HollyFrontier Corporation Reports Quarterly Net Income
For the fourth quarter, net income attributable to our stockholders,
exclusive of lower of cost or market inventory adjustments, PCLI
pre-acquisition costs and related tax effects, decreased by
HollyFrontier's President & CEO,
For the fourth quarter of 2016, net cash provided by operations totaled
The Company has scheduled a webcast conference call for today,
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
- the actions of actual or potential competitive suppliers of refined petroleum products in the Company's markets;
- the ability to successfully integrate PCLI's business with the company;
- 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; 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) |
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Three Months Ended |
Change from 2015 | ||||||||||||||||||
2016 | 2015 | Change | Percent | ||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||
Sales and other revenues | $ | 2,955,068 | $ | 2,943,559 | $ | 11,509 | — | % | |||||||||||
Operating costs and expenses: | |||||||||||||||||||
Cost of products sold: | |||||||||||||||||||
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) | 2,550,772 | 2,446,511 | 104,261 | 4 | |||||||||||||||
Lower of cost or market inventory adjustment | (97,656 | ) | 143,554 | (241,210 | ) | (168 | ) | ||||||||||||
2,453,116 | 2,590,065 | (136,949 | ) | (5 | ) | ||||||||||||||
Operating expenses | 258,688 | 285,214 | (26,526 | ) | (9 | ) | |||||||||||||
General and administrative expenses | 37,378 | 34,414 | 2,964 | 9 | |||||||||||||||
Depreciation and amortization | 93,594 | 90,572 | 3,022 | 3 | |||||||||||||||
Total operating costs and expenses | 2,842,776 | 3,000,265 | (157,489 | ) | (5 | ) | |||||||||||||
Income (loss) from operations | 112,292 | (56,706 | ) | 168,998 | (298 | ) | |||||||||||||
Other income (expense): | |||||||||||||||||||
Earnings of equity method investments | 4,058 | 2,169 | 1,889 | 87 | |||||||||||||||
Interest income | 1,111 | 988 | 123 | 12 | |||||||||||||||
Interest expense | (26,304 | ) | (11,657 | ) | (14,647 | ) | 126 | ||||||||||||
Other, net | (7,741 | ) | 535 | (8,276 | ) | (1,547 | ) | ||||||||||||
(28,876 | ) | (7,965 | ) | (20,911 | ) | 263 | |||||||||||||
Income (loss) before income taxes | 83,416 | (64,671 | ) | 148,087 | (229 | ) | |||||||||||||
Income tax expense (benefit) | 12,952 | (40,724 | ) | 53,676 | (132 | ) | |||||||||||||
Net income (loss) | 70,464 | (23,947 | ) | 94,411 | (394 | ) | |||||||||||||
Less net income attributable to noncontrolling interest | 17,299 | 19,974 | (2,675 | ) | (13 | ) | |||||||||||||
Net income (loss) attributable to |
$ | 53,165 | $ | (43,921 | ) | $ | 97,086 | (221 | )% | ||||||||||
Earnings (loss) per share attributable to |
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Basic | $ | 0.30 | $ | (0.24 | ) | $ | 0.54 | (225 | )% | ||||||||||
Diluted | $ | 0.30 | $ | (0.24 | ) | $ | 0.54 | (225 | )% | ||||||||||
Cash dividends declared per common share | $ | 0.33 | $ | 0.33 | $ | — | — | % | |||||||||||
Average number of common shares outstanding: | |||||||||||||||||||
Basic | 175,936 | 181,460 | (5,524 | ) | (3 | )% | |||||||||||||
Diluted | 176,137 | 181,460 | (5,323 | ) | (3 | )% | |||||||||||||
EBITDA | $ | 184,904 | $ | 16,596 | $ | 168,308 | 1,014 | % | |||||||||||
Adjusted EBITDA | $ | 100,654 | $ | 160,150 | $ | (59,496 | ) | (37 | )% | ||||||||||
Years Ended |
Change from 2015 | |||||||||||||||||||
2016 | 2015 | Change | Percent | |||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Sales and other revenues | $ | 10,535,700 | $ | 13,237,920 | $ | (2,702,220 | ) | (20 | )% | |||||||||||
Operating costs and expenses: | ||||||||||||||||||||
Cost of products sold: | ||||||||||||||||||||
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) | 8,765,927 | 10,239,218 | (1,473,291 | ) | (14 | ) | ||||||||||||||
Lower of cost or market inventory adjustment | (291,938 | ) | 226,979 | (518,917 | ) | (229 | ) | |||||||||||||
8,473,989 | 10,466,197 | (1,992,208 | ) | (19 | ) | |||||||||||||||
