DALLAS--(BUSINESS WIRE)--Feb. 19, 2019--
Holly Energy Partners, L.P. (“HEP” or the “Partnership”) (NYSE:HEP)
today reported financial results for the fourth quarter of 2018. Net
income attributable to HEP for the fourth quarter was $47.5 million
($0.45 per basic and diluted limited partner unit) compared to $86.1
million ($0.96 per basic and diluted limited partner unit) for the
fourth quarter of 2017.
Distributable cash flow was $64.2 million for the quarter, down $1.3
million, or 2.0%, compared to the fourth quarter of 2017. HEP announced
its 57thconsecutive distribution increase on January 24,
2019, raising the quarterly distribution from $0.665 to $0.6675 per
unit, which represents an increase of 3% over the distribution for the
fourth quarter of 2017.
Net income attributable to HEP for the fourth quarter of 2017 included a
$36.3 million remeasurement gain relating to HEP's acquisition of the
remaining interests in the SLC and Frontier pipelines. Excluding this
remeasurement gain, net income attributable to HEP for the fourth
quarter of 2017 was $49.8 million ($0.56 per basic and diluted limited
partner unit). Net income attributable to HEP for the fourth quarter of
2018 decreased $2.3 million compared to the fourth quarter of 2017
excluding this gain. This decrease in earnings is primarily due to
higher interest and operating expenses as well as the impact of downtime
from an unplanned outage on our fluid catalytic cracking unit at
HollyFrontier Corporation's ("HFC" or "HollyFrontier") Woods Cross
refinery.
Commenting on fourth quarter results, George Damiris, Chief Executive
Officer, stated, “HEP delivered a solid quarter and despite operating
issues at HFC's Woods Cross refinery, we were able to maintain our
record of consecutive quarterly distribution increases.
“Looking to 2019, we expect to grow HEP's quarterly distribution by
$0.0025 per limited partner unit while maintaining an annual
distribution coverage ratio of 1.0x.”
Fourth Quarter 2018 Revenue Highlights
Revenues for the quarter were $132.8 million, an increase of $3.6
million compared to the fourth quarter of 2017. The increase was
primarily attributable to our acquisition of the remaining interests in
the SLC and Frontier pipelines and higher crude oil volumes in the
Permian Basin, offset by a decrease in revenue on our Woods Cross
refinery processing units due to an operational outage. Compared to the
fourth quarter of 2017, our overall pipeline volumes increased for the
quarter by 8%.
-
Revenues from our refined product pipelines were $39.6 million,
an increase of $0.1 million, on shipments averaging 209.1 thousand
barrels per day ("mbpd") compared to 231.2 mbpd for the fourth quarter
of 2017. The volume decrease was mainly due to lower volumes on
pipelines servicing HollyFrontier'sWoods Cross refinery, which had
lower throughput due to operational issues at the refinery during the
quarter, lower volumes on pipelines servicing HFC's Navajo refinery
and lower volumes from Delek. Revenue remained relatively consistent
due to contractual minimum revenue commitments and tariff escalators.
-
Revenues from our intermediate pipelines were $7.1 million, a
decrease of $1.2 million compared to the fourth quarter of 2017, on
shipments averaging 151.0 mbpd compared to 158.1 mbpd for the fourth
quarter of 2017. The decreases were mainly attributable to lower
throughput at HFC's Navajo refinery and a decrease in deferred revenue
recognized.
-
Revenues from our crude pipelines were $29.4 million, an
increase of $4.0 million, on shipments averaging 495.4 mbpd compared
to 404.4 mbpd for the fourth quarter of 2017. The increases were
mainly attributable to our acquisition of the remaining interests in
the SLC and Frontier pipelines in the fourth quarter of 2017 as well
as increased volumes on our crude pipeline systems in New Mexico and
Texas.
-
Revenues from terminal, tankage and loading rack fees were
$38.5 million, an increase of $1.9 million compared to the fourth
quarter of 2017. Refined products and crude oil terminalled in the
facilities averaged 451.9 mbpd compared to 516.9 mbpd for the fourth
quarter of 2017. The volume decrease was mainly due to the planned
turnaround at HFC's El Dorado refinery as well as the cessation of
HEP's operations at the Tucson terminal in April 2018. Despite the
decrease in volume, revenue increased primarily due to tariff
escalators on minimum revenue commitments.
