DALLAS--(BUSINESS WIRE)--
Holly Energy Partners, L.P. ("HEP" or the "Partnership") (NYSE:HEP)
today reported financial results for the third quarter of 2013. For the
quarter, distributable cash flow was $43.9 million, up $3.4 million, or
8% compared to the third quarter of 2012. HEP announced its 36th
consecutive distribution increase on October 25, 2013, raising the
quarterly distribution from $0.4850 to $0.4925 per unit, representing a
6% increase over the distribution for the third quarter of 2012.
Net income for the second quarter was $23.1 million compared to $23.8
million for the third quarter of 2012. The decrease in net income is due
principally to increased depreciation resulting from asset abandonment
charges for tankage permanently removed from service, partially offset
by increased revenues and a payroll related tax refund. Though
accounting rules require us to write down tank assets that are replaced
or taken out of service, HEP's cash flow is not affected since minimum
commitments do not change and costs to construct the replacement tanks
are, in certain cases, reimbursed per the terms of our contracts with
HollyFrontier Corporation ("HFC"). Net income attributable to Holly
Energy Partners for the third quarter was $21.9 million ($0.25 per basic
and diluted limited partner unit) compared to $23.3 million ($0.32 per
basic and diluted limited partner unit) for the third quarter of 2012.
The additional decrease in net income attributable to Holly Energy
Partners is due principally to allocations of income to noncontrolling
interests.
Commenting on the third quarter of 2013, Matt Clifton, Chairman of the
Board and Chief Executive Officer, stated, "We are pleased that
financial results for the third quarter of 2013 allowed us to continue
our record of raising our quarterly distribution in all quarters since
our initial public offering nine years ago. Our previously announced New
Mexico crude gathering expansion project will be completed in phases
starting this fall. We expect this project will begin contributing to
our results during the first quarter of 2014.
"As we look forward we believe HEP is well positioned due to the quality
and geographic location of our assets, our superior employee base, and
our financially strong and supportive general partner, HollyFrontier.
HEP's future growth is underpinned by strong industry fundamentals,
planned capital projects and our existing long-term fee-based contracts
with built-in annual escalators."
Third Quarter 2013 Revenue Highlights
Revenues for the quarter were $77.7 million, a $3.7 million increase
compared to the third quarter of 2012 due to the effect of annual tariff
increases combined with higher cost reimbursement receipts from HFC.
Overall pipeline volumes were down 3% compared to the three months ended
September 30, 2012.
-
Revenues from our refined product pipelines were $26.4 million,
an increase of $0.6 million primarily due to the effect of annual
tariff increases. Shipments averaged 175.1 thousand barrels per day
("mbpd") compared to 180.4 mbpd for the third quarter of 2012.
-
Revenues from our intermediate pipelines were $6.6 million, a
decrease of $0.8 million, on shipments averaging 136.3 mbpd compared
to 132.2 mbpd for the third quarter of 2012. Although overall
intermediate pipeline shipments were up, revenues decreased due to the
effects of a $0.5 million decrease in deferred revenue realized and
decreased volumes on certain pipeline segments.
-
Revenues from our crude pipelines were $13.0 million, an
increase of $0.7 million, on shipments averaging 172.6 mbpd compared
to 187.9 mbpd for the third quarter of 2012. Although crude oil
pipeline shipments were down, revenues increased due to the annual
tariff increases and minimum quarterly revenue billings on segments
where volumes decreased.
-
Revenues from terminal, tankage and loading rack fees were
$31.7 million, an increase of $3.2 million compared to the third
quarter of 2012. The increase in revenues is due to annual fee
increases and higher tank cost reimbursement receipts from HFC.
Refined products terminalled in our facilities averaged 326.0 mbpd
compared to 325.1 mbpd for the third quarter of 2012.
Revenues for the three months ended September 30, 2013 include the
recognition of $0.2 million of prior shortfalls billed to shippers in
2012, as they did not meet their minimum volume commitments within the
contractual make-up period. As of September 30, 2013, shortfall deferred
revenue in our consolidated balance sheet was $11.2 million. Such
deferred revenue will be recognized in earnings either as payment for
shipments in excess of guaranteed levels, if and to the extent the
pipeline system will not have the necessary capacity for shipments in
excess of guaranteed levels, or when shipping rights expire unused over
the contractual make-up period.
