Document
false0001283140HOLLY ENERGY PARTNERS LP 0001283140 2019-10-30 2019-10-30

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 30, 2019
___________________

HOLLY ENERGY PARTNERS, L.P.
(Exact name of Registrant as specified in its charter)
Delaware
001-32225
20-0833098
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer
Identification Number)
2828 N. Harwood, Suite 1300
Dallas
Texas
75201
(Address of principal executive offices)
 
(Zip code)
       
Registrant’s telephone number, including area code: (214) 871-3555
 
Not applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to 12(b) of the Securities Exchange Act of 1934:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Limited Partner Units
HEP
New York Stock Exchange
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company        
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐
  



Item 2.02. Results of Operations and Financial Condition.
On October 30, 2019, Holly Energy Partners, L.P. (the “Partnership”) issued a press release announcing the Partnership’s third quarter 2019 results. A copy of the Partnership's press release is attached hereto as Exhibit 99.1 and incorporated herein in its entirety.
The information contained in, or incorporated into, this Item 2.02 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference to such filing.

Item 9.01 Financial Statements and Exhibits.
(d)    Exhibits.

99.1
104
—    Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document).
* Furnished herewith pursuant to Item 2.02.


Exhibit




Earnings Release
October 30, 2019
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13169094&doc=8
Holly Energy Partners, L.P. Reports Third Quarter Results
Reported net income attributable to HEP of $82.3 million or $0.78 per unit
Announced quarterly distribution of $0.6725 per unit, a 1.1% increase over third quarter 2018
Reported EBITDA of $123.1 million, Adjusted EBITDA of $90.3 million and distributable cash flow of $68.8 million providing a 1.01x distribution coverage ratio
Dallas, Texas -- Holly Energy Partners, L.P. (“HEP” or the “Partnership”) (NYSE:HEP) today reported financial results for the third quarter of 2019. Net income attributable to HEP for the third quarter was $82.3 million ($0.78 per basic and diluted limited partner unit), compared to $45.0 million ($0.43 per basic and diluted limited partner unit) for the third quarter of 2018.
Distributable cash flow was $68.8 million for the quarter, an increase of $2.2 million, or 3.4% compared to the third quarter of 2018. HEP declared a quarterly cash distribution of $0.6725 on 10/17/2019. This distribution remains the same as the $0.6725 paid in the second quarter of 2019.
During the third quarter of 2019, HEP and HollyFrontier Corporation ("HFC" or "HollyFrontier") renewed the original throughput agreement on specific HEP assets. Portions of the new throughput agreement meet the definition of sales-type leases, which resulted in an accounting gain of $35.2 million upon the initial recognition of the sales-type leases during the third quarter. Excluding this gain, net income attributable to HEP for the quarter was $47.2 million ($0.45 per basic and diluted limited partner unit), an increase of $2.2 million compared to the same period of 2018. The increase in net income attributable to HEP was mainly due to strong third-party volumes on our UNEV pipeline, higher spot revenues on our crude oil pipeline systems in Wyoming and Utah and stronger terminal and tank volumes at El Dorado and Tulsa.
Commenting on our 2019 third quarter results, George Damiris, Chief Executive Officer, stated, “HEP had a solid third quarter led by the continued strength in crude transportation across our system. The recently announced Cushing Connect joint venture highlights both our opportunities to grow HEP as well as our strong parent, HollyFrontier.
“Looking forward, HEP expects to hold quarterly cash distribution constant at $0.6725, while maintaining a coverage of 1.0x for the full year 2019 and through 2020.”
Third Quarter 2019 Revenue Highlights
Revenues for the third quarter were $135.9 million, an increase of $10.1 million compared to the third quarter of 2018. The increase was mainly attributable to higher volumes on our UNEV pipeline and our crude pipeline systems in Wyoming and Utah, which contributed to an increase in overall pipeline volumes of 8%. Along with higher volumes through our refinery tankage and terminals, contractual tariff escalators across our assets also led to an increase in revenues year over year.

