funds for the payment of payroll and income taxes due at the vesting of share-based awards.

On August 1, 2024, our Board of Directors announced that it declared a regular quarterly dividend in the amount of $0.50 per share, payable on September 5, 2024 to holders of record of common stock on August 21, 2024.

NOTE 12:Other Comprehensive Income (Loss)

The components and allocated tax effects of other comprehensive income (loss) are as follows:

	Before-Tax		Tax Expense (Benefit)		After-Tax
	(In thousands)
Three Months Ended June 30, 2024
Net change in foreign currency translation adjustment	$	(5,241)	$	(1,101)	$	(4,140)
Net unrealized loss on hedging instruments	(456)		(110)		(346)
Net change in pension and other post-retirement benefit obligations	(716)		(166)		(550)
Other comprehensive loss attributable to HF Sinclair stockholders	$	(6,413)	$	(1,377)	$	(5,036)
Three Months Ended June 30, 2023
Net change in foreign currency translation adjustment	$	9,852	$	2,076	$	7,776
Net unrealized loss on hedging instruments	(271)		(66)		(205)
Net change in pension and other post-retirement benefit obligations	(960)		(233)		(727)
Other comprehensive income attributable to HF Sinclair stockholders	$	8,621	$	1,777	$	6,844

27

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Before-Tax		Tax Expense (Benefit)		After-Tax
	(In thousands)
Six Months Ended June 30, 2024
Net change in foreign currency translation adjustment	$	(17,847)	$	(3,744)	$	(14,103)
Net unrealized loss on hedging activities	(456)		(110)		(346)
Net change in pension and other post-retirement benefit obligations	(1,415)		(335)		(1,080)
Other comprehensive loss attributable to HF Sinclair stockholders	$	(19,718)	$	(4,189)	$	(15,529)
Six Months Ended June 30, 2023
Net change in foreign currency translation adjustment	$	12,778	$	2,690	$	10,088
Net change in pension and other post-retirement benefit obligations	(1,920)		(466)		(1,454)
Other comprehensive income attributable to HF Sinclair stockholders	$	10,858	$	2,224	$	8,634

The following table presents the statements of income line item effects for reclassifications out of accumulated other comprehensive income (“AOCI”):

	Three Months Ended June 30,
AOCI Component	2024		2023		Statement of Income Line Item
	(In thousands)
Hedging instruments:
Commodity price swaps	$	(305)	$	271	Sales and other revenues
	(74)		66		Income tax expense (benefit)
	(231)		205		Net of tax
Other post-retirement benefit obligations:
Pension obligations	(215)		45		Gain (loss) on sale of assets and other
	(61)		11		Income tax expense (benefit)
	(154)		34		Net of tax
Post-retirement healthcare obligations	935		918		Gain on sale of assets and other
	228		223		Income tax expense
	707		695		Net of tax
Retirement restoration plan	(4)		(3)		Loss on sale of assets and other
	(1)		(1)		Income tax benefit
	(3)		(2)		Net of tax
Total reclassifications for the period	$	319	$	932

28

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Six Months Ended June 30,
AOCI Component	2024		2023		Statement of Income Line Item
	(In thousands)
Hedging instruments:
Commodity price swaps	$	(4,592)	$	270	Sales and other revenues
	(1,113)		65		Income tax expense
	(3,479)		205		Net of tax
Other post-retirement benefit obligations:
Pension obligations	(432)		90		Gain (loss) on sale of assets and other
	(114)		22		Income tax expense
	(318)		68		Net of tax
Post-retirement healthcare obligations	1,857		1,836		Gain on sale of assets and other
	451		445		Income tax expense
	1,406		1,391		Net of tax
Retirement restoration plan	(10)		(6)		Gain on sale of assets and other
	(2)		(1)		Income tax benefit
	(8)		(5)		Net of tax
Total reclassifications for the period	$	(2,399)	$	1,659

Accumulated other comprehensive loss in the equity section of our consolidated balance sheets includes:

	June 30, 2024		December 31, 2023
	(In thousands)
Foreign currency translation adjustment	$	(37,129)	$	(23,026)
Unrealized gain on pension obligations	1,051		619
Unrealized gain on post-retirement benefit obligations	9,111		10,623
Unrealized loss on hedging instruments	(346)		—
Accumulated other comprehensive loss	$	(27,313)	$	(11,784)

NOTE 13:Contingencies

In the ordinary course of business, we may become party to legal, regulatory or administrative proceedings or governmental investigations, including environmental and other matters. Damages or penalties may be sought from us in some matters and certain matters may require years to resolve. While the outcome and impact of these proceedings and investigations on us cannot be predicted with certainty, based on the advice of counsel and information currently available to us, management believes that the resolution of these proceedings and investigations through settlement or adverse judgment will not either individually or in the aggregate have a material adverse effect on our financial condition, results of operations or cash flows.

29

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

During 2017 and 2019, the EPA granted the Cheyenne, Wyoming refinery (the “Cheyenne Refinery”) and the refinery in Woods Cross, Utah (the “Woods Cross Refinery”) each a one-year small refinery exemption from the Renewable Fuel Standard program requirements for the 2016 and 2018, respectively, compliance years. As a result, the Cheyenne Refinery’s and Woods Cross Refinery’s gasoline and diesel production were not subject to the renewable volume obligation for the respective years. Upon each exemption granted, we increased our inventory of RINs and reduced our cost of materials and other. On April 7, 2022, the EPA issued a decision reversing the grant of small refinery exemptions for our Woods Cross Refinery and Cheyenne Refinery for the 2018 compliance year. On June 3, 2022, the EPA issued a decision reversing the grant of small refinery exemptions for our Woods Cross Refinery and Cheyenne Refinery for the 2016 compliance year and denying small refinery exemption petitions for our Woods Cross Refinery and Cheyenne Refinery for the 2019 and 2020 compliance years.

Certain of our subsidiaries pursued legal challenges to the EPA’s decisions to deny small refinery exemptions for the 2016, 2018, 2019 and 2020 compliance years. The first lawsuit, filed against the EPA on May 6, 2022, before the U.S. Court of Appeals for the DC Circuit, sought to have the EPA’s reversal of our 2018 small refinery exemption petitions overturned. The second lawsuit, filed against the EPA on August 5, 2022, before the U.S. Court of Appeals for the DC Circuit, sought to have the EPA’s reversal of our 2016 small refinery exemption petitions overturned and to have the EPA’s denial of our 2019 and 2020 small refinery exemption petitions reversed.

In addition, pursuant to the June 2022 and April 2022 decisions, respectively, the EPA established an alternative compliance demonstration to not impose obligations on small refineries that had exemptions reversed for the 2016 and 2018 compliance years. On June 24, 2022, Growth Energy filed two lawsuits in the U.S. Court of Appeals for the DC Circuit against the EPA, challenging the alternative compliance demonstration for the 2016 and 2018 compliance years. On July 25, 2022, certain of our subsidiaries intervened on behalf of the EPA to aid the defense of the EPA’s alternative compliance demonstration decision.

On July 26, 2024, the U.S. Court of Appeals for the DC Circuit issued a favorable decision vacating the EPA’s denial of all of our small refinery exemption petitions, finding the denial to be unlawful. The DC Circuit will remand the small refinery exemption petitions to the EPA for new determination. The DC Circuit also upheld the alternative compliance demonstration and denied Growth Energy’s challenge.

Since these decisions are still subject to appeal, it is too early to determine their final impact. We are unable to estimate the costs we may incur, if any, at this time.

NOTE 14:Segment Information

Our operations are organized into five reportable segments: Refining, Renewables, Marketing, Lubricants & Specialties and Midstream. Our operations that are not included in one of these five reportable segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under the Corporate, Other and Eliminations column.

The Refining segment represents the operations of our El Dorado, Tulsa, Navajo, Woods Cross, Puget Sound, Parco and Casper refineries and HF Sinclair Asphalt Company LLC (“Asphalt”). Refining activities involve the purchase and refining of crude oil and wholesale marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountains extending into the Pacific Northwest geographic regions of the United States. Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma.

The Renewables segment represents the operations of our Cheyenne renewable diesel unit (“RDU”), Artesia RDU, the Sinclair RDU and the pre-treatment unit at our Artesia, New Mexico facility.

The Marketing segment represents branded fuel sales to Sinclair branded sites in the United States and licensing fees for the use of the Sinclair brand at additional locations throughout the country. The Marketing segment also includes branded fuel sales to non-Sinclair branded sites from legacy HollyFrontier Corporation (“HollyFrontier”) agreements and revenues from other marketing activities. Our branded sites are located in several states across the United States with the highest concentration of the sites located in our West and Mid-Continent regions.

30

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Lubricants & Specialties segment represents Petro-Canada Lubricants Inc.’s production operations, located in Mississauga, Ontario, which includes lubricant products such as base oils, white oils, specialty products and finished lubricants, and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States and Europe. Additionally, the Lubricants & Specialties segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America and the operations of Red Giant Oil Company LLC, one of the leading suppliers of locomotive engine oil in North America. Also, the Lubricants & Specialties segment includes Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

The Midstream segment includes all of the operations of HEP, which owns and operates logistics and refinery assets consisting of petroleum product and crude oil pipelines, and terminals, tankage and loading rack facilities in the Mid-Continent, Southwest and Rocky Mountains geographic regions of the United States. The Midstream segment also includes 50% ownership interests in each of Osage Pipeline Company, LLC, the owner of a pipeline running from Cushing, Oklahoma to El Dorado, Kansas, Cheyenne Pipeline, LLC, the owner of a pipeline running from Fort Laramie, Wyoming to Cheyenne, Wyoming, and Cushing Connect, a 25.12% ownership interest in Saddle Butte Pipeline III, LLC, the owner of a pipeline running from the Powder River Basin to Casper, Wyoming, and a 49.995% ownership interest in Pioneer Investments Corp., the owner of a pipeline running from Sinclair, Wyoming to the North Salt Lake City, Utah Terminal. Revenues from the Midstream segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations.

Beginning in the first quarter of 2024, our Refining segment acquired from our Midstream segment the refinery processing units at our El Dorado and Woods Cross refineries. Additionally, we amended an intercompany agreement between certain of our subsidiaries within the Refining, Lubricants & Specialties and Midstream segments. As a result, we have revised our Refining, Lubricants & Specialties and Midstream segment information for the periods presented.

The accounting policies for our segments are the same as those described in the summary of significant accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2023.

