-
Reported net income attributable to HollyFrontier stockholders of
$253.1 million, or $1.47 per diluted share, and adjusted net income of
$93.2 million, or $0.54 per diluted share, for the first quarter
-
Reported EBITDA of $492.3 million and adjusted EBITDA of $281.8
million for the first quarter
-
Returned $134.7 million to shareholders through dividends and share
repurchases in the first quarter
-
Acquisition of Sonneborn, further strengthening our finished
lubricants and specialty products business
DALLAS--(BUSINESS WIRE)--
HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”)
today reported first quarter net income attributable to HollyFrontier
stockholders of $253.1 million, or $1.47 per diluted share, for the
quarter ended March 31, 2019, compared to $268.1 million, or $1.50 per
diluted share, for the quarter ended March 31, 2018.
The first quarter results reflect special items that collectively
increased net income by a total of $159.9 million. These items include a
lower of cost or market inventory valuation adjustment that increased
pre-tax earnings by $232.3 million, offset by Sonneborn acquisition and
integration costs totaling $12.6 million and incremental cost of
products sold attributable to our Sonneborn inventory value step-up of
$9.3 million. Excluding these items, net income for the current quarter
was $93.2 million ($0.54 per diluted share) compared to $137.3 million
($0.77 per diluted share) for the first quarter of 2018, which excludes
certain items that collectively increased earnings by $130.8 million for
the three months ended March 31, 2018. Total operating expenses for the
quarter were $331.6 million compared to $320.3 million for the first
quarter of last year.
HollyFrontier’s President & CEO, George Damiris, commented,
“HollyFrontier posted a solid first quarter despite seasonally weak
product cracks and maintenance at our Tulsa and El Dorado refineries. We
continue our long term efforts to improve reliability across our
refining system. With a rebound in the gasoline market and no major
planned downtime until September, we are well positioned for strong
financial performance heading into the summer driving season.”
The Refining and Marketing segment reported adjusted EBITDA of $193.4
million compared to $200.9 million for the first quarter of 2018. This
decrease was primarily driven by lower crude differentials which
resulted in a consolidated refinery gross margin of $12.74 per produced
barrel, a 1% decrease compared to $12.83 for the first quarter of 2018.
Crude oil charge averaged 400,430 barrels per day (“BPD”) for the
current quarter compared to 415,260 BPD for the first quarter 2018. The
lower crude charge was primarily due to the planned turnaround at our
Tulsa East refinery and unplanned maintenance at our El Dorado refinery.
Our Lubricants and Specialty Products segment reported adjusted EBITDA
of $20.4 million, despite the challenging base oil market. Rack Forward
adjusted EBITDA was $52.8 million for the quarter, including two months
of EBITDA contribution from Sonneborn.
Holly Energy Partners, L.P. (“HEP”) reported EBITDA of $93.5 million for
the first quarter 2019 compared to $88.5 million in the first quarter of
2018.
For the first quarter of 2019, net cash provided by operations totaled
$216.8 million. During the period, we declared and paid a dividend of
$0.33 per share to shareholders totaling $56.8 million and spent $77.8
million in stock repurchases. At March 31, 2019, our cash and cash
equivalents totaled $496.1 million, a $658.6 million decrease over cash
and cash equivalents of $1,154.8 million at December 31, 2018,
reflecting our purchase of Sonneborn. Additionally, our consolidated
debt was $2,430.9 million. Our debt, exclusive of HEP debt, which is
nonrecourse to HollyFrontier, was $992.9 million at March 31, 2019.
The Company has scheduled a webcast conference call for today, May 2,
2019, at 8:30 AM Eastern Time to discuss first quarter financial
results. This webcast may be accessed at: https://services.themediaframe.com/dataconf/productusers/hfc/mediaframe/29219/indexl.html.
An audio archive of this webcast will be available using the above noted
link through May 16, 2019.
