-
Reported net income attributable to HEP of $51.2 million or $0.49 per
unit
-
Announced 58th consecutive quarterly distribution increase
to $0.6700 per unit, a 2.3% increase over first quarter 2018
-
Reported EBITDA of $93.5 million and distributable cash flow of $70.6
million providing a 1.03x distribution coverage ratio
DALLAS--(BUSINESS WIRE)--May 1, 2019--
Holly Energy Partners, L.P. (“HEP” or the “Partnership”) (NYSE:HEP)
today reported financial results for the first quarter of 2019. Net
income attributable to HEP for the first quarter was $51.2 million
($0.49 per basic and diluted limited partner unit) compared to $46.2
million ($0.44 per basic and diluted limited partner unit) for the first
quarter of 2018.
Distributable cash flow was $70.6 million for the quarter, up $1.5
million, or 2.2% compared to the first quarter of 2018. HEP announced
its 58thconsecutive distribution increase on April 18, 2019,
raising the quarterly distribution from $0.6675 to $0.6700 per unit,
which represents an increase of 2.3% over the distribution for the first
quarter of 2018.
The increase in net income attributable to HEP was mainly due to higher
crude oil pipeline volumes around the Permian Basin, higher revenues on
our refinery processing units, and contractual tariff escalators. These
gains were partially offset by higher interest expense.
Commenting on our 2019 first quarter results, George Damiris, Chief
Executive Officer, stated, “HEP delivered strong financial results for
the first quarter driven by the continued growth of our crude pipeline
volumes and seasonal strength on the UNEV system, which allowed us to
maintain our record of quarterly distribution increases.
“Looking forward, we remain optimistic about our organic growth
potential. HEP remains on track to continue growing our distribution
while maintaining a distribution coverage ratio of 1.0x for the full
year 2019.”
First Quarter 2019 Revenue Highlights
Revenues for the quarter were $134.5 million, an increase of $5.6
million compared to the first quarter of 2018. The increase was mainly
attributable to higher crude oil pipeline volumes around the Permian
Basin, which contributed to an increase in overall pipeline volumes of
5%, higher revenues on our refinery processing units and contractual
tariff escalators.
-
Revenues from our refined product pipelines were $36.3 million,
an increase of $1.5 million, on shipments averaging 211.9 thousand
barrels per day ("mbpd") compared to 217.0 mbpd for the first quarter
of 2018. The volume decrease was mainly due to pipelines servicing
HollyFrontier Corporation's ("HFC" or "HollyFrontier") Woods Cross
refinery, which had lower throughput due to operational issues at the
refinery during the quarter partially offset by higher volumes from
Delek. The increase in revenues was mainly due to higher Delek volumes
and contractual tariff escalators.
-
Revenues from our intermediate pipelines were $7.3 million, a
decrease of $1.2 million compared to the first quarter of 2018, on
shipments averaging 130.8 mbpd compared to 127.0 mbpd for the first
quarter of 2018. The decrease in revenue was primarily attributable to
a decrease in deferred revenue realized.
-
Revenues from our crude pipelines were $31.5 million, an
increase of $2.7 million, on shipments averaging 527.3 mbpd compared
to 486.4 mbpd for the first 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.
-
Revenues from terminal, tankage and loading rack fees were
$37.6 million, a decrease of $0.6 million compared to the first
quarter of 2018. Refined products and crude oil terminalled in the
facilities averaged 442.7 mbpd compared to 452.8 mbpd for the first
quarter of 2018. The volume decrease and associated revenue decrease
were mainly due to the planned turnaround at HFC's Tulsa refinery and
operational issues at HFC's El Dorado refinery in the first quarter of
2019.
-
Revenues from refinery processing units were $21.8 million, an
increase of $3.3 million, on throughputs averaging 65.8 mbpd compared
to 66.9 mbpd for the first quarter of 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 $64.0 million for the three months
ended March 31, 2019, representing a decrease of $0.5 million from the
three months ended March 31, 2018. The decrease was mainly due to lower
professional services costs and lower amortization of intangible assets
and asset retirement obligations partially offset by higher property
taxes and employee compensation expenses.
Interest expense was $19.0 million for the three months ended March 31,
2019, representing an increase of $1.4 million over the same period of
2018. The increase was mainly due to higher average balances outstanding
under our senior secured revolving credit facility and market interest
rate increases under that 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://78449.themediaframe.com/dataconf/productusers/hep/mediaframe/29217/indexl.html
An audio archive of this webcast will be available using the above noted
link through May 15, 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;
-
the economic viability of HollyFrontier Corporation, Delek US
Holdings, Inc. and our other customers;
-
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 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 or cyber attacks and the consequences of
any such attacks;
-
general economic conditions;
-
the impact of recent 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.