31

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Refining		Renewables		Marketing		Lubricants & Specialties		Midstream		Corporate, Other and Eliminations		Consolidated Total
	(In thousands)
Three Months Ended June 30, 2024
Sales and other revenues:
Revenues from external customers	$	5,970,098	$	180,228	$	942,362	$	726,049	$	27,094	$	—	$	7,845,831
Intersegment revenues and other (1)	1,007,711		68,050		—		5,350		131,087		(1,212,198)		—
	$	6,977,809	$	248,278	$	942,362	$	731,399	$	158,181	$	(1,212,198)	$	7,845,831
Cost of sales (exclusive of depreciation and amortization):
Cost of materials and other (exclusive of lower of cost or market inventory valuation adjustment)	6,291,029		220,056		919,611		531,390		—		(1,211,561)		6,750,525
Lower of cost or market inventory valuation adjustment	—		(3,123)		—		—		—		—		(3,123)
Operating expenses	449,097		24,705		—		64,445		51,089		1,981		591,317
	6,740,126		241,638		919,611		595,835		51,089		(1,209,580)		7,338,719
Selling, general and administrative expenses	50,740		1,384		7,345		38,209		2,925		4,255		104,858
Depreciation and amortization	122,215		19,786		6,374		22,716		14,943		19,286		205,320
Income (loss) from operations	$	64,728	$	(14,530)	$	9,032	$	74,639	$	89,224	$	(26,159)	$	196,934
Earnings of equity method investments	$	—	$	—	$	—	$	—	$	7,158	$	957	$	8,115
Capital expenditures	$	35,694	$	3,271	$	12,960	$	7,173	$	11,144	$	13,967	$	84,209
Three Months Ended June 30, 2023
Sales and other revenues:
Revenues from external customers	$	5,901,713	$	175,063	$	1,040,933	$	686,104	$	29,833	$	—	$	7,833,646
Intersegment revenues and other (1)	1,137,669		98,122		—		4,529		106,540		(1,346,860)		—
	$	7,039,382	$	273,185	$	1,040,933	$	690,633	$	136,373	$	(1,346,860)	$	7,833,646
Cost of sales (exclusive of depreciation and amortization):
Cost of materials and other (exclusive of lower of cost or market inventory valuation adjustment)	5,842,573		258,806		1,008,306		510,581		—		(1,346,661)		6,273,605
Lower of cost or market inventory valuation adjustment	26,842		(34,705)		—		—		—		—		(7,863)
Operating expenses	411,324		24,373		—		64,034		45,853		1,216		546,800
	6,280,739		248,474		1,008,306		574,615		45,853		(1,345,445)		6,812,542
Selling, general and administrative expenses	53,038		1,336		8,127		44,914		5,512		14,461		127,388
Depreciation and amortization	112,542		18,968		6,016		20,379		21,819		9,636		189,360
Income (loss) from operations	$	593,063	$	4,407	$	18,484	$	50,725	$	63,189	$	(25,512)	$	704,356
Earnings of equity method investments	$	—	$	—	$	—	$	—	$	3,545	$	—	$	3,545
Capital expenditures	$	45,187	$	3,537	$	6,200	$	5,734	$	8,650	$	10,873	$	80,181

32

HF SINCLAIR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Refining		Renewables		Marketing		Lubricants & Specialties		Midstream		Corporate, Other and Eliminations		Consolidated Total
	(In thousands)
Six Months Ended June 30, 2024
Sales and other revenues:
Revenues from external customers	$	11,343,123	$	359,897	$	1,718,169	$	1,401,594	$	50,193	$	—	$	14,872,976
Intersegment revenues and other (1)	1,838,931		127,940		—		7,792		263,003		(2,237,666)		—
	$	13,182,054	$	487,837	$	1,718,169	$	1,409,386	$	313,196	$	(2,237,666)	$	14,872,976
Cost of sales (exclusive of depreciation and amortization):
Cost of materials and other (exclusive of lower of cost or market inventory valuation adjustment)	11,765,551		450,329		1,672,141		1,024,236		—		(2,235,232)		12,677,025
Lower of cost or market inventory valuation adjustment	(220,558)		(1,935)		—		—		—		—		(222,493)
Operating expenses	921,183		51,166		—		128,445		96,607		1,028		1,198,429
	12,466,176		499,560		1,672,141		1,152,681		96,607		(2,234,204)		13,652,961
Selling, general and administrative expenses	99,457		2,786		15,101		72,777		6,854		11,257		208,232
Depreciation and amortization	239,585		40,058		12,677		45,227		35,063		31,439		404,049
Income (loss) from operations	$	376,836	$	(54,567)	$	18,250	$	138,701	$	174,672	$	(46,158)	$	607,734
Earnings of equity method investments	$	—	$	—	$	—	$	—	$	14,546	$	915	$	15,461
Capital expenditures	$	90,718	$	5,921	$	20,491	$	12,484	$	19,249	$	24,454	$	173,317
Six Months Ended June 30, 2023
Sales and other revenues:
Revenues from external customers	$	11,566,927	$	377,476	$	1,978,318	$	1,419,818	$	56,249	$	—	$	15,398,788
Intersegment revenues and other (1)	2,191,070		193,725		—		10,325		216,056		(2,611,176)		—
	$	13,757,997	$	571,201	$	1,978,318	$	1,430,143	$	272,305	$	(2,611,176)	$	15,398,788
Cost of sales (exclusive of depreciation and amortization):
Cost of materials and other (exclusive of lower of cost or market inventory valuation adjustment)	11,483,704		521,544		1,932,355		1,049,441		—		(2,609,382)		12,377,662
Lower of cost or market inventory valuation adjustment	26,842		12,892		—		—		—		—		39,734
Operating expenses	913,083		55,744		—		127,627		87,532		2,197		1,186,183
	12,423,629		590,180		1,932,355		1,177,068		87,532		(2,607,185)		13,603,579
Selling, general and administrative expenses	92,116		2,251		15,090		84,178		10,147		19,519		223,301
Depreciation and amortization	212,625		38,942		11,887		39,747		41,581		18,561		363,343
Income (loss) from operations	$	1,029,627	$	(60,172)	$	18,986	$	129,150	$	133,045	$	(42,071)	$	1,208,565
Earnings of equity method investments	$	—	$	—	$	—	$	—	$	7,427	$	—	$	7,427
Capital expenditures	$	112,961	$	8,381	$	11,455	$	14,383	$	16,264	$	16,806	$	180,250

(1)Includes income earned by certain of our subsidiaries in the Midstream segment related to intercompany transportation agreements with certain of our subsidiaries in the Refining and Lubricants & Specialties segments that represent leases. These transactions eliminate in consolidation.

33

Table Content

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Item 2 contains “forward-looking” statements. See “Forward-Looking Statements” at the beginning of Part I of this Quarterly Report on Form 10-Q. In addition, this Item 2 should be read in conjunction with the accompanying consolidated financial statements and notes, as well as our consolidated financial statements and notes within our Annual Report on Form 10-K for the year ended December 31, 2023, and Exhibit 99.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. In this document, the words “we,” “our,” “ours” and “us” refer only to HF Sinclair Corporation (“HF Sinclair”) and its consolidated subsidiaries or to HF Sinclair or an individual subsidiary and not to any other person with certain exceptions. References herein to Holly Energy Partners, L.P. (“HEP”) with respect to time periods prior to the closing of the HEP Merger Transaction (as defined below) on December 1, 2023, refer to HEP and its consolidated subsidiaries.

OVERVIEW

We are an independent energy company that produces and markets high-value light products such as gasoline, diesel fuel, jet fuel, renewable diesel and other specialty products. We own and operate refineries located in Kansas, Oklahoma, New Mexico, Wyoming, Washington and Utah. We provide petroleum product and crude oil transportation, terminalling, storage and throughput services to our refineries and the petroleum industry. We market our refined products principally in the Southwest United States, the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states, and we supply high-quality fuels to more than 1,500 branded stations and license the use of the Sinclair brand at more than 300 additional locations throughout the country. We produce renewable diesel at two of our facilities in Wyoming and our facility in New Mexico. In addition, our subsidiaries produce and market base oils and other specialized lubricants in the United States, Canada and the Netherlands, and export products to more than 80 countries.

For the three months ended June 30, 2024, net income attributable to HF Sinclair stockholders was $151.8 million compared to $507.7 million for the three months ended June 30, 2023. For the six months ended June 30, 2024, net income attributable to HF Sinclair stockholders was $466.5 million compared to $860.9 million for the six months ended June 30, 2023.

Our results for the second quarter of 2024 were primarily impacted by high utilization rates in the refining industry. We continue to adjust our operational plans to evolving market conditions. The extent to which our future results are affected by volatile regional and global economic conditions will depend on various factors and consequences beyond our control.

In the Refining segment, we saw lower refining margins in both the West and Mid-Continent regions in the second quarter of 2024 principally as a result of high utilization rates across the industry. Additionally, we completed planned maintenance activities at our Parco refinery during the period. For the third quarter of 2024, we expect to run between 570,000 – 600,000 barrels per day of crude oil, which reflects planned maintenance at our Parco and El Dorado refineries.

In the Renewables segment, we saw improved performance as a result of increased sales volumes and feedstock optimization despite continued weakness in RINs and Low Carbon Fuel Standard (“LCFS”) prices and planned maintenance at our renewable diesel unit (“RDU”) within our Parco co-located refinery impacted renewable diesel margins in the second quarter of 2024. For the third quarter of 2024, we expect continued weakness in RINs and LCFS prices to impact renewable diesel margins.

In the Marketing segment, we continued to see strong value in the Sinclair branded sites during the second quarter of 2024 as the marketing business continued to provide a consistent sales channel with margin uplift for our produced fuels. We expect to grow the number of branded sites by approximately 10% over the next six to twelve months.

In the Lubricants & Specialties segment, during the second quarter of 2024, we continued to see strong performance, driven by increased sales volumes, sales mix optimization and base oil integration across our portfolio.

In the Midstream segment, our results benefited from higher revenues from increased sales volumes and higher tariffs in the second quarter of 2024.

34

Table Content

In August 2023, our Board of Directors authorized a $1.0 billion share repurchase program, and we continued to repurchase shares in the first and second quarter of 2024 under this program. On May 7, 2024, our Board of Directors authorized a new $1.0 billion share repurchase program (the “May 2024 Share Repurchase Program”), and we continued to repurchase shares this quarter under the May 2024 Share Repurchase Program. The timing and amount of share repurchases under the May 2024 Share Repurchase Program, including those from REH Company (“REH Company” and together with its affiliate REH Advisors Inc., “REH”), will depend on market conditions and corporate, tax, regulatory and other relevant conditions. On August 1, 2024, our Board of Directors announced that it declared a regular quarterly dividend in the amount of $0.50 per share. The dividend is payable on September 5, 2024 to holders of record of common stock on August 21, 2024.

