DALLAS, May 5, 2011 /PRNewswire/ -- Holly Corporation
(NYSE: HOC) ("Holly" or the "Company") today reported first quarter
2011 financial results. For the quarter, net income
attributable to Holly stockholders was $84.7
million ($1.59 per basic and
$1.58 per diluted share) compared to
a net loss of $28.1 million
($0.53 per basic and diluted share)
for the first quarter of 2010.
For the quarter, net income attributable to our stockholders
increased by $112.8 million compared
to the same period of 2010. This increase was due principally
to the effects of significantly higher refinery gross margins
during the current year first quarter. This factor was somewhat
offset by decreased sales volumes of produced refined products.
Overall refinery gross margins were $15.72 per produced barrel, a 183% increase
compared to $5.56 for the first
quarter of 2010. For the quarter, our overall refinery
production levels averaged 209,500 barrels per day ("BPD"), a 3%
decrease over the same period of 2010 due principally to the
effects of unplanned production downtime at our Navajo refinery during the quarter, partially
offset by increased production at the Tulsa refinery.
"We are very pleased with our first quarter results, reflecting
one of the most profitable quarters in Holly's history – despite
lower throughput rates at our Navajo refinery due to unscheduled downtime
during the quarter," said Matthew
Clifton, Chairman of the Board and Chief Executive Officer
of Holly. "Significant year-over-year margin improvements at
each of our refineries, contributed to the much improved EBITDA
levels of $181.1 million for the
three months ended March 31, 2011,
compared to $0.7 million for the same
period of 2010. Our Tulsa refinery, aided by strong
transportation fuel cracks and attractive lube margins, was our
strongest contributor with over $78
million in EBITDA during the quarter.
"Our processing of 100% lower priced WTI related crudes combined
with strong diesel cracks and unseasonably robust gasoline cracks
at all of our refineries helped fuel these improved results.
As a result, refinery gross margins in the 2011 first quarter
were at historically high levels, significantly better than the low
margins experienced in early 2010.
"As we start the second quarter, continued discounts on WTI
price related crudes compared to world oil prices and higher
gasoline and diesel cracks have improved the gross margins at all
three refineries relative to the first quarter. Production at
our Navajo refinery has returned
to planned levels after being reduced during the first quarter due
to the resultant impacts of a plant-wide power failure and bad
weather. At Tulsa, our west crude unit was brought down last
week to address a mechanical problem. We expect to return this unit
to service early next week. This unscheduled downtime should
have a limited effect on the quarter due to our ability to augment
production by reducing intermediate feedstock inventories during
the downtime and by running at slightly higher crude rates for the
remainder of the quarter.
"We have completed the diesel desulfurization project at our
Tulsa refinery, and progress
continues on our integration efforts in Tulsa with the pipeline integration expected
to be mechanically complete later this summer. We expect
these projects to lower operating expenses and improve the profit
producing potential of what has been a strong profit contributor
since last spring.
"At March 31, 2011 our cash and
marketable securities stood at $293
million. Excluding the Holly Energy Partners cash and
debt that is non-recourse to Holly, our cash adjusted debt to total
capitalization ratio was at 7%, ranking our balance sheet as one of
the strongest among our independent refining peers," Clifton
said.
Sales and other revenues for the first quarter of 2010 were
$2,326.6 million, a 24% increase
compared to the three months ended March 31,
2010. This increase was due to the effects of a 30%
year-over-year increase in first quarter refined product sales
prices that was partially offset by a 3% decrease in overall
volumes of produced refined products sold. The volume
decrease was primarily due to the effects of unplanned production
downtime at our Navajo refinery
during the current year first quarter. Cost of products sold
was $1,984.6 million, a 15% increase
compared to the first quarter of 2010 due mainly to higher crude
oil acquisition costs, partially offset by a decrease in volumes of
produced refined products sold.
The Company has scheduled a webcast conference call for today,
May 5, 2011, at 4:00 PM Eastern Time to discuss financial
results. This webcast may be accessed at:
http://www.videonewswire.com/event.asp?id=78731.
An audio archive of this webcast will be available using the
above noted link through May 18,
2011.