Revenues from our refined product pipelines were $32.7 million, an increase of $0.7 million compared to the third quarter of 2018, due to higher throughput and contractual tariff escalators. Shipments averaged 197.1 thousand barrels per day ("mbpd") compared to 187.1 mbpd for the third


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quarter of 2018. The volume increase was mainly due to higher volumes on our UNEV pipeline and pipelines servicing HFC's Navajo refinery.

Revenues from our intermediate pipelines were $7.5 million, an increase of $0.7 million compared to the third quarter of 2018, due to higher throughput and contractual tariff escalators. Shipments averaged 153.5 mbpd for the third quarter of 2019 compared to 148.3 mbpd for the third quarter of 2018. The increase in volumes was mainly due to higher throughputs on our intermediate pipelines servicing HollyFrontier's Tulsa refinery.

Revenues from our crude pipelines were $33.0 million, an increase of $2.0 million compared to the third quarter of 2018, and shipments averaged 488.1 mbpd compared to 442.1 mbpd for the third quarter of 2018. The increases were mainly attributable to increased volumes on our crude pipeline systems in New Mexico and Texas and on our crude pipeline systems in Wyoming and Utah, as well as contractual tariff escalators.

Revenues from terminal, tankage and loading rack fees were $42.5 million, an increase of $6.0 million compared to the third quarter of 2018. Refined products and crude oil terminalled in the facilities averaged 541.6 mbpd compared to 475.1 mbpd for the third quarter of 2018. The revenue and volume increases were mainly due to higher volumes at HFC's Tulsa and El Dorado refineries, our new Orla diesel rack and our Catoosa, Las Vegas and Spokane terminals.

Revenues from refinery processing units were $20.3 million, an increase of $0.7 million compared to the third quarter of 2018, and throughputs averaged 75.9 mbpd compared to 65.6 mbpd for the third quarter of 2018. The increase in revenue was mainly due to contractual rate increases.

Nine Months Ended September 30, 2019 Revenue Highlights
Revenues for the nine months ended September 30, 2019, were $401.1 million, an increase of $27.7 million compared to the nine months ended September 30, 2018. The increase was mainly attributable to higher crude oil pipeline volumes around the Permian Basin and our crude pipeline systems in Wyoming and Utah, higher revenues on our refinery processing units and contractual tariff escalators.

Revenues from our refined product pipelines were $101.5 million, an increase of $3.6 million compared to the nine months ended September 30, 2018. Shipments averaged 202.2 mbpd compared to 196.5 mbpd for the nine months ended September 30, 2018. The volume and revenue increases were mainly due to higher Delek volumes, higher volumes on pipelines servicing HFC's Woods Cross refinery, which had lower throughput in 2018 due to operational issues, and contractual tariff escalators.

Revenues from our intermediate pipelines were $22.1 million, a decrease of $0.4 million compared to the nine months ended September 30, 2018. Shipments averaged 142.0 mbpd compared to 142.4 mbpd for the nine months ended September 30, 2018. The decrease in revenue was primarily attributable to a decrease in deferred revenue realized.

Revenues from our crude pipelines were $96.9 million, an increase of $9.9 million compared to the nine months ended September 30, 2018. Shipments averaged 508.6 mbpd compared to 455.6 mbpd for the nine months ended September 30, 2018. The increases were mainly attributable to increased volumes on our crude pipeline systems in New Mexico and Texas and on our crude pipeline systems in Wyoming and Utah as well as contractual tariff escalators.

Revenues from terminal, tankage and loading rack fees were $119.1 million, an increase of $10.1 million compared to the nine months ended September 30, 2018. Refined products and crude oil terminalled in the facilities averaged 492.1 mbpd compared to 477.8 mbpd for the nine months ended September 30, 2018. The revenue and volume increases were mainly due to volumes at our new Orla diesel rack and higher volumes at the Spokane and Catoosa terminals, partially offset by lower volumes at HFC's Tulsa refinery as a result of the planned turnaround in the first quarter and flooding in the second quarter.