HEP Merger Transaction

On December 1, 2023, pursuant to the Agreement and Plan of Merger, dated as of August 15, 2023 (the “Merger Agreement”), by and among HEP, HF Sinclair, Navajo Pipeline Co., L.P., a Delaware limited partnership and an indirect wholly owned subsidiary of HF Sinclair (“HoldCo”), Holly Apple Holdings LLC, a Delaware limited liability company and a wholly owned subsidiary of HoldCo (“Merger Sub”), HEP Logistics Holdings, L.P., a Delaware limited partnership and the general partner of HEP (“HLH”), and Holly Logistic Services, L.L.C., a Delaware limited liability company and the general partner of HLH, Merger Sub merged with and into HEP, with HEP surviving as an indirect, wholly owned subsidiary of HF Sinclair (the “HEP Merger Transaction”).

Under the terms of the Merger Agreement, each outstanding common unit representing a limited partner interest in HEP (an “HEP common unit”), other than the HEP common units already owned by HF Sinclair and its subsidiaries, was converted into the right to receive 0.315 shares of HF Sinclair common stock and $4.00 in cash, without interest. The Merger Agreement consideration totaled $267.6 million in cash and resulted in the issuance of 21,072,326 shares of HF Sinclair common stock from treasury stock.

For a description of our existing indebtedness, as well as the changes thereto associated with the HEP Merger Transaction, see Note 9 “Debt” in the Notes to Consolidated Financial Statements.

Renewable Fuel Standard Regulations

Pursuant to the 2007 Energy Independence and Security Act, the Environmental Protection Agency (“EPA”) promulgated the Renewable Fuel Standard (“RFS”) regulations, which increased the volume of renewable fuels mandated to be blended into the nation’s fuel supply. The regulations, in part, require refiners to add annually increasing amounts of “renewable fuels” to their petroleum products or purchase credits, known as RINs, in lieu of such blending. Compliance with RFS regulations significantly increases our cost of materials and other, with RINs costs totaling $107.6 million and $214.1 million for the three and six months ended June 30, 2024, respectively, compared to $200.8 million and $358.3 million for the three and six months ended June 30, 2023, respectively. At June 30, 2024, our open RINs credit obligations were $22.7 million.

A more detailed discussion of our financial and operating results for the three and six months ended June 30, 2024 and 2023 is presented in the following sections.

35

RESULTS OF OPERATIONS

Financial Data

	Three Months Ended June 30,				Change from 2023
	2024		2023		Change		Percent
	(In thousands, except per share data)
Sales and other revenues	$	7,845,831	$	7,833,646	$	12,185	—	%
Operating costs and expenses:
Cost of sales (exclusive of depreciation and amortization):
Cost of materials and other (exclusive of lower of cost or market inventory valuation adjustment)	6,750,525		6,273,605		476,920		8	%
Lower of cost or market inventory valuation adjustment	(3,123)		(7,863)		4,740		(60)	%
Operating expenses (exclusive of depreciation and amortization)	591,317		546,800		44,517		8	%
	7,338,719		6,812,542		526,177		8	%
Selling, general and administrative expenses (exclusive of depreciation and amortization)	104,858		127,388		(22,530)		(18)	%
Depreciation and amortization	205,320		189,360		15,960		8	%
Total operating costs and expenses	7,648,897		7,129,290		519,607		7	%
Income from operations	196,934		704,356		(507,422)		(72)	%
Other income (expense):
Earnings of equity method investments	8,115		3,545		4,570		129	%
Interest income	18,495		17,591		904		5	%
Interest expense	(45,449)		(46,982)		1,533		(3)	%
Gain (loss) on foreign currency transactions	(369)		748		(1,117)		(149)	%
Gain (loss) on sale of assets and other	(264)		1,152		(1,416)		(123)	%
	(19,472)		(23,946)		4,474		(19)	%
Income before income taxes	177,462		680,410		(502,948)		(74)	%
Income tax expense	23,982		145,925		(121,943)		(84)	%
Net income	153,480		534,485		(381,005)		(71)	%
Less net income attributable to noncontrolling interest	1,692		26,824		(25,132)		(94)	%
Net income attributable to HF Sinclair stockholders	$	151,788	$	507,661	$	(355,873)	(70)	%
Earnings per share attributable to HF Sinclair stockholders:
Basic	$	0.79	$	2.62	$	(1.83)	(70)	%
Diluted	$	0.79	$	2.62	$	(1.83)	(70)	%
Cash dividends declared per common share	$	0.50	$	0.45	$	0.05	11	%
Average number of common shares outstanding:
Basic	191,510		192,348		(838)		—	%
Diluted	191,510		192,348		(838)		—	%

36

	Six Months Ended June 30,				Change from 2023
	2024		2023		Change		Percent
	(In thousands, except per share data)
Sales and other revenues	$	14,872,976	$	15,398,788	$	(525,812)	(3)	%
Operating costs and expenses:
Cost of sales (exclusive of depreciation and amortization):
Cost of materials and other (exclusive of lower of cost or market inventory valuation adjustment)	12,677,025		12,377,662		299,363		2	%
Lower of cost or market inventory valuation adjustment	(222,493)		39,734		(262,227)		(660)	%
Operating expenses (exclusive of depreciation and amortization)	1,198,429		1,186,183		12,246		1	%
	13,652,961		13,603,579		49,382		—	%
Selling, general and administrative expenses (exclusive of depreciation and amortization)	208,232		223,301		(15,069)		(7)	%
Depreciation and amortization	404,049		363,343		40,706		11	%
Total operating costs and expenses	14,265,242		14,190,223		75,019		1	%
Income from operations	607,734		1,208,565		(600,831)		(50)	%
Other income (expense):
Earnings of equity method investments	15,461		7,427		8,034		108	%
Interest income	40,674		37,526		3,148		8	%
Interest expense	(86,140)		(92,804)		6,664		(7)	%
Gain on foreign currency transactions	74		1,618		(1,544)		(95)	%
Gain on sale of assets and other	1,755		2,783		(1,028)		(37)	%
	(28,176)		(43,450)		15,274		(35)	%
Income before income taxes	579,558		1,165,115		(585,557)		(50)	%
Income tax expense	109,456		245,625		(136,169)		(55)	%
Net income	470,102		919,490		(449,388)		(49)	%
Less net income attributable to noncontrolling interest	3,650		58,563		(54,913)		(94)	%
Net income attributable to HF Sinclair stockholders	$	466,452	$	860,927	$	(394,475)	(46)	%
Earnings per share attributable to HF Sinclair stockholders:
Basic	$	2.38	$	4.40	$	(2.02)	(46)	%
Diluted	$	2.38	$	4.40	$	(2.02)	(46)	%
Cash dividends declared per common share	$	1.00	$	0.90	$	0.10	11	%
Average number of common shares outstanding:
Basic	195,110		193,888		1,222		1	%
Diluted	195,110		193,888		1,222		1	%

Balance Sheet Data

	June 30, 2024		December 31, 2023
	(Unaudited)
	(In thousands)
Cash and cash equivalents	$	866,274	$	1,353,747
Working capital	$	3,083,583	$	3,371,905
Total assets	$	17,381,762	$	17,716,265
Total debt	$	2,635,719	$	2,739,083
Total equity	$	9,957,114	$	10,237,298

37

Other Financial Data 

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(In thousands)
Net cash provided by operating activities	$	225,921	$	489,960	$	542,816	$	667,665
Net cash used for investing activities	$	(82,172)	$	(76,043)	$	(173,544)	$	(176,280)
Net cash used for financing activities	$	(516,284)	$	(163,683)	$	(851,744)	$	(542,793)
Capital expenditures	$	84,209	$	80,181	$	173,317	$	180,250
EBITDA (1)	$	408,044	$	872,337	$	1,025,423	$	1,525,173

(1)Earnings before interest, taxes, depreciation and amortization, which we refer to as “EBITDA,” is calculated as net income attributable to HF Sinclair stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization. EBITDA is not a calculation provided for under GAAP; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants. EBITDA presented above is reconciled to net income under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

Supplemental Segment Operating Data

Our operations are organized into five reportable segments, Refining, Renewables, Marketing, Lubricants & Specialties and Midstream. See Note 14 “Segment Information” in the Notes to Consolidated Financial Statements for additional information on our reportable segments.

Refining Segment Operating Data

The disaggregation of our refining geographic operating data is presented in two regions, Mid-Continent and West, to best reflect the economic drivers of our refining operations. The Mid-Continent region is comprised of the El Dorado and Tulsa refineries. The West region is comprised of the Puget Sound, Navajo, Woods Cross, Parco and Casper refineries. The following tables set forth information, including non-GAAP performance measures, about our consolidated refinery operations. Adjusted refinery gross margin per produced barrel sold is total Refining segment gross margin plus lower of cost or market inventory valuation adjustments, depreciation and amortization and operating expenses, divided by sales volumes of produced refined products sold. This margin measure does not include the non-cash effects of lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Mid-Continent Region
Crude charge (BPD) (1)	265,810			228,300			262,420			219,890
Refinery throughput (BPD) (2)	281,540			246,570			277,710			238,960
Sales of produced refined products (BPD) (3)	283,190			240,550			277,830			222,880
Refinery utilization (4)	102.2		%	87.8		%	100.9		%	84.6		%
Average per produced barrel sold: (5)
Gross margin (6)	$	0.66		$	9.68		$	3.98		$	9.05
Adjusted refinery gross margin (7)	$	8.39		$	19.42		$	9.41		$	19.71
Operating expenses (8)	5.90			6.40			6.15			7.72
Adjusted refinery gross margin, less operating expenses	$	2.49		$	13.02		$	3.26		$	11.99
Operating expenses per throughput barrel (9)	$	5.93		$	6.24		$	6.15		$	7.20

