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| 8-K - 8-K - HollyFrontier Corp | hfcform8-kq42012earnings.htm |
Press Release February 26, 2013 |  |
HollyFrontier Corporation Reports Quarterly Net Income
Dallas, Texas, February 26, 2013 ‑‑ HollyFrontier Corporation (NYSE-HFC) (“HollyFrontier” or the “Company”) today reported fourth quarter net income attributable to HollyFrontier stockholders of $391.6 million or $1.92 per diluted share for the quarter ended December 31, 2012, compared to $223.4 million or $1.06 per diluted share for the quarter ended December 31, 2011. For the year ended December 31, 2012, net income attributable to HollyFrontier stockholders totaled $1,727.2 million or $8.38 per diluted share compared to $1,023.4 million or $6.42 per diluted share for the year ended December 31, 2011.
For the fourth quarter, net income attributable to our stockholders increased by $168.2 million, or 75% compared to the same period of 2011, principally reflecting higher fourth quarter refining margins. Refinery gross margins were $24.00 per produced barrel, a 57% increase compared to $15.32 for the fourth quarter of 2011. Production levels averaged approximately 447,000 barrels per day (“BPD”) and crude oil charges averaged approximately 408,000 BPD for the current quarter, compared to expected crude throughput of 424,000 BPD. Lower crude oil charges in the quarter resulted from a combination of unplanned downtime and turnaround activity extending longer than planned. Operating expenses for the quarter were $296.8 million or $6.29 per barrel compared to $246.1 million or $5.22 per barrel for the fourth quarter of last year.
HollyFrontier’s President & CEO, Mike Jennings, commented, “We are extremely pleased with our solid fourth quarter results and the record year for HollyFrontier. For the fourth quarter, strength in inland to coastal crude oil differentials continued to contribute to attractive refined product margins, particularly considering the effects of lower seasonal demand that have historically yielded tighter margins. Looking to 2013, we believe that the structural crude advantages currently driving our operating margins will positively impact our operating income, allowing us to continue to pay both regular and special dividends. We remain committed to increasing total shareholder return while maintaining a strong balance sheet.”
For the fourth quarter of 2012, net cash provided by operations totaled $490.9 million. During the period, we paid dividends to shareholders of $275.5 million, which includes our $0.20 regular and a $0.50 special dividend declared in the fourth quarter. At December 31, 2012, our combined balance of cash and short-term investments totaled $2.4 billion and our consolidated debt was $1.3 billion. Our debt, exclusive of Holly Energy Partners' debt which is nonrecourse to HollyFrontier, was $471.6 million at December 31, 2012. We had no cash borrowings or outstanding principal under our credit facility during the quarter.
Included in our fourth quarter 2012 results were charges totaling $21.6 million or $0.11 per share after-tax, related to increased environmental accruals and the partial write-off of a previously capitalized project.
The Company has scheduled a webcast conference call for today, February 26, 2013, at 11:00 AM Eastern Time to discuss fourth quarter financial results. This webcast may be accessed at: https://event.webcasts.com/starthere.jsp?ei=1012528. An audio archive of this webcast will be available using the above noted link through March 12, 2013.
1
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 44% 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.
