HF Sinclair Corporation

10/28/2026 | Press release | Distributed by Public on 10/28/2026 11:19

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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 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.
We use certain non-GAAP financial measures in our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"). For a description of each of the non-GAAP measures used in this MD&A, please refer to the discussion under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" following Item 2 of Part I of this Quarterly Report on Form 10-Q. This Item 2 should be read in conjunction with our consolidated financial statements and the notes thereto included in this interim report. In addition, this Item 2 should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025.
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 lubricants and 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 1,850 branded stations and license the use of the Sinclair brand to more than 350 additional locations throughout the country. We produce renewable diesel at two of our facilities in Wyoming and one facility in New Mexico. In addition, we 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.
Market Developments
For the three months ended September 30, 2026, Net income attributable to HF Sinclair stockholders was $2,015 million, compared to a Net income attributable to HF Sinclair stockholders of $403 million for the three months ended September 30, 2025. For the nine months ended September 30, 2026, Net income attributable to HF Sinclair stockholders was $3,555 million, compared to $607 million for the nine months ended September 30, 2025.
Adjusted refinery gross margin per barrel sold increased $35.06, or 183%, from $19.16 for the three months ended September 30, 2025 to $54.22 for the three months ended September 30, 2026. Adjusted refinery gross margin per barrel sold increased $15.05, or 100%, from $15.07 for the nine months ended September 30, 2025 to $30.12 for the nine months ended September 30, 2026.
In the Refining segment, we saw favorable refining margins in the Mid-Continent and West regions, driven principally by the tight supply of transportation fuels across the markets, elevated crack spreads and benefits from the small refinery RINs waivers granted by the EPA. Additionally, stronger transportation fuel sales in the West region were offset by lower sales in the Mid-Continent region due to the planned turnaround at our El Dorado refinery. For the fourth quarter of 2026, we expect to run between 560,000-600,000 barrels per day of crude oil, which reflects the completion of the planned turnaround at our El Dorado refinery.
In the Renewables segment, margins were favorably impacted in the third quarter of 2026 by improved RINs prices, higher Producer's Tax Credit ("PTC") benefits and increased sales volumes. During the third quarter of 2025, we were only able to recognize partial benefits from the PTC.
In the Marketing segment, we continued to realize strong value from our Sinclair branded sites during the third quarter of 2026, as the marketing business provided a consistent sales channel with margin uplift for our produced fuels. We expect to grow the number of branded sites by approximately 10% annually.
During the three months ended September 30, 2026, the Lubricants & Specialties segment continued to see solid performance (excluding first-in, first out ("FIFO") impacts), driven by sales mix optimization and strong product and base oil prices, despite one-time costs related to the decision to retire our Mississauga, Ontario base oil refining assets (the "Mississauga Refinery").
In the Midstream segment, our results continued to benefit from higher pipeline revenues and throughput volumes, offset by higher operating expenses during the three months ended September 30, 2026.
We continue to review and adjust our operational plans to evolving market conditions. The extent to which our future results are affected by volatile regional and global economic conditions, including ongoing tariff and trade negotiations and global hostilities, such as the ongoing military conflicts in Ukraine and the Middle East, will depend on various factors and consequences beyond our control.
On August 26, 2026, our Board of Directors (the "Board") approved a new $1.5 billion share repurchase program (the "New Share Repurchase Program"), which replaced all existing share repurchase programs, including the approximately $11 million remaining under the share repurchase program initially authorized by the Board in May 2024 (the "2024 Share Repurchase Program"). The New Share Repurchase Program authorizes us to repurchase common stock in the open market or through privately negotiated transactions, including transactions with REH Advisors Inc. ("REH") (now the parent company of REH Company, LLC), which are 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 to repurchase shares in an amount sufficient to offset shares issued under our compensation programs. The Board has discretion to cancel the New Share Repurchase Program at any time.
On October 28, 2026, our Board declared a regular quarterly dividend in the amount of $0.525 per share, payable on December 2, 2026 to holders of record of common stock on November 12, 2026.
Western Gateway
In August 2026, we entered into a joint venture with affiliates of Phillips 66 and Kinder Morgan to form the proposed Western Gateway Pipeline system ("Western Gateway"). We will own a 15.0% interest in the joint venture while Phillips 66 and Kinder Morgan will own the remaining 49.9% and 35.1% interests, respectively. Western Gateway is a proposed 1,300-mile refined products pipeline system that would create a new fuel supply path from St. Louis, Missouri, to Arizona and California.
Lubricants & Specialties Planned Separation
In July 2026, we announced plans to pursue a separation of our Lubricants & Specialties segment through the capital markets, creating a new independent, publicly traded company (the "Planned Separation"). The Planned Separation is expected to be executed in a tax-efficient manner. We expect the Planned Separation will be in the form of a distribution of at least 80.1% of the Lubricants & Specialties company's stock and will be substantially completed over the course of 2027.
Mississauga Asset Retirement
In July 2026, concurrently with the announcement of the Planned Separation, we announced the decision to retire the Mississauga Refinery, with the transition expected to be substantially completed in the second half of 2027 (the "Mississauga Asset Retirement"). The Lubricants & Specialties business will maintain the continued operations of its R&D laboratory, lubricant blending and packaging, as well as supply chain, logistics, and commercial operations in the Ontario region, and will also continue to deliver base oil solutions through strategic third-party commercial arrangements, complemented by continued access to Group I and specialty products from HF Sinclair's Tulsa refinery. See Note 2 "Lubricants & Specialties Planned Separation and Mississauga Asset Retirement" in the Consolidated Financial Statements for additional information.