Operating expenses | 1,018,839 | 1,060,373 | (41,534 | ) | (4 | ) | ||||||||||||||
General and administrative expenses | 125,648 | 120,846 | 4,802 | 4 | ||||||||||||||||
Depreciation and amortization | 363,027 | 346,151 | 16,876 | 5 | ||||||||||||||||
|
654,084 | — | 654,084 | — | ||||||||||||||||
Total operating costs and expenses | 10,635,587 | 11,993,567 | (1,357,980 | ) | (11 | ) | ||||||||||||||
Income (loss) from operations | (99,887 | ) | 1,244,353 | (1,344,240 | ) | (108 | ) | |||||||||||||
Other income (expense): | ||||||||||||||||||||
Loss of equity method investments | 14,213 | (3,738 | ) | 17,951 | (480 | ) | ||||||||||||||
Interest income | 2,491 | 3,391 | (900 | ) | (27 | ) | ||||||||||||||
Interest expense | (72,192 | ) | (43,470 | ) | (28,722 | ) | 66 | |||||||||||||
Loss on early extinguishment of debt | (8,718 | ) | (1,370 | ) | — | (7,348 | ) | 536 | ||||||||||||
Other, net | (7,441 | ) | 9,402 | (16,843 | ) | (179 | ) | |||||||||||||
(71,647 | ) | (35,785 | ) | (35,862 | ) | 100 | ||||||||||||||
Income (loss) before income taxes | (171,534 | ) | 1,208,568 | (1,380,102 | ) | (114 | ) | |||||||||||||
Income tax expense | 19,411 | 406,060 | (386,649 | ) | (95 | ) | ||||||||||||||
Net income (loss) | (190,945 | ) | 802,508 | (993,453 | ) | (124 | ) | |||||||||||||
Less net income attributable to noncontrolling interest | 69,508 | 62,407 | 7,101 | 11 | ||||||||||||||||
Net income (loss) attributable to |
$ | (260,453 | ) | $ | 740,101 | $ | (1,000,554 | ) | (135 | )% | ||||||||||
Earnings (loss) per share attributable to |
||||||||||||||||||||
Basic | $ | (1.48 | ) | $ | 3.91 | $ | (5.39 | ) | (138 | )% | ||||||||||
Diluted | $ | (1.48 | ) | $ | 3.90 | $ | (5.38 | ) | (138 | )% | ||||||||||
Cash dividends declared per common share | $ | 1.32 | $ | 1.31 | $ | 0.01 | 1 | % | ||||||||||||
Average number of common shares outstanding: | ||||||||||||||||||||
Basic | 176,101 | 188,731 | (12,630 | ) | (7 | )% | ||||||||||||||
Diluted | 176,101 | 188,940 | (12,839 | ) | (7 | )% | ||||||||||||||
EBITDA | $ | 200,404 | $ | 1,533,761 | $ | (1,333,357 | ) | (87 | )% | |||||||||||
Adjusted EBITDA | $ | 575,956 | $ | 1,760,740 | $ | (1,184,784 | ) | (67 | )% | |||||||||||
Balance Sheet Data |
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|
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2016 | 2015 | ||||||||
(In thousands) | |||||||||
Cash, cash equivalents and investments in marketable securities | $ | 1,134,727 | $ | 210,552 | |||||
Working capital | $ | 1,767,780 | $ | 587,450 | |||||
Total assets | $ | 9,435,661 | $ | 8,388,299 | |||||
Long-term debt | $ | 2,235,137 | $ | 1,040,040 | |||||
Total equity | $ | 5,301,985 | $ | 5,809,773 | |||||
Segment Information
Our operations are 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
The HEP segment involves all of the operations of HEP, a consolidated
variable interest entity, which owns and operates logistics assets
consisting of petroleum product and crude oil pipelines, terminals,
tankage, loading rack facilities and refinery process units in the
Mid-Continent, Southwest and
Refining | HEP |
Corporate |
Consolidations |
Consolidated |
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(In thousands) | |||||||||||||||||||||||||
Three Months Ended |
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Sales and other revenues | $ | 2,936,386 | $ | 112,526 | $ | — | $ | (93,844 | ) | $ | 2,955,068 | ||||||||||||||
Depreciation and amortization | $ | 71,973 | $ | 18,841 | $ | 2,987 | $ | (207 | ) | $ | 93,594 | ||||||||||||||
Income (loss) from operations | $ | 95,455 | $ | 54,953 | $ | (37,548 | ) | $ | (568 | ) | $ | 112,292 | |||||||||||||
Earnings of equity method investments | $ | — | $ | 4,058 | $ | — | $ | — | $ | 4,058 | |||||||||||||||
Capital expenditures | $ | 78,360 | $ | 11,480 | $ | 2,473 | $ | — | $ | 92,313 | |||||||||||||||
Three Months Ended |
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Sales and other revenues | $ | 2,924,218 | $ | 97,251 | $ | 190 | $ | (78,100 | ) | $ | 2,943,559 | ||||||||||||||
Depreciation and amortization | $ | 70,997 | $ | 16,483 | $ | 3,299 | $ | (207 | ) | $ | 90,572 | ||||||||||||||
