Hollyfrontier corporation reports quarterly net
income
Dallas--(business wire)--hollyfrontier corporation (nyse:hfc) (“hollyfrontier” or the “company”) today reported third quarter net income attributable to hollyfrontier stockholders of $175.0 million or $0.88 per diluted share for the quarter ended september 30, 2014, compared to $82.3 million or $0.41 per diluted share for the quarter ended september 30, 2013. for the third quarter, net income attributable to our stockholders increased by $92.7 million compared to the same period of 2013, principally reflecting higher third quarter refining margins. refinery gross margins were $15.59 per produced barrel, a 47% increase compared to $10.64 for the third quarter of 2013. production levels averaged approximately 428,000 barrels per day (“bpd”) and crude oil charges averaged approximately 410,000 bpd for the current quarter. operating expenses for the quarter were $281.0 million or $6.39 per barrel compared to $256.3 million or $5.53 per barrel for the third quarter of last year. third quarter production reflected lower throughput levels as a result of planned el dorado turnaround activity that started in late september and unplanned reduction at our cheyenne refinery due to a temporary shutdown of the rocky mountain pipeline, which transports refined product from cheyenne to the denver market. hollyfrontier’s president & ceo, mike jennings, commented, “our third quarter net income attributable to hollyfrontier shareholders more than doubled compared to the prior year quarter despite lower refinery throughput. realized refined product margins improved across all regions driven by a combination of higher gasoline and diesel crack spreads and our ability to capitalize on regional crude discounts particularly in the permian basin. the fourth quarter is off to a strong start, where we have seen product demand strength in the mid continent and rockies region through october due to mild weather, a strong harvest and continued drilling activity. we continue to benefit from regional increases in crude production, particularly in our rockies and southwest regions. we also expect the continued growth in north american crude supply will improve our overall access to refinery feedstocks and provide us with an enduring structural advantage versus other refining centers.” for the third quarter of 2014, net cash provided by operations totaled $84.5 million. during the period, we declared $0.32 regular and $0.50 special dividends to shareholders totaling approximately $163.0 million and repurchased $113.0 million in common stock under our board approved share repurchase program. at september 30, 2014, our combined balance of cash and short-term investments totaled $1.5 billion and our consolidated debt was $1.0 billion. our debt, exclusive of holly energy partners' debt, which is nonrecourse to hollyfrontier, was $188.0 million at september 30, 2014. we had no cash borrowings or outstanding principal under our credit facility during the quarter. the company has scheduled a webcast conference call for today, november 5, 2014, at 8:30 am eastern time to discuss third quarter financial results. this webcast may be accessed at: https://event.webcasts.com/starthere.jsp?ei=1044052. an audio archive of this webcast will be available using the above noted link through november 19, 2014. 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 31,000 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. a subsidiary of hollyfrontier also owns a 39% interest (including the 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 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 endedseptember 30, nine months endedseptember 30, balance sheet data segment information our operations are organized into two reportable segments, refining and hep. our operations that are not included in the refining and hep segments are included in corporate and other. intersegment transactions are eliminated in our consolidated financial statements and are included in consolidations and eliminations. the refining segment includes the operations of our el dorado, tulsa, navajo, cheyenne and woods cross refineries and nk asphalt and involves the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. the petroleum products are primarily marketed in the mid-continent, southwest and rocky mountain regions of the united states and northern mexico. additionally, specialty lubricant products produced at our tulsa west facility are marketed throughout north america and are distributed in central and south america. nk asphalt manufactures and markets asphalt and asphalt products in arizona, new mexico, oklahoma, kansas, missouri, texas and northern mexico. 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 and terminal, tankage and loading rack facilities in the mid-continent, southwest and rocky mountain regions of the united states. revenues are generated by charging tariffs for transporting petroleum products and crude oil through its pipelines and by charging fees for terminalling petroleum products and other hydrocarbons, and storing and providing other services at its storage tanks and terminals. the hep segment also includes a 75% interest in the unev pipeline (an hep consolidated subsidiary) and a 25% interest in the slc pipeline. 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. corporateand other consolidationsandeliminations consolidatedtotal refining operating data the following tables set forth information, including non-gaap performance measures about our refinery operations. the cost of products and refinery gross margin do not include the effect of depreciation and amortization. reconciliations to amounts reported under gaap are provided under “reconciliations to amounts reported under generally accepted accounting principles” below. three months endedseptember 30, nine months endedseptember 30, three months endedseptember 30, nine months endedseptember 30, three months endedseptember 30, nine months endedseptember 30, three months endedseptember 30, nine months endedseptember 30, reconciliations to amounts reported under generally accepted accounting principles reconciliations of earnings before interest, taxes, depreciation and amortization (“ebitda”) to amounts reported under generally accepted accounting principles in financial statements. earnings before interest, taxes, depreciation and amortization, which we refer to as ebitda, is calculated as net income attributable to hollyfrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization. ebitda is not a calculation provided for under accounting principles generally accepted in the united states; however, the amounts included in the ebitda calculation are derived from amounts included in our consolidated financial statements. ebitda should not be considered as an alternative 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 is not necessarily comparable to similarly titled measures of other companies. ebitda is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. ebitda is also used by our management for internal analysis and as a basis for financial covenants. set forth below is our calculation of ebitda. three months endedseptember 30, nine months endedseptember 30, (1) includes loss on early extinguishment of debt of $7.7 million and $22.1 million for the nine months ended september 30, 2014 and september 30, 2013, respectively. 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 barrel is the difference between average net sales price and average cost of products per barrel of produced refined products. net operating margin per barrel is the difference between refinery gross margin and refinery operating expenses per barrel of produced refined products. these two margins do not include the effect of 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. refinery gross and net operating margins below are reconciliations to our consolidated statements of income for (i) net sales, cost of products and operating expenses, in each case averaged per produced barrel sold, and (ii) net operating margin and refinery gross margin. due to rounding of reported numbers, some amounts may not calculate exactly. reconciliation of produced refined product sales to total sales and other revenues three months endedseptember 30, nine months endedseptember 30, reconciliation of average cost of products per produced barrel sold to total cost of products sold three months endedseptember 30, nine months endedseptember 30, reconciliation of average refinery operating expenses per produced barrel sold to total operating expenses three months endedseptember 30, nine months endedseptember 30, reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenues three months endedseptember 30, nine months endedseptember 30, (1) we purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments. (2) we purchase crude oil that at times exceeds the supply needs of our refineries. quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold. additionally, at times we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at carryover cost. (3) other refining segment revenue includes the incremental revenues associated with nk asphalt and miscellaneous revenue. (4) other refining segment cost of products sold includes the incremental cost of products for nk asphalt and miscellaneous costs. (5) other refining segment operating expenses include the marketing costs associated with our refining segment and the operating expenses of nk asphalt.
