Business Wire | Nov 3, 2021 06:30AM EDT

HollyFrontier Corporation Reports Quarterly Results

Nov. 03, 2021

DALLAS--(BUSINESS WIRE)--Nov. 03, 2021--HollyFrontier Corporation (NYSE:HFC) ("HollyFrontier" or the "Company") today reported third quarter net income attributable to HollyFrontier stockholders of $280.8 million, or $1.71 per diluted share, for the quarter ended September 30, 2021, compared to a net loss of $(2.4) million, or $(0.01) per diluted share, for the quarter ended September 30, 2020.

The third quarter results reflect special items that collectively increased net income by a total of $70.8 million. On a pre-tax basis, these items include a gain on sale of real property of $86.0 million, partially offset by pre-close acquisition integration costs of $4.3 million and charges related to the Cheyenne Refinery conversion to renewable diesel production, including decommissioning charges of $6.7 million and severance charges totaling $0.2 million. Excluding these items, net income for the current quarter was $209.9 million ($1.28 per diluted share) compared to net loss of $(66.9) million ($(0.41) per diluted share) for the third quarter of 2020, which excludes certain items that collectively decreased net loss by $64.5 million.

HollyFrontier's President & CEO, Michael Jennings, commented, "HollyFrontier's standout third quarter results were driven by continued refined product margin strength in our regions, healthy base oil prices and robust operational performance in the quarter. On November 1, 2021, we closed on our previously announced acquisition of the Puget Sound Refinery. We are excited to add this high-quality refinery to our existing asset base along with the geographical diversification and earnings potential it provides."

Refining segment income before interest and income taxes was $217.4 million for the third quarter of 2021 compared to a loss before interest and income taxes of $(118.5) million in the third quarter of 2020. The segment reported EBITDA of $295.3 million for the third quarter of 2021 compared to $(39.3) million for the third quarter of 2020. This increase was driven by stronger product demand, which resulted in a consolidated refinery gross margin of $14.87 per produced barrel, a 140% increase compared to $6.20 for the third quarter of 2020. Crude oil charge averaged 416,430 barrels per day ("BPD") for the current quarter compared to 375,880 BPD for the third quarter of 2020.

Lubricants and Specialty Products segment income before interest and income taxes was $148.5 million for the third quarter of 2021 compared to $43.1 million in the third quarter of 2020. The segment reported EBITDA of $167.7 million for the third quarter of 2021 compared to $60.6 million in the third quarter of 2020. Excluding a gain on sale of real property of $86.0 million, Adjusted EBITDA in the third quarter of 2021 was $81.7 million. This increase was driven by strong base oil margins in the third quarter of 2021.

Holly Energy Partners, L.P. ("HEP") reported EBITDA of $77.6 million for the third quarter of 2021 compared to $55.3 million in the third quarter of 2020. Reported EBITDA for the third quarter of 2020 included a $35.7 million goodwill impairment charge, which was eliminated on the Company's consolidation. HEP reported Adjusted EBITDA of $83.3 million for the third quarter of 2021 compared to $86.4 million for the third quarter of 2020.

For the third quarter of 2021, net cash provided by operations totaled $249.4 million. At September 30, 2021, the Company's cash and cash equivalents totaled $1,481.6 million, an $83.3 million increase over cash and cash equivalents of $1,398.3 million at June 30, 2021. Additionally, the Company's consolidated debt was $3,072.4 million. The Company's debt, exclusive of HEP debt, which is nonrecourse to HollyFrontier, was $1,739.0 million at September 30, 2021.

The company has scheduled a webcast conference call for today, November 3, 2021, at 8:30 AM Eastern Time to discuss third quarter financial results. This webcast may be accessed at https://event.on24.com/wcc/r/3453047/731944E4F0294137EB72C182BC77BB87. An audio archive of this webcast will be available using the above noted link through November 17, 2021.

HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier owns and operates refineries located in Kansas, Oklahoma, New Mexico, Washington and Utah and markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier produces base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57% limited partner interest and a non-economic general partner interest in Holly Energy Partners, L.P., a master limited partnership that provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HollyFrontier Corporation subsidiaries.

The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are "forward-looking statements" based on management's beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission. Forward-looking statements use words such as "anticipate," "project," "expect," "plan," "goal," "forecast," "strategy," "intend," "should," "would," "could," "believe," "may," and similar expressions and statements regarding our plans and objectives for future operations. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Any differences could be caused by a number of factors, including, but not limited to, the Company's ability to successfully close the pending acquisition by the Company and HEP of Sinclair Oil Corporation and Sinclair Transportation Company (collectively, "Sinclair", and such transactions, the "Sinclair Transactions"), or once closed, integrate the operations of Sinclair with its existing operations and fully realize the expected synergies of the Sinclair Transactions or on the expected timeline; the satisfaction or waivers of the conditions precedent to the proposed Sinclair Transactions, including without limitation, the receipt of the Company stockholder approval for the issuance of HF Sinclair common stock at closing and regulatory approvals (including clearance by antitrust authorities necessary to complete the Sinclair Transactions on the terms and timeline desired), risks relating to the value of HF Sinclair common stock and the value of HEP's limited partner common units to be issued at the closing of the Sinclair Transactions from sales in anticipation of closing and from sales by the Sinclair holders following the closing of the Sinclair Transactions; the cost and potential for a delay in closing as a result of litigation challenging the Sinclair Transactions; the Company's ability to successfully integrate the operation of the Puget Sound refinery with our existing operations; the demand for and supply of crude oil and refined products, including uncertainty regarding the effects of the continuing COVID-19 pandemic on future demand; risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products or lubricant and specialty products in the Company's markets; the spread between market prices for refined products and market prices for crude oil; the possibility of constraints on the transportation of refined products or lubricant and specialty products; the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, whether due to infection in the workforce or in response to reductions in demand; the effects of current and/or future governmental and environmental regulations and policies, including the effects of current and/or future restrictions on various commercial and economic activities in response to the COVID-19 pandemic; the availability and cost of financing to the Company; the effectiveness of the Company's capital investments and marketing strategies; the Company's efficiency in carrying out and consummating construction projects, including the Company's ability to complete announced capital projects, such as the conversion of the Cheyenne Refinery to a renewable diesel facility and the construction of the Artesia renewable diesel unit and pretreatment unit, on time and within capital guidance; the Company's ability to timely obtain or maintain permits, including those necessary for operations or capital projects; the ability of the Company to acquire refined or lubricant product operations or pipeline and terminal operations on acceptable terms and to integrate any existing or future acquired operations; the possibility of terrorist or cyberattacks and the consequences of any such attacks; general economic conditions, including uncertainty regarding the timing, pace and extent of an economic recovery in the United States; a prolonged economic slowdown due to the COVID-19 pandemic could result in an impairment of goodwill and/or additional long-lived asset impairments; and other financial, operational and legal risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

RESULTS OF OPERATIONS

Financial Data (all information in this release is unaudited)

Three Months Ended Change from 2020 September 30,

2021 2020 Change Percent

(In thousands, except per share data)

Sales and other $ 4,685,059 $ 2,819,400 $ 1,865,659 66 %revenues

Operating costs and expenses:

Cost of products sold:

Cost of products sold(exclusive of lowerof cost or market 3,822,858 2,377,238 1,445,620 61 inventory valuationadjustment)

Lower of cost ormarket inventory - (62,849 ) 62,849 (100 )valuation adjustment

3,822,858 2,314,389 1,508,469 65

Operating expenses(exclusive of 352,520 332,496 20,024 6 depreciation andamortization)

Selling, general andadministrative 91,056 74,453 16,603 22 expenses

Depreciation and 121,220 125,280 (4,060 ) (3 )amortization

Total operating costs 4,387,654 2,846,618 1,541,036 54 and expenses

Income (loss) from 297,405 (27,218 ) 324,623 (1,193 )operations



Other income (expense):

Earnings of equity 3,689 1,316 2,373 180 method investments

Interest income 1,018 1,011 7 1

Interest expense (26,892 ) (30,589 ) 3,697 (12 )