Income (loss) from operations | $ | (72,473 | ) | $ | 52,356 | $ | (36,020 | ) | $ | (569 | ) | $ | (56,706 | ) | |||||||||||
Earnings of equity method investments | $ | — | $ | 2,169 | $ | — | $ | — | $ | 2,169 | |||||||||||||||
Capital expenditures | $ | 164,141 | $ | 34,967 | $ | 3,150 | $ | — | $ | 202,258 | |||||||||||||||
Year Ended |
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Sales and other revenues | $ | 10,467,190 | $ | 402,043 | $ | 168 | $ | (333,701 | ) | $ | 10,535,700 | ||||||||||||||
Depreciation and amortization | $ | 282,321 | $ | 68,811 | $ | 12,723 | $ | (828 | ) | $ | 363,027 | ||||||||||||||
Income (loss) from operations | $ | (163,624 | ) | $ | 196,716 | $ | (130,565 | ) | $ | (2,414 | ) | $ | (99,887 | ) | |||||||||||
Earnings of equity method investments | $ | — | $ | 14,213 | $ | — | $ | — | $ | 14,213 | |||||||||||||||
Capital expenditures | $ | 363,115 | $ | 107,595 | $ | 9,080 | $ | — | $ | 479,790 | |||||||||||||||
Year Ended |
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Sales and other revenues | $ | 13,171,183 | $ | 358,875 | $ | 663 | $ | (292,801 | ) | $ | 13,237,920 | ||||||||||||||
Depreciation and amortization | $ | 273,345 | $ | 61,690 | $ | 11,944 | $ | (828 | ) | $ | 346,151 | ||||||||||||||
Income (loss) from operations | $ | 1,190,578 | $ | 179,075 | $ | (123,004 | ) | $ | (2,296 | ) | $ | 1,244,353 | |||||||||||||
Earnings (loss) of equity method investments | $ | — | $ | 4,803 | $ | (8,541 | ) | $ | — | $ | (3,738 | ) | |||||||||||||
Capital expenditures | $ | 469,011 | $ | 193,121 | $ | 14,023 | $ | — | $ | 676,155 | |||||||||||||||
|
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Cash, cash equivalents and investments in marketable securities | $ | 49 | $ | 3,657 | $ | 1,131,021 | $ | — | $ | 1,134,727 | |||||||||||||||
Total assets | $ | 6,513,806 | $ | 1,920,487 | $ | 1,306,169 | $ | (304,801 | ) | $ | 9,435,661 | ||||||||||||||
Long-term debt | $ | — | $ | 1,243,912 | $ | 991,225 | $ | — | $ | 2,235,137 | |||||||||||||||
|
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Cash, cash equivalents and investments in marketable securities | $ | 91 | $ | 15,013 | $ | 195,448 | $ | — | $ | 210,552 | |||||||||||||||
Total assets | $ | 6,597,355 | $ | 1,812,279 | $ | 289,225 | $ | (310,560 | ) | $ | 8,388,299 | ||||||||||||||
Long-term debt | $ | — | $ | 1,008,752 | $ | 31,288 | $ | — | $ | 1,040,040 | |||||||||||||||
Refining Operating Data
The following tables set forth information, including non-GAAP performance measures about our refinery operations. The cost of products and refinery gross and net operating margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments and 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 |
Years Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||||||
|
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Crude charge (BPD) (1) | 272,520 | 238,280 | 262,170 | 263,340 | ||||||||||||||||
Refinery throughput (BPD) (2) | 289,990 | 250,080 | 280,920 | 277,260 | ||||||||||||||||
Refinery production (BPD) (3) | 279,760 | 240,010 | 269,840 | 266,170 | ||||||||||||||||
Sales of produced refined products (BPD) | 284,480 | 238,240 | 261,200 | 258,420 | ||||||||||||||||
Sales of refined products (BPD) (4) | 299,770 | 308,110 | 285,080 | 295,470 | ||||||||||||||||
Refinery utilization (5) | 104.8 | % | 91.6 | % | 100.8 | % | 101.3 | % | ||||||||||||
Average per produced barrel (6) | ||||||||||||||||||||
Net sales | $ | 62.19 | $ | 62.38 | $ | 58.14 | $ | 72.33 | ||||||||||||
Cost of products (7) | 55.41 | 52.30 | 50.17 | 56.88 | ||||||||||||||||
Refinery gross margin (8) | 6.78 | 10.08 | 7.97 | 15.45 | ||||||||||||||||
Refinery operating expenses (9) | 4.22 | 5.82 | 4.69 | 4.95 | ||||||||||||||||
Net operating margin (8) | $ | 2.56 | $ | 4.26 | $ | 3.28 | $ | 10.50 | ||||||||||||
Refinery operating expenses per throughput barrel (10) | $ | 4.14 | $ | 5.54 | $ | 4.36 | $ | 4.61 | ||||||||||||
Feedstocks: | ||||||||||||||||||||
Sweet crude oil | 59 | % | 56 | % | 58 | % | 59 | % | ||||||||||||