2
RESULTS OF OPERATIONS
Financial Data (all information in this release is unaudited)
Three Months Ended December 31, | Change from 2011 | |||||||||||||
2012 | 2011 | Change | Percent | |||||||||||
(In thousands, except per share data) | ||||||||||||||
Sales and other revenues | $ | 5,147,507 | $ | 4,972,412 | $ | 175,095 | 3.5 | % | ||||||
Operating costs and expenses: | ||||||||||||||
Cost of products sold | 4,073,226 | 4,258,439 | (185,213 | ) | (4.3 | ) | ||||||||
Operating expenses | 296,754 | 246,110 | 50,644 | 20.6 | ||||||||||
General and administrative expenses | 39,680 | 41,473 | (1,793 | ) | (4.3 | ) | ||||||||
Depreciation and amortization | 64,706 | 53,327 | 11,379 | 21.3 | ||||||||||
Total operating costs and expenses | 4,474,366 | 4,599,349 | (124,983 | ) | (2.7 | ) | ||||||||
Income from operations | 673,141 | 373,063 | 300,078 | 80.4 | ||||||||||
Other income (expense): | ||||||||||||||
Earnings of equity method investments | 468 | 561 | (93 | ) | (16.6 | ) | ||||||||
Interest income | 1,426 | 338 | 1,088 | 321.9 | ||||||||||
Interest expense | (22,826 | ) | (21,852 | ) | (974 | ) | 4.5 | |||||||
(20,932 | ) | (20,953 | ) | 21 | (0.1 | ) | ||||||||
Income before income taxes | 652,209 | 352,110 | 300,099 | 85.2 | ||||||||||
Income tax provision | 252,216 | 116,261 | 135,955 | 116.9 | ||||||||||
Net income | 399,993 | 235,849 | 164,144 | 69.6 | ||||||||||
Less net income attributable to noncontrolling interest | 8,389 | 12,469 | (4,080 | ) | (32.7 | ) | ||||||||
Net income attributable to HollyFrontier stockholders | $ | 391,604 | $ | 223,380 | $ | 168,224 | 75.3 | % | ||||||
Earnings per share attributable to HollyFrontier stockholders: | ||||||||||||||
Basic | $ | 1.92 | $ | 1.07 | $ | 0.85 | 79.4 | % | ||||||
Diluted | $ | 1.92 | $ | 1.06 | $ | 0.86 | 81.1 | % | ||||||
Cash dividends declared per common share | $ | 0.70 | $ | 0.60 | $ | 0.10 | 16.7 | % | ||||||
Average number of common shares outstanding: | ||||||||||||||
Basic | 203,458 | 209,319 | (5,861 | ) | (2.8 | )% | ||||||||
Diluted | 204,453 | 210,159 | (5,706 | ) | (2.7 | )% | ||||||||
EBITDA | $ | 729,926 | $ | 414,482 | $ | 315,444 | 76.1 | % | ||||||
3
Years Ended December 31, | Change from 2011 | |||||||||||||
2012 | 2011(1) | Change | Percent | |||||||||||
(In thousands, except per share data) | ||||||||||||||
Sales and other revenues | $ | 20,090,724 | $ | 15,439,528 | $ | 4,651,196 | 30.1 | % | ||||||
Operating costs and expenses: | ||||||||||||||
Cost of products sold | 15,840,643 | 12,680,078 | 3,160,565 | 24.9 | ||||||||||
Operating expenses | 994,966 | 748,081 | 246,885 | 33.0 | ||||||||||
General and administrative expenses | 128,101 | 120,114 | 7,987 | 6.6 | ||||||||||
Depreciation and amortization | 242,868 | 159,707 | 83,161 | 52.1 | ||||||||||
Total operating costs and expenses | 17,206,578 | 13,707,980 | 3,498,598 | 25.5 | ||||||||||
Income from operations | 2,884,146 | 1,731,548 | 1,152,598 | 66.6 | ||||||||||
Other income (expense): | ||||||||||||||
Earnings of equity method investments | 2,923 | 2,300 | 623 | 27.1 | ||||||||||
Interest income | 4,786 | 1,284 | 3,502 | 272.7 | ||||||||||
Interest expense | (104,186 | ) | (78,323 | ) | (25,863 | ) | 33.0 | |||||||
Gain on sale of marketable securities | 326 | — | 326 | — | ||||||||||
Merger transaction costs | — | (15,114 | ) | 15,114 | (100.0 | ) | ||||||||
(96,151 | ) | (89,853 | ) | (6,298 | ) | 7.0 | ||||||||
Income before income taxes | 2,787,995 | 1,641,695 | 1,146,300 | 69.8 | ||||||||||
Income tax provision | 1,027,962 | 581,991 | 445,971 | 76.6 | ||||||||||
Net income | 1,760,033 | 1,059,704 | 700,329 | 66.1 | ||||||||||
Less net income attributable to noncontrolling interest | 32,861 | 36,307 | (3,446 | ) | (9.5 | ) | ||||||||
Net income attributable to HollyFrontier stockholders | $ | 1,727,172 | $ | 1,023,397 | $ | 703,775 | 68.8 | % | ||||||
Earnings per share attributable to HollyFrontier stockholders: | ||||||||||||||
Basic | $ | 8.41 | $ | 6.46 | $ | 1.95 | 30.2 | % | ||||||
Diluted | $ | 8.38 | $ | 6.42 | $ | 1.96 | 30.5 | % | ||||||
Cash dividends declared per common share | $ | 3.10 | $ | 1.34 | $ | 1.76 | 131.3 | % | ||||||
Average number of common shares outstanding: | ||||||||||||||
Basic | 205,289 | 158,486 | 46,803 | 29.5 | % | |||||||||
Diluted | 206,184 | 159,294 | 46,890 | 29.4 | % | |||||||||
EBITDA | $ | 3,097,402 | $ | 1,842,134 | $ | 1,255,268 | 68.1 | % | ||||||
(1) Our consolidated financial and operating results reflect the operations of the merged Frontier businesses beginning July 1, 2011.
