DALLAS, May 6 /PRNewswire-FirstCall/ -- Holly Corporation
(NYSE: HOC) ("Holly" or the "Company") today reported first quarter
2010 financial results. For the quarter, the net loss
attributable to Holly stockholders was $28.1
million ($0.53 per basic and
diluted share) compared to net income attributable to Holly
stockholders of $21.9 million
($0.44 per basic and diluted share)
for the first quarter of 2009.
Holly also announced that its Board of Directors has
declared a regular quarterly cash dividend in the amount of
$0.15 per share, payable July 2, 2010 to holders of record on June 21, 2010.
For the quarter, net income attributable to our stockholders
decreased by $50 million compared to
the same period of 2009. This decrease was principally due to
industry-wide, low refinery gross margins in the current year's
first quarter. Overall refinery gross margins were
$5.56 per produced barrel, a 53%
decrease compared to $11.93 for the
first quarter of 2009. For the three months ended
March 31, 2010 our refinery
production levels were at 217,000 barrels per day ("BPD"), an
increase of 151% over the same period of 2009 due to production
from our recently acquired Tulsa Refinery facilities combined with
higher production levels at our Navajo and Woods
Cross refineries.
"The difficult refining environment that we experienced in late
2009 continued into the early months of 2010," said Matthew Clifton, Chairman of the Board and Chief
Executive Officer of Holly. "General weak demand for gasoline
and distillate products combined with increased crude costs led to
the 2010 first quarter loss. However, overall refinery
margins compared somewhat favorably to the 2009 fourth quarter due
to improvements late in the first quarter.
"Comparing to the 2009 first quarter, margin levels were reduced
in the markets served by the Navajo Refinery, with gasoline and
distillate cracks significantly less than the higher levels
experienced in early 2009. Yet at the Woods Cross Refinery,
margins compared favorably to the 2009 first quarter as strong
demand combined with wide crude discounts led to the positive
results. At our Tulsa Refinery, the lubes business generated
good results, however this benefit was negated by the low crack on
fuel products yielding an overall loss for our Tulsa operations. Additionally, our
asphalt marketing results were significantly off as compared to its
unusually strong contribution in the 2009 first quarter.
Finally, our results benefited from improved earnings
attributable to Holly Energy Partners' logistics business.
Although we are disappointed with the loss for this quarter,
we are cautiously optimistic about the remainder of 2010 as the
margin environment has shown significant improvement heading into
the summer."
"Operationally, at the Navajo Refinery production was somewhat
reduced in the first quarter to complete certain upgrade projects
that will permit us to run a wider range of lower priced crudes
while increasing our flexibility in varying the mix of
transportation fuels. At the Tulsa Refinery, we are making
progress on our integration and optimization projects of the two
facilities. During the first quarter, our production was just
over 100,000 BPD.
"Looking forward, we remain confident that the enhanced
capabilities of our assets, our expanded asset base, and the
markets we serve, combined with our conservative financial
condition will continue to allow us to meet the challenges
presented by today's refining environment," Clifton said.
Sales and other revenues for the 2010 first quarter were
$1,874 million, a 189% increase
compared to the three months ended March 31,
2009. This was due to the effects of a 140% increase
in year-over-year first quarter volumes of produced refined
products sold combined with a 58% current quarter increase in
refined product sales prices over the same period in 2009.
The volume increase was primarily due to volumes attributable
to our Tulsa Refinery operations. Cost of products sold was
$1,724 million, a 237% increase
compared to the three months ended March 31,
2009 due mainly to increased sales volumes combined with
significantly higher crude oil acquisition costs.
Operating costs and expenses for the three months ended
March 31, 2010 increased mainly due
to the inclusion of costs attributable to the operations of our
Tulsa Refinery facilities acquired on June
1 and December 1, 2009.
Interest expense for the three months ended March 31, 2010 increased by $11.5 million primarily due to interest incurred
on the $300 million Holly senior
notes.
The Company has scheduled a webcast conference call for today,
May 6, 2010 at 4:00 PM Eastern Time to discuss financial
results. This webcast may be accessed at:
http://www.videonewswire.com/event.asp?id=68093.
An audio archive of this webcast will be available using the
above noted link through May 20,
2010.
Holly 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 specialty lubricant
products. Holly operates through its subsidiaries a 100,000
BPSD refinery located in Artesia, New
Mexico, a 31,000 BPSD refinery in Woods Cross, Utah and a 125,000 BPSD refinery
located in Tulsa, Oklahoma.
Also, a subsidiary of Holly owns a 34% interest (including
the 2% general partner interest) in Holly Energy Partners, L.P.,
which through subsidiaries owns or leases approximately 2,500 miles
of petroleum product and crude oil pipelines in Texas, New
Mexico, Utah and
Oklahoma and tankage and refined
product terminals in several Southwest and Rocky Mountain
states.
The following is a "safe harbor" statement under the Private
Securities Litigation Reform Act of 1995: The statements in this
press release relating to matters that are not historical facts are
"forward-looking statements" based on management's beliefs and
assumptions using currently available information and expectations
as of the date hereof, are not guarantees of future performance and
involve certain risks and uncertainties, including those contained
in our filings with the Securities and Exchange Commission.