Sour crude oil | 19 | % | 23 | % | 18 | % | 21 | % | ||||||||||||
Heavy sour crude oil | 16 | % |
16 |
% | 17 | % | 15 | % | ||||||||||||
Other feedstocks and blends | 6 | % | 5 | % | 7 | % | 5 | % | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
Sales of produced refined products: |
|
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Gasolines | 53 | % | 53 | % | 50 | % | 50 | % | ||||||||||||
Diesel fuels | 31 | % | 29 | % | 33 | % | 33 | % | ||||||||||||
Jet fuels | 8 | % | 8 | % | 7 | % |
7 |
% | ||||||||||||
Fuel oil | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||
Asphalt | 1 | % | 2 | % | 2 | % | 2 | % | ||||||||||||
Lubricants | 4 | % | 4 | % | 5 | % | 4 | % | ||||||||||||
LPG and other | 2 | % | 3 | % | 2 | % | 3 | % | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
Three Months Ended |
Years Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||||||
|
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Crude charge (BPD) (1) | 92,450 | 101,500 | 98,090 | 100,450 | ||||||||||||||||
Refinery throughput (BPD) (2) | 100,720 | 112,850 | 107,690 | 111,840 | ||||||||||||||||
Refinery production (BPD) (3) | 99,930 | 111,590 | 106,460 | 110,210 | ||||||||||||||||
Sales of produced refined products (BPD) | 102,460 | 112,320 | 108,280 | 111,580 | ||||||||||||||||
Sales of refined products (BPD) (4) | 107,430 | 118,160 | 110,740 | 119,560 | ||||||||||||||||
Refinery utilization (5) | 92.5 | % | 101.5 | % | 98.1 | % | 100.5 | % | ||||||||||||
Average per produced barrel (6) | ||||||||||||||||||||
Net sales | $ | 64.45 | $ | 59.14 | $ | 57.87 | $ | 69.76 | ||||||||||||
Cost of products (7) | 55.21 | 50.96 | 48.68 | 53.57 | ||||||||||||||||
Refinery gross margin (8) | 9.24 | 8.18 | 9.19 | 16.19 | ||||||||||||||||
Refinery operating expenses (9) | 5.04 | 5.07 | 4.72 | 4.92 | ||||||||||||||||
Net operating margin (8) | $ | 4.20 | $ | 3.11 | $ | 4.47 | $ | 11.27 | ||||||||||||
Refinery operating expenses per throughput barrel (10) | $ | 5.13 | $ | 5.05 | $ | 4.75 | $ | 4.91 | ||||||||||||
Feedstocks: | ||||||||||||||||||||
Sweet crude oil | 25 | % | 42 | % | 28 | % | 36 | % | ||||||||||||
Sour crude oil | 67 | % | 48 | % | 63 | % | 54 | % | ||||||||||||
Heavy sour crude oil | — | % | — | % | — | % | — | % | ||||||||||||
Other feedstocks and blends | 8 | % | 10 | % | 9 | % | 10 | % | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
Sales of produced refined products: | ||||||||||||||||||||
Gasolines | 53 | % | 56 | % | 54 | % | 55 | % | ||||||||||||
Diesel fuels | 39 | % | 40 | % | 40 | % | 39 | % | ||||||||||||
Fuel oil | 4 | % | 1 | % | 3 | % | 2 | % | ||||||||||||
Asphalt | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||
LPG and other | 3 | % | 2 | % | 2 | % | 3 | % | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
|
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Crude charge (BPD) (1) | 67,100 | 67,530 | 63,650 | 68,770 | ||||||||||||||||
Refinery throughput (BPD) (2) | 75,930 | 73,650 | 68,870 | 74,480 | ||||||||||||||||
Refinery production (BPD) (3) | 73,220 | 69,600 | 65,810 | 70,180 | ||||||||||||||||
Sales of produced refined products (BPD) | 72,290 | 68,940 | 65,940 | 68,000 | ||||||||||||||||
Sales of refined products (BPD) (4) | 73,190 | 75,700 | 69,160 | 73,320 | ||||||||||||||||
Refinery utilization (5) | 69.2 | % | 81.4 | % | 65.6 | % | 82.9 | % | ||||||||||||
Three Months Ended |
Years Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||||||
|
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Average per produced barrel (6) | ||||||||||||||||||||
Net sales | $ | 60.54 | $ | 59.13 | $ | 57.80 | $ | 70.05 | ||||||||||||
Cost of products (7) | 54.38 | 46.92 | 49.13 | 51.80 | ||||||||||||||||
Refinery gross margin (8) | 6.16 | 12.21 | 8.67 | 18.25 | ||||||||||||||||
Refinery operating expenses (9) | 11.25 | 10.60 | 10.45 | 9.89 | ||||||||||||||||
Net operating margin (8) | $ | (5.09 | ) | $ | 1.61 | $ | (1.78 | ) | $ | 8.36 | ||||||||||
Refinery operating expenses per throughput barrel (10) | $ | 10.71 | $ | 9.92 | $ | 10.01 | $ | 9.03 | ||||||||||||
Feedstocks: | ||||||||||||||||||||