Balance Sheet Data
December 31, | |||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Cash, cash equivalents and investments in marketable securities | $ | 2,393,401 | $ | 1,840,610 | |||
Working capital | $ | 2,815,821 | $ | 2,030,063 | |||
Total assets | $ | 10,328,997 | $ | 9,576,243 | |||
Long-term debt | $ | 1,336,238 | $ | 1,214,742 | |||
Total equity | $ | 6,642,658 | $ | 5,835,900 | |||
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.
4
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.
Refining (1) | HEP | Corporate and Other | Consolidations and Eliminations | Consolidated Total | |||||||||||||||
(In thousands) | |||||||||||||||||||
Three Months Ended December 31, 2012 | |||||||||||||||||||
Sales and other revenues | $ | 5,135,106 | $ | 81,251 | $ | 136 | $ | (68,986 | ) | $ | 5,147,507 | ||||||||
Depreciation and amortization | $ | 48,160 | $ | 15,500 | $ | 1,253 | $ | (207 | ) | $ | 64,706 | ||||||||
Income (loss) from operations | $ | 677,735 | $ | 32,880 | $ | (36,941 | ) | $ | (533 | ) | $ | 673,141 | |||||||
Capital expenditures | $ | 106,840 | $ | 15,627 | $ | 5,259 | $ | — | $ | 127,726 | |||||||||
Three Months Ended December 31, 2011 | |||||||||||||||||||
Sales and other revenues | $ | 4,960,008 | $ | 68,079 | $ | — | $ | (55,675 | ) | $ | 4,972,412 | ||||||||
Depreciation and amortization | $ | 41,623 | $ | 10,881 | $ | 1,030 | $ | (207 | ) | $ | 53,327 | ||||||||
Income (loss) from operations | $ | 378,566 | $ | 34,402 | $ | (41,225 | ) | $ | 1,320 | $ | 373,063 | ||||||||
Capital expenditures | $ | 56,621 | $ | 40,420 | $ | 2,977 | $ | — | $ | 100,018 | |||||||||
Year Ended December 31, 2012 | |||||||||||||||||||
Sales and other revenues | $ | 20,042,955 | $ | 288,501 | $ | 1,048 | $ | (241,780 | ) | $ | 20,090,724 | ||||||||
Depreciation and amortization | $ | 181,247 | $ | 57,789 | $ | 4,660 | $ | (828 | ) | $ | 242,868 | ||||||||
Income (loss) from operations | $ | 2,879,383 | $ | 133,723 | $ | (126,840 | ) | $ | (2,120 | ) | $ | 2,884,146 | |||||||
Capital expenditures | $ | 278,705 | $ | 44,929 | $ | 11,629 | $ | — | $ | 335,263 | |||||||||
Year Ended December 31, 2011 | |||||||||||||||||||
Sales and other revenues | $ | 15,392,430 | $ | 212,995 | $ | 1,098 | $ | (166,995 | ) | $ | 15,439,528 | ||||||||
Depreciation and amortization | $ | 122,437 | $ | 33,288 | $ | 4,810 | $ | (828 | ) | $ | 159,707 | ||||||||
Income (loss) from operations | $ | 1,739,068 | $ | 110,102 | $ | (117,677 | ) | $ | 55 | $ | 1,731,548 | ||||||||
Capital expenditures | $ | 148,699 | $ | 216,215 | $ | 9,327 | $ | — | $ | 374,241 | |||||||||
December 31, 2012 | |||||||||||||||||||
Cash, cash equivalents and investments in marketable securities | $ | 2,101 | $ | 5,237 | $ | 2,386,063 | $ | — | $ | 2,393,401 | |||||||||
Total assets | $ | 6,702,872 | $ | 1,426,800 | $ | 2,531,967 | $ | (332,642 | ) | $ | 10,328,997 | ||||||||
Long-term debt | $ | — | $ | 864,673 | $ | 471,565 | $ | — | $ | 1,336,238 | |||||||||
December 31, 2011 | |||||||||||||||||||
Cash, cash equivalents and investments in marketable securities | $ | — | $ | 6,369 | $ | 1,834,241 | $ | — | $ | 1,840,610 | |||||||||
Total assets | $ | 6,576,966 | $ | 1,418,660 | $ | 1,997,600 | $ | (416,983 | ) | $ | 9,576,243 | ||||||||
Long-term debt | $ | — | $ | 598,761 | $ | 688,881 | $ | (72,900 | ) | $ | 1,214,742 | ||||||||
(1) The Refining segment reflects the operations of the El Dorado and Cheyenne Refineries beginning July 1, 2011 (date of Holly-Frontier merger).
