- Reported net loss attributable to HollyFrontier stockholders of
$(2.4) million, or $(0.01) per diluted share, and adjusted net loss
of $(66.9) million, or $(0.41) per diluted share, for the third
quarter
- Reported EBITDA of $157.0 million and adjusted EBITDA of $65.6
million for the third quarter
- Raised $750.0 million in a public bond offering in the third
quarter to enhance liquidity and fund expansion into renewable
diesel production
HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the
“Company”) today reported third quarter net loss attributable to
HollyFrontier stockholders of $(2.4) million, or $(0.01) per
diluted share, for the quarter ended September 30, 2020, compared
to net income of $261.8 million, or $1.58 per diluted share, for
the quarter ended September 30, 2019.
The third quarter results reflect special items that
collectively increased net income by a total of $64.5 million. On a
pre-tax basis, these items include HollyFrontier's pro-rata share
of a gain recognized upon the settlement of the Company's business
interruption claim with its insurance carrier related to a loss at
the Woods Cross Refinery totaling $77.1 million and a lower of cost
or market inventory valuation adjustment of $62.8 million,
partially offset by charges related to the Cheyenne Refinery
conversion to renewable diesel production, including last-in,
first-out (“LIFO”) inventory liquidation costs of $33.8 million,
decommissioning charges of $12.3 million and severance charges
totaling $2.4 million. Excluding these items, net loss for the
current quarter was $(66.9) million ($(0.41) per diluted share)
compared to net income of $278.0 million ($1.68 per diluted share)
for the third quarter of 2019, which excludes certain items that
collectively decreased net income by $16.2 million.
HollyFrontier’s President & CEO, Michael Jennings,
commented, “Despite the difficult operating environment,
HollyFrontier delivered solid results in the third quarter, led by
resilient financial performances from our lubricants and midstream
businesses. In August, we ran the last barrel of crude oil at
Cheyenne and began the conversion to renewable diesel production. I
would like to thank all of the employees at Cheyenne for safely
achieving this milestone. In September, we reinforced our strong
liquidity position through the successful $750.0 million bond
offering, providing us the necessary capital to fully fund the
previously announced renewable diesel projects at our Artesia, New
Mexico and Cheyenne, Wyoming facilities.”
The COVID-19 pandemic caused a decline in U.S. and global
economic activity starting in the first quarter of 2020. This
decrease reduced both volumes and unit margins across the Company's
businesses, resulting in lower gross margins and earnings. During
the third quarter of 2020, demand for transportation fuels remained
challenged while lubricants and specialties saw meaningful
improvement in industrial and transportation-related markets and
increased global demand for base oils.
The Refining segment reported adjusted EBITDA of $(53.6) million
for the third quarter of 2020 compared to $424.6 million for the
third quarter of 2019. This decrease was primarily due to continued
weak demand for gasoline and diesel coupled with compressed crude
differentials. Refinery gross margin for the third quarter of 2020
was $4.93 per produced barrel, a 71% decrease compared to $17.23
for the third quarter of 2019. Crude oil charge averaged 390,580
barrels per day (“BPD”) for the current quarter compared to 476,030
BPD for the third quarter of 2019.
The Lubricants and Specialty Products segment reported EBITDA of
$60.6 million for the third quarter of 2020 compared to $38.0
million in the third quarter of 2019. This increase was driven by
the strong recovery in global demand for finished lubricants and
base oils, resulting in higher sales volumes and margins during the
quarter.
Holly Energy Partners, L.P. (“HEP”) reported EBITDA of $55.3
million for the third quarter of 2020 compared to $123.1 million in
the third quarter of 2019. Reported EBITDA for the third quarter of
2020 included a $35.7 million goodwill impairment charge, and
reported EBITDA for the third quarter of 2019 included a $35.2
million gain on sales-type leases, both of which eliminated on the
Company's consolidation.
For the third quarter of 2020, net cash provided by operations
totaled $81.7 million. During the period, HollyFrontier declared
and paid a dividend of $0.35 per share to shareholders totaling
$57.2 million. At September 30, 2020, the Company's cash and cash
equivalents totaled $1,524.9 million, a $622.4 million increase
over cash and cash equivalents of $902.5 million at June 30, 2020.
Additionally, the Company's consolidated debt was $3,176.3 million.
The Company’s debt, exclusive of HEP debt, which is nonrecourse to
HollyFrontier, was $1,736.5 million at September 30, 2020.
The Company has scheduled a webcast conference call for today,
November 5, 2020, at 8:30 AM Eastern Time to discuss third quarter
financial results. This webcast may be accessed at:
https://event.on24.com/wcc/r/2628168/9BE4DA1E13C98135F6352CD76762D475.
An audio archive of this webcast will be available using the above
noted link through November 19, 2020.