Nine Months Ended September 30, 2013 Revenue Highlights
Revenues for nine months ended September 30, 2013 were $227.3 million, a
$16.2 million increase compared to the nine months ended September 30,
2012. This is due principally to a $4.4 million increase in deferred
revenue realized, the effect of annual tariff increases, increased
pipeline shipments in the second quarter and higher cost reimbursement
receipts from HFC.
-
Revenues from our refined product pipelines were $80.3 million,
an increase of $5.7 million primarily due to the effects of a $5.6
million increase in deferred revenue realized. Shipments averaged
169.7 mbpd compared to 166.7 mbpd for the nine months ended September
30, 2012.
-
Revenues from our intermediate pipelines were $20.0 million, a
decrease of $1.0 million, on shipments averaging 133.2 mbpd compared
to 131.0 mbpd for the nine months ended September 30, 2012. The
decrease in revenue is due to the effects of a $1.2 million decrease
in deferred revenue realized.
-
Revenues from our crude pipelines were $36.8 million, an
increase of $2.9 million, on shipments averaging 167.7 mbpd compared
to 169.9 mbpd for the nine months ended September 30, 2012. Revenues
increased due to the annual tariff increases.
-
Revenues from terminal, tankage and loading rack fees were
$90.2 million, an increase of $8.6 million compared to the nine months
ended September 30, 2012. This increase is due to annual fee
increases, increased terminal volumes and higher tank cost
reimbursement receipts from HFC. Refined products terminalled in our
facilities averaged 325.2 mbpd compared to 318.9 mbpd for the nine
months ended September 30, 2012.
Revenues for nine months ended September 30, 2013 include the
recognition of $7.6 million of prior shortfalls billed to shippers in
2012, as they did not meet their minimum volume commitments within the
contractual make-up period.
Operating Costs and Expenses Highlights
Operating costs and expenses were $43.6 million and $129.6 million for
the three and nine months ended September 30, 2013, representing
increases of $5.1 million and $15.7 million over the respective periods
of 2012. These increases are due to higher throughput levels on our
assets, as well as year-over-year increases in maintenance costs,
environmental accruals, employee costs and depreciation expense due to
asset abandonment charges related to tankage permanently removed from
service. Operating expenses for the three and nine months ended
September 30, 2013 were reduced by $3.5 million due to a net tax refund
related to payroll costs covering a multi-year period.
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.webcasts.com/starthere.jsp?ei=1022774.
An audio archive of this webcast will be available using the above noted
link through November 13, 2013.
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 owns and
operates petroleum product and crude gathering pipelines, tankage and
terminals in Texas, New Mexico, Arizona, Washington, Idaho, Oklahoma,
Utah, Wyoming and Kansas. In addition, the Partnership owns a 75%
interest in UNEV Pipeline, LLC, the owner of a Holly Energy operated
refined products pipeline running from Salt Lake City, Utah to Las
Vegas, Nevada, and related product terminals and a 25% interest in SLC
Pipeline LLC, a 95-mile intrastate pipeline system serving refineries in
the Salt Lake City, Utah area.
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, a 125,000 bpsd refinery 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 owns a
39% interest (including the general partner interest) in Holly Energy
Partners, L.P.
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. Forward looking statements use words such
as "anticipate," "project," "expect," "plan," "goal," "forecast,"
"intend," "could," "believe," "may," and similar expressions and
statements regarding our plans and objectives for future operations.
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. Such statements are subject to a variety of risks,
uncertainties and assumptions. If one or more of these risks or
uncertainties materialize, or if underlying assumptions prove incorrect,
our actual results may vary materially from those anticipated,
estimated, projected or expected. Certain factors could cause actual
results to differ materially from results anticipated in the
forward-looking statements. These factors include, but are 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;
-
the economic viability of HollyFrontier Corporation, Alon USA, Inc.
and our other customers;
-
the demand for refined petroleum products in markets we serve;
-
our ability to purchase and integrate additional operations in the
future successfully;
-
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 pipeline and terminal facilities;
-
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 attacks and the consequences of any such
attacks;
-
general economic conditions; and
-
other financial, operations 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.