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 owns and operates refineries located
in Kansas, Oklahoma, New Mexico, Wyoming 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. In addition, HollyFrontier produces base oils and other
specialized lubricants in the U.S., Canada and the Netherlands, and
exports products to more than 80 countries. HollyFrontier also owns a
57% 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
HollyFrontier Corporation 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. 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
March 31,
|
|
|
|
Change from 2018
|
|
|
|
2019
|
|
|
2018
|
|
|
|
Change
|
|
|
Percent
|
|
|
|
(In thousands, except per share data)
|
Sales and other revenues
|
|
|
$
|
3,897,247
|
|
|
|
$
|
4,128,427
|
|
|
|
|
$
|
(231,180
|
)
|
|
|
(6
|
)%
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)
|
|
|
|
3,199,205
|
|
|
|
|
3,347,125
|
|
|
|
|
|
(147,920
|
)
|
|
|
(4
|
)
|
Lower of cost or market inventory valuation adjustment
|
|
|
|
(232,346
|
)
|
|
|
|
(103,838
|
)
|
|
|
|
|
(128,508
|
)
|
|
|
124
|
|
|
|
|
|
2,966,859
|
|
|
|
|
3,243,287
|
|
|
|
|
|
(276,428
|
)
|
|
|
(9
|
)
|
Operating expenses
|
|
|
|
331,592
|
|
|
|
|
320,288
|
|
|
|
|
|
11,304
|
|
|
|
4
|
|
Selling, general and administrative expenses
|
|
|
|
88,034
|
|
|
|
|
64,664
|
|
|
|
|
|
23,370
|
|
|
|
36
|
|
Depreciation and amortization
|
|
|
|
121,421
|
|
|
|
|
104,341
|
|
|
|
|
|
17,080
|
|
|
|
16
|
|
Total operating costs and expenses
|
|
|
|
3,507,906
|
|
|
|
|
3,732,580
|
|
|
|
|
|
(224,674
|
)
|
|
|
(6
|
)
|
Income from operations
|
|
|
|
389,341
|
|
|
|
|
395,847
|
|
|
|
|
|
(6,506
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings of equity method investments
|
|
|
|
2,100
|
|
|
|
|
1,279
|
|
|
|
|
|
821
|
|
|
|
64
|
|
Interest income
|
|
|
|
6,375
|
|
|
|
|
2,590
|
|
|
|
|
|
3,785
|
|
|
|
146
|
|
Interest expense
|
|
|
|
(36,647
|
)
|
|
|
|
(32,723
|
)
|
|
|
|
|
(3,924
|
)
|
|
|
12
|
|
Gain on foreign currency transactions
|
|
|
|
2,265
|
|
|
|
|
5,560
|
|
|
|
|
|
(3,295
|
)
|
|
|
(59
|
)
|
Other, net
|
|
|
|
557
|
|
|
|
|
1,346
|
|
|
|
|
|
(789
|
)
|
|
|
(59
|
)
|
|
|
|
|
(25,350
|
)
|
|
|
|
(21,948
|
)
|
|
|
|
|
(3,402
|
)
|
|
|
16
|
|
Income before income taxes
|
|
|
|
363,991
|
|
|
|
|
373,899
|
|
|
|
|
|
(9,908
|
)
|
|
|
(3
|
)
|
Income tax expense
|
|
|
|
87,505
|
|
|
|
|
85,037
|
|
|
|
|
|
2,468
|
|
|
|
3
|
|
Net income
|
|
|
|
276,486
|
|
|
|
|
288,862
|
|
|
|
|
|
(12,376
|
)
|
|
|
(4
|
)
|
Less net income attributable to noncontrolling interest
|
|
|
|
23,431
|
|
|
|
|
20,771
|
|
|
|
|
|
2,660
|
|
|
|
13
|
|
Net income attributable to HollyFrontier stockholders
|
|
|
$
|
253,055
|
|
|
|
$
|
268,091
|
|
|
|
|
$
|
(15,036
|
)
|
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to HollyFrontier stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
1.48
|
|
|
|
$
|
1.51
|
|
|
|
|
$
|
(0.03
|
)
|
|
|
(2
|
)%
|
Diluted
|
|
|
$
|
1.47
|
|
|
|
$
|
1.50
|
|
|
|
|
$
|
(0.03
|
)
|
|
|
(2
|
)%
|
Cash dividends declared per common share
|
|
|
$
|
0.33
|
|
|
|
$
|
0.33
|
|
|
|
|
$
|
—
|
|
|
|
—
|
%
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
170,851
|
|
|
|
|
176,617
|
|
|
|
|
|
(5,766
|
)
|
|
|
(3
|
)%
|
Diluted
|
|
|
|
172,239
|
|
|
|
|
177,954
|
|
|
|
|
|
(5,715
|
)
|
|
|
(3
|
)%
|
EBITDA
|
|
|
$
|
492,253
|
|
|
|
$
|
487,602
|
|
|
|
|
$
|
4,651
|
|
|
|
1
|
%
|
Adjusted EBITDA
|
|
|
$
|
281,797
|
|
|
|
$
|
315,655
|
|
|
|
|
$
|