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Revenues from refinery processing units were $61.5 million, an increase of $4.5 million compared to the nine months ended September 30, 2018. Throughputs averaged 73.2 mbpd compared to 67.9 mbpd for the nine months ended September 30, 2018. The increase in revenue was mainly due to an adjustment in revenue recognition and contractual rate increases.

Operating Costs and Expenses Highlights
Operating costs and expenses were $71.8 million and $202.6 million for the three and nine months ended September 30, 2019, respectively, representing increases of $8.9 million and $13.4 million from the three and nine months ended September 30, 2018, respectively. These increases were mainly due to higher employee compensation expenses, maintenance costs and property taxes.
Interest expense was $18.8 million and $57.1 million for the three and nine months ended September 30, 2019, representing increases of $0.8 million and $3.8 million over the same periods of 2018. These increases were mainly due to higher average balances outstanding under our senior secured revolving credit facility and market interest rate increases under the facility.
 
We have scheduled a webcast conference call today at 4:00 PM Eastern Time to discuss financial results. This webcast may be accessed at:

https://event.on24.com/wcc/r/2080138/CAE357C8554E8B7B173607A94575B76B

An audio archive of this webcast will be available using the above noted link through November 13, 2019.
About Holly Energy Partners, L.P.
Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HollyFrontier Corporation subsidiaries. The Partnership, through its subsidiaries and joint ventures, owns and/or operates petroleum product and crude pipelines, tankage and terminals in Texas, New Mexico, Washington, Idaho, Oklahoma, Utah, Nevada, Wyoming and Kansas, as well as refinery processing units in Utah and Kansas.
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.
The statements in this press release relating to matters that are not historical facts are “forward-looking statements” within the meaning of the federal securities laws. These statements are based on our beliefs and assumptions and those of our general partner using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties. Although we and our general partner believe that such expectations reflected in such forward-looking statements are reasonable, neither we nor our general partner can give assurance that our expectations will prove to be correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in these statements. Any differences could be caused by a number of factors including, but not limited to:
risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored and throughput in our terminals and refinery processing units;
the economic viability of HollyFrontier Corporation, Delek US Holdings, Inc. and our other customers;


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the demand for refined petroleum products in markets we serve;
our ability to purchase and integrate future acquired operations;
our ability to complete previously announced or contemplated acquisitions;
the availability and cost of additional debt and equity financing;
the possibility of reductions in production or shutdowns at refineries utilizing our pipelines, terminal facilities and refinery processing units;
the effects of current and future government regulations and policies;
our operational efficiency in carrying out routine operations and capital construction projects;
the possibility of terrorist or cyber attacks and the consequences of any such attacks;
general economic conditions;
the impact of recent or proposed changes in tax laws and regulations that affect master limited partnerships; and
other financial, operational and legal risks and uncertainties detailed from time to time in our 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.


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RESULTS OF OPERATIONS (Unaudited)
       
Income, Distributable Cash Flow and Volumes
The following tables present income, distributable cash flow and volume information for the three and the nine months ended September 30, 2019 and 2018.
 
