HollyFrontier Corporation Reports 2020 Fourth Quarter and Full Year Results

  • Reported net loss attributable to HollyFrontier stockholders of $(601.4) million or $(3.72) per diluted share and adjusted net loss of $(139.9) million or $(0.87) per diluted share, for the year
  • Reported EBITDA of $(193.8) million and adjusted EBITDA of $412.2 million, for the year
  • Committed additional $400.0 million toward renewables expansion at Cheyenne and Artesia in 2020

DALLAS--()--HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”) today reported fourth quarter net loss attributable to HollyFrontier stockholders of $(117.7) million or $(0.73) per diluted share for the quarter ended December 31, 2020, compared to net income of $60.6 million or $0.37 per diluted share for the quarter ended December 31, 2019.

The fourth quarter results reflect special items that collectively increased net loss by a total of $0.9 million. On a pre-tax basis, these items include goodwill and long-lived asset impairment charges totaling $108.4 million and charges related to the Cheyenne Refinery conversion to renewable diesel production, including decommissioning charges of $12.4 million, last-in, first-out (“LIFO”) inventory liquidation costs of $3.1 million and severance charges totaling $0.3 million; partially offset by a lower of cost or market inventory valuation adjustment of $149.2 million. Excluding these items, adjusted net loss for the fourth quarter was $(118.6) million ($(0.74) per diluted share) compared to adjusted net income of $78.0 million ($0.48 per diluted share) for the fourth quarter of 2019, which excludes certain items that collectively decreased net income by $17.4 million for the three months ended December 31, 2019.

HollyFrontier’s President & CEO, Michael Jennings, commented, “Despite the challenging environment, HollyFrontier preserved our industry-leading balance sheet thanks to a resilient set of results led by HEP and our Lubricants businesses. Looking forward, we expect demand for transportation fuels will strengthen as COVID-19 vaccines are distributed and the global economy recovers from the pandemic. Our focus for 2021 is on operating safely and reliably while executing our ambitious capital and turnaround plans.”

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 fourth quarter of 2020, demand for transportation fuels remained challenged while lubricants and specialties continued to show strength in the second half of the year due to improvement in industrial and transportation-related markets and increased global demand for base oils.

The Refining segment reported adjusted EBITDA of $(111.5) million compared to $171.6 million for the fourth 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 fourth quarter of 2020 was $4.02 per produced barrel, a 71% decrease compared to $13.66 for the fourth quarter of 2019. Crude oil charge averaged 379,910 barrels per day (“BPD”) for the fourth quarter of 2020 compared to 359,500 BPD for the fourth quarter of 2019.

Our Lubricants and Specialty Products segment reported EBITDA of $(32.7) million, compared to $34.6 million in the fourth quarter of 2019. This decrease was driven by a goodwill impairment charge of $81.9 million related to Sonneborn. Excluding the impairment, our Lubricants and Specialties segment reported adjusted EBITDA of $49.2 million due to strengthening base oil margins in the fourth quarter of 2020.

Holly Energy Partners, L.P. (“HEP”) reported EBITDA of $86.8 million for the fourth quarter of 2020 compared to $87.8 million in the fourth quarter of 2019. Despite lower volumes year over year, HEP delivered strong fourth quarter 2020 earnings which were supported by long-term minimum volume commitment contracts.

For the fourth quarter of 2020, net cash provided by operations totaled $66.9 million. During the period, HollyFrontier declared and paid a dividend of $0.35 per share to shareholders totaling $57.9 million. At December 31, 2020, the Company's cash and cash equivalents totaled $1,368.3 million, a $156.6 million decrease over cash and cash equivalents of $1,524.9 million at September 30, 2020. Additionally, the Company's consolidated debt was $3,142.7 million. The Company's debt, exclusive of HEP debt, which is nonrecourse to HollyFrontier, was $1,737.1 million at December 31, 2020.

The Company has scheduled a webcast conference call for today, February 24, 2021, at 8:30 AM Eastern Time to discuss fourth quarter financial results. This webcast may be accessed at: https://event.on24.com/wcc/r/2950760/AF27087C3232DF9D1112AE68A106191D. An audio archive of this webcast will be available using the above noted link through March 10, 2021.

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 a significant 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; the effects of current and future governmental and environmental regulations and policies, including the effects of current and future 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; continued 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
December 31,

 

Change from 2019

 

2020

 

2019

 

Change

 

Percent

 

(In thousands, except per share data)

Sales and other revenues

$

2,900,768

 

 

$

4,381,888

 

 

$

(1,481,120

)

 

(34

)%

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of products sold:

 

 

 

 

 

 

 

Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

2,510,845

 

 

3,610,528

 

 

(1,099,683

)

 

(30

)

Lower of cost or market inventory valuation adjustment

(149,212

)

 

30,708

 

 

(179,920

)

 

(586

)

 

2,361,633

 

 

3,641,236

 

 

(1,279,603

)

 

(35

)

Operating expenses

336,077

 

 

383,630

 

 

(47,553

)

 

(12

)

Selling, general and administrative expenses

76,041

 

 

93,259

 

 

(17,218

)

 

(18

)

Depreciation and amortization

124,879

 

 

134,580

 

 

(9,701

)

 

(7

)

Goodwill and long-lived asset impairments

108,385

 

 

 

 

108,385

 

 

 

Total operating costs and expenses

3,007,015

 

 

4,252,705

 

 

(1,245,690

)

 

(29

)

Income (loss) from operations

(106,247

)

 

129,183

 

 

(235,430

)

 

(182

)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Earnings of equity method investments

1,461

 

 

(37

)

 

1,498

 

 

(4,049

)

Interest income

1,043

 

 

5,012

 

 

(3,969

)

 

(79

)

Interest expense

(40,604

)

 

(36,383

)

 

(4,221

)

 

12

 

Gain on foreign currency transactions

3,119

 

 

576

 

 

2,543

 

 

441

 

Other, net

3,034

 

 

2,008

 

 

1,026

 

 

51

 

 

(31,947

)

 

(28,824

)

 

(3,123

)

 

11

 

Income (loss) before income taxes

(138,194

)

 

100,359

 

 