(33,858
|
)
|
|
|
(11
|
)%
|
|
|
|
|
|
|
|
|
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(In thousands)
|
Cash and cash equivalents
|
|
|
$
|
496,139
|
|
|
$
|
1,154,752
|
Working capital
|
|
|
$
|
1,652,053
|
|
|
$
|
2,128,224
|
Total assets
|
|
|
$
|
12,123,430
|
|
|
$
|
10,994,601
|
Long-term debt
|
|
|
$
|
2,430,934
|
|
|
$
|
2,411,540
|
Total equity
|
|
|
$
|
6,594,574
|
|
|
$
|
6,459,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Information
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 HollyFrontier Asphalt Company
LLC (“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 Petro-Canada
Lubricants Inc.’s (“PCLI”) 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 operations of Red Giant Oil, one of the
largest suppliers of locomotive engine oil in North America and the
operations of 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 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 March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
|
$
|
3,372,666
|
|
|
|
$
|
493,334
|
|
|
|
$
|
31,138
|
|
|
$
|
109
|
|
|
|
$
|
3,897,247
|
|
Intersegment revenues
|
|
|
$
|
74,744
|
|
|
|
$
|
—
|
|
|
|
$
|
103,359
|
|
|
$
|
(178,103
|
)
|
|
|
$
|
—
|
|
|
|
|
$
|
3,447,410
|
|
|
|
$
|
493,334
|
|
|
|
$
|
134,497
|
|
|
$
|
(177,994
|
)
|
|
|
$
|
3,897,247
|
|
Cost of products sold (exclusive of lower of cost or market
inventory)
|
|
|
$
|
2,962,540
|
|
|
|
$
|
389,017
|
|
|
|
$
|
—
|
|
|
$
|
(152,352
|
)
|
|
|
$
|
3,199,205
|
|
Lower of cost or market inventory valuation adjustment
|
|
|
$
|
(232,346
|
)
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
(232,346
|
)
|
Operating expenses
|
|
|
$
|
264,497
|
|
|
|
$
|
53,559
|
|
|
|
$
|
37,513
|
|
|
$
|
(23,977
|
)
|
|
|
$
|
331,592
|
|
Selling, general and administrative expenses
|
|
|
$
|
26,977
|
|
|
|
$
|
39,719
|
|
|
|
$
|
2,620
|
|
|
$
|
18,718
|
|
|
|
$
|
88,034
|
|
Depreciation and amortization
|
|
|
$
|
74,415
|
|
|
|
$
|
20,171
|
|
|
|
$
|
23,830
|
|
|
$
|
3,005
|
|
|
|
$
|
121,421
|
|
Income (loss) from operations
|
|
|
$
|
351,327
|
|
|
|
$
|
(9,132
|
)
|
|
|
$
|
70,534
|
|
|
$
|
(23,388
|
)
|
|
|
$
|
389,341
|
|
Earnings of equity method investments
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
2,100
|
|
|
$
|
—
|
|
|
|
$
|
2,100
|
|
Capital expenditures
|
|
|
$
|
41,762
|
|
|
|
$
|
7,860
|
|
|
|
$
|
10,718
|
|
|
$
|
3,395
|
|
|
|
$
|
63,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
|
$
|
3,655,867
|
|
|
|
$
|
444,840
|
|
|
|
$
|
27,457
|
|
|
$
|
263
|
|
|
|
$
|
4,128,427
|
|
Intersegment revenues
|
|
|
$
|
93,318
|
|
|
|
$
|
—
|
|
|
|
$
|
101,427
|
|
|
$
|
(194,745
|
)
|
|
|
$
|
—
|
|
|
|
|
$
|
3,749,185
|
|
|
|
$
|
444,840
|
|
|
|
$
|
128,884
|
|
|
$
|
(194,482
|
)
|
|
|
$
|
4,128,427
|
|
Cost of products sold (exclusive of lower of cost or market
inventory)
|
|
|
$
|
3,211,704
|
|
|
|
$
|
307,531
|
|
|
|
$
|
—
|
|
|
$
|
(172,110
|
)
|
|
|
$
|
3,347,125
|
|
Lower of cost or market inventory valuation adjustment
|
|
|
$
|
(103,838
|
)
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
(103,838
|
)
|
Operating expenses
|
|
|
$
|
238,484
|
|
|
|
$
|
64,908
|
|
|
|
$
|
36,203
|
|
|
$
|
(19,307
|
)
|
|
|
$
|
320,288
|
|
Selling, general and administrative expenses
|
|
|
$
|
26,371
|
|
|
|
$
|
30,654
|
|
|
|
$
|
3,122
|
|
|
$
|
4,517
|
|
|
|
$
|
64,664
|
|
Depreciation and amortization
|
|
|
$
|
67,175
|
|
|
|
$
|
8,864
|
|
|
|
$
|
25,141
|
|
|
$
|
3,161
|
|
|
|
$
|
104,341
|
|