Although we believe that the expectations reflected in these
forward-looking statements are reasonable, we cannot assure you
that our expectations will prove correct. Therefore, actual
outcomes and results could materially differ from what is
expressed, implied or forecast in such statements. Any
differences could be caused by a number of factors, including, but
not limited to, risks and uncertainties with respect to the actions
of actual or potential competitive suppliers of refined petroleum
products in the Company's markets, the demand for and supply of
crude oil and refined products, the spread between market prices
for refined products and market prices for crude oil, the
possibility of constraints on the transportation of refined
products, the possibility of inefficiencies, curtailments or
shutdowns in refinery operations or pipelines, effects of
governmental and environmental regulations and policies, the
availability and cost of financing to the Company, the
effectiveness of the Company's capital investments and marketing
strategies, the Company's efficiency in carrying out construction
projects, the ability of the Company to acquire refined product
operations or pipeline and terminal operations on acceptable terms
and to integrate any future acquired operations, the Company's
ability to integrate the operations of the Tulsa refinery and the Sinclair refinery into
a single facility and into its business, the possibility of
terrorist attacks and the consequences of any such attacks, general
economic conditions, and other financial, operational and legal
risks and uncertainties detailed from time to time in the Company's
Securities and Exchange Commission filings. The
forward-looking statements speak only as of the date made and,
other than as required by law, we undertake no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
RESULTS OF
OPERATIONS
Financial Data
(all information in this release is unaudited)
|
|
|
Three Months
Ended
March
31,
|
Change from
2009
|
|
|
2010
|
2009
|
Change
|
Percent
|
|
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
Sales and other revenues
|
$
1,874,290
|
$
648,030
|
$
1,226,260
|
189.2%
|
|
Operating costs and
expenses:
|
|
|
|
|
|
Cost of products sold
(exclusive of depreciation and amortization)
|
1,723,864
|
511,654
|
1,212,210
|
236.9
|
|
Operating expenses (exclusive
of depreciation and amortization)
|
127,544
|
66,748
|
60,796
|
91.1
|
|
General and administrative
expenses (exclusive of depreciation and amortization)
|
17,869
|
11,756
|
6,113
|
52.0
|
|
Depreciation and amortization
|
27,757
|
20,081
|
7,676
|
38.2
|
|
Total operating
costs and expenses
|
1,897,034
|
610,239
|
1,286,795
|
210.9
|
|
Income (loss) from operations
|
(22,744)
|
37,791
|
(60,535)
|
(160.2)
|
|
Other income (expense):
|
|
|
|
|
|
Equity in earnings of SLC
Pipeline
|
481
|
175
|
306
|
174.9
|
|
Interest income
|
59
|
2,196
|
(2,137)
|
(97.3)
|
|
Interest expense
|
(17,722)
|
(6,239)
|
(11,483)
|
184.1
|
|
|
(17,182)
|
(3,868)
|
(13,314)
|
344.2
|
|
Income (loss) from continuing
operations before income taxes
|
(39,926)
|
33,923
|
(73,849)
|
(217.7)
|
|
Income tax provision (benefit)
|
(16,672)
|
11,849
|
(28,521)
|
(240.7)
|
|
Income (loss) from continuing
operations
|
(23,254)
|
22,074
|
(45,328)
|
(205.3)
|
|
Income from discontinued operations
(1)
|
-
|
1,331
|
(1,331)
|
(100.0)
|
|
Net income (loss)
|
(23,254)
|
23,405
|
(46,659)
|
(199.4)
|
|
Less noncontrolling interest in net
income
|
4,840
|
1,460
|
3,380
|
231.5
|
|
Net income (loss) attributable to
Holly Corporation stockholders
|
$
(28,094)
|
$
21,945
|
$
(50,039)
|
(228.0)%
|
|
|
|
|
|
|
|
Earnings attributable to Holly
Corporation stockholders:
|
|
|
|
|
|
Income (loss) from continuing
operations
|
$
(28,094)
|
$
21,553
|
$
(49,647)
|
(230.3)%
|
|
Income from discontinued
operations
|
-
|
392
|
(392)
|
(100.0)
|
|
Net income (loss)
|
$
(28,094)
|
$
21,945
|
$
(50,039)
|
(228.0)%
|
|
|
|
|
|
|
|
Earnings per share attributable to
Holly Corporation
stockholders – basic and
diluted:
|
|
|
|
|
|
Income (loss) from continuing
operations
|
$
(0.53)
|
$
0.43
|
$
(0.96)
|
(223.3)%
|
|
Income from discontinued
operations
|
-
|
0.01
|
(0.01)
|
(100.0)
|
|
Net income (loss)
|
$
(0.53)
|
$
0.44
|
$
(0.97)
|
(220.5)%
|
|
|
|
|
|
|
|
Cash dividends declared per common
share
|
$
0.15
|
$
0.15
|
$
-
|
-%
|
|
|
|
|
|
|
|
Average number of common shares
outstanding:
|
|
|
|
|
|
Basic
|
53,094
|
50,042
|
3,052
|
6.1%
|
|
Diluted
|
53,232
|
50,171
|
3,061
|
6.1%
|
|
|
|
|
|
|
|
EBITDA from continuing operations
|
$
654
|
$
57,526
|
$
(56,872)
|
(98.9)%
|
|
(1) On December 1, 2009,
HEP sold its interest in Rio Grande. Results of operations of
Rio Grande are presented in discontinued operations.
