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HollyFrontier (HFC) Q3 Earnings Top, Throughput Volumes Rise

Zacks Equity Research

HollyFrontier Corp. HFC reported third-quarter 2019 net income per share (excluding special items) of $1.68, beating the Zacks Consensus Estimate of $1.43. This robust performance stemmed from stronger throughput volumes.

However, the figure is 15.15% lower than the year-ago adjusted earnings of $1.98 due to weak gross margins.

Meanwhile, revenues of $4.42 billion surpassed the Zacks Consensus Estimate of $4.33 billion but declined 7.3% from the third-quarter 2018 sales of $4.77 billion.

Segmental Information

Refining: Adjusted EBITDA — the main contributor to HollyFrontier’s earnings — was $424.6 million. This reflected a 16.28% decrease from the year-ago quarterly income of $507.2 million due to lower product margins, which was down 11% to $17.23 per barrel.

Total refined product sales volumes averaged 485,500 barrels per day (bpd), up 8.4% from 447,770 bpd in the year-ago quarter. Moreover, throughput increased from 470,560 bpd in the year-ago quarter to 506,800 bpd. The same even surpassed the Zacks Consensus Estimate of 484,000 bpd. Meanwhile, capacity utilization was 104.2%, up from 96.7% in third-quarter 2018.

Lubricants and Specialty Products: The segmental EBITDA totalled $38 million, down 10.3% from $42.4 million reported in the year-ago quarter, thanks to the impact of macroeconomic issues on end markets. Product sales averaged 36,160 bpd, increasing from the prior-year level of 31,970 bpd. Further, throughput rose 8.3% year over year to 23,190 bpd in the reported quarter.

HEP: This unit includes HollyFrontier’s 57% interest in Holly Energy Partners L.P. (HEP), a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. Segmental EBITDA was $123.1 million, up 41.65% from $86.9 million in third-quarter 2018. Earnings were boosted by strong revenues from its crude oil pipeline systems located in Wyoming and Utah.

HollyFrontier Corporation Price, Consensus and EPS Surprise

HollyFrontier Corporation Price, Consensus and EPS Surprise

HollyFrontier Corporation price-consensus-eps-surprise-chart | HollyFrontier Corporation Quote

Balance Sheet

U.S. refiner HollyFrontier’s total capital expenditure was $74.5 million in the third quarter. As of Sep 30, the company had approximately $981.9 million in cash and cash equivalents and $2.4 billion in long-term debt, representing a debt-to-capitalization ratio of 27.04%.

The company paid out $54.5 million in dividends during the quarter and bought back shares worth $205 million.

Zacks Rank & Key Picks

HollyFrontier has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Subsea 7 SA, Inc. SUBCY, Phillips 66 PSX and Sunoco LP SUN, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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