Hf sinclair corporation reports quarterly results and announces regular cash dividend
Dallas--(business wire)--hf sinclair corporation (nyse: dino) (“hf sinclair” or the “company”) today reported second quarter net income attributable to hf sinclair stockholders of $1,221.3 million, or $5.43 per diluted share, for the quarter ended june 30, 2022, compared to $168.9 million, or $1.03 per diluted share, for the quarter ended june 30, 2021. the second quarter results reflect special items that collectively decreased net income by a total of $37.3 million. on a pre-tax basis, these items include a lower of cost or market inventory valuation adjustment of $34.5 million, acquisition integration costs of $12.5 million and decommissioning charges of $0.5 million related to the cheyenne refinery conversion to renewable diesel production. excluding these items, adjusted net income for the second quarter of 2022 was $1,258.5 million ($5.59 per diluted share) compared to $143.8 million ($0.87 per diluted share) for the second quarter of 2021, which excludes certain items that collectively increased net income by $25.1 million. hf sinclair’s ceo, michael jennings, commented, “hf sinclair delivered strong financial results in the second quarter driven by robust performance in our refining, marketing, lubricants and midstream segments. healthy free cash flow generation in the quarter allowed us to return cash to shareholders through dividends and share repurchases, further demonstrating the commitment to our capital return strategy. during the quarter, we also commenced start-up of the artesia, new mexico renewable diesel unit. with all of our previously announced renewables projects complete, we will continue to ramp up production of these assets as we expect to reach full production levels by the end of the third quarter. looking forward, we remain focused on the integration of our newly acquired assets from sinclair while maintaining safe and reliable operations.” refining segment income before interest and income taxes was $1,558.1 million for the second quarter of 2022 compared to $250.1 million in the second quarter of 2021. the segment reported ebitda of $1,660.9 million for the second quarter of 2022 compared to $330.0 million for the second quarter of 2021. this increase was driven by higher refining indicator margins in both the west and mid-continent regions, which resulted in higher refining segment earnings in the quarter. consolidated refinery gross margin was $36.36 per produced barrel, a 211% increase compared to $11.71 for the second quarter of 2021, and crude oil charge averaged 627,310 barrels per day (“bpd”) for the second quarter of 2022 compared to 416,350 bpd for the second quarter of 2021. renewables segment loss before interest and income taxes was $(73.2) million for the second quarter of 2022 compared to $(11.5) million in the second quarter of 2021. the segment reported ebitda of $(62.8) million for the second quarter of 2022 compared to $(11.2) million in the second quarter of 2021. excluding the lower of cost or market inventory valuation charge of $34.5 million, adjusted ebitda in the second quarter of 2022 was $(28.3) million. total sales volumes were 26 million gallons for the second quarter of 2022. the cheyenne renewable diesel unit (“rdu”) was mechanically complete in the fourth quarter of 2021 and fully operational in the first quarter of 2022, the pre-treatment unit (“ptu”) at our artesia, new mexico facility was completed and fully operational in the first quarter of 2022 and the artesia rdu was completed and fully operational in the second quarter of 2022. also, effective with the sinclair acquisition that closed on march 14, 2022, the renewables segment includes the sinclair rdu. marketing segment income before interest and income taxes was $19.5 million and reported ebitda was $23.9 million for the second quarter of 2022. total branded fuel sales volumes were 335 million gallons for the second quarter of 2022. lubricants and specialty products segment income before interest and income taxes was $135.1 million for the second quarter of 2022 compared to $60.1 million in the second quarter of 2021. the segment reported ebitda of $155.7 million for the second quarter of 2022 compared to $79.2 million in the second quarter of 2021. this increase was driven by strong finished product demand in our rack forward businesses. holly energy partners, l.p. (“hep”) reported ebitda of $79.8 million for the second quarter of 2022 compared to $88.1 million in the second quarter of 2021 and adjusted ebitda of $104.2 million for the second quarter of 2022 compared to $88.3 million in the second quarter of 2021. for the second quarter of 2022, net cash provided by operations totaled $1,528.4 million. at june 30, 2022, the company's cash and cash equivalents totaled $1,702.3 million, a $1,110.0 million increase over cash and cash equivalents of $592.3 million at march 31, 2022. during the second quarter of 2022, the company announced and paid a regular dividend of $0.40 per share to shareholders totaling $90.2 million and spent $110.4 million in stock repurchases. additionally, the company's consolidated debt was $3,348.1 million. the company’s debt, exclusive of hep debt, which is nonrecourse to hf sinclair, was $1,739.6 million at june 30, 2022. hf sinclair also announced today that its board of directors declared a regular quarterly dividend in the amount of $0.40 per share, payable on september 1, 2022 to holders of record of common stock on august 18, 2022. as of june 30, 2022, hf sinclair has achieved annualized run rate synergies of over $90 million related to the sinclair acquisition and over $100 million