-
Revenues from refinery processing units were $18.2 million, a
decrease of $1.2 million, on throughputs averaging 47.7 mbpd compared
to 62.7 mbpd for the fourth quarter of 2017. The decreases were due to
an unplanned outage on our fluid catalytic cracking unit at HFC's
Woods Cross refinery in the fourth quarter of 2018.
Revenues for the fourth quarter of 2018 included $4.1 million for
recognition of shortfalls billed to shippers in prior quarters. As of
December 31, 2018, deferred revenue reflected in our consolidated
balance sheet related to shortfalls billed was $1.8 million.
Year Ended December 31, 2018 Revenue Highlights
Revenues for the year ended December 31, 2018, were $506.2 million, an
increase of $51.9 million compared to the year ended December 31, 2017.
The increase was primarily attributable to our acquisition of the
remaining interests in the SLC and Frontier pipelines in the fourth
quarter of 2017 and the turnaround at HollyFrontier'sNavajo refinery in
the first quarter of 2017.
-
Revenues from our refined product pipelines were $137.5
million, an increase of $5.1 million, on shipments averaging 199.6
mbpd compared to 211.8 mbpd for the year ended December 31, 2017. The
volume decrease was mainly due to pipelines servicing HFC's Woods
Cross refinery, which had lower throughput due to operational issues
at the refinery beginning in the first quarter of 2018. These
decreases were partially offset by higher volumes on our product
pipelines in New Mexico due to the turnaround at HFC's Navajo refinery
in the first quarter of 2017. Revenue increased as a result of the
higher volumes on the New Mexico product pipelines and remained
relatively consistent for pipelines servicing HFC's Woods Cross
refinery due to contractual minimum volume commitments and tariff
escalators.
-
Revenues from our intermediate pipelines were $29.6 million, an
increase of $0.9 million, on shipments averaging 144.5 mbpd compared
to 141.6 mbpd for the year ended December 31, 2017. These increases
were principally due to the turnaround at HFC's Navajo refinery in the
first quarter of 2017 and increased production of base oil and
lubricants at HFC's Tulsa refinery.
-
Revenues from our crude pipelines were $116.3 million, an
increase of $42.4 million, on shipments averaging 465.6 mbpd compared
to 302.9 mbpd for the year ended December 31, 2017. The increases were
mainly attributable to our acquisition of the remaining interests in
the SLC and Frontier pipelines in the fourth quarter of 2017 as well
as increased volumes on our crude pipeline systems in New Mexico and
Texas.
-
Revenues from terminal, tankage and loading rack fees were
$147.5 million, an increase of $5.1 million compared to the year ended
December 31, 2017. Refined products and crude oil terminalled in the
facilities averaged 474.9 mbpd compared to 496.7 mbpd for the year
ended December 31, 2017. Despite the decrease in volume, revenue
increased primarily due to tariff escalators on minimum revenue
commitments.
-
Revenues from refinery processing units were $75.2 million, a
decrease of $1.7 million on throughputs averaging 62.8 mbpd compared
to 63.6 mbpd for the year ended December 31, 2017. The reduction in
revenue and volume was due to an unplanned outage on our fluid
catalytic cracking unit at HFC's Woods Cross refinery in the fourth
quarter of 2018.
Revenues for the year ended December 31, 2018, included the recognition
of $3.3 million of prior shortfalls billed to shippers in 2017 as they
did not exceed their minimum volume commitments within the contractual
make-up period.
Operating Costs and Expenses Highlights
Operating costs and expenses were $66.8 million and $256.0 million for
the three months and year ended December 31, 2018, respectively,
representing increases of $4.8 million and $24.8 million from the three
months and year ended December 31, 2017, respectively. The increases
were primarily due to new operating expenses related to our acquisition
of the remaining interests in the SLC and Frontier pipelines in the
fourth quarter of 2017.
Interest expense was $18.7 million and $71.9 million for the three
months and year ended December 31, 2018, respectively, representing
increases of $1.6 million and $13.5 million over the same periods of
2017. These increases were mainly due to the private placement of an
additional $100 million in aggregate principal amount of our 6% Senior
Notes due 2024 completed in the third quarter of 2017, 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/27947/indexl.html.