Gain on businessinterruption - 81,000 (81,000 ) (100 )insurance settlement

Gain (loss) onforeign currency (3,492 ) 1,030 (4,522 ) (439 )transactions

Gain on sale of 85,779 1,368 84,411 6,170 assets and other

60,102 55,136 4,966 9

Income before income 357,507 27,918 329,589 1,181 taxes

Income tax expense 54,766 4,573 50,193 1,098

Net income 302,741 23,345 279,396 1,197

Less net incomeattributable to 21,954 25,746 (3,792 ) (15 )noncontrollinginterest

Net income (loss)attributable to $ 280,787 $ (2,401 ) $ 283,188 (11,795 )HollyFrontier %stockholders



Earnings (loss) pershare attributable to HollyFrontierstockholders:

Basic $ 1.71 $ (0.01 ) $ 1.72 (17,200 ) %

Diluted $ 1.71 $ (0.01 ) $ 1.72 (17,200 ) %

Cash dividends )declared per common $ - $ 0.35 $ (0.35 ) (100 %share

Average number ofcommon shares outstanding:

Basic 162,551 162,015 536 - %

Diluted 162,551 162,015 536 - %



EBITDA $ 482,647 $ 157,030 $ 325,617 207 %

Adjusted EBITDA $ 407,830 $ 65,638 $ 342,192 521 %

Nine Months EndedSeptember 30,

Change from 2020

2021

2020

Change

Percent

(In thousands, except per share data)

Sales and other revenues

$

12,766,475

$

8,282,875

$

4,483,600

54

%

Operating costs and expenses:

Cost of products sold:

Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

10,608,892

6,647,960

3,960,932

60

Lower of cost or market inventory valuation adjustment

(318,862

)

227,711

(546,573

)

(240

)

10,290,030

6,875,671

3,414,359

50

Operating expenses (exclusive of depreciation and amortization)

1,086,620

964,200

122,420

13

Selling, general and administrative expenses

250,785

237,559

13,226

6

Depreciation and amortization

369,341

396,033

(26,692

)

(7

)

Long-lived asset impairment

-

436,908

(436,908

)

(100

)

Total operating costs and expenses

11,996,776

8,910,371

3,086,405

35

Income (loss) from operations

769,699

(627,496

)

1,397,195

(223

)

Other income (expense):

Earnings of equity method investments

8,875

5,186

3,689

71

Interest income

3,078

6,590

(3,512

)

(53

)

Interest expense

(94,220

)

(85,923

)

(8,297

)

10

Gain on business interruption insurance settlement

-

81,000

(81,000

)

(100

)

Gain on tariff settlement

51,500

-

51,500

-

Gain on sales-type leases

-

33,834

(33,834

)

(100

)

Loss on early extinguishment of debt

-

(25,915

)

25,915

(100

)

Loss on foreign currency transactions

(4,226

)

(918

)

(3,308

)

360

Gain on sale of assets and other

95,596

4,790

90,806

1,896

60,603

18,644

41,959

225

Income (loss) before income taxes

830,302

(608,852

)

1,439,154

(236

)

Income tax expense (benefit)

149,944

(188,504

)

338,448

(180

)

Net income (loss)

680,358

(420,348

)

1,100,706

(262

)

Less net income attributable to noncontrolling interest

82,504

63,353

19,151

30

Net income (loss) attributable to HollyFrontier stockholders

$

597,854

$

(483,701

)

$

1,081,555

(224

)%

Earnings (loss) per share attributable to HollyFrontier stockholders:

Basic

$

3.63

$

(2.99

)

$

6.62

(221

)%

Diluted

$

3.63

$

(2.99

)

$

6.62

(221

)%

Cash dividends declared per common share

$

0.35

$

1.05

$

(0.70

)

(67

)%

Average number of common shares outstanding:

Basic

162,518

161,927

591

-

%

Diluted

162,518

161,927

591

-

%

EBITDA

$

1,208,281

$

(196,839

)

$

1,405,120

(714

)%

Adjusted EBITDA

$

789,639

$

434,118

$

355,521

82

%

Balance Sheet Data

Nine Months Ended Change from 2020 September 30,

2021 2020 Change Percent

(In thousands, except per share data)

Sales and other $ 12,766,475 $ 8,282,875 $ 4,483,600 54 %revenues

Operating costs and expenses:

Cost of products sold:

Cost of products sold(exclusive of lower ofcost or market 10,608,892 6,647,960 3,960,932 60 inventory valuationadjustment)

Lower of cost ormarket inventory (318,862 ) 227,711 (546,573 ) (240 )valuation adjustment

10,290,030 6,875,671 3,414,359 50

Operating expenses(exclusive of 1,086,620 964,200 122,420 13 depreciation andamortization)

Selling, general andadministrative 250,785 237,559 13,226 6 expenses

Depreciation and 369,341 396,033 (26,692 ) (7 )amortization

Long-lived asset - 436,908 (436,908 ) (100 )impairment

Total operating costs 11,996,776 8,910,371 3,086,405 35 and expenses

Income (loss) from 769,699 (627,496 ) 1,397,195 (223 )operations



Other income (expense):

Earnings of equity 8,875 5,186 3,689 71 method investments

Interest income 3,078 6,590 (3,512 ) (53 )

Interest expense (94,220 ) (85,923 ) (8,297 ) 10

Gain on businessinterruption insurance - 81,000 (81,000 ) (100 )settlement

Gain on tariff 51,500 - 51,500 - settlement

Gain on sales-type - 33,834 (33,834 ) (100 )leases

Loss on early - (25,915 ) 25,915 (100 )extinguishment of debt

Loss on foreign (4,226 ) (918 ) (3,308 ) 360 currency transactions

Gain on sale of assets 95,596 4,790 90,806 1,896 and other

60,603 18,644 41,959 225

Income (loss) before 830,302 (608,852 ) 1,439,154 (236 )income taxes

Income tax expense 149,944 (188,504 ) 338,448 (180 )(benefit)

Net income (loss) 680,358 (420,348 ) 1,100,706 (262 )

Less net incomeattributable to 82,504 63,353 19,151 30 noncontrollinginterest

Net income (loss)attributable to $ 597,854 $ (483,701 ) $ 1,081,555 (224 )HollyFrontier %stockholders



Earnings (loss) pershare attributable to HollyFrontierstockholders:

Basic $ 3.63 $ (2.99 ) $ 6.62 (221 ) %

Diluted $ 3.63 $ (2.99 ) $ 6.62 (221 ) %

Cash dividends )declared per common $ 0.35 $ 1.05 $ (0.70 ) (67 %share

Average number ofcommon shares outstanding:

Basic 162,518 161,927 591 - %

Diluted 162,518 161,927 591 - %



EBITDA $ 1,208,281 $ (196,839 ) $ 1,405,120 (714 ) %

Adjusted EBITDA $ 789,639 $ 434,118 $ 355,521 82 %

Balance Sheet Data

September 30, December 31,

2021 2020

(In thousands)

Cash and cash equivalents $ 1,481,562 $ 1,368,318

Working capital $ 2,310,815 $ 1,935,605

Total assets $ 12,897,181 $ 11,506,864

Long-term debt $ 3,072,352 $ 3,142,718

Total equity $ 6,329,539 $ 5,722,203

Segment Information

Our operations are organized into three reportable segments, Refining, Lubricants and Specialty Products and HEP. Our operations that are not included in the Refining, Lubricants and Specialty Products and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under the Corporate, Other and Eliminations column.

The Refining segment includes the operations of our El Dorado, Tulsa, Navajo, Woods Cross Refineries and HollyFrontier Asphalt Company LLC ("HFC Asphalt") (aggregated as a reportable segment). Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain geographic regions of the United States. HFC Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma. The Refining segment also included the operations of the Cheyenne Refinery through the third quarter of 2020, at which time it permanently ceased petroleum refining operations.