5
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 Ended December 31, | Years Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 (10) | ||||||||||||
Mid-Continent Region (El Dorado and Tulsa Refineries) | |||||||||||||||
Crude charge (BPD) (1) | 237,190 | 250,840 | 248,360 | 183,070 | |||||||||||
Refinery throughput (BPD) (2) | 267,970 | 271,940 | 269,760 | 194,310 | |||||||||||
Refinery production (BPD) (3) | 264,740 | 265,480 | 263,310 | 188,760 | |||||||||||
Sales of produced refined products (BPD) | 269,350 | 273,460 | 254,350 | 188,020 | |||||||||||
Sales of refined products (BPD) (4) | 272,790 | 275,210 | 258,020 | 190,340 | |||||||||||
Refinery utilization (5) | 91.2 | % | 96.5 | % | 95.5 | % | 94.8 | % | |||||||
Average per produced barrel (6) | |||||||||||||||
Net sales | $ | 116.42 | $ | 113.94 | $ | 119.19 | $ | 119.51 | |||||||
Cost of products (7) | 93.77 | 99.23 | 95.77 | 99.92 | |||||||||||
Refinery gross margin | 22.65 | 14.71 | 23.42 | 19.59 | |||||||||||
Refinery operating expenses (8) | 5.12 | 4.94 | 4.83 | 5.04 | |||||||||||
Net operating margin | $ | 17.53 | $ | 9.77 | $ | 18.59 | $ | 14.55 | |||||||
Refinery operating expenses per throughput barrel (9) | $ | 5.15 | $ | 4.97 | $ | 4.55 | $ | 4.88 | |||||||
Feedstocks: | |||||||||||||||
Sweet crude oil | 70 | % | 77 | % | 70 | % | 82 | % | |||||||
Sour crude oil | 6 | % | 5 | % | 8 | % | 4 | % | |||||||
Heavy sour crude oil | 13 | % | 10 | % | 14 | % | 8 | % | |||||||
Other feedstocks and blends | 11 | % | 8 | % | 8 | % | 6 | % | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||
Sales of produced refined products: | |||||||||||||||
Gasolines | 51 | % | 49 | % | 48 | % | 44 | % | |||||||
Diesel fuels | 30 | % | 29 | % | 29 | % | 32 | % | |||||||
Jet fuels | 8 | % | 7 | % | 9 | % | 7 | % | |||||||
Fuel oil | 1 | % | — | % | 1 | % | — | % | |||||||
Asphalt | 3 | % | 4 | % | 2 | % | 4 | % | |||||||
Lubricants | 3 | % | 4 | % | 5 | % | 6 | % | |||||||
Gas oil/intermediates | — | % | 2 | % | — | % | 3 | % | |||||||
LPG and other | 4 | % | 5 | % | 6 | % | 4 | % | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||
6
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 (10) | ||||||||||||
Southwest Region (Navajo Refinery) | |||||||||||||||
Crude charge (BPD) (1) | 99,610 | 86,190 | 93,830 | 83,700 | |||||||||||
Refinery throughput (BPD) (2) | 110,740 | 99,310 | 103,120 | 93,260 | |||||||||||
Refinery production (BPD) (3) | 106,280 | 96,490 | 100,810 | 91,810 | |||||||||||
Sales of produced refined products (BPD) | 104,220 | 101,780 | 99,160 | 93,950 | |||||||||||
Sales of refined products (BPD) (4) | 111,100 | 106,140 | 104,620 | 98,540 | |||||||||||
Refinery utilization (5) | 99.6 | % | 86.2 | % | 93.8 | % | 83.7 | % | |||||||
Average per produced barrel (6) | |||||||||||||||
Net sales | $ | 119.77 | $ | 115.90 | $ | 122.62 | $ | 118.76 | |||||||
Cost of products (7) | 91.06 | 101.14 | 95.70 | 98.40 | |||||||||||
Refinery gross margin | 28.71 | 14.76 | 26.92 | 20.36 | |||||||||||
Refinery operating expenses (8) | 7.48 | 5.14 | 6.07 | 5.44 | |||||||||||
Net operating margin | $ | 21.23 | $ | 9.62 | $ | 20.85 | $ | 14.92 | |||||||
Refinery operating expenses per throughput barrel (9) | $ | 7.04 | $ | 5.27 | $ | 5.84 | $ | 5.48 | |||||||
Feedstocks: | |||||||||||||||
Sweet crude oil | 3 | % | — | % | 2 | % | 3 | % | |||||||