Three Months Ended September 30,
 
Change from
 
2019
 
2018
 
2018
 
(In thousands, except per unit data)
Revenues
 
 
 
 
 
Pipelines:
 
 
 
 
 
Affiliates – refined product pipelines
$
19,401

 
$
20,803

 
$
(1,402
)
Affiliates – intermediate pipelines
7,490

 
6,772

 
718

Affiliates – crude pipelines
21,675

 
20,461

 
1,214

 
48,566

 
48,036

 
530

   Third parties – refined product pipelines
13,270

 
11,194

 
2,076

Third parties – crude pipelines
11,327

 
10,505

 
822

 
73,163

 
69,735

 
3,428

Terminals, tanks and loading racks:
 
 
 
 
 
Affiliates
37,183

 
32,572

 
4,611

Third parties
5,271

 
3,897

 
1,374

 
42,454

 
36,469

 
5,985

 
 
 
 
 
 
Affiliates - refinery processing units
20,278

 
19,580

 
698

 
 
 
 
 
 
Total revenues
135,895

 
125,784

 
10,111

Operating costs and expenses
 
 
 
 
 
Operations
44,924

 
35,996

 
8,928

Depreciation and amortization
24,121

 
24,367

 
(246
)
General and administrative
2,714

 
2,498

 
216

 
71,759

 
62,861

 
8,898

Operating income
64,136

 
62,923

 
1,213

 
 
 
 
 
 
Equity in earnings of equity method investments
1,334

 
1,114

 
220

Interest expense, including amortization
(18,807
)
 
(18,042
)
 
(765
)
Interest income
2,243

 
540

 
1,703

Gain on sales-type leases

35,166

 

 
35,166

Gain on sale of assets and other
142

 
38

 
104

 
20,078

 
(16,350
)
 
36,428

Income before income taxes
84,214

 
46,573

 
37,641

State income tax benefit (expense)
(30
)
 
(39
)
 
9

Net income
84,184

 
46,534

 
37,650

Allocation of net income attributable to noncontrolling interests
(1,839
)
 
(1,531
)
 
(308
)
Net income attributable to Holly Energy Partners
$
82,345

 
$
45,003

 
$
37,342

Limited partners’ earnings per unit – basic and diluted
$
0.78

 
$
0.43

 
$
0.35

Weighted average limited partners’ units outstanding
105,440

 
105,440

 

EBITDA(1)
$
123,060

 
$
86,911

 
$
36,149

Adjusted EBITDA(1)
$
90,269

 
$
86,911

 
$
3,358

Distributable cash flow(2)
$
68,838

 
$
66,598

 
$
2,240

Volumes (bpd)
 
 
 
 
 
Pipelines:
 
 
 
 
 
Affiliates – refined product pipelines
129,681

 
120,024

 
9,657

Affiliates – intermediate pipelines
153,547

 
148,347

 
5,200

Affiliates – crude pipelines 
358,867

 
322,590

 
36,277

 
642,095

 
590,961

 
51,134

Third parties – refined product pipelines
67,440

 
67,112

 
328

Third parties – crude pipelines
129,222

 
119,503

 
9,719

 
838,757

 
777,576

 
61,181

Terminals and loading racks:
 
 
 
 
 
Affiliates
482,291

 
417,079

 
65,212

Third parties
59,307

 
57,990

 
1,317

 
541,598

 
475,069

 
66,529

 
 
 
 
 
 
Affiliates – refinery processing units
75,857

 
65,640

 
10,217

 
 
 
 
 
 
Total for pipelines and terminal assets (bpd)
1,456,212

 
1,318,285

 
137,927




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Nine Months Ended September 30,
 
Change from
 
2019
 
2018
 
2018
 
(In thousands, except per unit data)
Revenues
 
 
 
 
 
Pipelines:
 
 
 
 
 
Affiliates – refined product pipelines
$
60,892

 
$
60,841

 
$
51

Affiliates – intermediate pipelines
22,068

 
22,496

 
(428
)
Affiliates – crude pipelines
63,447

 
58,737

 
4,710

 
146,407

 
142,074

 
4,333

   Third parties – refined product pipelines
40,652

 
37,124

 
3,528

Third parties – crude pipelines
33,467

 
28,245

 
5,222

 
220,526

 
207,443

 
13,083

Terminals, tanks and loading racks:
 
 
 
 
 
Affiliates
103,852

 
96,606

 
7,246

Third parties
15,269

 
12,430

 
2,839

 
119,121

 
109,036

 
10,085

 
 
