HF Sinclair Corporation (DINO) Bundle
Understanding HF Sinclair Corporation (DINO) Revenue Streams
Understanding HF Sinclair Corporation’s Revenue Streams
HF Sinclair Corporation generates revenue through several key segments, primarily including Refining, Marketing, Lubricants & Specialties, Midstream, and Renewables. Below is a breakdown of these revenue sources for the nine months ended September 30, 2024.
| Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Refining | $16,729,833 | 75.8% |
| Marketing | $2,668,219 | 12.1% |
| Lubricants & Specialties | $2,084,183 | 9.4% |
| Midstream | $77,946 | 0.4% |
| Renewables | $519,935 | 2.4% |
| Total | $22,080,116 | 100% |
The total revenue for the nine months ended September 30, 2024, was $22,080.1 million, a 9% decrease from the $24,304.3 million reported in the same period in 2023. This decline is primarily attributed to lower refined product sales prices and reduced excess crude oil sales volumes.
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, the year-over-year revenue growth rate reflects a decrease of 9%. In comparison, the nine months ended September 30, 2023, showed a revenue of $24,304.3 million.
Contribution of Different Business Segments to Overall Revenue
The Refining segment remains the largest contributor to overall revenue, accounting for 75.8% of total revenue. The Marketing segment follows, contributing 12.1%, while Lubricants & Specialties and Midstream contribute 9.4% and 0.4%, respectively. The Renewables segment adds a modest 2.4% to total revenue.
Significant Changes in Revenue Streams
One significant change in revenue streams has been the decrease in refined product sales prices, which affected overall sales and revenues across several segments. For instance, the Refining segment's sales decreased from $21,808.9 million in the same period of the prior year to $19,563.8 million in 2024, reflecting a challenging market environment for refining margins. Additionally, the Lubricants & Specialties segment experienced a slight decline in revenue, while the Marketing segment showed resilience with steady sales volumes despite the overall revenue decline.
Quarterly Revenue Overview
Sales and other revenues for the third quarter of 2024 were $7,207.1 million, down from $8,905.5 million in the third quarter of 2023, representing a 19.1% decline. This decrease was primarily due to lower refined product sales prices, partially offset by higher sales volumes.
| Quarter | Revenue (in millions) | Year-over-Year Change (%) |
|---|---|---|
| Q3 2024 | $7,207.1 | -19.1% |
| Q3 2023 | $8,905.5 | N/A |
The fluctuation in revenue reflects broader economic challenges, including fluctuating crude oil prices and varying demand for refined products. The company has continued to adapt its operational strategies to navigate these changes in the market landscape.
A Deep Dive into HF Sinclair Corporation (DINO) Profitability
A Deep Dive into HF Sinclair Corporation's Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, gross profit was $1,436.4 million, down from $2,019.5 million for the same period in 2023, reflecting a decrease of 29%. The gross profit margin for the nine months of 2024 was 6.5%, compared to 8.3% in 2023.
Operating Profit Margin: Operating income for the nine months ended September 30, 2024, was $486.9 million, a decline of 79% from $2,279.9 million in the prior year. The operating profit margin stood at 2.2% in 2024 versus 9.4% in 2023.
Net Profit Margin: Net income attributable to stockholders for the nine months ended September 30, 2024, was $390.5 million, down 76% from $1,651.8 million in 2023. The net profit margin was 1.8% in 2024 compared to 6.8% in 2023.