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 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, the extraordinary market environment and effects of the
COVID-19 pandemic, including the continuation of a material decline
in demand for refined petroleum products in markets the Company
serves; risks and uncertainties with respect to the actions of
actual or potential competitive suppliers and transporters of
refined petroleum products or lubricant and specialty products in
the Company’s markets; the spread between market prices for refined
products and market prices for crude oil; the possibility of
constraints on the transportation of refined products or lubricant
and specialty products; the possibility of inefficiencies,
curtailments or shutdowns in refinery operations or pipelines,
whether due to infection in the workforce or in response to
reductions in demand; effects of governmental and environmental
regulations and policies, including the effects of current
restrictions on various commercial and economic activities in
response to the COVID-19 pandemic; 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 and consummating construction projects,
including the Company's ability to complete announced capital
projects, such as the conversion of the Cheyenne Refinery to a
renewable diesel facility and the construction of the Artesia
renewable diesel unit and pretreatment unit, on time and within
budget; the Company's ability to timely obtain or maintain permits,
including those necessary for operations or capital projects; the
ability of the Company to acquire refined or lubricant product
operations or pipeline and terminal operations on acceptable terms
and to integrate any existing or future acquired operations; the
possibility of terrorist or cyberattacks and the consequences of
any such attacks; general economic conditions, including
uncertainty regarding the timing, pace and extent of an economic
recovery in the United States; further deterioration in gross
margins or a prolonged economic slowdown due to COVID-19 could
result in an impairment of goodwill and / or additional long-lived
asset impairments; 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
September 30,
Change from 2019
2020
2019
Change
Percent
(In thousands, except per share
data)
Sales and other revenues
$
2,819,400
$
4,424,828
$
(1,605,428
)
(36
)%
Operating costs and expenses:
Cost of products sold:
Cost of products sold (exclusive of lower
of cost or market inventory valuation adjustment)
2,377,238
3,403,767
(1,026,529
)
(30
)
Lower of cost or market inventory
valuation adjustment
(62,849
)
34,062
(96,911
)
(285
)
2,314,389
3,437,829
(1,123,440
)
(33
)
Operating expenses
332,496
345,578
(13,082
)
(4
)
Selling, general and administrative
expenses
74,453
87,626
(13,173
)
(15
)
Depreciation and amortization
125,280
127,016
(1,736
)
(1
)
Total operating costs and
expenses
2,846,618
3,998,049
(1,151,431
)
(29
)
Income (loss) from operations
(27,218
)
426,779
(453,997
)
(106
)
Other income (expense):
Earnings of equity method investments
1,316
1,334
(18
)
(1
)
Interest income
1,011
6,164
(5,153
)
(84
)
Interest expense
(30,589
)
(36,027
)
5,438
(15
)
Gain on business interruption insurance
settlement
81,000
—
81,000
—
Gain on foreign currency transactions
1,030
395
635
161
Other, net
1,368
2,356
(988
)
(42
)
55,136
(25,778
)
80,914
(314
)
Income before income taxes
27,918
401,001
(373,083
)
(93
)
Income tax expense
4,573
103,021
(98,448
)
(96
)
Net income
23,345
297,980
(274,635
)
(92
)
Less net income attributable to
noncontrolling interest
25,746
36,167
(10,421
)
(29
)
Net income (loss) attributable to
HollyFrontier stockholders
$
(2,401
)
$
261,813
$
(264,214
)
(101
)%
Earnings (loss) per share attributable
to HollyFrontier stockholders:
Basic
$
(0.01
)
$
1.60
$
(1.61
)
(101
)%
Diluted
$
(0.01
)
$
1.58
$
(1.59
)
(101
)%
Cash dividends declared per common
share
$
0.35
$
0.33
$
0.02
6
%
Average number of common shares
outstanding:
Basic
162,015
163,676
(1,661
)
(1
)%
Diluted
162,015
165,011
(2,996
)
(2
)%
EBITDA
$
157,030
$
521,713
$
(364,683
)
(70
)%
Adjusted EBITDA
$
65,638
$
523,082
$
(457,444
)
(87
)%
Nine Months Ended
September 30,
Change from 2019
2020
2019
Change
Percent
(In thousands, except per share
data)
Sales and other revenues
$
8,282,875
$
13,104,690
$
(4,821,815
)
(37
)%
Operating costs and expenses:
Cost of products sold:
Cost of products sold (exclusive of lower
of cost or market inventory valuation adjustment)
6,647,960
10,307,856
(3,659,896
)
(36
)
Lower of cost or market inventory
valuation adjustment
227,711
(150,483
)
378,194
(251
)
6,875,671
10,157,373
(3,281,702
)
(32
)
Operating expenses
964,200
1,010,422
(46,222
)
(5
)
Selling, general and administrative
expenses
237,559
260,977
(23,418
)
(9
)
Depreciation and amortization
396,033
375,345
20,688
6
Long-lived asset and goodwill
impairments
436,908
152,712
284,196
186
Total operating costs and
expenses
8,910,371
11,956,829
(3,046,458
)
(25
)
Income (loss) from operations
(627,496
)
1,147,861
(1,775,357
)
(155
)
Other income (expense):
Earnings of equity method investments
5,186
5,217
(31
)
(1
)
Interest income
6,590
17,127
(10,537
)
(62
)
Interest expense
(85,923
)
(106,938
)
21,015
(20
)
Gain on business interruption insurance
settlement
81,000
—
81,000
—
Gain on sales-type leases
33,834
—
33,834
—
Loss on early extinguishment of debt
(25,915
)
—
(25,915
)
—
Gain (loss) on foreign currency
transactions
(918
)
4,873
(5,791
)
(119
)
Other, net
4,790
3,005
1,785
59
18,644
(76,716
)
95,360
(124
)
Income (loss) before income
taxes
(608,852
)
1,071,145
(1,679,997
)
(157
)
Income tax expense (benefit)
(188,504
)
279,862
(468,366
)
(167
)
Net income (loss)
(420,348
)
791,283
(1,211,631
)
(153
)
Less net income attributable to
noncontrolling interest
63,353
79,500
(16,147
)
(20
)
Net income (loss) attributable to
HollyFrontier stockholders
$
(483,701
)
$
711,783
$
(1,195,484
)
(168
)%
Earnings (loss) per share attributable
to HollyFrontier stockholders:
Basic
$
(2.99
)
$
4.23
$
(7.22
)
(171
)%
Diluted
$
(2.99
)
$
4.20
$
(7.19
)
(171
)%
Cash dividends declared per common
share
$
1.05
$
0.99
$
0.06
6
%
Average number of common shares
outstanding:
Basic
161,927
167,935
(6,008
)
(4
)%
Diluted
161,927
169,125
(7,198
)
(4
)%
EBITDA
$
(196,839
)
$
1,456,801
$
(1,653,640
)
(114
)%
Adjusted EBITDA
$
434,118
$
1,451,864
$
(1,017,746
)
(70
)%
Balance Sheet Data
September 30,
December 31,
2020
2019
(In thousands)
Cash and cash equivalents
$
1,524,888
$
885,162
Working capital
$
2,081,978
$
1,620,261
Total assets
$
11,579,741
$
12,164,841
Long-term debt
$
3,176,349
$
2,455,640
Total equity
$
5,876,569
$
6,509,426
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 the
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
processing 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, Cheyenne Pipeline LLC and Cushing Connect Pipeline &
Terminal 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.