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 possibility of
terrorist attacks and the consequences of any such attacks, general
economic conditions, risks and uncertainties with respect to our
proposed "merger of equals" with Frontier Oil Corporation,
including our ability to complete the merger in the anticipated
timeframe or at all, the diversion of management in connection with
the merger and our ability to realize fully or at all the
anticipated benefits of the merger 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
2010
|
|
|
2011
|
2010
|
Change
|
Percent
|
|
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
Sales and other
revenues
|
$ 2,326,585
|
$ 1,874,290
|
$ 452,295
|
24.1%
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
Cost of products
sold (exclusive of depreciation and amortization)
|
1,984,617
|
1,723,864
|
260,753
|
15.1
|
|
|
Operating expenses
(exclusive of depreciation and amortization)
|
134,743
|
127,544
|
7,199
|
5.6
|
|
|
General and
administrative expenses (exclusive of depreciation
and
amortization)
|
16,818
|
17,869
|
(1,051)
|
(5.9)
|
|
|
Depreciation and
amortization
|
31,308
|
27,757
|
3,551
|
12.8
|
|
|
Total
operating costs and expenses
|
2,167,486
|
1,897,034
|
270,452
|
14.3
|
|
|
Income (loss) from
operations
|
159,099
|
(22,744)
|
181,843
|
799.5
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
Equity in earnings
of SLC Pipeline
|
740
|
481
|
259
|
53.8
|
|
|
Interest
income
|
85
|
59
|
26
|
44.1
|
|
|
Interest
expense
|
(16,204)
|
(17,722)
|
1,518
|
8.6
|
|
|
Merger transaction
costs
|
(3,698)
|
-
|
(3,698)
|
(100.0)
|
|
|
(19,077)
|
(17,182)
|
(1,895)
|
11.0
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
140,022
|
(39,926)
|
179,948
|
450.7
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit)
|
49,011
|
(16,672)
|
65,683
|
394.0
|
|
|
|
|
|
|
|
|
Net income (loss)
|
91,011
|
(23,254)
|
114,265
|
491.4
|
|
|
|
|
|
|
|
|
Less net income attributable to
noncontrolling interest
|
6,317
|
4,840
|
1,477
|
30.5
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to Holly Corporation stockholders
|
$
84,694
|
$
(28,094)
|
$
112,788
|
401.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable
to Holly Corporation stockholders:
|
|
|
|
|
|
|
Basic
|
$
1.59
|
$
(0.53)
|
$
2.12
|
400.0%
|
|
|
Diluted
|
$
1.58
|
$
(0.53)
|
$
2.11
|
398.1%
|
|
|
|
|
|
|
|
|
Cash dividends declared per
common share
|
$
0.15
|
$
0.15
|
$
-
|
-%
|
|
|
|
|
|
|
|
|
Average number of common shares
outstanding:
|
|
|
|
|
|
|
Basic
|
53,307
|
53,094
|
213
|
0.4%
|
|
|
Diluted
|
53,633
|
53,094
|
539
|
1.0%
|
|
|
|
|
|
|
|
|
EBITDA
|
$ 181,132
|
$ 654
|
$ 180,478
|
27,596.0%
|
|
|
|
|
|
|
|
|
|
Balance Sheet
Data
|
|
|
March
31,
|
December
31,
|
|
|
2011
|
2010
|
|
|
(In
thousands)
|
|
|
|
|
|
|
Cash, cash equivalents and
investments in marketable securities
|
$
292,611
|
$
230,444
|
|
|
Working capital
|
$ 340,512
|
$
313,580
|
|
|
Total assets
|
$ 3,989,760
|
$
3,701,475
|
|
|
Long-term debt
|
$ 834,213
|
$
810,561
|
|
|
Total equity
|
$ 1,367,950
|
$
1,288,139
|
|
|
|
|
|
|
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, Oklahoma, Kansas, Missouri, 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
(1)
|
Corporate
and
Other
|
Consolidations
and
Eliminations
|
Consolidated
Total
|
|
|
(In
thousands)
|
|
|
Three Months Ended March 31,
2011
|
|
|
|
|
|
|
|
Sales and other
revenues
|
$ 2,315,092
|
$ 45,005
|
$ 648
|