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	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Mid-Continent Region
Feedstocks:
Sweet crude oil	56		%	59		%	53		%	62		%
Sour crude oil	20		%	17		%	23		%	16		%
Heavy sour crude oil	19		%	16		%	19		%	14		%
Other feedstocks and blends	5		%	8		%	5		%	8		%
Total	100		%	100		%	100		%	100		%
Sales of produced refined products:
Gasolines	54		%	49		%	53		%	49		%
Diesel fuels	30		%	31		%	31		%	30		%
Jet fuels	5		%	6		%	5		%	7		%
Fuel oil	1		%	1		%	1		%	1		%
Asphalt	4		%	5		%	4		%	4		%
Lubricants	4		%	4		%	4		%	5		%
LPG and other	2		%	4		%	2		%	4		%
Total	100		%	100		%	100		%	100		%
West Region
Crude charge (BPD) (1)	368,920			325,640			357,410			306,480
Refinery throughput (BPD) (2)	395,070			352,400			382,240			339,710
Sales of produced refined products (BPD) (3)	383,060			357,630			371,030			334,420
Refinery utilization (4)	88.3		%	77.9		%	85.5		%	73.3		%
Average per produced barrel sold: (5)
Gross margin (6)	$	2.83		$	13.34		$	4.07		$	12.50
Adjusted refinery gross margin (7)	$	13.50		$	23.71		$	13.93		$	24.44
Operating expenses (8)	8.52			8.33			9.04			9.94
Adjusted refinery gross margin, less operating expenses	$	4.98		$	15.38		$	4.89		$	14.50
Operating expenses per throughput barrel (9)	$	8.26		$	8.46		$	8.77		$	9.79
Feedstocks:
Sweet crude oil	37		%	30		%	35		%	31		%
Sour crude oil	41		%	44		%	42		%	42		%
Heavy sour crude oil	10		%	13		%	11		%	11		%
Black wax crude oil	6		%	6		%	6		%	6		%
Other feedstocks and blends	6		%	7		%	6		%	10		%
Total	100		%	100		%	100		%	100		%
Sales of produced refined products:
Gasolines	51		%	54		%	52		%	55		%
Diesel fuels	32		%	28		%	32		%	30		%
Jet fuels	6		%	6		%	6		%	5		%
Fuel oil	2		%	1		%	2		%	2		%
Asphalt	3		%	3		%	2		%	2		%
LPG and other	6		%	8		%	6		%	6		%
Total	100		%	100		%	100		%	100		%

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	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Consolidated
Crude charge (BPD) (1)	634,730			553,940			619,830			526,370
Refinery throughput (BPD) (2)	676,610			598,970			659,950			578,670
Sales of produced refined products (BPD) (3)	666,250			598,180			648,860			557,300
Refinery utilization (4)	93.6		%	81.7		%	91.4		%	77.6		%
Average per produced barrel sold: (5)
Gross margin (6)	$	1.90		$	11.87		$	4.03		$	11.12
Adjusted refinery gross margin (7)	$	11.33		$	21.99		$	11.99		$	22.55
Operating expenses (8)	7.41			7.56			7.80			9.05
Adjusted refinery gross margin, less operating expenses	$	3.92		$	14.43		$	4.19		$	13.50
Operating expenses per throughput barrel (9)	$	7.29		$	7.55		$	7.67		$	8.72
Feedstocks:
Sweet crude oil	46		%	42		%	42		%	44		%
Sour crude oil	32		%	33		%	34		%	32		%
Heavy sour crude oil	13		%	14		%	14		%	12		%
Black wax crude oil	3		%	3		%	4		%	3		%
Other feedstocks and blends	6		%	8		%	6		%	9		%
Total	100		%	100		%	100		%	100		%
Sales of produced refined products:
Gasolines	52		%	52		%	52		%	53		%
Diesel fuels	32		%	29		%	32		%	30		%
Jet fuels	6		%	6		%	6		%	6		%
Fuel oil	1		%	1		%	1		%	1		%
Asphalt	3		%	4		%	3		%	3		%
Base oils	2		%	2		%	2		%	2		%
LPG and other	4		%	6		%	4		%	5		%
Total	100		%	100		%	100		%	100		%

(1)Crude charge represents the barrels per day of crude oil processed at our refineries.

(2)Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries.

(3)Represents barrels sold of refined products produced at our refineries (including Asphalt and intersegment sales) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold.

(4)Represents crude charge divided by total crude capacity (BPSD). Our consolidated crude capacity is 678,000 BPSD.

(5)Represents the average amount per produced barrel sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(6)Gross margin represents total Refining segment sales and other revenues less cost of materials and other, lower of cost or market inventory valuation adjustments, operating expenses and depreciation and amortization, divided by sales volumes of refined products produced at our refineries.

(7)Adjusted refinery gross margin is a non-GAAP measure and represents total Refining segment gross margin plus lower of cost or market inventory valuation adjustments, depreciation and amortization and operating expenses, divided by sales volumes of refined products produced at our refineries. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(8)Represents total Refining segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes of refined products produced at our refineries.

(9)Represents total Refining segment operating expenses, exclusive of depreciation and amortization, divided by refinery throughput.

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Renewables Segment Operating Data

The following table sets forth information, including non-GAAP performance measures, about our renewables operations and includes our Sinclair RDU. Adjusted renewables gross margin per produced gallon sold is total Renewables segment gross margin plus lower of cost or market inventory valuation adjustments, depreciation and amortization and operating expenses, divided by sales volumes of produced renewables products sold. This margin measure does not include the non-cash effects of lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Renewables
Sales volumes (in thousand gallons)	63,557		50,159		124,729		97,987
Average per produced gallon sold: (1)
Gross margin (2)	$	(0.21)	$	0.11	$	(0.42)	$	(0.59)
Adjusted renewables gross margin (3)	$	0.44	$	0.29	$	0.30	$	0.51
Operating expenses (4)	0.39		0.49		0.41		0.57
Adjusted renewables gross margin, less operating expenses	$	0.05	$	(0.20)	$	(0.11)	$	(0.06)

(1)Represents the average amount per produced gallon sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(2)Gross margin represents total Renewables segment sales and other revenues less cost of materials and other, lower of cost or market inventory valuation adjustments, operating expenses and depreciation and amortization, divided by sales volumes of renewable diesel produced at our renewable diesel units.

(3)Adjusted renewables gross margin is a non-GAAP measure and represents total Renewables segment gross margin plus lower of cost or market inventory valuation adjustments, depreciation and amortization and operating expenses, divided by sales volumes of renewable diesel produced at our renewable diesel units. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(4)Represents total Renewables segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes of renewable diesel produced at our renewable diesel units.

Marketing Segment Operating Data

The following table sets forth information, including non-GAAP performance measures, about our marketing operations and includes our Sinclair branded fuel business. Adjusted marketing gross margin per gallon sold is total Marketing segment gross margin plus depreciation and amortization, divided by sales volumes of marketing products sold. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Marketing
Number of branded sites at period end (1)	1,564		1,520		1,564		1,520
Sales volumes (in thousand gallons)	357,137		364,409		678,147		692,816
Average per gallon sold: (2)
Gross margin (3)	$	0.05	$	0.07	$	0.05	$	0.05
Adjusted marketing gross margin (4)	$	0.06	$	0.09	$	0.07	$	0.07

(1)Includes non-Sinclair branded sites from legacy HollyFrontier agreements.

(2)Represents the average amount per gallon sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

(3)Gross margin represents total Marketing segment sales and other revenues less cost of materials and other and depreciation and amortization, divided by sales volumes of marketing products sold.

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(4)Adjusted marketing gross margin is a non-GAAP measure and represents total Marketing segment gross margin plus depreciation and amortization, divided by sales volumes of marketing products sold. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

Lubricants & Specialties Segment Operating Data

The following table sets forth information about our lubricants and specialties operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Lubricants & Specialties
Sales of produced refined products (BPD)	34,915		29,140		33,009		30,460
Sales of produced refined products:
Finished products	48	%	53	%	48	%	52	%
Base oils	26	%	26	%	26	%	27	%
Other	26	%	21	%	26	%	21	%
Total	100	%	100	%	100	%	100	%

Midstream Segment Operating Data

The following table sets forth information about our midstream operations:

	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Midstream
Volumes (BPD)
Pipelines:
Affiliates—refined product pipelines	175,824	136,598	170,226	139,782
Affiliates—intermediate pipelines	151,894	104,472	144,982	109,372
Affiliates—crude pipelines	426,036	390,285	433,745	431,768
	753,754	631,355	748,953	680,922
Third parties—refined product pipelines	41,596	42,202	39,159	41,321
Third parties—crude pipelines	200,348	208,384	181,420	192,273
	995,698	881,941	969,532	914,516
Terminals and loading racks:
Affiliates	862,459	683,089	825,689	684,956
Third parties	39,602	49,909	36,356	46,206
	902,061	732,998	862,045	731,162
Total for pipelines and terminals assets (BPD)	1,897,759	1,614,939	1,831,577	1,645,678

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Results of Operations – Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Summary

Net income attributable to HF Sinclair stockholders for the three months ended June 30, 2024, was $151.8 million ($0.79 per basic and diluted share), a $355.9 million decrease compared to net income of $507.7 million ($2.62 per basic and diluted share) for the three months ended June 30, 2023. The decrease in net income was principally driven by lower adjusted refinery gross margins in both the West and Mid-Continent regions, partially offset by higher refined product sales volumes. Lower of cost or market inventory reserve adjustments related to our refining and renewables inventories increased pre-tax earnings by $3.1 million for the three months ended June 30, 2024, and decreased pre-tax earnings by $7.9 million for the three months ended June 30, 2023. Adjusted refinery gross margins for the three months ended June 30, 2024, decreased to $11.33 per produced barrel sold as compared to $21.99 for the three months ended June 30, 2023.

Sales and Other Revenues

Sales and other revenues increased 0.2% from $7,833.6 million for the three months ended June 30, 2023, to $7,845.8 million for the three months ended June 30, 2024, principally due to higher refined product sales volumes, partially offset by decreased refined product sales prices and lower excess crude oil sales volumes as a result of fewer planned maintenance activities in 2024. Sales and other revenues included $942.4 million, $726.0 million, $27.1 million and $180.2 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the three months ended June 30, 2024. Sales and other revenues included $1,040.9 million, $686.1 million, $29.8 million and $175.1 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the three months ended June 30, 2023.

Cost of Materials and Other

Cost of materials and other, exclusive of lower of cost or market inventory valuation adjustments, increased 8% from $6,273.6 million for the three months ended June 30, 2023, to $6,750.5 million for the three months ended June 30, 2024, principally due to higher refined product sales volumes and higher crude oil costs, partially offset by lower excess crude oil sales volumes as a result of fewer planned maintenance activities in 2024. Within our Lubricants & Specialties segment, the first in, first out (“FIFO”) impact was a charge of $14.4 million for the three months ended June 30, 2024, compared to a benefit of $0.5 million for the three months ended June 30, 2023.