Refining
Lubricants and Specialty
Products
HEP
Corporate, Other and
Eliminations
Consolidated Total
(In thousands)
Three Months Ended September 30,
2020
Sales and other revenues:
Revenues from external customers
$
2,339,782
$
452,878
$
26,740
$
—
$
2,819,400
Intersegment revenues
56,331
2,164
100,991
(159,486
)
—
$
2,396,113
$
455,042
$
127,731
$
(159,486
)
$
2,819,400
Cost of products sold (exclusive of lower
of cost or market inventory)
$
2,211,342
$
302,703
$
—
$
(136,807
)
$
2,377,238
Lower of cost or market inventory
valuation adjustment
$
(62,849
)
$
—
$
—
$
—
$
(62,849
)
Operating expenses
$
256,079
$
54,488
$
40,003
$
(18,074
)
$
332,496
Selling, general and administrative
expenses
$
30,866
$
36,773
$
2,332
$
4,482
$
74,453
Depreciation and amortization
$
79,146
$
17,432
$
24,109
$
4,593
$
125,280
Income (loss) from operations
$
(118,471
)
$
43,646
$
61,287
$
(13,680
)
$
(27,218
)
Income (loss) before interest and income
taxes
$
(118,471
)
$
43,120
$
70,067
$
62,780
$
57,496
Net income attributable to noncontrolling
interest
$
—
$
—
$
2,293
$
23,453
$
25,746
Earnings of equity method investments
$
—
$
—
$
1,316
$
—
$
1,316
Capital expenditures
$
41,740
$
6,995
$
7,902
$
26,635
$
83,272
Three Months Ended September 30,
2019
Sales and other revenues:
Revenues from external customers
$
3,865,399
$
529,561
$
29,868
$
—
$
4,424,828
Intersegment revenues
81,571
8,157
106,027
(195,755
)
—
$
3,946,970
$
537,718
$
135,895
$
(195,755
)
$
4,424,828
Cost of products sold (exclusive of lower
of cost or market inventory)
$
3,177,167
$
397,926
$
—
$
(171,326
)
$
3,403,767
Lower of cost or market inventory
valuation adjustment
$
34,062
$
—
$
—
$
—
$
34,062
Operating expenses
$
276,869
$
57,974
$
44,924
$
(34,189
)
$
345,578
Selling, general and administrative
expenses
$
31,707
$
43,875
$
2,714
$
9,330
$
87,626
Depreciation and amortization
$
76,765
$
22,700
$
24,121
$
3,430
$
127,016
Income (loss) from operations
$
350,400
$
15,243
$
64,136
$
(3,000
)
$
426,779
Income (loss) before interest and income
taxes
$
350,400
$
15,325
$
100,778
$
(35,639
)
$
430,864
Net income attributable to noncontrolling
interest
$
—
$
—
$
1,004
$
35,163
$
36,167
Earnings of equity method investments
$
—
$
—
$
1,334
$
—
$
1,334
Capital expenditures
$
53,506
$
8,697
$
6,076
$
6,310
$
74,589
Refining
Lubricants and Specialty
Products
HEP
Corporate, Other and
Eliminations
Consolidated Total
(In thousands)
Nine Months Ended September 30,
2020
Sales and other revenues:
Revenues from external customers
$
6,880,444
$
1,330,021
$
72,410
$
—
$
8,282,875
Intersegment revenues
178,039
8,911
297,982
(484,932
)
—
$
7,058,483
$
1,338,932
$
370,392
$
(484,932
)
$
8,282,875
Cost of products sold (exclusive of lower
of cost or market inventory)
$
6,113,530
$
952,430
$
—
$
(418,000
)
$
6,647,960
Lower of cost or market inventory
valuation adjustment
$
227,711
$
—
$
—
$
—
$
227,711
Operating expenses
$
754,612
$
156,459
$
109,721
$
(56,592
)
$
964,200
Selling, general and administrative
expenses
$
94,677
$
121,654
$
7,569
$
13,659
$
237,559
Depreciation and amortization
$
251,019
$
59,260
$
72,095
$
13,659
$
396,033
Long-lived asset impairment
$
215,242
$
204,708
$
16,958
$
—
$
436,908
Income (loss) from operations
$
(598,308
)
$
(155,579
)
$
164,049
$
(37,658
)
$
(627,496
)
Income (loss) before interest and income
taxes
$
(598,308
)
$
(155,847
)
$
185,593
$
39,043
$
(529,519
)
Net income attributable to noncontrolling
interest
$
—
$
—
$
4,158
$
59,195
$
63,353
Earnings of equity method investments
$
—
$
—
$
5,186
$
—
$
5,186
Capital expenditures
$
106,856
$
20,387
$
38,642
$
47,123
$
213,008