Income (loss) from operations
|
|
|
$
|
309,289
|
|
|
|
$
|
32,883
|
|
|
|
$
|
64,418
|
|
|
$
|
(10,743
|
)
|
|
|
$
|
395,847
|
|
Earnings of equity method investments
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
1,279
|
|
|
$
|
—
|
|
|
|
$
|
1,279
|
|
Capital expenditures
|
|
|
$
|
42,774
|
|
|
|
$
|
8,538
|
|
|
|
$
|
12,612
|
|
|
$
|
5,615
|
|
|
|
$
|
69,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
5,310
|
|
|
|
$
|
110,119
|
|
|
|
$
|
11,540
|
|
|
$
|
369,170
|
|
|
|
$
|
496,139
|
|
Total assets
|
|
|
$
|
7,338,824
|
|
|
|
$
|
2,368,141
|
|
|
|
$
|
2,202,110
|
|
|
$
|
214,355
|
|
|
|
$
|
12,123,430
|
|
Long-term debt
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
1,438,054
|
|
|
$
|
992,880
|
|
|
|
$
|
2,430,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
7,236
|
|
|
|
$
|
80,931
|
|
|
|
$
|
3,045
|
|
|
$
|
1,063,540
|
|
|
|
$
|
1,154,752
|
|
Total assets
|
|
|
$
|
6,465,155
|
|
|
|
$
|
1,506,209
|
|
|
|
$
|
2,142,027
|
|
|
$
|
881,210
|
|
|
|
$
|
10,994,601
|
|
Long-term debt
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
1,418,900
|
|
|
$
|
992,640
|
|
|
|
$
|
2,411,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
Mid-Continent Region (El Dorado and Tulsa Refineries)
|
|
|
|
|
|
|
Crude charge (BPD) (1) |
|
|
|
213,180
|
|
|
|
|
227,690
|
|
Refinery throughput (BPD) (2) |
|
|
|
230,050
|
|
|
|
|
246,070
|
|
Sales of produced refined products (BPD) (3) |
|
|
|
217,600
|
|
|
|
|
253,080
|
|
Refinery utilization (4) |
|
|
|
82.0
|
%
|
|
|
|
87.6
|
%
|
|
|
|
|
|
|
|
Average per produced barrel (5) |
|
|
|
|
|
|
Refinery gross margin
|
|
|
$
|
11.14
|
|
|
|
$
|
10.65
|
|
Refinery operating expenses (6) |
|
|
|
6.66
|
|
|
|
|
5.14
|
|
Net operating margin
|
|
|
$
|
4.48
|
|
|
|
$
|
5.51
|
|
|
|
|
|
|
|
|
Refinery operating expenses per throughput barrel (7) |
|
|
$
|
6.30
|
|
|
|
$
|
5.28
|
|
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
|
|
Sweet crude oil
|
|
|
|
50
|
%
|
|
|
|
43
|
%
|
Sour crude oil
|
|
|
|
26
|
%
|
|
|
|
30
|
%
|
Heavy sour crude oil
|
|
|
|
17
|
%
|
|
|
|
20
|
%
|
Other feedstocks and blends
|
|
|
|
7
|
%
|
|
|
|
7
|
%
|
Total
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
Sales of produced refined products:
|
|
|
|
|
|
|
Gasolines
|
|
|
|
53
|
%
|
|
|
|
55
|
%
|
Diesel fuels
|
|
|
|
28
|
%
|
|
|
|
30
|
%
|
Jet fuels
|
|
|
|
9
|
%
|
|
|
|
5
|
%
|
Fuel oil
|
|
|
|
1
|
%
|
|
|
|
1
|
%
|
Asphalt
|
|
|
|
3
|
%
|
|
|
|
3
|
%
|
Base oils
|
|
|
|
4
|
%
|
|
|
|
4
|
%
|
LPG and other
|
|
|
|
2
|
%
|
|
|
|
2
|
%
|
Total
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
Southwest Region (Navajo Refinery)
|
|
|
|
|
|
|
Crude charge (BPD) (1) |
|
|
|
106,030
|
|
|
|
|
106,110
|
|
Refinery throughput (BPD) (2) |
|
|
|
116,220
|
|
|
|
|
116,560
|
|
Sales of produced refined products (BPD) (3) |
|
|
|
123,390
|
|
|
|
|
122,260
|
|
Refinery utilization (4) |
|
|
|
106.0
|
%
|
|
|
|
106.1
|
%
|
|
|
|
|
|
|
|
Average per produced barrel (5) |
|
|
|
|
|
|
Refinery gross margin
|
|
|
$
|
15.95
|
|
|
|
$
|
9.85
|
|
Refinery operating expenses (6) |
|
|
|
4.94
|
|
|
|
|
4.00
|
|
Net operating margin
|
|
|
$
|
11.01
|
|
|
|
$
|
5.85
|
|
|
|
|
|
|
|
|
Refinery operating expenses per throughput barrel (7) |
|
|
$
|
5.24
|
|
|
|
$
|
4.19
|
|
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
|
|
Sweet crude oil
|
|
|
|
16
|
%
|
|
|
|
31
|
%
|
Sour crude oil
|
|
|
|
75
|
%
|
|
|
|
60
|
%
|
Other feedstocks and blends
|
|
|
|
9
|
%