An audio archive of this webcast will be available using the above noted
link through March 5, 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 and the years ended December 31, 2018
and 2017.
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
Change from |
|
|
|
2018 |
|
|
2017 |
|
|
2017 |
|
|
|
(In thousands, except per unit data)
|
| Revenues |
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
|
$
|
22,189
|
|
|
|
$
|
22,053
|
|
|
|
$
|
136
|
|
|
Affiliates – intermediate pipelines
|
|
|
7,144
|
|
|
|
8,366
|
|
|
|
(1,222
|
)
|
|
Affiliates – crude pipelines
|
|
|
21,004
|
|
|
|
18,070
|
|
|
|
2,934
|
|
|
|
|
50,337
|
|
|
|
48,489
|
|
|
|
1,848
|
|
|
Third parties – refined product pipelines
|
|
|
17,401
|
|
|
|
17,481
|
|
|
|
(80
|
)
|
|
Third parties – crude pipelines
|
|
|
8,359
|
|
|
|
7,301
|
|
|
|
1,058
|
|
|
|
|
76,097
|
|
|
|
73,271
|
|
|
|
2,826
|
|
|
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
33,612
|
|
|
|
31,937
|
|
|
|
1,675
|
|
|
Third parties
|
|
|
4,853
|
|
|
|
4,618
|
|
|
|
235
|
|
|
|
|
38,465
|
|
|
|
36,555
|
|
|
|
1,910
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliates - refinery processing units
|
|
|
18,230
|
|
|
|
19,395
|
|
|
|
(1,165
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
132,792
|
|
|
|
129,221
|
|
|
|
3,571
|
|
| Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
39,699
|
|
|
|
35,021
|
|
|
|
4,678
|
|
|
Depreciation and amortization
|
|
|
24,375
|
|
|
|
21,549
|
|
|
|
2,826
|
|
|
General and administrative
|
|
|
2,747
|
|
|
|
5,451
|
|
|
|
(2,704
|
)
|
|
|
|
66,821
|
|
|
|
62,021
|
|
|
|
4,800
|
|
| Operating income |
|
|
65,971
|
|
|
|
67,200
|
|
|
|
(1,229
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of equity method investments
|
|
|
1,698
|
|
|
|
1,545
|
|
|
|
153
|
|
|
Interest expense, including amortization
|
|
|
(18,650
|
)
|
|
|
(17,089
|
)
|
|
|
(1,561
|
)
|
|
Interest income
|
|
|
526
|
|
|
|
185
|
|
|
|
341
|
|
|
Remeasurement gain on preexisting equity interests
|
|
|
—
|
|
|
|
36,254
|
|
|
|
(36,254
|
)
|
|
Gain on sale of assets and other
|
|
|
51
|
|
|
|
105
|
|
|
|
(54
|
)
|
|
|
|
(16,375
|
)
|
|
|
21,000
|
|
|
|
(37,375
|
)
|
| Income before income taxes |
|
|
49,596
|
|
|
|
88,200
|
|
|
|
(38,604
|
)
|
|
State income tax benefit (expense)
|
|
|
123
|
|
|
|
(85
|
)
|
|
|
208
|
|
| Net income |
|
|
49,719
|
|
|
|
88,115
|
|
|
|
(38,396
|
)
|
|
Allocation of net income attributable to noncontrolling interests
|
|
|
(2,186
|
)
|
|
|
(2,044
|
)
|
|
|
(142
|
)
|
| Net income attributable to Holly Energy Partners |
|
|
47,533
|
|
|
|
86,071
|
|
|
|
(38,538
|
)
|
|
General partner interest in net income, including incentive
distributions(1) |
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
| Limited partners’ interest in net income |
|
|
$
|
47,533
|
|
|
|
$
|
86,071
|
|
|
|
$
|
(38,538
|
)
|
| Limited partners’ earnings per unit – basic and diluted(1) |
|
|
$
|
0.45
|
|
|
|
$
|
0.96
|
|
|
|
$
|
(0.51
|
)
|
| Weighted average limited partners’ units outstanding |
|
|
105,440
|
|
|
|
89,422
|
|
|
|
16,018
|
|
| EBITDA(2) |
|
|
$
|
89,909
|
|
|
|
$
|
124,609
|