Nine Months Ended September 30,
2019
Sales and other revenues:
Revenues from external customers
$
11,446,841
$
1,568,241
$
89,388
$
220
$
13,104,690
Intersegment revenues
244,799
8,157
311,755
(564,711
)
—
$
11,691,640
$
1,576,398
$
401,143
$
(564,491
)
$
13,104,690
Cost of products sold (exclusive of lower
of cost or market inventory)
$
9,598,539
$
1,202,296
$
—
$
(492,979
)
$
10,307,856
Lower of cost or market inventory
valuation adjustment
$
(150,483
)
$
—
$
—
$
—
$
(150,483
)
Operating expenses
$
794,081
$
170,655
$
123,045
$
(77,359
)
$
1,010,422
Selling, general and administrative
expenses
$
88,322
$
125,681
$
7,322
$
39,652
$
260,977
Depreciation and amortization
$
227,405
$
65,891
$
72,192
$
9,857
$
375,345
Goodwill impairment
$
—
$
152,712
$
—
$
—
$
152,712
Income (loss) from operations
$
1,133,776
$
(140,837
)
$
198,584
$
(43,662
)
$
1,147,861
Income (loss) before interest and income
taxes
$
1,133,776
$
(140,518
)
$
238,910
$
(71,212
)
$
1,160,956
Net income attributable to noncontrolling
interest
$
—
$
—
$
3,524
$
75,976
$
79,500
Earnings of equity method investments
$
—
$
—
$
5,217
$
—
$
5,217
Capital expenditures
$
129,167
$
25,887
$
23,828
$
16,175
$
195,057
Refining
Lubricants and Specialty
Products
HEP
Corporate, Other and
Eliminations
Consolidated Total
(In thousands)
September 30, 2020
Cash and cash equivalents
$
6,085
$
211,646
$
18,091
$
1,289,066
$
1,524,888
Total assets
$
6,197,301
$
1,933,482
$
2,193,770
$
1,255,188
$
11,579,741
Long-term debt
$
—
$
—
$
1,439,874
$
1,736,475
$
3,176,349
December 31, 2019
Cash and cash equivalents
$
9,755
$
169,277
$
13,287
$
692,843
$
885,162
Total assets
$
7,189,094
$
2,223,418
$
2,205,437
$
546,892
$
12,164,841
Long-term debt
$
—
$
—
$
1,462,031
$
993,609
$
2,455,640
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 long-lived asset
impairment charges, 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
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Mid-Continent Region (El Dorado and
Tulsa Refineries)
Crude charge (BPD) (1)
244,200
294,380
234,550
257,590
Refinery throughput (BPD) (2)
257,280
307,720
249,430
272,440
Sales of produced refined products (BPD)
(3)
243,830
290,930
239,800
260,780
Refinery utilization (4)
93.9
%
113.2
%
90.2
%
99.1
%
Average per produced barrel (5)
Refinery gross margin
$
3.21
$
14.61
$
6.41
$
14.55
Refinery operating expenses (6)
5.47
5.05
5.47
5.48
Net operating margin
$
(2.26)
$
9.56
$
0.94
$
9.07
Refinery operating expenses per throughput
barrel (7)
$
5.19
$
4.77
$
5.26
$
5.25
Feedstocks:
Sweet crude oil
62
%
59
%
58
%
56
%
Sour crude oil
18
%
21
%
19
%
23
%
Heavy sour crude oil
15
%
16
%
17
%
16
%
Other feedstocks and blends
5
%
4
%
6
%
5
%
Total
100
%
100
%
100
%
100
%
Sales of produced refined products:
Gasolines
53
%
49
%
52
%
51
%
Diesel fuels
35
%
34
%
34
%
32
%
Jet fuels
3
%
6
%
4
%
7
%
Fuel oil
1
%
1
%
1
%
1
%
Asphalt
2
%
4
%
3
%
3
%
Base oils
4
%
4
%
4
%
4
%
LPG and other
2
%
2
%
2
%
2
%
Total
100
%
100
%
100
%
100
%
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Southwest Region (Navajo Refinery)
(8)
Crude charge (BPD) (1)
96,660
106,860
94,320
107,330
Refinery throughput (BPD) (2)
106,780
117,250
104,570
117,660
Sales of produced refined products (BPD)
(3)
106,350
116,890
107,270
120,760
Refinery utilization (4)
96.7
%
106.9
%
94.3
%
107.3
%
Average per produced barrel (5)
Refinery gross margin
$
9.70
$
18.61
$
11.16
$
19.35
Refinery operating expenses (6)
5.07
5.25
5.17
4.90
Net operating margin
$
4.63
$
13.36
$
5.99
$
14.45
Refinery operating expenses per throughput
barrel (7)
$
5.05
$
5.23
$
5.31
$
5.03
Feedstocks:
