DALLAS--(BUSINESS WIRE)--
HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”)
today reported second quarter net income attributable to HollyFrontier
stockholders of $345.5 million or $1.94 per diluted share for the
quarter ended June 30, 2018, compared to $57.8 million or $0.33 per
diluted share for the quarter ended June 30, 2017.
The second quarter results reflect special items that collectively
increased net income by a total of $86.6 million. These items include a
lower of cost or market inventory valuation adjustment that increased
pre-tax earnings by $106.9 million and a $25.3 million reduction to RINs
costs as a result of our Woods Cross refinery's small refinery exemption
for the 2017 calendar year. These items were partially offset by $14.7
million in charges related to damages attributable to our Woods Cross
refinery outage that started in March 2018, net of estimated insurance
claims.
Excluding these items, net income for the current quarter was $258.9
million ($1.45 per diluted share) compared to $116.0 million ($0.66 per
diluted share) for the second quarter of 2017, which excludes certain
items that collectively decreased earnings by $58.2 million for the
three months ended June 30, 2017. These items include an inventory
valuation adjustment, a RINs cost reduction as a result of the small
refinery exemption granted to our Cheyenne refinery for the 2016
calendar year, Petro-Canada Lubricants Inc. ("PCLI") acquisition and
integration costs, long-lived asset impairment charges and incremental
cost of products sold attributable to our PCLI inventory value step-up.
Adjusted for these items, net income increased $142.9 million compared
to the same period of 2017 due principally to higher margins in our
refining business. Total operating expenses for the quarter were $296.2
million compared to $316.3 million for the second quarter of last year.
HollyFrontier’s President & CEO, George Damiris, commented,
“HollyFrontier's second quarter reflects our ability to take advantage
of both location and quality discounts in the crude oil markets. Within
our lubricants business, healthy finished product demand and our
integrated business model are generating consistent earnings despite a
weak base oil market. Going into the second half of the year, we expect
the macro environment to remain very positive and look forward to
finishing the year strong.”
The Refining and Marketing segment reported adjusted EBITDA of $384.8
million compared to $192.8 million for the second quarter of 2017. This
increase was primarily driven by lower laid-in crude costs which
resulted in a consolidated refinery gross margin of $16.57 per produced
barrel, a 46% increase compared to $11.36 for the second quarter of
2017. Crude oil charges averaged 463,480 barrels per day (“BPD”) for the
current quarter compared to 467,090 BPD for the second quarter 2017. Our
Woods Cross refinery ran at reduced rates throughout the quarter as a
result of the outage beginning in March 2018. We expect to increase
production during August and return to full run rate by early September.
Our Lubricants and Specialty Products segment reported EBITDA of $39.4
million, driven by consistent Rack Forward sales volumes and margins.
Rack Forward EBITDA was $51.9 million for the quarter and HollyFrontier
continues to expect Rack Forward EBITDA in the $190.0 million to $210.0
million range for 2018. Rack Back EBITDA was negatively impacted by
weakness in the base oil markets. Additionally, we closed on our
previously announced acquisition of Red Giant Oil Company on August 1,
2018.
Holly Energy Partners, L.P. ("HEP") reported EBITDA of $81.9 million for
the second quarter compared to $75.1 million in the second quarter of
2017. This growth was driven by the acquisition of the SLC and Frontier
Pipelines as well as volume growth in HEP’s Permian crude gathering
system.
For the second quarter of 2018, net cash provided by operations totaled
$394.4 million. During the period, we declared and paid a dividend of
$0.33 per share to shareholders totaling $58.6 million and spent $28.6
million in stock repurchases. At June 30, 2018, our cash and cash
equivalents totaled $979.9 million, a $198.4 million increase over cash
and cash equivalents of $781.5 million at March 31, 2018. Additionally,
our consolidated debt was $2,387.8 million. Our debt, exclusive of HEP
debt, which is nonrecourse to HollyFrontier, was $992.2 million at
June 30, 2018.
HollyFrontier also announced today that its Board of Directors declared
a regular quarterly dividend of $0.33 per share. The dividend will be
paid on September 20, 2018 to holders of record of common stock on
August 23, 2018.
The Company has scheduled a webcast conference call for today, August 2,
2018, at 8:30 AM Eastern Time to discuss second quarter financial
results. This webcast may be accessed at: https://event.webcasts.com/starthere.jsp?ei=1200322&tp_key=944875c65d.
An audio archive of this webcast will be available using the above noted
link through August 16, 2018.
HollyFrontier Corporation, headquartered in Dallas, Texas, is an
independent petroleum refiner and marketer that produces high-value
light products such as gasoline, diesel fuel, jet fuel and other
specialty products. HollyFrontier operates through its subsidiaries a
135,000 barrels per stream day (“BPSD”) refinery located in El Dorado,
Kansas, two refinery facilities with a combined capacity of 125,000 BPSD
located in Tulsa, Oklahoma, a 100,000 BPSD refinery located in Artesia,
New Mexico, a 52,000 BPSD refinery located in Cheyenne, Wyoming and a
45,000 BPSD refinery in Woods Cross, Utah. HollyFrontier markets its
refined products principally in the Southwest U.S., the Rocky Mountains
extending into the Pacific Northwest and in other neighboring Plains
states. In addition, HollyFrontier, through its subsidiary, owns
Petro-Canada Lubricants Inc., whose Mississauga, Ontario facility
produces 15,600 barrels per day of base oils and other specialized
lubricant products, and also owns a 57% interest and a non-economic
general partner interest in Holly Energy Partners, L.P.
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. 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, risks and uncertainties with respect to the actions of
actual or potential competitive suppliers of refined petroleum products
in the Company’s markets, the demand for and supply of crude oil and
refined products, the spread between market prices for refined products
and market prices for crude oil, the possibility of constraints on the
transportation of refined products, the possibility of inefficiencies,
curtailments or shutdowns in refinery operations or pipelines, effects
of governmental and environmental regulations and policies, the
availability and cost of financing to the Company, the effectiveness of
the Company’s capital investments and marketing strategies, the
Company’s efficiency in carrying out construction projects, the ability
of the Company to acquire refined product operations or pipeline and
terminal operations on acceptable terms and to integrate any future
acquired operations, the possibility of terrorist and cyber attacks and
the consequences of any such attacks, general economic conditions and
other financial, operational and legal risks and uncertainties detailed
from time to time in the Company’s Securities and Exchange Commission
filings. The forward-looking statements speak only as of the date made
and, other than as required by law, we undertake no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
RESULTS OF OPERATIONS
Financial Data (all information in this release is unaudited)