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 nine months ended September 30, 2013.
|
|
|
|
Three Months Ended September 30,
|
|
|
Change from
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
|
|
(In thousands, except per unit data)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates — refined product pipelines
|
|
|
$
|
17,196
|
|
|
|
$
|
16,351
|
|
|
|
$
|
845
|
|
|
Affiliates — intermediate pipelines
|
|
|
|
6,567
|
|
|
|
|
7,319
|
|
|
|
|
(752
|
)
|
|
Affiliates — crude pipelines
|
|
|
|
12,994
|
|
|
|
|
12,306
|
|
|
|
|
688
|
|
|
|
|
|
|
36,757
|
|
|
|
|
35,976
|
|
|
|
|
781
|
|
|
Third parties — refined product pipelines
|
|
|
|
9,246
|
|
|
|
|
9,538
|
|
|
|
|
(292
|
)
|
|
|
|
|
|
46,003
|
|
|
|
|
45,514
|
|
|
|
|
489
|
|
|
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
|
28,766
|
|
|
|
|
26,139
|
|
|
|
|
2,627
|
|
|
Third parties
|
|
|
|
2,954
|
|
|
|
|
2,401
|
|
|
|
|
553
|
|
|
|
|
|
|
31,720
|
|
|
|
|
28,540
|
|
|
|
|
3,180
|
|
|
Total revenues
|
|
|
|
77,723
|
|
|
|
|
74,054
|
|
|
|
|
3,669
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
21,686
|
|
|
|
|
22,732
|
|
|
|
|
(1,046
|
)
|
|
Depreciation and amortization
|
|
|
|
19,449
|
|
|
|
|
14,351
|
|
|
|
|
5,098
|
|
|
General and administrative
|
|
|
|
2,415
|
|
|
|
|
1,399
|
|
|
|
|
1,016
|
|
|
|
|
|
|
43,550
|
|
|
|
|
38,482
|
|
|
|
|
5,068
|
|
|
Operating income
|
|
|
|
34,173
|
|
|
|
|
35,572
|
|
|
|
|
(1,399
|
)
|
|
Equity in earnings of SLC Pipeline
|
|
|
|
835
|
|
|
|
|
877
|
|
|
|
|
(42
|
)
|
|
Interest expense, including amortization
|
|
|
|
(11,816
|
)
|
|
|
|
(12,540
|
)
|
|
|
|
724
|
|
|
Interest income
|
|
|
|
3
|
|
|
|
|
—
|
|
|
|
|
3
|
|
|
Other income
|
|
|
|
61
|
|
|
|
|
—
|
|
|
|
|
61
|
|
|
Gain (loss) on sale of assets
|
|
|
|
(159
|
)
|
|
|
|
—
|
|
|
|
|
(159
|
)
|
|
|
|
|
|
(11,076
|
)
|
|
|
|
(11,663
|
)
|
|
|
|
587
|
|
|
Income before income taxes
|
|
|
|
23,097
|
|
|
|
|
23,909
|
|
|
|
|
(812
|
)
|
|
State income tax expense
|
|
|
|
(40
|
)
|
|
|
|
(137
|
)
|
|
|
|
97
|
|
|
Net income
|
|
|
|
23,057
|
|
|
|
|
23,772
|
|
|
|
|
(715
|
)
|
|
Allocation of net loss attributable to Predecessors
|
|
|
|
—
|
|
|
|
|
146
|
|
|
|
|
(146
|
)
|
|
Allocation of net income attributable to noncontrolling interests
|
|
|
|
(1,172
|
)
|
|
|
|
(582
|
)
|
|
|
|
(590
|
)
|
|
Net income attributable to Holly Energy Partners
|
|
|
|
21,885
|
|
|
|
|
23,336
|
|
|
|
|
(1,451
|
)
|
|
General partner interest in net income, including incentive
distributions(1) |
|
|
|
(7,128
|
)
|
|
|
|
(5,276
|
)
|
|
|
|
(1,852
|
)
|
|
Limited partners' interest in net income
|
|
|
$
|
14,757
|
|
|
|
$
|
18,060
|
|
|
|
$
|
(3,303
|
)
|
|
Limited partners' earnings per unit — basic and diluted:(1) |
|
|
$
|
0.25
|
|
|
|
$
|
0.32
|
|
|
|
$
|
(0.07
|
)
|
|
Weighted average limited partners' units outstanding
|
|
|
|
58,657
|
|
|
|
|
56,536
|
|
|
|
|
2,121
|
|
|
EBITDA(2) |
|
|
$
|
53,187
|
|
|
|
$
|
49,920
|
|
|
|
$
|
3,267
|
|
|
Distributable cash flow(3) |
|
|
$
|
43,865
|
|
|
|
$
|
40,431
|
|
|
|
$
|