During the second quarter of 2023, we recognized a lower of cost or market inventory valuation adjustment charge related to our Refining segment inventories of $26.8 million. Additionally, during the second quarter of 2024 and 2023, we recognized a lower of cost or market inventory valuation adjustment benefit related to our Renewables segment inventories of $3.1 million and $34.7 million, respectively.

Adjusted Refinery Gross Margins

Adjusted refinery gross margin per produced barrel sold decreased 48% from $21.99 for the three months ended June 30, 2023, to $11.33 for the three months ended June 30, 2024. The decrease was due to lower average per barrel sold sales prices and higher crude oil and feedstock prices during the three months ended June 30, 2024. Adjusted refinery gross margin per barrel does not include the non-cash effects of lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period, operating expenses, and depreciation and amortization. See “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q for a reconciliation to the income statement of sale prices of products sold and cost of products purchased.

Operating Expenses

Operating expenses, exclusive of depreciation and amortization, increased 8% from $546.8 million for the three months ended June 30, 2023, to $591.3 million for the three months ended June 30, 2024, primarily due to increased maintenance and personnel costs during the three months ended June 30, 2024.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 18% from $127.4 million for the three months ended June 30, 2023, to $104.9 million for the three months ended June 30, 2024, primarily due to lower professional costs and a decrease in acquisition integration and regulatory costs as compared to the prior period. We incurred $0.9 million and $3.5 million in acquisition integration and regulatory costs during the three months ended June 30, 2024 and 2023, respectively.

Depreciation and Amortization Expenses

Depreciation and amortization increased 8% from $189.4 million for the three months ended June 30, 2023, to $205.3 million for the three months ended June 30, 2024, principally due to depreciation and amortization attributable to additional capitalized refinery turnaround costs and capitalized improvement projects as compared to the prior period.

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Interest Income

Interest income was $18.5 million for the three months ended June 30, 2024, compared to $17.6 million for the three months ended June 30, 2023. The increase in interest income was primarily due to higher interest rates on cash investments during the three months ended June 30, 2024.

Interest Expense

Interest expense was $45.4 million for the three months ended June 30, 2024, compared to $47.0 million for the three months ended June 30, 2023. This decrease was primarily due to a reduction in total debt outstanding as compared to the prior period.

Gain (Loss) on Foreign Currency Transactions

Remeasurement adjustments resulting from the foreign currency conversion of the intercompany financing notes payable by Petro-Canada Lubricants Inc. net of mark-to-market valuations on foreign exchange forward contracts with banks which hedge the foreign currency exposure on these intercompany notes were a net loss of $0.4 million and a net gain of $0.7 million for the three months ended June 30, 2024 and 2023, respectively. For the three months ended June 30, 2024 and 2023, the change in foreign currency transactions included a gain of $3.5 million and a loss of $8.7 million, respectively, on foreign exchange forward contracts (utilized as an economic hedge).

Income Taxes

For the three months ended June 30, 2024, we recorded income tax expense of $24.0 million compared to $145.9 million for the three months ended June 30, 2023. This decrease was principally due to lower pre-tax income during the three months ended June 30, 2024, compared to the same period of 2023. Our effective tax rates were 13.5% and 21.4% for the three months ended June 30, 2024 and 2023, respectively. The difference between the U.S. federal statutory rate and the effective tax rate for the three months ended June 30, 2024, is primarily due to the relationship between pre-tax results and non-taxable permanent differences. The difference in the U.S. federal statutory rate and the effective tax rate for the three months ended June 30, 2023, was primarily due to the impact of federal tax credits and the relationship between pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes.

Results of Operations – Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Summary

Net income attributable to HF Sinclair stockholders for the six months ended June 30, 2024 was $466.5 million ($2.38 per basic and diluted share), a $394.5 million decrease compared to net income of $860.9 million ($4.40 per basic and diluted share) for the six months ended June 30, 2023. The decrease in net income was principally driven by lower adjusted refinery gross margins in both the West and Mid-Continent regions, partially offset by higher refined product sales volumes. Lower of cost or market inventory reserve adjustments related to our Refining and Renewables segments inventories increased pre-tax earnings by $222.5 million for the six months ended June 30, 2024 and decreased pre-tax earnings by $39.7 million for the six months ended June 30, 2023. Adjusted refinery gross margins for the six months ended June 30, 2024, decreased to $11.99 per produced barrel sold as compared to $22.55 for the six months ended June 30, 2023.

Sales and Other Revenues

Sales and other revenues decreased 3% from $15,398.8 million for the six months ended June 30, 2023 to $14,873.0 million for the six months ended June 30, 2024, principally due to decreased refined product sales prices and lower excess crude oil sales volumes as a result of fewer planned maintenance activities in 2024, partially offset by higher refined product sales volumes. Sales and other revenues included $1,718.2 million, $1,401.6 million, $50.2 million and $359.9 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the six months ended June 30, 2024. Sales and other revenues included $1,978.3 million, $1,419.8 million, $56.2 million and $377.5 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the six months ended June 30, 2023.

Cost of Materials and Other

Cost of materials and other, exclusive of lower of cost or market inventory valuation adjustments, increased 2% from $12,377.7 million for the six months ended June 30, 2023 to $12,677.0 million for the six months ended June 30, 2024, principally due to higher refined product sales volumes and higher crude oil costs, partially offset by lower excess crude oil sales volumes as a result of fewer planned maintenance activities in 2024. Within our Lubricants & Specialties segment, FIFO impact was a charge of $15.7 million and $13.4 million for the six months ended June 30, 2024 and 2023, respectively.

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During the six months ended June 30, 2024, we recognized a lower of cost or market inventory valuation adjustment benefit related to our Refining segment inventories of $220.6 million as compared to a charge of $26.8 million during the six months ended June 30, 2023. Additionally, during the six months ended June 30, 2024, we recognized a lower of cost or market inventory valuation adjustment benefit related to our Renewables segment inventories of $1.9 million as compared to a charge of $12.9 million during the six months ended June 30, 2023.

Adjusted Refinery Gross Margins

Adjusted refinery gross margin per produced barrel sold decreased 47% from $22.55 for the six months ended June 30, 2023 to $11.99 for the six months ended June 30, 2024, principally due to lower average per barrel sold sales prices and higher crude oil and feedstock prices during the six months ended June 30, 2024. Adjusted refinery gross margin per barrel does not include the non-cash effects of lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period, operating expenses, and depreciation and amortization. See “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q for a reconciliation to the income statement of sale prices of products sold and cost of products purchased.

Operating Expenses

Operating expenses, exclusive of depreciation and amortization, increased 1% from $1,186.2 million for the six months ended June 30, 2023, to $1,198.4 million for the six months ended June 30, 2024, primarily due to increased maintenance and personnel costs, partially offset by lower natural gas costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 7% from $223.3 million for the six months ended June 30, 2023, to $208.2 million for the six months ended June 30, 2024, primarily due to lower professional costs and a decrease in acquisition integration and regulatory costs as compared to the prior period. We incurred $1.9 million and $7.4 million in acquisition integration and regulatory costs during the six months ended June 30, 2024 and 2023, respectively.

Depreciation and Amortization Expenses

Depreciation and amortization increased 11% from $363.3 million for the six months ended June 30, 2023, to $404.0 million for the six months ended June 30, 2024, principally due to additional capitalized refinery turnaround costs and capitalized improvement projects as compared to the prior period.

Interest Income

Interest income was $40.7 million for the six months ended June 30, 2024, compared to $37.5 million for the six months ended June 30, 2023. The increase in interest income was primarily due to higher interest rates on cash investments.

Interest Expense

Interest expense was $86.1 million for the six months ended June 30, 2024, compared to $92.8 million for the six months ended June 30, 2023. This decrease was primarily due to a reduction in total debt outstanding as compared to the prior period.

Gain (Loss) on Foreign Currency Transactions

Remeasurement adjustments resulting from the foreign currency conversion of the intercompany financing note payable by Petro-Canada Lubricants Inc. net of mark-to-market valuations on foreign exchange forward contracts with banks which hedge the foreign currency exposure on this intercompany note were a net gain of $0.1 million and $1.6 million for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, foreign currency transactions included a gain of $13.7 million and a loss of $8.6 million, respectively, on foreign exchange forward contracts (utilized as an economic hedge).

Income Taxes

For the six months ended June 30, 2024, we recorded income tax expense of $109.5 million compared to $245.6 million for the six months ended June 30, 2023. This decrease was principally due to lower pre-tax income during the six months ended June 30, 2024, compared to the same period of 2023. Our effective tax rates were 18.9% and 21.1% for the six months ended June 30, 2024 and 2023, respectively. The difference between the U.S. federal statutory rate and the effective tax rate for the six months ended June 30, 2024 is primarily due to the relationship between pre-tax results and non-taxable permanent differences. The difference in the U.S. federal statutory rate and the effective tax rate for the six months ended June 30, 2023 was primarily due to the impact of federal tax credits and the relationship between pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes.

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LIQUIDITY AND CAPITAL RESOURCES

HF Sinclair Credit Agreement

We have a $1.65 billion senior unsecured revolving credit facility maturing in April 2026 (the “HF Sinclair Credit Agreement”). The HF Sinclair Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes. At June 30, 2024, we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $0.3 million under the HF Sinclair Credit Agreement.

HEP Credit Agreement

Through our wholly owned subsidiary, HEP, we have a $1.2 billion senior secured revolving credit facility maturing in July 2025 (the “HEP Credit Agreement”). The HEP Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments, working capital and for general corporate purposes. It is also available to fund letters of credit up to a $50.0 million sub-limit and has an accordion feature that allows us to increase the commitments under the HEP Credit Agreement up to a maximum amount of $1.7 billion.

In connection with the consummation of the HEP Merger Transaction, we amended the HEP Credit Agreement to, among other things, (a) provide a guaranty from us and terminate all guaranties from subsidiaries of HEP, (b) amend the definition of “Investment Grade Rating” (as defined in the HEP Credit Agreement) to reference the credit rating of our senior unsecured indebtedness, (c) eliminate the requirement to deliver separate audited and unaudited financial statements for HEP and its subsidiaries and only provide certain segment-level reporting for HEP with any compliance certificate delivered in accordance with the HEP Credit Agreement and (d) amend certain covenants to eliminate certain restrictions on (i) amendments to intercompany contracts, (ii) transactions with us and our subsidiaries and (iii) investments in and contributions, dividends, transfers and distributions to us and our subsidiaries.

During the six months ended June 30, 2024, we had net repayments of $105.5 million under the HEP Credit Agreement. At June 30, 2024, we were in compliance with all of its covenants, had outstanding borrowings of $350.0 million and no outstanding letters of credit under the HEP Credit Agreement.

