DINO - NYSE

Welcome to HF Sinclair Corporation's Second Quarter 2025 Conference Call and Webcast. Hosting the call today is Tim Go, Chief Executive Officer of HF Sinclair. He is joined by Atanas Atanasov, Chief Financial Officer; Steve Ledbetter, EVP of Commercial; Valerie Pompa, EVP of Operations; and Matt Joyce, SVP of Lubricants & Specialties. [Operator Instructions] And please note that this conference is being recorded. It is now my pleasure to turn the floor over to Craig Biery, Vice President, Investor Relations. Craig, you may now go ahead, please.

Thank you, Ellie. Good morning, everyone, and welcome to HF Sinclair Corporation's Second Quarter 2025 Earnings Call. This morning, we issued a press release announcing results for the quarter ending June 30, 2025. If you would like a copy of the earnings press release, you may find it on our website at hfsinclair.com. Before we proceed with remarks, please note the safe harbor disclosure statement in today's press release. In summary, it says statements made regarding management expectations, judgments or predictions are forward-looking statements. These statements are intended to be covered under the safe harbor provisions of federal security laws. There are many factors that could cause results to differ from expectations, including those noted in our SEC filings. The call also may include discussion of non-GAAP measures. Please see the earnings press release for reconciliations to GAAP financial measures. Also, please note any time-sensitive information provided on today's call may no longer be accurate at the time of any webcast replay or rereading of the transcript. And with that, I'll turn the call over to Tim.

Good morning, everyone, and thank you for joining our call. During the second quarter of 2025, we made strong progress against our strategic priorities to improve reliability, optimization and integration. And I'm pleased to report we delivered sequential improvements over the last 3 quarters in our 3 key metrics: refining throughput, capture and lower operating costs, allowing us to return $145 million to stockholders through dividend and share repurchases in the current period. Looking forward, we remain focused on advancing these priorities further. And with the majority of our turnarounds behind us in 2025, we believe we are well positioned to continue to execute our strategy and return excess cash to our shareholders. Now let me cover our segment highlights. In Refining, for the second quarter, we successfully completed the scheduled turnaround activities at our Tulsa and Parco refineries. We also delivered sequential quarter improvements in capture and crude throughput despite heavy maintenance, weaker crude differentials and a rising RIN price environment. In addition, we achieved operating expense per throughput barrel of $7.32, showing significant progress again towards our near-term goal of $7.25 per barrel. Looking ahead, we have one remaining turnaround at our Puget Sound Refinery scheduled to begin at the end of the third quarter. In Renewables, we continue to deliver near breakeven EBITDA results in this tough economic environment as we continue to maximize our low CI feedstock mix while controlling our operating expenses. These results are indicative of how much we've improved our renewable diesel business, especially in light of the significant loss of PTC year-over-year. In the second quarter, we began to partially recognize some benefits from the producers tax credit and expect to capture additional incremental PTC value in the third quarter. Our Marketing segment delivered $25 million in EBITDA and achieved an adjusted gross margin of $0.10 per gallon delivered by optimizing our business since the Sinclair acquisition. We also grew our branded supplied stores by a net of 55 sites during the quarter and up a net 155 stores over the past 12 months, both records for a quarter and for a trailing 12-month period. And we have over 80 additional supplied branded sites signed and targeted to bring online over the next 6 to 12 months. In Lubricants & Specialties, we reported $55 million in EBITDA, which includes a significant $20 million in FIFO headwinds due to falling feedstock prices. During the period, sales volumes and product mix were impacted by our Mississauga turnaround. However, we continue to execute on our strategy of forward integrating our base oils into both finished and specialty businesses, most notably launching a Sinclair lubricants product offering in the United States. In our Midstream business, we delivered $112 million in adjusted EBITDA as we benefited from higher pipeline revenues and lower operating costs from our focused integration efforts since the HEP buy-in. During the quarter, we returned $145 million in cash to shareholders, consisting of $50 million in share repurchases and $95 million in regular dividends. Since the Sinclair acquisition in March 2022, we have returned over $4.2 billion in cash to shareholders and have reduced our share count by over 58 million shares. As of June 30, 2025, we had approximately $750 million remaining on our share repurchase authorization, and we remain committed to returning excess cash to shareholders while maintaining our investment-grade balance sheet. Also today, we announced that our Board of Directors declared a regular quarterly dividend of $0.50 per share, payable on September 4, 2025, to holders of record on August 21, 2025. Looking forward, we are encouraged by the continued strength in Refining margins across our system, particularly in distillates. We believe our overall strategy is working and delivering visible organic growth to our bottom line, both in Refining and our non-refining segments, and we remain committed to executing our strategic priorities in order to continue to return cash to our shareholders. With that, let me turn the call over to Atanas.