RESULTS OF OPERATIONS (Unaudited)
Income, Distributable Cash Flow and Volumes
The following tables present income, distributable cash flow and volume
information for the three months ended March 31, 2019 and 2018.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
Change from |
|
|
|
|
2019 |
|
2018 |
|
2018 |
|
|
|
|
(In thousands, except per unit data)
|
Revenues |
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
|
|
$
|
20,732
|
|
|
$
|
21,294
|
|
|
$
|
(562
|
)
|
Affiliates – intermediate pipelines
|
|
|
|
|
7,281
|
|
|
|
8,469
|
|
|
|
(1,188
|
)
|
Affiliates – crude pipelines
|
|
|
|
|
21,121
|
|
|
|
19,797
|
|
|
|
1,324
|
|
|
|
|
|
|
49,134
|
|
|
|
49,560
|
|
|
|
(426
|
)
|
Third parties – refined product pipelines
|
|
|
|
|
15,604
|
|
|
|
13,582
|
|
|
|
2,022
|
|
Third parties – crude pipelines
|
|
|
|
|
10,362
|
|
|
|
9,027
|
|
|
|
1,335
|
|
|
|
|
|
|
75,100
|
|
|
|
72,169
|
|
|
|
2,931
|
|
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
|
|
32,406
|
|
|
|
33,334
|
|
|
|
(928
|
)
|
Third parties
|
|
|
|
|
5,172
|
|
|
|
4,847
|
|
|
|
325
|
|
|
|
|
|
|
37,578
|
|
|
|
38,181
|
|
|
|
(603
|
)
|
|
|
|
|
|
|
|
|
|
Affiliates - refinery processing units
|
|
|
|
|
21,819
|
|
|
|
18,534
|
|
|
|
3,285
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
134,497
|
|
|
|
128,884
|
|
|
|
5,613
|
|
Operating costs and expenses |
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
37,519
|
|
|
|
36,202
|
|
|
|
1,317
|
|
Depreciation and amortization
|
|
|
|
|
23,824
|
|
|
|
25,142
|
|
|
|
(1,318
|
)
|
General and administrative
|
|
|
|
|
2,620
|
|
|
|
3,122
|
|
|
|
(502
|
)
|
|
|
|
|
|
63,963
|
|
|
|
64,466
|
|
|
|
(503
|
)
|
Operating income |
|
|
|
|
70,534
|
|
|
|
64,418
|
|
|
|
6,116
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of equity method investments
|
|
|
|
|
2,100
|
|
|
|
1,279
|
|
|
|
821
|
|
Interest expense, including amortization
|
|
|
|
|
(19,022
|
)
|
|
|
(17,581
|
)
|
|
|
(1,441
|
)
|
Interest income
|
|
|
|
|
528
|
|
|
|
515
|
|
|
|
13
|
|
Gain (loss) on sale of assets and other
|
|
|
|
|
(310
|
)
|
|
|
86
|
|
|
|
(396
|
)
|
|
|
|
|
|
(16,704
|
)
|
|
|
(15,701
|
)
|
|
|
(1,003
|
)
|
Income before income taxes |
|
|
|
|
53,830
|
|
|
|
48,717
|
|
|
|
5,113
|
|
State income tax expense
|
|
|
|
|
(36
|
)
|
|
|
(82
|
)
|
|
|
46
|
|
Net income |
|
|
|
|
53,794
|
|
|
|
48,635
|
|
|
|
5,159
|
|
Allocation of net income attributable to noncontrolling interests
|
|
|
|
|
(2,612
|
)
|
|
|
(2,467
|
)
|
|
|
(145
|
)
|
Limited partners’ interest in net income |
|
|
|
$
|
51,182
|
|
|
$
|
46,168
|
|
|
$
|
5,014
|
|
Limited partners’ earnings per unit—basic and diluted |
|
|
|
$
|
0.49
|
|
|
$
|
0.44
|
|
|
$
|
0.05
|
|
Weighted average limited partners’ units outstanding |
|
|
|
|
105,440
|
|
|
|
103,836
|
|
|
|
1,604
|
|
EBITDA(1) |
|
|
|
$
|
93,536
|
|
|
$
|
88,458
|
|
|
$
|
5,078
|
|
Distributable cash flow(2) |
|
|
|
$
|
70,599
|
|
|
$
|
69,099
|
|
|
$
|
1,500
|
|
|
|
|
|
|
|
|
|
|
Volumes (bpd) |
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
|
|
|
130,807
|
|
|
|
144,805
|
|
|
|
(13,998
|
)
|
Affiliates – intermediate pipelines
|
|
|
|
|
130,830
|
|
|
|
126,993
|
|
|
|
3,837
|
|
Affiliates – crude pipelines
|
|
|
|
|
400,797
|
|
|
|
360,409
|
|
|
|
40,388
|
|
|
|
|
|
|
662,434
|
|
|
|
632,207