|
|
|
$
|
(34,700
|
)
|
| Distributable cash flow(3) |
|
|
$
|
64,210
|
|
|
|
$
|
65,520
|
|
|
|
$
|
(1,310
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Volumes (bpd) |
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
|
134,459
|
|
|
|
150,470
|
|
|
|
(16,011
|
)
|
|
Affiliates – intermediate pipelines
|
|
|
150,964
|
|
|
|
158,058
|
|
|
|
(7,094
|
)
|
|
Affiliates – crude pipelines
|
|
|
389,631
|
|
|
|
317,762
|
|
|
|
71,869
|
|
|
|
|
675,054
|
|
|
|
626,290
|
|
|
|
48,764
|
|
|
Third parties – refined product pipelines
|
|
|
74,616
|
|
|
|
80,683
|
|
|
|
(6,067
|
)
|
|
Third parties – crude pipelines
|
|
|
105,810
|
|
|
|
86,623
|
|
|
|
19,187
|
|
|
|
|
855,480
|
|
|
|
793,596
|
|
|
|
61,884
|
|
|
Terminals and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
385,772
|
|
|
|
448,837
|
|
|
|
(63,065
|
)
|
|
Third parties
|
|
|
66,087
|
|
|
|
68,050
|
|
|
|
(1,963
|
)
|
|
|
|
451,859
|
|
|
|
516,887
|
|
|
|
(65,028
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refinery processing units
|
|
|
47,696
|
|
|
|
62,721
|
|
|
|
(15,025
|
)
|
|
|
|
|
|
|
|
|
|
|
| Total for pipelines, terminals and refinery processing unit
assets (bpd) |
|
|
1,355,035
|
|
|
|
1,373,204
|
|
|
|
(18,169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
|
Change from |
|
|
|
2018 |
|
|
2017 |
|
|
2017 |
|
|
|
(In thousands, except per unit data)
|
| Revenues |
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
|
$
|
82,998
|
|
|
|
$
|
80,030
|
|
|
|
$
|
2,968
|
|
|
Affiliates – intermediate pipelines
|
|
|
29,639
|
|
|
|
28,732
|
|
|
|
907
|
|
|
Affiliates – crude pipelines
|
|
|
79,741
|
|
|
|
65,960
|
|
|
|
13,781
|
|
|
|
|
192,378
|
|
|
|
174,722
|
|
|
|
17,656
|
|
|
Third parties – refined product pipelines
|
|
|
54,524
|
|
|
|
52,379
|
|
|
|
2,145
|
|
|
Third parties – crude pipelines
|
|
|
36,605
|
|
|
|
7,939
|
|
|
|
28,666
|
|
|
|
|
283,507
|
|
|
|
235,040
|
|
|
|
48,467
|
|
|
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
130,251
|
|
|
|
125,510
|
|
|
|
4,741
|
|
|
Third parties
|
|
|
17,283
|
|
|
|
16,908
|
|
|
|
375
|
|
|
|
|
147,534
|
|
|
|
142,418
|
|
|
|
5,116
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliates - refinery processing units
|
|
|
75,179
|
|
|
|
76,904
|
|
|
|
(1,725
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
506,220
|
|
|
|
454,362
|
|
|
|
51,858
|
|
| Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
146,430
|
|
|
|
137,605
|
|
|
|
8,825
|
|
|
Depreciation and amortization
|
|
|
98,492
|
|
|
|
79,278
|
|
|
|
19,214
|
|
|
General and administrative
|
|
|
11,040
|
|
|
|
14,323
|
|
|
|
(3,283
|
)
|
|
|
|
255,962
|
|
|
|
231,206
|
|
|
|
24,756
|
|
| Operating income |
|
|
250,258
|
|
|
|
223,156
|
|
|
|
27,102
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of equity method investments
|
|
|
5,825
|
|
|
|
12,510
|
|
|
|
(6,685
|
)
|
|
Interest expense, including amortization
|
|
|
(71,899
|
)
|
|
|
(58,448
|
)
|
|
|
(13,451
|
)
|
|
Interest income
|
|
|
2,108
|
|
|
|
491
|
|
|
|
1,617
|
|
|
Loss on early extinguishment of debt
|
|
|
—
|
|
|
|
(12,225
|
)
|
|
|
12,225
|
|
|
Remeasurement gain on preexisting equity interests