of working capital synergies. the company is currently on pace to exceed its target of approximately $100 million in annual run rate synergies within two years of the acquisition close date through a combination of commercial improvements, operating expense reductions and optimization of selling, general and administrative expenses. the company has scheduled a webcast conference call for today, august 8, 2022, at 8:30 am eastern time to discuss second quarter financial results. this webcast may be accessed at https://events.q4inc.com/attendee/167295545. an audio archive of this webcast will be available using the above noted link through august 22, 2022. hf sinclair corporation, headquartered in dallas, texas, is an independent energy company that produces and markets high-value light products such as gasoline, diesel fuel, jet fuel, renewable diesel and other specialty products. hf sinclair owns and operates refineries located in kansas, oklahoma, new mexico, wyoming, 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. hf sinclair supplies high-quality fuels to more than 1,300 sinclair branded stations and licenses the use of the sinclair brand at more than 300 additional locations throughout the country. in addition, subsidiaries of hf sinclair produce and market base oils and other specialized lubricants in the u.s., canada and the netherlands, and export products to more than 80 countries. through its subsidiaries, hf sinclair produces renewable diesel at two of its facilities in wyoming and also at its facility in artesia, new mexico. hf sinclair also owns a 47% 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 hf sinclair 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 (the “sec”). forward-looking statements use words such as “anticipate,” “project,” “will,” “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 and hep’s ability to successfully integrate the sinclair oil corporation (now known as sinclair oil llc, “sinclair oil”) and sinclair transportation company llc (“stc”) businesses acquired from reh company (formerly known as the sinclair companies) (collectively, the “sinclair transactions”) with their existing operations and fully realize the expected synergies of the sinclair transactions or on the expected timeline; the company's ability to successfully integrate the operation of the puget sound refinery with its existing operations; the demand for and supply of crude oil and refined products, including uncertainty regarding the effects of the continuing coronavirus (“covid-19”) pandemic on future demand and increasing societal expectations that companies address climate change; 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, accidents, unexpected leaks or spills, unscheduled shutdowns, weather events, civil unrest, expropriation of assets, and other economic, diplomatic, legislative, or political events or developments, terrorism, cyberattacks, or other catastrophes or disruptions affecting our operations, production facilities, machinery, pipelines and other logistics assets, equipment, or information systems, or any of the foregoing of our suppliers, customers, or third-party service providers; 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 and increases in interest rates; the availability and cost of financing to the company; the effectiveness of the company’s capital investments and marketing strategies; the company’s and hep’s efficiency in carrying out and consummating construction projects, including the company's ability to complete announced capital projects on time and within capital guidance; the company's and hep’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; uncertainty regarding the effects and duration of global hostilities and any associated military campaigns which may disrupt crude oil supplies and markets for the company's refined products and create instability in the financial markets that could restrict the company's ability to raise capital; 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, inflation and labor costs which could result in an impairment of goodwill and/or long-lived asset impairments; and other financial, operational and legal risks and uncertainties detailed from time to time in the company’s and hep’s sec 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 june 30, change from 2021 2022 2021 change percent (in thousands, except per share data) sales and other revenues $ 11,162,160 $ 4,577,123 $ 6,585,037 144 % operating costs and expenses: cost of products sold: cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) 8,579,915 3,825,729 4,754,186 124 lower of cost or market inventory valuation adjustment 34,543 (118,825 ) 153,368 (129 ) 8,614,458 3,706,904 4,907,554 132 operating expenses (exclusive of depreciation and amortization) 606,127 334,191 271,936 81 selling, general and administrative expenses (exclusive of depreciation and amortization) 110,875 77,754 33,121 43 depreciation and amortization 164,044 124,042 40,002 32 total operating costs and expenses 9,495,504 4,242,891 5,252,613 124 income from operations 1,666,656 334,232 1,332,424 399 other income (expense): earnings of equity method investments 5,447 3,423 2,024 59 interest income 1,844 1,029 815 79 interest expense (38,961 ) (28,942 ) (10,019 ) 35 gain (loss) on foreign currency transactions (905 ) 583 (1,488 ) (255 ) gain on sale of assets and other 2,320 7,927 (5,607 ) (71 ) (30,255 ) (15,980 ) (14,275 ) 89 income before income taxes 1,636,401 318,252 1,318,149 414 income tax expense 383,493 123,485 260,008 211 net income 1,252,908 194,767 1,058,141 543 less net income attributable to noncontrolling interest 31,646 25,917 5,729 22 net income attributable