The Lubricants and Specialty Products segment involves Petro-Canada Lubricants Inc.'s ("PCLI") production operations, located in Mississauga, Ontario, that include lubricant products such as base oils, white oils, specialty products and finished lubricants and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States, Europe and China. Additionally, the Lubricants and Specialty Products segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America, the operations of Red Giant Oil, one of the largest suppliers of locomotive engine oil in North America and the operations of Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

The HEP segment involves all of the operations of HEP, a consolidated variable interest entity, which owns and operates logistics assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units in the Mid-Continent, Southwest and Rocky Mountain geographic regions of the United States. The HEP segment also includes a 75% interest in UNEV Pipeline, LLC (an HEP consolidated subsidiary), and a 50% ownership interest in each of Osage Pipeline Company, LLC, Cheyenne Pipeline LLC and Cushing Connect Pipeline & Terminal LLC. Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations. Due to certain basis differences, our reported amounts for the HEP segment may not agree to amounts reported in HEP's periodic public filings.

Lubricants Corporate, Refining and HEP Other and Consolidated Specialty Eliminations Total Products

(In thousands)

Three Months Ended September 30, 2021

Sales andother revenues:

Revenues fromexternal $ 3,993,570 $ 666,033 $ 25,459 $ (3 ) $ 4,685,059 customers

Intersegment 189,441 501 97,125 (287,067 ) - revenues

$ 4,183,011 $ 666,534 $ 122,584 $ (287,070 ) $ 4,685,059

Cost ofproducts sold(exclusive of $ 3,605,600 $ 482,533 $ - $ (265,275 ) $ 3,822,858 lower of costor marketinventory)

Operating $ 248,316 $ 60,940 $ 42,793 $ 471 $ 352,520 expenses

Selling,general and $ 32,345 $ 41,476 $ 3,849 $ 13,386 $ 91,056 administrativeexpenses

Depreciationand $ 77,890 $ 19,226 $ 21,627 $ 2,477 $ 121,220 amortization

Income (loss)from $ 218,860 $ 62,359 $ 54,315 $ (38,129 ) $ 297,405 operations

Income (loss)before $ 217,438 $ 148,460 $ 58,081 $ (40,598 ) $ 383,381 interest andincome taxes

Net incomeattributableto $ - $ - $ 1,188 $ 20,766 $ 21,954 noncontrollinginterest

Earnings ofequity method $ - $ - $ 3,689 $ - $ 3,689 investments

Capital $ 40,814 $ 7,833 $ 19,217 $ 147,640 $ 215,504 expenditures



Three Months Ended September 30, 2020

Sales andother revenues:

Revenues fromexternal $ 2,339,782 $ 452,878 $ 26,740 $ - $ 2,819,400 customers

Intersegment 56,331 2,164 100,991 (159,486 ) - revenues

$ 2,396,113 $ 455,042 $ 127,731 $ (159,486 ) $ 2,819,400

Cost ofproducts sold(exclusive of $ 2,211,342 $ 302,703 $ - $ (136,807 ) $ 2,377,238 lower of costor marketinventory)

Lower of costor marketinventory $ (62,849 ) $ - $ - $ - $ (62,849 )valuationadjustment

Operating $ 256,079 $ 54,488 $ 40,003 $ (18,074 ) $ 332,496 expenses

Selling,general and $ 30,866 $ 36,773 $ 2,332 $ 4,482 $ 74,453 administrativeexpenses

Depreciationand $ 79,146 $ 17,432 $ 24,109 $ 4,593 $ 125,280 amortization

Income (loss)from $ (118,471 ) $ 43,646 $ 61,287 $ (13,680 ) $ (27,218 )operations

Income (loss)before $ (118,471 ) $ 43,120 $ 70,067 $ 62,780 $ 57,496 interest andincome taxes

Net incomeattributableto $ - $ - $ 2,293 $ 23,453 $ 25,746 noncontrollinginterest

Earnings ofequity method $ - $ - $ 1,316 $ - $ 1,316 investments

Capital $ 41,740 $ 6,995 $ 7,902 $ 26,635 $ 83,272 expenditures

Refining

Lubricants and Specialty Products

HEP

Corporate, Otherand Eliminations

ConsolidatedTotal

(In thousands)

Nine Months Ended September 30, 2021

Sales and other revenues:

Revenues from external customers

$

10,837,876

$

1,850,786

$

77,809

$

4

$

12,766,475

Intersegment revenues

455,089

9,500

298,193

(762,782

)

-

$

11,292,965

$

1,860,286

$

376,002

$

(762,778

)

$

12,766,475

Cost of products sold (exclusive of lower of cost or market inventory)

$

9,986,862

$

1,305,274

$

-

$

(683,244

)

$

10,608,892

Lower of cost or market inventory valuation adjustment

$

(318,353

)

$

-

$

-

$

(509

)

$

(318,862

)

Operating expenses

$

772,593

$

183,003

$

126,226

$

4,798

$

1,086,620

Selling, general and administrative expenses

$

90,977

$

124,612

$

9,664

$

25,532

$

250,785

Depreciation and amortization

$

245,910

$

58,499

$

66,908

$

(1,976

)

$

369,341

Income (loss) from operations

$

514,976

$

188,898

$

173,204

$

(107,379

)

$

769,699

Income (loss) before interest and income taxes

$

513,226

$

275,538

$

212,750

$

(80,070

)

$

921,444

Net income attributable to noncontrolling interest

$

-

$

-

$

4,027

$

78,477

$

82,504

Earnings of equity method investments

$

-

$

-

$

8,875

$

-

$

8,875

Capital expenditures

$

114,325

$

17,534

$

76,933

$

339,553

$

548,345

Nine Months Ended September 30, 2020

Sales and other revenues:

Revenues from external customers

$

6,880,444

$

1,330,021

$

72,410

$

-

$

8,282,875

Intersegment revenues

$

178,039

$

8,911

$

297,982

$

(484,932

)

$

-

$

7,058,483

$

1,338,932

$

370,392

$

(484,932

)

$

8,282,875

Cost of products sold (exclusive of lower of cost or market inventory)

$

6,113,530

$

952,430

$

-

$

(418,000

)

$

6,647,960

Lower of cost or market inventory valuation adjustment

$

227,711

$

-

$

-

$

-

$

227,711

Operating expenses

$

754,612

$

156,459

$

109,721

$

(56,592

)

$

964,200

Selling, general and administrative expenses

$

94,677

$

121,654

$

7,569

$

13,659

$

237,559

Depreciation and amortization

$

251,019

$

59,260

$

72,095

$

13,659

$

396,033

Long-lived asset impairment

$

215,242

$

204,708

$

16,958

$

-

$

436,908

Income (loss) from operations

$

(598,308

)

$

(155,579

)

$

164,049

$

(37,658

)

$

(627,496

)

Income (loss) before interest and income taxes

$

(598,308

)

$

(155,847

)

$

185,593

$

39,043

$

(529,519

)

Net income attributable to noncontrolling interest

$

-

$

-

$

4,158

$

59,195

$

63,353

Earnings of equity method investments

$

-

$

-

$

5,186

$

-

$

5,186

Capital expenditures

$

106,856

$

20,387

$

38,642

$

47,123

$

213,008

Lubricants Corporate, Consolidated Refining and Specialty HEP Other and Total Products Eliminations

(In thousands)

Nine Months Ended September 30, 2021

Sales andother revenues:

Revenues fromexternal $ 10,837,876 $ 1,850,786 $ 77,809 $ 4 $ 12,766,475 customers

Intersegment 455,089 9,500 298,193 (762,782 ) - revenues

$ 11,292,965 $ 1,860,286 $ 376,002 $ (762,778 ) $ 12,766,475

Cost ofproducts sold(exclusive of $ 9,986,862 $ 1,305,274 $ - $ (683,244 ) $ 10,608,892 lower of costor marketinventory)

Lower of costor marketinventory $ (318,353 ) $ - $ - $ (509 ) $ (318,862 )valuationadjustment

Operating $ 772,593 $ 183,003 $ 126,226 $ 4,798 $ 1,086,620 expenses

Selling,general and $ 90,977 $ 124,612 $ 9,664 $ 25,532 $ 250,785 administrativeexpenses

Depreciationand $ 245,910 $ 58,499 $ 66,908 $ (1,976 ) $ 369,341 amortization

Income (loss)from $ 514,976 $ 188,898 $ 173,204 $ (107,379 ) $ 769,699 operations