$ (34,160)
|
$ 2,326,585
|
|
|
Depreciation and
amortization
|
$ 22,983
|
$ 7,235
|
$ 1,297
|
$ (207)
|
$ 31,308
|
|
|
Income (loss) from
operations
|
$ 152,104
|
$ 23,611
|
$ (16,098)
|
$ (518)
|
$ 159,099
|
|
|
Capital
expenditures
|
$ 22,965
|
$ 11,475
|
$ 39,598
|
$ -
|
$ 74,038
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2010
|
|
|
|
|
|
|
|
Sales and other
revenues
|
$ 1,867,174
|
$ 40,689
|
$ 66
|
$ (33,639)
|
$ 1,874,290
|
|
|
Depreciation and
amortization
|
$ 20,726
|
$ 6,805
|
$ 521
|
$ (295)
|
$ 27,757
|
|
|
Income (loss) from
operations
|
$ (24,579)
|
$ 18,261
|
$ (15,767)
|
$ (659)
|
$ (22,744)
|
|
|
Capital
expenditures
|
$ 19,209
|
$ 1,911
|
$ 9,978
|
$ -
|
$ 31,098
|
|
|
|
|
|
|
|
|
|
March 31, 2011
|
|
|
|
|
|
|
|
Cash, cash
equivalents and investments
in
marketable securities
|
$ -
|
$ 1,502
|
$ 291,109
|
$
-
|
$ 292,611
|
|
|
Total
assets
|
$ 2,725,065
|
$ 679,101
|
$ 619,825
|
$
(34,231)
|
$ 3,989,760
|
|
|
Long-term
debt
|
$ -
|
$ 505,918
|
$ 345,108
|
$
(16,813)
|
$ 834,213
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
Cash, cash
equivalents and investments
in
marketable securities
|
$ -
|
$ 403
|
$ 230,041
|
$
-
|
$ 230,444
|
|
|
Total
assets
|
$ 2,490,193
|
$ 669,820
|
$ 573,531
|
$
(32,069)
|
$ 3,701,475
|
|
|
Long-term
debt
|
$ -
|
$ 482,271
|
$ 345,215
|
$
(16,925)
|
$ 810,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
2011
|
2010
|
|
|
Navajo
Refinery
|
|
|
|
|
Crude charge (BPD)
(1)
|
69,980
|
78,910
|
|
|
Refinery throughput (BPD)
(2)
|
78,930
|
90,490
|
|
|
Refinery production (BPD)
(3)
|
76,720
|
87,530
|
|
|
Sales of produced refined
products (BPD)
|
79,840
|
86,930
|
|
|
Sales of refined products
(BPD) (4)
|
86,700
|
90,120
|
|
|
|
|
|
|
Refinery utilization
(5)
|
70.0%
|
78.9%
|
|
|
|
|
|
|
Average per produced
barrel (6)
|
|
|
|
|
Net
sales
|
$ 110.99
|
$ 88.06
|
|
|
Cost of
products (7)
|
95.60
|
82.96
|
|
|
Refinery gross
margin
|
15.39
|
5.10
|
|
|
Refinery operating
expenses (8)
|
6.34
|
5.18
|
|
|
Net operating
margin
|
$
9.05
|
$
(0.08)
|
|
|
|
|
|
|
Refinery operating expenses per
throughput barrel
|
$ 6.34
|
$ 4.97
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
Sour crude
oil
|
73%
|
87%
|
|
|
Sweet crude
oil
|
5%
|
4%
|
|
|
Heavy sour crude
oil
|
11%
|
-%
|
|
|
Other feedstocks
and blends
|
11%
|
9%
|
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
|
Sales of produced refined
products:
|
|
|
|
|
Gasolines
|
51%
|
59%
|
|
|
Diesel
fuels
|
35%
|
30%
|
|
|
Jet
fuels
|
1%
|
4%
|
|
|
Fuel oil
|
5%
|
4%
|
|
|
Asphalt
|
5%
|
1%
|
|
|
LPG and
other
|
3%
|
2%
|
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
|
Crude charge (BPD)
(1)
|
25,770
|
25,680
|
|
|
Refinery throughput (BPD)
(2)
|
27,900
|
27,110
|
|
|
Refinery production (BPD)
(3)
|
26,620
|
26,540
|
|
|
Sales of produced refined
products (BPD)
|
26,650
|
28,170
|
|
|
Sales of refined products
(BPD) (4)
|
26,740
|
28,360
|
|
|
|
|
|
|
Refinery utilization
(5)
|
83.1%
|
82.8%
|
|
|
|
|
|
|
Average per produced
barrel (6)
|
|
|
|
|
Net
sales
|
$ 108.77
|
$ 89.52
|
|
|
Cost of
products (7)
|
89.87
|
74.72
|
|
|
Refinery gross
margin
|
18.90
|
14.80
|
|
|
Refinery operating
expenses (8)
|
6.43
|
6.20
|
|
|
Net operating
margin
|
$
12.47
|
$
8.60
|
|
|
|
|
|
|
Refinery operating expenses per
throughput barrel
|
$ 6.43
|
$ 6.45
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2011
|
2010
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