to hf sinclair stockholders $ 1,221,262 $ 168,850 $ 1,052,412 623 % earnings per share attributable to hf sinclair stockholders: basic $ 5.43 $ 1.03 $ 4.40 427 % diluted $ 5.43 $ 1.03 $ 4.40 427 % cash dividends declared per common share $ 0.40 $ — $ 0.40 100 % average number of common shares outstanding: basic 222,952 162,523 60,429 37 % diluted 222,952 162,523 60,429 37 % ebitda $ 1,805,916 $ 444,290 $ 1,361,626 306 % adjusted ebitda $ 1,853,008 $ 334,501 $ 1,518,507 454 % six months ended june 30, change from 2021 2022 2021 change percent (in thousands, except per share data) sales and other revenues $ 18,620,910 $ 8,081,416 $ 10,539,494 130 % operating costs and expenses: cost of products sold: cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) 15,081,927 6,786,034 8,295,893 122 lower of cost or market inventory valuation adjustment 25,992 (318,862 ) 344,854 (108 ) 15,107,919 6,467,172 8,640,747 134 operating expenses (exclusive of depreciation and amortization) 1,083,561 734,100 349,461 48 selling, general and administrative expenses (exclusive of depreciation and amortization) 221,297 159,729 61,568 39 depreciation and amortization 308,645 248,121 60,524 24 total operating costs and expenses 16,721,422 7,609,122 9,112,300 120 income from operations 1,899,488 472,294 1,427,194 302 other income (expense): earnings of equity method investments 9,073 5,186 3,887 75 interest income 2,841 2,060 781 38 interest expense (73,820 ) (67,328 ) (6,492 ) 10 gain on tariff settlement — 51,500 (51,500 ) (100 ) loss on foreign currency transactions (766 ) (734 ) (32 ) 4 gain on sale of assets and other 6,215 9,817 (3,602 ) (37 ) (56,457 ) 501 (56,958 ) (11,369 ) income before income taxes 1,843,031 472,795 1,370,236 290 income tax expense 404,822 95,178 309,644 325 net income 1,438,209 377,617 1,060,592 281 less net income attributable to noncontrolling interest 56,973 60,550 (3,577 ) (6 ) net income attributable to hollyfrontier stockholders $ 1,381,236 $ 317,067 $ 1,064,169 336 % earnings per share attributable to hollyfrontier stockholders: basic $ 6.86 $ 1.92 $ 4.94 257 % diluted $ 6.86 $ 1.92 $ 4.94 257 % cash dividends declared per common share $ 0.40 $ 0.35 $ 0.05 14 % average number of common shares outstanding: basic 199,149 162,501 36,648 23 % diluted 199,149 162,501 36,648 23 % ebitda $ 2,165,682 $ 725,634 $ 1,440,048 198 % adjusted ebitda $ 2,229,715 $ 381,809 $ 1,847,906 484 % balance sheet data june 30, december 31, 2022 2021 (in thousands) cash and cash equivalents $ 1,702,286 $ 234,444 working capital $ 3,636,627 $ 1,696,990 total assets $ 19,177,854 $ 12,916,613 long-term debt $ 3,348,103 $ 3,072,737 total equity $ 9,874,910 $ 6,294,465 segment information effective the first quarter of 2022, we revised our reportable segments to align with certain changes in how our chief operating decision maker manages and allocates resources to our businesses. accordingly, we created two new reportable segments, renewables and marketing. our operations are now organized into five reportable segments, refining, renewables, marketing, lubricants and specialty products and hep. our operations that are not included in one of these five reportable 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. as a result of the sinclair transactions that closed on march 14, 2022, the operations of the acquired sinclair businesses are reported in the refining, renewables, marketing and hep segments. the refining segment represents the operations of our el dorado, tulsa, navajo and woods cross refineries and hollyfrontier asphalt company llc (“hfc asphalt”). also, effective with our acquisition that closed november 1, 2021, the refining segment includes our puget sound refinery, and effective with our acquisition that closed on march 14, 2022, includes our sinclair and casper refineries. refining activities involve the purchase and refining of crude oil and wholesale 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 mountains extending into the pacific northwest geographic regions of the united states. hfc asphalt operates various asphalt terminals in arizona, new mexico and oklahoma. the renewables segment represents the operations of the cheyenne rdu, which was mechanically complete in the fourth quarter of 2021 and fully operational in the first quarter of 2022, the ptu at our artesia, new mexico facility, which was completed and fully operational in the first quarter of 2022 and the artesia rdu, which was completed and fully operational in the second quarter of 2022. also, effective with our acquisition that closed on march 14, 2022, the renewables segment includes the sinclair rdu. during the construction phase of our rdus and ptu, operating expense and capital expenditures were reported in the corporate and other segment, and this financial information has been retrospectively adjusted to reflect our current segment presentation. effective with our acquisition that closed on march 14, 2022, the marketing segment includes branded fuel sales through more than 300 distributors to more than 1,300 branded sites in the united states and licensing fees for the use of the sinclair brand at more than 300 additional locations throughout the country. the lubricants and specialty products segment represents petro-canada lubricants, inc.’s (“pcli”) production operations, located in mississauga, ontario, that includes 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 and the operations of red giant oil company llc, one of the largest suppliers of locomotive engine oil in north america. also, the lubricants and specialty products segment includes 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 includes all of the operations of hep, which owns and operates logistics and refinery 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 mountains geographic regions of the united states. the hep segment also includes 50% ownership interests in each of the osage pipeline, the cheyenne pipeline and cushing connect, a 25.06% ownership interest in the saddle butte pipeline and a 49.995% ownership interest in the pioneer pipeline. 