Thank you, Tim, and good morning, everyone. Let's begin by reviewing HF Sinclair's financial highlights. Today, we reported second quarter net income attributable to HF Sinclair shareholders of $208 million, or $1.10 per diluted share. These results reflect special items that collectively decreased net income by $114 million. Excluding these items, adjusted net income for the second quarter was $322 million, or $1.70 per diluted share compared to adjusted net income of $150 million, or $0.78 per diluted share for the same period in 2024. Adjusted EBITDA for the second quarter was $665 million compared to $406 million in the second quarter of 2024. In our Refining segment, second quarter adjusted EBITDA was $476 million compared to $187 million in the second quarter of 2024. This increase was principally driven by higher adjusted refinery gross margins in both the West and Mid-Con regions, partially offset by lower refined product sales volumes. Crude oil charge averaged 616,000 barrels per day for the second quarter compared to 635,000 barrels per day for the second quarter of 2024. This decrease was primarily a result of turnaround activities at our Tulsa and Parco refineries during the second quarter of 2025. In our Renewables segment, we reported adjusted EBITDA of negative $2 million for the second quarter, excluding the lower cost of market inventory valuation adjustment benefit of $24 million compared to $2 million of adjusted EBITDA for the second quarter of 2024. Our second quarter 2025 results were impacted by lower sales volumes and margins. During the quarter, we recognized a partial benefit from the producers tax credit. Total sales volumes were 55 million gallons for the second quarter of 2025 compared to 64 million gallons for the second quarter of 2024. Our Marketing segment reported EBITDA of $25 million for the second quarter compared to $15 million for the second quarter of 2024. This increase was primarily driven by higher margins and high-grading our mix of stores in the second quarter of 2025. Our Lubricants & Specialties segment reported EBITDA of $55 million for the second quarter compared to EBITDA of $97 million for the second quarter of 2024. This decrease was primarily driven by lower base oil margins in addition to lower sales volumes as a result of turnaround activities at our Mississauga facility. During the second quarter of 2025, we recognized a FIFO charge of $20 million in the quarter versus a FIFO charge of $14 million in the same period last year. Our Midstream segment reported adjusted EBITDA of $112 million in the second quarter compared to $110 million in the same period of last year. This increase was primarily driven by higher pipeline revenues and lower operating expenses, partially offset by lower volumes in the second quarter of 2025. Net cash provided by operations totaled $587 million in the second quarter, which included $179 million of turnaround spend. HF Sinclair capital expenditures totaled $111 million for the second quarter of 2025. As of June 30, 2025, HF Sinclair's cash balance was $874 million. As of June 30, we had $2.7 billion of debt outstanding with a debt-to-cap ratio of 22% or net debt-to-cap ratio of 15%. Let's go through some guidance items. With respect to capital spending for full year 2025, we still expect to spend approximately $775 million in sustaining capital, including turnaround and catalysts. This is down $25 million from 2024 and included a non- refining, Lubricants & Specialties turnaround in the first half of 2025. In addition, we expect to spend $100 million in growth capital investments across our business segments. For the third quarter of 2025, we expect to run between 615,000 and 645,000 barrels per day of crude oil in our Refining segment, which reflects the planned turnaround at our Puget Sound Refinery. We're now ready to take questions from the audience.

[Operator Instructions] Our first question comes from the line of Manav Gupta of UBS.

Very strong performance in Refining. Captures across both refining systems very strong. Just trying to understand, is this a function of something which happened during the quarter? Or is it also somewhere -- I mean, you took over, Tim, you had this policy that you want the most competitive refining system in the business. Is this also a function of you're kind of getting there where now your capture rates are matching some of the best in the business. So if you could help us understand the very strong capture rates in both regions.

