Delaware (State or other jurisdiction of incorporation) | 001-32225 (Commission File Number) | 20-0833098 (I.R.S. Employer Identification Number) |
2828 N. Harwood, Suite 1300 Dallas, Texas (Address of principal executive offices) | 75201 (Zip code) |
99.1 | — Press Release of the Partnership issued February 21, 2013 announcing fourth quarter of 2012 results.* |
99.1 | — Press Release of the Partnership issued February 21, 2013 announcing fourth quarter of 2012 results.* |
Earnings Release February 21, 2013 |
• | Revenues from our refined product pipelines were $30.6 million, an increase of $6.7 million primarily due to increased refined pipeline shipments, revenues attributable to UNEV, annual tariff increases and an increase of $1.8 million in previously deferred revenue realized. Shipments averaged 182.3 thousand barrels per day (“mbpd”) compared to 163.5 mbpd for the fourth quarter of 2011. |
• | Revenues from our intermediate pipelines were $7.5 million, an increase of $1.2 million primarily due to increased shipments on our intermediate lines serving the Navajo refinery and an increase of $0.3 million in previously deferred revenue realized. Shipments averaged 115.8 mbpd compared to 128.4 mbpd for the fourth quarter of 2011. The overall volume decrease was attributable to a scheduled refinery turnaround that reduced volumes on our Tulsa interconnect pipelines. |
• | Revenues from our crude pipelines were $12.0 million, a decrease of $5.2 million, on shipments averaging 174.4 mbpd compared to 174.2 mbpd for the fourth quarter of 2011. Revenues in 2011 included $5.5 million attributable to a crude oil pipeline settlement with HollyFrontier in October 2011. |
• | Revenues from terminal, tankage and loading rack fees were $31.3 million, an increase of $9.7 million compared to the fourth quarter of 2011. This includes $7.2 million of increased throughput revenues attributable to our assets acquired in November 2011 that serve HollyFrontier's El Dorado and Cheyenne refineries. Refined products terminalled in our facilities increased to an average of 343.3 mbpd compared to 300.8 mbpd for the fourth quarter of 2011. |
• | Revenues from our refined product pipelines were $105.2 million, an increase of $20.3 million primarily due to increased refined pipeline shipments, revenues attributable to UNEV and annual tariff increases partially offset by the effects of a $5.4 million decrease in previously deferred revenue realized. Shipments averaged 170.7 mbpd compared to 143.1 mbpd for the year ended December 31, 2011. |
• | Revenues from our intermediate pipelines were $28.5 million, an increase of $6.6 million, on shipments averaging 127.2 mbpd compared to 93.4 mbpd for the year ended December 31, 2011. This includes $3.4 million of increased revenues attributable to our Tulsa interconnect pipelines and the effects of a $0.8 million increase in previously deferred revenue realized. |
• | Revenues from our crude pipelines were $45.9 million, a decrease of $1.7 million, on shipments averaging 171.0 mbpd compared to 161.8 mbpd for the year ended December 31, 2011. The decrease in revenues was due to the crude oil pipeline settlement of $5.5 million with HollyFrontier in 2011. |
• | Revenues from terminal, tankage and loading rack fees were $112.9 million, an increase of $53.0 million compared to the year ended December 31, 2011. This includes $45.4 million of increased throughput revenues attributable to our terminal, tankage and loading racks serving HollyFrontier's El Dorado and Cheyenne refineries. Refined products terminalled in our facilities increased to an average of 325.0 mbpd compared to 238.1 mbpd for the year ended December 31, 2011. |
• | risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored and throughput in our terminals; |
• | the economic viability of HollyFrontier Corporation, Alon USA, Inc. and our other customers; |
• | the demand for refined petroleum products in markets we serve; |
• | our ability to successfully purchase and integrate additional operations in the future; |
• | our ability to complete previously announced or contemplated acquisitions; |
• | the availability and cost of additional debt and equity financing; |
