Given so many brands, including Sonneborn, fall under the HF Sinclair Corporation, could you explain how the brands all come together?
HF Sinclair is a publicly traded entity on the New York Stock Exchange, boasting approximately $30 billion in revenues, primarily from fuel refining. The bulk of our operations have seen us building seven different refineries across North America over the last decade. Within this framework, we have grown to a US$3 billion segment known as the Lubricants and Specialties Division, which I oversee. This segment includes four major brands possessing historical and heritage technologies catered to various end-use applications outside of fuels. Assembled over the past seven to eight years, these businesses form a substantial part of our portfolio.
Sonneborn is nestled within this division, representing roughly a third of the segment's revenue, focusing on highly purified hydrocarbon-based technologies. These technologies are essential in sensitive applications such as pharmaceuticals, medical and personal care. Sonneborn, with a heritage stretching back about 120 years, operates both in North America and Europe, serving approximately 80 different countries. Our specialties business, including Sonneborn, addresses critical needs across various industries, being integral in producing consumer products by major brands globally.
Upon joining from Lubrizol, were you surprised by the diversity of the assets compiled by HF Sinclair?
It was the diversity and potential of HF Sinclair’s portfolio that initially attracted me. The company’s broad spectrum of assets provides numerous opportunities to tap into emerging markets, particularly with our Naturals product line, aptly named SonneNatural, and our renewable diesel initiatives. For instance, Sonneborn's role in our portfolio was particularly compelling due to its strong foundation and relationships with key customers who are increasingly demanding sustainable solutions.
From SonneNatural™ NXG to renewable fuels, what are the exciting markets and trends you are looking to drive growth into?
The personal care market is particularly dynamic, with an increasing demand for sustainability, a trend strongly reflected in our customer expectations. Many of our clients in this sector, including prominent global brands, are committing to becoming 100% sustainable by 2030. In response, Sonneborn has developed SonneNatural™ NXG, as an extension of the SonneNatural product line, which features 100% plant-based solutions tailored to meet these evolving needs.
Looking to the future, we are expanding our focus to include thermal management, particularly influenced by the growing demands of AI and digital infrastructures.
We have established a dedicated thermal management team and are set to launch a new product line aimed at improving data center energy efficiency. This initiative involves innovative cooling solutions that involve immersing servers in specially designed fluids to dissipate heat more effectively, thus reducing the massive energy consumption typically associated with cooling systems.
Data centers, as they operate today, consume vast amounts of energy and water, which is the industry’s dirty little secret.
Under what brand will the thermal management product be launched and when can we expect an announcement?
It will be launched under the Petro-Canada Lubricants brand. We actually trademarked a brand 25 years ago, which I believe is one of the coolest product names. However, I cannot reveal it right now as it would spoil our Q4 reveal. But I recommend attending the Open Compute Forum in Silicon Valley this October, where we will make an exciting announcement. Regarding our growing customer base, it represents an entirely new category of customers for us.. Engaging with prominent companies opens up exciting possibilities and aligns with our strategic direction.
Looking towards the next three to five years, what excites you the most and what strategic movements do you foresee?
Over the next three to five years, regulatory changes worldwide are making a significant impact, necessitating a strong regulatory focus in our operations. Our century-long presence in the hydrocarbon business provides a robust foundation to adapt and innovate for more sustainable solutions, leveraging our core competencies in testing, production, and formulation.
We want to be known for high-quality, high-performance, and customer-driven solutions. As an example, Sonneborn is positioned uniquely due to its specialty chemical focus and extensive market insight. We aim to be recognized as market leaders who not only meet but set high standards and provide bespoke solutions that address changing market needs. This includes being nimble and proactive, anticipating market trends to effectively communicate and deliver our value proposition.
What regulatory changes do you see on the horizon, and how might they affect your business strategy?
In the regulatory landscape, we expect that stringent regulations will push some market players who do not meet high standards out of the market. This could lead to opportunities for us as we adhere to our high production and quality standards. In Europe, for instance, there’s robust due diligence to ensure responsible production, a standard we commit to. In Asia, particularly in Japan and Korea, our long-standing commitment to quality keeps us in a leading position, although regulations in China are more unpredictable.