Income (loss)before $ 513,226 $ 275,538 $ 212,750 $ (80,070 ) $ 921,444 interest andincome taxes

Net incomeattributableto $ - $ - $ 4,027 $ 78,477 $ 82,504 noncontrollinginterest

Earnings ofequity method $ - $ - $ 8,875 $ - $ 8,875 investments

Capital $ 114,325 $ 17,534 $ 76,933 $ 339,553 $ 548,345 expenditures



Nine Months Ended September 30, 2020

Sales andother revenues:

Revenues fromexternal $ 6,880,444 $ 1,330,021 $ 72,410 $ - $ 8,282,875 customers

Intersegment $ 178,039 $ 8,911 $ 297,982 $ (484,932 ) $ - revenues

$ 7,058,483 $ 1,338,932 $ 370,392 $ (484,932 ) $ 8,282,875

Cost ofproducts sold(exclusive of $ 6,113,530 $ 952,430 $ - $ (418,000 ) $ 6,647,960 lower of costor marketinventory)

Lower of costor marketinventory $ 227,711 $ - $ - $ - $ 227,711 valuationadjustment

Operating $ 754,612 $ 156,459 $ 109,721 $ (56,592 ) $ 964,200 expenses

Selling,general and $ 94,677 $ 121,654 $ 7,569 $ 13,659 $ 237,559 administrativeexpenses

Depreciationand $ 251,019 $ 59,260 $ 72,095 $ 13,659 $ 396,033 amortization

Long-livedasset $ 215,242 $ 204,708 $ 16,958 $ - $ 436,908 impairment

Income (loss)from $ (598,308 ) $ (155,579 ) $ 164,049 $ (37,658 ) $ (627,496 )operations

Income (loss)before $ (598,308 ) $ (155,847 ) $ 185,593 $ 39,043 $ (529,519 )interest andincome taxes

Net incomeattributableto $ - $ - $ 4,158 $ 59,195 $ 63,353 noncontrollinginterest

Earnings ofequity method $ - $ - $ 5,186 $ - $ 5,186 investments

Capital $ 106,856 $ 20,387 $ 38,642 $ 47,123 $ 213,008 expenditures

Refining

Lubricants and Specialty Products

HEP

Corporate, Other and Eliminations

Consolidated Total

(In thousands)

September 30, 2021

Cash and cash equivalents

$

18,056

$

218,970

$

12,816

$

1,231,720

$

1,481,562

Total assets

$

7,266,496

$

2,119,076

$

2,236,091

$

1,275,518

$

12,897,181

Long-term debt

$

-

$

-

$

1,333,309

$

1,739,043

$

3,072,352

December 31, 2020

Cash and cash equivalents

$

3,106

$

163,729

$

21,990

$

1,179,493

$

1,368,318

Total assets

$

6,203,847

$

1,864,313

$

2,198,478

$

1,240,226

$

11,506,864

Long-term debt

$

-

$

-

$

1,405,603

$

1,737,115

$

3,142,718

Refining Segment Operating Data

The following tables set forth information, including non-GAAP (Generally Accepted Accounting Principles) performance measures about our refinery operations. Refinery gross and net operating margins do not include the non-cash effects of long-lived asset impairment charges, lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below.

As of September 30, 2021, our refinery operations included the El Dorado, Tulsa, Navajo and Woods Cross Refineries. In the third quarter of 2020, we permanently ceased petroleum refining operations at our Cheyenne Refinery and subsequently began converting certain assets at our Cheyenne Refinery to renewable diesel production. 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 continues to be comprised of the El Dorado and Tulsa Refineries, and the new West region is comprised of the Navajo and Woods Cross Refineries. Refining segment operating data for the three and the nine months ended September 30, 2020 has been retrospectively adjusted to reflect the revised regional groupings.

Lubricants Corporate, Consolidated Refining and Specialty HEP Other and Total Products Eliminations

(In thousands)

September 30, 2021

Cash andcash $ 18,056 $ 218,970 $ 12,816 $ 1,231,720 $ 1,481,562 equivalents

Total $ 7,266,496 $ 2,119,076 $ 2,236,091 $ 1,275,518 $ 12,897,181 assets

Long-term $ - $ - $ 1,333,309 $ 1,739,043 $ 3,072,352 debt



December 31, 2020

Cash andcash $ 3,106 $ 163,729 $ 21,990 $ 1,179,493 $ 1,368,318 equivalents

Total $ 6,203,847 $ 1,864,313 $ 2,198,478 $ 1,240,226 $ 11,506,864 assets

Long-term $ - $ - $ 1,405,603 $ 1,737,115 $ 3,142,718 debt

Refining Segment Operating Data

The following tables set forth information, including non-GAAP (Generally Accepted Accounting Principles) performance measures about our refinery operations. Refinery gross and net operating margins do not include the non-cash effects of long-lived asset impairment charges, lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below.

As of September 30, 2021, our refinery operations included the El Dorado, Tulsa, Navajo and Woods Cross Refineries. In the third quarter of 2020, we permanently ceased petroleum refining operations at our Cheyenne Refinery and subsequently began converting certain assets at our Cheyenne Refinery to renewable diesel production. 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 continues to be comprised of the El Dorado and Tulsa Refineries, and the new West region is comprised of the Navajo and Woods Cross Refineries. Refining segment operating data for the three and the nine months ended September 30, 2020 has been retrospectively adjusted to reflect the revised regional groupings.

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Mid-Continent Region(El Dorado and Tulsa Refineries)

Crude charge (BPD) ^(1) 280,220 244,200 258,530 234,550

Refinery throughput 294,970 257,280 272,770 249,430 (BPD)^ (2)

Sales of producedrefined products (BPD) 277,310 243,830 258,800 239,800 ^(3)

Refinery utilization ^ 107.8 % 93.9 % 99.4 % 90.2 %(4)



Average per produced barrel ^(5)

Refinery gross margin $ 13.59 $ 3.21 $ 10.65 $ 6.41

Refinery operating 5.72 5.47 6.68 5.47 expenses ^(6)

Net operating margin $ 7.87 $ (2.26 ) $ 3.97 $ 0.94



Refinery operatingexpenses per throughput $ 5.37 $ 5.19 $ 6.33 $ 5.26 barrel ^(7)



Feedstocks:

Sweet crude oil 66 % 62 % 63 % 58 %

Sour crude oil 13 % 18 % 14 % 19 %

Heavy sour crude oil 16 % 15 % 18 % 17 %

Other feedstocks and 5 % 5 % 5 % 6 %blends

Total 100 % 100 % 100 % 100 %



Sales of produced refined products:

Gasolines 52 % 53 % 51 % 52 %

Diesel fuels 32 % 35 % 33 % 34 %

Jet fuels 5 % 3 % 5 % 4 %

Fuel oil 1 % 1 % 1 % 1 %

Asphalt 4 % 2 % 3 % 3 %

Base oils 4 % 4 % 4 % 4 %

LPG and other 2 % 2 % 3 % 2 %

Total 100 % 100 % 100 % 100 %

Three Months EndedSeptember 30,

Nine Months Ended September 30,

2021

2020

2021

2020

West Region (Navajo and Woods Cross Refineries)

Crude charge (BPD) (1)

136,210

131,680

135,370

125,710

Refinery throughput (BPD) (2)

149,760

146,860

148,700

139,710

Sales of produced refined products (BPD) (3)

144,710

144,970

148,410

142,740

Refinery utilization (4)

93.9

%

90.8

%

93.4

%

86.7

%

Average per produced barrel (5)

Refinery gross margin

$

17.33

$

11.24

$

13.67

$

12.01

Refinery operating expenses (6)

7.70

6.88

7.43

7.01

Net operating margin

$

9.63

$

4.36

$

6.24

$

5.00

Refinery operating expenses per throughput barrel (7)

$

7.44

$

6.79

$

7.41

$

7.16

Feedstocks:

Sweet crude oil

22

%

30

%

22

%

30

%

Sour crude oil

58

%

48

%

59

%

49

%

Black wax crude oil

11

%

12

%

10

%

11

%

Other feedstocks and blends

9

%

10

%

9

%

10

%

Total

100

%

100

%

100

%

100

%

Sales of produced refined products:

Gasolines

51

%

57

%

52

%

56

%

Diesel fuels

39

%

34

%

38

%

35

%

Fuel oil

3

%

2

%

3

%

2

%

Asphalt

5

%

6

%

4

%

5

%

LPG and other

2

%

1

%

3

%

2

%

Total

100

%

100

%

100

%

100

%

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

West Region (Navajo and Woods Cross Refineries)

Crude charge (BPD) ^(1) 136,210 131,680 135,370 125,710

Refinery throughput 149,760 146,860 148,700 139,710 (BPD)^ (2)

Sales of producedrefined products (BPD) 144,710 144,970 148,410 142,740 ^(3)

Refinery utilization ^ 93.9 % 90.8 % 93.4 % 86.7 %(4)



Average per produced barrel ^(5)

Refinery gross margin $ 17.33 $ 11.24 $ 13.67 $ 12.01

Refinery operating 7.70 6.88 7.43 7.01 expenses ^(6)

Net operating margin $ 9.63 $ 4.36 $ 6.24 $ 5.00



Refinery operatingexpenses per throughput $ 7.44 $ 6.79 $ 7.41 $ 7.16 barrel ^(7)



Feedstocks:

Sweet crude oil 22 % 30 % 22 % 30 %

Sour crude oil 58 % 48 % 59 % 49 %

Black wax crude oil 11 % 12 % 10 % 11 %

Other feedstocks and 9 % 10 % 9 % 10 %blends

Total 100 % 100 % 100 % 100 %



Sales of produced refined products:

Gasolines 51 % 57 % 52 % 56 %

Diesel fuels 39 % 34 % 38 % 35 %

Fuel oil 3 % 2 % 3 % 2 %

Asphalt 5 % 6 % 4 % 5 %

LPG and other 2 % 1 % 3 % 2 %

Total 100 % 100 % 100 % 100 %

Consolidated

Crude charge (BPD) (1)

416,430

375,880

393,900

360,260

Refinery throughput (BPD) (2)

444,730

404,140

421,470

389,140

Sales of produced refined products (BPD) (3)

422,020

388,800

407,210

382,540

Refinery utilization (4)

102.8

%

92.8

%

97.3

%

89.0

%

Average per produced barrel (5)

Refinery gross margin

$

14.87

$

6.20

$

11.75

$

8.50

Refinery operating expenses (6)

6.40

6.00

6.95

6.04

Net operating margin

$

8.47

$

0.20

$

4.80

$

2.46

Refinery operating expenses per throughput barrel (7)

$

6.07

$

5.77

$

6.71

$

5.94

Feedstocks:

Sweet crude oil

51

%

51

%

49

%

48

%

Sour crude oil

28

%

28

%

29

%

30

%

Heavy sour crude oil

11

%

10

%

12

%

11

%

Black wax crude oil

4

%

4

%

4

%

4

%

Other feedstocks and blends

6

%

7

%

6

%

7

%

Total

100

%

100

%

100

%

100

%

Consolidated

Crude charge (BPD) ^(1) 416,430 375,880 393,900 360,260

Refinery throughput (BPD)^ (2) 444,730 404,140 421,470 389,140

Sales of produced refined 422,020 388,800 407,210 382,540 products (BPD) ^(3)

Refinery utilization ^(4) 102.8 % 92.8 % 97.3 % 89.0 %



Average per produced barrel ^ (5)

Refinery gross margin $ 14.87 $ 6.20 $ 11.75 $ 8.50

Refinery operating expenses ^ 6.40 6.00 6.95 6.04 (6)

Net operating margin $ 8.47 $ 0.20 $ 4.80 $ 2.46



Refinery operating expenses per $ 6.07 $ 5.77 $ 6.71 $ 5.94 throughput barrel ^(7)



Feedstocks:

Sweet crude oil 51 % 51 % 49 % 48 %

Sour crude oil 28 % 28 % 29 % 30 %

Heavy sour crude oil 11 % 10 % 12 % 11 %

Black wax crude oil 4 % 4 % 4 % 4 %

Other feedstocks and blends 6 % 7 % 6 % 7 %

Total 100 % 100 % 100 % 100 %

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2021

2020

2021

2020

Consolidated

Sales of produced refined products:

Gasolines

51

%

54

%

52

%

54

%

Diesel fuels

35

%

35

%

35

%

34

%

Jet fuels

3

%

2

%

3

%

2

%

Fuel oil

2

%

1

%

1

%

1

%

Asphalt

4

%

4

%

4

%

4

%

Base oils

3

%

2

%

2

%

3

%

LPG and other

2

%

2

%

3

%

2

%

Total

100

%

100

%

100

%

100

%

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Consolidated

Sales of produced refined products:

Gasolines 51 % 54 % 52 % 54 %

Diesel fuels 35 % 35 % 35 % 34 %

Jet fuels 3 % 2 % 3 % 2 %

Fuel oil 2 % 1 % 1 % 1 %

Asphalt 4 % 4 % 4 % 4 %

Base oils 3 % 2 % 2 % 3 %

LPG and other 2 % 2 % 3 % 2 %

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 refined products produced at our refineries (including HFC Asphalt) 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 405,000 BPSD.

(5)

Represents 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" below.

(6)

Represents total refining segment operating expenses, exclusive of depreciation and amortization and Cheyenne Refinery operating expenses, divided by sales volumes of refined products produced at our refineries.

(7)

Represents total refining segment operating expenses, exclusive of depreciation and amortization and Cheyenne Refinery operating expenses, divided by refinery throughput.

Lubricants and Specialty Products Segment Operating Data

The following table sets forth information about our lubricants and specialty products operations.

(1) Crude charge represents the barrels per day of crude oil processed at our refineries.

Refinery throughput represents the barrels per day of crude and other(2) refinery feedstocks input to the crude units and other conversion units at our refineries.

Represents barrels sold of refined products produced at our refineries(3) (including HFC Asphalt) 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 405,000 BPSD.

Represents average amount per produced barrel sold, which is a non-GAAP(5) measure. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below.

Represents total refining segment operating expenses, exclusive of(6) depreciation and amortization and Cheyenne Refinery operating expenses, divided by sales volumes of refined products produced at our refineries.

Represents total refining segment operating expenses, exclusive of(7) depreciation and amortization and Cheyenne Refinery operating expenses, divided by refinery throughput.

Lubricants and Specialty Products Segment Operating Data

The following table sets forth information about our lubricants and specialty products operations.

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Lubricants and Specialty Products

Throughput (BPD) 18,260 19,020 29,140 19,050

Sales of produced 31,700 33,560 33,640 32,460 products (BPD)



Sales of produced products:

Finished products 53 % 50 % 52 % 51 %

Base oils 28 % 27 % 28 % 24 %

Other 19 % 23 % 20 % 25 %

Total 100 % 100 % 100 % 100 %

Supplemental financial data attributable to our Lubricants and Specialty Products segment is presented below:

Total Rack Back ^ Rack Eliminations Lubricants (1) Forward ^ ^(3) and (2) Specialty Products

(In thousands)

Three months ended September 30, 2021

Sales and other $ 270,207 $ 634,654 $ (238,327 ) $ 666,534 revenues

Cost of products sold $ 148,171 $ 572,689 $ (238,327 ) $ 482,533

Operating expenses $ 29,046 $ 31,894 $ - $ 60,940

Selling, general and $ 7,058 $ 34,418 $ - $ 41,476 administrative expenses

Depreciation and $ 6,375 $ 12,851 $ - $ 19,226 amortization

Income (loss) from $ 79,557 $ (17,198 ) $ - $ 62,359 operations

Income (loss) beforeinterest and income $ 165,575 $ (17,115 ) $ - $ 148,460 taxes

