Net income tumbled for HollyFrontier in 2Q

Refinery operator HollyFrontier Corporation reported second quarter net income fell compared to a year ago but adjusted earnings increased.

The income attributable to HollyFrontier stockholders totaled $196.9 million, or $1.15 per diluted share, for the quarter ended June 30, 2019, compared to $345.5 million, or $1.94 per diluted share, for the quarter ended June 30, 2018.

The company owns and operates a refinery in Tulsa, Oklahoma along with others in El Dorado, Kansas and in Utah and New Mexico.

The second quarter results reflect special items that collectively decreased net income by a total of $175.4 million. These items include a lower of cost or market inventory valuation adjustment that decreased pre-tax earnings by $47.8 million, a goodwill impairment of $152.7 million and Sonneborn acquisition and integration costs of $3.6 million. Excluding these items, net income for the current quarter was $372.3 million ($2.18 per diluted share) compared to $258.9 million ($1.45 per diluted share) for the second quarter of 2018, which excludes certain items that collectively increased earnings by $86.6 million for the three months ended June 30, 2018. Total operating expenses for the quarter were $333.3 million compared to $296.2 million for the second quarter of last year.

HollyFrontier’s President & CEO, George Damiris, commented, “HollyFrontier’s solid second quarter results were driven by strong gasoline and diesel margins across our company. Our healthy free cash flow generation allowed us to return over $245 million in cash to shareholders through regular dividends and share repurchases. With no major planned downtime until late September, we believe our refineries are well positioned for strong operational and financial performance in the third quarter.”

The Refining and Marketing segment reported adjusted EBITDA of $556.1 million compared to $384.8 million for the second quarter of 2018. This increase was primarily driven by higher gasoline and diesel margins across our refining system which resulted in a consolidated refinery gross margin of $19.64 per produced barrel, a 19% increase compared to $16.57 for the second quarter of 2018. Crude oil charge averaged 453,030 barrels per day for the current quarter compared to 463,480 BPD for the second quarter 2018.

Our Lubricants and Specialty Products segment reported adjusted EBITDA of $28.8 million, despite weakness in the base oil market. Rack Forward adjusted EBITDA was $64.2 million for the quarter, driven by improved finished product margins.

Holly Energy Partners, L.P. reported EBITDA of $88.6 million for the second quarter 2019 compared to $81.9 million in the second quarter of 2018.

For the second quarter of 2019, net cash provided by operations totaled $752.7 million. During the period, we declared and paid a dividend of $0.33 per share to shareholders totaling $56.7 million and spent $189.2 million in stock repurchases. At June 30, 2019, our cash and cash equivalents totaled $914.6 million, a $418.5 million increase over cash and cash equivalents of $496.1 million at March 31, 2019. Additionally, our consolidated debt was $2,430.8 million. Our debt, exclusive of HEP debt, which is nonrecourse to HollyFrontier, was $993.1 million at June 30, 2019.

HollyFrontier also announced that its Board of Directors declared a regular quarterly dividend of $0.33 per share. The dividend will be paid on September 4, 2019 to holders of record of common stock on August 22, 2019.

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