• | the possibility of reductions in production or shutdowns at refineries utilizing our pipeline and terminal facilities; |
• | the effects of current and future government regulations and policies; |
• | our operational efficiency in carrying out routine operations and capital construction projects; |
• | the possibility of terrorist attacks and the consequences of any such attacks; |
• | general economic conditions; and |
• | other financial, operations and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings. |
Three Months Ended December 31, | Change from | ||||||||||
2012 | 2011 (1) | 2011 | |||||||||
(In thousands, except per unit data) | |||||||||||
Revenues | |||||||||||
Pipelines: | |||||||||||
Affiliates – refined product pipelines | $ | 20,955 | $ | 13,280 | $ | 7,675 | |||||
Affiliates – intermediate pipelines | 7,463 | 6,310 | 1,153 | ||||||||
Affiliates – crude pipelines | 12,044 | 17,245 | (5,201 | ) | |||||||
40,462 | 36,835 | 3,627 | |||||||||
Third parties – refined product pipelines | 9,658 | 10,628 | (970 | ) | |||||||
50,120 | 47,463 | 2,657 | |||||||||
Terminals, tanks and loading racks: | |||||||||||
Affiliates | 28,700 | 19,341 | 9,359 | ||||||||
Third parties | 2,612 | 2,283 | 329 | ||||||||
31,312 | 21,624 | 9,688 | |||||||||
Total revenues | 81,432 | 69,087 | 12,345 | ||||||||
Operating costs and expenses: | |||||||||||
Operations | 24,129 | 20,200 | 3,929 | ||||||||
Depreciation and amortization | 14,660 | 10,554 | 4,106 | ||||||||
General and administrative | 1,669 | 1,628 | 41 | ||||||||
40,458 | 32,382 | 8,076 | |||||||||
Operating income | 40,974 | 36,705 | 4,269 | ||||||||
Equity in earnings of SLC Pipeline | 862 | 704 | 158 | ||||||||
Interest expense, including amortization | (12,914 | ) | (9,858 | ) | (3,056 | ) | |||||
Other income | 10 | 9 | 1 | ||||||||
(12,042 | ) | (9,145 | ) | (2,897 | ) | ||||||
Income before income taxes | 28,932 | 27,560 | 1,372 | ||||||||
State income tax expense | (83 | ) | (65 | ) | (18 | ) | |||||
Net income | 28,849 | 27,495 | 1,354 | ||||||||
Allocation of net loss attributable to Predecessors(1) | - | 2,836 | (2,836 | ) | |||||||
Allocation of net loss (income) attributable to noncontrolling interests | (1,810 | ) | 563 | (2,373 | ) | ||||||
Net income attributable to Holly Energy Partners | 27,039 | 30,894 | (3,855 | ) | |||||||
General partner interest in net income, including incentive distributions(3) | 5,777 | 5,429 | 348 | ||||||||
Limited partners’ interest in net income | $ | 21,262 | $ | 25,465 | $ | (4,203 | ) | ||||
Limited partners’ earnings per unit – basic and diluted:(2)(3) | $ | 0.37 | $ | 0.51 | $ | (0.14 | ) | ||||
Weighted average limited partners’ units outstanding(2) | 56,782 | 50,217 | 6,565 | ||||||||
EBITDA(4) | $ | 54,696 | $ | 49,728 | $ | 4,968 | |||||
Distributable cash flow(5) | $ | 41,618 | $ | 32,371 | $ | 9,247 |
Volumes (bpd) | ||||||||
Pipelines: | ||||||||
Affiliates – refined product pipelines | 116,637 | 98,528 | 18,109 | |||||
Affiliates – intermediate pipelines | 115,843 | 128,437 | (12,594 | ) | ||||
Affiliates – crude pipelines | 174,368 | 174,226 | 142 | |||||
406,848 | 401,191 | 5,657 | ||||||
Third parties – refined product pipelines | 65,688 | 64,986 | 702 | |||||
472,536 | 466,177 | 6,359 | ||||||
Terminals and loading racks: | ||||||||
Affiliates | 288,203 | 249,365 | 38,838 | |||||
Third parties | 55,057 | 51,434 | 3,623 | |||||
343,260 | 300,799 | 42,461 | ||||||
Total for pipelines and terminal assets (bpd) | 815,796 | 766,976 | 48,820 |
Year Ended December 31, | Change from | ||||||||||
2012 | 2011(1) | 2011 | |||||||||
(In thousands, except per unit data) | |||||||||||
Revenues | |||||||||||
Pipelines: | |||||||||||
Affiliates – refined product pipelines | $ | 67,682 | $ | 46,649 | $ | 21,033 | |||||
Affiliates – intermediate pipelines | 28,540 | 21,948 | 6,592 | ||||||||
Affiliates – crude pipelines | 45,888 | 47,542 | (1,654 | ) | |||||||
142,110 | 116,139 | 25,971 | |||||||||
Third parties – refined product pipelines | 37,521 | 38,216 | (695 | ) | |||||||
179,631 | 154,355 | 25,276 | |||||||||
Terminals, tanks and loading racks: | |||||||||||
Affiliates | 103,472 | 52,122 | 51,350 | ||||||||
Third parties | 9,457 | 7,791 | 1,666 | ||||||||