EBITDA $ 171,950 $ (4,264 ) $ - $ 167,686



Three months ended September 30, 2020

Sales and other $ 110,952 $ 423,418 $ (79,328 ) $ 455,042 revenues

Cost of products sold $ 98,033 $ 283,998 $ (79,328 ) $ 302,703

Operating expenses $ 25,400 $ 29,088 $ - $ 54,488

Selling, general and $ 5,616 $ 31,157 $ - $ 36,773 administrative expenses

Depreciation and $ 5,419 $ 12,013 $ - $ 17,432 amortization

Income (loss) from $ (23,516 ) $ 67,162 $ - $ 43,646 operations

Income (loss) beforeinterest and income $ (23,516 ) $ 66,636 $ - $ 43,120 taxes

EBITDA $ (18,097 ) $ 78,649 $ - $ 60,552

Nine months ended September 30, 2021

Sales and other revenues

$

698,134

$

1,747,111

$

(584,959)

$

1,860,286

Cost of products sold

$

443,983

$

1,446,250

$

(584,959)

$

1,305,274

Operating expenses

$

86,773

$

96,230

$

-

$

183,003

Selling, general and administrative expenses

$

19,711

$

104,901

$

-

$

124,612

Depreciation and amortization

$

19,910

$

38,589

$

-

$

58,499

Income from operations

$

127,757

$

61,141

$

-

$

188,898

Income before interest and income taxes

$

213,775

$

61,763

$

-

$

275,538

EBITDA

$

233,685

$

100,352

$

-

$

334,037

Nine months ended September 30, 2020

Sales and other revenues

$

361,638

$

1,241,402

$

(264,108)

$

1,338,932

Cost of products sold

$

345,843

$

870,695

$

(264,108)

$

952,430

Operating expenses

$

69,703

$

86,756

$

-

$

156,459

Selling, general and administrative expenses

$

16,596

$

105,058

$

-

$

121,654

Depreciation and amortization

$

22,163

$

37,097

$

-

$

59,260

Long-lived asset impairment

$

167,017

$

37,691

$

-

$

204,708

Income (loss) from operations

$

(259,684)

$

104,105

$

-

$

(155,579)

Income (loss) before interest and income taxes

$

(259,684)

$

103,837

$

-

$

(155,847)

EBITDA

$

(237,521)

$

140,934

$

-

$

(96,587)

Nine monthsended September 30, 2021

Sales and other $ 698,134 $ 1,747,111 $ (584,959) $ 1,860,286 revenues

Cost of $ 443,983 $ 1,446,250 $ (584,959) $ 1,305,274 products sold

Operating $ 86,773 $ 96,230 $ - $ 183,003 expenses

Selling,general and $ 19,711 $ 104,901 $ - $ 124,612 administrativeexpenses

Depreciationand $ 19,910 $ 38,589 $ - $ 58,499 amortization

Income from $ 127,757 $ 61,141 $ - $ 188,898 operations

Income beforeinterest and $ 213,775 $ 61,763 $ - $ 275,538 income taxes

EBITDA $ 233,685 $ 100,352 $ - $ 334,037



Nine monthsended September 30, 2020

Sales and other $ 361,638 $ 1,241,402 $ (264,108) $ 1,338,932 revenues

Cost of $ 345,843 $ 870,695 $ (264,108) $ 952,430 products sold

Operating $ 69,703 $ 86,756 $ - $ 156,459 expenses

Selling,general and $ 16,596 $ 105,058 $ - $ 121,654 administrativeexpenses

Depreciationand $ 22,163 $ 37,097 $ - $ 59,260 amortization

Long-livedasset $ 167,017 $ 37,691 $ - $ 204,708 impairment

Income (loss) $ (259,684) $ 104,105 $ - $ (155,579) from operations

Income (loss)before interest $ (259,684) $ 103,837 $ - $ (155,847) and incometaxes

EBITDA $ (237,521) $ 140,934 $ - $ (96,587)

(1)

Rack Back consists of the PCLI base oil production activities, by-product sales to third parties and intra-segment base oil sales to Rack Forward.

(2)

Rack Forward activities include the purchase of base oils from Rack Back and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties.

(3)

Intra-segment sales of Rack Back produced base oils to Rack Forward are eliminated under the "Eliminations" column.

Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization ("EBITDA") and EBITDA excluding special items ("Adjusted EBITDA") to amounts reported under generally accepted accounting principles ("GAAP") in financial statements.

Earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, is calculated as net income (loss) attributable to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax provision and (iii) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA plus or minus (i) lower of cost or market inventory valuation adjustments, (ii) gain on sale of real property, (iii) HollyFrontier's pro-rata share of gain on business interruption insurance settlement, (iv) long-lived asset impairment, inclusive of HollyFrontier's pro-rata share of impairment in HEP segment, (v) HollyFrontier's pro-rata share of HEP's gain on sales-type leases, (vi) HollyFrontier's pro-rata share of HEP's loss on early extinguishment of debt, (vii) severance costs, (viii) restructuring charges, (ix) Cheyenne Refinery LIFO inventory liquidation costs, (x) decommissioning costs, (xi) pre-close acquisition integration costs, (xii) acquisition integration and regulatory costs and (xiii) gain on tariff settlement.

EBITDA and Adjusted EBITDA are not calculations provided for under accounting principles generally accepted in the United States; however, the amounts included in these calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. These are presented here because they are widely used financial indicators used by investors and analysts to measure performance. EBITDA and Adjusted EBITDA are also used by our management for internal analysis and as a basis for financial covenants.

Set forth below is our calculation of EBITDA and Adjusted EBITDA.

(1) Rack Back consists of the PCLI base oil production activities, by-product sales to third parties and intra-segment base oil sales to Rack Forward.

Rack Forward activities include the purchase of base oils from Rack Back(2) and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties.

(3) Intra-segment sales of Rack Back produced base oils to Rack Forward are eliminated under the "Eliminations" column.

Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization ("EBITDA") and EBITDA excluding special items ("Adjusted EBITDA") to amounts reported under generally accepted accounting principles ("GAAP") in financial statements.

Earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, is calculated as net income (loss) attributable to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax provision and (iii) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA plus or minus (i) lower of cost or market inventory valuation adjustments, (ii) gain on sale of real property, (iii) HollyFrontier's pro-rata share of gain on business interruption insurance settlement, (iv) long-lived asset impairment, inclusive of HollyFrontier's pro-rata share of impairment in HEP segment, (v) HollyFrontier's pro-rata share of HEP's gain on sales-type leases, (vi) HollyFrontier's pro-rata share of HEP's loss on early extinguishment of debt, (vii) severance costs, (viii) restructuring charges, (ix) Cheyenne Refinery LIFO inventory liquidation costs, (x) decommissioning costs, (xi) pre-close acquisition integration costs, (xii) acquisition integration and regulatory costs and (xiii) gain on tariff settlement.

EBITDA and Adjusted EBITDA are not calculations provided for under accounting principles generally accepted in the United States; however, the amounts included in these calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. These are presented here because they are widely used financial indicators used by investors and analysts to measure performance. EBITDA and Adjusted EBITDA are also used by our management for internal analysis and as a basis for financial covenants.

Set forth below is our calculation of EBITDA and Adjusted EBITDA.