(238,553

)

 

(238

)

Income tax expense (benefit)

(43,643

)

 

19,290

 

 

(62,933

)

 

(326

)

Net income (loss)

(94,551

)

 

81,069

 

 

(175,620

)

 

(217

)

Less net income attributable to noncontrolling interest

23,196

 

 

20,464

 

 

2,732

 

 

13

 

Net income (loss) attributable to HollyFrontier stockholders

$

(117,747

)

 

$

60,605

 

 

$

(178,352

)

 

(294

)%

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

Basic

$

(0.73

)

 

$

0.38

 

 

$

(1.11

)

 

(292

)%

Diluted

$

(0.73

)

 

$

0.37

 

 

$

(1.10

)

 

(297

)%

Cash dividends declared per common share

$

0.35

 

 

$

0.35

 

 

$

 

 

%

Average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

162,151

 

 

161,398

 

 

753

 

 

%

Diluted

162,151

 

 

162,898

 

 

(747

)

 

%

 

 

 

 

 

 

 

 

EBITDA

$

3,050

 

 

$

245,846

 

 

$

(242,796

)

 

(99

)%

Adjusted EBITDA

$

(21,898

)

 

$

262,660

 

 

$

(284,558

)

 

(108

)%

 

Years Ended
December 31,

 

Change from 2019

 

2020

 

2019

 

Change

 

Percent

 

(In thousands, except per share data)

Sales and other revenues

$

11,183,643

 

 

$

17,486,578

 

 

$

(6,302,935

)

 

(36

)%

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of products sold:

 

 

 

 

 

 

 

Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

9,158,805

 

 

13,918,384

 

 

(4,759,579

)

 

(34

)

Lower of cost or market inventory valuation adjustment

 

78,499

 

 

(119,775

)

 

198,274

 

 

(166

)

 

9,237,304

 

 

13,798,609

 

 

(4,561,305

)

 

(33

)

Operating expenses

1,300,277

 

 

1,394,052

 

 

(93,775

)

 

(7

)

Selling, general and administrative expenses

313,600

 

 

354,236

 

 

(40,636

)

 

(11

)

Depreciation and amortization

520,912

 

 

509,925

 

 

10,987

 

 

2

 

Goodwill and long-lived asset impairments

545,293

 

 

152,712

 

 

392,581

 

 

257

 

Total operating costs and expenses

11,917,386

 

 

16,209,534

 

 

(4,292,148

)

 

(26

)

Income (loss) from operations

(733,743

)

 

1,277,044

 

 

(2,010,787

)

 

(157

)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Earnings of equity method investments

6,647

 

 

5,180

 

 

1,467

 

 

28

 

Interest income

7,633

 

 

22,139

 

 

(14,506

)

 

(66

)

Interest expense

(126,527

)

 

(143,321

)

 

16,794

 

 

(12

)

Gain on business interruption insurance settlement

81,000

 

 

 

 

81,000

 

 

%

Gain on sales-type lease

33,834

 

 

 

 

33,834

 

 

%

Loss on early extinguishment of debt

(25,915

)

 

 

 

(25,915

)

 

%

Gain on foreign currency transactions

2,201

 

 

5,449

 

 

(3,248

)

 

(60

)

Other, net

7,824

 

 

5,013

 

 

2,811

 

 

56

 

 

(13,303

)

 

(105,540

)

 

92,237

 

 

(87

)

Income (loss) before income taxes

(747,046

)

 

1,171,504

 

 

(1,918,550

)

 

(164

)

Income tax expense (benefit)

(232,147

)

 

299,152

 

 

(531,299

)

 

(178

)

Net income (loss)

(514,899

)

 

872,352

 

 

(1,387,251

)

 

(159

)

Less net income attributable to noncontrolling interest

86,549

 

 

99,964

 

 

(13,415

)

 

(13

)

Net income (loss) attributable to HollyFrontier stockholders

$

(601,448

)

 

$

772,388

 

 

$

(1,373,836

)

 

(178

)%

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

Basic

$

(3.72

)

 

$

4.64

 

 

$

(8.36

)

 

(180

)%

Diluted

$

(3.72

)

 

$

4.61

 

 

$

(8.33

)

 

(181

)%

Cash dividends declared per common share

$

1.40

 

 

$

1.34

 

 

$

0.06

 

 

4

%

Average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

161,983

 

 

166,287

 

 

(4,304

)

 

(3

)%

Diluted

161,983

 

 

167,385

 

 

(5,402

)

 

(3

)%

 

 

 

 

 

 

 

 

EBITDA

$

(193,789

)

 

$

1,702,647

 

 

$

(1,896,436

)

 

(111

)%

Adjusted EBITDA

$

412,220

 

 

$

1,714,524

 

 

$

(1,302,304

)

 

(76

)%

Balance Sheet Data

 

Years Ended December 31,

 

2020

 

2019

 

(In thousands)

Cash and cash equivalents

$

1,368,318

 

$

885,162

Working capital

$

1,935,605

 

$

1,620,261

Total assets

$

11,506,864

 

$

12,164,841

Long-term debt

$

3,142,718

 

$

2,455,640

Total equity

$

5,722,203

 

$

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 represents the operations of our El Dorado, Tulsa, Navajo, 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 geographic regions of the United States. HFC Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma. The Refining segment also included the operations of the Cheyenne Refinery until it permanently ceased petroleum refining operations during the third quarter of 2020.