|
|
|
|
9
|
%
|
Total
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
Sales of produced refined products:
|
|
|
|
|
|
|
Gasolines
|
|
|
|
54
|
%
|
|
|
|
54
|
%
|
Diesel fuels
|
|
|
|
37
|
%
|
|
|
|
38
|
%
|
Fuel oil
|
|
|
|
3
|
%
|
|
|
|
2
|
%
|
Asphalt
|
|
|
|
3
|
%
|
|
|
|
3
|
%
|
LPG and other
|
|
|
|
3
|
%
|
|
|
|
3
|
%
|
Total
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
|
|
|
|
Crude charge (BPD) (1) |
|
|
|
81,220
|
|
|
|
|
81,460
|
|
Refinery throughput (BPD) (2) |
|
|
|
87,450
|
|
|
|
|
89,420
|
|
Sales of produced refined products (BPD) (3) |
|
|
|
82,040
|
|
|
|
|
90,180
|
|
Refinery utilization (4) |
|
|
|
83.7
|
%
|
|
|
|
84.0
|
%
|
|
|
|
|
|
|
|
Average per produced barrel (5) |
|
|
|
|
|
|
Refinery gross margin
|
|
|
$
|
12.14
|
|
|
|
$
|
22.98
|
|
Refinery operating expenses (6) |
|
|
|
10.73
|
|
|
|
|
9.54
|
|
Net operating margin
|
|
|
$
|
1.41
|
|
|
|
$
|
13.44
|
|
|
|
|
|
|
|
|
Refinery operating expenses per throughput barrel (7) |
|
|
$
|
10.07
|
|
|
|
$
|
9.62
|
|
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
|
|
Sweet crude oil
|
|
|
|
36
|
%
|
|
|
|
33
|
%
|
Heavy sour crude oil
|
|
|
|
35
|
%
|
|
|
|
37
|
%
|
Black wax crude oil
|
|
|
|
22
|
%
|
|
|
|
21
|
%
|
Other feedstocks and blends
|
|
|
|
7
|
%
|
|
|
|
9
|
%
|
Total
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
Sales of produced refined products:
|
|
|
|
|
|
|
Gasolines
|
|
|
|
54
|
%
|
|
|
|
56
|
%
|
Diesel fuels
|
|
|
|
34
|
%
|
|
|
|
34
|
%
|
Fuel oil
|
|
|
|
3
|
%
|
|
|
|
3
|
%
|
Asphalt
|
|
|
|
5
|
%
|
|
|
|
3
|
%
|
LPG and other
|
|
|
|
4
|
%
|
|
|
|
4
|
%
|
Total
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
Crude charge (BPD) (1) |
|
|
|
400,430
|
|
|
|
|
415,260
|
|
Refinery throughput (BPD) (2) |
|
|
|
433,720
|
|
|
|
|
452,050
|
|
Sales of produced refined products (BPD) (3) |
|
|
|
423,030
|
|
|
|
|
465,520
|
|
Refinery utilization (4) |
|
|
|
87.6
|
%
|
|
|
|
90.9
|
%
|
|
|
|
|
|
|
|
Average per produced barrel (5) |
|
|
|
|
|
|
Refinery gross margin
|
|
|
$
|
12.74
|
|
|
|
$
|
12.83
|
|
Refinery operating expenses (6) |
|
|
|
6.95
|
|
|
|
|
5.69
|
|
Net operating margin
|
|
|
$
|
5.79
|
|
|
|
$
|
7.14
|
|
|
|
|
|
|
|
|
Refinery operating expenses per throughput barrel (7) |
|
|
$
|
6.78
|
|
|
|
$
|
5.86
|
|
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
|
|
Sweet crude oil
|
|
|
|
38
|
%
|
|
|
|
38
|
%
|
Sour crude oil
|
|
|
|
34
|
%
|
|
|
|
32
|
%
|
Heavy sour crude oil
|
|
|
|
16
|
%
|
|
|
|
18
|
%
|
Black wax crude oil
|
|
|
|
4
|
%
|
|
|
|
4
|
%
|
Other feedstocks and blends
|
|
|
|
8
|
%
|
|
|
|
8
|
%
|
Total
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
Sales of produced refined products:
|
|
|
|
|
|
|
Gasolines
|
|
|
|
53
|
%
|
|
|
|
55
|
%
|
Diesel fuels
|
|
|
|
32
|
%
|
|
|
|
33
|
%
|
Jet fuels
|
|
|
|
5
|
%
|
|
|
|
3
|
%
|
Fuel oil
|
|
|
|
2
|
%
|
|
|
|
1
|
%
|
Asphalt
|
|
|
|
3
|
%
|
|
|
|
3
|
%
|
Base oils
|
|
|
|
2
|
%
|
|
|
|
2
|
%
|
LPG and other
|
|
|
|
3
|
%
|
|
|
|
3
|
%
|
Total
|
|
|
|
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)
|
|
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.
|
|
|
|
|
|
|
Lubricants and Specialty Products Segment Operating Data
We acquired our Sonneborn business on February 1, 2019. For the three
months ended March 31, 2019 our lubricants and specialty product
operating results reflect the operations of our Sonneborn business for
the period February 1, 2019 through March 31, 2019.
