HF Sinclair Corporation and Holly Energy Partners, L.P (NYSE:HEP) have reported their Q3 2023 earnings, with both companies disclosing an Earnings Per Share (EPS) of $0.5, a slight miss from the anticipated $0.52. The earnings call was led by Tim Go, CEO of HF Sinclair, along with other executives.
The two firms reported a robust net income of $791 million or $4.23 per diluted share, and an adjusted net income of $760 million or $4.06 per diluted share. Despite these strong figures, both companies saw a significant 20% decline in adjusted EBITDA compared to Q3 2022, which stood at $1.2 billion for the recent quarter. This decrease has been attributed to lower refining margins and a decrease in product sales volumes.
In terms of segment performance, the Refining segment contributed $1 billion to the adjusted EBITDA, impacted by lower refining margins and reduced refined product sales volumes. The Casper and Tulsa refineries successfully completed turnarounds within the quarter. Meanwhile, the Renewables segment reported a positive adjusted EBITDA of $5 million for Q3 2023.
The Marketing segment reported an EBITDA of $21 million and record branded fuel sales volumes of 398,000,000 gallons. The Lubricants & Specialties Products segment reported an EBITDA of $118 million.
HEP's Q2 2023 EBITDA was driven by tariff increases effective from July 1, 2023, resulting in $94 million. It was also disclosed that HF Sinclair entered into a definitive merger agreement with HEP on August 15, 2023.
Regarding shareholder returns, HF Sinclair paid a quarterly dividend of $0.45 per share totaling $84 million and spent $586 million on share repurchases in Q3 2023. This resulted in a total cash return of over $1.09 billion, reducing the share count by 8%.
As of September 30, 2023, HF Sinclair's standalone liquidity stood at approximately $3.85 billion, with a debt-to-cap ratio of 15%. The company's standalone capital expenditures totaled $75 million for Q3 2023.
HEP generated distributable cash flow of $78 million in Q3 2023, while HF Sinclair owns 59.6 million HEP limited partner units. HF Sinclair's net cash flows for Q3 2023 totaled $1.4 billion. Lastly, HEP's third quarter net income was $63 million, and the adjusted EBITDA was $119 million.
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