Sweet crude oil
25
%
22
%
24
%
21
%
Sour crude oil
66
%
69
%
66
%
70
%
Other feedstocks and blends
9
%
9
%
10
%
9
%
Total
100
%
100
%
100
%
100
%
Sales of produced refined products:
Gasolines
55
%
50
%
54
%
51
%
Diesel fuels
34
%
40
%
36
%
39
%
Fuel oil
2
%
3
%
2
%
3
%
Asphalt
8
%
5
%
6
%
5
%
LPG and other
1
%
2
%
2
%
2
%
Total
100
%
100
%
100
%
100
%
Rocky Mountain Region (Cheyenne and
Woods Cross Refineries) (8)
Crude charge (BPD) (1)
49,720
74,790
63,300
78,530
Refinery throughput (BPD) (2)
57,040
81,830
69,370
85,300
Sales of produced refined products (BPD)
(3)
57,110
77,680
67,070
77,890
Refinery utilization (4)
51.3
%
77.1
%
65.3
%
81.0
%
Average per produced barrel (5)
Refinery gross margin
$
3.39
$
24.97
$
10.63
$
19.73
Refinery operating expenses (6)
15.94
11.95
13.25
11.39
Net operating margin
$
(12.55
)
$
13.02
$
(2.62
)
$
8.34
Refinery operating expenses per throughput
barrel (7)
$
15.96
$
11.34
$
12.81
$
10.40
Feedstocks:
Sweet crude oil
38
%
38
%
36
%
36
%
Heavy sour crude oil
19
%
30
%
33
%
33
%
Black wax crude oil
30
%
23
%
22
%
23
%
Other feedstocks and blends
13
%
9
%
9
%
8
%
Total
100
%
100
%
100
%
100
%
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Rocky Mountain Region (Cheyenne and
Woods Cross Refineries) (8)
Sales of produced refined products:
Gasolines
57
%
54
%
56
%
53
%
Diesel fuels
31
%
32
%
33
%
34
%
Fuel oil
3
%
4
%
3
%
4
%
Asphalt
5
%
5
%
5
%
5
%
LPG and other
4
%
5
%
3
%
4
%
Total
100
%
100
%
100
%
100
%
Consolidated
Crude charge (BPD) (1)
390,580
476,030
392,170
443,450
Refinery throughput (BPD) (2)
421,100
506,800
423,370
475,400
Sales of produced refined products (BPD)
(3)
407,280
485,500
414,140
459,440
Refinery utilization (4)
85.5
%
104.2
%
85.8
%
97.0
%
Average per produced barrel (5)
Refinery gross margin
$
4.93
$
17.23
$
8.33
$
16.69
Refinery operating expenses (6)
6.83
6.20
6.65
6.33
Net operating margin
$
(1.90
)
$
11.03
$
1.68
$
10.36
Refinery operating expenses per throughput
barrel (7)
$
6.61
$
5.94
$
6.50
$
6.12
Feedstocks:
Sweet crude oil
50
%
47
%
46
%
44
%
Sour crude oil
27
%
29
%
27
%
30
%
Heavy sour crude oil
12
%
14
%
16
%
15
%
Black wax crude oil
4
%
4
%
4
%
4
%
Other feedstocks and blends
7
%
6
%
7
%
7
%
Total
100
%
100
%
100
%
100
%
Sales of produced refined products:
Gasolines
54
%
50
%
54
%
51
%
Diesel fuels
34
%
35
%
34
%
35
%
Jet fuels
2
%
4
%
2
%
4
%
Fuel oil
1
%
2
%
1
%
2
%
Asphalt
4
%
4
%
4
%
4
%
Base oils
3
%
2
%
2
%
2
%
LPG and other
2
%
3
%
3
%
2
%
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.
(8)
As previously disclosed, our Cheyenne
Refinery ceased petroleum refining operations in the third quarter
of 2020. Beginning with the fourth quarter of 2020, activities
associated with the conversion of our Cheyenne Refinery to
renewable diesel production will be reported in the Corporate and
Other segment, and the disaggregation of our refining geographic
operating data will be presented in two regions, Mid-Continent and
West, to best reflect the economic drivers of our refining
operations. The Mid-Continent region will continue to be comprised
of our El Dorado and Tulsa Refineries, and the new West region will
be comprised of our Navajo and Woods Cross Refineries.
Lubricants and Specialty Products Segment Operating
Data
We acquired our Sonneborn business on February 1, 2019. For the
nine months ended September 30, 2019 our lubricants and specialty
product operating results reflect the operations of our Sonneborn
business for the period February 1, 2019 through September 30,
2019.
The following table sets forth information about our lubricants
and specialty products operations.