Manav, this is Steve Ledbetter. Thanks for the question. And we are quite proud of the performance in capture sequentially, as Tim mentioned, quarter-over-quarter for the past 3 quarters. Despite what we saw in terms of headwinds as far as heavy diffs narrowing, A&S getting more expensive as well as the backwardation in the role, we continued to improve our overall laden crude performance, and that is really improving by creating flexibility of our crude slate and improving the mode of transportation of how we get that crude into our systems and on our integrated Midstream assets. So it helps both ways. I think larger than that, we ran very well. We produced and finished the products that we wanted. Our distillate production was up quarter-over-quarter, over 10,000 barrels a day. We're continuing to focus on premium. And I think we're looking down the road and around the bend, and we're putting barrels in the markets that we see are coming short and taking advantage of those arbs. We're just getting better at this and making substantial different changes in how we take more nimble and accurate decisions, and we see that continuing as we move forward.

My follow-up quick here is, look, there were some buybacks in the quarter. Margins are stronger. If things stay where they are, should we expect you to probably increase the pace of buybacks? But also there are a number of bolt-on opportunities out there in terms of both Lubes and Marketing. So how should we think about shareholder returns versus smaller bolt-on opportunities, which historically, you have done very well in acquiring stuff? And how should we think about the balance between those two for the cash that you're generating?

Thanks, Manav. This is Atanas. Great question. We reiterate our strong commitment to our shareholder returns. As you could see in this past quarter, we're looking at 8%, 9%. If margins continue to be where they are, we anticipate to continue to execute on that priority. History is a good indicator of how we've done. We've delivered historically double-digit returns, and we remain committed to that. With respect to how do we balance between organic growth versus capital returns organic, we believe we can achieve both successfully given the cash flow generations in the business. And as we look at capital -- as we look at returns on organic projects, those are highly accretive at 20-plus percent IRRs and multiples of around 4x. So we believe we can achieve both and reward our shareholders for that success.

Congrats on a very strong quarter.

Thanks, Manav.

Your next question comes from the line of Ryan Todd of Piper Sandler.

Great. Maybe a question for you on renewable diesel. How much, if any, of the 45

Yes, Ryan, this is Steve. So we were able to begin recognizing PTC in the second quarter, not fully. In the third quarter, we've worked through a number of appropriate contractual arrangements that will allow us to begin recognizing even more of that. We're not commenting on the exact number, but we've worked through the complexity and difficulty of this legislation and think we have a path forward to where we can capture the most value possible out of the PTC. When you think about the overall structure of the proposed legislation, the impacts from 45

Yes. And Ryan, this is Tim. I'll just echo what Steve went through here. Our strategy has always been to keep this renewable diesel business at breakeven to slightly positive in these what we consider to be trough and bottom-of-cycle conditions. And you can see we've done a good job of that over the last year or 2. And we're just waiting for really the market structure to improve. I do think, as you pointed out, that the market structure will improve as we look forward. You saw the CARB group roll out their LCFS tightening. And while the credits bank is still in excess, it is starting to shrink, and we expect the LCF prices to continue to grow in the price as the bank continues to whittle down. You saw the RVO proposed numbers come out. Those numbers are very high, and we think the RINs prices have to go up as a result of those RVO numbers, if those RVO numbers are finalized as they were proposed. So we do think the market structure itself of the renewable diesel business will continue to improve, and we think we're positioned well to take advantage of it. And then the last thing I'll just mention, Steve and Atanas both mentioned this in their remarks, but we only partially recognized PTC so far. We do think we're positioning our contracts and doing the work to be able to recognize more of the PTC in the third quarter, and we think that will also help our renewable diesel business going forward.

Great. Maybe one follow-up on the refinery on the overall, but certainly the Refining side. But I think if you look at operational performance and the capital number in the quarter despite some turnaround activity there, it seems like turnarounds again went very smoothly. Can you talk about how this fits into your efforts on operational improvement, where you think you are in the process of kind of getting refinery reliability, operations, turnaround, et cetera, to where they need to be?