3,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volumes (bpd)
|
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates — refined product pipelines
|
|
|
|
116,078
|
|
|
|
|
114,113
|
|
|
|
|
1,965
|
|
|
Affiliates — intermediate pipelines
|
|
|
|
136,312
|
|
|
|
|
132,220
|
|
|
|
|
4,092
|
|
|
Affiliates — crude pipelines
|
|
|
|
172,569
|
|
|
|
|
187,861
|
|
|
|
|
(15,292
|
)
|
|
|
|
|
|
424,959
|
|
|
|
|
434,194
|
|
|
|
|
(9,235
|
)
|
|
Third parties — refined product pipelines
|
|
|
|
59,036
|
|
|
|
|
66,274
|
|
|
|
|
(7,238
|
)
|
|
|
|
|
|
483,995
|
|
|
|
|
500,468
|
|
|
|
|
(16,473
|
)
|
|
Terminals and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
|
261,431
|
|
|
|
|
267,638
|
|
|
|
|
(6,207
|
)
|
|
Third parties
|
|
|
|
64,615
|
|
|
|
|
57,496
|
|
|
|
|
7,119
|
|
|
|
|
|
|
326,046
|
|
|
|
|
325,134
|
|
|
|
|
912
|
|
|
Total for pipelines and terminal assets (bpd)
|
|
|
|
810,041
|
|
|
|
|
825,602
|
|
|
|
|
(15,561
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
Change from
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
|
|
(In thousands, except per unit data)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates—refined product pipelines
|
|
|
$
|
50,918
|
|
|
|
$
|
46,727
|
|
|
|
$
|
4,191
|
|
|
Affiliates—intermediate pipelines
|
|
|
|
20,030
|
|
|
|
|
21,076
|
|
|
|
|
(1,046
|
)
|
|
Affiliates—crude pipelines
|
|
|
|
36,760
|
|
|
|
|
33,844
|
|
|
|
|
2,916
|
|
|
|
|
|
|
107,708
|
|
|
|
|
101,647
|
|
|
|
|
6,061
|
|
|
Third parties—refined product pipelines
|
|
|
|
29,412
|
|
|
|
|
27,856
|
|
|
|
|
1,556
|
|
|
|
|
|
|
137,120
|
|
|
|
|
129,503
|
|
|
|
|
7,617
|
|
|
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
|
82,514
|
|
|
|
|
74,773
|
|
|
|
|
7,741
|
|
|
Third parties
|
|
|
|
7,672
|
|
|
|
|
6,853
|
|
|
|
|
819
|
|
|
|
|
|
|
90,186
|
|
|
|
|
81,626
|
|
|
|
|
8,560
|
|
|
Total revenues
|
|
|
|
227,306
|
|
|
|
|
211,129
|
|
|
|
|
16,177
|
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
72,089
|
|
|
|
|
65,114
|
|
|
|
|
6,975
|
|
|
Depreciation and amortization
|
|
|
|
48,730
|
|
|
|
|
42,801
|
|
|
|
|
5,929
|
|
|
General and administrative
|
|
|
|
8,747
|
|
|
|
|
5,925
|
|
|
|
|
2,822
|
|
|
|
|
|
|
129,566
|
|
|
|
|
113,840
|
|
|
|
|
15,726
|
|
|
Operating income
|
|
|
|
97,740
|
|
|
|
|
97,289
|
|
|
|
|
451
|
|
|
Equity in earnings of SLC Pipeline
|
|
|
|
2,238
|
|
|
|
|
2,502
|
|
|
|
|
(264
|
)
|
|
Interest expense, including amortization
|
|
|
|
(35,929
|
)
|
|
|
|
(34,269
|
)
|
|
|
|
(1,660
|
)
|
|
Interest income
|
|
|
|
110
|
|
|
|
|
—
|
|
|
|
|
110
|
|
|
Other income
|
|
|
|
61
|
|
|
|
|
—
|
|
|
|
|
61
|
|
|
Loss on early extinguishment of debt
|
|
|
|
—
|
|
|
|
|
(2,979
|
)
|
|
|
|
2,979
|
|
|
Gain (loss) on sale of assets
|
|
|
|
1,863
|
|
|
|
|
—
|
|
|
|
|
1,863
|
|
|
|
|
|
|
(31,657
|
)
|
|
|
|
(34,746
|
)
|
|
|
|
3,089
|
|
|
Income before income taxes
|
|
|
|
66,083
|
|
|
|
|
62,543
|
|
|
|
|
3,540
|
|
|
State income tax expense
|
|
|
|
(440
|
)
|
|
|
|
(287
|
)
|
|
|
|
(153
|
)
|
|
Net income
|
|
|
|
65,643
|
|
|
|
|
62,256
|
|
|
|
|
3,387
|
|
|