Sweet crude
oil
|
57%
|
61%
|
|
|
Heavy sour crude
oil
|
4%
|
7%
|
|
|
Black wax crude
oil
|
31%
|
28%
|
|
|
Other feedstocks
and blends
|
8%
|
4%
|
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
|
Sales of produced refined
products:
|
|
|
|
|
Gasolines
|
61%
|
64%
|
|
|
Diesel
fuels
|
29%
|
28%
|
|
|
Jet
fuels
|
2%
|
1%
|
|
|
Fuel oil
|
2%
|
1%
|
|
|
Asphalt
|
3%
|
3%
|
|
|
LPG and
other
|
3%
|
3%
|
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
|
Crude charge (BPD)
(1)
|
105,600
|
103,600
|
|
|
Refinery throughput (BPD)
(2)
|
106,690
|
104,810
|
|
|
Refinery production (BPD)
(3)
|
106,160
|
102,890
|
|
|
Sales of produced refined
products (BPD)
|
100,010
|
98,760
|
|
|
Sales of refined products
(BPD) (4)
|
100,400
|
100,620
|
|
|
|
|
|
|
Refinery utilization
(5)
|
84.5%
|
82.9%
|
|
|
|
|
|
|
Average per produced
barrel (6)
|
|
|
|
|
Net
sales
|
$ 115.29
|
$ 86.22
|
|
|
Cost of
products (7)
|
100.50
|
82.89
|
|
|
Refinery gross
margin
|
14.79
|
3.33
|
|
|
Refinery operating
expenses (8)
|
5.98
|
5.91
|
|
|
Net operating
margin
|
$
8.81
|
$
(2.58)
|
|
|
|
|
|
|
Refinery operating expenses per
throughput barrel
|
$ 5.98
|
$ 5.56
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
Sweet crude
oil
|
97%
|
99%
|
|
|
Heavy sour crude
oil
|
2%
|
-%
|
|
|
Other feedstocks
and blends
|
1%
|
1%
|
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
|
Sales of produced refined
products:
|
|
|
|
|
Gasolines
|
37%
|
41%
|
|
|
Diesel
fuels
|
31%
|
30%
|
|
|
Jet
fuels
|
8%
|
9%
|
|
|
Lubricants
|
11%
|
10%
|
|
|
Asphalt
|
4%
|
4%
|
|
|
Gas oil /
intermediates
|
7%
|
2%
|
|
|
LPG and
other
|
2%
|
4%
|
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2011
|
2010
|
|
|
Consolidated
|
|
|
|
|
Crude charge (BPD)
(1)
|
201,350
|
208,190
|
|
|
Refinery throughput (BPD)
(2)
|
213,520
|
222,410
|
|
|
Refinery production (BPD)
(3)
|
209,500
|
216,960
|
|
|
Sales of produced refined
products (BPD)
|
206,500
|
213,860
|
|
|
Sales of refined products
(BPD) (4)
|
213,840
|
219,100
|
|
|
|
|
|
|
Refinery utilization
(5)
|
78.7%
|
81.3%
|
|
|
|
|
|
|
Average per produced
barrel (6)
|
|
|
|
|
Net
sales
|
$ 113.28
|
$ 87.40
|
|
|
Cost of
products (7)
|
97.56
|
81.84
|
|
|
Refinery gross
margin
|
15.72
|
5.56
|
|
|
Refinery operating
expenses (8)
|
6.24
|
5.65
|
|
|
Net operating
margin
|
$
9.48
|
$
(0.09)
|
|
|
|
|
|
|
Refinery operating expenses per
throughput barrel
|
$ 6.24
|
$ 5.43
|
|
|
|
|
|
|
Feedstocks:
|
|
|
|
|
Sour crude
oil
|
27%
|
35%
|
|
|
Sweet crude
oil
|
58%
|
56%
|
|
|
Heavy sour crude
oil
|
5%
|
1%
|
|
|
Black wax crude
oil
|
4%
|
3%
|
|
|
Other feedstocks
and blends
|
6%
|
5%
|
|
|
Total
|
100%
|
100%
|
|
|
|
|
|
|
Sales of produced refined
products:
|
|
|
|
|
Gasolines
|
45%
|
51%
|
|
|
Diesel
fuels
|
33%
|
30%
|
|
|
Jet
fuels
|
4%
|
6%
|
|
|
Fuel oil
|
2%
|
2%
|
|
|
Asphalt
|
4%
|
3%
|
|
|
Lubricants
|
6%
|
4%
|
|
|
Gas oil /
intermediates
|
3%
|
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 throughput represents
the barrels per day of crude and other refinery feedstocks
input to the crude units and other conversion units at our
refinery.
|
|
|
(3)
|
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. Refinery production
excludes fuel produced for refinery consumption.
|
|
|
(4)
|
Includes refined products
purchased for resale.
|
|
|
(5)
|
Represents crude charge divided
by total crude capacity (BPSD). Our consolidated crude
capacity is 256,000 BPSD.
