HF Sinclair Posts Strong Q2 Results on Another Good Refining Performance; Repurchases Resume

HF Sinclair exceeded market expectations, reporting adjusted earnings of $1,258.5 million in the second quarter compared with $143.8 million a year ago largely thanks to strong refining results. After reinstating the dividend earlier than expected at a higher rate of $0.40 per share in the first quarter, it maintained that level for the second quarter. Including the dividend and $110.4 million in repurchases, it returned $200.6 million to shareholders during the quarter. Given its debt and cash balance targets have been achieved and market conditions remain favorable, we expect greater repurchase amounts in the third quarter as management works toward its $1 billion in shareholder returns by Q1 2023. Our fair value estimate and narrow moat rating are unchanged. HF is one of the cheaper refiners under our coverage.