The following table sets forth information about our lubricants and
specialty products operations.
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
Lubricants and Specialty Products
|
|
|
|
|
|
|
Throughput (BPD)
|
|
|
19,800
|
|
|
|
21,580
|
|
Sales of produced products (BPD)
|
|
|
34,770
|
|
|
|
32,450
|
|
|
|
|
|
|
|
|
Sales of produced products:
|
|
|
|
|
|
|
Finished products
|
|
|
49
|
%
|
|
|
45
|
%
|
Base oils
|
|
|
26
|
%
|
|
|
34
|
%
|
Other
|
|
|
25
|
%
|
|
|
21
|
%
|
Total
|
|
|
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 March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other revenues
|
|
|
$
|
156,455
|
|
|
|
$
|
444,342
|
|
|
$
|
(107,463
|
)
|
|
|
$
|
493,334
|
|
Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)
|
|
|
$
|
145,818
|
|
|
|
$
|
350,662
|
|
|
$
|
(107,463
|
)
|
|
|
$
|
389,017
|
|
Operating expenses
|
|
|
$
|
29,560
|
|
|
|
$
|
23,999
|
|
|
$
|
—
|
|
|
|
$
|
53,559
|
|
Selling, general and administrative expenses
|
|
|
$
|
13,479
|
|
|
|
$
|
26,240
|
|
|
$
|
—
|
|
|
|
$
|
39,719
|
|
Depreciation and amortization
|
|
|
$
|
10,526
|
|
|
|
$
|
9,645
|
|
|
$
|
—
|
|
|
|
$
|
20,171
|
|
Income (loss) from operations
|
|
|
$
|
(42,928
|
)
|
|
|
$
|
33,796
|
|
|
$
|
—
|
|
|
|
$
|
(9,132
|
)
|
EBITDA
|
|
|
$
|
(32,402
|
)
|
|
|
$
|
43,441
|
|
|
$
|
—
|
|
|
|
$
|
11,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other revenues
|
|
|
$
|
173,432
|
|
|
|
$
|
399,039
|
|
|
$
|
(127,631
|
)
|
|
|
$
|
444,840
|
|
Cost of products sold (exclusive of lower of cost or market
inventory valuation adjustment)
|
|
|
$
|
152,054
|
|
|
|
$
|
283,108
|
|
|
$
|
(127,631
|
)
|
|
|
$
|
307,531
|
|
Operating expenses
|
|
|
$
|
28,771
|
|
|
|
$
|
36,137
|
|
|
$
|
—
|
|
|
|
$
|
64,908
|
|
Selling, general and administrative expenses
|
|
|
$
|
6,819
|
|
|
|
$
|
23,835
|
|
|
$
|
—
|
|
|
|
$
|
30,654
|
|
Depreciation and amortization
|
|
|
$
|
5,628
|
|
|
|
$
|
3,236
|
|
|
$
|
—
|
|
|
|
$
|
8,864
|
|
Income from operations
|
|
|
$
|
(19,840
|
)
|
|
|
$
|
52,723
|
|
|
$
|
—
|
|
|
|
$
|
32,883
|
|
EBITDA
|
|
|
$
|
(14,212
|
)
|
|
|
$
|
55,959
|
|
|
$
|
—
|
|
|
|
$
|
41,747
|
|
(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 HollyFrontier
stockholders plus (i) interest expense, net of interest income, (ii)
income tax expense, and (iii) depreciation and amortization. Adjusted
EBITDA is calculated as EBITDA plus or minus (i) lower of cost or market
inventory valuation adjustments, (ii) acquisition and integration costs,
(iii) incremental cost of products sold attributable to our Sonneborn
inventory value step-up and (iv) RINs cost reduction related to our
Cheyenne Refinery small refinery exemptions.
