Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 1, 2019 (August 1, 2019)
 
HOLLYFRONTIER CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware
(State or other
jurisdiction of incorporation)
001-03876
(Commission File Number)
75-1056913
(I.R.S. Employer
Identification Number)
2828 N. Harwood, Suite 1300
Dallas, TX
(Address of principal
executive offices)
 

75201
(Zip code)
       
Registrant’s telephone number, including area code: (214) 871-3555
 
Not applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to 12(b) of the Securities Exchange Act of 1934:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock $0.01 par value
HFC
New York Stock Exchange
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company        ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ¨
  



Item 2.02. Results of Operations and Financial Condition.

On August 1, 2019, HollyFrontier Corporation (the “Company”) issued a press release announcing the Company’s second quarter 2019 results. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated herein in its entirety.

The information contained in, or incorporated into, this Item 2.02 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference to such filing.


Item 9.01 Financial Statements and Exhibits.

(d)    Exhibits.
99.1

* Furnished herewith pursuant to Item 2.02.







SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HOLLYFRONTIER CORPORATION

By:    /s/ Richard L. Voliva III            
Richard L. Voliva III
Executive Vice President and
Chief Financial Officer

Date: August 1, 2019


Exhibit


Press Release
August 1, 2019
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13035052&doc=3

HollyFrontier Corporation Reports Quarterly Results and Announces Regular Cash Dividend

Reported net income attributable to HollyFrontier stockholders of $196.9 million, or $1.15 per diluted share, and adjusted net income of $372.3 million, or $2.18 per diluted share, for the second quarter

Reported EBITDA of $442.8 million and adjusted EBITDA of $647.0 million for the second quarter

Returned $245.8 million to shareholders through dividends and share repurchases in the second quarter

Dallas, Texas, August 1, 2019 ‑‑ HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”) today reported second quarter net income attributable to HollyFrontier stockholders of $196.9 million, or $1.15 per diluted share, for the quarter ended June 30, 2019, compared to $345.5 million, or $1.94 per diluted share, for the quarter ended June 30, 2018.

The second quarter results reflect special items that collectively decreased net income by a total of $175.4 million. These items include a lower of cost or market inventory valuation adjustment that decreased pre-tax earnings by $47.8 million, a goodwill impairment of $152.7 million and Sonneborn acquisition and integration costs of $3.6 million. Excluding these items, net income for the current quarter was $372.3 million ($2.18 per diluted share) compared to $258.9 million ($1.45 per diluted share) for the second quarter of 2018, which excludes certain items that collectively increased earnings by $86.6 million for the three months ended June 30, 2018. Total operating expenses for the quarter were $333.3 million compared to $296.2 million for the second quarter of last year.

HollyFrontier’s President & CEO, George Damiris, commented, “HollyFrontier’s solid second quarter results were driven by strong gasoline and diesel margins across our company. Our healthy free cash flow generation allowed us to return over $245 million in cash to shareholders through regular dividends and share repurchases. With no major planned downtime until late September, we believe our refineries are well positioned for strong operational and financial performance in the third quarter.”

The Refining and Marketing segment reported adjusted EBITDA of $556.1 million compared to $384.8 million for the second quarter of 2018. This increase was primarily driven by higher gasoline and diesel margins across our refining system which resulted in a consolidated refinery gross margin of $19.64 per produced barrel, a 19% increase compared to $16.57 for the second quarter of 2018. Crude oil charge averaged 453,030 barrels per day (“BPD”) for the current quarter compared to 463,480 BPD for the second quarter 2018.

Our Lubricants and Specialty Products segment reported adjusted EBITDA of $28.8 million, despite weakness in the base oil market. Rack Forward adjusted EBITDA was $64.2 million for the quarter, driven by improved finished product margins.

Holly Energy Partners, L.P. (“HEP”) reported EBITDA of $88.6 million for the second quarter 2019 compared to $81.9 million in the second quarter of 2018.


1



For the second quarter of 2019, net cash provided by operations totaled $752.7 million. During the period, we declared and paid a dividend of $0.33 per share to shareholders totaling $56.7 million and spent $189.2 million in stock repurchases. At June 30, 2019, our cash and cash equivalents totaled $914.6 million, a $418.5 million increase over cash and cash equivalents of $496.1 million at March 31, 2019. Additionally, our consolidated debt was $2,430.8 million. Our debt, exclusive of HEP debt, which is nonrecourse to HollyFrontier, was $993.1 million at June 30, 2019.