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(In thousands)

Net income (loss)attributable to $ 280,787 $ (2,401 ) $ 597,854 $ (483,701 )HollyFrontierstockholders

Add interest expense 26,892 30,589 94,220 85,923

Subtract interest (1,018 ) (1,011 ) (3,078 ) (6,590 )income

Add (subtract)income tax expense 54,766 4,573 149,944 (188,504 )(benefit)

Add depreciation and 121,220 125,280 369,341 396,033 amortization

EBITDA $ 482,647 $ 157,030 $ 1,208,281 $ (196,839 )

Add (subtract) lowerof cost or market - (62,849 ) (318,862 ) 227,711 inventory valuationadjustment

Subtract gain onsale of real (86,018 ) - (86,018 ) - property

SubtractHollyFrontier'spro-rata share of - (77,143 ) - (77,143 )gain on businessinterruptioninsurance settlement

Add long-lived assetimpairment,inclusive of - - - 429,540 pro-rata share ofimpairment in HEPsegment

SubtractHollyFrontier'spro-rata share of - - - (19,134 )HEP's gain onsales-type leases

Add HollyFrontier'spro-rata share ofHEP's loss on early - - - 14,656 extinguishment ofdebt

Add severance costs 198 2,429 906 3,546

Add restructuring - - 7,813 3,679 charges

Add CheyenneRefinery LIFO - 33,814 923 33,814 inventoryliquidation costs

Add decommissioning 6,714 12,309 23,061 12,309 costs

Add pre-closeacquisition 4,289 - 5,035 - integration costs

Add acquisitionintegration and - 48 - 1,979 regulatory costs

Subtract gain on - - (51,500 ) - tariff settlement

Adjusted EBITDA $ 407,830 $ 65,638 $ 789,639 $ 434,118

EBITDA and Adjusted EBITDA attributable to our Refining segment is presented below:

Three Months Ended Nine Months Ended September 30, September 30,

Refining Segment 2021 2020 2021 2020

(In thousands)

Income (loss) frombefore interest and $ 217,438 $ (118,471 ) $ 513,226 $ (598,308 )income taxes ^(1)

Add depreciation and 77,890 79,146 245,910 251,019 amortization

EBITDA 295,328 (39,325 ) 759,136 (347,289 )

Add (subtract) lowerof cost or market - (62,849 ) (318,353 ) 227,711 inventory valuationadjustment

Add long-lived asset - - - 215,242 impairment

Add severance costs - 2,429 - 3,546

Add restructuring - - - 2,009 charges

Add Cheyenne RefineryLIFO inventory - 33,814 - 33,814 liquidation costs

Add decommissioning - 12,309 - 12,309 costs

Adjusted EBITDA $ 295,328 $ (53,622 ) $ 440,783 $ 147,342

(1)

Income (loss) before interest and income taxes of our Refining segment represents income (loss) plus (i) interest expense, net of interest income and (ii) income tax provision.

EBITDA and Adjusted EBITDA attributable to our Lubricants and Specialty Products segment is set forth below.

Income (loss) before interest and income taxes of our Refining segment(1) represents income (loss) plus (i) interest expense, net of interest income and (ii) income tax provision.

EBITDA and Adjusted EBITDA attributable to our Lubricants and Specialty Products segment is set forth below.

TotalLubricants and Specialty Products Rack LubricantsSegment Rack Back Forward and Specialty Products

(In thousands)

Three months ended September 30, 2021

Income before interest and income $ 165,575 $ (17,115 ) $ 148,460 taxes^ (1)

Add depreciation and amortization 6,375 12,851 19,226

EBITDA 171,950 (4,264 ) 167,686

Subtract gain on sale of real (86,018 ) - (86,018 )property

Adjusted EBITDA $ 85,932 $ (4,264 ) $ 81,668



Three months ended September 30, 2020

Income (loss) before interest and $ (23,516 ) $ 66,636 $ 43,120 income taxes ^(1)

Add depreciation and amortization 5,419 12,013 17,432

EBITDA (18,097 ) 78,649 60,552

Lubricants and Specialty Products Segment

Rack Back

Rack Forward

Total Lubricants and Specialty Products

(In thousands)

Nine months ended September 30, 2021

Income before interest and income taxes (1)

$

213,775

$

61,763

$

275,538

Add depreciation and amortization

19,910

38,589

58,499

EBITDA

233,685

100,352

334,037

Subtract gain on sale of real property

(86,018

)

-

(86,018

)

Add restructuring charges

1,079

6,734

7,813

Adjusted EBITDA

$

148,746

$

107,086

$

255,832

Nine months ended September 30, 2020

Income (loss) before interest and income taxes (1)

$

(259,684

)

$

103,837

$

(155,847

)

Add depreciation and amortization

22,163

37,097

59,260

EBITDA

(237,521

)

140,934

(96,587

)

Add long-lived asset impairment

167,017

37,691

204,708

Adjusted EBITDA

$

(70,504

)

$

178,625

$

108,121

TotalLubricants and Specialty Products Rack LubricantsSegment Rack Back Forward and Specialty Products

(In thousands)

Nine months ended September 30, 2021

Income before interest and income $ 213,775 $ 61,763 $ 275,538 taxes ^(1)

Add depreciation and amortization 19,910 38,589 58,499

EBITDA 233,685 100,352 334,037

Subtract gain on sale of real (86,018 ) - (86,018 )property

Add restructuring charges 1,079 6,734 7,813

Adjusted EBITDA $ 148,746 $ 107,086 $ 255,832



Nine months ended September 30, 2020

Income (loss) before interest and $ (259,684 ) $ 103,837 $ (155,847 )income taxes ^(1)

Add depreciation and amortization 22,163 37,097 59,260

EBITDA (237,521 ) 140,934 (96,587 )

Add long-lived asset impairment 167,017 37,691 204,708

Adjusted EBITDA $ (70,504 ) $ 178,625 $ 108,121

(1)

Income (loss) before interest and income taxes of our Lubricants and Specialty Products segment represents income (loss) plus (i) interest expense, net of interest income and (ii) income tax provision.

Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis. Refinery gross margin per produced barrel sold is total refining segment revenues less total refining segment cost of products sold, exclusive of lower of cost or market inventory valuation adjustments, divided by sales volumes of produced refined products sold. Net operating margin per barrel sold is the difference between refinery gross margin and refinery operating expenses per produced barrel sold. These two margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments, depreciation and amortization or long-lived asset impairments. Each of these component performance measures can be reconciled directly to our consolidated statements of income. Other companies in our industry may not calculate these performance measures in the same manner.

Below are reconciliations to our consolidated statements of income for refinery net operating and gross margin and operating expenses, in each case averaged per produced barrel sold. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of average refining segment net operating margin per produced barrel sold to refinery gross margin to total sales and other revenues

Income (loss) before interest and income taxes of our Lubricants and(1) Specialty Products segment represents income (loss) plus (i) interest expense, net of interest income and (ii) income tax provision.

Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis. Refinery gross margin per produced barrel sold is total refining segment revenues less total refining segment cost of products sold, exclusive of lower of cost or market inventory valuation adjustments, divided by sales volumes of produced refined products sold. Net operating margin per barrel sold is the difference between refinery gross margin and refinery operating expenses per produced barrel sold. These two margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments, depreciation and amortization or long-lived asset impairments. Each of these component performance measures can be reconciled directly to our consolidated statements of income. Other companies in our industry may not calculate these performance measures in the same manner.

Below are reconciliations to our consolidated statements of income for refinery net operating and gross margin and operating expenses, in each case averaged per produced barrel sold. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of average refining segment net operating margin per produced barrel sold to refinery gross margin to total sales and other revenues

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(Dollars in thousands, except per barrel amounts)

Consolidated

Net operatingmargin per $ 8.47 $ 0.20 $ 4.80 $ 2.46 producedbarrel sold

Add averagerefineryoperating 6.40 6.00 6.95 6.04 expenses perproducedbarrel sold

Refinery grossmargin per $ 14.87 $ 6.20 $ 11.75 $ 8.50 producedbarrel sold

Times producedbarrels sold 422,020 388,800 407,210 382,540 (BPD)

Times numberof days in 92 92 273 274 period

Refining gross $ 577,340 $ 221,772 $ 1,306,228 $ 890,936 margin

Add (subtract) 71 164 (125 ) 61 rounding

West andMid-Continent 577,411 221,936 1,306,103 890,997 regions grossmargin

Add West andMid-Continentregions cost 3,605,600 2,043,361 9,986,862 5,665,897 of productssold

Add Cheyennerefinery sales - 130,816 - 501,589 and otherrevenues

Refiningsegment sales 4,183,011 2,396,113 11,292,965 7,058,483 and otherrevenues

Add Lubricantsand SpecialtyProducts 666,534 455,042 1,860,286 1,338,932 segment salesand otherrevenues

Add HEPsegment sales 122,584 127,731 376,002 370,392 and otherrevenues

Subtractcorporate, (287,070 ) (159,486 ) (762,778 ) (484,932 )other andeliminations

Sales and $ 4,685,059 $ 2,819,400 $ 12,766,475 $ 8,282,875 other revenues

Reconciliation of average refining segment operating expenses per produced barrel sold to total operating expenses

