HollyFrontier Corporation
Aug 7, 2013

HollyFrontier Corporation Reports Quarterly Net Income and Announces Special and Regular Cash Dividends

DALLAS--(BUSINESS WIRE)-- HollyFrontier Corporation (NYSE:HFC) ("HollyFrontier" or the "Company") today reported second quarter net income attributable to HollyFrontier stockholders of $257.0 million or $1.27 per diluted share for the quarter ended June 30, 2013, compared to $493.5 million or $2.39 per diluted share for the quarter ended June 30, 2012. Included in the current quarter results were non-recurring charges that amounted to $0.13 per share, after tax.

HollyFrontier also announced today that its Board of Directors declared a special cash dividend in the amount of $0.50 per share, payable on September 13, 2013 to holders of record of common stock on August 26, 2013. In addition, the Board of Directors approved a regular quarterly dividend of $0.30 per share. This dividend will be paid on September 27, 2013 to holders of record of common stock on September 6, 2013.

For the second quarter, net income attributable to our stockholders decreased by $236.5 million compared to the same period of 2012, principally reflecting lower second quarter refining margins as well as one-time pension and debt extinguishment charges, net of an insurance recovery, resulting in a net combined charge totaling $42.4 million ($25.9 million, net of tax). Refinery gross margins were $20.28 per produced barrel, a 26% decrease compared to $27.43 for the second quarter of 2012. Production levels averaged approximately 409,000 barrels per day ("BPD") and crude oil charges averaged approximately 381,000 BPD for the current quarter. Operating expenses for the quarter were $277.5 million or $6.09 per barrel compared to $222.7 million or $5.00 per barrel for the second quarter of last year.

HollyFrontier's President & CEO, Mike Jennings, commented, "Narrowing refined product margins and reduced throughputs contributed to a year-over-year decline in second quarter earnings. Coastal to inland crude differentials contracted significantly during the quarter, reducing crack spreads for inland refiners. Additionally, production levels were down due to planned and unplanned maintenance activities at our Tulsa, El Dorado and Cheyenne refineries. Although refining margins have come in from last year's record highs, our margins remain healthy, and our outlook is positive. We believe that the favorable locations of our refineries relative to sources of crude oil production growth will continue to provide us with a feedstock advantage. Today's $0.50 special and $0.30 regular dividend announcement demonstrates our ongoing commitment to increasing total shareholder return. Our current regular dividend yield is 2.6%, and our trailing twelve month cash dividend yield stands at 7.8% relative to yesterday's closing price of $45.92."

For the second quarter of 2013, net cash provided by operations totaled $203.0 million. During the period, we declared $0.30 regular and $0.50 special dividends to shareholders totaling approximately $163.0 million and redeemed our $286.8 million principal amount 9.875% senior notes. At June 30, 2013, our combined balance of cash and short-term investments totaled $2.0 billion and our consolidated debt was $1.0 billion. Our debt, exclusive of Holly Energy Partners' debt, which is nonrecourse to HollyFrontier, was $191.1 million at June 30, 2013. We had no cash borrowings or outstanding principal under our credit facility during the quarter.

The Company has scheduled a webcast conference call for today, August 7, 2013, at 8:30 AM Eastern Time to discuss second quarter financial results. This webcast may be accessed at: https://event.webcasts.com/starthere.jsp?ei=1018664. An audio archive of this webcast will be available using the above noted link through August 21, 2013.

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 operates through its subsidiaries a 135,000 barrels per stream day ("bpsd") refinery located in El Dorado, Kansas, two refinery facilities with a combined capacity of 125,000 bpsd located in Tulsa, Oklahoma, a 100,000 bpsd refinery located in Artesia, New Mexico, a 52,000 bpsd refinery located in Cheyenne, Wyoming and a 31,000 bpsd refinery in Woods Cross, Utah. HollyFrontier markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. A subsidiary of HollyFrontier also owns a 39% interest (including the general partner interest) in Holly Energy Partners, L.P.

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 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
June 30,

Change from 2012

 

2013     2012 Change   Percent
(In thousands, except per share data)
Sales and other revenues $ 5,298,848   $ 4,806,681 $ 492,167 10 %
Operating costs and expenses:
Cost of products sold (exclusive of depreciation and amortization) 4,456,808 3,681,764 775,044 21
Operating expenses (exclusive of depreciation and amortization) 277,542 222,726 54,816 25
General and administrative expenses (exclusive of depreciation and amortization) 34,000 32,106 1,894 6
Depreciation and amortization 70,492   56,948   13,544   24
Total operating costs and expenses 4,838,842   3,993,544   845,298   21
Income from operations 460,006 813,137 (353,131 ) (43 )
Other income (expense):
Earnings (loss) of equity method investments (1,089 ) 886 (1,975 ) (223 )
Interest income 778 681 97 14
Interest expense (19,794 ) (26,942 ) 7,148 (27 )
Loss on early extinguishment of debt (22,109 ) (22,109 )
Gain on sale of marketable securities   326   (326 ) (100 )
(42,214 ) (25,049 ) (17,165 ) 69
Income before income taxes 417,792 788,088 (370,296 ) (47 )
Income tax provision 152,043   285,718   (133,675 ) (47 )
Net income 265,749 502,370 (236,621 ) (47 )
Less net income attributable to noncontrolling interest 8,768 8,871 (103 ) (1 )
Net income attributable to HollyFrontier stockholders $ 256,981     $ 493,499   $ (236,518 ) (48 )%
Earnings per share attributable to HollyFrontier stockholders:
Basic $ 1.27     $ 2.40   $ (1.13 ) (47 )%
Diluted $ 1.27     $ 2.39   $ (1.12 ) (47 )%
Cash dividends declared per common share $ 0.80     $ 0.65   $ 0.15   23 %
Average number of common shares outstanding:
Basic 201,543 205,727 (4,184 ) (2 )%
Diluted 201,905 206,481 (4,576 ) (2 )%
EBITDA $ 520,641 $ 862,426 $ (341,785 ) (40 )%
Six Months Ended

June 30,

  Change from 2012  
2013   2012 Change   Percent
(In thousands, except per share data)
Sales and other revenues $ 10,006,637 $ 9,738,419 $ 268,218 3 %
Operating costs and expenses:
Cost of products sold (exclusive of depreciation and amortization) 8,249,343 7,868,681 380,662 5
Operating expenses (exclusive of depreciation and amortization) 542,641 464,353 78,288 17
General and administrative expenses (exclusive of depreciation and amortization) 63,198 59,634 3,564 6
Depreciation and amortization 142,254   113,050   29,204   26
Total operating costs and expenses 8,997,436   8,505,718   491,718