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. refining renewables marketing lubricants and specialty products hep corporate, other and eliminations consolidated total (in thousands) three months ended june 30, 2022 sales and other revenues: revenues from external customers $ 8,839,662 $ 115,939 $ 1,336,302 $ 845,024 $ 25,233 $ — $ 11,162,160 intersegment revenues 1,448,919 78,639 — 4,917 110,537 (1,643,012 ) — $ 10,288,581 $ 194,578 $ 1,336,302 $ 849,941 $ 135,770 $ (1,643,012 ) $ 11,162,160 cost of products sold (exclusive of lower of cost or market inventory) $ 8,119,285 $ 192,662 $ 1,311,333 $ 576,428 $ — $ (1,619,793 ) $ 8,579,915 lower of cost or market inventory valuation adjustment $ — $ 34,543 $ — $ — $ — $ — $ 34,543 operating expenses $ 469,304 $ 29,273 $ — $ 74,470 $ 53,899 $ (20,819 ) $ 606,127 selling, general and administrative expenses $ 39,123 $ 1,001 $ 1,049 $ 43,555 $ 4,683 $ 21,464 $ 110,875 depreciation and amortization $ 102,780 $ 10,371 $ 4,418 $ 20,605 $ 26,371 $ (501 ) $ 164,044 income (loss) from operations $ 1,558,089 $ (73,272 ) $ 19,502 $ 134,883 $ 50,817 $ (23,363 ) $ 1,666,656 income (loss) before interest and income taxes $ 1,558,120 $ (73,202 ) $ 19,502 $ 135,116 $ 56,309 $ (22,327 ) $ 1,673,518 net income attributable to noncontrolling interest $ — $ — $ — $ — $ 1,929 $ 29,717 $ 31,646 earnings of equity method investments $ — $ — $ — $ — $ 5,447 $ — $ 5,447 capital expenditures $ 36,711 $ 87,525 $ 5,309 $ 8,026 $ 9,100 $ 12,773 $ 159,444 refining renewables lubricants and specialty products hep corporate, other and eliminations consolidated total (in thousands) three months ended june 30, 2021 sales and other revenues: revenues from external customers $ 3,887,273 $ — $ 662,755 $ 27,092 $ 3 $ 4,577,123 intersegment revenues 205,186 — 6,434 99,142 (310,762 ) — $ 4,092,459 $ — $ 669,189 $ 126,234 $ (310,759 ) $ 4,577,123 cost of products sold (exclusive of lower of cost or market inventory) $ 3,619,319 $ — $ 491,218 $ — $ (284,808 ) $ 3,825,729 lower of cost or market inventory valuation adjustment $ (118,825 ) $ — $ — $ — $ — $ (118,825 ) operating expenses $ 231,422 $ 11,231 $ 61,310 $ 42,068 $ (11,840 ) $ 334,191 selling, general and administrative expenses $ 30,136 $ — $ 37,583 $ 2,846 $ 7,189 $ 77,754 depreciation and amortization $ 79,938 $ 316 $ 19,152 $ 22,275 $ 2,361 $ 124,042 income (loss) from operations $ 250,469 $ (11,547 ) $ 59,926 $ 59,045 $ (23,661 ) $ 334,232 income (loss) before interest and income taxes $ 250,111 $ (11,547 ) $ 60,093 $ 67,911 $ (20,403 ) $ 346,165 net income attributable to noncontrolling interest $ — $ — $ — $ 1,193 $ 24,724 $ 25,917 earnings of equity method investments $ — $ — $ — $ 3,423 $ — $ 3,423 capital expenditures $ 33,150 $ 113,747 $ 5,614 $ 24,498 $ 5,871 $ 182,880 refining renewables marketing lubricants and specialty products hep corporate, other and eliminations consolidated total (in thousands) six months ended june 30, 2022 sales and other revenues: revenues from external customers $ 15,211,556 144,252 1,613,343 $ 1,598,582 $ 53,177 $ — $ 18,620,910 intersegment revenues 1,583,192 97,693 — 6,368 202,791 (1,890,044 ) — $ 16,794,748 241,945 1,613,343 $ 1,604,950 $ 255,968 $ (1,890,044 ) $ 18,620,910 cost of products sold (exclusive of lower of cost or market inventory) $ 14,028,895 $ 236,933 $ 1,582,464 $ 1,081,005 $ — $ (1,847,370 ) $ 15,081,927 lower of cost or market inventory valuation adjustment $ — $ 25,992 $ — $ — $ — $ — $ 25,992 operating expenses $ 824,276 $ 56,369 $ — $ 140,471 $ 96,523 $ (34,078 ) $ 1,083,561 selling, general and administrative expenses $ 73,005 $ 1,873 $ 1,189 $ 85,304 $ 8,995 $ 50,931 $ 221,297 depreciation and amortization $ 197,461 $ 16,171 $ 4,919 $ 41,199 $ 47,957 $ 938 $ 308,645 income (loss) from operations $ 1,671,111 $ (95,393 ) $ 24,771 $ 256,971 $ 102,493 $ (60,465 ) $ 1,899,488 income (loss) before interest and income taxes $ 1,671,171 $ (95,304 ) $ 24,771 $ 259,817 $ 111,712 $ (58,157 ) $ 1,914,010 net income attributable to noncontrolling interest $ — $ — $ — $ — $ 5,192 $ 51,781 $ 56,973 earnings of equity method investments $ — $ — $ — $ — $ 9,073 $ — $ 9,073 capital expenditures $ 66,631 $ 186,294 $ 5,309 $ 14,395 $ 23,246 $ 21,865 $ 317,740 refining renewables lubricants and specialty products hep corporate, other and eliminations consolidated total (in thousands) six months ended june 30, 2021 sales and other revenues: revenues from external customers $ 6,844,306 $ — $ 1,184,753 $ 52,350 $ 7 $ 8,081,416 intersegment revenues $ 265,648 $ — $ 8,999 $ 201,068 $ (475,715 ) $ — $ 7,109,954 $ — $ 1,193,752 $ 253,418 $ (475,708 ) $ 8,081,416 cost of products sold (exclusive of lower of cost or market inventory) $ 6,381,262 $ — $ 822,741 $ — $ (417,969 ) $ 6,786,034 lower of cost or market inventory valuation adjustment $ (318,353 ) $ — $ — $ — $ (509 ) $ (318,862 ) operating expenses $ 524,277 $ 24,052 $ 122,063 $ 83,433 $ (19,725 ) $ 734,100 selling, general and administrative expenses $ 58,632 $ — $ 83,136 $ 5,815 $ 12,146 $ 159,729 depreciation and amortization $ 168,020 $ 658 $ 39,273 $ 45,281 $ (5,111 ) $ 248,121 income (loss) from operations $ 296,116 $ (24,710 ) $ 126,539 $ 118,889 $ (44,540 ) $ 472,294 income (loss) before interest and income taxes $ 295,788 $ (24,710 ) $ 127,078 $ 