|
|
|
—
|
|
|
|
36,254
|
|
|
|
(36,254
|
)
|
|
Gain on sale of assets and other
|
|
|
121
|
|
|
|
422
|
|
|
|
(301
|
)
|
|
|
|
(63,845
|
)
|
|
|
(20,996
|
)
|
|
|
(42,849
|
)
|
| Income before income taxes |
|
|
186,413
|
|
|
|
202,160
|
|
|
|
(15,747
|
)
|
|
State income tax expense
|
|
|
(26
|
)
|
|
|
(249
|
)
|
|
|
223
|
|
| Net income |
|
|
186,387
|
|
|
|
201,911
|
|
|
|
(15,524
|
)
|
|
Allocation of net income attributable to noncontrolling interests
|
|
|
(7,540
|
)
|
|
|
(6,871
|
)
|
|
|
(669
|
)
|
| Net income attributable to Holly Energy Partners |
|
|
178,847
|
|
|
|
195,040
|
|
|
|
(16,193
|
)
|
|
General partner interest in net income, including incentive
distributions(1) |
|
|
—
|
|
|
|
(35,047
|
)
|
|
|
35,047
|
|
| Limited partners’ interest in net income |
|
|
$
|
178,847
|
|
|
|
$
|
159,993
|
|
|
|
$
|
18,854
|
|
| Limited partners’ earnings per unit—basic and diluted(1) |
|
|
$
|
1.70
|
|
|
|
$
|
2.28
|
|
|
|
$
|
(0.58
|
)
|
| Weighted average limited partners’ units outstanding |
|
|
104,908
|
|
|
|
70,291
|
|
|
|
34,617
|
|
| EBITDA(2) |
|
|
$
|
347,156
|
|
|
|
$
|
332,524
|
|
|
|
$
|
14,632
|
|
|
Adjusted EBITDA(2)
|
|
|
$
|
347,156
|
|
|
|
$
|
344,749
|
|
|
|
$
|
2,407
|
|
| Distributable cash flow(3) |
|
|
$
|
265,087
|
|
|
|
$
|
242,955
|
|
|
|
$
|
22,132
|
|
|
|
|
|
|
|
|
|
|
|
| Volumes (bpd) |
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
|
127,865
|
|
|
|
133,822
|
|
|
|
(5,957
|
)
|
|
Affiliates – intermediate pipelines
|
|
|
144,537
|
|
|
|
141,601
|
|
|
|
2,936
|
|
|
Affiliates – crude pipelines
|
|
|
349,686
|
|
|
|
281,093
|
|
|
|
68,593
|
|
|
|
|
622,088
|
|
|
|
556,516
|
|
|
|
65,572
|
|
|
Third parties – refined product pipelines
|
|
|
71,784
|
|
|
|
78,013
|
|
|
|
(6,229
|
)
|
|
Third parties – crude pipelines
|
|
|
115,933
|
|
|
|
21,834
|
|
|
|
94,099
|
|
|
|
|
809,805
|
|
|
|
656,363
|
|
|
|
153,442
|
|
|
Terminals and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
413,525
|
|
|
|
428,001
|
|
|
|
(14,476
|
)
|
|
Third parties
|
|
|
61,367
|
|
|
|
68,687
|
|
|
|
(7,320
|
)
|
|
|
|
474,892
|
|
|
|
496,688
|
|
|
|
(21,796
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refinery processing units
|
|
|
62,787
|
|
|
|
63,572
|
|
|
|
(785
|
)
|
|
|
|
|
|
|
|
|
|
|
| Total for pipelines, terminals and refinery processing unit
assets (bpd) |
|
|
1,347,484
|
|
|
|
1,216,623
|
|
|
|
130,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Prior to the equity restructuring transaction on October 31, 2017,
net income attributable to Holly Energy Partners was allocated
between limited partners and the general partner interest in
accordance with the provisions of the partnership agreement. HEP net
income allocated to the general partner included incentive
distributions that were declared subsequent to quarter end. There
were no distributions made on the general partner interest after
October 31, 2017. No general partner distributions were declared for
the three months ended December 31, 2017, and general partner
distributions of $36.5 million were declared for the year ended
December 31, 2017.