Sweet crude oil | 37 | % | 40 | % | 39 | % | 42 | % | ||||||||||||
Sour crude oil | — | % | — | % | — | % | — | % | ||||||||||||
Heavy sour crude oil | 32 | % | 36 | % | 35 | % | 37 | % | ||||||||||||
Black wax crude oil | 19 | % | 16 | % | 18 | % | 13 | % | ||||||||||||
Other feedstocks and blends | 12 | % | 8 | % | 8 | % | 8 | % | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
Sales of produced refined products: | ||||||||||||||||||||
Gasolines | 61 | % | 59 | % | 60 | % | 57 | % | ||||||||||||
Diesel fuels | 30 | % | 32 | % | 33 | % | 36 | % | ||||||||||||
Jet fuels | — | % | 1 | % | — | % | — | % | ||||||||||||
Fuel oil | 3 | % | 3 | % | 2 | % | 3 | % | ||||||||||||
Asphalt | 4 | % | 2 | % | 3 | % | 2 | % | ||||||||||||
LPG and other | 2 | % | 3 | % | 2 | % | 2 | % | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
Consolidated | ||||||||||||||||||||
Crude charge (BPD) (1) | 432,070 | 407,310 | 423,910 | 432,560 | ||||||||||||||||
Refinery throughput (BPD) (2) | 466,640 | 436,580 | 457,480 | 463,580 | ||||||||||||||||
Refinery production (BPD) (3) | 452,910 | 421,200 | 442,110 | 446,560 | ||||||||||||||||
Sales of produced refined products (BPD) | 459,230 | 419,500 | 435,420 | 438,000 | ||||||||||||||||
Sales of refined products (BPD) (4) | 480,390 | 501,970 | 464,980 | 488,350 | ||||||||||||||||
Refinery utilization (5) | 94.5 | % | 91.9 | % | 92.8 | % | 97.6 | % | ||||||||||||
Average per produced barrel (6) | ||||||||||||||||||||
Net sales | $ | 62.43 | $ | 60.97 | $ | 58.02 | $ | 71.32 | ||||||||||||
Cost of products (7) | 55.20 | 51.06 | 49.64 | 55.25 | ||||||||||||||||
Refinery gross margin (8) | 7.23 | 9.91 | 8.38 | 16.07 | ||||||||||||||||
Refinery operating expenses (9) | 5.51 | 6.40 | 5.57 | 5.71 | ||||||||||||||||
Net operating margin (8) | $ | 1.72 | $ | 3.51 | $ | 2.81 | $ | 10.36 | ||||||||||||
Refinery operating expenses per throughput barrel (10) | $ | 5.42 | $ | 6.15 | $ | 5.30 | $ | 5.39 | ||||||||||||
Feedstocks: | ||||||||||||||||||||
Sweet crude oil | 48 | % | 49 | % | 48 | % | 51 | % | ||||||||||||
Sour crude oil | 26 | % | 26 | % | 26 | % | 25 | % | ||||||||||||
Heavy sour crude oil | 16 | % | 15 | % | 16 | % | 15 | % | ||||||||||||
Black wax crude oil | 3 | % | 3 | % | 3 | % | 2 | % | ||||||||||||
Other feedstocks and blends | 7 | % | 7 | % | 7 | % | 7 | % | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
Three Months Ended |
Years Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Consolidated | ||||||||||||||||||||
Sales of produced refined products: | ||||||||||||||||||||
Gasolines | 54 | % | 55 | % | 52 | % | 52 | % | ||||||||||||
Diesel fuels | 33 | % | 32 | % | 35 | % | 35 | % | ||||||||||||
Jet fuels | 5 | % | 4 | % | 4 | % | 4 | % | ||||||||||||
Fuel oil | 2 | % | 2 | % | 2 | % | 1 | % | ||||||||||||
Asphalt | 2 | % | 2 | % | 2 | % | 2 | % | ||||||||||||
Lubricants | 2 | % | 2 | % | 3 | % | 3 | % | ||||||||||||
LPG and other | 2 | % | 3 | % | 2 | % | 3 | % | ||||||||||||
Total | 100 | % | 100 | % | 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 refineries. | |
(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. | |
(4) | Includes refined products purchased for resale. | |
(5) |
Represents crude charge divided by total crude capacity (BPSD).
Effective |
|
(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) |
Excludes lower of cost or market inventory valuation adjustments
of |
|
(9) |
Represents operating expenses of our refineries, exclusive of depreciation and amortization. |
|
(10) |
Represents refinery operating expenses, exclusive of depreciation and amortization, divided by refinery throughput. |
|
Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles
Reconciliations of earnings before interest, taxes, depreciation and amortization ("EBITDA") and EBITDA excluding "non-cash" lower of cost or market inventory valuation adjustments, goodwill and asset impairment charges and PCLI pre-acquisition costs ("Adjusted 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 (loss) attributable to
Set forth below is our calculation of EBITDA and Adjusted EBITDA.