154,669 $ (14,762 ) $ 538,063 net income attributable to noncontrolling interest $ — $ — $ — $ 2,839 $ 57,711 $ 60,550 earnings of equity method investments $ — — $ — $ 5,186 $ — $ 5,186 capital expenditures $ 73,511 $ 183,969 $ 9,701 $ 57,716 $ 7,944 $ 332,841 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 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. the disaggregation of our refining geographic operating data is presented in two regions, mid-continent and west, to best reflect the economic drivers of our refining operations. the mid-continent region is comprised of the el dorado and tulsa refineries. the west region is comprised of the puget sound, navajo, woods cross, sinclair and casper refineries. the puget sound refinery was acquired november 1, 2021, and thus is included for the period january 1, 2022 to june 30, 2022. in addition, the refinery operations of the sinclair and casper refineries are included for the period march 14, 2022 (the date of acquisition) through june 30, 2022. three months ended june 30, six months ended june 30, 2022 2021 2022 (8) 2021 mid-continent region crude charge (bpd) (1) 277,930 278,380 284,030 247,500 refinery throughput (bpd) (2) 292,570 293,050 298,950 257,030 sales of produced refined products (bpd) (3) 279,170 287,680 279,710 249,400 refinery utilization (4) 106.9 % 107.1 % 109.2 % 95.2 % average per produced barrel (5) refinery gross margin $ 32.53 $ 10.82 $ 20.96 $ 8.99 refinery operating expenses (6) 6.21 5.27 6.11 7.22 net operating margin $ 26.32 $ 5.55 $ 14.85 $ 1.77 refinery operating expenses per throughput barrel (7) $ 5.92 $ 5.18 $ 5.72 $ 6.89 feedstocks: sweet crude oil 54 % 64 % 58 % 62 % sour crude oil 22 % 14 % 18 % 14 % heavy sour crude oil 19 % 17 % 19 % 19 % other feedstocks and blends 5 % 5 % 5 % 5 % total 100 % 100 % 100 % 100 % sales of produced refined products: gasolines 49 % 51 % 50 % 51 % diesel fuels 35 % 34 % 34 % 34 % jet fuels 5 % 4 % 6 % 5 % fuel oil 1 % 1 % 1 % 1 % asphalt 4 % 2 % 3 % 2 % base oils 4 % 4 % 4 % 4 % lpg and other 2 % 4 % 2 % 3 % total 100 % 100 % 100 % 100 % three months ended june 30, six months ended june 30, 2022 2021 2022 (8) 2021 west region crude charge (bpd) (1) 349,380 137,970 292,450 134,940 refinery throughput (bpd) (2) 370,740 151,680 315,350 148,160 sales of produced refined products (bpd) (3) 376,400 156,260 309,530 150,290 refinery utilization (4) 83.6 % 95.2 % 77.6 % 93.1 % average per produced barrel (5) refinery gross margin $ 39.21 $ 13.35 $ 30.42 $ 11.88 refinery operating expenses (6) 9.10 6.57 9.19 7.29 net operating margin $ 30.11 $ 6.78 $ 21.23 $ 4.59 refinery operating expenses per throughput barrel (7) $ 9.24 $ 6.77 $ 9.02 $ 7.40 feedstocks: sweet crude oil 33 % 22 % 29 % 23 % sour crude oil 46 % 59 % 50 % 59 % heavy sour crude oil 10 % — % 9 % — % black wax crude oil 5 % 10 % 5 % 9 % other feedstocks and blends 6 % 9 % 7 % 9 % total 100 % 100 % 100 % 100 % sales of produced refined products: gasolines 53 % 52 % 53 % 53 % diesel fuels 33 % 37 % 31 % 37 % jet fuels 5 % — % 5 % — % fuel oil 2 % 3 % 5 % 3 % asphalt 3 % 5 % 2 % 4 % lpg and other 4 % 3 % 4 % 3 % total 100 % 100 % 100 % 100 % consolidated crude charge (bpd) (1) 627,310 416,350 576,480 382,440 refinery throughput (bpd) (2) 663,310 444,730 614,300 405,190 sales of produced refined products (bpd) (3) 655,570 443,940 589,240 399,690 refinery utilization (4) 92.5 % 102.8 % 90.5 % 94.4 % average per produced barrel (5) refinery gross margin $ 36.36 $ 11.71 $ 25.93 $ 10.07 refinery operating expenses (6) 7.87 5.73 7.73 7.25 net operating margin $ 28.49 $ 5.98 $ 18.20 $ 2.82 refinery operating expenses per throughput barrel (7) $ 7.77 $ 5.72 $ 8.25 $ 7.07 feedstocks: sweet crude oil 42 % 50 % 43 % 48 % sour crude oil 36 % 30 % 34 % 30 % heavy sour crude oil 14 % 11 % 14 % 12 % black wax crude oil 3 % 3 % 3 % 3 % other feedstocks and blends 5 % 6 % 6 % 7 % total 100 % 100 % 100 % 100 % three months ended june 30, six months ended june 30, 2022 2021 2022 (8) 2021 consolidated sales of produced refined products: gasolines 51 % 51 % 51 % 52 % diesel fuels 34 % 35 % 32 % 35 % jet fuels 5 % 3 % 6 % 3 % fuel oil 2 % 1 % 3 % 1 % asphalt 3 % 3 % 3 % 3 % base oils 2 % 3 % 2 % 3 % lpg and other 3 % 4 % 3 % 3 % 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 inter-segment sales) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold. (4) represents crude charge divided by total crude capacity (bpsd). as a result of our acquisition of the puget sound refinery on november 1, 2021, and the sinclair and casper refineries on march 14, 2022, our consolidated crude capacity increased from 405,000 bpsd at june 30, 2021 to 678,000 bpsd at june 30, 2022. (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, divided by sales volumes of refined products produced at our refineries. (7) represents total refining segment operating expenses, exclusive of depreciation and amortization, divided by refinery throughput. (8) we acquired the sinclair and casper refineries on march 14, 2022. refining operating data for the six months ended june 30, 2022 includes crude oil and feedstocks processed and refined products sold at our sinclair and casper refineries for the period march 14, 2022 through june 30, 2022 only, averaged over the 181 days in the six months ended june 30, 2022. renewables segment operating data the following table sets forth information about our renewables operations. three months ended june 30, 2022 six months ended june 30, 2022 renewables sales volumes (in thousand gallons) 25,688 30,632 average per produced gallon (1) renewables gross margin $ 0.07 $ 0.16 renewables operating expense (2) 1.14 1.84 net operating margin $ (1.07 ) $ (1.68 ) (1) represents average amount per produced gallons 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. (2) represents total renewables segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes of renewable diesel produced at our renewable diesel units. marketing segment operating data the following table sets forth information about our marketing operations and includes our sinclair business for the period march 14, 2022 (the date of acquisition) through june 30, 2022. three months ended june 30, 2022 six months ended june 30, 2022 marketing number of branded sites at period end 1,329 1,329 sales volumes (in thousand gallons) 335,106 420,019 margin per gallon of sales (1) $ 0.07 $ 0.07 (1) represents average amount per gallon sold, which is a non-gaap measure. reconciliations to amounts reported under gaap are provided under “reconciliations to amounts reported under generally accepted accounting principles” below. lubricants and specialty products segment operating data the following table sets forth information about our lubricants and specialty products operations. three months ended june 30, six months ended june 30, 2022 2021 2022 2021 lubricants and specialty products throughput (bpd) 20,260 19,310 19,800 19,860 sales of produced products (bpd) 34,000 36,670 34,510 34,630 sales of produced products: finished products 53 % 51 % 52 % 52 % base oils 27 % 29 % 29 % 27 % other 20 % 20 % 19 % 21 % total 100 % 100 % 100 % 100 % supplemental financial data attributable to our lubricants and specialty products segment is presented below: rack back (1) rack forward (2) eliminations (3) total lubricants and specialty products (in thousands) three months ended june 30, 2022 sales and other revenues $ 358,628 $ 754,442 $ (263,129 ) $ 849,941 cost of products sold $ 249,095 $ 590,462 $ (263,129 ) $ 576,428 operating expenses $ 38,073 $ 36,397 $ — $ 74,470 selling, general and administrative expenses $ 5,636 $ 37,919 $ — $ 43,555 depreciation and amortization $ 7,712 $ 12,893 $ — $ 20,605 income from operations $ 58,112 $ 76,771 $ — $ 134,883 income before interest and income taxes $ 58,131 $ 76,985 $ — $ 135,116 ebitda $ 65,843 $ 89,878 $ — $ 155,721 three months ended june 30, 2021 sales and other revenues $ 254,485 $ 629,211 $ (214,507 ) $ 669,189 cost of products sold $ 163,280 $ 542,445 $ (214,507 ) $ 491,218 operating expenses $ 29,106 $ 32,204 $ — $ 61,310 selling, general and administrative expenses $ 5,914 $ 31,669 $ — $ 37,583 depreciation and amortization $ 6,230 $ 12,922 $ — $ 19,152 income from operations $ 49,955 $ 9,971 $ — $ 59,926 income before interest and income taxes $ 49,955 $ 10,138 $ — $ 60,093 ebitda $ 56,185 $ 23,060 $ — $ 79,245 rack back (1) rack forward (2) eliminations (3) total lubricants and specialty products (in thousands) six months ended june 30, 2022 sales and other revenues $ 637,214 $ 1,442,389 $ (474,653 ) $ 1,604,950 cost of products sold $ 427,634 $ 1,128,024 $ (474,653 ) $ 1,081,005 operating expenses $ 68,887 $ 71,584 $ — $ 140,471 selling, general and administrative expenses $ 11,843 $ 73,461 $ — $ 85,304 depreciation and amortization $ 15,269 $ 25,930 $ — $ 41,199 income from operations $ 113,581 $ 143,390 $ — $ 256,971 income before interest and income taxes $ 116,181 $ 143,636 $ — $ 259,817 ebitda $ 131,450 $ 169,566 $ — $ 301,016 six months ended june 30, 2021 sales and other revenues $ 427,927 $ 1,112,457 $ (346,632 ) $ 1,193,752 cost of products sold $ 295,812 $ 873,561 $ (346,632 ) $ 822,741 operating expenses $ 57,727 $ 64,336 $ — $ 122,063 selling, general and administrative expenses $ 12,653 $ 70,483 $ — $ 83,136 depreciation and amortization $ 13,535 $ 25,738 $ — $ 39,273 income from operations $ 48,200 $ 78,339 $ — $ 126,539 income before interest and income taxes $ 48,200 $ 78,878 $ — $ 127,078 ebitda $ 61,735 $ 104,616 $ — $ 166,351 (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 attributable to hf sinclair 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) severance costs, (iii) restructuring charges, (iv) cheyenne refinery lifo inventory liquidation costs, (v) decommissioning costs, (vi) acquisition integration and regulatory costs and (vii) 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 june 30, six months ended june 30, 2022 2021 2022 2021 (in thousands) net income attributable to hf sinclair stockholders $ 1,221,262 $ 168,850 $ 1,381,236 $ 317,067 add interest expense 38,961 28,942 73,820 67,328 subtract interest income (1,844 ) (1,029 ) (2,841 ) (2,060 ) add (subtract) income tax expense (benefit) 383,493 123,485 404,822 95,178 add depreciation and amortization 164,044 124,042 308,645 248,121 ebitda $ 1,805,916 $ 444,290 $ 2,165,682 $ 725,634 subtract lower of cost or market inventory valuation adjustment 34,543 (118,825 ) 25,992 (318,862 ) add severance costs — 194 — 708 add restructuring charges — — — 7,813 add cheyenne refinery lifo inventory liquidation costs — — — 923 add decommissioning costs 512 8,096 1,469 16,347 add acquisition integration and regulatory costs 12,037 746 36,572 746 subtract gain on tariff settlement — — — (51,500 ) adjusted ebitda $ 1,853,008 $ 334,501 $ 2,229,715 $ 381,809 ebitda and adjusted ebitda attributable to our refining segment is presented below: three months ended june 30, six months ended june 30, refining segment 2022 2021 2022 2021 (in thousands) income before interest and income taxes (1) $ 1,558,120 $ 250,111 $ 1,671,171 $ 295,788 add depreciation and amortization 102,780 79,938 197,461 168,020 ebitda 1,660,900 330,049 1,868,632 463,808 subtract lower of cost or market inventory valuation adjustment — (118,825 ) — (318,353 ) adjusted ebitda $ 1,660,900 $ 211,224 $ 1,868,632 $ 145,455 (1) income