Renewable Fuel Standard Regulations
Pursuant to the 2007 Energy Independence and Security Act, the 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 satisfy annual renewable volume obligations calculated as a percentage of their petroleum fuel shipments or imports, which may be met through physical blending of renewable fuels or by purchasing and retiring RINs. Excluding the benefits from small refinery RINs waivers granted by the EPA, our compliance costs related to the RFS regulation significantly increased our Cost of materials and other to $516 million and $1,512 million for the three and nine months ended September 30, 2026, respectively. For the three and nine months ended September 30, 2026, the Refining segment recognized $181 million and $364 million in revenues related to RINs sales which are included in Sales and other revenues in our consolidated statement of operations. Small refinery RINs waivers granted increased pre-tax earnings by $603 million for the nine months ended September 30, 2026. We recognized $582 million in Cost of materials and other and $21 million in Sales and other revenues related to the small refinery RINs waivers granted in the third quarter of 2026 and the fourth quarter of 2025, respectively. At September 30, 2026, our open RINs credit obligations were $41 million. For additional information regarding the RFS and small refinery RINs waivers, refer to the discussion under "Renewable Fuel Standard" in Item 1 of Part II of this Quarterly Report on Form 10-Q.
A more detailed discussion of our financial and operating results for the three and nine months ended September 30, 2026 and 2025 is presented in the following sections.
RESULTS OF OPERATIONS
Financial Data
Three Months Ended September 30,
Change from 2025
2026 2025 Change Percent
(In millions, except share and per share data)
Sales and other revenues $ 10,857 $ 7,251 $ 3,606 50 %
Operating costs and expenses:
Cost of sales: (1)
Cost of materials and other (2)
7,012 5,692 1,320 23 %
Lower of cost or market inventory valuation adjustments (30) 66 (96) NM
Operating expenses 723 590 133 23 %
7,705 6,348 1,357 21 %
Selling, general and administrative expenses (1)
146 105 41 39 %
Depreciation and amortization 278 230 48 21 %
Other operating expenses, net 56 4 52 1,300 %
Total operating costs and expenses 8,185 6,687 1,498 22 %
Income from operations 2,672 564 2,108 374 %
Other income (expense):
Earnings of equity method investments 5 6 (1) (17) %
Interest income 25 11 14 127 %
Interest expense (54) (51) (3) 6 %
Other income (expense), net
1 (2) 3 NM
(23) (36) 13 (36) %
Income before income taxes 2,649 528 2,121 402 %
Income tax expense:
Current 622 74 548 741 %
Deferred 10 49 (39) (80) %
632 123 509 414 %
Net income 2,017 405 1,612 398 %
Less: net income attributable to noncontrolling interests 2 2 - - %
Net income attributable to HF Sinclair stockholders $ 2,015 $ 403 $ 1,612 400 %
Earnings per share attributable to HF Sinclair stockholders:
Basic $ 11.38 $ 2.15 $ 9.23 429 %
Diluted $ 11.38 $ 2.15 $ 9.23 429 %
Average number of common shares outstanding (in thousands):
Basic 175,871 186,499 (10,628) (6) %
Diluted 175,871 186,499 (10,628) (6) %
Nine Months Ended September 30,
Change from 2025
2026 2025 Change Percent
(In millions, except per share data)
Sales and other revenues $ 28,370 $ 20,405 $ 7,965 39 %
Operating costs and expenses:
Cost of sales: (1)
Cost of materials and other (2)
21,125 16,608 4,517 27 %
Lower of cost or market inventory valuation adjustments (672) 97 (769) NM
Operating expenses 2,001 1,758 243 14 %
22,454 18,463 3,991 22 %
Selling, general and administrative expenses (1)
391 323 68 21 %
Depreciation and amortization 735 681 54 8 %
Other operating expenses, net 103 18 85 472 %
Total operating costs and expenses 23,683 19,485 4,198 22 %
Income from operations 4,687 920 3,767 409 %
Other income (expense):
Earnings of equity method investments 19 27 (8) (30) %
Interest income 50 27 23 85 %
Interest expense (115) (153) 38 (25) %
Other income (expense), net
19 (48) 67 NM
(27) (147) 120 (82) %
Income before income taxes 4,660 773 3,887 503 %
Income tax expense:
Current 967 106 861 812 %
Deferred 133 54 79 146 %
1,100 160 940 588 %
Net income 3,560 613 2,947 481 %
Less: net income attributable to noncontrolling interests 5 6 (1) (17) %
Net income attributable to HF Sinclair stockholders $ 3,555 $ 607 $ 2,948 486 %
Earnings per share attributable to HF Sinclair stockholders:
Basic $ 19.75 $ 3.21 $ 16.54 515 %
Diluted $ 19.75 $ 3.21 $ 16.54 515 %
Average number of common shares outstanding (in thousands):
Basic 178,630 187,688 (9,058) (5) %
Diluted 178,630 187,688 (9,058) (5) %
(1) Exclusive of Depreciation and amortization.
(2) Exclusive of Lower of cost or market inventory valuation adjustments.
Balance Sheet Data
September 30, 2026 December 31, 2025
(In millions)
Cash and cash equivalents $ 3,333 $ 978
Working capital $ 5,025 $ 2,327
Total assets $ 20,697 $ 16,510
Total debt $ 2,774 $ 2,769
Total equity $ 11,784 $ 9,249
Other Financial Data
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(In millions)
Net cash provided by operating activities $ 1,784 $ 809 $ 3,751 $ 1,307
Net cash used for investing activities $ (136) $ (148) $ (416) $ (341)
Net cash used for financing activities $ (577) $ (84) $ (977) $ (323)
Capital expenditures $ 137 $ 121 $ 357 $ 318
EBITDA (1)
$ 2,954 $ 796 $ 5,455 $ 1,574
(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) Income tax expense, (ii) Interest expense, net of Interest income 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 Income from operations 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 financial indicator widely 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 2 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 18 "Segment Information" in the 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. This margin measure does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to inventory held 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 2 of Part I of this Quarterly Report on Form 10-Q.