Three Months Ended |
Years Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net income (loss) attributable to |
$ | 53,165 | $ | (43,921 | ) | $ | (260,453 | ) | $ | 740,101 | ||||||||||
Add (subtract) income tax provision (benefit) | 12,952 | (40,724 | ) | 19,411 | 406,060 | |||||||||||||||
Add interest expense (1) | 26,304 | 11,657 | 80,910 | 44,840 | ||||||||||||||||
Subtract interest income | (1,111 | ) | (988 | ) | (2,491 | ) | (3,391 | ) | ||||||||||||
Add depreciation and amortization | 93,594 | 90,572 | 363,027 | 346,151 | ||||||||||||||||
EBITDA | $ | 184,904 | $ | 16,596 | $ | 200,404 | $ | 1,533,761 | ||||||||||||
Add (subtract) lower of cost or market inventory adjustment | (97,656 | ) | 143,554 | (291,938 | ) | 226,979 | ||||||||||||||
Add goodwill and asset impairment | — | — | 654,084 | — | ||||||||||||||||
PCLI pre-acquisition costs | 13,406 | — | 13,406 | — | ||||||||||||||||
Adjusted EBITDA | $ | 100,654 | $ | 160,150 | $ | 575,956 | $ | 1,760,740 | ||||||||||||
(1) Includes loss on early extinguishment of debt of |
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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.
Refinery gross margin per barrel is the difference between average net sales price and average cost of products per barrel of produced refined products. Net operating margin per barrel is the difference between refinery gross margin and refinery operating expenses per barrel of produced refined products. These two margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments, goodwill and asset impairment charges and 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 and Net Operating Margins
Below are reconciliations to our consolidated statements of income for (i) net sales, cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) 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.
Reconciliation of produced product sales to total sales and other revenues |
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Three Months Ended |
Years Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(Dollars in thousands, except per barrel amounts) | ||||||||||||||||||||
Consolidated | ||||||||||||||||||||
Average sales price per produced barrel sold | $ | 62.43 | $ | 60.97 | $ | 58.02 | $ | 71.32 | ||||||||||||
|
459,230 | 419,500 | 435,420 | 438,000 | ||||||||||||||||
|
92 | 92 | 366 | 365 | ||||||||||||||||
Produced refined product sales | $ | 2,637,615 | $ | 2,353,076 | $ | 9,246,283 | $ | 11,401,928 | ||||||||||||
Total produced refined product sales | $ | 2,637,615 | $ | 2,353,076 | $ | 9,246,283 | $ | 11,401,928 | ||||||||||||
Add refined product sales from purchased products and rounding (1) | 123,401 | 438,809 | 624,233 | 1,214,920 | ||||||||||||||||
Total refined product sales | 2,761,016 | 2,791,885 | 9,870,516 | 12,616,848 | ||||||||||||||||
Add direct sales of excess crude oil (2) | 142,129 | 91,435 | 436,974 | 352,113 | ||||||||||||||||
Add other refining segment revenue (3) | 33,241 | 40,898 | 159,700 | 202,222 | ||||||||||||||||
Total refining segment revenue | 2,936,386 | 2,924,218 | 10,467,190 | 13,171,183 | ||||||||||||||||
Add HEP segment sales and other revenues | 112,526 | 97,251 | 402,043 | 358,875 | ||||||||||||||||
Add corporate and other revenues | — | 190 | 168 | 663 | ||||||||||||||||
Subtract consolidations and eliminations | (93,844 | ) | (78,100 | ) | (333,701 | ) | (292,801 | ) | ||||||||||||
Sales and other revenues | $ | 2,955,068 | $ | 2,943,559 | $ | 10,535,700 | $ | 13,237,920 | ||||||||||||
Reconciliation of average cost of products per produced barrel sold to cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) |
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Three Months Ended |
Years Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(Dollars in thousands, except per barrel amounts) | ||||||||||||||||||||
Consolidated | ||||||||||||||||||||
Average cost of products per produced barrel sold | $ | 55.20 | $ | 51.06 | $ | 49.64 | $ | 55.25 | ||||||||||||
|
459,230 | 419,500 | 435,420 | 438,000 | ||||||||||||||||
|
92 | 92 | 366 | 365 | ||||||||||||||||
Cost of products for produced products sold | $ | 2,332,154 | $ | 1,970,610 | $ | 7,910,815 | $ | 8,832,818 | ||||||||||||
Total cost of products for produced products sold | $ | 2,332,154 | $ | 1,970,610 | $ | 7,910,815 | $ | 8,832,818 | ||||||||||||
Add refined product costs from purchased products and rounding (1) | 129,858 | 439,110 | 638,540 | 1,245,451 | ||||||||||||||||
