- Reported net income attributable to HEP of $42.0 million or
$0.33 per unit
- Announced quarterly distribution of $0.35 per unit
- Reported EBITDA of $66.0 million and Adjusted EBITDA of $110.1
million
Holly Energy Partners, L.P. ("HEP" or the "Partnership") (NYSE:
HEP) today reported financial results for the third quarter of
2022. Net income attributable to HEP for the third quarter of 2022
was $42.0 million ($0.33 per basic and diluted limited partner
unit), compared to $49.2 million ($0.46 per basic and diluted
limited partner unit) for the third quarter of 2021.
Results for the third quarter of 2022 reflect the impact to our
equity in earnings of equity method investments of HEP’s 50% share
of incurred and estimated environmental remediation and recovery
expenses, net of insurance proceeds received to date, associated
with a release of crude oil on the Osage Pipe Line Company, LLC
("Osage") pipeline of $20.3 million. Excluding this impact, net
income attributable to HEP for the third quarter of 2022 was $62.2
million ($0.49 per basic and diluted limited partner unit). The
increase in net income attributable to HEP was mainly due to net
income from Sinclair Transportation Company LLC ("Sinclair
Transportation"), which was acquired on March 14, 2022, partially
offset by higher interest expense and higher operating costs and
expenses.
Distributable cash flow was $78.7 million for the third quarter
of 2022, an increase of $11.9 million, or 17.8%, compared to the
third quarter of 2021. The increase was mainly due to distributable
cash flow related to Sinclair Transportation, partially offset by
higher interest expense. HEP declared a quarterly cash distribution
of $0.35 per unit on October 20, 2022.
Commenting on our 2022 third quarter results, Michael Jennings,
Chief Executive Officer and President, stated, “HEP generated solid
results during the quarter, supported by strong volumes in both our
crude and refined product transportation and storage systems. We
announced a quarterly distribution of $0.35 per unit and remain
committed to our capital allocation strategy.”
“Looking forward, we expect strong performance across our
portfolio, driven by seasonally high refinery utilization
rates.”
Third Quarter 2022 Revenue Highlights
Revenues for the third quarter of 2022 were $149.0 million, an
increase of $26.4 million compared to the third quarter of 2021.
The increase was mainly due to revenues on our recently acquired
Sinclair Transportation assets, higher revenues on our refinery
processing units and rate increases that went into effect on July
1, 2022.
- Revenues from our refined product pipelines were $31.4
million, an increase of $3.9 million compared to the third quarter
of 2021. Shipments averaged 205.7 thousand barrels per day ("mbpd")
compared to 162.3 mbpd for the third quarter of 2021. The revenue
and volume increases were mainly due to higher volumes on our
recently acquired Sinclair Transportation product pipelines, higher
volumes on our UNEV pipeline and rate increases that went into
effect on July 1, 2022. Revenues did not increase in proportion to
volumes due to our recognition of a significant portion of the
Sinclair Transportation refined product pipeline tariffs as
interest income under sales-type lease accounting.
- Revenues from our intermediate pipelines were $8.0
million, an increase of $0.5 million compared to the third quarter
of 2021. Shipments averaged 137.0 mbpd for the third quarter of
2022 compared to 136.4 mbpd for the third quarter of 2021. The
increase in revenue was mainly due to rate increases that went into
effect on July 1, 2022.
- Revenues from our crude pipelines were $37.7 million, an
increase of $5.4 million compared to the third quarter of 2021.
Shipments averaged 639.0 mbpd compared to 408.0 mbpd for the third
quarter of 2021. The increase in volumes was mainly attributable to
our Cushing Connect pipeline, which went into service in September
2021, volumes on our recently acquired Sinclair Transportation
crude pipelines and higher volumes on our crude pipeline systems in
New Mexico and Texas. The increase in revenues was mainly due to
our recently acquired Sinclair Transportation crude pipelines,
higher volumes on our crude pipeline systems in New Mexico and
Texas and rate increases that went into effect on July 1, 2022.
Revenues did not increase in proportion to volumes due to our
recognition of most of the Cushing Connect pipeline tariffs and a
significant portion of Sinclair Transportation crude pipeline
tariffs as interest income under sales-type lease accounting.
- Revenues from terminal, tankage and loading rack fees
were $44.4 million, an increase of $11.1 million compared to the
third quarter of 2021. Refined products and crude oil terminalled
in the facilities averaged 620.9 mbpd compared to 472.2 mbpd for
the third quarter of 2021. The increase in volumes was mainly due
to our recently acquired Sinclair Transportation assets. Revenues
increased mainly due to revenues on our recently acquired Sinclair
Transportation assets and rate increases that went into effect on
July 1, 2022.
- Revenues from refinery processing units were $27.4
million, an increase of $5.5 million compared to the third quarter
of 2021, and throughputs averaged 72.1 mbpd compared to 72.3 mbpd
for the third quarter of 2021. Revenues increased mainly due to
higher natural gas cost recoveries in revenues, higher throughput
at our Woods Cross refinery processing units and rate increases
that went into effect on July 1, 2022.
Nine Months Ended September 30, 2022 Revenue
Highlights
Revenues for the nine months ended September 30, 2022, were
$405.0 million, an increase of $29.0 million compared to the nine
months ended September 30, 2021. The increase was mainly
attributable to revenues on our recently acquired Sinclair
Transportation assets and increased revenues from our UNEV assets,
partially offset by lower revenues on our Cheyenne assets as a
result of the conversion of HF Sinclair's Cheyenne refinery to
renewable diesel production and lower revenues on our product
pipelines servicing HF Sinclair's Navajo refinery. The nine months
ended September 30, 2021 included the recognition of the $10
million termination fee related to the termination of HF Sinclair's
minimum volume commitment on our Cheyenne assets.
