Hollyfrontier corporation reports quarterly
results
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 balance sheet data 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 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. represents total refining segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes of refined products produced at our refineries. 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. 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: total lubricantsandspecialty products 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. ebitda and adjusted ebitda attributable to our refining segment is presented below: ebitda and adjusted ebitda attributable to our lubricants and specialty products segment is set forth below. total lubricantsandspecialty products 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 reconciliation of average refining segment operating expenses per produced barrel sold to total operating expenses 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. reconciliation of effective tax rate to adjusted effective tax rate