Total cost of refined products sold | 2,462,012 | 2,409,720 | 8,549,355 | 10,078,269 | ||||||||||||||||
Add crude oil cost of direct sales of excess crude oil (2) | 143,686 | 93,833 | 441,180 | 348,362 | ||||||||||||||||
Add other refining segment cost of products sold (4) | 17,818 | 17,430 | 72,222 | 98,979 | ||||||||||||||||
Total refining segment cost of products sold | 2,623,516 | 2,520,983 | 9,062,757 | 10,525,610 | ||||||||||||||||
Subtract consolidations and eliminations | (72,744 | ) | (74,472 | ) | (296,830 | ) | (286,392 | ) | ||||||||||||
Costs of products sold (exclusive of lower of cost or market inventory valuation adjustment and depreciation and amortization) | $ | 2,550,772 | $ | 2,446,511 | $ | 8,765,927 | $ | 10,239,218 | ||||||||||||
Reconciliation of average refinery operating expenses per produced barrel sold to total operating expenses |
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Three Months Ended |
Years Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(Dollars in thousands, except per barrel amounts) | ||||||||||||||||||||
Consolidated | ||||||||||||||||||||
Average refinery operating expenses per produced barrel sold | $ | 5.51 | $ | 6.40 | $ | 5.57 | $ | 5.71 | ||||||||||||
|
459,230 | 419,500 | 435,420 | 438,000 | ||||||||||||||||
|
92 | 92 | 366 | 365 | ||||||||||||||||
Refinery operating expenses for produced products sold | $ | 232,793 | $ | 247,002 | $ | 887,656 | $ | 912,858 | ||||||||||||
Total refinery operating expenses for produced products sold | $ | 232,793 | $ | 247,002 | $ | 887,656 | $ | 912,858 | ||||||||||||
Add other refining segment operating expenses and rounding (5) | 10,305 | 14,715 | 35,934 | 41,813 | ||||||||||||||||
Total refining segment operating expenses | 243,098 | 261,717 | 923,590 | 954,671 | ||||||||||||||||
Add HEP segment operating expenses | 34,819 | 24,955 | 123,985 | 105,554 | ||||||||||||||||
Add corporate and other costs | 1,096 | 1,394 | 4,893 | 3,433 | ||||||||||||||||
Subtract consolidations and eliminations | (20,325 | ) | (2,852 | ) | (33,629 | ) | (3,285 | ) | ||||||||||||
Operating expenses (exclusive of depreciation and amortization) | $ | 258,688 | $ | 285,214 | $ | 1,018,839 | $ | 1,060,373 | ||||||||||||
Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenues |
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Three Months Ended |
Years Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(Dollars in thousands, except per barrel amounts) | ||||||||||||||||||||
Consolidated | ||||||||||||||||||||
Net operating margin per barrel | $ | 1.72 | $ | 3.51 | $ | 2.81 | $ | 10.36 | ||||||||||||
Add average refinery operating expenses per produced barrel | 5.51 | 6.40 | 5.57 | 5.71 | ||||||||||||||||
Refinery gross margin per barrel | 7.23 | 9.91 | 8.38 | 16.07 | ||||||||||||||||
Add average cost of products per produced barrel sold | 55.20 | 51.06 | 49.64 | 55.25 | ||||||||||||||||
Average sales price per produced barrel sold | $ | 62.43 | $ | 60.97 | $ | 58.02 | $ | 71.32 | ||||||||||||
|
459,230 | 419,500 | 435,420 | 438,000 | ||||||||||||||||
|
92 | 92 | 366 | 365 | ||||||||||||||||
Produced refined product sales | $ | 2,637,615 | $ | 2,353,076 | $ | 9,246,283 | $ | 11,401,928 | ||||||||||||
Total produced refined product sales | $ | 2,637,615 | $ | 2,353,076 | $ | 9,246,283 | $ | 11,401,928 | ||||||||||||
Add refined product sales from purchased products and rounding (1) | 123,401 | 438,809 | 624,233 | 1,214,920 | ||||||||||||||||
Total refined product sales | 2,761,016 | 2,791,885 | 9,870,516 | 12,616,848 | ||||||||||||||||
Add direct sales of excess crude oil (2) | 142,129 | 91,435 | 436,974 | 352,113 | ||||||||||||||||
Add other refining segment revenue (3) | 33,241 | 40,898 | 159,700 | 202,222 | ||||||||||||||||
Total refining segment revenue | 2,936,386 | 2,924,218 | 10,467,190 | 13,171,183 | ||||||||||||||||
Add HEP segment sales and other revenues | 112,526 | 97,251 | 402,043 | 358,875 | ||||||||||||||||
Add corporate and other revenues | — | 190 | 168 | 663 | ||||||||||||||||
Subtract consolidations and eliminations | (93,844 | ) | (78,100 | ) | (333,701 | ) | (292,801 | ) | ||||||||||||
Sales and other revenues | $ | 2,955,068 | $ | 2,943,559 | $ | 10,535,700 | $ | 13,237,920 | ||||||||||||
(1) | We purchase finished products to facilitate delivery to certain locations 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, at times 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 cost. | |