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 geographic 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 December 31, 2020

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

2,406,214

 

 

$

462,724

 

 

$

25,629

 

 

$

6,201

 

 

$

2,900,768

 

Intersegment revenues

74,492

 

 

1,554

 

 

101,827

 

 

(177,873

)

 

 

 

$

2,480,706

 

 

$

464,278

 

 

$

127,456

 

 

$

(171,672

)

 

$

2,900,768

 

Cost of products sold (exclusive of lower of cost or market inventory adjustment)

$

2,326,150

 

 

$

318,857

 

 

$

 

 

$

(134,162

)

 

$

2,510,845

 

Lower of cost or market inventory valuation adjustment

$

(145,497

)

 

$

 

 

$

 

 

$

(3,715

)

 

$

(149,212

)

Operating expenses

$

233,433

 

 

$

59,609

 

 

$

37,971

 

 

$

5,064

 

 

$

336,077

 

Selling, general and administrative expenses

$

32,621

 

 

$

36,162

 

 

$

2,420

 

 

$

4,838

 

 

$

76,041

 

Depreciation and amortization

$

73,598

 

 

$

21,396

 

 

$

23,350

 

 

$

6,535

 

 

$

124,879

 

Goodwill and long-lived asset impairments

$

26,518

 

 

$

81,867

 

 

$

 

 

$

 

 

$

108,385

 

Income (loss) from operations

$

(66,117

)

 

$

(53,613

)

 

$

63,715

 

 

$

(50,232

)

 

$

(106,247

)

Income (loss) before interest and income taxes

$

(66,117

)

 

$

(54,056

)

 

$

65,428

 

 

$

(43,888

)

 

$

(98,633

)

Net income attributable to noncontrolling interest

$

 

 

$

 

 

$

1,124

 

 

$

22,072

 

 

$

23,196

 

Earnings of equity method investments

$

 

 

$

 

 

$

1,461

 

 

$

 

 

$

1,461

 

Capital expenditures

$

45,870

 

 

$

12,086

 

 

$

20,641

 

 

$

38,555

 

 

$

117,152

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2019

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

3,837,269

 

 

$

512,980

 

 

$

31,639

 

 

$

 

 

$

4,381,888

 

Intersegment revenues

67,879

 

 

3,150

 

 

99,995

 

 

(171,024

)

 

 

 

$

3,905,148

 

 

$

516,130

 

 

$

131,634

 

 

$

(171,024

)

 

$

4,381,888

 

Cost of products sold (exclusive of lower of cost or market inventory adjustment)

$

3,381,967

 

 

$

377,740

 

 

$

 

 

$

(149,179

)

 

$

3,610,528

 

Lower of cost or market inventory valuation adjustment

$

30,708

 

 

$

 

 

$

 

 

$

 

 

$

30,708

 

Operating expenses

$

301,407

 

 

$

60,868

 

 

$

38,951

 

 

$

(17,596

)

 

$

383,630

 

Selling, general and administrative expenses

$

32,196

 

 

$

42,914

 

 

$

2,929

 

 

$

15,220

 

 

$

93,259

 

Depreciation and amortization

$

82,527

 

 

$

22,890

 

 

$

24,514

 

 

$

4,649

 

 

$

134,580

 

Income (loss) from operations

$

76,343

 

 

$

11,718

 

 

$

65,240

 

 

$

(24,118

)

 

$

129,183

 

Income (loss) before interest and income taxes

$

76,343

 

 

$

11,681

 

 

$

65,532

 

 

$

(21,826

)

 

$

131,730

 

Net income attributable to noncontrolling interest

$

 

 

$

 

 

$

1,457

 

 

$

19,007

 

 

$

20,464

 

Earnings of equity method investments

$

 

 

$

 

 

$

(37

)

 

$

 

 

$

(37

)

Capital expenditures

$

69,835

 

 

$

15,110

 

 

$

6,284

 

 

$

7,477

 

 

$

98,706

 

 

 

Refining

 

Lubricants
and Specialty
Products

 

HEP

 

Corporate,
Other and
Eliminations

 

Consolidated
Total

 

(In thousands)

Year Ended December 31, 2020

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

9,286,658

 

 

$

1,792,745

 

 

$

98,039

 

$

6,201

 

 

$

11,183,643

 

Intersegment revenues

252,531

 

 

10,465

 

 

399,809

 

(662,805

)

 

 

 

$

9,539,189

 

 

$

1,803,210

 

 

$

497,848

 

$

(656,604

)

 

$

11,183,643

 

Cost of products sold (exclusive of lower of cost or market inventory adjustment)

$

8,439,680

 

 

$

1,271,287

 

 

$

 

$

(552,162

)

 

$

9,158,805

 

Lower of cost or market inventory valuation adjustment

$

82,214

 

 

$

 

 

$

 

$

(3,715

)

 

$

78,499

 

Operating expenses

$

988,045

 

 

$

216,068

 

 

$

147,692

 

$

(51,528

)

 

$

1,300,277

 

Selling, general and administrative expenses

$

127,298

 

 

$

157,816

 

 

$

9,989

 

$

18,497

 

 

$

313,600

 

Depreciation and amortization

$

324,617

 

 

$

80,656

 

 

$

95,445

 

$

20,194

 

 

$

520,912

 

Goodwill and long-lived asset impairments

$

241,760

 

 

$

286,575

 

 

$

16,958

 

$

 

 

$

545,293

 

Income (loss) from operations

$

(664,425

)

 

$

(209,192

)

 

$

227,764

 

$

(87,890

)

 

$

(733,743

)

Income (loss) before interest and income taxes

$

(664,425

)

 

$

(209,903

)

 

$

251,021

 

$

(4,845

)

 

$

(628,152

)

Net income attributable to noncontrolling interest

$

 

 

$

 

 

$

5,282

 

$

81,267

 

 

$

86,549

 

Earnings of equity method investments

$

 

 

$

 

 

$

6,647

 

$

 

 

$

6,647

 

Capital expenditures

$

152,726

 

 

$

32,473

 

 

$

59,283

 

$

85,678

 

 

$

330,160

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2019

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

15,284,110

 

 

$

2,081,221

 

 

$

121,027

 

$

220

 

 

$

17,486,578

 

Intersegment revenues

312,678

 

 

11,307

 

 

411,750

 

(735,735

)

 

 

 

$

15,596,788

 

 

$

2,092,528

 

 

$

532,777

 

$

(735,515

)

 

$

17,486,578

 

Cost of products sold (exclusive of lower of cost or market inventory adjustment)

$

12,980,506

 

 

$

1,580,036

 

 

$

 

$

(642,158

)

 

$

13,918,384

 

Lower of cost or market inventory valuation adjustment

$

(119,775

)

 

$

 

 

$

 

$

 

 

$

(119,775

)

Operating expenses

$

1,095,488

 

 

$

231,523

 

 

$

161,996

 