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Lubricants and Specialty
Products
Throughput (BPD)
19,020
23,190
19,050
19,920
Sales of produced products (BPD)
33,560
36,160
32,460
34,740
Sales of produced products:
Finished products
50
%
50
%
51
%
50
%
Base oils
27
%
24
%
24
%
27
%
Other
23
%
26
%
25
%
23
%
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 September 30,
2020
Sales and other revenues
$
110,952
$
423,418
$
(79,328
)
$
455,042
Cost of products sold
$
98,033
$
283,998
$
(79,328
)
$
302,703
Operating expenses
$
25,400
$
29,088
$
—
$
54,488
Selling, general and administrative
expenses
$
5,616
$
31,157
$
—
$
36,773
Depreciation and amortization
$
5,419
$
12,013
$
—
$
17,432
Income (loss) from operations
$
(23,516
)
$
67,162
$
—
$
43,646
Income (loss) before interest and income
taxes
$
(23,516
)
$
66,636
$
—
$
43,120
EBITDA
$
(18,097
)
$
78,649
$
—
$
60,552
Three months ended September 30,
2019
Sales and other revenues
$
196,355
$
477,261
$
(135,898
)
$
537,718
Cost of products sold
$
175,976
$
357,848
$
(135,898
)
$
397,926
Operating expenses
$
27,825
$
30,149
$
—
$
57,974
Selling, general and administrative
expenses
$
5,862
$
38,013
$
—
$
43,875
Depreciation and amortization
$
11,390
$
11,310
$
—
$
22,700
Income (loss) from operations
$
(24,698
)
$
39,941
$
—
$
15,243
Income (loss) before interest and income
taxes
$
(24,698
)
$
40,023
$
—
$
15,325
EBITDA
$
(13,308
)
$
51,333
$
—
$
38,025
Rack Back (1)
Rack Forward (2)
Eliminations (3)
Total Lubricants and Specialty
Products
(In thousands)
Nine months ended September 30,
2020
Sales and other revenues
$
361,638
$
1,241,402
$
(264,108
)
$
1,338,932
Cost of products sold
$
345,843
$
870,695
$
(264,108
)
$
952,430
Operating expenses
$
69,703
$
86,756
$
—
$
156,459
Selling, general and administrative
expenses
$
16,596
$
105,058
$
—
$
121,654
Depreciation and amortization
$
22,163
$
37,097
$
—
$
59,260
Long-lived asset impairment
$
167,017
$
37,691
$
—
$
204,708
Income (loss) from operations
$
(259,684
)
$
104,105
$
—
$
(155,579
)
Income (loss) before interest and income
taxes
$
(259,684
)
$
103,837
$
—
$
(155,847
)
EBITDA
$
(237,521
)
$
140,934
$
—
$
(96,587
)
Nine months ended September 30,
2019
Sales and other revenues
$
486,035
$
1,428,786
$
(338,423
)
$
1,576,398
Cost of products sold
$
453,519
$
1,087,200
$
(338,423
)
$
1,202,296
Operating expenses
$
87,970
$
82,685
$
—
$
170,655
Selling, general and administrative
expenses
$
25,707
$
99,974
$
—
$
125,681
Depreciation and amortization
$
32,991
$
32,900
$
—
$
65,891
Goodwill impairment
$
152,712
$
—
$
—
$
152,712
Income (loss) from operations
$
(266,864
)
$
126,027
$
—
$
(140,837
)
Income (loss) before interest and income
taxes
$
(266,864
)
$
126,346
$
—
$
(140,518
)
EBITDA
$
(233,873
)
$
159,246
$
—
$
(74,627
)
(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.
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 (loss)
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) HollyFrontier's pro-rata share of gain
on business interruption insurance settlement, (iii) long-lived
asset impairment, inclusive of pro-rata share of impairment in HEP
segment, (iv) goodwill impairment, (v) HollyFrontier's pro-rata
share of HEP's gain on sales-type leases, (vi) HollyFrontier's
pro-rata share of HEP's loss on early extinguishment of debt, (vii)
severance costs, (viii) restructuring charges, (ix) Cheyenne
Refinery LIFO inventory liquidation costs, (x) decommissioning
costs, (xi) acquisition integration and regulatory costs, (xii)
incremental cost of products sold attributable to our Sonneborn
inventory value step-up and (xiii) RINs cost reductions.
EBITDA and Adjusted EBITDA are not calculations provided for
under accounting principles generally accepted in the United
States; however, the amounts included in these calculations are
derived from amounts included in our consolidated financial
statements. EBITDA and Adjusted EBITDA should not be considered as
alternatives 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 and Adjusted EBITDA are not
necessarily comparable to similarly titled measures of other
companies. These are presented here because they are widely used
financial indicators used by investors and analysts to measure
performance. EBITDA and Adjusted EBITDA are also used by our
management for internal analysis and as a basis for financial
covenants.
Set forth below is our calculation of EBITDA and adjusted
EBITDA.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
(In thousands)
Net income (loss) attributable to
HollyFrontier stockholders
$
(2,401
)
$
261,813
$
(483,701
)
$
711,783
Add interest expense
30,589
36,027
85,923
106,938
Subtract interest income
(1,011
)
(6,164
)
(6,590
)
(17,127
)
Add (subtract) income tax expense
(benefit)
4,573
103,021
(188,504
)
279,862
Add depreciation and amortization
125,280
127,016
396,033
375,345
EBITDA
$
157,030
$
521,713
$
(196,839
)
$
1,456,801
Add (subtract) lower of cost or market
inventory valuation adjustment
(62,849
)
34,062
227,711
(150,483
)
Subtract HollyFrontier's pro-rata share of
gain on business interruption insurance settlement
(77,143
)
—
(77,143
)
—
Add long-lived asset impairment, inclusive
of pro-rata share of impairment in HEP segment
—
—
429,540
—
Add goodwill impairment
—
—
—
152,712
Subtract HollyFrontier's pro-rata share of
HEP's gain on sales-type leases
—
—
(19,134
)
—
Add HollyFrontier's pro-rata share of
HEP's loss on early extinguishment of debt
—
—
14,656
—
Add severance costs
2,429
—
3,546
—
Add restructuring charges
—
—
3,679
—
Add Cheyenne Refinery LIFO inventory
liquidation costs
33,814
—
33,814
—
Add decommissioning costs
12,309
—
12,309
—
Add acquisition integration and regulatory
costs
48
3,887
1,979
20,076
Add incremental cost of products sold
attributable to Sonneborn inventory value step-up
—
—
—
9,338
Subtract RINs cost reduction
—
(36,580
)
—
(36,580
)
Adjusted EBITDA
$
65,638
$
523,082
$
434,118
$
1,451,864
EBITDA and Adjusted EBITDA attributable to our Refining segment
is presented below:
Three Months Ended
September 30,
Nine Months Ended
September 30,
Refining Segment
2020
2019
2020
2019
(In thousands)
Income (loss) from operations (1)
$
(118,471
)
$
350,400
$
(598,308
)
$
1,133,776
Add depreciation and amortization
79,146
76,765
251,019
227,405
EBITDA
(39,325
)
427,165
(347,289
)
1,361,181
Add (subtract) lower of cost or market
inventory valuation adjustment
(62,849
)
34,062
227,711
(150,483
)
Subtract RINs cost reduction
—
(36,580
)
—
(36,580
)
Add long-lived asset impairment
—
—
215,242
—
Add severance costs
2,429
—
3,546
—
Add restructuring charges
—
—
2,009
—
Add Cheyenne Refinery LIFO inventory
liquidation costs
33,814
—
33,814
—
Add decommissioning costs
12,309
—
12,309
—
Adjusted EBITDA
$
(53,622
)
$
424,647
$
147,342
$
1,174,118
(1) Income from operations of our Refining
segment represents income plus (i) interest expense, net of
interest income and (ii) income tax provision.