 
 
 
 
Affiliates - refinery processing units
61,496

 
56,949

 
4,547

 
 
 
 
 
 
Total revenues
401,143

 
373,428

 
27,715

Operating costs and expenses
 
 
 
 
 
Operations
123,045

 
106,731

 
16,314

Depreciation and amortization
72,192

 
74,117

 
(1,925
)
General and administrative
7,322

 
8,293

 
(971
)
 
202,559

 
189,141

 
13,418

Operating income
198,584

 
184,287

 
14,297

 
 
 
 
 
 
Equity in earnings of equity method investments
5,217

 
4,127

 
1,090

Interest expense, including amortization
(57,059
)
 
(53,249
)
 
(3,810
)
Interest income
3,322

 
1,581

 
1,741

Gain on sales-type leases

35,166

 

 
35,166

Gain (loss) on sale of assets and other
(57
)
 
71

 
(128
)
 
(13,411
)
 
(47,470
)
 
34,059

Income before income taxes
185,173

 
136,817

 
48,356

State income tax expense
(36
)
 
(149
)
 
113

Net income
185,137

 
136,668

 
48,469

Allocation of net income attributable to noncontrolling interests
(5,920
)
 
(5,354
)
 
(566
)
Net income attributable to Holly Energy Partners
$
179,217

 
$
131,314

 
$
47,903

Limited partners’ earnings per unit—basic and diluted
$
1.70

 
$
1.25

 
$
0.45

Weighted average limited partners’ units outstanding
105,440

 
104,908

 
532

EBITDA(1)
$
305,182

 
$
257,248

 
$
47,934

Adjusted EBITDA(1)
$
272,391

 
$
257,248

 
$
15,143

Distributable cash flow(2)
$
206,923

 
$
200,878

 
$
6,045

 
 
 
 
 
 
Volumes (bpd)
 
 
 
 
 
Pipelines:
 
 
 
 
 
Affiliates – refined product pipelines
130,426

 
125,642

 
4,784

Affiliates – intermediate pipelines
141,991

 
142,371

 
(380
)
Affiliates – crude pipelines
376,518

 
336,224

 
40,294

 
648,935

 
604,237

 
44,698

Third parties – refined product pipelines
71,773

 
70,830

 
943

Third parties – crude pipelines
132,101

 
119,344

 
12,757

 
852,809

 
794,411

 
58,398

Terminals and loading racks:
 
 
 
 

Affiliates
429,660

 
418,009

 
11,651

Third parties
62,437

 
59,776

 
2,661

 
492,097

 
477,785

 
14,312

 
 
 
 
 
 
Affiliates – refinery processing units
73,178

 
67,873

 
5,305

 
 
 
 
 
 
Total for pipelines and terminal assets (bpd)
1,418,084

 
1,340,069

 
78,015






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(1)
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to Holly Energy Partners plus (i) interest expense, net of interest income, (ii) state income tax and (iii) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA minus gain on sales-type leases plus pipeline tariffs not included in revenues due to impacts from lease accounting for certain pipeline tariffs. Portions of our minimum guaranteed pipeline tariffs for assets subject to sales-type lease accounting are recorded as interest income with the remaining amounts recorded as a reduction in net investment in leases. These pipeline tariffs were previously recorded as revenues prior to the adoption of ASU No. 2016-02, "Leases". EBITDA and Adjusted EBITDA are not calculations based upon generally accepted accounting principles ("GAAP"). However, the amounts included in the EBITDA and Adjusted EBITDA calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income attributable to Holly Energy Partners or operating income, as indications of our operating performance or as alternatives to operating cash flow as a measure of liquidity. EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. EBITDA and Adjusted EBITDA 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 compliance with financial covenants.

