HF Sinclair Earnings: Earnings Slide on Weaker Refining Margins, but Operation Improvement Evident

HF Sinclair's second-quarter adjusted earnings decreased to $149.3 million from $503.8 million a year ago, surpassing market expectations. The decline was largely attributable to a fall in refining results even as operations improved. The refining segment's adjusted EBITDA fell to $186.9 million from $732.4 million a year ago, as realized refining margins during the quarter fell to $11.33 per barrel from $21.99 a year ago. Crude throughput increased to 634.7 thousand barrels a day during the quarter from 553.9 mb/d last year on less turnaround activity and improved reliability, while operating expense per barrel fell to $7.29 from $7.55 a year ago. Management is targeting $7.25/bbl in the near term, with long-term plans to achieve $6.50/bbl. Our fair value estimate and narrow moat rating are unchanged.