before interest and income taxes of our refining segment represents income plus (i) interest expense, net of interest income and (ii) income tax provision. ebitda and adjusted ebitda attributable to our renewables segment is set forth below: three months ended june 30, six months ended june 30, renewables segment 2022 2021 2022 2021 (in thousands) loss before interest and income taxes (1) $ (73,202 ) $ (11,547 ) $ (95,304 ) $ (24,710 ) add depreciation and amortization 10,371 316 16,171 658 ebitda (62,831 ) (11,231 ) (79,133 ) (24,052 ) subtract lower of cost or market inventory valuation adjustment 34,543 — 25,992 — adjusted ebitda $ (28,288 ) $ (11,231 ) $ (53,141 ) $ (24,052 ) (1) loss before interest and income taxes of our renewables segment represents loss plus (i) interest expense, net of interest income and (ii) income tax provision. ebitda attributable to our marketing segment is set forth below: marketing segment three months ended june 30, 2022 six months ended june 30, 2022 (in thousands) income before interest and income taxes (1) $ 19,502 $ 24,771 add depreciation and amortization 4,418 4,919 ebitda $ 23,920 $ 29,690 (1) income before interest and income taxes of our marketing segment represents income 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. lubricants and specialty products segment rack back rack forward total lubricants and specialty products (in thousands) three months ended june 30, 2022 income before interest and income taxes (1) $ 58,131 $ 76,985 $ 135,116 add depreciation and amortization 7,712 12,893 20,605 ebitda $ 65,843 $ 89,878 $ 155,721 three months ended june 30, 2021 income before interest and income taxes (1) $ 49,955 $ 10,138 $ 60,093 add depreciation and amortization 6,230 12,922 19,152 ebitda 56,185 23,060 79,245 lubricants and specialty products segment rack back rack forward total lubricants and specialty products (in thousands) six months ended june 30, 2022 income before interest and income taxes (1) $ 116,181 $ 143,636 $ 259,817 add depreciation and amortization 15,269 25,930 41,199 ebitda 131,450 169,566 301,016 six months ended june 30, 2021 income before interest and income taxes (1) $ 48,200 $ 78,878 $ 127,078 add depreciation and amortization 13,535 25,738 39,273 ebitda 61,735 104,616 166,351 add restructuring charges 1,079 6,734 7,813 adjusted ebitda $ 62,814 $ 111,350 $ 174,164 (1) income before interest and income taxes of our lubricants and specialty products segment represents income 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 and depreciation and amortization. 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 june 30, six months ended june 30, 2022 2021 2022 2021 (dollars in thousands, except per barrel amounts) consolidated net operating margin per produced barrel sold $ 28.49 $ 5.98 $ 18.20 $ 2.82 add average refinery operating expenses per produced barrel sold 7.87 5.73 7.73 7.25 refinery gross margin per produced barrel sold 36.36 11.71 25.93 10.07 times produced barrels sold (bpd) 655,570 443,940 589,240 399,690 times number of days in period 91 91 181 181 refinery gross margin 2,169,124 473,067 2,765,498 728,503 add rounding 172 73 355 189 total refining segment gross margin 2,169,296 473,140 2,765,853 728,692 add refining segment cost of products sold 8,119,285 3,619,319 14,028,895 6,381,262 refining segment sales and other revenues 10,288,581 4,092,459 16,794,748 7,109,954 add renewables segment sales and other revenues 194,578 — 241,945 — add marketing segment sales and other revenues 1,336,302 — 1,613,343 — add lubricants and specialty products segment sales and other revenues 849,941 669,189 1,604,950 1,193,752 add hep segment sales and other revenues 135,770 126,234 255,968 253,418 subtract corporate, other and eliminations (1,643,012 ) (310,759 ) (1,890,044 ) (475,708 ) sales and other revenues $ 11,162,160 $ 4,577,123 $ 18,620,910 $ 8,081,416 reconciliation of average refining segment operating expenses per produced barrel sold to total operating expenses three months ended june 30, six months ended june 30, 2022 2021 2022 2021 (dollars in thousands, except per barrel amounts) consolidated average operating expenses per produced barrel sold $ 7.87 $ 5.73 $ 7.73 $ 7.25 times produced barrels sold (bpd) 655,570 443,940 589,240 399,690 times number of days in period 91 91 181 181 refinery operating expenses 469,500 231,484 $ 824,423 $ 524,493 subtract rounding (196 ) (62 ) (147 ) (216 ) total refining segment operating expenses 469,304 231,422 824,276 524,277 add renewables segment operating expenses 29,273 11,231 56,369 24,052 add lubricants and specialty products segment operating expenses 74,470 61,310 140,471 122,063 add hep segment operating expenses 53,899 42,068 96,523 83,433 subtract corporate, other and eliminations (20,819 ) (11,840 ) (34,078 ) (19,725 ) operating expenses (exclusive of depreciation and amortization) $ 606,127 $ 334,191 $ 1,083,561 $ 734,100 reconciliation of renewables operating information (non-gaap performance measures) to amounts reported under generally accepted accounting principles in financial statements. renewables gross margin and net operating margin are non-gaap performance measures that are used by our management and others to compare our renewables performance to that of other companies in our industry. we believe these margin measures are helpful to investors in evaluating our renewables performance on a relative and absolute basis. renewables gross margin per produced gallon sold is total renewables segment revenues less total renewables segment cost of products sold, exclusive of lower of cost or market inventory valuation adjustments, divided by sales volumes of produced renewables products sold. net operating margin per produced gallon sold is the difference between renewables gross margin and renewables operating expenses per produced gallon sold. these two margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments and depreciation and amortization. 