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Change from 2017
|
|
|
2018
|
|
2017
|
|
Change
|
|
Percent
|
|
|
(In thousands, except per share data)
|
Sales and other revenues
|
|
$
|
4,471,236
|
|
|
$
|
3,458,864
|
|
|
$
|
1,012,372
|
|
|
29
|
%
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of products sold:
|
|
|
|
|
|
|
|
|
Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)
|
|
3,595,916
|
|
|
2,753,459
|
|
|
842,457
|
|
|
31
|
|
Lower of cost or market inventory valuation adjustment
|
|
(106,926
|
)
|
|
83,982
|
|
|
(190,908
|
)
|
|
(227
|
)
|
|
|
3,488,990
|
|
|
2,837,441
|
|
|
651,549
|
|
|
23
|
|
Operating expenses
|
|
296,215
|
|
|
316,261
|
|
|
(20,046
|
)
|
|
(6
|
)
|
Selling, general and administrative expenses
|
|
68,675
|
|
|
59,803
|
|
|
8,872
|
|
|
15
|
|
Depreciation and amortization
|
|
110,379
|
|
|
105,282
|
|
|
5,097
|
|
|
5
|
|
Asset impairment
|
|
—
|
|
|
19,247
|
|
|
(19,247
|
)
|
|
(100
|
)
|
Total operating costs and expenses
|
|
3,964,259
|
|
|
3,338,034
|
|
|
626,225
|
|
|
19
|
|
Income from operations
|
|
506,977
|
|
|
120,830
|
|
|
386,147
|
|
|
320
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Earnings of equity method investments
|
|
1,734
|
|
|
4,053
|
|
|
(2,319
|
)
|
|
(57
|
)
|
Interest income
|
|
2,934
|
|
|
176
|
|
|
2,758
|
|
|
1,567
|
|
Interest expense
|
|
(32,324
|
)
|
|
(29,645
|
)
|
|
(2,679
|
)
|
|
9
|
|
Gain (loss) on foreign currency transactions
|
|
(325
|
)
|
|
10,328
|
|
|
(10,653
|
)
|
|
(103
|
)
|
Other, net
|
|
1,364
|
|
|
327
|
|
|
1,037
|
|
|
317
|
|
|
|
(26,617
|
)
|
|
(14,761
|
)
|
|
(11,856
|
)
|
|
80
|
|
Income before income taxes
|
|
480,360
|
|
|
106,069
|
|
|
374,291
|
|
|
353
|
|
Income tax expense
|
|
117,447
|
|
|
31,996
|
|
|
85,451
|
|
|
267
|
|
Net income
|
|
362,913
|
|
|
74,073
|
|
|
288,840
|
|
|
390
|
|
Less net income attributable to noncontrolling interest
|
|
17,406
|
|
|
16,306
|
|
|
1,100
|
|
|
7
|
|
Net income attributable to HollyFrontier stockholders
|
|
$
|
345,507
|
|
|
$
|
57,767
|
|
|
$
|
287,740
|
|
|
498
|
%
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to HollyFrontier stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.96
|
|
|
$
|
0.33
|
|
|
$
|
1.63
|
|
|
494
|
%
|
Diluted
|
|
$
|
1.94
|
|
|
$
|
0.33
|
|
|
$
|
1.61
|
|
|
488
|
%
|
Cash dividends declared per common share
|
|
$
|
0.33
|
|
|
$
|
0.33
|
|
|
$
|
—
|
|
|
—
|
%
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
175,899
|
|
|
176,147
|
|
|
(248
|
)
|
|
—
|
%
|
Diluted
|
|
177,586
|
|
|
176,302
|
|
|
1,284
|
|
|
1
|
%
|
EBITDA
|
|
$
|
602,723
|
|
|
$
|
224,514
|
|
|
$
|
378,209
|
|
|
168
|
%
|
Adjusted EBITDA
|
|
$
|
485,256
|
|
|
$
|
306,069
|
|
|
$
|
179,187
|
|
|
59
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
Change from 2017
|
|
|
2018
|
|
2017
|
|
Change
|
|
Percent
|
|
|
(In thousands, except per share data)
|
Sales and other revenues
|
|
$
|
8,599,663
|
|
|
$
|
6,539,347
|
|
|
$
|
2,060,316
|
|
|
32
|
%
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of products sold:
|
|
|
|
|
|
|
|
|
Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)
|
|
6,943,041
|
|
|
5,394,634
|
|
|
1,548,407
|
|
|
29
|
|
Lower of cost or market inventory valuation adjustment
|
|
(210,764
|
)
|
|
95,805
|
|
|
(306,569
|
)
|
|
(320
|
)
|
|
|
6,732,277
|
|
|
5,490,439
|
|
|
1,241,838
|
|
|
23
|
|
Operating expenses
|
|
616,503
|
|
|
623,987
|
|
|
(7,484
|
)
|
|
(1
|
)
|
Selling, general and administrative expenses
|
|
133,339
|
|
|
117,051
|
|
|
16,288
|
|
|
14
|
|
Depreciation and amortization
|
|
214,720
|
|
|
201,322
|
|
|
13,398
|
|
|
7
|
|
Asset impairment
|
|
—
|
|
|
19,247
|
|
|
(19,247
|
)
|
|
(100
|
)
|
Total operating costs and expenses
|
|
7,696,839
|
|
|
6,452,046
|
|
|
1,244,793
|
|
|
19
|
|
Income from operations
|
|
902,824
|
|
|
87,301
|
|
|
815,523
|
|
|
934
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Earnings of equity method investments
|
|
3,013
|
|
|
5,893
|
|
|
(2,880
|
)
|
|
(49
|
)
|
Interest income
|
|
5,524
|
|
|
995
|
|
|
4,529
|
|
|
455
|
|
Interest expense
|
|
(65,047
|
)
|
|
(56,803
|
)
|
|
(8,244
|
)
|
|
15
|
|
Loss on early extinguishment of debt
|
|
—
|
|
|
(12,225
|
)
|
|
12,225
|
|
|
(100
|
)
|
Gain on foreign currency transactions
|
|
5,235
|
|
|
395
|
|
|
4,840
|
|
|
1,225
|
|
Gain on foreign currency swap contracts
|
|
—
|
|
|
24,545
|
|
|
(24,545
|
)
|
|
(100
|
)
|
Other, net
|
|
2,710
|
|
|
1,397
|
|
|
1,313
|
|
|
94
|
|
|
|
(48,565
|
)
|
|
(35,803
|
)
|
|
(12,762
|
)
|
|
36
|
|
Income before income taxes
|
|
854,259
|
|
|
51,498
|
|
|
802,761
|
|
|
1,559
|
|
Income tax expense
|
|
202,484
|
|
|
15,207
|
|
|
187,277
|
|
|
1,232
|
|
Net income
|
|
651,775
|
|
|
36,291
|
|
|
615,484
|
|
|
1,696
|
|
Less net income attributable to noncontrolling interest
|
|
38,177
|
|
|
23,992
|
|
|
14,185
|
|
|
59
|
|
Net income attributable to HollyFrontier stockholders
|
|
$
|
613,598
|
|
|
$
|
12,299
|
|
|
$
|
601,299
|
|
|
4,889
|
%
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to HollyFrontier stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.47
|
|
|
$
|
0.07
|
|
|
$
|
3.40
|
|
|
4,857
|
%
|
Diluted
|
|
$
|
3.44
|
|
|
$
|
0.07
|
|
|
$
|
3.37
|
|
|
4,814
|
%
|
Cash dividends declared per common share
|
|
$
|
0.66
|
|
|
$
|
0.66
|
|
|
$
|
—
|
|
|
—
|
%
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
176,256
|
|
|
176,141
|
|
|
115
|
|
|
—
|
%
|
Diluted
|
|
177,820
|
|
|
176,490
|
|
|
1,330
|
|
|
1
|
%
|
EBITDA
|
|
$
|
1,090,325
|
|
|
$
|
284,636
|
|
|
$
|
805,689
|
|
|
283
|
%
|
Adjusted EBITDA
|
|
$
|
800,911
|
|
|
$
|
391,529
|
|
|
$
|
409,382
|
|
|
105
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
2018
|
|
2017
|
|
|
(In thousands)
|
Cash and cash equivalents
|
|
$
|
979,872
|
|
|
$
|
630,757
|
Working capital
|
|
$
|
2,146,625
|
|
|
$
|
1,640,118
|
Total assets
|
|
$
|
11,281,352
|
|
|
$
|
10,692,154
|
Long-term debt
|
|
$
|
2,387,759
|
|
|
$
|
2,498,993
|
Total equity
|
|
$
|
6,403,643
|
|
|
$
|
5,896,940
|
|
|
|
|
|
|
|
|
Segment Information
In the fourth quarter of 2017, we revised our reportable segments to
align with certain changes in how our chief operating decision maker
manages and allocates resources to our business. Accordingly, our Tulsa
refineries' lubricants operations, previously reported in the Refining
segment, are now combined with the operations of our Petro-Canada
Lubricants business (acquired February 1, 2017) and reported in the
Lubricants and Specialty Products segment. Segment information for the
three and six months ended June 30, 2017 has been retrospectively
adjusted to reflect our current segment presentation.
Our operations are organized into three reportable segments, Refining,
Lubricants and Specialty Products and HEP. Our operations that are not
included in the Refining, Lubricants and Specialty Products and HEP
segments are included in Corporate and Other. Intersegment transactions
are eliminated in our consolidated financial statements and are included
in Eliminations. Corporate and Other and Eliminations are aggregated and
presented under Corporate, Other and Eliminations column. The Refining
segment includes the operations of our El Dorado, Tulsa, Navajo,
Cheyenne and Woods Cross refineries and HFC Asphalt (aggregated as a
reportable segment). Refining activities involve the purchase and
refining of crude oil and wholesale and branded marketing of refined
products, such as gasoline, diesel fuel and jet fuel. These petroleum
products are primarily marketed in the Mid-Continent, Southwest and
Rocky Mountain regions of the United States. HFC Asphalt operates
various terminals in Arizona, New Mexico and Oklahoma.
