HollyFrontier Corp. (NYSE: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.
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. (OTC:SUBCY) , Phillips 66 (NYSE:PSX) and Sunoco LP (NYSE: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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