|
|
|
(6)
|
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.
|
|
|
(7)
|
Transportation, terminal and
refinery storage costs billed from HEP are included in cost of
products.
|
|
|
(8)
|
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.
|
|
|
Three Months
Ended
March
31,
|
|
|
2011
|
2010
|
|
|
(In
thousands)
|
|
|
|
|
|
|
Net income (loss) attributable
to Holly Corporation stockholders
|
$ 84,694
|
$ (28,094)
|
|
|
Add income tax
provision (subtract benefit)
|
49,011
|
(16,672)
|
|
|
Add interest
expense
|
16,204
|
17,722
|
|
|
Subtract interest
income
|
(85)
|
(59)
|
|
|
Add depreciation
and amortization
|
31,308
|
27,757
|
|
|
EBITDA
|
$
181,132
|
$
654
|
|
|
|
|
|
|
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,
|
|
|
2011
|
2010
|
|
|
Average per produced
barrel:
|
|
|
|
|
|
|
|
|
Navajo
Refinery
|
|
|
|
|
Net
sales
|
$ 110.99
|
$ 88.06
|
|
|
Less cost of
products
|
95.60
|
82.96
|
|
|
Refinery
gross margin
|
$
15.39
|
$
5.10
|
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
|
Net
sales
|
$ 108.77
|
$ 89.52
|
|
|
Less cost of
products
|
89.87
|
74.72
|
|
|
Refinery
gross margin
|
$
18.90
|
$ 14.80
|
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
|
Net
sales
|
$ 115.29
|
$ 86.22
|
|
|
Less cost of
products
|
100.50
|
82.89
|
|
|
Refinery
gross margin
|
$
14.79
|
$
3.33
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
Net
sales
|
$ 113.28
|
$ 87.40
|
|
|
Less cost of
products
|
97.56
|
81.84
|
|
|
Refinery
gross margin
|
$
15.72
|
$
5.56
|
|
|
|
|
|
|
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,
|
|
|
2011
|
2010
|
|
|
Average per produced
barrel:
|
|
|
|
|
|
|
|
|
Navajo
Refinery
|
|
|
|
|
Refinery
gross margin
|
$ 15.39
|
$ 5.10
|
|
|
Less refinery
operating expenses
|
6.34
|
5.18
|
|
|
Net operating
margin
|
$
9.05
|
$
(0.08)
|
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
|
Refinery
gross margin
|
$ 18.90
|
$ 14.80
|
|
|
Less refinery
operating expenses
|
6.43
|
6.20
|
|
|
Net operating
margin
|
$
12.47
|
$
8.60
|
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
|
Refinery
gross margin
|
$ 14.79
|
$ 3.33
|
|
|
Less refinery
operating expenses
|
5.98
|
5.91
|
|
|
Net operating
margin
|
$
8.81
|
$
(2.58)
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
Refinery
gross margin
|
$ 15.72
|
$ 5.56
|
|
|
Less refinery
operating expenses
|
6.24
|
5.65
|
|
|
Net operating
margin
|
$
9.48
|
$
(0.09)
|
|
|
|
|
|
|
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,
|
|
|
2011
|
2010
|
|
|
Navajo
Refinery
|
|
|
|
|
Average sales price per produced
barrel sold
|
$ 110.99
|
$ 88.06
|
|
|
Times sales of produced refined
products sold (BPD)
|
79,840
|
86,930
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refined product sales from
produced products sold
|
$
797,530
|
$
688,955
|
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
|
Average sales price per produced
barrel sold
|
$ 108.77
|
$ 89.52
|
|
|
Times sales of produced refined
products sold (BPD)
|
26,650
|
28,170
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refined product sales from
produced products sold
|
$
260,885
|
$
226,960
|
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
|
Average sales price per produced
barrel sold
|
$ 115.29
|
$ 86.22
|
|
|
Times sales of produced refined
products sold (BPD)
|
100,010
|
98,760
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refined product sales from
produced products sold
|
$
1,037,714