Allocation of net loss attributable to Predecessors
|
|
|
|
—
|
|
|
|
|
4,199
|
|
|
|
|
(4,199
|
)
|
|
Allocation of net loss (income) attributable to noncontrolling
interests
|
|
|
|
(5,192
|
)
|
|
|
|
658
|
|
|
|
|
(5,850
|
)
|
|
Net income attributable to Holly Energy Partners
|
|
|
|
60,451
|
|
|
|
|
67,113
|
|
|
|
|
(6,662
|
)
|
|
General partner interest in net income, including incentive
distributions (1) |
|
|
|
20,038
|
|
|
|
|
16,674
|
|
|
|
|
3,364
|
|
|
Limited partners' interest in net income
|
|
|
$
|
40,413
|
|
|
|
$
|
50,439
|
|
|
|
$
|
(10,026
|
)
|
|
Limited partners' earnings per unit—basic and diluted (1) |
|
|
$
|
0.69
|
|
|
|
$
|
0.91
|
|
|
|
$
|
(0.22
|
)
|
|
Weighted average limited partners' units outstanding
|
|
|
|
58,108
|
|
|
|
|
55,332
|
|
|
|
|
2,776
|
|
|
EBITDA (2) |
|
|
$
|
145,440
|
|
|
|
$
|
139,546
|
|
|
|
$
|
5,894
|
|
|
Distributable cash flow (3) |
|
|
$
|
112,316
|
|
|
|
$
|
111,506
|
|
|
|
$
|
810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volumes (bpd)
|
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates—refined product pipelines
|
|
|
|
109,995
|
|
|
|
|
104,444
|
|
|
|
|
5,551
|
|
|
Affiliates—intermediate pipelines
|
|
|
|
133,222
|
|
|
|
|
130,972
|
|
|
|
|
2,250
|
|
|
Affiliates—crude pipelines
|
|
|
|
167,685
|
|
|
|
|
169,922
|
|
|
|
|
(2,237
|
)
|
|
|
|
|
|
410,902
|
|
|
|
|
405,338
|
|
|
|
|
5,564
|
|
|
Third parties—refined product pipelines
|
|
|
|
59,711
|
|
|
|
|
62,301
|
|
|
|
|
(2,590
|
)
|
|
|
|
|
|
470,613
|
|
|
|
|
467,639
|
|
|
|
|
2,974
|
|
|
Terminals and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
|
265,242
|
|
|
|
|
265,958
|
|
|
|
|
(716
|
)
|
|
Third parties
|
|
|
|
59,995
|
|
|
|
|
52,918
|
|
|
|
|
7,077
|
|
|
|
|
|
|
325,237
|
|
|
|
|
318,876
|
|
|
|
|
6,361
|
|
|
Total for pipelines and terminal assets (bpd)
|
|
|
|
795,850
|
|
|
|
|
786,515
|
|
|
|
|
9,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net income is allocated between limited partners and the general
partner interest in accordance with the provisions of the partnership
agreement. Net income allocated to the general partner includes
incentive distributions declared subsequent to quarter end. General
partner incentive distributions were $6.8 million and $4.9 million for
the three months ended September 30, 2013 and 2012, respectively, and
$19.2 million and $15.6 million for the nine months ended September 30,
2013 and 2012, respectively. Net income attributable to the limited
partners is divided by the weighted average limited partner units
outstanding in computing the limited partners' per unit interest in net
income.
(2) 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 (excluding
Predecessor amounts). EBITDA is not a calculation based upon GAAP.
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 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. 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 also is used by our management for internal
analysis and as a basis for compliance with financial covenants.
Set forth below is our calculation of EBITDA.