EBITDA and Adjusted EBITDA attributable to our Lubricants and
Specialty Products segment is set forth below.
Lubricants and Specialty Products
Segment
Rack Back
Rack Forward
Total Lubricants and Specialty
Products
(In thousands)
Three months ended September 30,
2020
Income (loss) before interest and income
taxes (1)
$
(23,516
)
$
66,636
$
43,120
Add depreciation and amortization
5,419
12,013
17,432
EBITDA
(18,097
)
78,649
60,552
Three months ended September 30,
2019
Income (loss) before interest and income
taxes (1)
$
(24,698
)
$
40,023
$
15,325
Add depreciation and amortization
11,390
11,310
22,700
EBITDA
$
(13,308
)
$
51,333
$
38,025
Nine months ended September 30,
2020
Income (loss) before interest and income
taxes (1)
$
(259,684
)
$
103,837
$
(155,847
)
Add depreciation and amortization
22,163
37,097
59,260
EBITDA
$
(237,521
)
$
140,934
$
(96,587
)
Add long-lived asset impairment
167,017
37,691
204,708
Adjusted EBITDA
$
(70,504
)
$
178,625
$
108,121
Nine months ended September 30,
2019
Income (loss) before interest and income
taxes (1)
$
(266,864
)
$
126,346
$
(140,518
)
Add depreciation and amortization
32,991
32,900
65,891
EBITDA
(233,873
)
159,246
(74,627
)
Add goodwill impairment
152,712
—
152,712
Add incremental cost of products sold
attributable to Sonneborn inventory value step-up
—
9,338
9,338
Adjusted EBITDA
$
(81,161
)
$
168,584
$
87,423
(1) Income (loss) before interest and
income taxes of our Lubricants and Specialty Products segment
represents income (loss) plus (i) interest expense, net of interest
income and (ii) income tax provision.
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 produced barrel sold is total
refining segment revenues less total refining segment cost of
products sold, exclusive of lower of cost or market inventory
valuation adjustments, divided by sales volumes of produced refined
products sold. Net operating margin per barrel sold is the
difference between refinery gross margin and refinery operating
expenses per produced barrel sold. These two margins do not include
the non-cash effects of long-lived asset impairment charges, lower
of cost or market inventory valuation adjustments or 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.
Below are reconciliations to our consolidated statements of
income for refinery net operating and gross margin and operating
expenses, in each case averaged per produced barrel sold. Due to
rounding of reported numbers, some amounts may not calculate
exactly.
Reconciliation of average refining segment
net operating margin per produced barrel sold to refinery gross
margin to total sales and other revenues
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
(Dollars in thousands, except per
barrel amounts)
Consolidated
Net operating margin per produced barrel
sold
$
(1.90
)
$
11.03
$
1.68
$
10.36
Add average refinery operating expenses
per produced barrel sold
6.83
6.20
6.65
6.33
Refinery gross margin per produced barrel
sold
$
4.93
$
17.23
$
8.33
$
16.69
Times produced barrels sold (BPD)
407,280
485,500
414,140
459,440
Times number of days in period
92
92
274
273
Refining segment gross margin
$
184,726
$
769,595
$
945,241
$
2,093,379
Add (subtract) rounding
45
208
(288
)
(278
)
Total refining segment gross margin
184,771
769,803
944,953
2,093,101
Add refining segment cost of products
sold
2,211,342
3,177,167
6,113,530
9,598,539
Refining segment sales and other
revenues
2,396,113
3,946,970
7,058,483
11,691,640
Add lubricants and specialty products
segment sales and other revenues
455,042
537,718
1,338,932
1,576,398
Add HEP segment sales and other
revenues
127,731
135,895
370,392
401,143
Subtract corporate, other and
eliminations
(159,486
)
(195,755
)
(484,932
)
(564,491
)
Sales and other revenues
$
2,819,400
$
4,424,828
$
8,282,875
$
13,104,690
Reconciliation of average refining segment
operating expenses per produced barrel sold to total operating
expenses
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
(Dollars in thousands, except per
barrel amounts)
Consolidated
Average operating expenses per produced
barrel sold
$
6.83
$
6.20
$
6.65
$
6.33
Times produced barrels sold (BPD)
407,280
485,500
414,140
459,440
Times number of days in period
92
92
274
273
Refining segment operating expenses
$
255,918
$
276,929
$
754,604
$
793,954
Add (subtract) rounding
161
(60
)
8
127
Total refining segment operating
expenses
256,079
276,869
754,612
794,081
Add lubricants and specialty products
segment operating expenses
54,488
57,974
156,459
170,655
Add HEP segment operating expenses
40,003
44,924
109,721
123,045
Subtract corporate, other and
eliminations
(18,074
)
(34,189
)
(56,592
)
(77,359
)
Operating expenses (exclusive of
depreciation and amortization)
$
332,496
$
345,578
$
964,200
$
1,010,422
Reconciliation of net income (loss)
attributable to HollyFrontier stockholders to adjusted net income
attributable to HollyFrontier stockholders
