0001915657-26-000040
SEC filingA dramatic turnaround from net loss to $648M net income, driven by inventory valuation adjustments and improved margins.
HF Sinclair Corporation reported a transformative first quarter of 2026, swinging from a net loss of $4 million in the prior-year period to net income of $648 million. The improvement was primarily driven by lower-of-cost-or-market inventory valuation adjustments, which significantly boosted operating income. Revenue rose 12% to $7.1 billion, reflecting higher refined product prices and volumes. Operating income increased to $847 million from $81 million, and operating margin expanded to 11.9%.
The increase in net income was also supported by improved adjusted refinery gross margins and adjusted renewables gross margins. The company defines adjusted refinery gross margin per produced barrel sold as total Refining segment gross margin plus lower-of-cost-or-market inventory valuation adjustments, operating expenses, and depreciation and amortization, divided by sales volumes of produced refined products. Similarly, adjusted renewables gross margin per produced gallon sold is calculated using total Renewables segment gross margin plus those adjustments. These metrics highlight the underlying operational improvements beyond the inventory effects.
Net cash provided by operating activities improved to $457 million from negative $89 million in the prior year, driven by higher earnings and working capital changes. Capital expenditures were $102 million, resulting in free cash flow of $355 million. Management emphasized a disciplined capital allocation strategy focused on preserving financial flexibility to execute capital priorities and generate long-term stockholder value.
Results for the quarter included contributions from the January 2026 acquisition of Industrial Oils Unlimited, LLC, which expanded the specialty product portfolio and is expected to support future growth opportunities. The company continues to review and adjust operational plans to evolving market conditions. The decrease in cash flow from investing activities was primarily due to unrealized losses on precious metals financing arrangements during the period.