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
(In thousands)
|
|
Net income attributable to Holly Energy Partners
|
|
|
$
|
21,885
|
|
|
|
$
|
23,336
|
|
|
|
|
$
|
60,451
|
|
|
|
$
|
67,113
|
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
11,289
|
|
|
|
|
10,738
|
|
|
|
|
|
33,490
|
|
|
|
|
29,045
|
|
|
Interest Income
|
|
|
|
(3
|
)
|
|
|
|
—
|
|
|
|
|
|
(110
|
)
|
|
|
|
—
|
|
|
Amortization of discount and deferred debt charges
|
|
|
|
527
|
|
|
|
|
528
|
|
|
|
|
|
1,590
|
|
|
|
|
1,403
|
|
|
Loss on early extinguishment of debt
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
2,979
|
|
|
Amortization of unrecognized loss attributable to terminated cash
flow hedge
|
|
|
|
—
|
|
|
|
|
1,274
|
|
|
|
|
|
849
|
|
|
|
|
3,821
|
|
|
State income tax
|
|
|
|
40
|
|
|
|
|
137
|
|
|
|
|
|
440
|
|
|
|
|
287
|
|
|
Depreciation and amortization
|
|
|
|
19,449
|
|
|
|
|
14,351
|
|
|
|
|
|
48,730
|
|
|
|
|
42,801
|
|
|
Predecessor depreciation and amortization
|
|
|
|
—
|
|
|
|
|
(444
|
)
|
|
|
|
|
—
|
|
|
|
|
(7,903
|
)
|
|
EBITDA
|
|
|
$
|
53,187
|
|
|
|
$
|
49,920
|
|
|
|
|
$
|
145,440
|
|
|
|
$
|
139,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Distributable cash flow is not a calculation based upon GAAP.
However, the amounts included in the calculation are derived from
amounts separately presented in our consolidated financial statements,
with the exception of billed crude revenue settlement and 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. Also, it is 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,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
(In thousands)
|
|
Net income attributable to Holly Energy Partners
|
|
|
$
|
21,885
|
|
|
|
$
|
23,336
|
|
|
|
|
$
|
60,451
|
|
|
|
$
|
67,113
|
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
19,449
|
|
|
|
|
14,351
|
|
|
|
|
|
48,730
|
|
|
|
|
42,801
|
|
|
Predecessor depreciation and amortization
|
|
|
|
—
|
|
|
|
|
(444
|
)
|
|
|
|
|
—
|
|
|
|
|
(7,903
|
)
|
|
Amortization of discount and deferred debt charges
|
|
|
|
527
|
|
|
|
|
528
|
|
|
|
|
|
1,590
|
|
|
|
|
1,403
|
|
|
Loss on early extinguishment of debt
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
2,979
|
|
|
Amortization of unrecognized loss attributable to terminated cash
flow hedge
|
|
|
|
—
|
|
|
|
|
1,274
|
|
|
|
|
|
849
|
|
|
|
|
3,821
|
|
|
Increase (decrease) in deferred revenue attributable to shortfall
billings
|
|
|
|
3,472
|
|
|
|
|
2,162
|
|
|
|
|
|
3,624
|
|
|
|
|
1,733
|
|
|
Billed crude revenue settlement
|
|
|
|
—
|
|
|
|
|
917
|
|
|
|
|
|
918
|
|
|
|
|
2,753
|
|
|
Maintenance capital expenditures*
|
|
|
|
(2,045
|
)
|
|
|
|
(2,287
|
)
|
|
|
|
|
(6,557
|
)
|
|
|
|
(3,886
|
)
|
|
Other non-cash adjustments
|
|
|
|
577
|
|
|
|
|
594
|
|
|
|
|
|
2,711
|
|
|
|
|
692
|
|
|
Distributable cash flow
|
|
|
$
|
43,865
|
|
|
|
$
|
40,431
|
|
|
|
|
$
|
112,316
|
|
|
|
$
|
111,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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, and
safety and to address environmental regulations.
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
(In thousands)
|
|
Balance Sheet Data
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
11,220
|
|
|
$
|
5,237
|
|
Working capital
|
|
|
$
|
16,110
|
|
|
$
|
11,826
|
|
Total assets
|
|
|
$
|
1,382,372
|
|
|
$
|
1,394,110
|
|
Long-term debt
|
|
|
$
|
809,391
|
|
|
$
|
864,674
|
|
Partners' equity(4) |
|
|
$
|
387,510
|
|
|
$
|
352,653
|
|
|
|
|
|
|
|
|
|
|
(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 of $305.3 million would
have been recorded as increases to our properties and equipment and
intangible assets instead of decreases to partners' equity.
Holly Energy Partners, L.P.
Douglas S. Aron, 214-954-6511
Executive
Vice President and
Chief Financial Officer
or
Julia
Heidenreich, 214-954-6511
Vice President, Investor Relations
or
Blake
Barfield, 214-954-6511
Investor Relations
Source: Holly Energy Partners, L.P.
News Provided by Acquire Media