|
|
|
|
|
|
|
Balance Sheet
Data
|
|
|
March
31,
|
December
31,
|
|
|
2010
|
2009
|
|
|
(In
thousands)
|
|
|
|
|
|
Cash, cash equivalents and investments
in marketable securities
|
$
94,756
|
$
125,819
|
|
Working capital
|
$
297,879
|
$
257,899
|
|
Total assets
|
$
3,382,327
|
$
3,145,939
|
|
Long-term debt – Holly
Corporation
|
$
328,268
|
$
328,260
|
|
Long-term debt – Holly Energy
Partners
|
$
492,327
|
$
379,198
|
|
Total equity
|
$
1,163,511
|
$
1,207,781
|
|
|
|
|
|
|
Segment Information
Our operations are currently organized into two reportable
segments, Refining and HEP. Our operations that are not
included in the Refining and HEP segments are included in Corporate
and Other. Intersegment transactions are eliminated in our
consolidated financial statements and are included in
Consolidations and Eliminations.
The Refining segment includes the operations of our Navajo, Woods
Cross and Tulsa refineries
and Holly Asphalt Company ("Holly Asphalt"). The Refining
segment involves the purchase and refining of crude oil and
wholesale and branded marketing of refined products, such as
gasoline, diesel fuel, jet fuel and specialty lubricant products.
The petroleum products produced by the Refining segment are
primarily marketed in the Southwest, Rocky Mountain and
Mid-Continent regions of the United
States and northern Mexico.
Additionally, the Refining segment includes specialty
lubricant products produced at our Tulsa refinery that are marketed throughout
North America and are distributed
in Central and South America.
Holly Asphalt manufactures and markets asphalt and asphalt
products in Arizona, New Mexico, Texas and northern Mexico.
The HEP segment involves all of the operations of HEP. HEP
owns and operates a system of petroleum product and crude gathering
pipelines in Texas, New Mexico, Oklahoma and Utah, distribution terminals in Texas, New
Mexico, Arizona,
Utah, Idaho, and Washington and refinery tankage in
New Mexico, Utah and Oklahoma. Revenues are generated by
charging tariffs for transporting petroleum products and crude oil
through its pipelines, by leasing certain pipeline capacity to Alon
USA, Inc., by charging fees for terminalling refined products and
other hydrocarbons, and storing and providing other services at its
storage tanks and terminals. The HEP segment also includes a 25%
interest in SLC Pipeline LLC ("SLC Pipeline") that services
refineries in the Salt Lake City,
Utah area. Revenues from the HEP segment are earned
through transactions with unaffiliated parties for pipeline
transportation, rental and terminalling operations as well as
revenues relating to pipeline transportation services provided for
our refining operations.
|
|
|
Refining
|
HEP
|
Corporate and
Other
|
Consolidations and
Eliminations
|
Consolidated
Total
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2010
|
|
|
|
|
|
|
Sales and other revenues
|
$
1,867,174
|
$
40,689
|
$
66
|
$
(33,639)
|
$
1,874,290
|
|
Operating expenses
|
$
114,594
|
$
13,060
|
$
6
|
$
(116)
|
$
127,544
|
|
General and administrative
expenses
|
$
-
|
$
2,563
|
$
15,306
|
$
-
|
$
17,869
|
|
Depreciation and amortization
|
$
20,726
|
$
6,805
|
$
521
|
$
(295)
|
$
27,757
|
|
Income (loss) from operations
|
$
(24,579)
|
$
18,261
|
$
(15,767)
|
$
(659)
|
$
(22,744)
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2009
|
|
|
|
|
|
|
Sales and other revenues
|
$
636,910
|
$
29,332
|
$
99
|
$
(18,311)
|
$
648,030
|
|
Operating expenses
|
$
56,415
|
$
10,342
|
$
19
|
$
(28)
|
$
66,748
|
|
General and administrative
expenses
|
$
-
|
$
1,334
|
$
10,520
|
$
(98)
|
$
11,756
|
|
Depreciation and amortization
|
$
11,951
|
$
5,578
|
$
2,552
|
$
-
|
$
20,081
|
|
Income (loss) from operations
|
$
38,705
|
$
12,078
|
$
(12,992)
|
$
-
|
$
37,791
|
|
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
|
|
|
Cash, cash equivalents and
investments
in marketable
securities
|
$
-
|
$
16,609
|
$
78,147
|
$
-
|
$
94,756
|
|
Total assets
|
$
2,392,006
|
$
686,022
|
$
335,538
|
$
(31,239)
|
$
3,382,327
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
|
|
|
Cash, cash equivalents and
investments
in marketable
securities
|
$
-
|
$
2,508
|
$
123,311
|
$
-
|
$
125,819
|
|
Total assets
|
$
2,142,317
|
$
641,775
|
$
392,007
|
$
(30,160)
|
$
3,145,939
|
|
|
|
|
|
|
|
|
|
Refining Operating Data
Our refinery operations include the Navajo, Woods
Cross and Tulsa refineries.
The following tables set forth information, including
non-GAAP performance measures about our consolidated refinery
operations. The cost of products and refinery gross margin do
not include the effect of depreciation and amortization.