The Lubricants and Specialty Products segment involves PCLI's production
operations, located in Mississauga, Ontario, that
include lubricant products such as base oils, white oils, specialty
products and finished lubricants and the operations of our Petro-Canada
Lubricants business that includes the marketing of products to both
retail and wholesale outlets through a global sales network with
locations in Canada, the United States, Europe and China. Additionally,
the Lubricants and Specialty Products segment includes specialty
lubricant products produced at our Tulsa refineries that are marketed
throughout North America and are distributed in Central and South
America.
The HEP segment involves all of the operations of HEP, a consolidated
variable interest entity, which owns and operates logistics assets
consisting of petroleum product and crude oil pipelines, terminals,
tankage, loading rack facilities and refinery process units in the
Mid-Continent, Southwest and Rocky Mountain regions of the United
States. The HEP segment also includes a 75% interest in UNEV Pipeline,
LLC (an HEP consolidated subsidiary), and a 50% ownership interest in
each of Osage Pipeline Company, LLC and Cheyenne Pipeline LLC. Revenues
from the HEP segment are earned through transactions with unaffiliated
parties for pipeline transportation, rental and terminalling operations
as well as revenues relating to pipeline transportation services
provided for our refining operations. Due to certain basis differences,
our reported amounts for the HEP segment may not agree to amounts
reported in HEP's periodic public filings.
|
|
|
|
|
|
|
|
|
|
|
|
|
Refining
|
|
Lubricants
and Specialty
Products
|
|
HEP
|
|
Corporate,
Other and
Eliminations
|
|
Consolidated
Total
|
|
|
(In thousands)
|
Three Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
3,987,115
|
|
|
$
|
459,405
|
|
|
$
|
24,746
|
|
|
$
|
(30
|
)
|
|
$
|
4,471,236
|
|
Intersegment revenues
|
|
$
|
91,866
|
|
|
$
|
8,284
|
|
|
$
|
94,014
|
|
|
$
|
(194,164
|
)
|
|
$
|
—
|
|
|
|
$
|
4,078,981
|
|
|
$
|
467,689
|
|
|
$
|
118,760
|
|
|
$
|
(194,194
|
)
|
|
$
|
4,471,236
|
|
Cost of products sold (exclusive of lower of cost or market
inventory)
|
|
$
|
3,394,853
|
|
|
$
|
373,141
|
|
|
$
|
—
|
|
|
$
|
(172,078
|
)
|
|
$
|
3,595,916
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
(106,926
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(106,926
|
)
|
Operating expenses
|
|
$
|
262,558
|
|
|
$
|
19,905
|
|
|
$
|
34,533
|
|
|
$
|
(20,781
|
)
|
|
$
|
296,215
|
|
Selling, general and administrative expenses
|
|
$
|
26,201
|
|
|
$
|
35,257
|
|
|
$
|
2,673
|
|
|
$
|
4,544
|
|
|
$
|
68,675
|
|
Depreciation and amortization
|
|
$
|
72,989
|
|
|
$
|
10,020
|
|
|
$
|
24,609
|
|
|
$
|
2,761
|
|
|
$
|
110,379
|
|
Income (loss) from operations
|
|
$
|
429,306
|
|
|
$
|
29,366
|
|
|
$
|
56,945
|
|
|
$
|
(8,640
|
)
|
|
$
|
506,977
|
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,734
|
|
|
$
|
—
|
|
|
$
|
1,734
|
|
Capital expenditures
|
|
$
|
42,188
|
|
|
$
|
16,842
|
|
|
$
|
18,957
|
|
|
$
|
1,950
|
|
|
$
|
79,937
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
2,999,054
|
|
|
$
|
444,000
|
|
|
$
|
15,990
|
|
|
$
|
(180
|
)
|
|
$
|
3,458,864
|
|
Intersegment revenues
|
|
$
|
105,545
|
|
|
$
|
—
|
|
|
$
|
93,153
|
|
|
$
|
(198,698
|
)
|
|
$
|
—
|
|
|
|
$
|
3,104,599
|
|
|
$
|
444,000
|
|
|
$
|
109,143
|
|
|
$
|
(198,878
|
)
|
|
$
|
3,458,864
|
|
Cost of products sold (exclusive of lower of cost or market
inventory)
|
|
$
|
2,615,937
|
|
|
$
|
317,921
|
|
|
$
|
—
|
|
|
$
|
(180,399
|
)
|
|
$
|
2,753,459
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
82,794
|
|
|
$
|
1,188
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
83,982
|
|
Operating expenses
|
|
$
|
242,713
|
|
|
$
|
55,750
|
|
|
$
|
34,160
|
|
|
$
|
(16,362
|
)
|
|
$
|
316,261
|
|
Selling, general and administrative expenses
|
|
$
|
22,654
|
|
|
$
|
27,769
|
|
|
$
|
2,618
|
|
|
$
|
6,762
|
|
|
$
|
59,803
|
|
Depreciation and amortization
|
|
$
|
75,426
|
|
|
$
|
7,532
|
|
|
$
|
19,541
|
|
|
$
|
2,783
|
|
|
$
|
105,282
|
|
Asset impairment
|
|
$
|
19,247
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,247
|
|
Income (loss) from operations
|
|
$
|
45,828
|
|
|
$
|
33,840
|
|
|
$
|
52,824
|
|
|
$
|
(11,662
|
)
|
|
$
|
120,830
|
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,053
|
|
|
$
|
—
|
|
|
$
|
4,053
|
|
Capital expenditures
|
|
$
|
51,825
|
|
|
$
|
9,122
|
|
|
$
|
12,259
|
|
|
$
|
4,087
|
|
|
$
|
77,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refining
|
|
Lubricants
and Specialty
Products
|
|
HEP
|
|
Corporate,
Other and
Eliminations
|
|
Consolidated
Total
|
|
|
(In thousands)
|
|
Six Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
7,645,262
|
|
|
$
|
902,271
|
|
|
$
|
52,203
|
|
|
$
|
(73
|
)
|
|
$
|
8,599,663
|
|
Intersegment revenues
|
|
$
|
182,904
|
|
|
$
|
10,258
|
|
|
$
|
195,441
|
|
|
$
|
(388,603
|
)
|
|
$
|
—
|
|
|
|
$
|
7,828,166
|
|
|
$
|
912,529
|
|
|
$
|
247,644
|
|
|
$
|
(388,676
|
)
|
|
$
|
8,599,663
|
|
Cost of products sold (exclusive of lower of cost or market
inventory)
|
|
$
|
6,606,557
|
|
|
$
|
680,672
|
|
|
$
|
—
|
|
|
$
|
(344,188
|
)
|
|
$
|
6,943,041
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
(210,764
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(210,764
|
)
|
Operating expenses
|
|
$
|
502,405
|
|
|
$
|
84,813
|
|
|
$
|
70,736
|
|
|
$
|
(41,451
|
)
|
|
$
|
616,503
|
|
Selling, general and administrative expenses
|
|
$
|
52,572
|
|
|
$
|
65,911
|
|
|
$
|
5,795
|
|
|
$
|
9,061
|
|
|
$
|
133,339
|
|
Depreciation and amortization
|
|
$
|
140,164
|
|
|
$
|
18,884
|
|
|
$
|
49,750
|
|
|
$
|
5,922
|
|
|
$
|
214,720
|
|
Income (loss) from operations
|
|
$
|
737,232
|
|
|
$
|
62,249
|
|
|
$
|
121,363
|
|
|
$
|
(18,020
|
)
|
|
$
|
902,824
|
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,013
|
|
|
$
|
—
|
|
|
$
|
3,013
|
|
Capital expenditures