|
$
766,358
|
|
|
|
|
|
|
Sum of refined products sales
from produced products sold from our three refineries
(1)
|
$ 2,096,129
|
$ 1,682,273
|
|
|
Add refined product sales from
purchased products and rounding (2)
|
75,804
|
41,506
|
|
|
Total refined products
sales
|
2,171,933
|
1,723,779
|
|
|
Add direct sales of excess crude
oil (3)
|
135,409
|
134,862
|
|
|
Add other refining segment
revenue (4)
|
7,750
|
8,533
|
|
|
Total refining segment
revenue
|
2,315,092
|
1,867,174
|
|
|
Add HEP segment sales and other
revenues
|
45,005
|
40,689
|
|
|
Add corporate and other
revenues
|
648
|
66
|
|
|
Subtract consolidations and
eliminations
|
(34,160)
|
(33,639)
|
|
|
Sales and other
revenues
|
$
2,326,585
|
$
1,874,290
|
|
|
|
|
|
|
|
(1)
|
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.
|
|
|
(2)
|
We purchase finished products
when opportunities arise that provide a profit on the sale of such
products, or to meet delivery commitments.
|
|
|
(3)
|
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.
|
|
|
(4)
|
Other refining segment revenue
includes the incremental revenues associated with Holly Asphalt and
revenue derived from feedstock and sulfur credit
sales.
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
2011
|
2010
|
|
|
|
|
|
|
Average sales price per produced
barrel sold
|
$ 113.28
|
$ 87.40
|
|
|
Times sales of produced refined
products sold (BPD)
|
206,500
|
213,860
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refined product sales from
produced products sold
|
$
2,096,129
|
$
1,682,273
|
|
|
|
|
|
|
|
Reconciliation of average
cost of products per produced barrel
sold to total cost of products sold
|
|
|
Three Months
Ended March 31,
|
|
|
2011
|
2010
|
|
|
Navajo
Refinery
|
|
|
|
|
Average cost of products per
produced barrel sold
|
$ 95.60
|
$ 82.96
|
|
|
Times sales of produced refined
products sold (BPD)
|
79,840
|
86,930
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Cost of products for produced
products sold
|
$
686,943
|
$
649,054
|
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
|
Average cost of products per
produced barrel sold
|
$ 89.87
|
$ 74.72
|
|
|
Times sales of produced refined
products sold (BPD)
|
26,650
|
28,170
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Cost of products for produced
products sold
|
$
215,553
|
$
189,438
|
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
|
Average cost of products per
produced barrel sold
|
$ 100.50
|
$ 82.89
|
|
|
Times sales of produced refined
products sold (BPD)
|
100,010
|
98,760
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Cost of products for produced
products sold
|
$
904,590
|
$
736,759
|
|
|
|
|
|
|
Sum of cost of products for
produced products sold from our three refineries
(1)
|
$ 1,807,086
|
$ 1,575,251
|
|
|
Add refined product costs from
purchased products sold and rounding (2)
|
75,622
|
41,464
|
|
|
Total refined cost of products
sold
|
1,882,708
|
1,616,715
|
|
|
Add crude oil cost of direct
sales of excess crude oil (3)
|
132,880
|
133,667
|
|
|
Add other refining segment cost
of products sold (4)
|
2,338
|
6,051
|
|
|
Total refining segment cost of
products sold
|
2,017,926
|
1,756,433
|
|
|
Subtract consolidations and
eliminations
|
(33,309)
|
(32,569)
|
|
|
Costs of products sold
(exclusive of depreciation and amortization)
|
$
1,984,617
|
$
1,723,864
|
|
|
|
|
|
|
|
(1)
|
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.