Reconciliations to amounts reported under GAAP are provided
under "Reconciliations to Amounts Reported Under Generally Accepted
Accounting Principles" below.
|
|
|
Three Months Ended
March 31,
|
|
|
2010
|
2009
|
|
Navajo Refinery
|
|
|
|
Crude charge (BPD) (1)
|
78,910
|
57,685
|
|
Refinery production (BPD) (2)
|
87,530
|
63,061
|
|
Sales of produced refined products
(BPD)
|
86,930
|
62,147
|
|
Sales of refined products (BPD) (3)
|
90,120
|
71,138
|
|
|
|
|
|
Refinery utilization (4)
|
78.9%
|
67.9%
|
|
|
|
|
|
Average per produced barrel
(5)
|
|
|
|
Net sales
|
$
88.06
|
$
57.37
|
|
Cost of products (6)
|
82.96
|
44.92
|
|
Refinery gross margin
|
5.10
|
12.45
|
|
Refinery operating expenses (7)
|
5.18
|
6.17
|
|
Net operating margin
|
$
(0.08)
|
$
6.28
|
|
|
|
|
|
Feedstocks:
|
|
|
|
Sour crude oil
|
87%
|
87%
|
|
Sweet crude oil
|
4%
|
8%
|
|
Other feedstocks and blends
|
9%
|
5%
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
Sales of produced refined
products:
|
|
|
|
Gasolines
|
59%
|
61%
|
|
Diesel fuels
|
30%
|
31%
|
|
Jet fuels
|
4%
|
1%
|
|
Fuel oil
|
4%
|
1%
|
|
Asphalt
|
1%
|
3%
|
|
LPG and other
|
2%
|
3%
|
|
Total
|
100%
|
100%
|
|
|
|
Woods Cross
Refinery
|
|
|
|
Crude charge (BPD) (1)
|
25,680
|
23,309
|
|
Refinery production (BPD) (2)
|
26,540
|
23,286
|
|
Sales of produced refined products
(BPD)
|
28,170
|
27,024
|
|
Sales of refined products (BPD) (3)
|
28,360
|
27,664
|
|
|
|
|
|
Refinery utilization (4)
|
82.8%
|
75.2%
|
|
|
|
|
|
Average per produced barrel
(5)
|
|
|
|
Net sales
|
$
89.52
|
$
50.31
|
|
Cost of products (6)
|
74.72
|
39.57
|
|
Refinery gross margin
|
14.80
|
10.74
|
|
Refinery operating expenses (7)
|
6.20
|
6.92
|
|
Net operating margin
|
$
8.60
|
$
3.82
|
|
|
|
|
|
Feedstocks:
|
|
|
|
Sour crude oil
|
8%
|
3%
|
|
Sweet crude oil
|
61%
|
66%
|
|
Black wax crude oil
|
28%
|
29%
|
|
Other feedstocks and blends
|
3%
|
2%
|
|
Total
|
100%
|
100%
|
|
|
|
Feedstocks:
|
|
|
|
Sour crude oil
|
8%
|
3%
|
|
Sweet crude oil
|
61%
|
66%
|
|
Black wax crude oil
|
28%
|
29%
|
|
Other feedstocks and blends
|
3%
|
2%
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2010
|
2009
|
|
Sales of produced refined
products:
|
|
|
|
Gasolines
|
64%
|
68%
|
|
Diesel fuels
|
28%
|
23%
|
|
Jet fuels
|
1%
|
1%
|
|
Fuel oil
|
1%
|
4%
|
|
Asphalt
|
3%
|
1%
|
|
LPG and other
|
3%
|
3%
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
Tulsa Refinery
|
|
|
|
Crude charge (BPD) (1)
|
103,600
|
-
|
|
Refinery production (BPD) (2)
|
102,890
|
-
|
|
Sales of produced refined products
(BPD)
|
98,760
|
-
|
|
Sales of refined products (BPD) (3)
|
100,620
|
-
|
|
|
|
|
|
Refinery utilization (4)
|
82.9%
|
-%
|
|
|
|
|
|
Average per produced barrel
(5)
|
|
|
|
Net sales
|
$
86.22
|
$
-
|
|
Cost of products (6)
|
82.89
|
-
|
|
Refinery gross margin
|
3.33
|
-
|
|
Refinery operating expenses (7)
|
5.91
|
-
|
|
Net operating margin
|
$
(2.58)
|
$
-
|
|
|
|
|
|
Feedstocks:
|
|
|
|
Sweet crude oil
|
100%
|
-%
|
|
|
|
|
|
Sales of produced refined
products:
|
|
|
|
Gasolines
|
41%
|
-%
|
|
Diesel fuels
|
30%
|
-%
|
|
Jet fuels
|
9%
|
-%
|
|
Lubricants
|
10%
|
-%
|
|
Asphalt
|
4%
|
-%
|
|
Gas oil / intermediates
|
2%
|
-%
|
|
LPG and other
|
4%
|
-%
|
|
Total
|
100%
|
-%
|
|
|
|
|
|
Consolidated
|
|
|
|
Crude charge (BPD) (1)
|
208,190
|
80,994
|
|
Refinery production (BPD) (2)
|
216,960
|
86,347
|
|
Sales of produced refined products
(BPD)
|
213,860
|
89,171
|
|
Sales of refined products (BPD) (3)
|
219,100
|
98,802
|
|
|
|
|
|
Refinery utilization (4)
|
81.3%
|
69.8%
|
|
|
|
|
|
Average per produced barrel
(5)
|
|
|
|
Net sales
|
$
87.40
|
$
55.23
|
|
Cost of products (6)
|
81.84
|
43.30
|
|
Refinery gross margin
|
5.56
|
11.93
|
|
Refinery operating expenses (7)
|
5.65
|
6.40
|
|
Net operating margin
|
$
(0.09)
|
$
5.53
|
|
|
|
|
|
Feedstocks:
|
|
|
|
Sour crude oil
|
36%
|
64%
|
|
Sweet crude oil
|
56%
|
24%
|
|
Black wax crude oil
|
3%
|
8%
|
|
Other feedstocks and blends
|
5%
|
4%
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2010
|
2009
|
|
Sales of produced refined
products:
|
|
|
|
Gasolines
|
51%
|
63%
|
|
Diesel fuels
|
30%
|
29%
|
|
Jet fuels
|
6%
|
1%
|
|
Fuel oil
|
2%
|
2%
|
|
Asphalt
|
3%
|
2%
|
|
Lubricants
|
4%
|
-%
|
|
Gas oil / intermediates
|
1%
|
-%
|
|
LPG and other
|
3%
|
3%
|
|
Total
|
100%
|
100%
|
|
(1)
Crude charge represents the barrels per day of crude oil processed
at our refineries.