Sour crude oil | 72 | % | 86 | % | 77 | % | 75 | % | |||||||
Heavy sour crude oil | 15 | % | 1 | % | 12 | % | 11 | % | |||||||
Other feedstocks and blends | 10 | % | 13 | % | 9 | % | 11 | % | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||
Sales of produced refined products: | |||||||||||||||
Gasolines | 51 | % | 56 | % | 51 | % | 52 | % | |||||||
Diesel fuels | 39 | % | 33 | % | 38 | % | 34 | % | |||||||
Jet fuels | — | % | 1 | % | — | % | 1 | % | |||||||
Fuel oil | 6 | % | 4 | % | 6 | % | 6 | % | |||||||
Asphalt | 1 | % | 4 | % | 2 | % | 4 | % | |||||||
LPG and other | 3 | % | 2 | % | 3 | % | 3 | % | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||
Rocky Mountain Region (Cheyenne and Woods Cross Refineries) | |||||||||||
Crude charge (BPD) (1) | 71,100 | 69,500 | 73,020 | 48,230 | |||||||
Refinery throughput (BPD) (2) | 78,830 | 77,210 | 80,860 | 52,630 | |||||||
Refinery production (BPD) (3) | 75,500 | 75,950 | 78,610 | 51,320 | |||||||
Sales of produced refined products (BPD) | 72,130 | 75,570 | 77,550 | 50,750 | |||||||
Sales of refined products (BPD) (4) | 79,150 | 77,430 | 80,980 | 51,750 | |||||||
Refinery utilization (5) | 85.7 | % | 83.7 | % | 88.0 | % | 84.3 | % | |||
7
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 (10) | ||||||||||||
Rocky Mountain Region (Cheyenne and Woods Cross Refineries) | |||||||||||||||
Average per produced barrel (6) | |||||||||||||||
Net sales | $ | 112.94 | $ | 111.88 | $ | 116.44 | $ | 116.37 | |||||||
Cost of products (7) | 90.69 | 93.55 | 89.29 | 91.33 | |||||||||||
Refinery gross margin | 22.25 | 18.33 | 27.15 | 25.04 | |||||||||||
Refinery operating expenses (8) | 8.92 | 6.34 | 6.91 | 6.41 | |||||||||||
Net operating margin | $ | 13.33 | $ | 11.99 | $ | 20.24 | $ | 18.63 | |||||||
Refinery operating expenses per throughput barrel (9) | $ | 8.16 | $ | 6.21 | $ | 6.63 | $ | 6.18 | |||||||
Feedstocks: | |||||||||||||||
Sweet crude oil | 49 | % | 48 | % | 47 | % | 52 | % | |||||||
Sour crude oil | 1 | % | 1 | % | 1 | % | 1 | % | |||||||
Heavy sour crude oil | 31 | % | 30 | % | 31 | % | 24 | % | |||||||
Black wax crude oil | 9 | % | 11 | % | 11 | % | 15 | % | |||||||
Other feedstocks and blends | 10 | % | 10 | % | 10 | % | 8 | % | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||
Sales of produced refined products: | |||||||||||||||
Gasolines | 53 | % | 58 | % | 55 | % | 56 | % | |||||||
Diesel fuels | 36 | % | 30 | % | 32 | % | 31 | % | |||||||
Jet fuels | — | % | 1 | % | — | % | 1 | % | |||||||
Fuel oil | 2 | % | 1 | % | 2 | % | 1 | % | |||||||
Asphalt | 3 | % | 5 | % | 5 | % | 6 | % | |||||||
LPG and other | 6 | % | 5 | % | 6 | % | 5 | % | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||
Consolidated | |||||||||||||||
Crude charge (BPD) (1) | 407,900 | 406,530 | 415,210 | 315,000 | |||||||||||
Refinery throughput (BPD) (2) | 457,540 | 448,460 | 453,740 | 340,200 | |||||||||||
Refinery production (BPD) (3) | 446,520 | 437,920 | 442,730 | 331,890 | |||||||||||
Sales of produced refined products (BPD) | 445,700 | 450,810 | 431,060 | 332,720 | |||||||||||
Sales of refined products (BPD) (4) | 463,040 | 458,780 | 443,620 | 340,630 | |||||||||||
Refinery utilization (5) | 92.1 | % | 91.8 | % | 93.7 | % | 89.9 | % | |||||||
Average per produced barrel (6) | |||||||||||||||
Net sales | $ | 116.64 | $ | 114.03 | $ | 119.48 | $ | 118.82 | |||||||
Cost of products (7) | 92.64 | 98.71 | 94.59 | 98.18 | |||||||||||