HollyFrontier also announced today that its Board of Directors declared a regular quarterly dividend of $0.33 per share. The dividend will be paid on September 4, 2019 to holders of record of common stock on August 22, 2019.

The Company has scheduled a webcast conference call for today, August 1, 2019, at 8:30 AM Eastern Time to discuss second quarter financial results. This webcast may be accessed at: https://78449.themediaframe.com/dataconf/productusers/hfc/mediaframe/30665/indexl.html. An audio archive of this webcast will be available using the above noted link through August 15, 2019.

HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier owns and operates refineries located in Kansas, Oklahoma, New Mexico, Wyoming and Utah and markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier produces base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57% limited partner interest and a non-economic general partner interest in Holly Energy Partners, L.P., a master limited partnership that provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HollyFrontier Corporation subsidiaries.

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 and cyber 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.


2



RESULTS OF OPERATIONS

Financial Data (all information in this release is unaudited)
 
Three Months Ended
June 30,
 
Change from 2018
 
2019
 
2018
 
Change
 
Percent
 
(In thousands, except per share data)
Sales and other revenues
$
4,782,615

 
$
4,471,236

 
$
311,379

 
7
 %
Operating costs and expenses:
 
 
 
 
 
 
 
Cost of products sold:
 
 
 
 
 
 
 
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)
3,704,884

 
3,595,916

 
108,968

 
3

Lower of cost or market inventory valuation adjustment
47,801

 
(106,926
)
 
154,727

 
(145
)
 
3,752,685

 
3,488,990

 
263,695

 
8

Operating expenses
333,252

 
296,215

 
37,037

 
13

Selling, general and administrative expenses
85,317

 
68,675

 
16,642

 
24

Depreciation and amortization
126,908

 
110,379

 
16,529

 
15

Goodwill impairment
152,712

 

 
152,712

 

Total operating costs and expenses
4,450,874

 
3,964,259

 
486,615

 
12

Income from operations
331,741

 
506,977

 
(175,236
)
 
(35
)
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
Earnings of equity method investments
1,783

 
1,734

 
49

 
3

Interest income
4,588

 
2,934

 
1,654

 
56

Interest expense
(34,264
)
 
(32,324
)
 
(1,940
)
 
6

Gain (loss) on foreign currency transactions
2,213

 
(325
)
 
2,538

 
(781
)
Other, net
92

 
1,364

 
(1,272
)
 
(93
)
 
(25,588
)
 
(26,617
)
 
1,029

 
(4
)
Income before income taxes
306,153

 
480,360

 
(174,207
)
 
(36
)
Income tax expense
89,336

 
117,447

 
(28,111
)
 
(24
)
Net income
216,817

 
362,913

 
(146,096
)
 
(40
)
Less net income attributable to noncontrolling interest
19,902

 
17,406

 
2,496

 
14

Net income attributable to HollyFrontier stockholders
$
196,915

 
$
345,507

 
$
(148,592
)
 
(43
)%
 
 
 
 
 
 
 
 
Earnings per share attributable to HollyFrontier stockholders:
 
 
 
 
 
 
 
Basic
$
1.16

 
$
1.96

 
$
(0.80
)
 
(41
)%
Diluted
$
1.15

 
$
1.94

 
$
(0.79
)
 
(41
)%
Cash dividends declared per common share
$
0.33

 
$
0.33

 
$

 
 %
Average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
169,356

 
175,899

 
(6,543
)
 
(4
)%
Diluted
170,547

 
177,586

 
(7,039
)
 
(4
)%
EBITDA
$
442,835

 
$
602,723

 
$
(159,888
)
 
(27
)%
Adjusted EBITDA
$
646,985

 
$
485,256

 
$
161,729

 
33
 %

3



 
Six Months Ended
June 30,
 
Change from 2018
 
2019
 
2018
 
Change
 
Percent
 
(In thousands, except per share data)
Sales and other revenues
$
8,679,862

 
$
8,599,663

 
$
80,199

 
1
 %
Operating costs and expenses:
 
 
 
 
 
 
 
Cost of products sold:
 
 
 
 
 
 
 
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

6,904,089

 
6,943,041

 
(38,952
)
 
(1
)
Lower of cost or market inventory valuation adjustment

(184,545
)
 
(210,764
)
 