|
|
$
|
84,962
|
|
|
$
|
25,380
|
|
|
$
|
31,570
|
|
|
$
|
7,565
|
|
|
$
|
149,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
5,741,781
|
|
|
$
|
765,269
|
|
|
$
|
32,599
|
|
|
$
|
(302
|
)
|
|
$
|
6,539,347
|
|
Intersegment revenues
|
|
$
|
185,453
|
|
|
$
|
—
|
|
|
$
|
182,178
|
|
|
$
|
(367,631
|
)
|
|
$
|
—
|
|
|
|
$
|
5,927,234
|
|
|
$
|
765,269
|
|
|
$
|
214,777
|
|
|
$
|
(367,933
|
)
|
|
$
|
6,539,347
|
|
Cost of products sold (exclusive of lower of cost or market
inventory)
|
|
$
|
5,175,091
|
|
|
$
|
548,702
|
|
|
$
|
—
|
|
|
$
|
(329,159
|
)
|
|
$
|
5,394,634
|
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
94,325
|
|
|
$
|
1,480
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
95,805
|
|
Operating expenses
|
|
$
|
497,084
|
|
|
$
|
95,069
|
|
|
$
|
66,712
|
|
|
$
|
(34,878
|
)
|
|
$
|
623,987
|
|
Selling, general and administrative expenses
|
|
$
|
45,019
|
|
|
$
|
41,082
|
|
|
$
|
5,255
|
|
|
$
|
25,695
|
|
|
$
|
117,051
|
|
Depreciation and amortization
|
|
$
|
144,864
|
|
|
$
|
12,836
|
|
|
$
|
37,914
|
|
|
$
|
5,708
|
|
|
$
|
201,322
|
|
Asset impairment
|
|
$
|
19,247
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,247
|
|
Income (loss) from operations
|
|
$
|
(48,396
|
)
|
|
$
|
66,100
|
|
|
$
|
104,896
|
|
|
$
|
(35,299
|
)
|
|
$
|
87,301
|
|
Earnings of equity method investments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,893
|
|
|
$
|
—
|
|
|
$
|
5,893
|
|
Capital expenditures
|
|
$
|
99,259
|
|
|
$
|
10,957
|
|
|
$
|
20,524
|
|
|
$
|
6,310
|
|
|
$
|
137,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
8,223
|
|
|
$
|
92,483
|
|
|
$
|
6,656
|
|
|
$
|
872,510
|
|
|
$
|
979,872
|
|
Total assets
|
|
$
|
7,020,880
|
|
|
$
|
1,402,189
|
|
|
$
|
2,154,741
|
|
|
$
|
703,542
|
|
|
$
|
11,281,352
|
|
Long-term debt
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,395,599
|
|
|
$
|
992,160
|
|
|
$
|
2,387,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
7,488
|
|
|
$
|
41,756
|
|
|
$
|
7,776
|
|
|
$
|
573,737
|
|
|
$
|
630,757
|
|
Total assets
|
|
$
|
6,474,666
|
|
|
$
|
1,610,472
|
|
|
$
|
2,191,984
|
|
|
$
|
415,032
|
|
|
$
|
10,692,154
|
|
Long-term debt
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,507,308
|
|
|
$
|
991,685
|
|
|
$
|
2,498,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
In the fourth quarter of 2017, we revised the following refining segment
operating data computations: refinery gross margin; net operating
margin; and operating expenses to better align with similar measurements
provided by other companies in our industry and to facilitate comparison
of our refining performance relative to our peers. Effective with this
change, these measurements are now inclusive of all refining segment
activities, including HFC Asphalt operations and revenues and costs
related to products purchased for resale and excess crude oil sales.
Refining segment operating data for the three and six months ended June
30, 2017 has been retrospectively adjusted to reflect our current
presentation.
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Mid-Continent Region (El Dorado and Tulsa Refineries)
|
|
|
|
|
|
|
|
|
|
Crude charge (BPD) (1) |
|
289,820
|
|
|
290,460
|
|
|
258,930
|
|
|
|
256,370
|
|
Refinery throughput (BPD) (2) |
|
300,030
|
|
|
304,840
|
|
|
273,200
|
|
|
|
263,730
|
|
Sales of produced refined products (BPD) (3) |
|
270,710
|
|
|
282,950
|
|
|
261,950
|
|
|
|
255,900
|
|
Refinery utilization (4) |
|
111.5
|
%
|
|
111.7
|
%
|
|
99.6
|
%
|
|
|
98.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Average per produced barrel (5) |
|
|
|
|
|
|
|
|
|
Refinery gross margin (6) |
|
$
|
11.90
|
|
|
$
|
9.10
|
|
|
$
|
11.30
|
|
|
$
|
7.73
|
|
Refinery operating expenses (7) |
|
4.89
|
|
|
4.51
|
|
|
5.02
|
|
|
|
5.24
|
|
Net operating margin
|
|
$
|
7.01
|
|
|
$
|
4.59
|
|
|
$
|
6.28
|
|
|
$
|
2.49
|
|
|
|
|
|
|
|
|
|
|
|
Refinery operating expenses per throughput barrel (8) |
|
$
|
4.41
|
|
|
$
|
4.18
|
|
|
$
|
4.82
|
|
|
$
|
4.90
|
|
|
|
|
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
|
|
|
|
|
Sweet crude oil
|
|
58
|
%
|
|
62
|
%
|
|
51
|
%
|
|
|
60
|
%
|
Sour crude oil
|
|
23
|
%
|
|
18
|
%
|
|
26
|
%
|
|
|
19
|
%
|
Heavy sour crude oil
|
|
16
|
%
|
|
15
|
%
|
|
18
|
%
|
|
|
15
|
%
|
Other feedstocks and blends
|
|
3
|
%
|
|
5
|
%
|
|
5
|
%
|
|
|
6
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
|
Gasolines
|
|
49
|
%
|
|
50
|
%
|
|
51
|
%
|
|
|
50
|
%
|
Diesel fuels
|
|
35
|
%
|
|
34
|
%
|
|
33
|
%
|
|
|
32
|
%
|
Jet fuels
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
|
7
|
%
|
Fuel oil
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
|
1
|
%
|
Asphalt
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|
|
3
|
%
|
Base oils
|
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
|
|
5
|
%
|
LPG and other
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
|
2
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Southwest Region (Navajo Refinery)
|
|
|
|
|
|
|
|
|
|
Crude charge (BPD) (1) |
|
111,900
|
|
|
102,120
|
|
|
109,020
|
|
|
|
88,370
|
|
Refinery throughput (BPD) (2) |
|
120,340
|
|
|
112,720
|
|
|
118,510
|
|
|
|
96,200
|
|
Sales of produced refined products (BPD) (3) |
|
118,240
|
|
|
113,490
|
|
|
120,240
|
|
|
|
96,280
|
|
Refinery utilization (4) |
|
111.9
|
%
|
|
102.1
|
%
|
|
109.0
|
%
|
|
|
88.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Average per produced barrel (5) |
|
|
|
|
|
|
|
|
|
Refinery gross margin (6) |
|
$
|
21.04
|
|
|
$
|
11.56
|
|
|
$
|
15.38
|
|
|
$
|
10.53
|
|
Refinery operating expenses (7) |
|
5.34
|
|
|
5.20
|
|
|
4.68
|
|
|
|
6.10
|
|
Net operating margin
|
|
$
|
15.70
|
|
|
$
|
6.36
|
|
|
$
|
10.70
|
|
|
$
|
4.43
|
|
|
|
|
|
|
|
|
|
|
|
Refinery operating expenses per throughput barrel (8) |
|
$
|
5.25
|
|
|
$
|
5.24
|
|
|
$
|
4.75
|
|
|
$
|
6.11
|
|
|
|
|
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
|
|
|
|
|
Sweet crude oil