(2)
Refinery production represents the barrels per day of refined
products yielded from processing crude and other refinery
feedstocks through the crude units and other conversion units
at our refineries.
(3)
Includes refined products purchased for resale.
(4)
Represents crude charge divided by total crude capacity (BPSD).
Our consolidated crude capacity was increased by
15,000 BPSD effective April 1, 2009 (our Navajo refinery
expansion), 85,000 BPSD effective June 1, 2009 (our Tulsa Refinery
west facility acquisition) and 40,000 BPSD effective December 1,
2009 (our Tulsa refinery east facility acquisition), increasing our
consolidated crude capacity to 256,000 BPSD.
(5)
Represents average per barrel amount for produced refined products
sold, which is a non-GAAP measure. Reconciliations to
amounts reported under GAAP are provided under "Reconciliations to
Amounts Reported Under Generally Accepted Accounting Principles"
below.
(6)
Transportation, terminal and refinery storage costs billed from HEP
are included in cost of products.
(7)
Represents operating expenses of our refineries, exclusive of
depreciation and amortization.
|
|
|
|
|
Reconciliations to Amounts Reported Under Generally Accepted
Accounting Principles
Reconciliations of earnings before interest, taxes,
depreciation and amortization ("EBITDA") to amounts reported under
generally accepted accounting principles in financial
statements.
Earnings before interest, taxes, depreciation and amortization,
which we refer to as EBITDA, is calculated as net income
attributable to Holly Corporation stockholders plus (i) interest
expense, net of interest income, (ii) income tax provision, and
(iii) depreciation and amortization. EBITDA is not a
calculation provided for under accounting principles generally
accepted in the United States;
however, the amounts included in the EBITDA calculation are derived
from amounts included in our consolidated financial statements.
EBITDA should not be considered as an alternative to net
income or operating income as an indication of our operating
performance or as an alternative to operating cash flow as a
measure of liquidity. EBITDA is not necessarily comparable to
similarly titled measures of other companies. EBITDA is
presented here because it is a widely used financial indicator used
by investors and analysts to measure performance. EBITDA is
also used by our management for internal analysis and as a basis
for financial covenants.
Set forth below is our calculation of EBITDA from continuing
operations.
|
|
|
Three Months Ended
March 31,
|
|
|
2010
|
2009
|
|
|
(In
thousands)
|
|
|
|
|
|
Income (loss) from
continuing operations
|
$
(23,254)
|
$
22,074
|
|
Subtract noncontrolling
interest in income from continuing operations
|
(4,840)
|
(521)
|
|
Add
(subtract) income tax provision (benefit)
|
(16,672)
|
11,849
|
|
Add
interest expense
|
17,722
|
6,239
|
|
Subtract
interest income
|
(59)
|
(2,196)
|
|
Add depreciation and
amortization
|
27,757
|
20,081
|
|
EBITDA from
continuing operations
|
$
654
|
$
57,526
|
|
|
|
|
|
|
Reconciliations of refinery operating information
(non-GAAP performance measures) to amounts reported under generally
accepted accounting principles in financial statements.
Refinery gross margin and net operating margin are non-GAAP
performance measures that are used by our management and others to
compare our refining performance to that of other companies in our
industry. We believe these margin measures are helpful to
investors in evaluating our refining performance on a relative and
absolute basis.
We calculate refinery gross margin and net operating margin
using net sales, cost of products and operating expenses, in each
case averaged per produced barrel sold. These two margins do
not include the effect of depreciation and amortization. Each
of these component performance measures can be reconciled directly
to our Consolidated Statements of Income.
Other companies in our industry may not calculate these
performance measures in the same manner.