Three Months Ended Nine Months Ended September 30, September 30,



(Dollars in thousands, except per barrel amounts)

Consolidated

Average operatingexpenses per produced $ 6.40 $ 6.00 $ 6.95 $ 6.04 barrel sold

Times produced 422,020 388,800 407,210 382,540 barrels sold (BPD)

Times number of days 92 92 273 274 in period

Refining operating $ 248,485 $ 214,618 $ 772,620 $ 633,088 expenses

Add (subtract) (169 ) (97 ) (27 ) 373 rounding

West andMid-Continent regions 248,316 214,521 772,593 633,461 operating expenses

Add Cheyenne Refinery - 41,558 - 121,151 operating expenses

Refining segment 248,316 256,079 772,593 754,612 operating expenses

Add Lubricants andSpecialty Products 60,940 54,488 183,003 156,459 segment operatingexpenses

Add HEP segment 42,793 40,003 126,226 109,721 operating expenses

Subtract corporate,other and 471 (18,074 ) 4,798 (56,592 )eliminations

Operating expenses(exclusive of $ 352,520 $ 332,496 $ 1,086,620 $ 964,200 depreciation andamortization)

Reconciliation of net income (loss) attributable to HollyFrontier stockholders to adjusted net income (loss) attributable to HollyFrontier stockholders

Adjusted net income (loss) attributable to HollyFrontier stockholders is a non-GAAP financial measure that excludes non-cash lower of cost or market inventory valuation adjustments, gain on sale of real property, gain on business interruption insurance settlement, long-lived asset impairment, HEP's gain on sales-type leases, HEP's loss on early extinguishment of debt, severance costs, restructuring charges, Cheyenne Refinery LIFO inventory liquidation costs, decommissioning costs, pre-close acquisition integration costs, acquisition integration and regulatory costs and gain on tariff settlement. We believe this measure is helpful to investors and others in evaluating our financial performance and to compare our results to that of other companies in our industry. Similarly titled performance measures of other companies may not be calculated in the same manner.

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(In thousands, except per share amounts)

Consolidated

GAAP:

Income (loss) before $ 357,507 $ 27,918 $ 830,302 $ (608,852 )income taxes

Income tax expense 54,766 4,573 149,944 (188,504 )(benefit)

Net income (loss) 302,741 23,345 680,358 (420,348 )

Less net incomeattributable to 21,954 25,746 82,504 63,353 noncontrollinginterest

Net income (loss)attributable to 280,787 (2,401 ) 597,854 (483,701 )HollyFrontierstockholders



Non-GAAP adjustmentsto arrive at adjusted results:

Lower of cost ormarket inventory - (62,849 ) (318,862 ) 227,711 valuation adjustment

Gain on sale of real (86,018 ) - (86,018 ) - property

Gain on businessinterruption insurance - (81,000 ) - (81,000 )settlement

Long-lived asset - - - 436,908 impairment

HEP's gain on - - - (33,834 )sales-type leases

HEP's loss on early - - - 25,915 extinguishment of debt

Severance costs 198 2,429 906 3,546

Restructuring charges - - 7,813 3,679

Cheyenne Refinery LIFOinventory liquidation - 33,814 923 33,814 costs

Decommissioning costs 6,714 12,309 23,061 12,309

Pre-close acquisition 4,289 - 5,035 - integration costs

Acquisitionintegration and - 48 - 1,979 regulatory costs

Gain on tariff - - (51,500 ) - settlement

Total adjustments toincome (loss) before (74,817 ) (95,249 ) (418,642 ) 631,027 income taxes

Adjustment to incometax expense (benefit) (3,979 ) (26,907 ) (88,493 ) 168,497 ^(1)

Adjustment to netincome attributable to - (3,857 ) - 70 noncontrollinginterest

Total adjustments, net (70,838 ) (64,485 ) (330,149 ) 462,460 of tax



Adjusted results - Non-GAAP:

Adjusted income (loss) 282,690 (67,331 ) 411,660 22,175 before income taxes

Adjusted income tax 50,787 (22,334 ) 61,451 (20,007 )expense (benefit) ^(2)

Adjusted net income 231,903 (44,997 ) 350,209 42,182 (loss)

Less net incomeattributable to 21,954 21,889 82,504 63,423 noncontrollinginterest

Adjusted net income(loss) attributable to $ 209,949 $ (66,886 ) $ 267,705 $ (21,241 )HollyFrontierstockholders

Adjusted earnings(loss) per share - $ 1.28 $ (0.41 ) $ 1.63 $ (0.13 )diluted ^(3)

(1)

Represents adjustment to GAAP income tax benefit to arrive at adjusted income tax expense (benefit), which is computed as follows:

(1) Represents adjustment to GAAP income tax benefit to arrive at adjusted income tax expense (benefit), which is computed as follows:

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2021

2020

2021

2020

(In thousands)

Non-GAAP income tax expense (benefit) (2)

$

50,787

$

(22,334

)

$

61,451

$

(20,007

)

Add (subtract) GAAP income tax expense (benefit)

54,766

4,573

149,944

(188,504

)

Non-GAAP adjustment to income tax expense (benefit)

$

(3,979

)

$

(26,907

)

$

(88,493

)

$

168,497

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(In thousands)



Non-GAAP income tax expense $ 50,787 $ (22,334 ) $ 61,451 $ (20,007 )(benefit)^ (2)

Add (subtract) GAAP income tax 54,766 4,573 149,944 (188,504 )expense (benefit)

Non-GAAP adjustment to income $ (3,979 ) $ (26,907 ) $ (88,493 ) $ 168,497 tax expense (benefit)

(2)

Non-GAAP income tax expense (benefit) is computed by (a) adjusting HFC's consolidated estimated Annual Effective Tax Rate ("AETR") for GAAP purposes for the effects of the above Non-GAAP adjustments (b) applying the resulting Adjusted Non-GAAP AETR to Non-GAAP adjusted income before income taxes and (c) adjusting for discrete tax items applicable to the period.

(3)

Adjusted earnings per share - diluted is calculated as adjusted net income (loss) attributable to HollyFrontier stockholders divided by the average number of shares of common stock outstanding assuming dilution, which is based on weighted-average diluted shares outstanding as that used in the GAAP diluted earnings per share calculation. Income allocated to participating securities, if applicable, in the adjusted earnings per share calculation is calculated the same way as that used in GAAP diluted earnings per share calculation.

Reconciliation of effective tax rate to adjusted effective tax rate

Non-GAAP income tax expense (benefit) is computed by (a) adjusting HFC's consolidated estimated Annual Effective Tax Rate ("AETR") for GAAP(2) purposes for the effects of the above Non-GAAP adjustments (b) applying the resulting Adjusted Non-GAAP AETR to Non-GAAP adjusted income before income taxes and (c) adjusting for discrete tax items applicable to the period.



Adjusted earnings per share - diluted is calculated as adjusted net income (loss) attributable to HollyFrontier stockholders divided by the average number of shares of common stock outstanding assuming dilution, which is(3) based on weighted-average diluted shares outstanding as that used in the GAAP diluted earnings per share calculation. Income allocated to participating securities, if applicable, in the adjusted earnings per share calculation is calculated the same way as that used in GAAP diluted earnings per share calculation.

Reconciliation of effective tax rate to adjusted effective tax rate

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(Dollars in thousands)

GAAP:

Income (loss) before $ 357,507 $ 27,918 $ 830,302 $ (608,852 )income taxes

Income tax expense $ 54,766 $ 4,573 $ 149,944 $ (188,504 )(benefit)

Effective tax rate forGAAP financial 15.3 % 16.4 % 18.1 % 31.0 %statements

Adjusted - Non-GAAP:

Effect of Non-GAAP 2.7 % 16.8 % (3.2 ) (121.2 )adjustments % %

Effective tax rate for 18.0 % 33.2 % 14.9 % (90.2 )adjusted results %

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CONTACT: Richard L. Voliva III, Executive Vice President and Chief Financial Officer Craig Biery, Vice President, Investor Relations HollyFrontier Corporation 214-954-6510