26,219

 
(12
)
 
6,719,544

 
6,732,277

 
(12,733
)
 

Operating expenses
664,844

 
616,503

 
48,341

 
8

Selling, general and administrative expenses
173,351

 
133,339

 
40,012

 
30

Depreciation and amortization
248,329

 
214,720

 
33,609

 
16

Goodwill impairment
152,712

 

 
152,712

 

Total operating costs and expenses
7,958,780

 
7,696,839

 
261,941

 
3

Income from operations
721,082

 
902,824

 
(181,742
)
 
(20
)
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
Earnings of equity method investments
3,883

 
3,013

 
870

 
29

Interest income
10,963

 
5,524

 
5,439

 
98

Interest expense
(70,911
)
 
(65,047
)
 
(5,864
)
 
9

Gain on foreign currency transactions
4,478

 
5,235

 
(757
)
 
(14
)
Other, net
649

 
2,710

 
(2,061
)
 
(76
)
 
(50,938
)
 
(48,565
)
 
(2,373
)
 
5

Income before income taxes
670,144

 
854,259

 
(184,115
)
 
(22
)
Income tax expense
176,841

 
202,484

 
(25,643
)
 
(13
)
Net income
493,303

 
651,775

 
(158,472
)
 
(24
)
Less net income attributable to noncontrolling interest
43,333

 
38,177

 
5,156

 
14

Net income attributable to HollyFrontier stockholders
$
449,970

 
$
613,598

 
$
(163,628
)
 
(27
)%
 
 
 
 
 
 
 
 
Earnings per share attributable to HollyFrontier stockholders:
 
 
 
 
 
 
 
Basic
$
2.64

 
$
3.47

 
$
(0.83
)
 
(24
)%
Diluted
$
2.62

 
$
3.44

 
$
(0.82
)
 
(24
)%
Cash dividends declared per common share
$
0.66

 
$
0.66

 
$

 
 %
Average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
170,100

 
176,256

 
(6,156
)
 
(3
)%
Diluted
171,264

 
177,820

 
(6,556
)
 
(4
)%
EBITDA
$
935,088

 
$
1,090,325

 
$
(155,237
)
 
(14
)%
Adjusted EBITDA
$
928,782

 
$
800,911

 
$
127,871

 
16
 %

Balance Sheet Data
 
June 30,
 
December 31,
 
2019
 
2018
 
(In thousands)
Cash and cash equivalents
$
914,644

 
$
1,154,752

Working capital
$
1,802,370

 
$
2,128,224

Total assets
$
12,104,491

 
$
10,994,601

Long-term debt
$
2,430,832

 
$
2,411,540

Total equity
$
6,530,999

 
$
6,459,059



4




Segment Information

Our operations are organized into three reportable segments, Refining, Lubricants and Specialty Products and HEP. Our operations that are not included in the Refining, Lubricants and Specialty Products and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under Corporate, Other and Eliminations column.

The Refining segment includes the operations of our El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross refineries and HollyFrontier Asphalt Company LLC (“HFC Asphalt”) (aggregated as a reportable segment). Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. HFC Asphalt operates various terminals in Arizona, New Mexico and Oklahoma.

The Lubricants and Specialty Products segment involves Petro-Canada Lubricants Inc.’s (“PCLI”) production operations, located in Mississauga, Ontario, that include lubricant products such as base oils, white oils, specialty products and finished lubricants and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States, Europe and China. Additionally, the Lubricants and Specialty Products segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America, the operations of Red Giant Oil, one of the largest suppliers of locomotive engine oil in North America and the operations of Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

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 Rocky Mountain regions of the United States. The HEP segment also includes a 75% interest in UNEV Pipeline, LLC (an HEP consolidated subsidiary), and a 50% ownership interest in each of Osage Pipeline Company, LLC and Cheyenne Pipeline LLC. 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. Due to certain basis differences, our reported amounts for the HEP segment may not agree to amounts reported in HEP's periodic public filings.