|
|
34
|
%
|
|
25
|
%
|
|
32
|
%
|
|
|
22
|
%
|
Sour crude oil
|
|
59
|
%
|
|
66
|
%
|
|
60
|
%
|
|
|
70
|
%
|
Other feedstocks and blends
|
|
7
|
%
|
|
9
|
%
|
|
8
|
%
|
|
|
8
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
|
Gasolines
|
|
47
|
%
|
|
49
|
%
|
|
51
|
%
|
|
|
50
|
%
|
Diesel fuels
|
|
41
|
%
|
|
41
|
%
|
|
39
|
%
|
|
|
39
|
%
|
Fuel oil
|
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
|
|
3
|
%
|
Asphalt
|
|
5
|
%
|
|
5
|
%
|
|
4
|
%
|
|
|
5
|
%
|
LPG and other
|
|
4
|
%
|
|
3
|
%
|
|
4
|
%
|
|
|
3
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
|
|
|
|
|
|
|
|
Crude charge (BPD) (1) |
|
61,760
|
|
|
74,510
|
|
|
71,560
|
|
|
|
74,610
|
|
Refinery throughput (BPD) (2) |
|
69,830
|
|
|
80,740
|
|
|
79,570
|
|
|
|
82,240
|
|
Sales of produced refined products (BPD) (3) |
|
64,870
|
|
|
76,420
|
|
|
77,460
|
|
|
|
78,710
|
|
Refinery utilization (4) |
|
63.7
|
%
|
|
76.8
|
%
|
|
73.8
|
%
|
|
|
76.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Average per produced barrel (5) |
|
|
|
|
|
|
|
|
|
Refinery gross margin (6) |
|
$
|
27.89
|
|
|
$
|
19.40
|
|
|
$
|
25.05
|
|
|
$
|
14.79
|
|
Refinery operating expenses (7) |
|
14.34
|
|
|
10.41
|
|
|
11.58
|
|
|
|
10.30
|
|
Net operating margin
|
|
$
|
13.55
|
|
|
$
|
8.99
|
|
|
$
|
13.47
|
|
|
$
|
4.49
|
|
|
|
|
|
|
|
|
|
|
|
Refinery operating expenses per throughput barrel (8) |
|
$
|
13.33
|
|
|
$
|
9.85
|
|
|
$
|
11.28
|
|
|
$
|
9.86
|
|
|
|
|
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
|
|
|
|
|
Sweet crude oil
|
|
18
|
%
|
|
32
|
%
|
|
26
|
%
|
|
|
35
|
%
|
Heavy sour crude oil
|
|
51
|
%
|
|
39
|
%
|
|
43
|
%
|
|
|
36
|
%
|
Black wax crude oil
|
|
20
|
%
|
|
21
|
%
|
|
21
|
%
|
|
|
20
|
%
|
Other feedstocks and blends
|
|
11
|
%
|
|
8
|
%
|
|
10
|
%
|
|
|
9
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
|
Gasolines
|
|
57
|
%
|
|
59
|
%
|
|
57
|
%
|
|
|
58
|
%
|
Diesel fuels
|
|
32
|
%
|
|
33
|
%
|
|
33
|
%
|
|
|
33
|
%
|
Fuel oil
|
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
|
|
2
|
%
|
Asphalt
|
|
5
|
%
|
|
4
|
%
|
|
4
|
%
|
|
|
5
|
%
|
LPG and other
|
|
3
|
%
|
|
2
|
%
|
|
4
|
%
|
|
|
2
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Crude charge (BPD) (1) |
|
463,480
|
|
|
467,090
|
|
|
439,510
|
|
|
|
419,350
|
|
Refinery throughput (BPD) (2) |
|
490,200
|
|
|
498,300
|
|
|
471,280
|
|
|
|
442,170
|
|
Sales of produced refined products (BPD) (3) |
|
453,830
|
|
|
472,870
|
|
|
459,640
|
|
|
|
430,890
|
|
Refinery utilization (4) |
|
101.4
|
%
|
|
102.2
|
%
|
|
96.2
|
%
|
|
|
91.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Average per produced barrel (5) |
|
|
|
|
|
|
|
|
|
Refinery gross margin (6) |
|
$
|
16.57
|
|
|
$
|
11.36
|
|
|
$
|
14.68
|
|
|
$
|
9.64
|
|
Refinery operating expenses (7) |
|
6.36
|
|
|
5.64
|
|
|
6.04
|
|
|
|
6.37
|
|
Net operating margin
|
|
$
|
10.21
|
|
|
$
|
5.72
|
|
|
$
|
8.64
|
|
|
$
|
3.27
|
|
|
|
|
|
|
|
|
|
|
|
Refinery operating expenses per throughput barrel (8) |
|
$
|
5.89
|
|
|
$
|
5.35
|
|
|
$
|
5.89
|
|
|
$
|
6.07
|
|
|
|
|
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
|
|
|
|
|
Sweet crude oil
|
|
46
|
%
|
|
49
|
%
|
|
42
|
%
|
|
|
48
|
%
|
Sour crude oil
|
|
29
|
%
|
|
26
|
%
|
|
30
|
%
|
|
|
26
|
%
|
Heavy sour crude oil
|
|
17
|
%
|
|
16
|
%
|
|
18
|
%
|
|
|
15
|
%
|
Black wax crude oil
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|
|
4
|
%
|
Other feedstocks and blends
|
|
5
|
%
|
|
6
|
%
|
|
7
|
%
|
|
|
7
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Sales of produced refined products:
|
|
|
|
|
|
|
|
|
|
Gasolines
|
|
50
|
%
|
|
51
|
%
|
|
52
|
%
|
|
|
51
|
%
|
Diesel fuels
|
|
36
|
%
|
|
35
|
%
|
|
35
|
%
|
|
|
34
|
%
|
Jet fuels
|
|
4
|
%
|
|
4
|
%
|
|
3
|
%
|
|
|
5
|
%
|
Fuel oil
|
|
1
|
%
|
|
1
|
%
|
|
2
|
%
|
|
|
1
|
%
|
Asphalt
|
|
4
|
%
|
|
4
|
%
|
|
3
|
%
|
|
|
4
|
%
|
Base oils
|
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
|
|
3
|
%
|
LPG and other
|
|
3
|
%
|
|
2
|
%
|
|
3
|
%
|
|
|
2
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Crude charge represents the barrels per day of crude oil processed
at our refineries.
|
(2)
|
|
Refinery throughput represents the barrels per day of crude and
other refinery feedstocks input to the crude units and other
conversion units at our refineries.
|
(3)
|
|
Represents barrels sold of refined products produced at our
refineries (including HFC Asphalt) and does not include volumes of
refined products purchased for resale or volumes of excess crude oil
sold.
|
(4)
|
|
Represents crude charge divided by total crude capacity ("BPSD").
Our consolidated crude capacity is 457,000 BPSD.
|
(5)
|
|
Represents average amount per produced barrel sold, which is a
non-GAAP measure. Reconciliations to amounts reported under GAAP are
provided under “Reconciliations to Amounts Reported Under Generally
Accepted Accounting Principles” below.
|
(6)
|
|
Excludes lower of cost or market inventory valuation adjustments of
$106.9 million and $84.0 million for the three months ended June 30,
2018 and 2017, respectively, and $210.8 million and $95.8 million
for the six months ended June 30, 2018 and 2017, respectively.
|
(7)
|
|
Represents total refining segment operating expenses, exclusive of
depreciation and amortization, divided by sales volumes of refined
products produced at our refineries.
|
(8)
|
|
Represents total refining segment operating expenses, exclusive of
depreciation and amortization, divided by refinery throughput.
|
|
|
|
Lubricants and Specialty Products Segment Operating Data
We acquired our Petro-Canada Lubricants business on February 1, 2017.
For the six months ended June 30, 2017 our lubricants and specialty
product operating results reflect the operations of our Petro-Canada
Lubricants business for the period February 1, 2017 through June 30,
2017.
The following table sets forth information about our lubricants and
specialty products operations.