Yes. This is Valerie Pompa. We've -- once we complete the turnarounds this year, we'll have completed all of one cycle, if you will, of the assets in the last 5 years. So our turnaround performance, we will have, I'll say, caught up on our turnarounds coming out of COVID, coming out of the acquisitions. So we believe that we're positioned well going into the next 5-year cycle around turnarounds. We have continued to improve our turnaround structure, how we execute in the field and bringing in more and more technology to drive consistent performance. So what you're seeing is the work and the strategy that we've put in place continuing to pay dividends in our reliability. And I think we're going to see that into the future.

Yes. And Ryan, this is Tim. We've said this before, maybe on the last call, I can't remember, but we think we're in the, call it, the fifth inning of our operational excellence journey, having been through this first turnaround cycle that Val just mentioned. And you really are starting to see some of the inflection in the results that we're seeing. Reliability, much improved. You're seeing that in throughput. Capture, much improved. You're seeing that as we continue to optimize and integrate these businesses. It's no coincidence that it's been a couple of years now since the Puget Sound, the Sinclair and the HEP acquisitions and the fruits of those labors are really starting to show up in the results now. You're seeing it in OpEx per barrel as we continue to show that improvement going forward, now getting close to our near-term target. And that's both a numerator and a denominator impact that you're seeing in that OpEx per barrel number. And then lastly, as you point out, our CapEx is starting to show that as well. We had a heavy turnaround in the second quarter as we showed. But as we look into next year, and we talked about this earlier, we do think that our maintenance capital takes a significant step change down. And you'll start to see that again in our CapEx guidance when we issue that at the end of the year. But all of those proof points that our strategy that we've been preaching on and have been talking about for the last year or 2 is really working and starting to deliver bottom line results.

Your next question comes from the line of Phillip Jungwirth of BMO.

In Lubricants, beyond the planned turnaround and the FIFO headwind, can you talk about the margin trajectory for this business in the quarter? How much of that weakness was April driven? And how are things -- how are you seeing things shape up so far in the third quarter?

Phil, this is Matt Joyce. Thanks for the question. Yes, I think if we look at the overall performance, you're absolutely right. FIFO headwinds and our planned turnaround at Mississauga, which was safely completed, but we did come into some weather and found some work there that caused us to just take a little bit longer to get back to where we wanted to be versus our scheduled plan. But the culmination of that, along with base oil margins, there was a big turnaround quarter for the industry. But what we saw is that Group IIs and Group IIIs continue to be a bit long, and we foresee that continuing to be the case into quarter 3, which has put some pressure on our base oils along the way. And if you look at the results with that little bit less volume and the product mix that has a lower profit margin profile, it culminated in the results we saw for the L&S business for the quarter.

Yes. And Phil, I would just chime in. This is Tim. A few years ago, base oil tightness, a major turnaround, FIFO headwinds, that would have created some significant fluctuations in our quarterly results. And again, the work that Matt and his team have done to really smooth that out to stabilize the business, you see the fluctuations in the market just don't have nearly the same fluctuations that you see in our results now because of the integration work that the Lubes business has been able to do.

Okay. Great. And then I know you don't have direct exposure to California, but I was wondering if you had any thoughts on the proposed Senate Bill 237, more so on the Energy Commission and CARB engaging with Western states on a more uniform gasoline spec. Maybe this doesn't have any traction, but just wondering if you had any thoughts on potential market impact and how it [ should cover that ] basis.

Yes. This is Steve. I think it's an interesting one. The proposals that are out there, there's a lot of rumors, and I know that there's been some things to get to a regional spec. I don't know that, that is going to be successful. And ultimately, if it is extended out from California as the base, I don't think it's going to be good for supply. And so ultimately, I don't know that, that's where it will land. Regardless of that, I think our capability to go make the various grades and get into Southern PADD 5 are extended both from our Navajo refining complex as well as our Rockies complex. And we have the ability to flex and take advantage of whatever the spec change may be at the time. But my personal opinion is I don't know that, that is going to land in a regional spec that is more stringent than what the current specs of the various regions are.

Yes. And Phil, I'll just chime in, too. We continue to watch all the activities and all the changes that are occurring in California for sure. But our strategy, as we've talked about before, is to continue to directly supply more CARB and more CARB components through our Puget Sound Refinery, which we are taking advantage of the project that we talked about over the last call to be able to supply even more barrels to that region. And then two, to indirectly supply the neighboring states, whether it be Nevada, whether it be Arizona through our existing infrastructure and through our existing refineries in the West. And as you can see from our results, our West region is performing very well, taking advantage of some of the opportunities that are presented there. And if you look at demand in general, our -- the West diesel demand, quite honestly, is above 5-year highs right now. And that's because of some of the dynamics we just talked about and, of course, renewable diesel production being down. And with that higher petroleum diesel demand that we're seeing in the West, we're able to take full advantage of that.