HEP Senior Notes Exchange

On December 4, 2023, we completed our offers to exchange any and all outstanding HEP 5.000% senior notes maturing February 2028 (the “HEP 5.000% Senior Notes”) and HEP 6.375% senior notes maturing April 2027 (the “HEP 6.375% Senior Notes”) (and, collectively, the “HEP Senior Notes”) for HF Sinclair 5.000% senior notes maturing February 2028 (the “HF Sinclair 5.000% Senior Notes”) and HF Sinclair 6.375% senior notes maturing April 2027 (the “HF Sinclair 6.375% Senior Notes”) (and, collectively, the “New HF Sinclair Senior Notes”) to be issued by HF Sinclair with registration rights and cash. In connection with the exchange offers, we amended the indenture governing the HEP Senior Notes to eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events which may lead to an “Event of Default,” (iii) the SEC reporting covenant and (iv) the requirement of HEP to offer to purchase the HEP Senior Notes upon a change of control.

The New HF Sinclair Senior Notes are unsecured and unsubordinated obligations of ours and rank equally with all our other existing and future unsecured and unsubordinated indebtedness. Each series of the New HF Sinclair Senior Notes has the same interest rate, interest payment dates, maturity date and redemption terms as the corresponding series of HEP Senior Notes. The New HF Sinclair Senior Notes were issued in exchange for the HEP Senior Notes pursuant to a private exchange offer exempt from registration under the Securities Act of 1933, as amended. This exchange was part of a broader corporate strategy, including the HEP Merger Transaction, which closed on December 1, 2023.

HF Sinclair Financing Arrangements

Certain of our wholly owned subsidiaries entered into financing arrangements whereby such subsidiaries sold a portion of their precious metals catalyst to a financial institution and then leased back the precious metals catalyst in exchange for cash. The volume of the precious metals catalyst and the lease rate are fixed over the term of each lease, and the lease payments are recorded as interest expense. The current leases mature in one year or less. Upon maturity, we must either satisfy the obligation at fair market value or refinance to extend the maturity.

HF Sinclair may, from time to time, issue letters of credit pursuant to uncommitted letters of credit facilities with its lenders. At June 30, 2024, there were no letters of credit outstanding under such credit facilities.

See Note 9 “Debt” in the Notes to Consolidated Financial Statements for additional information on our debt instruments.

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Liquidity

We believe our current cash and cash equivalents, along with future internally generated cash flow and funds available under our credit facilities, will provide sufficient resources to fund currently planned capital projects and our liquidity needs for the foreseeable future. We expect that, to the extent necessary, we can raise additional funds from time to time through equity or debt financings in the public and private capital markets. Further, we may, from time to time, seek to retire some or all of our outstanding debt or debt agreements through cash purchases, and/or exchanges, open market purchases, privately negotiated transactions, tender offers or otherwise. Such transactions, if any, may be material and will depend on prevailing market conditions, our liquidity requirements and other factors. In addition, components of our long-term growth strategy include the optimization of existing units at our facilities and the selective acquisition of complementary assets for our operations intended to increase earnings and cash flow. We also expect to use cash for payment of cash dividends, which are at the discretion of our Board of Directors, and for the repurchase of common stock under the May 2024 Share Repurchase Program.

Our liquidity was approximately $3.37 billion at June 30, 2024, consisting of cash and cash equivalents of $866.3 million, an undrawn $1.65 billion credit facility under the HF Sinclair Credit Agreement and $850.0 million remaining availability under the HEP Credit Agreement.

We consider all highly liquid instruments with a maturity of three months or less at the time of purchase to be cash equivalents. These primarily consist of investments in conservative, highly rated instruments issued by financial institutions, government and corporate entities with strong credit standings and money market funds. Cash equivalents are stated at cost, which approximates market value.

On April 1, 2024, we repurchased 5,000,000 shares of our outstanding common stock from REH Company in a privately negotiated transaction under the share repurchase program approved by our Board of Directors in August 2023 (the “August 2023 Share Repurchase Program”) and pursuant to the Stock Purchase Agreement, dated April 1, 2024 (the “April 2024 Stock Purchase Agreement”), between us and REH Company. The price paid under the April 2024 Stock Purchase Agreement was $59.22 per share resulting in an aggregate purchase price of $296.1 million. The purchase price was funded with cash on hand.

On May 7, 2024, our Board of Directors approved the May 2024 Share Repurchase Program, which replaced all existing share repurchase programs, including the approximately $214.2 million remaining under the August 2023 Share Repurchase Program. The May 2024 Share Repurchase Program authorizes us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH are also authorized under the May 2024 Share Repurchase Program, subject to REH’s interest in selling its shares and other limitations. The timing and amount of share repurchases, including those from REH, will depend on market conditions and corporate, tax, regulatory and other relevant considerations. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs. The May 2024 Share Repurchase Program may be discontinued at any time by our Board of Directors.

On May 14, 2024, we repurchased 1,348,435 shares of our outstanding common stock from REH Company in a privately negotiated transaction under the May 2024 Share Repurchase Program and pursuant to the Stock Purchase Agreement, dated May 14, 2024 (the “May 2024 Stock Purchase Agreement”), between us and REH Company. The price paid under the May 2024 Stock Purchase Agreement was $55.62 per share resulting in an aggregate purchase price of $75.0 million. The purchase price was funded with cash on hand.

During the six months ended June 30, 2024, we made open market and privately negotiated purchases of 7,930,742 shares for $462.2 million under the August 2023 Share Repurchase Program, of which 6,516,326 shares were repurchased for $381.1 million pursuant to privately negotiated repurchases from REH Company. During the six months ended June 30, 2024, we made open market and privately negotiated purchases of 1,348,435 shares for $75.0 million under the May 2024 Share Repurchase Program, of which 1,348,435 shares were repurchased for $75.0 million pursuant to privately negotiated repurchases from REH Company.

Cash Flows – Operating Activities

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net cash flows provided by operating activities were $542.8 million for the six months ended June 30, 2024, compared to $667.7 million for the six months ended June 30, 2023, a decrease of $124.9 million primarily driven by a decrease in net income, partially offset by changes in working capital combined with lower turnaround spend during the six months ended June 30, 2024. Changes in working capital increased operating cash flows by $28.0 million for the six months ended June 30, 2024, and decreased operating cash flows by $374.0 million for the six months ended June 30, 2023. Additionally, for the six months ended June 30, 2024, turnaround expenditures were $169.3 million compared to $347.1 million for the six months ended June 30, 2023.

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Cash Flows – Investing Activities and Planned Capital Expenditures

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

For the six months ended June 30, 2024, our net cash flows used for investing activities were $173.5 million. Cash expenditures for properties, plants and equipment for the six months ended June 30, 2024, were $173.3 million.

For the six months ended June 30, 2023, our net cash flows used for investing activities were $176.3 million. Cash expenditures for properties, plants and equipment for the six months ended June 30, 2023, were $180.3 million.

Each year, our Board of Directors approves our annual capital budget, which includes specific projects that management is authorized to undertake. When conditions warrant or as new opportunities arise, additional projects may be approved. The funds appropriated for a particular capital project may be expended over a period of several years, depending on the time required to complete the project. Therefore, our planned capital expenditures for a given year consist of expenditures appropriated in that year’s capital budget plus expenditures for projects appropriated in prior years that have not yet been completed. Refinery turnaround spending is amortized over the useful life of the turnaround.

The refining industry is capital-intensive and requires ongoing investments to sustain our refining operations. This includes the replacement of, or rebuilding, refinery units and components that extend their useful life. We also invest in projects that improve operational reliability and profitability via enhancements that improve refinery processing capabilities as well as production yield and flexibility. Our capital expenditures also include projects related to renewable diesel, environmental, health and safety compliance and include initiatives as a result of federal and state mandates.

Our refinery operations and related emissions are highly regulated at both federal and state levels, and we invest in our facilities as needed to remain in compliance with these standards. Additionally, when faced with new emissions or fuel standards, we seek to execute projects that facilitate compliance and also improve the operating costs and/or yields of associated refining processes.

Expected capital and turnaround cash spending for 2024 is as follows:

	Expected Cash Spending
	(In millions)
HF Sinclair Capital Expenditures
Refining	$	235.0
Renewables	5.0
Lubricants & Specialties	40.0
Marketing	10.0
Midstream	30.0
Corporate	65.0
Turnarounds and catalyst	415.0
Total sustaining	$	800.0
Growth capital	75.0
Total	$	875.0

Cash Flows – Financing Activities

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

For the six months ended June 30, 2024, our net cash flows used for financing activities were $851.7 million. During the six months ended June 30, 2024, we repurchased $540.8 million of our common stock, paid $195.3 million in dividends and had net repayments of $105.5 million under the HEP Credit Agreement.

For the six months ended June 30, 2023, our net cash flows used for financing activities were $542.8 million. During the six months ended June 30, 2023, we repurchased $248.0 million of our common stock, paid $175.3 million in dividends and had net repayments of $62.0 million under the HEP Credit Agreement.

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Contractual Obligations and Commitments

During the six months ended June 30, 2024, we had net repayments of $105.5 million, resulting in $350.0 million of outstanding borrowings under the HEP Credit Agreement at June 30, 2024.

There were no other significant changes to our long-term contractual obligations during this period.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023. Certain critical accounting policies that materially affect the amounts recorded in our consolidated financial statements include assessing contingent liabilities for probable losses.

Contingencies

We are subject to proceedings, lawsuits and other claims related to environmental, labor, product and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy when dealing with these matters.

RISK MANAGEMENT

We use certain strategies to reduce some commodity price and operational risks. We do not attempt to eliminate all market risk exposures when we believe that the exposure relating to such risk would not be significant to our future earnings, financial position, capital resources or liquidity or that the cost of eliminating the exposure would outweigh the benefit.

Commodity Price Risk Management

Our primary market risk is commodity price risk. We are exposed to market risks related to the volatility in crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations. We periodically enter into derivative contracts in the form of commodity price swaps, collar contracts, forward purchase and sales and futures contracts to mitigate price exposure with respect to our inventory positions, natural gas purchases, sales prices of refined products and crude oil costs.

Foreign Currency Risk Management

We are exposed to market risk related to the volatility in foreign currency exchange rates. We periodically enter into derivative contracts in the form of foreign exchange forward contracts to mitigate the exposure associated with fluctuations on intercompany notes with our foreign subsidiaries that are not denominated in the U.S. dollar.