$

(94,955

)

 

$

1,394,052

 

Selling, general and administrative expenses

$

120,518

 

 

$

168,595

 

 

$

10,251

 

$

54,872

 

 

$

354,236

 

Depreciation and amortization

$

309,932

 

 

$

88,781

 

 

$

96,706

 

$

14,506

 

 

$

509,925

 

Goodwill impairment

$

 

 

$

152,712

 

 

$

 

$

 

 

$

152,712

 

Income (loss) from operations

$

1,210,119

 

 

$

(129,119

)

 

$

263,824

 

$

(67,780

)

 

$

1,277,044

 

Income (loss) before interest and income taxes

$

1,210,119

 

 

$

(128,837

)

 

$

304,442

 

$

(93,038

)

 

$

1,292,686

 

Net income attributable to noncontrolling interest

$

 

 

$

 

 

$

4,981

 

$

94,983

 

 

$

99,964

 

Earnings of equity method investments

$

 

 

$

 

 

$

5,180

 

$

 

 

$

5,180

 

Capital expenditures

$

199,002

 

 

$

40,997

 

 

$

30,112

 

$

23,652

 

 

$

293,763

 

 

 

Refining

 

Lubricants
and Specialty
Products

 

HEP

Corporate,
Other and
Eliminations

 

Consolidated
Total

 

(In thousands)

December 31, 2020

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

3,106

 

$

163,729

 

$

21,990

 

$

1,179,493

 

$

1,368,318

Total assets

$

6,203,847

 

$

1,864,313

 

$

2,198,478

 

$

1,240,226

 

$

11,506,864

Long-term debt

$

 

$

 

$

1,405,603

 

$

1,737,115

 

$

3,142,718

 

 

 

 

 

 

 

 

 

 

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.

As of December 31, 2020, our refinery operations included the El Dorado, Tulsa, Navajo and Woods Cross Refineries. In the third quarter of 2020, we permanently ceased petroleum refining operations at our Cheyenne Refinery and subsequently began converting certain assets at our Cheyenne Refinery to renewable diesel production. The disaggregation of the Company's refining geographic operating data is 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 the El Dorado and Tulsa Refineries, and the new West region will be comprised of the Navajo and Woods Cross Refineries. All prior period geographic operating data included below has been retrospectively adjusted to reflect the revised regional groupings.

 

 

 

Three Months Ended
December 31,

 

Years Ended
December 31,

 

 

2020

 

2019

 

2020

 

2019

Mid-Continent Region (El Dorado and Tulsa Refineries)

 

 

 

 

 

 

Crude charge (BPD) (1)

 

260,780

 

 

243,400

 

 

241,140

 

 

254,010

 

Refinery throughput (BPD) (2)

 

279,670

 

 

256,790

 

 

257,030

 

 

268,500

 

Sales of produced refined products (BPD) (3)

 

273,710

 

 

254,950

 

 

248,320

 

 

259,310

 

Refinery utilization (4)

 

100.3

%

 

93.6

%

 

92.7

%

 

97.7

%

 

 

 

 

 

 

 

 

 

Average per produced barrel (5)

 

 

 

 

 

 

 

 

Refinery gross margin

 

$

1.93

 

 

$

11.15

 

 

$

5.17

 

 

$

13.71

 

Refinery operating expenses (6)

 

5.42

 

 

6.66

 

 

5.46

 

 

5.77

 

Net operating margin

 

$

(3.49

)

 

$

4.49

 

 

$

(0.29

)

 

$

7.94

 

 

 

 

 

 

 

 

 

 

Refinery operating expenses per throughput barrel (7)

 

$

5.30

 

 

$

6.61

 

 

$

5.27

 

 

$

5.58

 

 

 

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

 

Sweet crude oil

 

59

%

 

54

%

 

58

%

 

55

%

Sour crude oil

 

19

%

 

26

%

 

19

%

 

24

%

Heavy sour crude oil

 

15

%

 

15

%

 

17

%

 

16

%

Other feedstocks and blends

 

7

%

 

5

%

 

6

%

 

5

%

Total

 

100

%

 

100

%

 

100

%

 

100

%

 

 

 

 

 

 

 

 

 

Sales of produced refined products:

 

 

 

 

 

 

 

 

Gasolines

 

54

%

 

53

%

 

52

%

 

51

%

Diesel fuels

 

33

%

 

30

%

 

34

%

 

32

%

Jet fuels

 

4

%

 

6

%

 

4

%

 

7

%

Fuel oil

 

1

%

 

1

%

 

1

%

 

1

%

Asphalt

 

3

%

 

4

%

 

3

%

 

3

%

Base oils

 

4

%

 

3

%

 

4

%

 

4

%

LPG and other

 

1

%

 

3

%

 

2

%

 

2

%

Total

 

100

%

 

100

%

 

100

%

 

100

%

 
 

 

 

Three Months Ended
December 31,

 

Years Ended
December 31,

 

 

2020

 

2019

 

2020

 

2019

West Region (Navajo and Wood Cross Refineries)

 

 

 

 

 

 

 

 

Crude charge (BPD) (1)

 

119,130

 

 

116,100

 

 

124,050

 

 

134,850

 

Refinery throughput (BPD) (2)

 

133,110

 

 

128,983

 

 

138,050

 

 

149,070

 

Sales of produced refined products (BPD) (3)

 

144,280

 

 

143,410

 

 

143,350

 

 

155,060

 

Refinery utilization (4)

 

82.2

%

 

80.1

%

 

85.6

%

 

93.0

%

 

 

 

 

 

 

 

 

 

Average per produced barrel (5)

 

 

 

 

 

 

 

 

Refinery gross margin

 

$

7.98

 

 

$

18.12

 

 

$

10.97

 

 

$

19.62

 

Refinery operating expenses (6)

 

7.31

 

 

7.39

 

 

7.07

 

 

6.69

 

Net operating margin

 

$

0.67

 

 

$

10.73

 

 

$

3.90

 

 

$

12.93

 

 

 

 

 

 

 

 

 

 

Refinery operating expenses per throughput barrel (7)

 

$

7.93

 

 

$

8.22

 

 