5



 
 
Refining
 
Lubricants and Specialty Products
 
HEP
 
Corporate, Other and Eliminations
 
Consolidated Total
 
 
(In thousands)
Three Months Ended June 30, 2019
 
 
 
 
 
 
 
 
Sales and other revenues:
 
 
 
 
 
 
 
 
 
 
Revenues from external customers
 
$
4,208,776

 
$
545,346

 
$
28,382

 
$
111

 
$
4,782,615

Intersegment revenues
 
88,484

 

 
102,369

 
(190,853
)
 

 
 
$
4,297,260

 
$
545,346

 
$
130,751

 
$
(190,742
)
 
$
4,782,615

Cost of products sold (exclusive of lower of cost or market inventory)
 
$
3,458,832

 
$
415,353

 
$

 
$
(169,301
)
 
$
3,704,884

Lower of cost or market inventory valuation adjustment
 
$
47,801

 
$

 
$

 
$

 
$
47,801

Operating expenses
 
$
252,715

 
$
59,122

 
$
40,608

 
$
(19,193
)
 
$
333,252

Selling, general and administrative expenses
 
$
29,638

 
$
42,087

 
$
1,988

 
$
11,604

 
$
85,317

Depreciation and amortization
 
$
76,225

 
$
23,020

 
$
24,241

 
$
3,422

 
$
126,908

Goodwill impairment
 
$

 
$
152,712

 
$

 
$

 
$
152,712

Income (loss) from operations
 
$
432,049

 
$
(146,948
)
 
$
63,914

 
$
(17,274
)
 
$
331,741

Earnings of equity method investments
 
$

 
$

 
$
1,783

 
$

 
$
1,783

Capital expenditures
 
$
33,899

 
$
9,331

 
$
7,034

 
$
6,470

 
$
56,734

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
Sales and other revenues:
 
 
 
 
 
 
 
 
 
 
Revenues from external customers
 
$
3,987,115

 
$
459,405

 
$
24,746

 
$
(30
)
 
$
4,471,236

Intersegment revenues
 
91,866

 
8,284

 
94,014

 
(194,164
)
 

 
 
$
4,078,981

 
$
467,689

 
$
118,760

 
$
(194,194
)
 
$
4,471,236

Cost of products sold (exclusive of lower of cost or market inventory)
 
$
3,394,853

 
$
373,141

 
$

 
$
(172,078
)
 
$
3,595,916

Lower of cost or market inventory valuation adjustment
 
$
(106,926
)
 
$

 
$

 
$

 
$
(106,926
)
Operating expenses
 
$
262,558

 
$
19,905

 
$
34,533

 
$
(20,781
)
 
$
296,215

Selling, general and administrative expenses
 
$
26,201

 
$
35,257

 
$
2,673

 
$
4,544

 
$
68,675

Depreciation and amortization
 
$
72,989

 
$
10,020

 
$
24,609

 
$
2,761

 
$
110,379

Income (loss) from operations
 
$
429,306

 
$
29,366

 
$
56,945

 
$
(8,640
)
 
$
506,977

Earnings of equity method investments
 
$

 
$

 
$
1,734

 
$

 
$
1,734

Capital expenditures
 
$
42,188

 
$
16,842

 
$
18,957

 
$
1,950

 
$
79,937


6



 
 
Refining
 
Lubricants and Specialty Products
 
HEP
 
Corporate, Other and Eliminations
 
Consolidated Total
 
 
(In thousands)
Six Months Ended June 30, 2019
 
 
 
 
 
 
 
 
Sales and other revenues:
 
 
 
 
 
 
 
 
 
 
Revenues from external customers
 
$
7,581,442

 
$
1,038,680

 
$
59,520

 
$
220

 
$
8,679,862

Intersegment revenues
 
163,228

 

 
205,728

 
(368,956
)
 

 
 
$
7,744,670

 
$
1,038,680

 
$
265,248

 
$
(368,736
)
 
$
8,679,862

Cost of products sold (exclusive of lower of cost or market inventory)
 
$
6,421,372

 
$
804,370

 
$

 
$
(321,653
)
 
$
6,904,089

Lower of cost or market inventory valuation adjustment
 
$
(184,545
)
 
$

 
$

 
$

 
$
(184,545
)
Operating expenses
 
$
517,212

 
$
112,681

 
$
78,121

 
$
(43,170
)
 
$
664,844

Selling, general and administrative expenses
 
$
56,615

 
$
81,806

 
$
4,608

 
$
30,322

 
$
173,351

Depreciation and amortization
 
$
150,640

 
$
43,191

 
$
48,071

 
$
6,427

 
$
248,329

Goodwill impairment
 
$

 
$
152,712

 
$

 
$

 
$
152,712

Income (loss) from operations
 
$
783,376

 
$
(156,080
)
 