Question comes from the line of Joe Laetsch of Morgan Stanley.

So I wanted to start with the Refining macro and your views on supply-demand here. Margins improved in the second quarter and remain supported in July. How are you viewing the balances today from both a supply and demand perspective in the Mid-Con and Rockies?

Yes, Joe, this is Steve. I think from a macro perspective, we would say supply is more balanced than it was. If you look at the supply same period versus last year, it's actually down due to utilization. But overall, in terms of the balance and the demand aspects, we look at gas as relatively flat and our distillate demand as being up, and that's partially driven by some of the things Tim mentioned with lower RD and bio production and lower imported as well as the export economics on distillate. And so that looks like that's a good story longer term as well as we're about to jump into the harvest season and then step right into heating oil season. So longer kind of through the year, we see that diesel is going to be strong. We're very bullish on that. And gas will be kind of get to the end of the driving season and then tail off, but we're roughly net balanced in our regions given current utilization and current demand patterns.

Yes. And Joe, I would just chime in, this is Tim, that, that macro view has improved over the course of this year. There was a lot of concern earlier in the year that capacity growth would outshine demand growth. And really, what we've seen play out over this year is that, that's not happening, that demand growth is still ahead of, if not just breakeven with capacity growth. And that's favorable to Refining perspectives and outlook. And I would just say that if you look longer term, the policies of this new administration are also strengthening the outlook for the refining industry. The CRA bill that basically eliminated or reversed the ban on internal combustion engines in California, the Big Beautiful Bill that is taking away some of the artificial incentives for some of the EV vehicles, at least in my opinion, that's really creating more of a global landscape that's more favorable to our refining industry as well. So the factors that Steve just mentioned, I think, have support from just overall policy as well.

That's helpful. And then on the crude side, there are several moving pieces between OPEC unwinds, Venezuela barrels coming back to the market, Canada wildfires, then Mexico oil production. Could you just talk to what you're seeing from a light-heavy crude differential and availability standpoint currently as well as expectations going forward?

Yes, sure. Our view, obviously, where the differentials are quite a bit more narrow than we've experienced in the past, and that stemmed kind of mid last year for TMX coming online and those barrels supporting a stronger or a narrow differential finding homes in abroad. What we're seeing in terms of the forward curve, we're still looking in Q3 around a $9 to $10 differential, but with further strengthening out in Q4 around $13. And then I think longer term, in the next -- sometime in 2026, we're seeing a potential diff widening. We haven't really seen the OPEC expansion do much in terms of support or widening those differentials yet. We think that longer term, it will, coupled with the production, outrunning egress in Canada. But we found and have been nimble in our ability to go get more and different crudes into our kit because we're connected to many hubs. And I think that's one of the underlying reasons we mentioned earlier about our improved laden crude, specifically in the Mid-Con with our ability to touch those different barrels. But yes, looking forward, it looks like we'll get some help in Q4, but not to the level that we've seen in the past couple of years before the TMX expansion.

Next question comes from the line of Neil Mehta of Goldman Sachs.

Would just love your updated perspective on M&A on the refining landscape. I think we all saw the Reuters reporting with speculative around Benicia. But just your perspective on the bar, how high is it for you to do M&A? You've done really good deals over the last 5 to 6 years. So do you think you have the license in the market to go out and do more bolt-ons, less transformative but bolt-on type of assets?