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Mid-Continent Region
Crude charge (BPD) (1)
250,340 280,240 262,170 264,580
Refinery throughput (BPD) (2)
268,820 296,220 279,420 280,920
Sales of produced refined products (BPD) (3)
243,520 281,040 260,900 265,300
Refinery utilization (4)
96.3 % 107.8 % 100.8 % 101.8 %
Average per produced barrel sold: (5)
Gross margin (6)
$ 42.47 $ 8.08 $ 19.68 $ 4.01
Adjusted refinery gross margin (7)
$ 53.38 $ 17.50 $ 24.50 $ 13.71
Less: operating expenses (8)
8.59 6.20 7.65 6.52
Adjusted refinery gross margin, less operating expenses $ 44.79 $ 11.30 $ 16.85 $ 7.19
Operating expenses per throughput barrel (9)
$ 7.78 $ 5.88 $ 7.14 $ 6.15
Feedstocks:
Sweet crude oil 52 % 52 % 53 % 51 %
Sour crude oil 26 % 27 % 26 % 25 %
Heavy sour crude oil 15 % 16 % 15 % 18 %
Other feedstocks and blends 7 % 5 % 6 % 6 %
Total 100 % 100 % 100 % 100 %
Sales of produced refined products:
Gasolines 50 % 50 % 50 % 51 %
Diesel fuels 30 % 32 % 31 % 32 %
Jet fuels 8 % 7 % 8 % 7 %
Fuel oil 1 % 1 % 1 % 1 %
Asphalt 5 % 4 % 4 % 3 %
Base oils 4 % 4 % 4 % 4 %
LPG and other 2 % 2 % 2 % 2 %
Total 100 % 100 % 100 % 100 %
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
West Region
Crude charge (BPD) (1)
363,720 358,810 360,100 355,910
Refinery throughput (BPD) (2)
391,160 384,860 386,610 381,960
Sales of produced refined products (BPD) (3)
400,020 380,100 391,880 378,890
Refinery utilization (4)
87.0 % 85.8 % 86.1 % 85.1 %
Average per produced barrel sold: (5)
Gross margin (6)
$ 42.29 $ 9.30 $ 24.47 $ 4.82
Adjusted refinery gross margin (7)
$ 54.73 $ 20.38 $ 33.87 $ 16.02
Less: operating expenses (8)
9.91 8.18 9.08 8.48
Adjusted refinery gross margin, less operating expenses $ 44.82 $ 12.20 $ 24.79 $ 7.54
Operating expenses per throughput barrel (9)
$ 10.14 $ 8.08 $ 9.21 $ 8.41
Feedstocks:
Sweet crude oil 29 % 33 % 29 % 32 %
Sour crude oil 47 % 44 % 48 % 45 %
Heavy sour crude oil 11 % 11 % 10 % 11 %
Wax crude oil 6 % 5 % 6 % 5 %
Other feedstocks and blends 7 % 7 % 7 % 7 %
Total 100 % 100 % 100 % 100 %
Sales of produced refined products:
Gasolines 50 % 51 % 51 % 52 %
Diesel fuels 30 % 32 % 30 % 33 %
Jet fuels 8 % 6 % 7 % 6 %
Fuel oil 2 % 2 % 3 % 2 %
Asphalt 3 % 3 % 2 % 2 %
LPG and other 7 % 6 % 7 % 5 %
Total 100 % 100 % 100 % 100 %
Consolidated
Crude charge (BPD) (1)
614,060 639,050 622,270 620,490
Refinery throughput (BPD) (2)
659,980 681,080 666,030 662,880
Sales of produced refined products (BPD) (3)
643,540 661,140 652,780 644,190
Refinery utilization (4)
90.6 % 94.3 % 91.8 % 91.5 %
Average per produced barrel sold: (5)
Gross margin (6)
$ 42.36 $ 8.78 $ 22.56 $ 4.49
Adjusted refinery gross margin (7)
$ 54.22 $ 19.16 $ 30.12 $ 15.07
Less: operating expenses (8)
9.41 7.34 8.51 7.67
Adjusted refinery gross margin, less operating expenses $ 44.81 $ 11.82 $ 21.61 $ 7.40
Operating expenses per throughput barrel (9)
$ 9.18 $ 7.12 $ 8.34 $ 7.45
Feedstocks:
Sweet crude oil 39 % 42 % 39 % 40 %
Sour crude oil 39 % 36 % 39 % 37 %
Heavy sour crude oil 12 % 13 % 12 % 14 %
Wax crude oil 3 % 3 % 3 % 3 %
Other feedstocks and blends 7 % 6 % 7 % 6 %
Total 100 % 100 % 100 % 100 %
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Consolidated
Sales of produced refined products:
Gasolines 50 % 51 % 51 % 52 %
Diesel fuels 30 % 31 % 31 % 31 %
Jet fuels 8 % 7 % 7 % 7 %
Fuel oil 1 % 2 % 2 % 2 %
Asphalt 4 % 3 % 3 % 2 %
Base oils 2 % 2 % 2 % 2 %
LPG and other 5 % 4 % 4 % 4 %
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 produced refined products 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 2 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 produced refined products.
(7)Adjusted refinery gross margin 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 2 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 produced refined products.
(9)Represents total Refining segment Operating expenses, exclusive of Depreciation and amortization, divided by refinery throughput.
Renewables Segment Operating Data
The following table sets forth information, including non-GAAP performance measures, about our renewables operations. 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. 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 2 of Part I of this Quarterly Report on Form 10-Q.
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Renewables
Sales of produced renewables products (in thousand gallons) 63,195 57,159 175,548 156,408
Average per produced gallon sold: (1)
Gross margin (2)
$ 1.97 $ (0.94) $ 2.19 $ (0.61)
Adjusted renewables gross margin (3)
$ 2.11 $ 0.18 $ 2.48 $ 0.24
Less: operating expenses (4)
0.37 0.39 0.39 0.43
Adjusted renewables gross margin, less operating expenses $ 1.74 $ (0.21) $ 2.09 $ (0.19)
(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 2 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 produced renewables products.
(3)Adjusted renewables gross margin 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 2 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 produced renewables products.
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. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" following Item 2 of Part I of this Quarterly Report on Form 10-Q.
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Marketing
Number of branded sites at period end (1)
1,852 1,705 1,852 1,705
Sales of refined products (in thousand gallons) 420,175 360,482 1,131,454 991,494
Average per gallon sold: (2)
Gross margin (3)
$ 0.10 $ 0.09 $ 0.09 $ 0.09
Adjusted marketing gross margin (4)
$ 0.12 $ 0.11 $ 0.11 $ 0.11
(1)Includes certain non-Sinclair branded sites.
(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 2 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.