|
|
|
|
|
(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. Adjusted
EBITDA is calculated as EBITDA plus loss on early extinguishment of
debt. 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
December 31, |
|
|
Years Ended
December 31, |
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
Net income attributable to Holly Energy Partners |
|
|
$
|
47,533
|
|
|
|
$
|
86,071
|
|
|
|
$
|
178,847
|
|
|
|
$
|
195,040
|
|
|
|
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
17,886
|
|
|
|
16,343
|
|
|
|
68,858
|
|
|
|
55,385
|
|
|
|
|
|
Interest Income
|
|
|
(526
|
)
|
|
|
(185
|
)
|
|
|
(2,108
|
)
|
|
|
(491
|
)
|
|
|
|
|
Amortization of discount and deferred debt charges
|
|
|
764
|
|
|
|
746
|
|
|
|
3,041
|
|
|
|
3,063
|
|
|
|
|
|
State income tax (benefit) expense
|
|
|
(123
|
)
|
|
|
85
|
|
|
|
26
|
|
|
|
249
|
|
|
|
|
|
Depreciation and amortization
|
|
|
24,375
|
|
|
|
21,549
|
|
|
|
98,492
|
|
|
|
79,278
|
|
|
|
|
|
EBITDA |
|
|
$
|
89,909
|
|
|
|
$
|
124,609
|
|
|
|
$
|
347,156
|
|
|
|
$
|
332,524
|
|
|
|
|
|
Add loss on early extinguishment of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,225
|
|
|
|
|
|
Adjusted EBITDA |
|
|
$
|
89,909
|
|
|
|
$
|
124,609
|
|
|
|
$
|
347,156
|
|
|
|
$
|
344,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
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
December 31, |
|
|
Years Ended
December 31, |
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
Net income attributable to Holly Energy Partners |
|
|
$
|
47,533
|
|
|
|
$
|
86,071
|
|
|
|
$
|
178,847
|
|
|
|
$
|
195,040
|
|
|
|
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
24,375
|
|
|
|
21,549
|
|
|
|
98,492
|
|
|
|
79,278
|
|
|
|
|
|
Remeasurement of gain on preexisting equity interests
|
|
|
—
|
|
|
|
(36,254
|
)
|
|
|
—
|
|
|
|
(36,254
|
)
|
|
|
|
|
Amortization of discount and deferred debt charges
|
|
|
764
|
|
|
|
746
|
|
|
|
3,041
|
|
|
|
3,063
|
|
|
|
|
|
Loss on early extinguishment of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,225
|
|
|
|
|
|
Customer billings greater than revenue recognized
|
|
|
(3,780
|
)
|
|
|
(5,118
|
)
|
|
|
(786
|
)
|
|
|
(1,283
|
)
|
|
|
|
|
Maintenance capital expenditures (4) |
|
|
(3,678
|
)
|
|
|
(1,440
|
)
|
|
|
(8,182
|
)
|
|
|
(7,748
|
)
|
|
|
|
|
Increase (decrease) in environmental liability
|
|
|
131
|
|
|
|
159
|
|
|
|
(237
|
)
|
|
|
(581
|
)
|
|
|
|
|
Decrease in reimbursable deferred revenue
|
|
|
(1,242
|
)
|
|
|
(914
|
)
|
|
|
(5,179
|
)
|
|
|
(3,679
|
)
|
|
|
|
|
Other non-cash adjustments
|
|
|
107
|
|
|
|
721
|
|
|
|
(909
|
)
|
|
|
2,894
|
|
|
|
|
|
Distributable cash flow |
|
|
$
|
64,210
|
|
|
|
$
|
65,520
|
|
|
|
$
|
265,087
|
|
|
|
$
|
242,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
3,045
|
|
|
|
$
|
7,776
|
|
|
|
|
Working capital
|
|
|
$
|
8,577
|
|
|
|
$
|
18,906
|
|
|
|
|
Total assets
|
|
|
$
|
2,102,540
|
|
|
|
$
|
2,154,114
|
|
|
|
|
Long-term debt
|
|
|
$
|
1,418,900
|
|
|
|
$
|
1,507,308
|
|
|
|
|
Partners' equity (5) |
|
|
$
|
427,435
|
|
|
|
$
|
393,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
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.
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190219005308/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.
214/954-6511