(3) | Other refining segment revenue includes the incremental revenues associated with HFC Asphalt, product purchased and sold forward for profit as market conditions and available storage capacity allows and miscellaneous revenue. | |
(4) | Other refining segment cost of products sold includes the incremental cost of products for HFC Asphalt, the incremental cost associated with storing product purchased and sold forward as market conditions and available storage capacity allows and miscellaneous costs. | |
(5) | Other refining segment operating expenses include the marketing costs associated with our refining segment and the operating expenses of HFC Asphalt. | |
Reconciliation of net income (loss) attributable
to
Adjusted net income attributable to
Three Months Ended |
Years Ended |
||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||
GAAP: | |||||||||||||||||||
Income (loss) before income taxes | $ | 83,416 | $ | (64,671 | ) | $ | (171,534 | ) | $ | 1,208,568 | |||||||||
Income tax expense (benefit) | 12,952 | (40,724 | ) | 19,411 | 406,060 | ||||||||||||||
Net income (loss) | 70,464 | (23,947 | ) | (190,945 | ) | 802,508 | |||||||||||||
Less net income attributable to noncontrolling interest | 17,299 | 19,974 | 69,508 | 62,407 | |||||||||||||||
Net income (loss) attributable to |
53,165 | (43,921 | ) | (260,453 | ) | 740,101 | |||||||||||||
NonGAAP adjustments to arrive at adjusted results: | |||||||||||||||||||
Lower of cost or market inventory valuation adjustment (1) | (97,656 | ) | 143,554 | (291,938 | ) | 226,979 | |||||||||||||
Impairment loss - long-lived assets (2) | — | — | 344,766 | — | |||||||||||||||
Impairment loss - goodwill (2) | — | — | 309,318 | — | |||||||||||||||
Pre-acquisition PCLI costs (3) | 13,406 | — | 13,406 | — | |||||||||||||||
Total adjustments - pretax | (84,250 | ) | 143,554 | 375,552 | 226,979 | ||||||||||||||
Income tax expense (benefit) | (21,062 | ) | 55,555 | 25,491 | 87,841 | ||||||||||||||
Total adjustments, net of tax | (63,188 | ) | 87,999 | 350,061 | 139,138 | ||||||||||||||
Adjusted results - NonGAAP: | |||||||||||||||||||
Adjusted income (loss) before income taxes | (834 | ) | 78,883 | 204,018 | 1,435,547 | ||||||||||||||
Income tax expense (benefit) | (8,110 | ) | 14,831 | 44,902 | 493,901 | ||||||||||||||
Adjusted net income | 7,276 | 64,052 | 159,116 | 941,646 | |||||||||||||||
Less net income attributable to noncontrolling interest | 17,299 | 19,974 | 69,508 | 62,407 | |||||||||||||||
Adjusted net income (loss) attributable to |
$ | (10,023 | ) | $ | 44,078 | $ | 89,608 | $ | 879,239 | ||||||||||
Adjusted earnings (loss) per share attributable to |
$ | (0.06 | ) | $ | 0.24 | $ | 0.51 | $ | 4.64 | ||||||||||
(1) | GAAP requires that inventories be stated at the lower of cost or market. We maintain an inventory valuation reserve, whereby inventory costs in excess of market values are written down to current replacement costs and charged to cost of products sold. The valuation reserve is reassessed quarterly, at which time an inventory valuation adjustment is recorded, as a new lower of cost or market inventory valuation reserve is established. Such inventory valuation adjustments result in non-cash charges or benefits. | |
(2) |
Our goodwill is evaluated for impairment annually or when impairment
indicators occur. In the second quarter of 2016, we determined that
goodwill and long-lived assets of our |
|
(3) |
Pre-acquisition PCLI costs consist of legal and professional fees
related to our |
|
Reconciliation of effective tax rate to adjusted effective tax rate |
||||||||||
Three Months Ended |
Year Ended |
|||||||||
2016 | 2016 | |||||||||
(Dollars in thousands) | ||||||||||
GAAP | ||||||||||
Income (loss) before income taxes | $ | 83,416 | $ | (171,534 | ) | |||||
Income tax expense | $ | 12,952 | $ | 19,411 | ||||||
Effective tax rate for GAAP financial statements | 16 | % | (11 | )% | ||||||
Effect of NonGAAP adjustments (lower of cost or market inventory adjustments, goodwill and asset impairment and PCLI pre-acquisition costs) | 956% | 33% | ||||||||
Adjusted - NonGAAP | ||||||||||
Effective tax rate for adjusted results | 972% | 22% | ||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170222005491/en/
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or
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