Refinery Gross Margin
Refinery gross margin per barrel is the difference between
average net sales price and average cost of products per barrel of
produced refined products. Refinery gross margin for each of
our refineries and for all of our refineries on a consolidated
basis is calculated as shown below.
|
|
|
Three Months
Ended
March
31,
|
|
|
2010
|
2009
|
|
Average per
produced barrel:
|
|
|
|
|
|
|
|
Navajo
Refinery
|
|
|
|
Net sales
|
$
88.06
|
$
57.37
|
|
Less cost
of products
|
82.96
|
44.92
|
|
Refinery
gross margin
|
$
5.10
|
$
12.45
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
Net sales
|
$
89.52
|
$
50.31
|
|
Less cost
of products
|
74.72
|
39.57
|
|
Refinery
gross margin
|
$
14.80
|
$
10.74
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
Net sales
|
$
86.22
|
$
-
|
|
Less cost
of products
|
82.89
|
-
|
|
Refinery
gross margin
|
$
3.33
|
$
-
|
|
|
|
|
|
Consolidated
|
|
|
|
Net sales
|
$
87.40
|
$
55.23
|
|
Less cost
of products
|
81.84
|
43.30
|
|
Refinery
gross margin
|
$
5.56
|
$
11.93
|
|
|
|
|
|
|
Net Operating Margin
Net operating margin per barrel is the difference between
refinery gross margin and refinery operating expenses per barrel of
produced refined products. Net operating margin for each of
our refineries and for all of our refineries on a consolidated
basis is calculated as shown below.
|
|
|
Three Months
Ended
March
31,
|
|
|
2010
|
2009
|
|
Average per
produced barrel:
|
|
|
|
|
|
|
|
Navajo
Refinery
|
|
|
|
Refinery
gross margin
|
$
5.10
|
$
12.45
|
|
Less
refinery operating expenses
|
5.18
|
6.17
|
|
Net
operating margin
|
$
(0.08)
|
$
6.28
|
|
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2010
|
2009
|
|
Woods Cross
Refinery
|
|
|
|
Refinery
gross margin
|
$
14.80
|
$
10.74
|
|
Less
refinery operating expenses
|
6.20
|
6.92
|
|
Net
operating margin
|
$
8.60
|
$
3.82
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
Refinery
gross margin
|
$
3.33
|
$
-
|
|
Less
refinery operating expenses
|
5.91
|
-
|
|
Net
operating margin
|
$
(2.58)
|
$
-
|
|
|
|
|
|
Consolidated
|
|
|
|
Refinery
gross margin
|
$
5.56
|
$
11.93
|
|
Less
refinery operating expenses
|
5.65
|
6.40
|
|
Net
operating margin
|
$
(0.09)
|
$
5.53
|
|
|
|
|
|
|
Below are reconciliations to our Consolidated Statements of
Income for (i) net sales, cost of products and operating expenses,
in each case averaged per produced barrel sold, and (ii) net
operating margin and refinery gross margin. Due to rounding
of reported numbers, some amounts may not calculate exactly.
Reconciliations of refined product sales from produced products
sold to total sales and other revenue
|
|
|
Three Months
Ended
March
31,
|
|
|
2010
|
2009
|
|
Navajo
Refinery
|
|
|
|
Average sales
price per produced barrel sold
|
$
88.06
|
$
57.37
|
|
Times sales of
produced refined products sold (BPD)
|
86,930
|
62,147
|
|
Times number of
days in period
|
90
|
90
|
|
Refined product
sales from produced products sold
|
$
688,955
|
$
320,884
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
Average sales
price per produced barrel sold
|
$
89.52
|
$
50.31
|
|
Times sales of
produced refined products sold (BPD)
|
28,170
|
27,024
|
|
Times number of
days in period
|
90
|
90
|
|
Refined product
sales from produced products sold
|
$
226,960
|
$
122,362
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
Average sales
price per produced barrel sold
|
$
86.22
|
$
-
|
|
Times sales of
produced refined products sold (BPD)
|
98,760
|
-
|
|
Times number of
days in period
|
90
|
-
|
|
Refined product
sales from produced products sold
|
$
766,358
|
$
-
|
|
|
|
|
|
Sum of refined
products sales from produced products sold from our three
refineries (4)
|
$
1,682,273
|
$
443,246
|
|
Add refined
product sales from purchased products and rounding (1)
|
41,506
|
53,646
|
|
Total refined
products sales
|
1,723,779
|
496,892
|
|
Add direct sales
of excess crude oil (2)
|
134,862
|
121,255
|
|
Add other refining
segment revenue (3)
|
8,533
|
18,763
|
|
Total refining
segment revenue
|
1,867,174
|
636,910
|
|
Add HEP segment
sales and other revenues
|
40,689
|
29,332
|
|
Add corporate and
other revenues
|
66
|
99
|
|
Subtract
consolidations and eliminations
|
(33,639)
|
(18,311)
|
|
Sales and other
revenues
|
$
1,874,290
|
$
648,030
|
|
(1) We purchase finished
products when opportunities arise that provide a profit on the sale
of such products, or to meet delivery commitments.
(2) We purchase crude oil that
at times exceeds the supply needs of our refineries. Quantities in
excess of our needs are sold at market prices to purchasers of
crude oil that are recorded on a gross basis with the sales price
recorded as revenues and the corresponding acquisition cost as
inventory and then upon sale as cost of products sold.
Additionally, we enter into buy/sell exchanges of crude oil
with certain parties to facilitate the delivery of quantities to
certain locations that are netted at carryover cost.
(3) Other refining segment
revenue includes the revenues associated with Holly Asphalt and
revenue derived from feedstock and sulfur credit sales.