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As of June 30, 2024, we have the following notional contract volumes related to all outstanding derivative instruments used to mitigate commodity price and foreign currency risk:

		Notional Contract Volumes by Year of Maturity
Derivative Instrument	Total Outstanding Notional	2024	2025	Unit of Measure
Forward diesel contracts - short	125,000	125,000	—	Barrels
NYMEX futures (WTI) - short	1,790,000	1,790,000	—	Barrels
Forward gasoline and diesel contracts - long	150,000	150,000	—	Barrels
Foreign currency forward contracts	385,904,193	177,833,367	208,070,826	U.S. dollar
Forward commodity contracts (platinum) (1)	34,628	2,047	32,581	Troy ounces
Natural gas price swaps (basis spread) - long	2,208,000	2,208,000	—	MMBTU

(1)Represents an embedded derivative within our precious metals catalyst financing arrangements, which may be refinanced or require repayment under certain conditions. See Note 9 “Debt” in the Notes to Consolidated Financial Statements for additional information on these financing arrangements.

The following sensitivity analysis provides the hypothetical effects of market price fluctuations to the commodity hedged under our derivative contracts:

	Derivative Fair Value Gain (Loss) at June 30,
	2024		2023
	(In thousands)
10% increase in underlying commodity prices	$	(14,739)	$	(7,561)
10% decrease in underlying commodity prices	$	14,739	$	7,179

Interest Rate Risk Management

The market risk inherent in our fixed-rate debt is the potential change arising from increases or decreases in interest rates, as discussed below.

For the fixed rate HF Sinclair Senior Notes, HollyFrontier Senior Notes and HEP Senior Notes (each as set forth in Note 9 “Debt” in the Notes to Consolidated Financial Statements), changes in interest rates will generally affect the fair value of the debt, but not earnings or cash flows. The outstanding principal, estimated fair value and estimated change in fair value (assuming a hypothetical 10% change in the yield-to-maturity rates) for this debt as of June 30, 2024, is presented below:

	Outstanding Principal		Estimated Fair Value		Estimated Change in Fair Value
	(In thousands)
HollyFrontier Corporation, HF Sinclair and HEP Senior Notes	$	2,300,000	$	2,261,980	$	39,730

For the variable rate HF Sinclair Credit Agreement and HEP Credit Agreement, changes in interest rates would affect cash flows, but not the fair value. At June 30, 2024, outstanding borrowings under the HEP Credit Agreement were $350.0 million, and no borrowings were outstanding under the HF Sinclair Credit Agreement. A hypothetical 10% change in interest rates applicable to the HEP Credit Agreement would not materially affect cash flows.

Our operations are subject to catastrophic losses, operational hazards and unforeseen interruptions, including but not limited to fire, explosion, releases or spills, cyberattacks, weather-related perils, vandalism, power failures, mechanical failures and other events beyond our control. We maintain various insurance coverages, including general liability, property damage, business interruption and cyber insurance, which are subject to certain deductibles and insurance policy terms and conditions. We are not fully insured against certain risks because such risks are not fully insurable, coverage is unavailable, or premium costs, in our judgment, do not justify such expenditures.

Financial information is reviewed on the counterparties in order to review and monitor their financial stability and assess their ongoing ability to honor their commitments under the derivative contracts. We have not experienced, nor do we expect to experience, any difficulty in the counterparties honoring their commitments.

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We have a risk management oversight committee consisting of members from our senior management. This committee oversees our risk enterprise program, monitors our risk environment and provides direction for activities to mitigate identified risks that may adversely affect the achievement of our goals.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

See “Risk Management” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to amounts reported under generally accepted accounting principles in financial statements.

Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income attributable to HF Sinclair stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization. EBITDA is not a calculation provided for under GAAP; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants.

Below is our calculation of EBITDA:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(In thousands)
Net income attributable to HF Sinclair stockholders	$	151,788	$	507,661	$	466,452	$	860,927
Add interest expense	45,449		46,982		86,140		92,804
Subtract interest income	(18,495)		(17,591)		(40,674)		(37,526)
Add income tax expense	23,982		145,925		109,456		245,625
Add depreciation and amortization	205,320		189,360		404,049		363,343
EBITDA	$	408,044	$	872,337	$	1,025,423	$	1,525,173

Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Adjusted refinery gross margin is a non-GAAP performance measure that is used by our management and others to compare our refining performance to that of other companies in our industry. We believe this margin measure is helpful to investors in evaluating our refining performance on a relative and absolute basis, including against publicly available crack spread data. Adjusted refinery gross margin per produced barrel sold is total Refining segment gross margin plus lower of cost or market inventory valuation adjustments, depreciation and amortization and operating expenses, divided by sales volumes of produced refined products sold. This margin measure does not include the non-cash effects of lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period. Adjusted refinery gross margin is not a calculation provided for under GAAP and should not be considered in isolation or as a substitute for Refining segment gross margin. The GAAP measure most directly comparable to adjusted refinery gross margin is Refining segment gross margin. Other companies in our industry may not calculate these performance measures in the same manner. Due to rounding of reported numbers, some amounts may not calculate exactly.

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Reconciliation of Refining segment gross margin to adjusted refinery gross margin to adjusted refinery gross margin per produced barrel sold and adjusted refinery gross margin, less operating expenses per produced barrel sold

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(In thousands, except per barrel amounts)
Refining segment
Sales and other revenues	$	6,977,809	$	7,039,382	$	13,182,054	$	13,757,997
Cost of sales (exclusive of depreciation and amortization)	6,740,126		6,280,739		12,466,176		12,423,629
Depreciation and amortization	122,215		112,542		239,585		212,625
Gross margin	115,468		646,101		476,293		1,121,743
Add (subtract) lower of cost or market inventory adjustment	—		26,842		(220,558)		26,842
Add operating expenses	449,097		411,324		921,183		913,083
Add depreciation and amortization	122,215		112,542		239,585		212,625
Adjusted refinery gross margin	$	686,780	$	1,196,809	$	1,416,503	$	2,274,293
Produced barrels sold (BPD) (1)	666,250		598,180		648,860		557,300
Average per produced barrel sold:
Gross margin	$	1.90	$	11.87	$	4.03	$	11.12
Add (subtract) lower of cost or market inventory adjustment	—		0.49		(1.87)		0.27
Add operating expenses	7.41		7.56		7.80		9.05
Add depreciation and amortization	2.02		2.07		2.03		2.11
Adjusted refinery gross margin	$	11.33	$	21.99	$	11.99	$	22.55
Less operating expenses	7.41		7.56		7.80		9.05
Adjusted refinery gross margin, less operating expenses	$	3.92	$	14.43	$	4.19	$	13.50

(1)Represents the number of produced barrels sold per calendar day in the period.

Reconciliation of renewables operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Adjusted renewables gross margin is a non-GAAP performance measure that is used by our management and others to compare our renewables performance to that of other companies in our industry. We believe this margin measure is helpful to investors in evaluating our renewables performance on a relative and absolute basis. Adjusted renewables gross margin per produced gallon sold is total Renewables segment gross margin plus lower of cost or market inventory valuation adjustments, depreciation and amortization and operating expenses, divided by sales volumes of produced renewables products sold. This margin measure does not include the non-cash effects of lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period. Adjusted renewables gross margin is not a calculation provided for under GAAP and should not be considered in isolation or as a substitute for Renewables segment gross margin. The GAAP measure most directly comparable to adjusted renewables gross margin is Renewables segment gross margin. Other companies in our industry may not calculate these performance measures in the same manner. Due to rounding of reported numbers, some amounts may not calculate exactly.

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Reconciliation of Renewables segment gross margin to adjusted renewables gross margin to adjusted renewables gross margin per produced gallon sold and adjusted renewables gross margin, less operating expenses per produced gallon sold

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(In thousands, except per gallon amounts)
Renewables segment
Sales and other revenues	$	248,278	$	273,185	$	487,837	$	571,201
Cost of sales (exclusive of depreciation and amortization)	241,638		248,474		499,560		590,180
Depreciation and amortization	19,786		18,968		40,058		38,942
Gross margin	(13,146)		5,743		(51,781)		(57,921)
Add (subtract) lower of cost or market inventory adjustment	(3,123)		(34,705)		(1,935)		12,892
Add operating expenses	24,705		24,373		51,166		55,744
Add depreciation and amortization	19,786		18,968		40,058		38,942
Adjusted renewables gross margin	$	28,222	$	14,379	$	37,508	$	49,657
Produced gallons sold (in thousand gallons)	63,557		50,159		124,729		97,987
Average per produced gallon sold:
Gross margin	$	(0.21)	$	0.11	$	(0.42)	$	(0.59)
Add (subtract) lower of cost or market inventory adjustment	(0.05)		(0.69)		(0.02)		0.13
Add operating expenses	0.39		0.49		0.41		0.57
Add depreciation and amortization	0.31		0.38		0.33		0.40
Adjusted renewables gross margin	$	0.44	$	0.29	$	0.30	$	0.51
Less operating expenses	0.39		0.49		0.41		0.57
Adjusted renewables gross margin, less operating expenses	$	0.05	$	(0.20)	$	(0.11)	$	(0.06)

Reconciliation of marketing operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Adjusted marketing gross margin is a non-GAAP performance measure that is used by our management and others to compare our marketing performance to that of other companies in our industry. We believe this margin measure is helpful to investors in evaluating our marketing performance on a relative and absolute basis. Adjusted marketing gross margin per gallon sold is total Marketing segment gross margin plus depreciation and amortization, divided by sales volumes of marketing products sold. Adjusted marketing gross margin is not a calculation provided for under GAAP and should not be considered in isolation or as a substitute for Marketing segment gross margin. The GAAP measure most directly comparable to adjusted marketing gross margin is Marketing segment gross margin. Other companies in our industry may not calculate these performance measures in the same manner. Due to rounding of reported numbers, some amounts may not calculate exactly.

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Reconciliation of Marketing segment gross margin to adjusted marketing gross margin to adjusted marketing gross margin per gallon sold

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(In thousands, except per gallon amounts)
Marketing segment
Sales and other revenues	$	942,362	$	1,040,933	$	1,718,169	$	1,978,318
Cost of sales (exclusive of depreciation and amortization)	919,611		1,008,306		1,672,141		1,932,355
Depreciation and amortization	6,374		6,016		12,677		11,887
Gross margin	16,377		26,611		33,351		34,076
Add depreciation and amortization	6,374		6,016		12,677		11,887
Adjusted marketing gross margin	$	22,751	$	32,627	$	46,028	$	45,963
Sales volumes (in thousand gallons)	357,137		364,409		678,147		692,816
Average per gallon sold:
Gross margin	$	0.05	$	0.07	$	0.05	$	0.05
Add depreciation and amortization	0.01		0.02		0.02		0.02
Adjusted marketing gross margin	$	0.06	$	0.09	$	0.07	$	0.07

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Item 4.Controls and Procedures

Evaluation of disclosure controls and procedures. Our principal executive officer and principal financial officer have evaluated, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024.

Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings

Commitment and Contingency Reserves

In the ordinary course of business, we may become party to legal, regulatory or administrative proceedings or governmental investigations, including environmental and other matters. Damages or penalties may be sought from us in some matters and certain matters may require years to resolve. While the outcome and impact of these proceedings and investigations on us cannot be predicted with certainty, based on advice of counsel and information currently available to us, management believes that the resolution of these proceedings and investigations through settlement or adverse judgment will not either individually or in the aggregate have a material adverse effect on our financial condition, results of operations or cash flows.

The environmental proceedings are reported to comply with SEC regulations which require us to disclose proceedings arising under provisions regulating the discharge of materials into the environment or protecting the environment when a governmental authority is party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe could exceed $300,000 or more.

Environmental Matters

Navajo

HF Sinclair Navajo Refining LLC (“HFS Navajo”) has been engaged in discussions with, and has responded to document requests from, the EPA, the United States Department of Justice (the “DOJ”) and the New Mexico Environment Department (the “NMED”) (collectively, the “Navajo Matter Government Agencies”) regarding HFS Navajo’s compliance with the Clean Air Act (“CAA”) and underlying regulations, and similar New Mexico laws and regulations, at its Artesia and Lovington, New Mexico refineries. The discussions have included the following topics: (a) alleged noncompliance with CAA’s National Emission Standards for Hazardous Air Pollutants (“NESHAP”) and New Source Performance Standards (“NSPS”) at the Artesia refinery, which were set forth in a Notice of Violation (“May 2020 NOV”) issued by the EPA in May 2020; (b) a Post Inspection Notice issued in June 2020 by the NMED, alleging noncompliance issues similar to those alleged by the EPA in its May 2020 NOV as well as alleged noncompliance with the State Implementation Plan (“SIP”) and the Title V permit operating programs; (c) an information request issued in September 2020 by the EPA, pursuant to CAA Section 114, related to benzene fenceline monitoring, flare fuel gas, leak detection and repair, storage vessels and tanks, and other information regarding the Artesia refinery; (d) an information request issued by the EPA in May 2021, pursuant to CAA Section 114, requesting additional information and testing related to certain tanks at the Artesia refinery; and (e) informal information requests related to, among other things, the Artesia refinery’s wastewater treatment plant, oil water separators and heat exchangers. In each of April 2022, June 2023 and August 2023, the EPA alleged additional CAA noncompliance at the Artesia refinery beyond the allegations in the May 2020 NOV, including alleged noncompliance with NESHAP, NSPS, SIP, Title V and other requirements.

Beginning in the spring of 2021, HFS Navajo and the Navajo Matter Government Agencies began monthly meetings to discuss potential injunctive relief measures to address the alleged noncompliance at the Artesia refinery. In September 2021 and August 2023, the EPA presented to HFS Navajo potential claims for stipulated penalties for alleged noncompliance with a 2002 consent decree.

HFS Navajo continues to work with the Navajo Matter Government Agencies to resolve these issues. At this time, no penalties have been demanded, and it is too early to predict the outcome of this matter.

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Puget Sound

HF Sinclair Puget Sound Refining LLC (“HFS Puget Sound”) has been engaged in discussions with, and has responded to document requests from, the Northwest Clean Air Agency (“NWCAA”), the EPA and the DOJ (collectively, the “PSR Matter Government Agencies”) regarding HFS Puget Sound’s compliance with the CAA, Emergency Planning and Community Right-to-Know Act (“EPCRA”) and related regulations, and similar Washington laws and regulations, at its Puget Sound Refinery. HFS Puget Sound acquired the Puget Sound Refinery from Equilon Enterprises LLC dba Shell Oil Products US (“SOPUS”) on November 1, 2021. The discussions with the PSR Matter Government Agencies have included the following topics: (a) an information request issued in March 2022 by the EPA, pursuant to CAA Section 114, covering periods of ownership of the Puget Sound Refinery by both HFS Puget Sound and SOPUS; (b) a Notice of Violation issued by the EPA to SOPUS and HFS Puget Sound on September 29, 2023, alleging violations of the CAA, EPCRA and the Pollution Prevention Act; and (c) the PSR Matter Government Agencies’ potential injunctive relief demands presented to SOPUS and HFS Puget Sound on June 28 and July 15, 2024, covering various process units at Puget Sound Refinery to address the alleged noncompliance. HFS Puget Sound believes that it is entitled to indemnification for certain of the matters described above.

HFS Puget Sound continues to work with the PSR Matter Government Agencies to resolve these issues.

At this time, no penalties have been demanded, and it is too early to predict the outcome of this matter.

Renewable Fuel Standard

On April 7, 2022, the EPA issued a decision reversing the grant of small refinery exemptions for our Woods Cross and Cheyenne refineries for the 2018 compliance year. On June 3, 2022, the EPA issued a decision reversing the grant of small refinery exemptions for our Woods Cross and Cheyenne refineries for the 2016 compliance year and denying small refinery exemption petitions for our Woods Cross and Cheyenne refineries for the 2019 and 2020 compliance years.

Certain of our subsidiaries pursued legal challenges to the EPA’s decisions to deny small refinery exemptions for the 2016, 2018, 2019 and 2020 compliance years. The first lawsuit, filed against the EPA on May 6, 2022, before the U.S. Court of Appeals for the DC Circuit, sought to have the EPA’s reversal of our 2018 small refinery exemption petitions overturned. The second lawsuit, filed against the EPA on August 5, 2022, before the U.S. Court of Appeals for the DC Circuit, sought to have the EPA’s reversal of our 2016 small refinery exemption petitions overturned and to have the EPA’s denial of our 2019 and 2020 small refinery exemption petitions reversed.

In addition, for both the 2016 and 2018 compliance years, pursuant to the June 2022 and April 2022 decisions, respectively, the EPA established an alternative compliance demonstration for small refineries pursuant to which the EPA is not imposing any obligations for the small refineries whose exemptions were reversed. On June 24, 2022, Growth Energy filed two lawsuits in the U.S. Court of Appeals for the DC Circuit against the EPA challenging the alternative compliance demonstration for the 2016 and 2018 compliance years. On July 25, 2022, certain of our subsidiaries intervened on behalf of the EPA to aid the defense of the EPA’s alternative compliance demonstration decision.

On July 26, 2024, the U.S. Court of Appeals for the DC Circuit issued a favorable decision vacating the EPA’s denial of all of our small refinery exemption petitions, finding the denial to be unlawful. The DC Circuit will remand the small refinery exemption petitions to the EPA for new determination. The DC Circuit also upheld the alternative compliance demonstration and denied Growth Energy’s challenge.

Since these decisions are still subject to appeal, it is too early to determine their final impact.

Other

We are a party to various other litigation and proceedings that we believe, based on the advice of counsel, will not either individually or in the aggregate have a materially adverse impact on our financial condition, results of operations or cash flows.

Item 1A.Risk Factors

There have been no material changes in our risk factors as previously disclosed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. You should carefully consider the risk factors discussed in our 2023 Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(c) Common Stock Repurchases Made in the Quarter

The following table discloses purchases of shares of our common stock made by us during the second quarter of 2024:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number  of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
April 2024	5,000,000	$	59.22	5,000,000	$	214,194,423
May 2024	1,348,435	$	55.62	1,348,435	$	925,000,045
June 2024	—	$	—	—	$	925,000,045
Total for April to June 2024	6,348,435			6,348,435

(1)In May 2024, our Board of Directors approved a $1.0 billion share repurchase program (the “May 2024 Share Repurchase Program”), which replaced approximately $214.2 million remaining authorization under the share repurchase program approved by our Board of Directors in August 2023 (the “August 2023 Share Repurchase Program”). The May 2024 Share Repurchase Program authorized us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH Company (and together with its affiliate REH Advisors Inc., “REH”) were also authorized under this share repurchase program, subject to REH’s interest in selling its shares and other limitations. As of June 30, 2024, we had remaining authorization to repurchase up to $925.0 million under the May 2024 Share Repurchase Program.

On April 1, 2024, we repurchased 5,000,000 shares of our outstanding common stock from REH Company in a privately negotiated transaction under the August 2023 Share Repurchase Program and pursuant to the Stock Purchase Agreement, dated April 1, 2024 (the “April 2024 Stock Purchase Agreement”), between us and REH Company. The price paid under the April 2024 Stock Purchase Agreement was $59.22 per share resulting in an aggregate purchase price of $296.1 million. The purchase price was funded with cash on hand.

On May 14, 2024, we repurchased 1,348,435 shares of our outstanding common stock from REH Company in a privately negotiated transaction under the May 2024 Share Repurchase Program and pursuant to the Stock Purchase Agreement, dated May 14, 2024 (the “May 2024 Stock Purchase Agreement”), between us and REH Company. The price paid under the May 2024 Stock Purchase Agreement was $55.62 per share resulting in an aggregate purchase price of $75.0 million. The purchase price was funded with cash on hand.

Item 5. Other Information

None.

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Item 6.Exhibits

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of HF Sinclair Corporation (incorporated by reference to Exhibit 3.1 of Registrant’s Current Report on Form 8-K12B filed March 14, 2022, File No. 1-41325).
3.2	Amended and Restated By-Laws of HF Sinclair Corporation (incorporated by reference to Exhibit 3.1 of Registrant’s Current Report on Form 8-K filed February 6, 2024, File No. 1-41325).
10.1	Stock Purchase Agreement, dated as of April 1, 2024, by and among HF Sinclair Corporation and REH Company (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed April 2, 2024, File No. 1-41325).
10.2	Stock Purchase Agreement, dated as of May 14, 2024, by and among HF Sinclair Corporation and REH Company (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed May 16, 2024, File No. 1-41325).
31.1*	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
101++	The following financial information from HF Sinclair Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted as inline XBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, and (v) Notes to the Consolidated Financial Statements. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
104++	Cover page Interactive Data File (formatted as inline XBRL and contained in exhibit 101).

* Filed herewith.

** Furnished herewith.

++ Filed electronically herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HF SINCLAIR CORPORATION
	(Registrant)
Date: August 1, 2024		/s/ Atanas H. Atanasov
		Atanas H. Atanasov
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Date: August 1, 2024		/s/ Vivek Garg
		Vivek Garg
		Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)

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