Refinery gross margin | 24.00 | 15.32 | 24.89 | 20.64 | |||||||||||
Refinery operating expenses (8) | 6.29 | 5.22 | 5.49 | 5.36 | |||||||||||
Net operating margin | $ | 17.71 | $ | 10.10 | $ | 19.40 | $ | 15.28 | |||||||
Refinery operating expenses per throughput barrel (9) | $ | 6.12 | $ | 5.25 | $ | 5.22 | $ | 5.24 | |||||||
Feedstocks: | |||||||||||||||
Sweet crude oil | 50 | % | 55 | % | 51 | % | 56 | % | |||||||
Sour crude oil | 21 | % | 22 | % | 22 | % | 23 | % | |||||||
Heavy sour crude oil | 16 | % | 12 | % | 17 | % | 12 | % | |||||||
Black wax crude oil | 2 | % | 2 | % | 2 | % | 2 | % | |||||||
Other feedstocks and blends | 11 | % | 9 | % | 8 | % | 7 | % | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||||
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Three Months Ended December 31, | Years Ended December 31, | ||||||||||
2012 | 2011 | 2012 | 2011 (10) | ||||||||
Consolidated | |||||||||||
Sales of produced refined products: | |||||||||||
Gasolines | 51 | % | 52 | % | 50 | % | 48 | % | |||
Diesel fuels | 33 | % | 31 | % | 31 | % | 32 | % | |||
Jet fuels | 5 | % | 5 | % | 6 | % | 5 | % | |||
Fuel oil | 2 | % | 1 | % | 2 | % | 2 | % | |||
Asphalt | 3 | % | 4 | % | 3 | % | 4 | % | |||
Lubricants | 2 | % | 2 | % | 3 | % | 3 | % | |||
Gas oil / intermediates | — | % | 1 | % | — | % | 2 | % | |||
LPG and other | 4 | % | 4 | % | 5 | % | 4 | % | |||
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) | Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at our refineries. |
(4) | Includes refined products purchased for resale. |
(5) | Represents crude charge divided by total crude capacity (BPSD). As a result of our merger effective July 1, 2011, our consolidated crude capacity increased from 256,000 BPSD to 443,000 BPSD. |
(6) | Represents average per barrel amount for produced refined products 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. |
(7) | Transportation, terminal and refinery storage costs billed from HEP are included in cost of products. |
(8) | Represents operating expenses of our refineries, exclusive of depreciation and amortization. |
(9) | Represents refinery operating expenses, exclusive of depreciation and amortization divided by refinery throughput. |
(10) | We merged with Frontier effective July 1, 2011. Refining operating data for the year ended December 31, 2011 include crude oil processed and products yielded from the El Dorado and Cheyenne Refineries for the period from July 1, 2011 through December 31, 2011 only, and averaged over the 365 days in the year ended December 31, 2011. |
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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 Ended December 31, | Years Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands) | |||||||||||||||
Net income attributable to HollyFrontier stockholders | $ | 391,604 | $ | 223,380 | $ | 1,727,172 | $ | 1,023,397 | |||||||
Add income tax provision | 252,216 | 116,261 | 1,027,962 | 581,991 | |||||||||||
Add interest expense | 22,826 | 21,852 | 104,186 | 78,323 | |||||||||||
Subtract interest income | (1,426 | ) | (338 | ) | (4,786 | ) | (1,284 | ) | |||||||
Add depreciation and amortization | 64,706 | 53,327 | 242,868 | 159,707 | |||||||||||
EBITDA | $ | 729,926 | $ | 414,482 | $ | 3,097,402 | $ | 1,842,134 | |||||||
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.