(4)Adjusted marketing gross margin 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 2 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 September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Lubricants & Specialties
Sales of produced refined products (BPD) 30,190 32,008 34,361 30,981
Sales of produced refined products:
Finished products 52 % 49 % 48 % 51 %
Base oils 26 % 26 % 27 % 25 %
Other 22 % 25 % 25 % 24 %
Total 100 % 100 % 100 % 100 %
Midstream Segment Operating Data
The following table sets forth information about our midstream operations.
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Midstream
Volumes (BPD)
Pipelines:
Affiliates-refined product pipelines 143,063 141,617 155,762 150,434
Affiliates-intermediate pipelines 133,405 139,868 140,469 137,194
Affiliates-crude pipelines 474,504 464,323 463,941 424,426
750,972 745,808 760,172 712,054
Third parties-refined product pipelines 40,435 37,754 33,451 39,981
Third parties-crude pipelines 208,209 195,994 190,379 194,882
999,616 979,556 984,002 946,917
Terminals and loading racks:
Affiliates 965,323 1,045,066 1,008,989 1,002,107
Third parties 33,598 39,705 29,109 38,643
998,921 1,084,771 1,038,098 1,040,750
Total for pipelines and terminal assets (BPD)
1,998,537 2,064,327 2,022,100 1,987,667
Results of Operations - Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
Summary
Net income attributable to HF Sinclair stockholders for the three months ended September 30, 2026 was $2,015 million ($11.38 per basic and diluted share), a $1,612 million increase compared to $403 million ($2.15 per basic and diluted share) for the three months ended September 30, 2025. The increase in Net income attributable to HF Sinclair stockholders was principally driven by higher adjusted refinery gross margins in both the West and Mid-Continent regions. Adjusted refinery gross margin per produced barrel sold for the three months ended September 30, 2026 increased to $54.22 as compared to $19.16 for the three months ended September 30, 2025, primarily due to higher average sales prices per barrel and small refinery RINs waivers granted by the EPA, partially offset by higher crude oil and feedstock prices per barrel. Lower of cost or market inventory valuation adjustments decreased $96 million from a $66 million charge related to our Refining and Renewables segments' inventories for the three months ended September 30, 2025, to a $30 million benefit related to our Renewables segment inventories for the three months ended September 30, 2026.
Adjusted renewables gross margin for the three months ended September 30, 2026 increased to $2.11 per produced gallon sold as compared to $0.18 for the three months ended September 30, 2025 primarily due to higher RINs prices and PTC benefits. These favorable impacts were partially offset by a $509 million increase in Income tax expense and $109 million of additional costs and incremental accelerated depreciation and amortization charges recorded in relation to the Mississauga Asset Retirement.
Sales and Other Revenues
Sales and other revenues increased $3,606 million, or 50%, from $7,251 million for the three months ended September 30, 2025, to $10,857 million for the three months ended September 30, 2026, principally due to higher average refined product sales prices, partially offset by lower product sales volumes and higher crude oil and feedstock prices. Revenues from external customers during the third quarter of 2026 include $182 million, $1,576 million, $924 million and $34 million related to our Renewables, Marketing, Lubricants & Specialties and Midstream segments, respectively. Revenues from external customers included $163 million, $898 million, $654 million and $29 million related to our Renewables, Marketing, Lubricants & Specialties and Midstream segments for the three months ended September 30, 2025.
Cost of Materials and Other
Cost of materials and other, exclusive of Lower of cost or market inventory valuation adjustments, increased $1,320 million, or 23%, from $5,692 million for the three months ended September 30, 2025, to $7,012 million for the three months ended September 30, 2026, principally due to higher crude oil and feedstock costs which were offset by lower product sales volumes and the grant of small refinery RINs waivers. Within our Lubricants & Specialties segment, the FIFO impact resulted in a benefit of $22 million and $2 million for the three months ended September 30, 2026 and 2025, respectively.
During the third quarter of 2026, we recognized a lower of cost or market inventory valuation adjustment benefit of $30 million compared to a charge of $66 million during the third quarter of 2025.
Adjusted Refinery Gross Margin
Adjusted refinery gross margin per produced barrel sold increased $35.06, or 183%, from $19.16 for the three months ended September 30, 2025, to $54.22 for the three months ended September 30, 2026. The increase was primarily driven by improved crack spreads on refined products in both the Mid-Continent and West regions and the grant of small refinery RINs waivers, partially offset by lower product sales volumes for the three months ended September 30, 2026.
Adjusted refinery gross margin per produced barrel sold is a non-GAAP measure and excludes the non-cash effects of Lower of cost or market inventory valuation adjustment, Operating expenses, and Depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" following Item 2 of Part I of this Quarterly Report on Form 10-Q.
Operating Expenses
Operating expenses increased $133 million, or 23%, from $590 million for the three months ended September 30, 2025, to $723 million for the three months ended September 30, 2026, primarily due to higher employee benefits, maintenance, environmental remediation and other miscellaneous costs, partially offset by lower electricity and natural gas costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $41 million, or 39%, from $105 million for the three months ended September 30, 2025, to $146 million for the three months ended September 30, 2026, primarily due to higher employee benefits, professional services and other miscellaneous costs.
Depreciation and Amortization Expenses
Depreciation and amortization increased $48 million, or 21% from $230 million for the three months ended September 30, 2025 to $278 million for the three months ended September 30, 2026, primarily due to $54 million of incremental accelerated depreciation and amortization in connection with the Mississauga Asset Retirement. See Note 2 "Lubricants & Specialties Planned Separation and Mississauga Asset Retirement" in the Consolidated Financial Statements for information regarding the Mississauga Asset Retirement.
Other Operating Expenses, Net
Other operating expenses, net increased $52 million, or 1,300% from $4 million for the three months ended September 30, 2025, to $56 million for the three months ended September 30, 2026, primarily due to the abandonment of certain assets under construction at the Mississauga Refinery and severance costs in connection with the Mississauga Asset Retirement. See Note 2 "Lubricants & Specialties Planned Separation and Mississauga Asset Retirement" in the Consolidated Financial Statements for information regarding the Mississauga Asset Retirement.
Interest Income
Interest income increased $14 million, or 127%, from $11 million for the three months ended September 30, 2025, to $25 million for the three months ended September 30, 2026, primarily due to higher cash balances.