$
134,448

 
$
(40,662
)
 
$
721,082

Earnings of equity method investments
 
$

 
$

 
$
3,883

 
$

 
$
3,883

Capital expenditures
 
$
75,662

 
$
17,190

 
$
17,752

 
$
9,865

 
$
120,469

 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2018
 
 
 
 
 
 
 
 
Sales and other revenues:
 
 
 
 
 
 
 
 
 
 
Revenues from external customers
 
$
7,645,262

 
$
902,271

 
$
52,203

 
$
(73
)
 
$
8,599,663

Intersegment revenues
 
182,904

 
10,258

 
195,441

 
(388,603
)
 

 
 
$
7,828,166

 
$
912,529

 
$
247,644

 
$
(388,676
)
 
$
8,599,663

Cost of products sold (exclusive of lower of cost or market inventory)
 
$
6,606,557

 
$
680,672

 
$

 
$
(344,188
)
 
$
6,943,041

Lower of cost or market inventory valuation adjustment
 
$
(210,764
)
 
$

 
$

 
$

 
$
(210,764
)
Operating expenses
 
$
502,405

 
$
84,813

 
$
70,736

 
$
(41,451
)
 
$
616,503

Selling, general and administrative expenses
 
$
52,572

 
$
65,911

 
$
5,795

 
$
9,061

 
$
133,339

Depreciation and amortization
 
$
140,164

 
$
18,884

 
$
49,750

 
$
5,922

 
$
214,720

Income (loss) from operations
 
$
737,232

 
$
62,249

 
$
121,363

 
$
(18,020
)
 
$
902,824

Earnings of equity method investments
 
$

 
$

 
$
3,013

 
$

 
$
3,013

Capital expenditures
 
$
84,962

 
$
25,380

 
$
31,570

 
$
7,565

 
$
149,477

June 30, 2019
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
7,213

 
$
170,593

 
$
6,941

 
$
729,897

 
$
914,644

Total assets
 
$
7,075,770

 
$
2,247,858

 
$
2,188,139

 
$
592,724

 
$
12,104,491

Long-term debt
 
$

 
$

 
$
1,437,710

 
$
993,122

 
$
2,430,832

 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
7,236

 
$
80,931

 
$
3,045

 
$
1,063,540

 
$
1,154,752

Total assets
 
$
6,465,155

 
$
1,506,209

 
$
2,142,027

 
$
881,210

 
$
10,994,601

Long-term debt
 
$

 
$

 
$
1,418,900

 
$
992,640

 
$
2,411,540



7



Refining Segment Operating Data

The following tables set forth information, including non-GAAP (Generally Accepted Accounting Principles) performance measures about our refinery operations. 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 June 30,
 
Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
Mid-Continent Region (El Dorado and Tulsa Refineries)
 
 
 
 
 
 
 
 
Crude charge (BPD) (1)
 
264,290

 
289,820

 
238,890

 
258,930

Refinery throughput (BPD) (2)
 
278,710

 
300,030

 
254,520

 
273,200

Sales of produced refined products (BPD) (3)
 
273,010

 
270,710

 
245,450

 
261,950

Refinery utilization (4)
 
101.7
%
 
111.5
%
 
91.9
%
 
99.6
%
 
 
 
 
 
 
 
 
 
Average per produced barrel (5)
 
 
 
 
 
 
 
 
Refinery gross margin
 
$
17.17

 
$
11.90

 
$
14.51

 
$
11.30

Refinery operating expenses (6)
 
5.02

 
4.89

 
5.74

 
5.02

Net operating margin
 
$
12.15

 
$
7.01

 
$
8.77

 
$
6.28

 
 
 
 
 
 
 
 
 
Refinery operating expenses per throughput barrel (7)
 
$
4.92

 
$
4.41

 
$
5.54

 
$
4.82

 
 
 
 
 
 
 
 
 
Feedstocks:
 
 
 
 
 
 
 
 
Sweet crude oil
 
57
%
 
58
%
 
54
%
 
51
%
Sour crude oil
 
22
%
 
23
%
 
23
%
 
26
%
Heavy sour crude oil
 
16
%
 
16
%
 
17
%
 
18
%
Other feedstocks and blends
 
5
%
 
3
%
 
6
%
 
5
%
Total
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 
 
 
 
 
 
Sales of produced refined products:
 
 
 
 
 
 
 