112,929 | 59,913 | 53,016 | |||||||||
Total revenues | 292,560 | 214,268 | 78,292 | ||||||||
Operating costs and expenses: | |||||||||||
Operations | 89,242 | 64,521 | 24,721 | ||||||||
Depreciation and amortization | 57,461 | 36,958 | 20,503 | ||||||||
General and administrative | 7,594 | 6,576 | 1,018 | ||||||||
154,297 | 108,055 | 46,242 | |||||||||
Operating income | 138,263 | 106,213 | 32,050 | ||||||||
Equity in earnings of SLC Pipeline | 3,364 | 2,552 | 812 | ||||||||
Interest expense, including amortization | (47,182 | ) | (35,959 | ) | (11,223 | ) | |||||
Loss on early extinguishment of debt | (2,979 | ) | — | (2,979 | ) | ||||||
Other expense | 10 | 17 | (7 | ) | |||||||
(46,787 | ) | (33,390 | ) | (13,397 | ) | ||||||
Income before income taxes | 91,476 | 72,823 | 18,653 | ||||||||
State income tax expense | (371 | ) | (234 | ) | (137 | ) | |||||
Net income | 91,105 | 72,589 | 18,516 | ||||||||
Allocation of net loss attributable to Predecessors(1) | 4,200 | 6,351 | (2,151 | ) | |||||||
Allocation of net loss attributable to noncontrolling interests | (1,153 | ) | 859 | (2,012 | ) | ||||||
Net income attributable to Holly Energy Partners | 94,152 | 79,799 | 14,353 | ||||||||
General partner interest in net income, including incentive distributions(3) | (22,450 | ) | (16,806 | ) | (5,644 | ) | |||||
Limited partners’ interest in net income | $ | 71,702 | $ | 62,993 | $ | 8,709 | |||||
Limited partners’ earnings per unit – basic and diluted:(2)(3) | $ | 1.29 | $ | 1.38 | $ | (0.09 | ) | ||||
Weighted average limited partners’ units outstanding(2) | 55,696 | 45,672 | 10,024 | ||||||||
EBITDA(4) | $ | 194,242 | $ | 149,766 | $ | 44,476 | |||||
Distributable cash flow(5) | $ | 153,125 | $ | 100,295 | $ | 52,830 |
Volumes (bpd) | ||||||||
Pipelines: | ||||||||
Affiliates – refined product pipelines | 107,509 | 90,782 | 16,727 | |||||
Affiliates – intermediate pipelines | 127,169 | 93,419 | 33,750 | |||||
Affiliates – crude pipelines | 171,040 | 161,789 | 9,251 | |||||
405,718 | 345,990 | 59,728 | ||||||
Third parties – refined product pipelines | 63,152 | 52,361 | 10,791 | |||||
468,870 | 398,351 | 70,519 | ||||||
Terminals and loading racks: | ||||||||
Affiliates | 271,549 | 193,645 | 77,904 | |||||
Third parties | 53,456 | 44,454 | 9,002 | |||||
325,005 | 238,099 | 86,906 | ||||||
Total for pipelines and terminal assets (bpd) | 793,875 | 636,450 | 157,425 |
(1) | We are a consolidated variable interest entity and under common control of HollyFrontier. With respect to the July 2012 acquisition of HollyFrontier's 75% interest in UNEV, U.S. generally accepted accounting principles (“GAAP”) require that our financial statements reflect the historical operations of the assets recognized by |
(2) | A two-for-one unit split, payable in the form of a common unit distribution for each outstanding common unit, was paid on January 16, 2013 to all unitholders of record on January 7, 2013. All references to unit and per unit amounts in this earnings release have been adjusted to reflect the effect of the unit split for all periods presented. |
(3) | Net income attributable to Holly Energy Partners is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. Net income allocated to the general partner includes incentive distributions declared subsequent to quarter end. General partner incentive distributions were $5.3 million and $4.9 million for the three months ended December 31, 2012 and 2011, respectively, and $21.0 million and $15.5 million for the years ended December 31, 2012 and 2011, respectively. Net income attributable to the limited partners is divided by the weighted average limited partner units outstanding in computing the limited partners’ per unit interest in net income. |
(4) | Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to Holly Energy Partners plus (i) interest expense, net of interest income, (ii) state income tax and (iii) depreciation and amortization (excluding Predecessor amounts). EBITDA is not a calculation based upon GAAP. However, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income attributable to Holly Energy Partners or operating income, as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA also is used by our management for internal analysis and as a basis for compliance with financial covenants. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands) | |||||||||||||||