(4) The above calculations of
refined product sales from produced products sold can also be
computed on a consolidated basis. These amounts may not
calculate exactly due to rounding of reported numbers.
|
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2010
|
2009
|
|
|
|
|
|
Average sales
price per produced barrel sold
|
$
87.40
|
$
55.23
|
|
Times sales of
produced refined products sold (BPD)
|
213,860
|
89,171
|
|
Times number of
days in period
|
90
|
90
|
|
Refined product
sales from produced products sold
|
$
1,682,273
|
$
443,246
|
|
|
|
|
|
|
Reconciliation of average cost of products per produced barrel
sold to total cost of products sold
|
|
|
Three Months
Ended
March
31,
|
|
|
2010
|
2009
|
|
Navajo
Refinery
|
|
|
|
Average cost of
products per produced barrel sold
|
$
82.96
|
$
44.92
|
|
Times sales of
produced refined products sold (BPD)
|
86,930
|
62,147
|
|
Times number of
days in period
|
90
|
90
|
|
Cost of products
for produced products sold
|
$
649,054
|
$
251,248
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
Average cost of
products per produced barrel sold
|
$
74.72
|
$
39.57
|
|
Times sales of
produced refined products sold (BPD)
|
28,170
|
27,024
|
|
Times number of
days in period
|
90
|
90
|
|
Cost of products
for produced products sold
|
$
189,438
|
$
96,241
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
Average cost of
products per produced barrel sold
|
$
82.89
|
$
-
|
|
Times sales of
produced refined products sold (BPD)
|
98,760
|
-
|
|
Times number of
days in period
|
90
|
-
|
|
Cost of products
for produced products sold
|
$
736,759
|
$
-
|
|
|
|
|
|
Sum of cost of products for produced
products sold from our three refineries (4)
|
$
1,575,251
|
$
347,489
|
|
Add refined product costs from
purchased products sold and rounding (1)
|
41,464
|
57,760
|
|
Total refined cost of products
sold
|
1,616,715
|
405,249
|
|
Add crude oil cost of direct sales of
excess crude oil (2)
|
133,667
|
120,682
|
|
Add other refining segment cost of
products sold (3)
|
6,051
|
3,908
|
|
Total refining segment cost of
products sold
|
1,756,433
|
529,839
|
|
Subtract consolidations and
eliminations
|
(32,569)
|
(18,185)
|
|
Costs of products sold (exclusive of
depreciation and amortization)
|
$
1,723,864
|
$
511,654
|
|
(1) We
purchase finished products when opportunities arise that provide a
profit on the sale of such products, or to meet delivery
commitments.
(2) We
purchase crude oil that at times exceeds the supply needs of our
refineries. Quantities in excess of our needs are sold at market
prices to purchasers of crude oil that are recorded on a gross
basis with the sales price recorded as revenues and the
corresponding acquisition cost as inventory and then upon sale as
cost of products sold. Additionally, we enter into buy/sell
exchanges of crude oil with certain parties to facilitate the
delivery of quantities to certain locations that are netted at
carryover cost.
(3)
Other refining segment cost of products sold includes the cost of
products for Holly Asphalt and costs attributable to feedstock and
sulfur credit sales.
(4)
The above calculations of cost of products for produced products
sold can also be computed on a consolidated basis. These
amounts may not calculate exactly due to rounding of reported
numbers.
|
|
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2010
|
2009
|
|
|
|
|
|
Average cost
of products per produced barrel sold
|
$
81.84
|
$
43.30
|
|
Times sales
of produced refined products sold (BPD)
|
213,860
|
89,171
|
|
Times number
of days in period
|
90
|
90
|
|
Cost of
products for produced products sold
|
$
1,575,251
|
$
347,489
|
|
|
|
|
|
|
Reconciliation of average refinery operating expenses per
produced barrel sold to total operating expenses
|
|
|
Three Months
Ended
March
31,
|
|
|
2010
|
2009
|
|
Navajo Refinery
|
|
|
|
Average refinery operating expenses
per produced barrel sold
|
$
5.18
|
$
6.17
|
|
Times
sales of produced refined products sold (BPD)
|
86,930
|
62,147
|
|
Times
number of days in period
|
90
|
90
|
|
Refinery operating expenses for
produced products sold
|
$
40,527
|
$
34,510
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
Average refinery operating expenses
per produced barrel sold
|
$
6.20
|
$
6.92
|
|
Times
sales of produced refined products sold (BPD)
|
28,170
|
27,024
|
|
Times
number of days in period
|
90
|
90
|
|
Refinery operating expenses for
produced products sold
|
$
15,719
|
$
16,831
|
|
|
|
|
|
Tulsa Refinery
|
|
|
|
Average refinery operating expenses
per produced barrel sold
|
$
5.91
|
$
-
|
|
Times
sales of produced refined products sold (BPD)
|
98,760
|
-
|
|
Times
number of days in period
|
90
|
-
|
|
Refinery operating expenses for
produced products sold
|
$
52,530
|
$
-
|
|
|
|
|
|
Sum of refinery
operating expenses per produced products sold from our three
refineries (2)
|
$
108,776
|
$
51,341
|
|
Add
other refining segment operating expenses and rounding
(1)
|
5,818
|
5,074
|
|
Total
refining segment operating expenses
|
114,594
|
56,415
|
|
Add
HEP segment operating expenses
|
13,060
|
10,342
|
|
Add
corporate and other costs
|
6
|
19
|
|
Subtract consolidations and
eliminations
|
(116)
|
(28)
|
|
Operating expenses
(exclusive of depreciation and amortization)
|
$
127,544
|
$
66,748
|
|
(1)
Other refining segment operating expenses include the marketing
costs associated with our refining segment and the operating
expenses of Holly Asphalt.