 
Gasolines
 
51
%
 
49
%
 
52
%
 
51
%
Diesel fuels
 
34
%
 
35
%
 
31
%
 
33
%
Jet fuels
 
6
%
 
6
%
 
7
%
 
6
%
Fuel oil
 
1
%
 
1
%
 
1
%
 
1
%
Asphalt
 
2
%
 
3
%
 
3
%
 
3
%
Base oils
 
4
%
 
4
%
 
4
%
 
4
%
LPG and other
 
2
%
 
2
%
 
2
%
 
2
%
Total
 
100
%
 
100
%
 
100
%
 
100
%



8



 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
Southwest Region (Navajo Refinery)
 
 
 
 
 
 
 
 
Crude charge (BPD) (1)
 
109,080

 
111,900

 
107,560

 
109,020

Refinery throughput (BPD) (2)
 
119,480

 
120,340

 
117,860

 
118,510

Sales of produced refined products (BPD) (3)
 
122,090

 
118,240

 
122,730

 
120,240

Refinery utilization (4)
 
109.1
%
 
111.9
%
 
107.6
%
 
109.0
%
 
 
 
 
 
 
 
 
 
Average per produced barrel (5)
 
 
 
 
 
 
 
 
Refinery gross margin
 
$
23.45

 
$
21.04

 
$
19.70

 
$
15.38

Refinery operating expenses (6)
 
4.53

 
5.34

 
4.73

 
4.68

Net operating margin
 
$
18.92

 
$
15.70

 
$
14.97

 
$
10.70

 
 
 
 
 
 
 
 
 
Refinery operating expenses per throughput barrel (7)
 
$
4.63

 
$
5.25

 
$
4.93

 
$
4.75

 
 
 
 
 
 
 
 
 
Feedstocks:
 
 
 
 
 
 
 
 
Sweet crude oil
 
24
%
 
34
%
 
20
%
 
32
%
Sour crude oil
 
67
%
 
59
%
 
71
%
 
60
%
Other feedstocks and blends
 
9
%
 
7
%
 
9
%
 
8
%
Total
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 
 
 
 
 
 
Sales of produced refined products:
 
 
 
 
 
 
 
 
Gasolines
 
48
%
 
47
%
 
51
%
 
51
%
Diesel fuels
 
40
%
 
41
%
 
38
%
 
39
%
Fuel oil
 
4
%
 
3
%
 
3
%
 
2
%
Asphalt
 
6
%
 
5
%
 
5
%
 
4
%
LPG and other
 
2
%
 
4
%
 
3
%
 
4
%
Total
 
100
%
 
100
%
 
100
%
 
100
%
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
 
 
 
 
 
 
Crude charge (BPD) (1)
 
79,660

 
61,760

 
80,440

 
71,560

Refinery throughput (BPD) (2)
 
86,700

 
69,830

 
87,080

 
79,570

Sales of produced refined products (BPD) (3)
 
74,000

 
64,870

 
78,000

 
77,460

Refinery utilization (4)
 
82.1
%
 
63.7
%
 
82.9
%
 
73.8
%
 
 
 
 
 
 
 
 
 
Average per produced barrel (5)
 
 
 
 
 
 
 
 
Refinery gross margin
 
$
22.48

 
$
27.89

 
$
17.07

 
$
25.05

Refinery operating expenses (6)
 
11.53

 
14.34

 
11.11

 
11.58

Net operating margin
 
$
10.95

 
$
13.55

 
$
5.96

 
$
13.47

 
 
 
 
 
 
 
 
 
Refinery operating expenses per throughput barrel (7)
 
$
9.84

 
$
13.33

 
$
9.95

 
$
11.28

 
 
 
 
 
 
 
 
 
Feedstocks:
 
 
 
 
 
 
 
 
Sweet crude oil
 
34
%
 
18
%
 
35
%
 
26
%
Heavy sour crude oil
 
35
%
 
51
%
 
35
%
 
43
%
Black wax crude oil
 
23
%
 
20
%
 
22
%
 
21
%
Other feedstocks and blends
 
8
%
 
11
%
 
8
%
 
10
%
Total
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 
 
 
 
 
 

9



 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
 
 
 
 
 
 
Sales of produced refined products:
 
 
 
 
 
 
 