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. reconciliation of renewables gross margin and operating expenses to gross margin per produced gallon sold and net operating margin per produced gallon sold three months ended june 30, 2022 six months ended june 30, 2022 (in thousands, except for per gallon amounts) renewables segment sales and other revenues $ 194,578 $ 241,945 renewables segment cost of products sold 192,662 236,933 lower of cost or market inventory adjustment 34,543 25,992 (32,627 ) (20,980 ) subtract lower of cost or market inventory adjustment 34,543 25,992 renewables gross margin $ 1,916 $ 5,012 renewables operating expense $ 29,273 $ 56,369 produced gallons sold (in thousand gallons) 25,688 30,632 renewables gross margin per produced gallon sold $ 0.07 $ 0.16 less operating expense per produced gallon sold 1.14 1.84 net operating margin per produced gallon sold $ (1.07 ) $ (1.68 ) reconciliation of marketing operating information (non-gaap performance measures) to amounts reported under generally accepted accounting principles in financial statements. marketing gross margin is a non-gaap performance measure that is used by our management and others to compare our marketing performance to that of other companies in our industry. we believe this margin measure is helpful to investors in evaluating our marketing performance on a relative and absolute basis. marketing gross margin per gallon sold is total marketing segment revenues less total marketing segment cost of products sold divided by sales volumes of marketing products sold. this margin does not include the non-cash effects of depreciation and amortization. this component performance measure 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. reconciliation of marketing gross margin to gross margin per gallon sold three months ended june 30, 2022 six months ended june 30, 2022 (in thousands, except for per gallon amounts) marketing segment sales and other revenues $ 1,336,302 $ 1,613,343 marketing segment cost of products sold 1,311,333 1,582,464 marketing gross margin $ 24,969 $ 30,879 sales volumes (in thousand gallons) 335,106 420,019 marketing segment gross margin per gallon sold $ 0.07 $ 0.07 reconciliation of net income attributable to hf sinclair stockholders to adjusted net income attributable to hf sinclair stockholders adjusted net income attributable to hf sinclair stockholders is a non-gaap financial measure that excludes non-cash lower of cost or market inventory valuation adjustments, severance costs, restructuring charges, cheyenne refinery lifo inventory liquidation costs, decommissioning 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 june 30, six months ended june 30, 2022 2021 2022 2021 (in thousands, except per share amounts) consolidated gaap: income before income taxes $ 1,636,401 $ 318,252 $ 1,843,031 $ 472,795 income tax expense 383,493 123,485 404,822 95,178 net income 1,252,908 194,767 1,438,209 377,617 less net income attributable to noncontrolling interest 31,646 25,917 56,973 60,550 net income attributable to hf sinclair stockholders 1,221,262 168,850 1,381,236 317,067 non-gaap adjustments to arrive at adjusted results: lower of cost or market inventory valuation adjustment 34,543 (118,825 ) 25,992 (318,862 ) severance costs — 194 — 708 restructuring charges — — — 7,813 cheyenne refinery lifo inventory liquidation costs — — — 923 decommissioning costs 512 8,096 1,469 16,347 acquisition integration and regulatory costs 12,451 746 37,482 746 gain on tariff settlement — — — (51,500 ) total adjustments to income before income taxes 47,506 (109,043 ) 64,943 (343,825 ) adjustment to income tax expense (1) 9,832 (83,987 ) 11,107 (84,512 ) adjustment to net income attributable to noncontrolling interest 414 — 910 — total adjustments, net of tax 37,260 (25,056 ) 52,926 (259,313 ) adjusted results - non-gaap: adjusted income before income taxes 1,683,907 209,209 1,907,974 128,970 adjusted income tax expense (2) 393,325 39,498 415,929 10,666 adjusted net income 1,290,582 169,711 1,492,045 118,304 less net income attributable to noncontrolling interest 32,060 25,917 57,883 60,550 adjusted net income attributable to hf sinclair stockholders $ 1,258,522 $ 143,794 $ 1,434,162 $ 57,754 adjusted earnings per share - diluted (3) $ 5.59 $ 0.87 $ 7.12 $ 0.35 (1) represents adjustment to gaap income tax expense to arrive at adjusted income tax expense (benefit), which is computed as follows: three months ended june 30, six months ended june 30, 2022 2021 2022 2021 (in thousands) non-gaap income tax expense (2) $ 393,325 $ 39,498 $ 415,929 $ 10,666 add (subtract) gaap income tax expense 383,493 123,485 404,822 95,178 non-gaap adjustment to income tax expense $ 9,832 $ (83,987 ) $ 11,107 $ (84,512 ) (2) non-gaap income tax expense is computed by (a) adjusting hf sinclair’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 attributable to hf sinclair 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 three months ended june 30, six months ended june 30, 2022 2021 2022 2021 (dollars in thousands) gaap: income before income taxes $ 1,636,401 $ 318,252 $ 1,843,031 $ 472,795 income tax expense $ 383,493 $ 123,485 $ 404,822 $ 95,178 effective tax rate for gaap financial statements 23.4 % 38.8 % 22.0 % 20.1 % adjusted - non-gaap: effect of non-gaap adjustments — % (19.9 )% (0.2 )% (11.8 )% effective tax rate for adjusted results 23.4 % 18.9 % 21.8 % 8.3 %