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Lubricants and Specialty Products
|
|
|
|
|
|
|
|
|
Throughput (BPD)
|
|
18,610
|
|
|
21,470
|
|
|
20,100
|
|
|
21,750
|
|
Sales of produced products (BPD)
|
|
31,000
|
|
|
36,300
|
|
|
31,400
|
|
|
36,080
|
|
|
|
|
|
|
|
|
|
|
Sales of produced products:
|
|
|
|
|
|
|
|
|
Finished products
|
|
48
|
%
|
|
44
|
%
|
|
48
|
%
|
|
43
|
%
|
Base oils
|
|
32
|
%
|
|
32
|
%
|
|
32
|
%
|
|
34
|
%
|
Other
|
|
20
|
%
|
|
24
|
%
|
|
20
|
%
|
|
23
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our Lubricants and Specialty Products segment includes base oil
production activities, by-product sales to third parties and
intra-segment base oil sales to rack forward, referred to as “Rack
Back.“ “Rack Forward“ includes the purchase of base oils and the
blending, packaging, marketing and distribution and sales of finished
lubricants and specialty products to third parties. 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, 2018
|
|
|
|
|
|
|
|
|
Sales and other revenues
|
|
$
|
175,642
|
|
|
$
|
425,461
|
|
|
$
|
(133,414
|
)
|
|
$
|
467,689
|
Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)
|
|
$
|
153,040
|
|
|
$
|
353,515
|
|
|
$
|
(133,414
|
)
|
|
$
|
373,141
|
Operating expenses
|
|
$
|
27,210
|
|
|
$
|
(7,305
|
)
|
|
$
|
—
|
|
|
$
|
19,905
|
Selling, general and administrative expenses
|
|
$
|
7,888
|
|
|
$
|
27,369
|
|
|
$
|
—
|
|
|
$
|
35,257
|
Depreciation and amortization
|
|
$
|
6,013
|
|
|
$
|
4,007
|
|
|
$
|
—
|
|
|
$
|
10,020
|
Income (loss) from operations
|
|
$
|
(18,509
|
)
|
|
$
|
47,875
|
|
|
$
|
—
|
|
|
$
|
29,366
|
EBITDA
|
|
$
|
(12,496
|
)
|
|
$
|
51,882
|
|
|
$
|
—
|
|
|
$
|
39,386
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2017
|
|
|
|
|
|
|
|
|
Sales and other revenues
|
|
$
|
160,786
|
|
|
$
|
394,485
|
|
|
$
|
(111,271
|
)
|
|
$
|
444,000
|
Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)
|
|
$
|
129,832
|
|
|
$
|
299,360
|
|
|
$
|
(111,271
|
)
|
|
$
|
317,921
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
—
|
|
|
$
|
1,188
|
|
|
$
|
—
|
|
|
$
|
1,188
|
Operating expenses
|
|
$
|
22,934
|
|
|
$
|
32,816
|
|
|
$
|
—
|
|
|
$
|
55,750
|
Selling, general and administrative expenses
|
|
$
|
6,237
|
|
|
$
|
21,532
|
|
|
$
|
—
|
|
|
$
|
27,769
|
Depreciation and amortization
|
|
$
|
5,288
|
|
|
$
|
2,244
|
|
|
$
|
—
|
|
|
$
|
7,532
|
Income (loss) from operations
|
|
$
|
(3,505
|
)
|
|
$
|
37,345
|
|
|
$
|
—
|
|
|
$
|
33,840
|
EBITDA
|
|
$
|
1,783
|
|
|
$
|
39,589
|
|
|
$
|
—
|
|
|
$
|
41,372
|
|
|
|
|
|
|
|
|
|
|
|
Rack Back
(1)
|
|
Rack Forward
(2)
|
|
Eliminations
(3)
|
|
Total Lubricants
and Specialty
Products
|
|
|
(In thousands)
|
Six months ended June 30, 2018
|
|
|
|
|
|
|
|
|
Sales and other revenues
|
|
$
|
349,074
|
|
|
$
|
824,500
|
|
|
$
|
(261,045
|
)
|
|
$
|
912,529
|
Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)
|
|
$
|
305,094
|
|
|
$
|
636,623
|
|
|
$
|
(261,045
|
)
|
|
$
|
680,672
|
Operating expenses
|
|
$
|
55,981
|
|
|
$
|
28,832
|
|
|
$
|
—
|
|
|
$
|
84,813
|
Selling, general and administrative expenses
|
|
$
|
14,707
|
|
|
$
|
51,204
|
|
|
$
|
—
|
|
|
$
|
65,911
|
Depreciation and amortization
|
|
$
|
11,641
|
|
|
$
|
7,243
|
|
|
$
|
—
|
|
|
$
|
18,884
|
Income (loss) from operations
|
|
$
|
(38,349
|
)
|
|
$
|
100,598
|
|
|
$
|
—
|
|
|
$
|
62,249
|
EBITDA
|
|
$
|
(26,708
|
)
|
|
$
|
107,841
|
|
|
$
|
—
|
|
|
$
|
81,133
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2017
|
|
|
|
|
|
|
|
|
Sales and other revenues
|
|
$
|
267,825
|
|
|
$
|
684,338
|
|
|
$
|
(186,894
|
)
|
|
$
|
765,269
|
Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)
|
|
$
|
224,270
|
|
|
$
|
511,326
|
|
|
$
|
(186,894
|
)
|
|
$
|
548,702
|
Lower of cost or market inventory valuation adjustment
|
|
$
|
—
|
|
|
$
|
1,480
|
|
|
$
|
—
|
|
|
$
|
1,480
|
Operating expenses
|
|
$
|
38,561
|
|
|
$
|
56,508
|
|
|
$
|
—
|
|
|
$
|
95,069
|
Selling, general and administrative expenses
|
|
$
|
9,058
|
|
|
$
|
32,024
|
|
|
$
|
—
|
|
|
$
|
41,082
|
Depreciation and amortization
|
|
$
|
9,087
|
|
|
$
|
3,749
|
|
|
$
|
—
|
|
|
$
|
12,836
|
Income (loss) from operations
|
|
$
|
(13,151
|
)
|
|
$
|
79,251
|
|
|
$
|
—
|
|
|
$
|
66,100
|
EBITDA
|
|
$
|
(4,064
|
)
|
|
$
|
83,000
|
|
|
$
|
—
|
|
|
$
|
78,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Rack Back consists of the PCLI base oil production activities,
by-product sales to third parties and intra-segment base oil sales
to rack forward.
|
(2)
|
|
Rack Forward activities include the purchase of base oils from rack
back and the blending, packaging, marketing and distribution and
sales of finished lubricants and specialty products to third parties.
|
(3)
|
|
Intra-segment sales of Rack Back produced base oils to rack forward
are eliminated under the “Eliminations” column.
|
|
|
|
Reconciliations to Amounts Reported Under Generally Accepted
Accounting Principles
Reconciliations of earnings before interest, taxes, depreciation
and amortization (“EBITDA”) and EBITDA excluding special items
("Adjusted EBITDA") to amounts reported under generally accepted
accounting principles ("GAAP") in financial statements.
Earnings before interest, taxes, depreciation and amortization, referred
to as EBITDA, is calculated as net income (loss) attributable to
HollyFrontier stockholders plus (i) interest expense, net of interest
income, (ii) income tax provision, and (iii) depreciation and
amortization. Adjusted EBITDA is calculated as EBITDA plus or minus (i)
lower of cost or market inventory valuation adjustments (ii) our RINs
cost reduction related to our Cheyenne and Woods Cross small refinery
exemptions (iii) Woods Cross refinery outage damages (iv) Woods Cross
refinery estimated insurance claims on outage damages (v) PCLI
acquisition and integration costs (vi) long-lived asset impairment
charges charged to operating expense (vii) incremental cost of products
sold attributable to our PCLI inventory value step-up (viii) loss on
early extinguishment of debt and (ix) gain on foreign currency swap
contracts.