Trends in Profitability Over Time
Comparing the nine months ended September 30, 2024, with the same period of 2023, the following trends are evident:
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Gross Profit (in millions) | $1,436.4 | $2,019.5 | -29% |
| Operating Income (in millions) | $486.9 | $2,279.9 | -79% |
| Net Income (in millions) | $390.5 | $1,651.8 | -76% |
| Gross Margin (%) | 6.5% | 8.3% | -1.8% |
| Operating Margin (%) | 2.2% | 9.4% | -7.2% |
| Net Margin (%) | 1.8% | 6.8% | -5.0% |
Comparison of Profitability Ratios with Industry Averages
The following profitability ratios are compared with industry averages:
| Ratio | HF Sinclair (2024) | Industry Average | Difference |
|---|---|---|---|
| Gross Profit Margin | 6.5% | 10.2% | -3.7% |
| Operating Profit Margin | 2.2% | 8.5% | -6.3% |
| Net Profit Margin | 1.8% | 5.0% | -3.2% |
Analysis of Operational Efficiency
Operational efficiency metrics for the nine months ended September 30, 2024, are as follows:
- Cost of Materials and Other: $18,835.3 million, a decrease of 2% from $19,313.3 million in 2023.
- Selling, General and Administrative Expenses: $326.2 million, down 6% from $347.5 million in 2023.
- Depreciation and Amortization: $613.8 million, an increase of 10% from $558.9 million in 2023.
Gross margins per produced barrel sold decreased significantly, with the adjusted refinery gross margin per produced barrel sold for the nine months ended September 30, 2024, at $11.59, compared to $23.91 in 2023.
Overall, the decline in profitability metrics reflects the challenges faced by the company within the refining sector, impacted by lower margins and operational costs.
Debt vs. Equity: How HF Sinclair Corporation (DINO) Finances Its Growth
Debt vs. Equity: How HF Sinclair Corporation Finances Its Growth
As of September 30, 2024, the total debt of HF Sinclair Corporation stood at $2,636.8 million, down from $2,739.1 million at the end of 2023. This debt comprises both long-term and short-term obligations, with the company reporting $350.0 million classified as current debt under the HEP Credit Agreement, maturing in July 2025.
The company's equity totaled $9,670.4 million as of September 30, 2024, a decrease from $10,237.3 million at the end of the previous year. This results in a debt-to-equity ratio of approximately 0.27, indicating a conservative approach towards leveraging compared to industry standards, which typically hover around 0.5 to 1.0 for similar companies in the energy sector.
| Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Debt | $2,636.8 million | $2,739.1 million |
| Total Equity | $9,670.4 million | $10,237.3 million |
| Debt-to-Equity Ratio | 0.27 | 0.27 |
In recent months, the company has engaged in refinancing activities, notably amending its HEP Credit Agreement to enhance liquidity and operational flexibility. The HF Sinclair Credit Agreement, a $1.65 billion senior unsecured revolving credit facility maturing in April 2026, had no outstanding borrowings as of the latest reporting date.
HF Sinclair balances its financing strategy between debt and equity funding effectively. The company has repurchased $667.3 million of its common stock during the nine months ending September 30, 2024, alongside paying dividends totaling $290.5 million. This strategy reflects a commitment to returning value to shareholders while maintaining a manageable debt level.
Assessing HF Sinclair Corporation (DINO) Liquidity
Assessing HF Sinclair Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $3,622,785 | $1,229,482 | 2.95 |
Quick Ratio: The quick ratio, which excludes inventory, is as follows:
| Cash and Cash Equivalents | Accounts Receivable | Current Liabilities | Quick Ratio |
|---|---|---|---|
| $1,229,482 | $1,450,000 | $1,229,482 | 1.58 |
Analysis of Working Capital Trends
Working Capital: The working capital position as of September 30, 2024, is:
| Working Capital (Current Assets - Current Liabilities) | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Working Capital | $2,393,303 | $3,371,905 |
Cash Flow Statements Overview
Operating Cash Flow: The net cash provided by operating activities for the nine months ended September 30, 2024, is:
| Period | Net Cash Provided by Operating Activities |
|---|---|
| 2024 | $1,250.4 million |
| 2023 | $2,066.6 million |
Investing Cash Flow: Cash flows used for investing activities are:
| Period | Net Cash Used for Investing Activities |
|---|---|
| 2024 | ($294.6 million) |
| 2023 | ($247.7 million) |
Financing Cash Flow: The net cash used for financing activities is:
| Period | Net Cash Used for Financing Activities |
|---|---|
| 2024 | ($1,078.7 million) |
| 2023 | ($1,268.3 million) |
Potential Liquidity Concerns or Strengths
Total Liquidity: As of September 30, 2024, total liquidity is reported at:
| Cash and Cash Equivalents | Undrawn Credit Facilities | Total Liquidity |
|---|---|---|
| $1,229,482 | $2,500,000 | $3,729,482 |
Debt Position: Total debt as of September 30, 2024, is:
| Total Debt | Total Equity | Debt-to-Equity Ratio |
|---|---|---|
| $2,636,805 | $9,670,410 | 0.27 |
Is HF Sinclair Corporation (DINO) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key valuation ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the P/E ratio is calculated based on the latest earnings per share (EPS) of $2.01 for the nine months ended September 30, 2024, compared to an EPS of $8.57 for the same period in 2023. The stock price as of that date was approximately $46.84.