Interest Expense
Interest expense increased $3 million, or 6%, from $51 million for the three months ended September 30, 2025, to $54 million for the three months ended September 30, 2026, primarily due to unrealized losses on precious metals financing arrangements during the period.
Income Taxes
For the three months ended September 30, 2026, Income tax expense of $632 million was recorded on pre-tax income of $2,649 million, compared to Income tax expense of $123 million on pre-tax income of $528 million for the three months ended September 30, 2025. The increase was primarily due to higher pre-tax earnings year-over-year. For the three months ended September 30, 2026, the effective tax rate of 23.8% was higher than the statutory rate of 21.0%, primarily due to state and local income taxes on pre-tax earnings, partially offset by the benefits of nontaxable renewable fuel incentives. For the three months ended September 30, 2025, the effective tax rate was higher than the statutory rate of 21.0%, primarily due to pre-tax results and the effects of state and local income tax.
Results of Operations - Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Summary
Net income attributable to HF Sinclair stockholders for the nine months ended September 30, 2026, was $3,555 million ($19.75 per basic and diluted share), a $2,948 million increase compared to $607 million ($3.21 per basic and diluted share) for the nine months ended September 30, 2025. The increase in Net income attributable to HF Sinclair stockholders was principally driven by higher adjusted refinery gross margins in both the West and Mid-Continent regions. Adjusted refinery gross margin per produced barrel sold for the nine months ended September 30, 2026 increased to $30.12 as compared to $15.07 for the nine months ended September 30, 2025, primarily due to higher average sales prices per barrel and small refinery RINs waivers granted by the EPA, partially offset by higher crude oil and feedstock prices per barrel. Lower of cost or market inventory valuation adjustments related to our Refining and Renewables segments' inventories decreased by $769 million, from a $97 million charge for the nine months ended September 30, 2025, to a $672 million benefit for the nine months ended September 30, 2026.
Adjusted renewables gross margin for the nine months ended September 30, 2026 increased to $2.48 per produced gallon sold as compared to $0.24 for the nine months ended September 30, 2025 primarily due to higher RINs pricing, PTC benefits and higher sales volumes, compared to the nine months ended September 30, 2025. These favorable impacts were partially offset by a $940 million increase in Income tax expense and $109 million of additional costs and incremental accelerated depreciation and amortization charges recorded in relation to the Mississauga Asset Retirement.
Sales and Other Revenues
Sales and other revenues increased 39% from $20,405 million for the nine months ended September 30, 2025, to $28,370 million for the nine months ended September 30, 2026, principally due to higher average refined product sales prices, partially offset by lower product sales volumes and higher crude oil and feedstock prices. Revenues from external customers during the nine months ended September 30, 2026, include $633 million, $3,738 million, $2,575 million, and $97 million related to our Renewables, Marketing, Lubricants & Specialties, and Midstream segments, respectively. Revenues from external customers included $388 million, $2,410 million, $1,932 million, and $87 million related to our Renewables, Marketing, Lubricants & Specialties and Midstream segments, for the nine months ended September 30, 2025.
Cost of Materials and Other
Cost of materials and other, exclusive of Lower of cost or market inventory valuation adjustments, increased 27% from $16,608 million for the nine months ended September 30, 2025, to $21,125 million for the nine months ended September 30, 2026, principally due to higher crude oil and feedstock costs which were offset by lower product sales volumes and the grant of small refinery RINs waivers. Within our Lubricants & Specialties segment, the FIFO impact resulted in a benefit of $121 million and a charge of $10 million for the nine months ended September 30, 2026 and 2025, respectively.
During the nine months ended September 30, 2026, we recognized a lower of cost or market inventory valuation adjustment benefit of $672 million compared to a charge of $97 million.
Adjusted Refinery Gross Margin
Adjusted refinery gross margin per produced barrel sold increased 100% from $15.07 for the nine months ended September 30, 2025, to $30.12 for the nine months ended September 30, 2026. The increase was primarily driven by improved crack spreads for refined products in both the Mid-Continent and West regions and the grant of small refinery RINs waivers, partially offset by lower product sales volumes for the nine months ended September 30, 2026.
Adjusted refinery gross margin per produced barrel sold is a non-GAAP measure and excludes the non-cash effects of Lower of cost or market inventory valuation adjustment, Operating expenses, and Depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" following Item 2 of Part I of this Quarterly Report on Form 10-Q.
Operating Expenses
Operating expenses increased 14% from $1,758 million for the nine months ended September 30, 2025, to $2,001 million for the nine months ended September 30, 2026, primarily due to higher employee benefits, maintenance, environmental remediation and other miscellaneous costs, partially offset by lower natural gas costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 21% from $323 million for the nine months ended September 30, 2025, to $391 million for the nine months ended September 30, 2026 primarily due to higher employee benefits, professional services and other miscellaneous costs.
Depreciation and Amortization Expenses
Depreciation and amortization increased 8% from $681 million for the nine months ended September 30, 2025, to $735 million for the nine months ended September 30, 2026, primarily due to $54 million of incremental accelerated depreciation and amortization in connection with the Mississauga Asset Retirement. See Note 2 "Lubricants & Specialties Planned Separation and Mississauga Asset Retirement" in the Consolidated Financial Statements for information regarding the Mississauga Asset Retirement.
Other Operating Expenses, Net
Other operating expenses, net increased $85 million, or 472% from $18 million for the nine months ended September 30, 2025, to $103 million for the nine months ended September 30, 2026, primarily due to $74 million of impairment charges from the abandonment of certain assets under construction and $28 million of severance costs in connection with the Mississauga Asset Retirement. See Note 2 "Lubricants & Specialties Planned Separation and Mississauga Asset Retirement" in the Consolidated Financial Statements for information regarding the Mississauga Asset Retirement. For the nine months ended September 30, 2025 Other operating expenses, net primarily relates to decommissioning and closure costs of $8 million in our Refining segment.
Interest Income
Interest income increased $23 million, or 85%, from $27 million for the nine months ended September 30, 2025 to $50 million for the nine months ended September 30, 2026, primarily due to higher cash balances.