$

7.34

 

 

$

6.96

 

 

 

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

 

Sweet crude oil

 

29

%

 

28

%

 

30

%

 

26

%

Sour crude oil

 

48

%

 

49

%

 

49

%

 

52

%

Black wax crude oil

 

12

%

 

13

%

 

11

%

 

12

%

Other feedstocks and blends

 

11

%

 

10

%

 

10

%

 

10

%

Total

 

100

%

 

100

%

 

100

%

 

100

%

 

 

 

 

 

 

 

 

 

Sales of produced refined products:

 

 

 

 

 

 

 

 

Gasolines

 

57

%

 

55

%

 

56

%

 

53

%

Diesel fuels

 

34

%

 

33

%

 

35

%

 

37

%

Fuel oil

 

3

%

 

3

%

 

3

%

 

3

%

Asphalt

 

3

%

 

4

%

 

4

%

 

4

%

LPG and other

 

3

%

 

5

%

 

2

%

 

3

%

Total

 

100

%

 

100

%

 

100

%

 

100

%

Consolidated

 

 

 

 

 

 

 

 

Crude charge (BPD) (1)

 

379,910

 

 

359,500

 

 

365,190

 

 

388,860

 

Refinery throughput (BPD) (2)

 

412,780

 

 

385,773

 

 

395,080

 

 

417,570

 

Sales of produced refined products (BPD) (3)

 

417,990

 

 

398,360

 

 

391,670

 

 

414,370

 

Refinery utilization (4)

 

93.8

%

 

88.8

%

 

90.2

%

 

96.0

%

 

 

 

 

 

 

 

 

 

Average per produced barrel (5)

 

 

 

 

 

 

 

 

Refinery gross margin

 

$

4.02

 

 

$

13.66

 

 

$

7.29

 

 

$

15.92

 

Refinery operating expenses (6)

 

6.07

 

 

6.92

 

 

6.05

 

 

6.12

 

Net operating margin

 

$

(2.05

)

 

$

6.74

 

 

$

1.24

 

 

$

9.80

 

 

 

 

 

 

 

 

 

 

Refinery operating expenses per throughput barrel (7)

 

$

6.15

 

 

$

7.15

 

 

$

6.00

 

 

$

6.07

 

 

 

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

 

Sweet crude oil

 

49

%

 

45

%

 

48

%

 

45

%

Sour crude oil

 

29

%

 

34

%

 

29

%

 

34

%

Heavy sour crude oil

 

10

%

 

10

%

 

11

%

 

10

%

Black wax crude oil

 

4

%

 

4

%

 

4

%

 

4

%

Other feedstocks and blends

 

8

%

 

7

%

 

8

%

 

7

%

Total

 

100

%

 

100

%

 

100

%

 

100

%

Consolidated

 

 

 

 

 

 

 

 

Sales of produced refined products:

 

 

 

 

 

 

 

 

Gasolines

 

55

%

 

53

%

 

54

%

 

52

%

Diesel fuels

 

33

%

 

31

%

 

34

%

 

34

%

Jet fuels

 

3

%

 

4

%

 

3

%

 

4

%

Fuel oil

 

2

%

 

2

%

 

1

%

 

2

%

Asphalt

 

3

%

 

4

%

 

4

%

 

3

%

Base oils

 

2

%

 

2

%

 

2

%

 

2

%

LPG and other

 

2

%

 

4

%

 

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 405,000 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 Mid-Continent and West regions operating expenses, exclusive of long-lived asset impairment charges and depreciation and amortization, divided by sales volumes of refined products produced at our refineries.

(7)

Represents total Mid-Continent and West regions operating expenses, exclusive of long-lived asset impairment charges and depreciation and amortization, divided by refinery throughput.

Lubricants and Specialty Products Segment Operating Data

We acquired our Sonneborn business on February 1, 2019. For the year ended December 31, 2019, our lubricants and specialty product operating results reflect the operations of our Sonneborn business for the period February 1, 2019 through December 31, 2019.

The following table sets forth information about our lubricants and specialty products operations.

 

 

 

Three Months Ended
December 31,

 

Years Ended
December 31,

 

 

2020

 

2019

 

2020

 

2019

Lubricants and Specialty Products

 

 

 

 

 

 

 

 

Throughput (BPD)

 

21,425

 

 

21,229

 

 

19,645

 

 

20,251

 

Sales of produced products (BPD)

 

33,559

 

 

34,392

 

 

32,902

 

 

34,827

 

 

 

 

 

 

 

 

 

 

Sales of produced products:

 

 

 

 

 

 

 

 

Finished products

 

49

%

 

47

%

 

49

%

 

49

%

Base oils

 

28

%

 

25

%

 

26

%

 

27

%

Other

 

23

%

 

28

%

 

25

%

 

24

%

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 December 31, 2020

 

 

 

 

 

 

 

Sales and other revenues

$

143,786

 

 

$

426,407

 

 

$

(105,915

)

 

$

464,278

 

Cost of products sold

$

110,351

 

 

$

314,421

 

 

$

(105,915

)

 

$

318,857

 

Operating expenses

$

26,760

 

 

$

32,849

 

 

$

 

 

$

59,609

 

Selling, general and administrative expenses

$

5,680

 

 

$

30,482

 

 

$

 

 

$

36,162

 

Depreciation and amortization

$

6,908

 

 

$

14,488

 

 

$

 

 

$

21,396

 

Goodwill impairment

$

 

 

$

81,867

 

 

$

 

 

$

81,867

 

Income (loss) from operations

$

(5,913

)

 

$

(47,700

)

 

$

 

 

$

(53,613

)

Income (loss) before interest and income taxes

$

(5,913

)

 

$

(48,143

)

 

$

 

 

$

(54,056

)

EBITDA

$

995

 

 

$

(33,655

)

 

$

 

 

$

(32,660

)

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2019

 

 

 

 

 

 

 

Sales and other revenues

$

175,488

 

 

$

455,134

 

 

$

(114,492

)

 

$

516,130

 

Cost of products sold

$

167,141

 

 

$

325,091

 

 

$

(114,492

)

 

$

377,740

 

Operating expenses

$

29,014

 