|
|
|
(2)
|
We purchase finished products
when opportunities arise that provide a profit on the sale of such
products, or to meet delivery commitments.
|
|
|
(3)
|
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.
|
|
|
(4)
|
Other refining segment cost of
products sold includes the incremental cost of products for Holly
Asphalt and costs attributable to feedstock and sulfur credit
sales.
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
2011
|
2010
|
|
|
|
|
|
|
Average cost of products per
produced barrel sold
|
$ 97.56
|
$ 81.84
|
|
|
Times sales of produced refined
products sold (BPD)
|
206,500
|
213,860
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Cost of products for produced
products sold
|
$
1,807,086
|
$
1,575,251
|
|
|
|
|
|
|
|
Reconciliation of average
refinery operating expenses per produced barrel sold to total
operating expenses
|
|
|
Three Months
Ended March 31,
|
|
|
2011
|
2010
|
|
|
Navajo
Refinery
|
|
|
|
|
Average refinery operating
expenses per produced barrel sold
|
$ 6.34
|
$ 5.18
|
|
|
Times sales of produced refined
products sold (BPD)
|
79,840
|
86,930
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refinery operating expenses for
produced products sold
|
$
45,557
|
$
40,527
|
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
|
Average refinery operating
expenses per produced barrel sold
|
$ 6.43
|
$ 6.20
|
|
|
Times sales of produced refined
products sold (BPD)
|
26,650
|
28,170
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refinery operating expenses for
produced products sold
|
$
15,422
|
$
15,719
|
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
|
Average refinery operating
expenses per produced barrel sold
|
$ 5.98
|
$
5.91
|
|
|
Times sales of produced refined
products sold (BPD)
|
100,010
|
98,760
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refinery operating expenses for
produced products sold
|
$
53,825
|
$
52,530
|
|
|
|
|
|
|
Sum of refinery operating
expenses per produced products sold from our three
refineries (1)
|
$ 114,804
|
$ 108,776
|
|
|
Add other refining segment
operating expenses and rounding (2)
|
7,275
|
5,818
|
|
|
Total refining segment operating
expenses
|
122,079
|
114,594
|
|
|
Add HEP segment operating
expenses
|
12,796
|
13,060
|
|
|
Add corporate and other
costs
|
(6)
|
6
|
|
|
Subtract consolidations and
eliminations
|
(126)
|
(116)
|
|
|
Operating expenses (exclusive of
depreciation and amortization)
|
$
134,743
|
$
127,544
|
|
|
|
|
|
|
|
(1)
|
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.
|
|
|
(2)
|
Other refining segment operating
expenses include the marketing costs associated with our refining
segment and the operating expenses of Holly Asphalt.