The P/E ratio is calculated as follows:
- P/E Ratio = Stock Price / EPS
- P/E Ratio = $46.84 / $2.01 = 23.27
Price-to-Book (P/B) Ratio
The book value per share is derived from total equity divided by the number of shares outstanding. As of September 30, 2024, total equity was $9,670,410 and shares outstanding were 223,231.
- Book Value per Share = Total Equity / Shares Outstanding
- Book Value per Share = $9,670,410 / 223,231 = $43.38
- P/B Ratio = Stock Price / Book Value per Share
- P/B Ratio = $46.84 / $43.38 = 1.08
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the EBITDA was $1,124,016. The enterprise value (EV) is calculated as market capitalization plus total debt minus cash and cash equivalents.
- Market Capitalization = Stock Price Shares Outstanding
- Market Capitalization = $46.84 223,231 = $10,454,329
- Total Debt = $2,636,805
- Cash and Cash Equivalents = $1,229,482
- EV = Market Capitalization + Total Debt - Cash
- EV = $10,454,329 + $2,636,805 - $1,229,482 = $11,861,652
- EV/EBITDA = EV / EBITDA
- EV/EBITDA = $11,861,652 / $1,124,016 = 10.57
Stock Price Trends
Over the past 12 months, the stock price has seen significant fluctuations:
- 12 months ago: $66.30
- 6 months ago: $50.50
- 3 months ago: $46.84
- Current Price: $46.84
Dividend Yield and Payout Ratios
The company declared a cash dividend of $1.50 per share for the nine months ended September 30, 2024, with the current stock price at $46.84.
- Dividend Yield = Annual Dividend / Stock Price
- Dividend Yield = $1.50 / $46.84 = 3.20%
The payout ratio for the nine months ended September 30, 2024, is calculated as follows:
- Payout Ratio = Dividends / Net Income
- Payout Ratio = $290,538 / $390,508 = 74.4%
Analyst Consensus on Stock Valuation
Analysts currently have mixed opinions on the stock:
- Buy: 5 analysts
- Hold: 10 analysts
- Sell: 2 analysts
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 23.27 |
| P/B Ratio | 1.08 |
| EV/EBITDA Ratio | 10.57 |
| Current Stock Price | $46.84 |
| Dividend Yield | 3.20% |
| Payout Ratio | 74.4% |
| Analyst Buy Recommendations | 5 |
| Analyst Hold Recommendations | 10 |
| Analyst Sell Recommendations | 2 |
Key Risks Facing HF Sinclair Corporation (DINO)
Key Risks Facing HF Sinclair Corporation
Overview of Internal and External Risks
HF Sinclair Corporation faces a variety of internal and external risks that could significantly impact its financial health. These include:
- Industry Competition: The refining and marketing of petroleum products is highly competitive, with numerous players vying for market share. This competition can lead to price pressures and reduced margins.
- Regulatory Changes: The company operates in a heavily regulated industry. Changes in environmental regulations, fuel standards, and other compliance requirements can increase operational costs and affect profitability.