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Reconciliations of refined product sales from produced products sold to total sales and other revenues
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(Dollars in thousands, except per barrel amounts) | |||||||||||||||
Consolidated | |||||||||||||||
Average sales price per produced barrel sold | $ | 116.64 | $ | 114.03 | $ | 119.48 | $ | 118.82 | |||||||
Times sales of produced refined products (BPD) | 445,700 | 450,810 | 431,060 | 332,720 | |||||||||||
Times number of days in period | 92 | 92 | 366 | 365 | |||||||||||
Refined product sales from produced products sold | $ | 4,782,753 | $ | 4,729,340 | $ | 18,850,116 | $ | 14,429,833 | |||||||
Total refined product sales | $ | 4,782,753 | $ | 4,729,340 | $ | 18,850,116 | $ | 14,429,833 | |||||||
Add refined product sales from purchased products and rounding (1) | 194,364 | 84,132 | 572,206 | 350,843 | |||||||||||
Total refined product sales | 4,977,117 | 4,813,472 | 19,422,322 | 14,780,676 | |||||||||||
Add direct sales of excess crude oil (2) | 127,935 | 135,965 | 505,971 | 558,855 | |||||||||||
Add other refining segment revenue (3) | 30,054 | 10,571 | 114,662 | 52,899 | |||||||||||
Total refining segment revenue | 5,135,106 | 4,960,008 | 20,042,955 | 15,392,430 | |||||||||||
Add HEP segment sales and other revenues | 81,251 | 68,079 | 288,501 | 212,995 | |||||||||||
Add corporate and other revenues | 136 | — | 1,048 | 1,098 | |||||||||||
Subtract consolidations and eliminations | (68,986 | ) | (55,675 | ) | (241,780 | ) | (166,995 | ) | |||||||
Sales and other revenues | $ | 5,147,507 | $ | 4,972,412 | $ | 20,090,724 | $ | 15,439,528 | |||||||
Reconciliation of average cost of products per produced barrel sold to total cost of products sold
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(Dollars in thousands, except per barrel amounts) | |||||||||||||||
Consolidated | |||||||||||||||
Average cost of products per produced barrel sold | $ | 92.64 | $ | 98.71 | $ | 94.59 | $ | 98.18 | |||||||
Times sales of produced refined products (BPD) | 445,700 | 450,810 | 431,060 | 332,720 | |||||||||||
Times number of days in period | 92 | 92 | 366 | 365 | |||||||||||
Cost of products for produced products sold | $ | 3,798,648 | $ | 4,093,950 | $ | 14,923,271 | $ | 11,923,254 | |||||||
Total cost of products for produced products sold | $ | 3,798,648 | $ | 4,093,950 | $ | 14,923,271 | $ | 11,923,254 | |||||||
Add refined product costs from purchased products sold and rounding (1) | 194,459 | 83,012 | 572,755 | 351,788 | |||||||||||
Total cost of refined products sold | 3,993,107 | 4,176,962 | 15,496,026 | 12,275,042 | |||||||||||
Add crude oil cost of direct sales of excess crude oil (2) | 124,995 | 134,535 | 492,790 | 550,619 | |||||||||||
Add other refining segment cost of products sold (4) | 23,011 | 1,478 | 90,132 | 18,672 | |||||||||||
Total refining segment cost of products sold | 4,141,113 | 4,312,975 | 16,078,948 | 12,844,333 | |||||||||||
Subtract consolidations and eliminations | (67,887 | ) | (54,536 | ) | (238,305 | ) | (164,255 | ) | |||||||
Costs of products sold (exclusive of depreciation and amortization) | $ | 4,073,226 | $ | 4,258,439 | $ | 15,840,643 | $ | 12,680,078 | |||||||
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Reconciliation of average refinery operating expenses per produced barrel sold to total operating expenses
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(Dollars in thousands, except per barrel amounts) | |||||||||||||||