Set forth below is our calculation of EBITDA and Adjusted EBITDA.
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30, 2019
 
 
2019
 
2018
 
2019
 
2018
 
 
(In thousands)
Net income attributable to Holly Energy Partners
 
$
82,345

 
$
45,003

 
$
179,217

 
$
131,314

Add (subtract):
 
 
 
 
 
 
 
 
Interest expense
 
18,807

 
18,042

 
57,059

 
53,249

Interest Income
 
(2,243
)
 
(540
)
 
(3,322
)
 
(1,581
)
State income tax expense
 
30

 
39

 
36

 
149

Depreciation and amortization
 
24,121

 
24,367

 
72,192

 
74,117

EBITDA
 
123,060

 
86,911

 
305,182

 
257,248

Gain on sales-type leases
 
(35,166
)
 

 
(35,166
)
 

Pipeline tariffs not included in revenues
 
2,375

 

 
2,375

 

Adjusted EBITDA
 
$
90,269

 
$
86,911

 
$
272,391

 
$
257,248

(2)
Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts presented in our consolidated financial statements, with the general exception of maintenance capital expenditures. Distributable cash flow should not be considered in isolation or as an alternative to net income attributable to Holly Energy Partners or operating income, as an indication of our operating performance, or as an alternative to operating cash flow as a measure of liquidity. Distributable cash flow is not necessarily comparable to similarly titled measures of other companies. Distributable cash flow is presented here because it is a widely accepted financial indicator used by investors to compare partnership performance. It is also used by management for internal analysis and our performance units. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating.    
Set forth below is our calculation of distributable cash flow.
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30, 2019
 
 
2019
 
2018
 
2019
 
2018
 
 
(In thousands)
Net income attributable to Holly Energy Partners
 
$
82,345

 
$
45,003

 
$
179,217

 
$
131,314

Add (subtract):
 
 
 
 
 
 
 
 
Depreciation and amortization
 
24,121

 
24,367

 
72,192

 
74,117

Amortization of discount and deferred debt charges
 
771

 
762

 
2,307

 
2,278

Revenue recognized (greater) less than customer billings
 
504

 
1,294

 
(2,827
)
 
2,994

Maintenance capital expenditures (3)
 
(2,118
)
 
(3,198
)
 
(3,477
)
 
(4,504
)
Increase (decrease) in environmental liability
 
91

 
(150
)
 
(464
)
 
(368
)
Decrease in reimbursable deferred revenue
 
(1,964
)
 
(1,517
)
 
(5,604
)
 
(3,937
)
Gain on sales-type leases
 
(35,166
)
 

 
(35,166
)
 

Other
 
254

 
37

 
745

 
(1,016
)
Distributable cash flow
 
$
68,838

 
$
66,598

 
$
206,923

 
$
200,878



7




    
(3)
Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, safety and to address environmental regulations.
Set forth below is certain balance sheet data.
 
 
September 30,
 
December 31,
 
 
2019
 
2018
 
 
(In thousands)
Balance Sheet Data
 
 
 
 
Cash and cash equivalents
 
$
7,469

 
$
3,045

Working capital
 
$
10,762

 
$
8,577

Total assets
 
$
2,154,275

 
$
2,102,540

Long-term debt
 
$
1,431,869

 
$
1,418,900

Partners' equity (4)
 
$
404,584

 
$
427,435


(4)
As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to Holly Energy Partners because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to Holly Energy Partners. Additionally, if the assets contributed and acquired from HollyFrontier while we were a consolidated variable interest entity of HollyFrontier had been acquired from third parties, our acquisition cost in excess of HollyFrontier’s basis in the transferred assets would have been recorded in our financial statements as increases to our properties and equipment and intangible assets at the time of acquisition instead of decreases to partners’ equity.


FOR FURTHER INFORMATION, Contact:

Richard L. Voliva III, Executive Vice President and
Chief Financial Officer
Craig Biery, Director, Investor Relations
Holly Energy Partners, L.P.
214-954-6511


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