Adjusted net income (loss) attributable to HollyFrontier
stockholders is a non-GAAP financial measure that excludes non-cash
lower of cost or market inventory valuation adjustments, gain on
business interruption insurance settlement, long-lived asset and
goodwill impairments, HEP's gain on sales-type leases, HEP's loss
on early extinguishment of debt, severance costs, restructuring
charges, Cheyenne Refinery LIFO inventory liquidation costs,
decommissioning costs, acquisition integration and regulatory
costs, incremental cost of products sold due to Sonneborn inventory
value step-up and RINs cost reductions. We believe this measure is
helpful to investors and others in evaluating our financial
performance and to compare our results to that of other companies
in our industry. Similarly titled performance measures of other
companies may not be calculated in the same manner.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
(In thousands, except per share
amounts)
Consolidated
GAAP:
Income (loss) before income taxes
$
27,918
$
401,001
$
(608,852
)
$
1,071,145
Income tax expense (benefit)
4,573
103,021
(188,504
)
279,862
Net income (loss)
23,345
297,980
(420,348
)
791,283
Less net income attributable to
noncontrolling interest
25,746
36,167
63,353
79,500
Net income (loss) attributable to
HollyFrontier stockholders
(2,401
)
261,813
(483,701
)
711,783
Non-GAAP adjustments to arrive at
adjusted results:
Lower of cost or market inventory
valuation adjustment
(62,849
)
34,062
227,711
(150,483
)
Gain on business interruption insurance
settlement
(81,000
)
—
(81,000
)
—
Long-lived asset and goodwill
impairments
—
—
436,908
152,712
HEP's gain on sales-type leases
—
—
(33,834
)
—
HEP's loss on early extinguishment of
debt
—
—
25,915
—
Severance costs
2,429
—
3,546
—
Restructuring charges
—
—
3,679
—
Cheyenne Refinery LIFO inventory
liquidation costs
33,814
—
33,814
—
Decommissioning costs
12,309
—
12,309
—
Acquisition integration and regulatory
costs
48
3,887
1,979
20,076
Incremental cost of products sold
attributable to Sonneborn inventory value step-up
—
—
—
9,338
RINs cost reduction
—
(36,580
)
—
(36,580
)
Total adjustments to income (loss) before
income taxes
(95,249
)
1,369
631,027
(4,937
)
Adjustment to income tax expense (1)
(26,907
)
(14,818
)
168,497
(36,553
)
Adjustment to net income attributable to
noncontrolling interest
(3,857
)
—
70
—
Total adjustments, net of tax
(64,485
)
16,187
462,460
31,616
Adjusted results - Non-GAAP:
Adjusted income before income taxes
(67,331
)
402,370
22,175
1,066,208
Adjusted income tax expense (2)
(22,334
)
88,203
(20,007
)
243,309
Adjusted net income
(44,997
)
314,167
42,182
822,899
Adjusted net income attributable to
noncontrolling interest
21,889
36,167
63,423
79,500
Adjusted net income (loss) attributable to
HollyFrontier stockholders
$
(66,886
)
$
278,000
$
(21,241
)
$
743,399
Adjusted earnings per share attributable
to HollyFrontier stockholders - diluted (3)
$
(0.41
)
$
1.68
$
(0.13
)
$
4.39
Average number of common shares
outstanding - diluted
162,015
165,011
161,927
169,125
(1) Represents adjustment to GAAP income
tax expense to arrive at adjusted income tax expense, which is
computed as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
(In thousands)
Non-GAAP income tax expense (2)
$
(22,334
)
$
88,203
$
(20,007
)
$
243,309
Subtract GAAP income tax expense
(benefit)
4,573
103,021
(188,504
)
279,862
Non-GAAP adjustment to income tax
expense
$
(26,907
)
$
(14,818
)
$
168,497
$
(36,553
)
(2) Non-GAAP income tax expense is
computed by a) adjusting HFC's consolidated estimated Annual
Effective Tax Rate (“AETR”) for GAAP purposes for the effects of
the above Non-GAAP adjustments b) applying the resulting Adjusted
Non-GAAP AETR to Non-GAAP adjusted income before income taxes and
c) adjusting for discrete tax items applicable to the period.
(3) Adjusted earnings per share
attributable to HollyFrontier stockholders - diluted is calculated
as adjusted net income attributable to HollyFrontier stockholders
divided by the average number of shares of common stock outstanding
assuming dilution.
Reconciliation of effective tax rate to
adjusted effective tax rate
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
(Dollars in thousands)
GAAP:
Income (loss) before income taxes
$
27,918
$
401,001
$
(608,852
)
$
1,071,145
Income tax expense (benefit)
$
4,573
$
103,021
$
(188,504
)
$
279,862
Effective tax rate for GAAP financial
statements
16.4
%
25.7
%
31.0
%
26.1
%
Adjusted - Non-GAAP:
Effect of Non-GAAP adjustments
16.8
%
(3.8
)%
(121.2
)%
(3.3
)%
Effective tax rate for adjusted
results
33.2
%
21.9
%
(90.2
)%
22.8
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201105005240/en/
Richard L. Voliva III, Executive Vice President and Chief
Financial Officer Craig Biery, Vice President, Investor Relations
HollyFrontier Corporation 214-954-6510
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