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,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(In thousands)
|
Net income attributable to HollyFrontier stockholders
|
|
$
|
345,507
|
|
|
$
|
57,767
|
|
|
$
|
613,598
|
|
|
$
|
12,299
|
|
Add interest expense
|
|
32,324
|
|
|
29,645
|
|
|
65,047
|
|
|
56,803
|
|
Subtract interest income
|
|
(2,934
|
)
|
|
(176
|
)
|
|
(5,524
|
)
|
|
(995
|
)
|
Add income tax provision
|
|
117,447
|
|
|
31,996
|
|
|
202,484
|
|
|
15,207
|
|
Add depreciation and amortization
|
|
110,379
|
|
|
105,282
|
|
|
214,720
|
|
|
201,322
|
|
EBITDA
|
|
$
|
602,723
|
|
|
$
|
224,514
|
|
|
$
|
1,090,325
|
|
|
$
|
284,636
|
|
Add (subtract) lower of cost or market inventory valuation adjustment
|
|
(106,926
|
)
|
|
83,982
|
|
|
(210,764
|
)
|
|
95,805
|
|
Subtract RINs cost reduction
|
|
(25,267
|
)
|
|
(30,456
|
)
|
|
(96,971
|
)
|
|
(30,456
|
)
|
Add Woods Cross refinery outage damages
|
|
24,566
|
|
|
—
|
|
|
24,566
|
|
|
—
|
|
Subtract Woods Cross refinery estimated insurance claims on outage
damages
|
|
(9,840
|
)
|
|
—
|
|
|
(9,840
|
)
|
|
—
|
|
Add PCLI acquisition and integration costs
|
|
—
|
|
|
3,693
|
|
|
3,595
|
|
|
19,290
|
|
Add long-lived asset impairment
|
|
—
|
|
|
19,247
|
|
|
—
|
|
|
19,247
|
|
Add incremental cost of products sold attributable to PCLI inventory
value step-up
|
|
—
|
|
|
5,089
|
|
|
—
|
|
|
15,327
|
|
Add loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,225
|
|
Subtract gain on foreign currency swap contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,545
|
)
|
Adjusted EBITDA
|
|
$
|
485,256
|
|
|
$
|
306,069
|
|
|
$
|
800,911
|
|
|
$
|
391,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA and Adjusted EBITDA attributable to our Refining segment is
presented below:
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
Refining Segment
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(In thousands)
|
Income (loss) from operations (1) |
|
$
|
429,306
|
|
|
$
|
45,828
|
|
|
$
|
737,232
|
|
|
$
|
(48,396
|
)
|
Add depreciation and amortization
|
|
72,989
|
|
|
75,426
|
|
|
140,164
|
|
|
144,864
|
|
EBITDA
|
|
502,295
|
|
|
121,254
|
|
|
877,396
|
|
|
96,468
|
|
Add (subtract) lower of cost or market inventory valuation adjustment
|
|
(106,926
|
)
|
|
82,794
|
|
|
(210,764
|
)
|
|
94,325
|
|
Subtract RINs cost reduction
|
|
(25,267
|
)
|
|
(30,456
|
)
|
|
(96,971
|
)
|
|
(30,456
|
)
|
Add Woods Cross refinery outage damages
|
|
24,566
|
|
|
—
|
|
|
24,566
|
|
|
—
|
|
Subtract Woods Cross refinery estimated insurance claims on outage
damages
|
|
(9,840
|
)
|
|
—
|
|
|
(9,840
|
)
|
|
—
|
|
Add long-lived asset impairment
|
|
—
|
|
|
19,247
|
|
|
—
|
|
|
19,247
|
|
Adjusted EBITDA
|
|
$
|
384,828
|
|
|
$
|
192,839
|
|
|
$
|
584,387
|
|
|
$
|
179,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Income (loss) from operations of our Refining segment represents
income plus (i) interest expense, net of interest income and (ii)
income tax provision.
|
|
|
|
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, 2018
|
|
|
|
|
|
|
Income (loss) from operations (1) |
|
$
|
(18,509
|
)
|
|
$
|
47,875
|
|
|
$
|
29,366
|
Add depreciation and amortization
|
|
6,013
|
|
|
4,007
|
|
|
10,020
|
EBITDA
|
|
$
|
(12,496
|
)
|
|
$
|
51,882
|
|
|
$
|
39,386
|
Three months ended June 30, 2017
|
|
|
|
|
|
|
Income (loss) from operations (1) |
|
$
|
(3,505
|
)
|
|
$
|
37,345
|
|
|
$
|
33,840
|
Add depreciation and amortization
|
|
5,288
|
|
|
2,244
|
|
|
7,532
|
EBITDA
|
|
$
|
1,783
|
|
|
$
|
39,589
|
|
|
$
|
41,372
|
|
|
|
|
|
|
|
Six months ended June 30, 2018
|
|
|
|
|
|
|
Income (loss) from operations (1) |
|
$
|
(38,349
|
)
|
|
$
|
100,598
|
|
|
$
|
62,249
|
Add depreciation and amortization
|
|
11,641
|
|
|
7,243
|
|
|
18,884
|
EBITDA
|
|
$
|
(26,708
|
)
|
|
$
|
107,841
|
|
|
$
|
81,133
|
Six months ended June 30, 2017
|
|
|
|
|
|
|
Income (loss) from operations (1) |
|
$
|
(13,151
|
)
|
|
$
|
79,251
|
|
|
$
|
66,100
|
Add depreciation and amortization
|
|
9,087
|
|
|
3,749
|
|
|
12,836
|
EBITDA
|
|
$
|
(4,064
|
)
|
|
$
|
83,000
|
|
|
$
|
78,936
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Income (loss) from operations of our Lubricants and Specialty
Products segment represents income (loss) plus (i) interest expense,
net of interest income and (ii) income tax provision.
|
|
|
|
Reconciliations of refinery operating information (non-GAAP
performance measures) to amounts reported under generally accepted
accounting principles in financial statements.
Refinery gross margin and net operating margin are non-GAAP performance
measures that are used by our management and others to compare our
refining performance to that of other companies in our industry. We
believe these margin measures are helpful to investors in evaluating our
refining performance on a relative and absolute basis. Refinery gross
margin per produced barrel sold is total refining segment revenues less
total refining segment cost of products sold, exclusive of lower of cost
or market inventory valuation adjustments, divided by sales volumes of
produced refined products sold. Net operating margin per barrel sold is
the difference between refinery gross margin and refinery operating
expenses per produced barrel sold. These two margins do not include the
non-cash effects of lower of cost or market inventory valuation
adjustments or 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,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(Dollars in thousands, except per barrel amounts)
|
Consolidated
|
|
|
|
|
|
|
|
|
Net operating margin per produced barrel sold
|
|
$
|
10.21
|
|
|
$
|
5.72
|
|
|
$
|
8.64
|
|
|
$
|
3.27
|
|
Add average refinery operating expenses per produced barrel sold
|
|
6.36
|
|
|
5.64
|
|
|
6.04
|
|
|
6.37
|
|
Refinery gross margin per produced barrel sold
|
|
$
|
16.57
|
|
|
$
|
11.36
|
|
|
$
|
14.68
|
|
|
$
|
9.64
|
|
Times produced barrels sold (BPD)
|
|
453,830
|
|
|
472,870
|
|
|
459,640
|
|
|
430,890
|
|
Times number of days in period
|
|
91
|
|
|
91
|
|
|
181
|
|
|
181
|
|
Refining segment gross margin
|
|
$
|
684,317
|
|
|
$
|
488,834
|
|
|
$
|
1,221,300
|
|
|
$
|
751,834
|
|
Subtract rounding
|
|
(189
|
)
|
|
(172
|
)
|
|
309
|
|
|
309
|
|
Total refining segment gross margin
|
|
684,128
|
|
|
488,662
|
|
|
1,221,609
|
|
|
752,143
|
|
Add refining segment cost of products sold
|
|
3,394,853
|
|
|
2,615,937
|
|
|
6,606,557
|
|
|
5,175,091
|
|
Refining segment sales and other revenues
|
|
4,078,981
|
|
|
3,104,599
|
|
|
7,828,166
|
|
|
5,927,234
|
|
Add lubricants and specialty products segment sales and other
revenues
|
|
467,689
|
|
|
444,000
|
|
|
912,529
|
|
|
765,269
|
|
Add HEP segment sales and other revenues
|
|
118,760
|
|
|
109,143
|
|
|
247,644
|
|
|
214,777
|
|
Subtract corporate, other and eliminations
|
|
(194,194
|
)
|
|
(198,878
|
)
|
|
(388,676
|
)
|
|
(367,933
|