Interest Expense
Interest expense decreased $38 million, or 25%, from $153 million for the nine months ended September 30, 2025, to $115 million for the nine months ended September 30, 2026, primarily due to unrealized gains on precious metals financing arrangements during the period.
Other Income (Expense), Net
Other income (expense), net was $19 million of income for the nine months ended September 30, 2026, compared to $48 million of expense for the nine months ended September 30, 2025. The income for the nine months ended September 30, 2026 was primarily due to a $14 million gain on settlement of precious metals. The expense for the nine months ended September 30, 2025, was primarily due to a $40 million loss on sale of equity method investment in Cheyenne Pipeline, LLC, and a $24 million loss on the early extinguishment of debt, inclusive of unamortized discount and debt issuance costs.
Income Taxes
For the nine months ended September 30, 2026, Income tax expense of $1,100 million was recorded on pre-tax income of $4,660 million, compared to Income tax expense of $160 million on pre-tax income of $773 million for the nine months ended September 30, 2025. The increase was primarily due to higher pre-tax earnings year-over-year. For the nine months ended September 30, 2026, the effective tax rate of 23.6% was higher than the statutory rate of 21.0% primarily due to state and local income taxes on pre-tax earnings, partially offset by the benefits of nontaxable renewable fuel incentives. For the nine months ended September 30, 2025, the effective tax rate was lower than the statutory rate of 21.0%, primarily due to pre-tax results and the benefits of nontaxable renewable fuel incentives and a discrete benefit associated with the revaluation of deferred tax liabilities from state tax law changes enacted in the second quarter of 2025.
LIQUIDITY AND CAPITAL RESOURCES
We have a disciplined capital allocation strategy focused on preserving financial flexibility, enabling us to execute our capital priorities and generate long-term value for our stockholders. Consistent with that strategy, we seek to self-fund development projects and make strategic decisions focused on profitable growth, while reducing our debt and returning cash to stockholders through dividends and share repurchases.
HF Sinclair Credit Agreement
We have a $2.0 billion senior unsecured revolving credit facility maturing in April 2030 (the "HF Sinclair Credit Agreement") which contains an extension feature that allows us to extend the term of the commitment from time to time in increments of up to one year, subject to the terms and conditions set forth in the HF Sinclair Credit Agreement. The HF Sinclair Credit Agreement includes an accordion feature that allows us to increase such commitments to an aggregate principal amount of up to $2.75 billion. The HF Sinclair Credit Agreement may be used for revolving credit loans and letters of credit and is available to fund general corporate purposes.
At September 30, 2026, we were in compliance with all covenants and had no outstanding borrowings or letters of credit under the HF Sinclair Credit Agreement.
Senior Notes
Our unsecured senior notes and unsubordinated obligations rank equally with all future unsecured and unsubordinated indebtedness. We may, from time to time, seek to retire some or all of our outstanding 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.
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 in exchange for cash and then financed the use of the precious metals catalyst for a term not to exceed one year. During the nine months ended September 30, 2026, we received proceeds of $71 million and made principal payments of $25 million. In addition, we settled an obligation of $19 million through the transfer of owned precious metals, resulting in a non-cash gain of $14 million which represents the excess of the financing arrangement's settlement value over the carrying value of the precious metals transferred. During the three months ended September 30, 2026, we entered into new financings under which we received precious metals with a fair value of $23 million and subsequently extinguished a previously existing financing arrangement with a different financial institution with a fair value of $23 million through the delivery of precious metals.
We may, from time to time, issue letters of credit pursuant to uncommitted letters of credit facilities, which are unrelated to the HF Sinclair Credit Agreement. As of September 30, 2026, we had $12 million of outstanding letters of credit issued under these credit facilities.
See Note 13 "Debt" in the Consolidated Financial Statements for additional information on our debt instruments.
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 current liquidity needs. We expect that, to the extent necessary, we can raise additional funds through equity or debt financings in the public and private capital markets. Further, we may seek to retire some or all of our outstanding 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 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, the Planned Separation and the Mississauga Asset Retirement, expansion of our Midstream footprint, including our investment in the Western Gateway Pipeline System ("Western Gateway"), expansion of our Marketing footprint by growing the number of branded sites and increasing investment in our non-operating joint ventures, and selective acquisition of complementary assets for our operations intended to capture synergies and increase earnings and cash flow. We also expect to use cash on hand for dividend payments, which are at the discretion of our Board, and for the repurchase of common stock under the New Share Repurchase Program.
Our liquidity was approximately $5.3 billion at September 30, 2026, consisting of Cash and cash equivalents of $3.3 billion and $2.0 billion available under the HF Sinclair 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 liquid, highly rated instruments issued by financial institutions, government entities with strong credit standings and money market funds. Cash equivalents are stated at cost, which approximates market value.
Mississauga Asset Retirement
Costs associated with the Mississauga Asset Retirement are currently estimated at $140 million and will be funded with cash on hand and operating cash flows in 2027. See Note 2 "Lubricants & Specialties Planned Separation and Mississauga Asset Retirement" for additional information.
Share Repurchases
On August 2, 2026, we repurchased 2,375,000 shares of our outstanding common stock from REH in a privately negotiated transaction under the 2024 Share Repurchase Program and pursuant to the Stock Purchase Agreement, dated August 2, 2026 (the "August 2026 Stock Purchase Agreement"), between us and REH. The price paid under the August 2026 Stock Purchase Agreement was $89.41 per share resulting in an aggregate purchase price of $212 million. The purchase price was funded with cash on hand.
In connection with the August 2026 Stock Purchase Agreement, the Board increased the 2024 Share Repurchase Program by $15 million, effective July 31, 2026.
On August 26, 2026, our Board approved the New Share Repurchase Program, which replaced all existing share repurchase programs, including the approximately $11 million remaining under the 2024 Share Repurchase Program. The New Share Repurchase Program authorizes us to repurchase common stock in the open market or through privately negotiated transactions, including transactions with REH, which are 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 to repurchase shares in an amount sufficient to offset shares issued under our compensation programs. The Board has discretion to cancel the New Share Repurchase Program at any time.