 

$

31,854

 

 

$

 

 

$

60,868

 

Selling, general and administrative expenses

$

6,147

 

 

$

36,767

 

 

$

 

 

$

42,914

 

Depreciation and amortization

$

4,010

 

 

$

18,880

 

 

$

 

 

$

22,890

 

Income (loss) from operations

$

(30,824

)

 

$

42,542

 

 

$

 

 

$

11,718

 

Income (loss) before interest and income taxes

$

(30,824

)

 

$

42,505

 

 

$

 

 

$

11,681

 

EBITDA

$

(26,814

)

 

$

61,385

 

 

$

 

 

$

34,571

 

 

 

Rack Back (1)

 

Rack
Forward (2)

 

Eliminations (3)

 

Total
Lubricants and
Specialty
Products

 

(In thousands)

Year Ended December 31, 2020

 

 

 

 

 

 

 

Sales and other revenues

$

505,424

 

 

$

1,667,809

 

$

(370,023

)

 

$

1,803,210

 

Cost of products sold

$

456,194

 

 

$

1,185,116

 

$

(370,023

)

 

$

1,271,287

 

Operating expenses

$

96,463

 

 

$

119,605

 

$

 

 

$

216,068

 

Selling, general and administrative expenses

$

22,276

 

 

$

135,540

 

$

 

 

$

157,816

 

Depreciation and amortization

$

29,071

 

 

$

51,585

 

$

 

 

$

80,656

 

Goodwill and long-lived asset impairments

$

167,017

 

 

$

119,558

 

$

 

 

$

286,575

 

Income (loss) from operations

$

(265,597

)

 

$

56,405

 

$

 

 

$

(209,192

)

Income (loss) before interest and income taxes

$

(265,597

)

 

$

55,694

 

$

 

 

$

(209,903

)

EBITDA

$

(236,526

)

 

$

107,279

 

$

 

 

$

(129,247

)

 

 

 

 

 

 

 

 

Year Ended December 31, 2019

 

 

 

 

 

 

 

Sales and other revenues

$

661,523

 

 

$

1,883,920

 

$

(452,915

)

 

$

2,092,528

 

Cost of products sold

$

620,660

 

 

$

1,412,291

 

$

(452,915

)

 

$

1,580,036

 

Operating expenses

$

116,984

 

 

$

114,539

 

$

 

 

$

231,523

 

Selling, general and administrative expenses

$

31,854

 

 

$

136,741

 

$

 

 

$

168,595

 

Depreciation and amortization

$

37,001

 

 

$

51,780

 

$

 

 

$

88,781

 

Goodwill impairment

$

152,712

 

 

$

 

$

 

 

$

152,712

 

Income (loss) from operations

$

(297,688

)

 

$

168,569

 

$

 

 

$

(129,119

)

Income (loss) before interest and income taxes

$

(297,688

)

 

$

168,851

 

$

 

 

$

(128,837

)

EBITDA

$

(260,687

)

 

$

220,631

 

$

 

 

$

(40,056

)

(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 provision 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 (xiii) RINs cost reductions and (xiv) biodiesel blender's tax credit.

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
December 31,

 

Years Ended
December 31,

 

2020

 

2019

 

2020

 

2019

 

(In thousands)

Net income (loss) attributable to HollyFrontier stockholders

$

(117,747

)

 

$

60,605

 

 

$

(601,448

)

 

$

772,388

 

Add (subtract) income tax expense (benefit)

(43,643

)

 

19,290

 

 

(232,147

)

 

299,152

 

Add interest expense

40,604

 

 

36,383

 

 

126,527

 

 

143,321

 

Subtract interest income

(1,043

)

 

(5,012

)

 

(7,633

)

 

(22,139

)

Add depreciation and amortization

124,879

 

 

134,580

 

 

520,912

 

 

509,925

 

EBITDA

$

3,050

 

 

$

245,846

 

 

$

(193,789

)

 

$

1,702,647

 

Add (subtract) lower of cost or market inventory valuation adjustment

(149,212

)

 

30,708

 

 

78,499

 

 

(119,775

)

Add goodwill impairment

81,867

 

 

 

 

81,867

 

 

152,712

 

Subtract HollyFrontier's pro-rata share of gain on business interruption insurance settlement

 

 

 

 

(77,143

)

 

 

Add long-lived asset impairment, inclusive of pro-rata share of impairment in HEP segment

26,518

 

 

 

 

456,058

 

 

 

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

296

 

 

 

 

3,842

 

 

 

Add restructuring charges

 

 

 

 

3,679

 

 

 

Add Cheyenne Refinery LIFO inventory liquidation costs

3,129

 

 

 

 

36,943

 

 

 

Add decommissioning costs

12,439

 

 

 

 

24,748

 

 

 

Add acquisition integration and regulatory costs

15

 

 

4,118

 

 

1,994

 

 

24,194

 

Add incremental cost of products sold attributable to Sonneborn inventory value step-up

 

 

 

 

 

 

9,338

 

Subtract RINs cost reduction

 

 

 

 

 

 

(36,580

)

Subtract biodiesel blender's tax credit

 

 

(18,012

)

 

 

 

(18,012

)

Adjusted EBITDA

$

(21,898

)

 

$

262,660

 

 

$

412,220

 

 

$

1,714,524

 

EBITDA and Adjusted EBITDA attributable to our Refining segment is presented below:

 

 

Three Months Ended
December 31,

 

Years Ended
December 31,

Refining Segment

2020

 

2019

 

2020

 

2019

 

(In thousands)

Income (loss) from operations (1)

$

(66,117

)

 

$

76,343

 

 

$

(664,425

)

 

$

1,210,119

 

Add depreciation and amortization

73,598

 

 

82,527

 

 

324,617

 

 

309,932

 

EBITDA

$

7,481

 

 

$

158,870

 

 

$

(339,808

)

 

$

1,520,051

 

Add (subtract) lower of cost or market inventory valuation adjustment

(145,497

)

 

30,708

 

 

82,214

 

 

(119,775

)

Add long-lived asset impairment

26,518

 

 

 

 

241,760

 

 

 

Add severance costs

 

 