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
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(In thousands)
|
Net income attributable to HollyFrontier stockholders
|
|
|
$
|
253,055
|
|
|
|
$
|
268,091
|
|
Add interest expense
|
|
|
|
36,647
|
|
|
|
|
32,723
|
|
Subtract interest income
|
|
|
|
(6,375
|
)
|
|
|
|
(2,590
|
)
|
Add income tax expense
|
|
|
|
87,505
|
|
|
|
|
85,037
|
|
Add depreciation and amortization
|
|
|
|
121,421
|
|
|
|
|
104,341
|
|
EBITDA
|
|
|
$
|
492,253
|
|
|
|
$
|
487,602
|
|
Add (subtract) lower of cost or market inventory valuation adjustment
|
|
|
|
(232,346
|
)
|
|
|
|
(103,838
|
)
|
Add acquisition and integration costs
|
|
|
|
12,552
|
|
|
|
|
3,595
|
|
Add incremental cost of products sold attributable to Sonneborn
inventory value step-up
|
|
|
|
9,338
|
|
|
|
|
—
|
|
Subtract RINs cost reduction
|
|
|
|
—
|
|
|
|
|
(71,704
|
)
|
Adjusted EBITDA
|
|
|
$
|
281,797
|
|
|
|
$
|
315,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA and Adjusted EBITDA attributable to our Refining segment is
presented below:
|
|
|
Three Months Ended
March 31,
|
Refining Segment
|
|
|
2019
|
|
|
2018
|
|
|
|
(In thousands)
|
Income from operations (1) |
|
|
$
|
351,327
|
|
|
|
$
|
309,289
|
|
Add depreciation and amortization
|
|
|
|
74,415
|
|
|
|
|
67,175
|
|
EBITDA
|
|
|
|
425,742
|
|
|
|
|
376,464
|
|
Add (subtract) lower of cost or market inventory valuation adjustment
|
|
|
|
(232,346
|
)
|
|
|
|
(103,838
|
)
|
Subtract RINs cost reduction
|
|
|
|
—
|
|
|
|
|
(71,704
|
)
|
Adjusted EBITDA
|
|
|
$
|
193,396
|
|
|
|
$
|
200,922
|
|
(1)
|
|
Income from operations 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 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 March 31, 2019
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations (1) |
|
|
$
|
(42,928
|
)
|
|
|
$
|
33,796
|
|
|
$
|
(9,132
|
)
|
Add depreciation and amortization
|
|
|
|
10,526
|
|
|
|
|
9,645
|
|
|
|
20,171
|
|
EBITDA
|
|
|
$
|
(32,402
|
)
|
|
|
$
|
43,441
|
|
|
$
|
11,039
|
|
Add incremental cost of products sold attributable to Sonneborn
inventory value step-up
|
|
|
|
—
|
|
|
|
|
9,338
|
|
|
|
9,338
|
|
Adjusted EBITDA
|
|
|
$
|
(32,402
|
)
|
|
|
$
|
52,779
|
|
|
$
|
20,377
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations (1) |
|
|
$
|
(19,840
|
)
|
|
|
$
|
52,723
|
|
|
$
|
32,883
|
|
Add depreciation and amortization
|
|
|
|
5,628
|
|
|
|
|
3,236
|
|
|
|
8,864
|
|
EBITDA
|
|
|
$
|
(14,212
|
)
|
|
|
$
|
55,959
|
|
|
$
|
41,747
|
|
(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
March 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(Dollars in thousands, except per barrel amounts)
|
Consolidated
|
|
|
|
|
|
|
Net operating margin per produced barrel sold
|
|
|
$
|
5.79
|
|
|
|
$
|
7.14
|
|
Add average refinery operating expenses per produced barrel sold
|
|
|
|
6.95
|
|
|
|
|
5.69
|
|
Refinery gross margin per produced barrel sold
|
|
|
$
|
12.74
|
|
|
|
$
|
12.83
|
|
Times produced barrels sold (BPD)
|
|
|
|
423,030
|
|
|
|
|
465,520
|
|
Times number of days in period
|
|
|
|
90
|
|
|
|
|
90
|
|
Refining segment gross margin
|
|
|
$
|
485,046
|
|
|
|
$
|
537,536
|
|
Add (subtract) rounding
|
|
|
|
(176
|
)
|
|
|
|
(55
|
)
|
Total refining segment gross margin
|
|
|
|
484,870
|
|
|
|
|
537,481
|
|
Add refining segment cost of products sold
|
|
|
|
2,962,540
|
|
|
|
|
3,211,704
|
|
Refining segment sales and other revenues
|
|
|
|
3,447,410
|
|
|
|
|
3,749,185
|
|
Add lubricants and specialty products segment sales and other
revenues
|
|
|
|
493,334
|
|
|
|
|
444,840
|
|
Add HEP segment sales and other revenues
|
|
|
|
134,497
|
|
|
|
|
128,884
|
|
Subtract corporate, other and eliminations
|
|
|
|
(177,994
|
)
|
|
|
|
(194,482
|
)
|
Sales and other revenues
|
|
|
$
|
3,897,247
|
|
|
|
$
|
4,128,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of average refining segment
operating expenses per produced barrel sold to total operating expenses
|
|
|
Three Months Ended
March 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(Dollars in thousands, except per barrel amounts)
|
Consolidated
|