- Market Conditions: Fluctuations in crude oil prices and refined product prices can significantly impact revenue and margins. For instance, adjusted refinery gross margins decreased to $10.79 per produced barrel sold in Q3 2024, compared to $26.27 in Q3 2023.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Net Income Decline: For the three months ended September 30, 2024, the company reported a net loss of $75.9 million compared to a net income of $790.9 million in the same period in 2023.
- Cash Flow Challenges: Net cash provided by operating activities decreased to $1.25 billion for the nine months ended September 30, 2024, down from $2.07 billion in 2023.
- Increased Debt Levels: Total debt stood at $2.64 billion as of September 30, 2024, compared to $2.74 billion at the end of 2023.
Mitigation Strategies
The company employs various strategies to mitigate these risks:
- Capital Expenditure Management: Planned capital expenditures for 2024 are set at $875 million, which includes investments in refining and renewable projects to enhance operational efficiency.
- Share Repurchase Program: The Board of Directors approved a $1 billion share repurchase program to manage share dilution and improve shareholder value.
- Operational Adjustments: The company continues to adjust its operational plans in response to evolving market conditions, including expected throughput of 565,000-600,000 barrels per day for Q4 2024.
| Risk Factor | Description | Impact (Q3 2024) |
|---|---|---|
| Net Income | Significant decrease in net income attributable to stockholders. | Net loss of $75.9 million |
| Adjusted Refinery Gross Margin | Lower margins due to competitive pricing and market conditions. | $10.79 per barrel sold |
| Operating Cash Flow | Reduction in cash flow from operations affecting liquidity. | $1.25 billion |
| Total Debt | Increased leverage impacting financial stability. | $2.64 billion |
Future Growth Prospects for HF Sinclair Corporation (DINO)
Future Growth Prospects for HF Sinclair Corporation
HF Sinclair Corporation is poised for growth through various strategic initiatives and market expansions. Below is an analysis of key growth drivers, revenue projections, and competitive advantages.
Key Growth Drivers
- Product Innovations: The company continues to expand its renewable diesel production, with facilities in Wyoming and New Mexico, which is expected to enhance its market position in sustainable energy.
- Market Expansions: Plans to increase the number of branded sites by approximately 10% over the next six to twelve months, leveraging the strong brand value of its marketing segment.
- Acquisitions: The company has a robust strategy for potential acquisitions that align with its growth objectives, particularly in the renewable sector.
Future Revenue Growth Projections
For the nine months ended September 30, 2024, sales and other revenues decreased to $22.08 billion from $24.30 billion in 2023, a decline of 9%. However, the company anticipates a rebound as market conditions improve and operational efficiencies are realized.
| Period | Sales and Other Revenues (in billions) | Net Income (in millions) | Earnings per Share |
|---|---|---|---|
| 2023 (Nine Months) | $24.30 | $1,651.8 | $8.57 |
| 2024 (Nine Months) | $22.08 | $390.5 | $2.01 |
Strategic Initiatives and Partnerships
The company has launched a $1.0 billion share repurchase program in May 2024, which is expected to support stock price stability and shareholder value. Additionally, ongoing investments in refining and renewable projects are projected to enhance operational capacity.
Competitive Advantages
- Diverse Product Portfolio: The company produces a wide range of high-value light products, including gasoline, diesel fuel, and lubricants, catering to various market segments.
- Strong Market Presence: With refineries across multiple states, the company is well-positioned to serve the Southwest and Rocky Mountain regions, ensuring a consistent supply chain.
- Financial Resilience: Despite a net loss of $75.9 million for the three months ended September 30, 2024, the company's liquidity remains robust at approximately $3.7 billion, consisting of cash and undrawn credit facilities.
Overall, the strategic focus on renewable energy, coupled with strong market positioning and financial management, positions the company for potential growth in the coming years.
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Article updated on 8 Nov 2024
Resources:
- HF Sinclair Corporation (DINO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of HF Sinclair Corporation (DINO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View HF Sinclair Corporation (DINO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.