(2)
The above calculations of refinery operating expenses from
produced products sold can also be computed on a consolidated
basis. These amounts may not calculate exactly due to
rounding of reported numbers.
|
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2010
|
2009
|
|
|
|
|
|
Average
refinery operating expenses per produced barrel sold
|
$
5.65
|
$
6.40
|
|
Times sales
of produced refined products sold (BPD)
|
213,860
|
89,171
|
|
Times number
of days in period
|
90
|
90
|
|
Refinery
operating expenses for produced products sold
|
$
108,776
|
$
51,341
|
|
|
|
|
|
|
Reconciliation of net operating margin per barrel to refinery
gross margin per barrel to total sales and other revenues
|
|
|
Three Months Ended
March 31,
|
|
|
2010
|
2009
|
|
Navajo
Refinery
|
|
|
|
Net operating
margin per barrel
|
$
(0.08)
|
$
6.28
|
|
Add average
refinery operating expenses per produced barrel
|
5.18
|
6.17
|
|
Refinery gross
margin per barrel
|
5.10
|
12.45
|
|
Add average cost
of products per produced barrel sold
|
82.96
|
44.92
|
|
Average sales
price per produced barrel sold
|
$
88.06
|
$
57.37
|
|
Times sales of
produced refined products sold (BPD)
|
86,930
|
62,147
|
|
Times number of
days in period
|
90
|
90
|
|
Refined products
sales from produced products sold
|
$
688,955
|
$
320,884
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
Net operating
margin per barrel
|
$
8.60
|
$
3.82
|
|
Add average
refinery operating expenses per produced barrel
|
6.20
|
6.92
|
|
Refinery gross
margin per barrel
|
14.80
|
10.74
|
|
Add average cost
of products per produced barrel sold
|
74.72
|
39.57
|
|
Average sales
price per produced barrel sold
|
$
89.52
|
$
50.31
|
|
Times sales of
produced refined products sold (BPD)
|
28,170
|
27,024
|
|
Times number of
days in period
|
90
|
90
|
|
Refined products
sales from produced products sold
|
$
226,960
|
$
122,362
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
Net operating
margin per barrel
|
$
(2.58)
|
$
-
|
|
Add average
refinery operating expenses per produced barrel
|
5.91
|
-
|
|
Refinery gross
margin per barrel
|
3.33
|
-
|
|
Add average cost
of products per produced barrel sold
|
82.89
|
-
|
|
Average sales
price per produced barrel sold
|
$
86.22
|
$
-
|
|
Times sales of
produced refined products sold (BPD)
|
98,760
|
-
|
|
Times number of
days in period
|
90
|
-
|
|
Refined products
sales from produced products sold
|
$
766,358
|
$
-
|
|
|
|
|
|
Sum of refined products sales from
produced products sold from our three refineries (4)
|
$
1,682,273
|
$
443,246
|
|
Add refined
product sales from purchased products and rounding (1)
|
41,506
|
53,646
|
|
Total refined
products sales
|
1,723,779
|
496,892
|
|
Add direct sales
of excess crude oil (2)
|
134,862
|
121,255
|
|
Add other refining
segment revenue (3)
|
8,533
|
18,763
|
|
Total refining
segment revenue
|
1,867,174
|
636,910
|
|
Add HEP segment
sales and other revenues
|
40,689
|
29,332
|
|
Add corporate and
other revenues
|
66
|
99
|
|
Subtract
consolidations and eliminations
|
(33,639)
|
(18,311)
|
|
Sales and other
revenues
|
$
1,874,290
|
$
648,030
|
|
(1) We
purchase finished products when opportunities arise that provide a
profit on the sale of such products or to meet delivery
commitments.
(2) We
purchase crude oil that at times exceeds the supply needs of our
refineries. Quantities in excess of our needs are sold at market
prices to purchasers of crude oil that are recorded on a gross
basis with the sales price recorded as revenues and the
corresponding acquisition cost as inventory and then upon sale as
cost of products sold. Additionally, we enter into buy/sell
exchanges of crude oil with certain parties to facilitate the
delivery of quantities to certain locations that are netted
at carryover cost.
(3)
Other refining segment revenue includes the revenues associated
with Holly Asphalt and revenue derived from feedstock and sulfur
credit sales.
(4)
The above calculations of refined product sales from produced
products sold can also be computed on a consolidated basis.
These amounts may not calculate exactly due to rounding of
reported numbers.
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2010
|
2009
|
|
|
|
|
|
Net operating
margin per barrel
|
$
(0.09)
|
$
5.53
|
|
Add average
refinery operating expenses per produced barrel
|
5.65
|
6.40
|
|
Refinery gross
margin per barrel
|
5.56
|
11.93
|
|
Add average cost
of products per produced barrel sold
|
81.84
|
43.30
|
|
Average sales
price per produced barrel sold
|
$
87.40
|
$
55.23
|
|
Times sales of
produced refined products sold (BPD)
|
213,860
|
89,171
|
|
Times number of
days in period
|
90
|
90
|
|
Refined product
sales from produced products sold
|
$
1,682,273
|
$
443,246
|
|
|
|
|
|
|
SOURCE Holly Corporation