Consolidated | |||||||||||||||
Average refinery operating expenses per produced barrel sold | $ | 6.29 | $ | 5.22 | $ | 5.49 | $ | 5.36 | |||||||
Times sales of produced refined products (BPD) | 445,700 | 450,810 | 431,060 | 332,720 | |||||||||||
Times number of days in period | 92 | 92 | 366 | 365 | |||||||||||
Refinery operating expenses for produced products sold | $ | 257,918 | $ | 216,497 | $ | 866,146 | $ | 650,933 | |||||||
Total refinery operating expenses for produced products sold | $ | 257,918 | $ | 216,497 | $ | 866,146 | $ | 650,933 | |||||||
Add other refining segment operating expenses and rounding (5) | 10,180 | 10,347 | 37,231 | 35,659 | |||||||||||
Total refining segment operating expenses | 268,098 | 226,844 | 903,377 | 686,592 | |||||||||||
Add HEP segment operating expenses | 27,596 | 21,208 | 89,395 | 63,029 | |||||||||||
Add corporate and other costs | 1,419 | 310 | 2,721 | 427 | |||||||||||
Subtract consolidations and eliminations | (359 | ) | (2,252 | ) | (527 | ) | (1,967 | ) | |||||||
Operating expenses (exclusive of depreciation and amortization) | $ | 296,754 | $ | 246,110 | $ | 994,966 | $ | 748,081 | |||||||
Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenues
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(Dollars in thousands, except per barrel amounts) | |||||||||||||||
Consolidated | |||||||||||||||
Net operating margin per barrel | $ | 17.71 | $ | 10.10 | $ | 19.40 | $ | 15.28 | |||||||
Add average refinery operating expenses per produced barrel | 6.29 | 5.22 | 5.49 | 5.36 | |||||||||||
Refinery gross margin per barrel | 24.00 | 15.32 | 24.89 | 20.64 | |||||||||||
Add average cost of products per produced barrel sold | 92.64 | 98.71 | 94.59 | 98.18 | |||||||||||
Average sales price per produced barrel sold | $ | 116.64 | $ | 114.03 | $ | 119.48 | $ | 118.82 | |||||||
Times sales of produced refined products (BPD) | 445,700 | 450,810 | 431,060 | 332,720 | |||||||||||
Times number of days in period | 92 | 92 | 366 | 365 | |||||||||||
Refined product sales from produced products sold | $ | 4,782,753 | $ | 4,729,340 | $ | 18,850,116 | $ | 14,429,833 | |||||||
Total refined product sales from produced products sold | $ | 4,782,753 | $ | 4,729,340 | $ | 18,850,116 | $ | 14,429,833 | |||||||
Add refined product sales from purchased products and rounding (1) | 194,364 | 84,132 | 572,206 | 350,843 | |||||||||||
Total refined product sales | 4,977,117 | 4,813,472 | 19,422,322 | 14,780,676 | |||||||||||
Add direct sales of excess crude oil (2) | 127,935 | 135,965 | 505,971 | 558,855 | |||||||||||
Add other refining segment revenue (3) | 30,054 | 10,571 | 114,662 | 52,899 | |||||||||||
Total refining segment revenue | 5,135,106 | 4,960,008 | 20,042,955 | 15,392,430 | |||||||||||
Add HEP segment sales and other revenues | 81,251 | 68,079 | 288,501 | 212,995 | |||||||||||
Add corporate and other revenues | 136 | — | 1,048 | 1,098 | |||||||||||
Subtract consolidations and eliminations | (68,986 | ) | (55,675 | ) | (241,780 | ) | (166,995 | ) | |||||||
Sales and other revenues | $ | 5,147,507 | $ | 4,972,412 | $ | 20,090,724 | $ | 15,439,528 | |||||||
(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. |
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FOR FURTHER INFORMATION, Contact:
Douglas S. Aron, Executive Vice President and
Chief Financial Officer
Julia Heidenreich, Vice President,
Investor Relations
HollyFrontier Corporation
214/954-6510
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