Yes. As you know, we do not comment on market rumors, and those are market rumors in terms of what you saw in the past week or so. And I've already told you kind of what our focus is and our strategy is on the West and how we want to benefit and capture the opportunities that are out there. But in terms of M&A, we have done well in the past on M&A. We typically work countercyclically and look for value in terms of refining inorganic opportunities. That hasn't changed, and we will continue to look for those opportunities on a value perspective. I would just say today, that bid-ask spread is still very, very wide. And you don't see a lot of refining deals happening over the last few years, and I think that's a result of that refining bid-ask spread. So we'll continue to be open to those opportunities, but it has to be, as you pointed out, at the right value at the right time and be the right asset. And at this point, we haven't found anything that we think will actually improve our portfolio at the right price and at the right time. I will tell you that we do think there are better inorganic opportunities to bolt-on in both our Marketing and our Lubes businesses right now. And so that's what we're continuing to look at. We do think that the opportunity is there. We're not looking for anything huge or transformational. We're looking for things that will bolt on and help us accelerate the organic strategy of growth that we've already got going, both at Marketing and in Lubes. And as we've talked about before, we're very pleased with the progress that we're making in both of those businesses. And to the extent that there is something out there that can help us accelerate that progress, we do think there's opportunities out there that we'll continue to look at.

Okay. That's really helpful, Tim. And then I just wanted to follow up on your comments around return of capital. I think the buyback was a little bit higher than most of us expected in the quarter. The stock is still trading even after the bounce here below book value. Balance sheet is in pretty good shape. Is it fair to assume that you can kind of keep this run rate up at the forward curve? And could there even be upside?

Neil, this is Atanas. Thanks for the follow-up question. Our goal is, again, to continue to meet and exceed expectations with respect to capital returns. We had strong cash flow generation this quarter. As you can see, we were not looking to hoard cash. So we're returning it back to you, the shareholders.

Yes. And Neil, Atanas mentioned earlier in the call, we've got a history of returning cash to our shareholders. And I think that's what we can point to is our history and our focus and our commitment to do that will continue. I think I said this in my prepared remarks, but if you think about it, and in terms of the 60 million of shares that we issued when we bought Sinclair, we have now bought back in 98% of those 60 million shares. And then if you add back the shares that we issued as part of HEP, we have bought back a total of 72% of those total shares that we issued back then. So that's clearly one of our ways to add shareholder value and to get cash back to our shareholders is to buy back those shares, and we continue to be committed to doing that with our excess cash.

Next question comes from the line of Theresa Chen of Barclays.

I have a follow-up question on the indirect exposure to PADD 5. Setting Puget aside for a minute, just given the visible capacity reduction in California, from your Navajo facility in terms of the refined product placement, how much and how far West can you take that barrel? Is it largely to Phoenix? And then from SLC, how much space can you actually utilize on your unit pipeline? Can you regularly use there since there are shippers on that line, your neighboring SLC refiners, I imagine. Just wanted to understand how much can this realistically move the needle on capture in the West segment as these California facilities close over the next 12 months?

Theresa, this is Steve. I think you've hit on exactly one of our key -- what we believe is one of our key strategic advantages. From our Navajo complex, we can take a good portion of our light products make there into the Phoenix market. That's as far as it goes out of the Navajo refinery. But out of the Rockies complex, not only from our Salt Lake City Woods Cross Refinery, but the other Wyoming refineries, we can take and optimize kind of upgrade barrels right through the valley, up north and then south into Las Vegas. And we have ample space in terms of going and leveraging that integrated asset of UNEV, which we think provides a differentiation for us. And as you rightly call out, that continues to be a hunting ground that we look to go capture moving forward and all the market fundamentals and dynamics point to us being in a leading space there. So we look forward to capturing that as it continues to play out.

Yes. And Theresa, I would just say that UNEV pipeline that Steve mentioned, we have spare capacity on that today, but we also have opportunities to debottleneck that fairly simply and fairly straightforward when that time comes. So we believe there's still plenty of opportunity there. And yes, we think it can be meaningfully impactful to our West capture.

Understood. And on the comment on inorganic opportunities in the Marketing and LSP segments, just curious how fragmented are the markets in your areas of specific interest, either by product or by region. How much realistic run rate do you have on this inorganic strategy?

Yes. So we look to focus our branded put growth in the areas where we have logistics parity and can produce and get it on our Midstream assets. That's where we have significant advantages. So you can imagine Pacific Northwest, you can imagine Southern PADD 5 in Vegas, the Rockies. When you think about fragmented market, there's larger players that are coming in, but there's still a lot to do in terms of 10 to 15 site chains that are looking to go simplify or have an exit route and our brand brings something very strong in those markets. The brand recognition and awareness right through the Rockies into PADD 5 is quite strong, and it's something that is yet untapped. So the fragmentation is an aspect, but there's not been enough consolidation to take some of those opportunities off the table, and we look to go take advantage of some of that in our core markets.