|
|
|
|
30,227
|
|
Third parties – refined product pipelines
|
|
|
|
|
81,064
|
|
|
|
72,239
|
|
|
|
8,825
|
|
Third parties – crude pipelines
|
|
|
|
|
126,496
|
|
|
|
126,014
|
|
|
|
482
|
|
|
|
|
|
|
869,994
|
|
|
|
830,460
|
|
|
|
39,534
|
|
Terminals and loading racks:
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
|
|
373,912
|
|
|
|
390,481
|
|
|
|
(16,569
|
)
|
Third parties
|
|
|
|
|
68,765
|
|
|
|
62,352
|
|
|
|
6,413
|
|
|
|
|
|
|
442,677
|
|
|
|
452,833
|
|
|
|
(10,156
|
)
|
|
|
|
|
|
|
|
|
|
Affiliates – refinery processing units
|
|
|
|
|
65,837
|
|
|
|
66,875
|
|
|
|
(1,038
|
)
|
|
|
|
|
|
|
|
|
|
Total for pipelines and terminal assets (bpd) |
|
|
|
|
1,378,508
|
|
|
|
1,350,168
|
|
|
|
28,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. EBITDA is
not a calculation based upon generally accepted accounting
principles ("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 indications 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 compliance with financial covenants.
|
|
|
|
|
|
|
|
|
|
Set forth below is our calculation of EBITDA.
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2019 |
|
2018 |
|
|
|
|
(In thousands)
|
Net income attributable to Holly Energy Partners |
|
|
|
$
|
51,182
|
|
|
$
|
46,168
|
|
Add (subtract):
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
18,256
|
|
|
|
16,824
|
|
Interest Income
|
|
|
|
|
(528
|
)
|
|
|
(515
|
)
|
Amortization of discount and deferred debt charges
|
|
|
|
|
766
|
|
|
|
757
|
|
State income tax (benefit) expense
|
|
|
|
|
36
|
|
|
|
82
|
|
Depreciation and amortization
|
|
|
|
|
23,824
|
|
|
|
25,142
|
|
EBITDA |
|
|
|
$
|
93,536
|
|
|
$
|
88,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 March 31, |
|
|
|
|
2019 |
|
2018 |
|
|
|
|
(In thousands)
|
Net income attributable to Holly Energy Partners |
|
|
|
$
|
51,182
|
|
|
$
|
46,168
|
|
Add (subtract):
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
23,824
|
|
|
|
25,142
|
|
Amortization of discount and deferred debt charges
|
|
|
|
|
766
|
|
|
|
757
|
|
Revenue recognized greater than customer billings
|
|
|
|
|
(3,034
|
)
|
|
|
(1,681
|
)
|
Maintenance capital expenditures (3) |
|
|
|
|
(735
|
)
|
|
|
(318
|
)
|
Decrease in environmental liability
|
|
|
|
|
(278
|
)
|
|
|
(140
|
)
|
Decrease in reimbursable deferred revenue
|
|
|
|
|
(1,579
|
)
|
|
|
(1,177
|
)
|
Other non-cash adjustments
|
|
|
|
|
453
|
|
|
|
348
|
|
Distributable cash flow |
|
|
|
$
|
70,599
|
|
|
$
|
69,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
|
2019 |
|
2018 |
|
|
|
|
(In thousands)
|
Balance Sheet Data |
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
11,540
|
|
$
|
3,045
|
Working capital
|
|
|
|
$
|
21,841
|
|
$
|
8,577
|
Total assets
|
|
|
|
$
|
2,162,220
|
|
$
|
2,102,540
|
Long-term debt
|
|
|
|
$
|
1,438,054
|
|
$
|
1,418,900
|
Partners' equity (4) |
|
|
|
$
|
412,117
|
|
$
|
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.
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View source version on businesswire.com: https://www.businesswire.com/news/home/20190501005218/en/
Source: Holly Energy Partners, L.P.
Richard L. Voliva III, Executive Vice President and
Chief Financial
Officer
Craig Biery, Director, Investor Relations
Holly Energy Partners,
L.P.
214/954-651