 
Gasolines
 
50
%
 
57
%
 
52
%
 
57
%
Diesel fuels
 
37
%
 
32
%
 
35
%
 
33
%
Fuel oil
 
4
%
 
3
%
 
4
%
 
2
%
Asphalt
 
6
%
 
5
%
 
6
%
 
4
%
LPG and other
 
3
%
 
3
%
 
3
%
 
4
%
Total
 
100
%
 
100
%
 
100
%
 
100
%
Consolidated
 
 
 
 
 
 
 
 
Crude charge (BPD) (1)
 
453,030

 
463,480

 
426,890

 
439,510

Refinery throughput (BPD) (2)
 
484,890

 
490,200

 
459,460

 
471,280

Sales of produced refined products (BPD) (3)
 
469,100

 
453,830

 
446,190

 
459,640

Refinery utilization (4)
 
99.1
%
 
101.4
%
 
93.4
%
 
96.2
%
 
 
 
 
 
 
 
 
 
Average per produced barrel (5)
 
 
 
 
 
 
 
 
Refinery gross margin
 
$
19.64

 
$
16.57

 
$
16.39

 
$
14.68

Refinery operating expenses (6)
 
5.92

 
6.36

 
6.40

 
6.04

Net operating margin
 
$
13.72

 
$
10.21

 
$
9.99

 
$
8.64

 
 
 
 
 
 
 
 
 
Refinery operating expenses per throughput barrel (7)
 
$
5.73

 
$
5.89

 
$
6.22

 
$
5.89

 
 
 
 
 
 
 
 
 
Feedstocks:
 
 
 
 
 
 
 
 
Sweet crude oil
 
44
%
 
46
%
 
42
%
 
42
%
Sour crude oil
 
29
%
 
29
%
 
31
%
 
30
%
Heavy sour crude oil
 
16
%
 
17
%
 
16
%
 
18
%
Black wax crude oil
 
4
%
 
3
%
 
4
%
 
3
%
Other feedstocks and blends
 
7
%
 
5
%
 
7
%
 
7
%
Total
 
100
%
 
100
%
 
100
%
 
100
%
Sales of produced refined products:
 
 
 
 
 
 
 
 
Gasolines
 
50
%
 
50
%
 
52
%
 
52
%
Diesel fuels
 
36
%
 
36
%
 
34
%
 
35
%
Jet fuels
 
4
%
 
4
%
 
4
%
 
3
%
Fuel oil
 
2
%
 
1
%
 
2
%
 
2
%
Asphalt
 
4
%
 
4
%
 
4
%
 
3
%
Base oils
 
2
%
 
2
%
 
2
%
 
2
%
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)
Represents barrels sold of refined products produced at our refineries (including HFC Asphalt) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold.
(4)
Represents crude charge divided by total crude capacity (BPSD”). Our consolidated crude capacity is 457,000 BPSD.
(5)
Represents average amount per produced barrel 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)
Represents total refining segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes of
refined products produced at our refineries.
(7) Represents total refining segment operating expenses, exclusive of depreciation and amortization, divided by refinery throughput.




10



Lubricants and Specialty Products Segment Operating Data

We acquired our Sonneborn business on February 1, 2019. For the six months ended June 30, 2019 our lubricants and specialty product operating results reflect the operations of our Sonneborn business for the period February 1, 2019 through June 30, 2019.

The following table sets forth information about our lubricants and specialty products operations.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
Lubricants and Specialty Products
 
 
 
 
 
 
 
 
Throughput (BPD)
 
16,990

 
18,610

 
18,390

 
20,100

Sales of produced products (BPD)
 
34,660

 
31,000

 
34,050

 
31,400

 
 
 
 
 
 
 
 
 
Sales of produced products:
 
 
 
 
 
 
 
 
Finished products
 
52
%
 
48
%
 
50
%
 
48
%
Base oils
 
32
%
 
32
%
 
29
%
 
32
%
Other
 
16
%
 
20
%
 
21
%
 
20
%
Total
 
100
%
 
100
%
 
100
%
 
100
%

Our Lubricants and Specialty Products segment includes base oil production activities, by-product sales to third parties and intra-segment base oil sales to rack forward, referred to as “Rack Back.” “Rack Forward” includes the purchase of base oils and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties. Supplemental financial data attributable to our Lubricants and Specialty Products segment is presented below:

 
 
Rack Back (1)
 
Rack Forward (2)
 
Eliminations (3)
 
Total Lubricants and Specialty Products
 
 
(In thousands)
Three months ended June 30, 2019
 
 
 