 

 

3,546

 

 

 

Add restructuring charges

 

 

 

 

2,009

 

 

 

Subtract RINs cost reduction

 

 

 

 

 

 

(36,580

)

Subtract biodiesel blender's tax credit

 

 

(18,012

)

 

 

 

(18,012

)

Add Cheyenne Refinery LIFO inventory liquidation costs

 

 

 

 

33,814

 

 

 

Add decommissioning costs

 

 

 

 

12,309

 

 

 

Adjusted EBITDA

$

(111,498

)

 

$

171,566

 

 

$

35,844

 

 

$

1,345,684

 

(1)

Income (loss) 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 December 31, 2020

 

 

 

 

 

Loss before interest and income taxes (1)

$

(5,913

)

 

$

(48,143

)

 

$

(54,056

)

Add depreciation and amortization

6,908

 

 

14,488

 

 

21,396

 

EBITDA

995

 

 

(33,655

)

 

(32,660

)

Add goodwill impairment

 

 

81,867

 

 

81,867

 

Adjusted EBITDA

$

995

 

 

$

48,212

 

 

$

49,207

 

 

 

 

 

 

 

Three Months Ended December 31, 2019

 

 

 

 

 

Income (loss) before interest and income taxes (1)

$

(30,824

)

 

$

42,505

 

 

$

11,681

 

Add depreciation and amortization

4,010

 

 

18,880

 

 

22,890

 

EBITDA

$

(26,814

)

 

$

61,385

 

 

$

34,571

 

 

 

 

 

 

 

Year Ended December 31, 2020

 

 

 

 

 

Income (loss) before interest and income taxes (1)

$

(265,597

)

 

$

55,694

 

 

$

(209,903

)

Add depreciation and amortization

29,071

 

 

51,585

 

 

80,656

 

EBITDA

(236,526

)

 

107,279

 

 

(129,247

)

Add goodwill and long-lived asset impairments

167,017

 

 

119,558

 

 

286,575

 

Adjusted EBITDA

$

(69,509

)

 

$

226,837

 

 

$

157,328

 

 

 

 

 

 

 

Year Ended December 31, 2019

 

 

 

 

 

Income (loss) before interest and income taxes (1)

$

(297,688

)

 

$

168,851

 

 

$

(128,837

)

Add depreciation and amortization

37,001

 

 

51,780

 

 

88,781

 

EBITDA

(260,687

)

 

220,631

 

 

(40,056

)

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

$

(107,975

)

 

$

229,969

 

 

$

121,994

 

(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
December 31,

 

Years Ended
December 31,

 

2020

2019

 

2020

 

2019

 

(Dollars in thousands, except per barrel amounts)

Consolidated

 

 

 

 

 

 

 

Net operating margin per produced barrel sold

$

(2.05

)

 

$

6.74

 

 

$

1.24

 

 

$

9.80

 

Add average refinery operating expenses per produced barrel sold

6.07

 

 

6.92

 

 

6.05

 

 

6.12

 

Refinery gross margin per produced barrel sold

$

4.02

 

 

$

13.66

 

 

$

7.29

 

 

$

15.92

 

Times produced barrels sold (BPD)

417,990

 

 

398,360

 

 

391,670

 

 

414,370

 

Times number of days in period

92

 

 

92

 

 

366

 

 

365

 

Refining gross margin

$

154,589

 

 

$

500,627

 

 

$

1,045,030

 

 

$

2,407,821

 

Add (subtract) rounding

(33

)

 

41

 

 

523

 

 

215

 

West and Mid-Continent regions gross margin

154,556

 

 

500,668

 

 

1,045,553

 

 

2,408,036

 

Add West and Mid-Continent regions cost of products sold

2,326,150

 

 

3,198,238

 

 

7,992,047

 

 

12,062,661

 

Add Cheyenne Refinery sales and other revenues

 

 

206,242

 

 

501,589

 

 

1,126,091

 

Refining segment sales and other revenues

2,480,706

 

 

3,905,148

 

 

9,539,189

 

 

15,596,788

 

Add lubricants and specialty products segment sales and other revenues

464,278

 

 

516,130

 

 

1,803,210

 

 

2,092,528

 

Add HEP segment sales and other revenues

127,456

 

 

131,634

 

 

497,848

 

 

532,777

 

Subtract corporate, other and eliminations

(171,672

)

 

(171,024

)

 

(656,604

)

 

(735,515

)

Sales and other revenues

$

2,900,768

 

 

$

4,381,888

 

 

$

11,183,643

 

 

$

17,486,578

 

Reconciliation of average refining segment operating expenses per produced barrel sold to total operating expenses

 

 

Three Months Ended
December 31,

 

Years Ended
December 31,

 

2020

 

2019

 

2020

 

2019

 

(Dollars in thousands, except per barrel amounts)

Consolidated

 

 

 

 

 

 

 

Average operating expenses per produced barrel sold

$

6.07

 

$

6.92

 

 

$

6.05

 

 

$

6.12

 

Times produced barrels sold (BPD)

417,990

 

398,360

 

 

391,670

 

 

414,370

 

Times number of days in period

92

 

92

 

 

366

 

 

365

 

Refining operating expenses

$

233,422

 

$

253,612

 

 

$

867,275

 

 

$

925,620

 

Add (subtract) rounding

11

 

88

 

 

(381

)

 

(338

)

West and Mid-Continent regions operating expenses

233,433

 

253,700

 

 

866,894

 

 

925,282

 

Add Cheyenne Refinery operating expenses

 

47,707

 

 

121,151

 

 

170,206

 

Total refining segment operating expenses

233,433

 

301,407

 

 

988,045

 

 

1,095,488

 

Add lubricants and specialty products segment operating expenses

59,609

 

60,868

 

 

216,068

 

 

231,523

 

Add HEP segment operating expenses

37,971

 

38,951

 

 

147,692

 

 

161,996

 

Add (subtract) corporate, other and eliminations

5,064

 

(17,596

)

 

(51,528

)

 

(94,955

)

Operating expenses (exclusive of depreciation and amortization)

$

336,077

 

$

383,630

 

 

$

1,300,277

 

 