And I would just say, Theresa, that the DINO brand has really been taking off here. You can see that in our organic growth results, both the record number of new stores we've added in the second quarter as well as over the last rolling 12 months. And so we're very pleased with the organic pace of growth that we've got going on. But as Steve mentioned, we do think there's even more opportunities to accelerate that through some inorganic opportunities, which we'll continue to look at along the way. You also asked about Lube, so I'll ask Matt to comment on that.

Yes. Theresa, it's Matt here. We have over 300 lubricant marketers and manufacturers in the United States. And those brands often have -- those businesses have often had a heritage and a long history of great product solutions and offerings that could be very complementary to our business. And so we mentioned it earlier, we're really focused on looking at those opportunities when they become known to us and then whether or not they can help us accelerate our growth into these higher-value established markets or some new adjacencies that we don't participate in today. And in all cases, we're looking to use those to further develop our capabilities and competencies, whether that be through technology or supply chain in different markets that allow for us to get better reach to our customers and to serve the markets where we believe that we can win.

Yes. And Theresa, we have -- we do think the Lubes & Specialties industry is fairly fragmented still. We have been a consolidator in that industry when we put Petro-Canada, Sonneborn and Red Giant together. And we do think there are more opportunities to do that. Our strategy overall in Lubes is to continue to grow that finished lubes put to soak up our excess base oils and to basically drive a multiple expansion in our Lubes business as we continue to integrate that base oil and finished lubes business.

[indiscernible] comes from the line of Doug Leggate of Wolfe Research.

I apologize for being a little late on. You managed to clash with our cousins over in London. Tim, I wonder if I could ask two related questions related to the Renewables business. Frankly, you actually missed our Refining number, but you really not kicked our a** on the renewable diesel EBITDA this quarter. And I'm trying to understand how much of that is repeatable? And put differently, can you offer any kind of thoughts on what the sustainable EBITDA of the renewable diesel business could be assuming the producers tax credit is -- continues? The second part of my question if I can roll it in is related to SREs because obviously, you guys are exposed to that. And my understanding is that the comment period is due on the 8th of August. But if SREs are granted, that's presumably negative for RINs, which is presumably negative for renewable diesel. So I'm wondering if you can reconcile those two things, how you see the sustainable operating income or EBITDA for renewable diesel and what your stance is on SREs? I'll leave it there.

Yes. Doug, thanks for the question. And I know today was a busy day, so thank you, guys, for running around and participating in all these calls. I'm disappointed we missed your Refining number, but we'll do better next time. But...

No, it's great. Great quarter. Yes, it's a great quarter on renewable diesel is my point, yes.

No, no, I'm just giving you a hard time, Doug, and we're very pleased with our Refining results. And -- but we do know there's always -- we have more room for improvement, and we do have our sights to continue to improve in our Refining business. And we think next quarter will be -- will show even that more improvement as we continue this journey. So it's a fair observation to make, Doug, on that. On Renewables, we're very pleased with kind of like we said, our positioning on renewals, we think with RINs pricing, LCFS pricing that... [Audio Gap]

Once again, if we don't have any further questions, I'd now like to hand back over to Tim for any closing remarks. [Technical Difficulty] Ladies and gentlemen, please be on standby. We are currently experiencing a bit of a technical issue. Again, please be on standby. We will be back shortly. Thank you.

Go ahead, Ellie.

And there are no further questions. We will now turn the call back over to Tim for any closing remarks.

Thank you, Ellie, and we apologize for the drop there. But before we close, I want to give a shout-out to all of our employees who rolled up their sleeves and put on their rally caps this quarter to deliver these strong results. Refining throughput, capture and operating costs are all trending in the right direction, thanks to their hard work and dedication. And our non-refining segments continue to shine with our Marketing and Midstream businesses on pace for another record performance this year. All of these are indicators that our strategy is working. Looking ahead, we are constructive on the fundamentals of each of our businesses, including Refining. And as always, our priorities remain the same: to improve our reliability; two, integrate and optimize our portfolio of assets; and three, return excess cash to our shareholders. Thank you for joining our call, and have a great day.