During the nine months ended September 30, 2026, we made open market and privately negotiated purchases of 8,982,193 shares for $741 million, exclusive of excise tax, under the 2024 Share Repurchase Program and the New Share Repurchase Program. As of September 30, 2026, we had remaining authorization to repurchase up to $1.2 billion under the New Share Repurchase Program.
Cash Flows - Operating Activities
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Net cash flows provided by operating activities were $3,751 million for the nine months ended September 30, 2026, compared to Net cash flows provided by operating activities of $1,307 million for the nine months ended September 30, 2025, an increase of $2,444 million. Excluding non-cash impacts reflected in the reconciliation to net cash provided by operating activities, the increase was primarily driven by higher net income, favorable changes in working capital and a decrease in turnaround expenditures. Changes in working capital increased operating cash flows by $197 million for the nine months ended September 30, 2026, compared to $83 million for the nine months ended September 30, 2025. Additionally for the nine months ended September 30, 2026, turnaround expenditures were $289 million compared to $315 million for the nine months ended September 30, 2025.
Cash Flows - Investing Activities and Planned Capital Expenditures
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
For the nine months ended September 30, 2026, our Net cash flows used for investing activities were $416 million, which was inclusive of our acquisition of Industrial Oils Unlimited, LLC and our new joint venture, Green Trail Fuels, LLC. Cash expenditures for Properties, plants and equipment for the nine months ended September 30, 2026 were $357 million.
For the nine months ended September 30, 2025, our Net cash flows used for investing activities were $341 million. Cash expenditures for Properties, plants and equipment for the nine months ended September 30, 2025 were $318 million.
Our revised expected cash spending in 2026 for capital, turnaround and growth capital is as follows:
Expected Cash Spending Revised Cash Spending
(In millions)
Capital Expenditures:
Refining $ 225 $ 250
Renewables 6 6
Marketing 30 25
Lubricants & Specialties 25 30
Midstream 30 30
Corporate 9 9
Turnarounds and catalyst 325 375
Total sustaining $ 650 $ 725
Growth capital (1)
125 150
Total capital expenditures $ 775 $ 875
(1)Western Gateway: In August 2026, we entered into a joint venture with affiliates of Phillips 66 and Kinder Morgan to form Western Gateway. We will own a 15.0% interest in the joint venture while Phillips 66 and Kinder Morgan will own the remaining 49.9% and 35.1% interests, respectively. Western Gateway is a proposed 1,300-mile refined products pipeline system that would create a new fuel supply path from St. Louis, Missouri, and expanded Gulf Coast origin points to Arizona and California. Our investment in Western Gateway will be funded with cash on hand and operating cash flows. We expect to invest up to $750 million, of which $20 million is expected in 2026, with the remaining investment expected primarily between 2027 and 2029. See Note 1 "Description of Business and Presentation of Financial Statements" for additional information regarding Western Gateway.
Westline Connect: The Company is continuing to progress the previously announced multi-phased western expansion project and expects to reach a Final Investment Decision ("FID") in the first quarter of 2027. The first phase would increase the capacity to move product supply from our Rockies production into Utah and Nevada by 35,000 barrels per day and is targeted to be online by 2029. We expect the project to be funded with cash on hand and operating cash flows. We anticipate providing additional information on capital spend following the FID date.
Marketing: We plan to expand our Marketing footprint through continued investment in our non-operating joint ventures. We expect to fund this growth through cash on hand and operating cash flows.
Cash Flows - Financing Activities
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
For the nine months ended September 30, 2026, our Net cash flows used for financing activities were $977 million. During the nine months ended September 30, 2026, we paid $273 million in Dividends, we repurchased $734 million of our Common stock and we received net proceeds of $46 million from financing arrangements.
For the nine months ended September 30, 2025, our Net cash flows used for financing activities were $323 million. During the nine months ended September 30, 2025, we paid $284 million in Dividends, repurchased $216 million of our Common Stock, repaid $350 million under the now-terminated revolving credit facility of our subsidiary, Holly Energy Partners, L.P., and received net proceeds of $474 million from the issuance and redemption of certain senior notes.
Contractual Obligations and Commitments
As of September 30, 2026, our contractual obligations included debt obligations, interest payments related to debt obligations, financing arrangements, supply agreements, transportation and storage agreements, operating and finance leases, and other long-term obligations and commitments. In the ordinary course of business, we had debt-related activities during the nine months ended September 30, 2026, as described in Note 13 "Debt" of the Consolidated Financial Statements.
During the three months ended September 30, 2026, we entered into two additional agreements in the normal course of business with fixed and determinable quantities, representing estimated commitments of $3.2 billion and $80 million that will be incurred over the next 20 and 10 years, respectively. The additional agreements commence in 2027 and actual amounts paid under the agreements may vary based on commodity prices, inflation adjustments and other contractual terms.
As of September 30, 2026, there have been no material changes outside the ordinary course of business, in our contractual obligations since December 31, 2025. For additional information on our contractual obligations, refer to Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results may differ from those estimates. There have been no changes to the critical accounting policies or estimates disclosed 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, 2025.
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 the price of crude oil, other feedstocks and refined products and 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 contracts 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.
As of September 30, 2026, we have the following notional amounts related to all outstanding derivative instruments used to mitigate commodity price and foreign currency risk:
Notional Contract Volumes
by Year of Maturity
Contract Description
Total Outstanding Notional 2026 2027 Unit of Measure
Commodity contracts - long 3,362,369 1,713,675 1,648,694 Barrels
Commodity contracts - short 1,172,000 1,172,000 - Barrels
Foreign currency forward contracts 522,000,000 140,705,100 381,294,900
Canadian dollar
Forward platinum contracts (1)
62,370 - 62,370 Troy ounces
(1)Represents an embedded derivative within our precious metals financing arrangements, which may be refinanced or require repayment under certain conditions. See Note 13 "Debt" in the Consolidated Financial Statements for additional information on these financing arrangements.
Counterparty financial information is reviewed to monitor financial stability and assess the ongoing ability to honor commitments under derivative contracts. We have not experienced, nor do we expect to experience, any difficulty in counterparties honoring their commitments.