)
|
Sales and other revenues
|
|
$
|
4,471,236
|
|
|
$
|
3,458,864
|
|
|
$
|
8,599,663
|
|
|
$
|
6,539,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(Dollars in thousands, except per barrel amounts)
|
Consolidated
|
|
|
|
|
|
|
|
|
Average operating expenses per produced barrel sold
|
|
$
|
6.36
|
|
|
$
|
5.64
|
|
|
$
|
6.04
|
|
|
$
|
6.37
|
|
Times produced barrels sold (BPD)
|
|
453,830
|
|
|
472,870
|
|
|
459,640
|
|
|
430,890
|
|
Times number of days in period
|
|
91
|
|
|
91
|
|
|
181
|
|
|
181
|
|
Refining segment operating expenses
|
|
$
|
262,659
|
|
|
$
|
242,696
|
|
|
$
|
502,497
|
|
|
$
|
496,803
|
|
Add (subtract) rounding
|
|
(101
|
)
|
|
17
|
|
|
(92
|
)
|
|
281
|
|
Total refining segment operating expenses
|
|
262,558
|
|
|
242,713
|
|
|
502,405
|
|
|
497,084
|
|
Add lubricants and specialty products segment operating expenses
|
|
19,905
|
|
|
55,750
|
|
|
84,813
|
|
|
95,069
|
|
Add HEP segment operating expenses
|
|
34,533
|
|
|
34,160
|
|
|
70,736
|
|
|
66,712
|
|
Subtract corporate, other and eliminations
|
|
(20,781
|
)
|
|
(16,362
|
)
|
|
(41,451
|
)
|
|
(34,878
|
)
|
Operating expenses (exclusive of depreciation and amortization)
|
|
$
|
296,215
|
|
|
$
|
316,261
|
|
|
$
|
616,503
|
|
|
$
|
623,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income attributable to
HollyFrontier stockholders to adjusted net income attributable to
HollyFrontier stockholders
Adjusted net income attributable to HollyFrontier stockholders is a
non-GAAP financial measure that excludes non-cash lower of cost or
market inventory valuation adjustments, RINs cost reductions, refinery
outage damages and related estimated insurance claims, asset impairment
costs, PCLI acquisition and integration costs, incremental costs of
products sold due to PCLI inventory value step-up, gain of foreign
currency swap contracts and loss on early extinguishment of debt. 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,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(Dollars in thousands, except per share amounts)
|
Consolidated
|
|
|
|
|
|
|
|
|
GAAP:
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
$
|
480,360
|
|
|
$
|
106,069
|
|
|
$
|
854,259
|
|
|
$
|
51,498
|
|
Income tax expense
|
|
117,447
|
|
|
31,996
|
|
|
202,484
|
|
|
15,207
|
|
Net income
|
|
362,913
|
|
|
74,073
|
|
|
651,775
|
|
|
36,291
|
|
Less net income attributable to noncontrolling interest
|
|
17,406
|
|
|
16,306
|
|
|
38,177
|
|
|
23,992
|
|
Net income attributable to HollyFrontier stockholders
|
|
345,507
|
|
|
57,767
|
|
|
613,598
|
|
|
12,299
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments to arrive at adjusted results:
|
|
|
|
|
|
|
|
|
Lower of cost or market inventory valuation adjustment
|
|
(106,926
|
)
|
|
83,982
|
|
|
(210,764
|
)
|
|
95,805
|
|
RINs cost reduction
|
|
(25,267
|
)
|
|
(30,456
|
)
|
|
(96,971
|
)
|
|
(30,456
|
)
|
Woods Cross refinery outage damages
|
|
24,566
|
|
|
—
|
|
|
24,566
|
|
|
—
|
|
Woods Cross refinery estimated insurance claims on outage damages
|
|
(9,840
|
)
|
|
—
|
|
|
(9,840
|
)
|
|
—
|
|
PCLI acquisition and integration costs
|
|
—
|
|
|
3,693
|
|
|
3,595
|
|
|
19,290
|
|
Long-lived asset impairment
|
|
—
|
|
|
23,249
|
|
|
—
|
|
|
23,249
|
|
Incremental cost of products sold attributable to PCLI inventory
value step up
|
|
—
|
|
|
5,089
|
|
|
—
|
|
|
15,327
|
|
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,225
|
|
Gain on foreign currency swap contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,545
|
)
|
Total adjustments to income before income taxes
|
|
(117,467
|
)
|
|
85,557
|
|
|
(289,414
|
)
|
|
110,895
|
|
Adjustment to income tax expense (1) |
|
(30,872
|
)
|
|
27,354
|
|
|
(71,940
|
)
|
|
32,962
|
|
Adjustment to net income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,702
|
|
Total adjustments, net of tax
|
|
(86,595
|
)
|
|
58,203
|
|
|
(217,474
|
)
|
|
70,231
|
|
|
|
|
|
|
|
|
|
|
Adjusted results - Non-GAAP:
|
|
|
|
|
|
|
|
|
Adjusted income before income taxes
|
|
362,893
|
|
|
191,626
|
|
|
564,845
|
|
|
162,393
|
|
Adjusted income tax expense (2) |
|
86,575
|
|
|
59,350
|
|
|
130,544
|
|
|
48,169
|
|
Adjusted net income
|
|
276,318
|
|
|
132,276
|
|
|
434,301
|
|
|
114,224
|
|
Less net income attributable to noncontrolling interest
|
|
17,406
|
|
|
16,306
|
|
|
38,177
|
|
|
31,694
|
|
Adjusted net income attributable to HollyFrontier stockholders
|
|
$
|
258,912
|
|
|
$
|
115,970
|
|
|
$
|
396,124
|
|
|
$
|
82,530
|
|
Adjusted earnings per share attributable to HollyFrontier
stockholders - diluted (3) |
|
$
|
1.45
|
|
|
$
|
0.66
|
|
|
$
|
2.22
|
|
|
$
|
0.47
|
|
Average number of common shares outstanding - diluted
|
|
177,586
|
|
|
176,302
|
|
|
177,820
|
|
|
176,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents adjustment to GAAP income tax expense to arrive at
adjusted income tax expense, which is computed as follows:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
Non-GAAP income tax expense (2) |
|
$
|
86,575
|
|
|
$
|
59,350
|
|
|
$
|
130,544
|
|
|
$
|
48,169
|
Subtract GAAP income tax expense
|
|
117,447
|
|
|
31,996
|
|
|
202,484
|
|
|
15,207
|
Non-GAAP adjustment to income tax expense
|
|
$
|
(30,872
|
)
|
|
$
|
27,354
|
|
|
$
|
(71,940
|
)
|
|
$
|
32,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
Non-GAAP income tax expense is computed by a) adjusting HFC's
consolidated estimated Annual Effective Tax Rate ("AETR") for GAAP
purposes for the effects of the above Non-GAAP adjustments b)
applying the resulting Adjusted Non-GAAP AETR to Non-GAAP adjusted
income before income taxes and c) adjusting for discrete tax items
applicable to the period.
|
|
|
|
(3)
|
|
Adjusted earnings per share attributable to HollyFrontier
stockholders - diluted is calculated as adjusted net income
attributable to HollyFrontier stockholders divided by the average
number of shares of common stock outstanding assuming dilution.
|
|
|
|
Reconciliation of effective tax rate to adjusted
effective tax rate
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(Dollars in thousands)
|
GAAP:
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
$
|
480,360
|
|
|
$
|
106,069
|
|
|
$
|
854,259
|
|
|
$
|
51,498
|
|
Income tax expense
|
|
$
|
117,447
|
|
|
$
|
31,996
|
|
|
$
|
202,484
|
|
|
$
|
15,207
|
|
Effective tax rate for GAAP financial statements
|
|
24.4
|
%
|
|
30.2
|
%
|
|
23.7
|
%
|
|
29.5
|
%
|
Adjusted - Non-GAAP:
|
|
|
|
|
|
|
|
|
Effect of Non-GAAP adjustments
|
|
(0.5
|
)%
|
|
0.7
|
%
|
|
(0.6
|
)%
|
|
0.2
|
%
|
Effective tax rate for adjusted results
|
|
23.9
|
%
|
|
30.9
|
%
|
|
23.1
|
%
|
|
29.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20180802005255/en/
HollyFrontier Corporation
Richard L. Voliva III, 214-954-6510
Executive
Vice President and Chief Financial Officer
or
Craig Biery,
214-954-6510
Director, Investor Relations
Source: HollyFrontier Corporation