 
 
 
 
 
Sales and other revenues
 
$
133,225

 
$
507,183

 
$
(95,062
)
 
$
545,346

Cost of products sold
 
$
131,725

 
$
378,690

 
$
(95,062
)
 
$
415,353

Operating expenses
 
$
30,585

 
$
28,537

 
$

 
$
59,122

Selling, general and administrative expenses
 
$
6,366

 
$
35,721

 
$

 
$
42,087

Depreciation and amortization
 
$
11,075

 
$
11,945

 
$

 
$
23,020

Goodwill impairment
 
$
152,712

 
$

 
$

 
$
152,712

Income (loss) from operations
 
$
(199,238
)
 
$
52,290

 
$

 
$
(146,948
)
EBITDA
 
$
(188,163
)
 
$
64,235

 
$

 
$
(123,928
)
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2018
 
 
 
 
 
 
 
 
Sales and other revenues
 
$
175,642

 
$
425,461

 
$
(133,414
)
 
$
467,689

Cost of products sold
 
$
153,040

 
$
353,515

 
$
(133,414
)
 
$
373,141

Operating expenses
 
$
27,210

 
$
(7,305
)
 
$

 
$
19,905

Selling, general and administrative expenses
 
$
7,888

 
$
27,369

 
$

 
$
35,257

Depreciation and amortization
 
$
6,013

 
$
4,007

 
$

 
$
10,020

Income from operations
 
$
(18,509
)
 
$
47,875

 
$

 
$
29,366

EBITDA
 
$
(12,496
)
 
$
51,882

 
$

 
$
39,386


11




 
 
Rack Back (1)
 
Rack Forward (2)
 
Eliminations (3)
 
Total Lubricants and Specialty Products
 
 
(In thousands)
Six months ended June 30, 2019
 
 
 
 
 
 
 
 
Sales and other revenues
 
$
289,680

 
$
951,525

 
$
(202,525
)
 
$
1,038,680

Cost of products sold
 
$
277,543

 
$
729,352

 
$
(202,525
)
 
$
804,370

Operating expenses
 
$
60,145

 
$
52,536

 
$

 
$
112,681

Selling, general and administrative expenses
 
$
19,845

 
$
61,961

 
$

 
$
81,806

Depreciation and amortization
 
$
21,601

 
$
21,590

 
$

 
$
43,191

Goodwill impairment
 
$
152,712

 
$

 
$

 
$
152,712

Income (loss) from operations
 
$
(242,166
)
 
$
86,086

 
$

 
$
(156,080
)
EBITDA
 
$
(220,565
)
 
$
107,676

 
$

 
$
(112,889
)
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2018
 
 
 
 
 
 
 
 
Sales and other revenues
 
$
349,074

 
$
824,500

 
$
(261,045
)
 
$
912,529

Cost of products sold
 
$
305,094

 
$
636,623

 
$
(261,045
)
 
$
680,672

Operating expenses
 
$
55,981

 
$
28,832

 
$

 
$
84,813

Selling, general and administrative expenses
 
$
14,707

 
$
51,204

 
$

 
$
65,911

Depreciation and amortization
 
$
11,641

 
$
7,243

 
$

 
$
18,884

Income (loss) from operations
 
$
(38,349
)
 
$
100,598

 
$

 
$
62,249

EBITDA
 
$
(26,708
)
 
$
107,841

 
$

 
$
81,133


(1)
Rack Back consists of the PCLI base oil production activities, by-product sales to third parties and intra-segment base oil sales to rack forward.
(2)
Rack Forward activities include the purchase of base oils from rack back and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties.
(3)
Intra-segment sales of Rack Back produced base oils to rack forward are eliminated under the “Eliminations” column.

12



Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA excluding special items (“Adjusted EBITDA”) to amounts reported under generally accepted accounting principles (“GAAP”) in financial statements.

Earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, is calculated as net income attributable to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax expense, and (iii) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA plus or minus (i) lower of cost or market inventory valuation adjustments, (ii) goodwill impairment (iii) acquisition and integration costs, (iv) incremental cost of products sold attributable to our Sonneborn inventory value step-up, (v) RINs cost reduction related to our Cheyenne and Woods Cross small refinery exemptions, (vi) Woods Cross refinery outage damages and (vii) Woods Cross refinery estimated insurance claims on outage damages.