The following sensitivity analysis provides the hypothetical effects of market price fluctuations related to outstanding derivative instruments:
September 30,
Derivative Fair Value Gain (Loss)
2026 2025
(In millions)
10% increase in underlying commodity prices $ - $ (4)
10% decrease in underlying commodity prices $ - $ 4
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, HollyFrontier and HEP Senior Notes (each as demarcated in Note 13 "Debt" in the 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 September 30, 2026, are presented below:
Outstanding
Principal 		Estimated
Fair Value 		Estimated Change in Fair Value
(In millions)
HF Sinclair, HollyFrontier and HEP Senior Notes $ 2,800 $ 2,752 $ 72
For the variable rate under the HF Sinclair Credit Agreement, changes in interest rates would affect cash flows, but not the fair value. At September 30, 2026, there were no amounts outstanding under the HF Sinclair Credit Agreement. A hypothetical 10% change in interest rates applicable to the HF Sinclair Credit Agreement would not materially affect cash flows.
Operational Interruption Risk Management
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, 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.
We have a risk management oversight committee consisting of members from our senior management. This committee oversees our enterprise risk program, monitors our risk environment and provides direction for activities to mitigate identified risks that may adversely affect the achievement of our goals.
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 the financial statements.
Earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, is calculated as Net income attributable to HF Sinclair stockholders plus (i) Interest expense, net of Interest income, (ii) Income tax expense 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 Income from operations 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 financial indicator widely used by investors and analysts to measure our operating 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 September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(In millions)
Net income attributable to HF Sinclair stockholders $ 2,015 $ 403 $ 3,555 $ 607
Add: interest expense 54 51 115 153
Less: interest income (25) (11) (50) (27)
Add: income tax expense
632 123 1,100 160
Add: depreciation and amortization 278 230 735 681
EBITDA $ 2,954 $ 796 $ 5,455 $ 1,574
Reconciliation of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in the 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, Operating expenses and Depreciation and amortization, divided by sales volumes of produced refined products. This margin measure excludes the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to inventory held at the end of the period. Adjusted refinery gross margin is a non-GAAP performance measure 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.
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 September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(In millions, except barrel and per barrel amounts)
Refining segment
Sales and other revenues $ 9,857 $ 6,443 $ 25,356 $ 18,113
Cost of sales (1)
7,205 5,771 20,900 16,914
Depreciation and amortization 146 139 437 410
Gross margin $ 2,506 $ 533 $ 4,019 $ 789
Add: lower of cost or market inventory valuation adjustments
- 46 (604) 102
Add: operating expenses 557 447 1,516 1,349
Add: depreciation and amortization 146 139 437 410
Adjusted refinery gross margin $ 3,209 $ 1,165 $ 5,368 $ 2,650
Sales of produced refined products (BPD) (2)
643,540 661,140 652,780 644,190
Average per produced barrel sold:
Gross margin $ 42.36 $ 8.78 $ 22.56 $ 4.49
Add: lower of cost or market inventory valuation adjustments
- 0.75 (3.39) 0.58
Add: operating expenses 9.41 7.34 8.51 7.67
Add: depreciation and amortization 2.45 2.29 2.44 2.33
Adjusted refinery gross margin $ 54.22 $ 19.16 $ 30.12 $ 15.07
Less: operating expenses 9.41 7.34 8.51 7.67
Adjusted refinery gross margin, less operating expenses $ 44.81 $ 11.82 $ 21.61 $ 7.40
(1)Exclusive of Depreciation and amortization.
(2)Represents barrels sold of produced refined products at our refineries (including Asphalt and intersegment sales) and excludes volumes of refined products purchased for resale or volumes of excess crude oil sold.
Reconciliation of renewables operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in the 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, Operating expenses and Depreciation and amortization, divided by sales volumes of produced renewables products. This margin measure excludes 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.
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 September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(In millions, except gallon and per gallon amounts)
Renewables segment
Sales and other revenues $ 528 $ 277 $ 1,348 $ 725
Cost of sales (1)
388 309 912 750
Depreciation and amortization 16 22 51 71
Gross margin $ 124 $ (54) $ 385 $ (96)
Add: lower of cost or market inventory valuation adjustments
(30) 20 (68) (5)
Add: operating expenses 23 22 68 67
Add: depreciation and amortization 16 22 51 71
Adjusted renewables gross margin $ 133 $ 10 $ 436 $ 37
Sales of produced renewables products (in thousand gallons)
63,195 57,159 175,548 156,408
Average per produced gallon sold:
Gross margin $ 1.97 $ (0.94) $ 2.19 $ (0.61)
Add: lower of cost or market inventory valuation adjustments
(0.47) 0.35 (0.39) (0.03)
Add: operating expenses 0.37 0.39 0.39 0.43
Add: depreciation and amortization 0.24 0.38 0.29 0.45
Adjusted renewables gross margin $ 2.11 $ 0.18 $ 2.48 $ 0.24
Less: operating expenses 0.37 0.39 0.39 0.43
Adjusted renewables gross margin, less operating expenses $ 1.74 $ (0.21) $ 2.09 $ (0.19)
(1) Exclusive of Depreciation and amortization.
Reconciliation of marketing operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in the 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. 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.
Reconciliation of Marketing segment gross margin to adjusted marketing gross margin to adjusted marketing gross margin per gallon sold
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(In millions, except gallon and per gallon amounts)
Marketing segment
Sales and other revenues $ 1,576 $ 898 $ 3,738 $ 2,410
Cost of sales (1)
1,525 860 3,613 2,304
Depreciation and amortization 8 7 24 21
Gross margin $ 43 $ 31 $ 101 $ 85
Add: depreciation and amortization
8 7 24 21
Adjusted marketing gross margin $ 51 $ 38 $ 125 $ 106
Sales of refined products (in thousand gallons)
420,175 360,482 1,131,454 991,494
Average per gallon sold:
Gross margin $ 0.10 $ 0.09 $ 0.09 $ 0.09
Add: depreciation and amortization
0.02 0.02 0.02 0.02
Adjusted marketing gross margin $ 0.12 $ 0.11 $ 0.11 $ 0.11
(1) Exclusive of Depreciation and amortization.
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