Net income attributable to Holly Energy Partners | $ | 27,039 | $ | 30,894 | $ | 94,152 | $ | 79,799 | |||||||
Add (subtract): | |||||||||||||||
Interest expense | 11,111 | 9,508 | 40,141 | 34,706 | |||||||||||
Amortization of discount and deferred debt charges | 530 | 309 | 1,946 | 1,212 | |||||||||||
Loss on early extinguishment of debt | — | — | 2,979 | — | |||||||||||
Increase in interest expense – non-cash charges attributable to interest rate swaps and swap settlement costs | 1,273 | 41 | 5,095 | 41 | |||||||||||
State income tax | 83 | 65 | 371 | 234 | |||||||||||
Depreciation and amortization | 14,660 | 10,554 | 57,461 | 36,958 | |||||||||||
Predecessor depreciation and amortization | — | (1,643 | ) | (7,903 | ) | (3,184 | ) | ||||||||
EBITDA | $ | 54,696 | $ | 49,728 | $ | 194,242 | $ | 149,766 |
(5) | Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts presented in our consolidated financial statements, with the general exception of maintenance capital expenditures. Distributable cash flow should not be considered in isolation or as an |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands) | |||||||||||||||
Net income attributable to Holly Energy Partners | $ | 27,039 | $ | 30,894 | $ | 94,152 | $ | 79,799 | |||||||
Add (subtract): | |||||||||||||||
Depreciation and amortization | 14,660 | 10,554 | 57,461 | 36,958 | |||||||||||
Predecessor depreciation and amortization | — | (1,643 | ) | (7,903 | ) | (3,184 | ) | ||||||||
Amortization of discount and deferred debt charges | 530 | 309 | 1,946 | 1,212 | |||||||||||
Increase in interest expense - non-cash charges attributable to interest rate swaps and swap settlement costs | 1,273 | 41 | 5,095 | 41 | |||||||||||
Loss on early extinguishment of debt | — | 2,979 | — | ||||||||||||
Billed crude revenue settlement | 918 | (4,588 | ) | 3,670 | (4,588 | ) | |||||||||
Increase (decrease) in deferred revenue | (1,271 | ) | (2,488 | ) | 462 | (6,405 | ) | ||||||||
Maintenance capital expenditures* | (1,763 | ) | (1,829 | ) | (5,649 | ) | (5,415 | ) | |||||||
Other non-cash adjustments | 232 | 1,121 | 912 | 1,877 | |||||||||||
Distributable cash flow | $ | 41,618 | $ | 32,371 | $ | 153,125 | $ | 100,295 |
* | Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, and safety and to address environmental regulations. |
December 31, | December 31, | ||||||
2012 | 2011 (7) | ||||||
(In thousands) | |||||||
Balance Sheet Data | |||||||
Cash and cash equivalents | $ | 5,237 | $ | 6,369 | |||
Working capital | $ | 11,826 | $ | 6,601 | |||
Total assets | $ | 1,394,110 | $ | 1,399,196 | |||
Long-term debt | $ | 864,674 | $ | 605,888 | |||
Partners' equity(6)(7) | $ | 352,653 | $ | 638,676 |
(6) | As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to Holly Energy Partners because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to Holly Energy Partners. Additionally, if the assets contributed and acquired from HollyFrontier while we were a consolidated variable interest entity of HollyFrontier had been acquired from third parties, our acquisition cost in excess of HollyFrontier’s basis in the transferred assets of $320.1 million would have been recorded as increases to our properties and equipment and intangible assets instead of decreases to partners’ equity. |
(7) | December 31, 2011 amounts have been recast as if UNEV had been under our control at December 31, 2011. The impact on partners' equity from this recast was an increase of $314 million at December 31, 2011. Accounting rules for transactions between companies under common control require pre-acquisition periods to reflect HFC's historic basis in transferred assets and liabilities, notwithstanding how the transaction is ultimately financed. With the close of the UNEV acquisition in July 2012, we adjusted partners' equity to reflect the actual financing of the transaction. This included cash consideration of approximately $260.9 million which was financed through long-term borrowings. The reduction in partners' equity when comparing the reported periods is due principally to the recast accounting treatment. |