$

1,394,052

 

Reconciliation of net income (loss) attributable to HollyFrontier stockholders to adjusted net income (loss) 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, goodwill and long-lived asset impairments, gain on business interruption insurance settlement, 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, RINs cost reductions, biodiesel blender's tax credit, acquisition integration and regulatory costs and incremental cost of products sold due to Sonneborn inventory value step-up. 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
December 31,

 

Years Ended
December 31,

 

2020

 

2019

2020

 

2019

 

(Dollars in thousands, except per share amounts)

Consolidated

 

 

 

 

 

 

 

GAAP:

 

 

 

 

 

 

 

Income (loss) before income taxes

$

(138,194

)

 

$

100,359

 

 

$

(747,046

)

 

$

1,171,504

 

Income tax expense (benefit)

(43,643

)

 

19,290

 

 

(232,147

)

 

299,152

 

Net income (loss)

(94,551

)

 

81,069

 

 

(514,899

)

 

872,352

 

Less net income attributable to noncontrolling interest

23,196

 

 

20,464

 

 

86,549

 

 

99,964

 

Net income (loss) attributable to HollyFrontier stockholders

(117,747

)

 

60,605

 

 

(601,448

)

 

772,388

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments to arrive at adjusted results:

 

 

 

 

 

 

 

Lower of cost or market inventory valuation adjustment

(149,212

)

 

30,708

 

 

78,499

 

 

(119,775

)

Goodwill and long-lived asset impairments

108,385

 

 

 

 

545,293

 

 

152,712

 

Gain on business interruption insurance settlement

 

 

 

 

(81,000

)

 

 

HEP's gain on sales-type lease

 

 

 

 

(33,834

)

 

 

HEP's loss on early extinguishment of debt

 

 

 

 

25,915

 

 

 

Severance costs

296

 

 

 

 

3,842

 

 

 

Restructuring charges

 

 

 

 

3,679

 

 

 

Cheyenne Refinery LIFO inventory liquidation costs

3,129

 

 

 

 

36,943

 

 

 

Decommissioning costs

12,439

 

 

 

 

24,748

 

 

 

RINs cost reduction

 

 

 

 

 

 

(36,580

)

Biodiesel blender's tax credit

 

 

(18,012

)

 

 

 

(18,012

)

Acquisition integration and regulatory costs

15

 

 

4,118

 

 

1,994

 

 

24,194

 

Incremental cost of products sold attributable to Sonneborn inventory value step up

 

 

 

 

 

 

9,338

 

Total adjustments to income (loss) before income taxes

(24,948

)

 

16,814

 

 

606,079

 

 

11,877

 

Adjustment to income tax expense (1)

(24,077

)

 

(566

)

 

144,424

 

 

(37,270

)

Adjustment to net income attributable to noncontrolling interest

 

 

 

 

70

 

 

 

Total adjustments, net of tax

(871

)

 

17,380

 

 

461,585

 

 

49,147

 

 

 

 

 

 

 

 

 

Adjusted results - Non-GAAP:

 

 

 

 

 

 

 

Adjusted income (loss) before income taxes

(163,142

)

 

117,173

 

 

(140,967

)

 

1,183,381

 

Adjusted income tax expense (benefit) (2)

(67,720

)

 

18,724

 

 

(87,723

)

 

261,882

 

Adjusted net income (loss)

(95,422

)

 

98,449

 

 

(53,244

)

 

921,499

 

Less net income attributable to noncontrolling interest

23,196

 

 

20,464

 

 

86,619

 

 

99,964

 

Adjusted net income (loss) attributable to HollyFrontier stockholders

$

(118,618

)

 

$

77,985

 

 

$

(139,863

)

 

$

821,535

 

Adjusted earnings (loss) per share - diluted (3)

$

(0.74

)

 

$

0.48

 

 

$

(0.87

)

 

$

4.90

 

(1)

Represents adjustment to GAAP income tax expense to arrive at adjusted income tax expense, which is computed as follows:

 

Three Months Ended
December 31,

 

Years Ended
December 31,

 

2020

 

2019

 

2020

 

2019

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

Non-GAAP income tax expense (benefit) (2)

$

(67,720

)

 

$

18,724

 

 

$

(87,723

)

 

$

261,882

 

Subtract GAAP income tax expense (benefit)

(43,643

)

 

19,290

 

 

(232,147

)

 

299,152

 

Non-GAAP adjustment to income tax expense

$

(24,077

)

 

$

(566

)

 

$

144,424

 

 

$

(37,270

)

(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 - diluted is calculated as adjusted net income attributable to HollyFrontier stockholders divided by the average number of shares of common stock outstanding assuming dilution, which is based on weighted-average diluted shares outstanding as that used in the GAAP diluted earnings per share calculation. Income allocated to participating securities, if applicable, in the adjusted earnings per share calculation is the same as that used in GAAP diluted earnings per share calculation..

Reconciliation of effective tax rate to adjusted effective tax rate

 

 

Three Months Ended
December 31,

 

Years Ended
December 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

(Dollars in thousands)

GAAP:

 

 

 

 

 

 

 

 

Income before income taxes

 

$

(138,194

)

 

$

100,359

 

 

$

(747,046

)

 

$

1,171,504

 

Income tax expense

 

$

(43,643

)

 

$

19,290

 

 

$

(232,147

)

 

$

299,152

 

Effective tax rate for GAAP financial statements

 

31.6

%

 

19.2

%

 

31.1

%

 

25.5

%

Adjusted - Non-GAAP:

 

 

 

 

 

 

 

 

Effect of Non-GAAP adjustments

 

9.9

%

 

(3.2)

%

 

31.1

%

 

(3.4)

%

Effective tax rate for adjusted results

 

41.5

%

 

16.0

%

 

62.2

%

 

22.1

%

 

Contacts

Richard L. Voliva III, Executive Vice President and Chief Financial Officer
Craig Biery, Vice President, Investor Relations
HollyFrontier Corporation
214-954-6510

Contacts

Richard L. Voliva III, Executive Vice President and Chief Financial Officer
Craig Biery, Vice President, Investor Relations
HollyFrontier Corporation
214-954-6510