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2011
|
2010
|
|
|
|
|
|
|
Average refinery operating
expenses per produced barrel sold
|
$ 6.24
|
$ 5.65
|
|
|
Times sales of produced refined
products sold (BPD)
|
206,500
|
213,860
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refinery operating expenses for
produced products sold
|
$
114,804
|
$
108,776
|
|
|
|
|
|
|
|
Reconciliation of net operating
margin per barrel to refinery gross margin per barrel to total
sales and other revenues
|
|
|
Three Months
Ended March 31,
|
|
|
2011
|
2010
|
|
|
Navajo
Refinery
|
|
|
|
|
Net operating margin per
barrel
|
$
9.05
|
$ (0.08)
|
|
|
Add average refinery operating
expenses per produced barrel
|
6.34
|
5.18
|
|
|
Refinery gross margin per
barrel
|
15.39
|
5.10
|
|
|
Add average cost of products per
produced barrel sold
|
95.60
|
82.96
|
|
|
Average sales price per produced
barrel sold
|
$ 110.99
|
$ 88.06
|
|
|
Times sales of produced refined
products sold (BPD)
|
79,840
|
86,930
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refined products sales from
produced products sold
|
$
797,530
|
$
688,955
|
|
|
|
|
|
|
Woods Cross
Refinery
|
|
|
|
|
Net operating margin per
barrel
|
$ 12.47
|
$ 8.60
|
|
|
Add average refinery operating
expenses per produced barrel
|
6.43
|
6.20
|
|
|
Refinery gross margin per
barrel
|
18.90
|
14.80
|
|
|
Add average cost of products per
produced barrel sold
|
89.87
|
74.72
|
|
|
Average sales price per produced
barrel sold
|
$ 108.77
|
$ 89.52
|
|
|
Times sales of produced refined
products sold (BPD)
|
26,650
|
28,170
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refined products sales from
produced products sold
|
$
260,885
|
$
226,960
|
|
|
|
|
|
|
Tulsa
Refinery
|
|
|
|
|
Net operating margin per
barrel
|
$
8.81
|
$ (2.58)
|
|
|
Add average refinery operating
expenses per produced barrel
|
5.98
|
5.91
|
|
|
Refinery gross margin per
barrel
|
14.79
|
3.33
|
|
|
Add average cost of products per
produced barrel sold
|
100.50
|
82.89
|
|
|
Average sales price per produced
barrel sold
|
$ 115.29
|
$ 86.22
|
|
|
Times sales of produced refined
products sold (BPD)
|
100,010
|
98,760
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refined products sales from
produced products sold
|
$
1,037,714
|
$
766,358
|
|
|
|
|
|
|
Sum of refined products sales
from produced products sold from our three refineries
(1)
|
$ 2,096,129
|
$ 1,682,273
|
|
|
Add refined product sales from
purchased products and rounding (2)
|
75,804
|
41,506
|
|
|
Total refined products
sales
|
2,171,933
|
1,723,779
|
|
|
Add direct sales of excess crude
oil (3)
|
135,409
|
134,862
|
|
|
Add other refining segment
revenue (4)
|
7,750
|
8,533
|
|
|
Total refining segment
revenue
|
2,315,092
|
1,867,174
|
|
|
Add HEP segment sales and other
revenues
|
45,005
|
40,689
|
|
|
Add corporate and other
revenues
|
648
|
66
|
|
|
Subtract consolidations and
eliminations
|
(34,160)
|
(33,639)
|
|
|
Sales and other
revenues
|
$
2,326,585
|
$
1,874,290
|
|
|
|
|
|
|
|
(1)
|
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.
|
|
|
(2)
|
We purchase finished products
when opportunities arise that provide a profit on the sale of such
products or to meet delivery commitments.
|
|
|
(3)
|
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.
|
|
|
(4)
|
Other refining segment revenue
includes the incremental revenues associated with Holly Asphalt and
revenue derived from feedstock and sulfur credit
sales.
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
2011
|
2010
|
|
|
|
|
|
|
Net operating margin per
barrel
|
$
9.48
|
$ (0.09)
|
|
|
Add average refinery operating
expenses per produced barrel
|
6.24
|
5.65
|
|
|
Refinery gross margin per
barrel
|
15.72
|
5.56
|
|
|
Add average cost of products per
produced barrel sold
|
97.56
|
81.84
|
|
|
Average sales price per produced
barrel sold
|
$
113.28
|
$ 87.40
|
|
|
Times sales of produced refined
products sold (BPD)
|
206,500
|
213,860
|
|
|
Times number of days in
period
|
90
|
90
|
|
|
Refined product sales from
produced products sold
|
$
2,096,129
|
$
1,682,273
|
|
|
|
|
|
|
SOURCE Holly Corporation