|
|
|
|
|
|
Average operating expenses per produced barrel sold
|
|
|
$
|
6.95
|
|
|
|
$
|
5.69
|
|
Times produced barrels sold (BPD)
|
|
|
|
423,030
|
|
|
|
|
465,520
|
|
Times number of days in period
|
|
|
|
90
|
|
|
|
|
90
|
|
Refining segment operating expenses
|
|
|
$
|
264,605
|
|
|
|
$
|
238,393
|
|
Add (subtract) rounding
|
|
|
|
(108
|
)
|
|
|
|
91
|
|
Total refining segment operating expenses
|
|
|
|
264,497
|
|
|
|
|
238,484
|
|
Add lubricants and specialty products segment operating expenses
|
|
|
|
53,559
|
|
|
|
|
64,908
|
|
Add HEP segment operating expenses
|
|
|
|
37,513
|
|
|
|
|
36,203
|
|
Subtract corporate, other and eliminations
|
|
|
|
(23,977
|
)
|
|
|
|
(19,307
|
)
|
Operating expenses (exclusive of depreciation and amortization)
|
|
|
$
|
331,592
|
|
|
|
$
|
320,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, acquisition and integration
costs, incremental cost of products sold due to Sonneborn inventory
value step-up and RINs cost reductions. 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
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(Dollars in thousands, except per share amounts)
|
Consolidated
|
|
|
|
|
|
|
GAAP:
|
|
|
|
|
|
|
Income before income taxes
|
|
|
$
|
363,991
|
|
|
|
$
|
373,899
|
|
Income tax expense
|
|
|
|
87,505
|
|
|
|
|
85,037
|
|
Net income
|
|
|
|
276,486
|
|
|
|
|
288,862
|
|
Less net income attributable to noncontrolling interest
|
|
|
|
23,431
|
|
|
|
|
20,771
|
|
Net income attributable to HollyFrontier stockholders
|
|
|
|
253,055
|
|
|
|
|
268,091
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments to arrive at adjusted results:
|
|
|
|
|
|
|
Lower of cost or market inventory valuation adjustment
|
|
|
|
(232,346
|
)
|
|
|
|
(103,838
|
)
|
Acquisition and integration costs
|
|
|
|
12,552
|
|
|
|
|
3,595
|
|
Incremental cost of products sold attributable to Sonneborn
inventory value step-up
|
|
|
|
9,338
|
|
|
|
|
—
|
|
RINs cost reduction
|
|
|
|
—
|
|
|
|
|
(71,704
|
)
|
Total adjustments to income before income taxes
|
|
|
|
(210,456
|
)
|
|
|
|
(171,947
|
)
|
Adjustment to income tax expense (1) |
|
|
|
(50,595
|
)
|
|
|
|
(41,152
|
)
|
Total adjustments, net of tax
|
|
|
|
(159,861
|
)
|
|
|
|
(130,795
|
)
|
|
|
|
|
|
|
|
Adjusted results - Non-GAAP:
|
|
|
|
|
|
|
Adjusted income before income taxes
|
|
|
|
153,535
|
|
|
|
|
201,952
|
|
Adjusted income tax expense (2) |
|
|
|
36,910
|
|
|
|
|
43,885
|
|
Adjusted net income
|
|
|
|
116,625
|
|
|
|
|
158,067
|
|
Less net income attributable to noncontrolling interest
|
|
|
|
23,431
|
|
|
|
|
20,771
|
|
Adjusted net income attributable to HollyFrontier stockholders
|
|
|
$
|
93,194
|
|
|
|
$
|
137,296
|
|
Adjusted earnings per share attributable to HollyFrontier
stockholders - diluted (3) |
|
|
$
|
0.54
|
|
|
|
$
|
0.77
|
|
Average number of common shares outstanding - diluted
|
|
|
|
172,239
|
|
|
|
|
177,954
|
|
(1)
|
|
Represents adjustment to GAAP income tax expense to arrive at
adjusted income tax expense, which is computed as follows:
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
Non-GAAP income tax expense (2) |
|
|
$
|
36,910
|
|
|
|
$
|
43,885
|
|
Subtract GAAP income tax expense
|
|
|
|
87,505
|
|
|
|
|
85,037
|
|
Non-GAAP adjustment to income tax expense
|
|
|
$
|
(50,595
|
)
|
|
|
$
|
(41,152
|
)
|
(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
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(Dollars in thousands)
|
GAAP:
|
|
|
|
|
|
|
Income before income taxes
|
|
|
$
|
363,991
|
|
|
|
$
|
373,899
|
|
Income tax expense
|
|
|
$
|
87,505
|
|
|
|
$
|
85,037
|
|
Effective tax rate for GAAP financial statements
|
|
|
|
24.0
|
%
|
|
|
|
22.7
|
%
|
Adjusted - Non-GAAP:
|
|
|
|
|
|
|
Effect of Non-GAAP adjustments
|
|
|
|
0.1
|
%
|
|
|
|
0.6
|
%
|
Effective tax rate for adjusted results
|
|
|
|
24.1
|
%
|
|
|
|
23.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190502005228/en/
Richard L. Voliva III, Executive Vice President and
Chief Financial
Officer
Craig Biery, Director,
Investor Relations
HollyFrontier
Corporation
214-954-6510
Source: HollyFrontier Corporation