- Revenues from our refined product pipelines were $83.7
million, a decrease of $1.0 million compared to the nine months
ended September 30, 2021. Shipments averaged 180.3 mbpd compared to
165.8 mbpd for the nine months ended September 30, 2021. The volume
increase was mainly due to volumes on our recently acquired
Sinclair Transportation assets and higher volumes on our UNEV
pipeline, partially offset by lower volumes on our product
pipelines servicing HF Sinclair's Navajo refinery due to lower
throughput at the refinery. We recognized a significant portion of
the Sinclair Transportation refined product pipeline tariffs as
interest income under sales-type lease accounting.
- Revenues from our intermediate pipelines were $23.0
million, an increase of $0.5 million compared to the nine months
ended September 30, 2021. Shipments averaged 126.6 mbpd compared to
131.9 mbpd for the nine months ended September 30, 2021. The
decrease in volumes was mainly due to lower throughputs on our
intermediate pipelines servicing HF Sinclair's Navajo refinery
while revenue increased due to contractual minimum volume
guarantees and rate increases that went into effect on July 1,
2022.
- Revenues from our crude pipelines were $103.6 million,
an increase of $8.6 million compared to the nine months ended
September 30, 2021. Shipments averaged 594.2 mbpd compared to 393.0
mbpd for the nine months ended September 30, 2021. The increase in
volumes was mainly attributable to our Cushing Connect pipeline,
which went into service in September 2021, volumes on our recently
acquired Sinclair Transportation crude pipelines and higher volumes
on our crude pipeline systems in New Mexico and Texas. The increase
in revenues was mainly due to our recently acquired Sinclair
Transportation crude pipelines and higher volumes on our crude
pipelines in New Mexico and Texas. Revenues did not increase in
proportion to volumes due to our recognition of most of the Cushing
Connect pipeline tariffs and a significant portion of Sinclair
Transportation crude pipeline tariffs as interest income under
sales-type lease accounting.
- Revenues from terminal, tankage and loading rack fees
were $126.0 million, an increase of $17.6 million compared to the
nine months ended September 30, 2021. Refined products and crude
oil terminalled in the facilities averaged 575.2 mbpd compared to
436.9 mbpd for the nine months ended September 30, 2021. Volumes
increased mainly due to volumes on our recently acquired Sinclair
Transportation assets and higher throughputs at HF Sinclair's Tulsa
refinery. Revenues increased mainly due to revenues on our recently
acquired Sinclair Transportation assets, higher butane blending
revenues, and higher revenues on our Tulsa assets. In addition, the
nine months ended September 30, 2021 included the recognition of
the $10 million termination fee related to the termination of HF
Sinclair's minimum volume commitment on our Cheyenne assets as a
result of the conversion of the HF Sinclair Cheyenne refinery to
renewable diesel production.
- Revenues from refinery processing units were $68.7
million, an increase of $3.3 million compared to the nine months
ended September 30, 2021. Throughputs averaged 69.9 mbpd for both
the nine months ended September 30, 2021 and 2022. Revenues
increased mainly due to higher natural gas cost recoveries in
revenues as well as rate increases that went into effect on July 1,
2022.
Operating Costs and Expenses Highlights
Operating costs and expenses were $89.5 million and $244.1
million for the three and nine months ended September 30, 2022,
representing increases of $21.0 million and $25.3 million from the
three and nine months ended September 30, 2021. The increases were
mainly due to operating costs and expenses associated with our
recently acquired Sinclair Transportation assets as well as higher
employee costs, natural gas costs, maintenance costs and materials
and supplies costs, partially offset by lower rentals and leases.
In addition, the nine months ended September 30, 2021 included a
goodwill impairment charge of $11.0 million related to our Cheyenne
reporting unit.
Interest Expense and Interest Income Highlights
Interest expense was $23.0 million and $57.0 million for the
three and nine months ended September 30, 2022, representing
increases of $9.5 million and $16.4 million from the three and nine
months ended September 30, 2021. The increases were mainly due to
our April 2022 issuance of $400 million in aggregate principal
amount of 6.375% senior unsecured notes maturing in April 2027
related to the funding of the cash portion of the Sinclair
Transportation acquisition. In addition, market interest rates
increased on our senior secured revolving credit facility.
Interest income for the three and nine months ended September
30, 2022, totaled $24.2 million and $61.2 million, representing
increases of $17.4 million and $41.2 million compared to the three
and nine months ended September 30, 2021. The increases were mainly
due to higher sales-type lease interest income from our recently
acquired Sinclair Transportation pipelines and terminals and our
Cushing Connect pipeline, which was placed into service at the end
of the third quarter of 2021.
Equity in Earnings of Equity Method Investments
Highlights
Equity in earnings of equity method investments were losses of
$16.3 million and $7.3 million for the three and nine months ended
September 30, 2022, representing decreases of $20.0 million and
$16.1 million compared to the three and nine months ended September
30, 2021. The decreases were mainly due to lower earnings from our
equity method investment in Osage due to HEP’s 50% share of
incurred and estimated environmental remediation and recovery
expenses, net of insurance proceeds received to date, associated
with a release of crude oil that occurred in the third quarter of
2022. Additional insurance recoveries will be recorded as they are
received. Our share of the remaining insurance coverage is $12.5
million. The pipeline resumed operations in the third quarter of
2022 and remediation efforts are underway. The decrease in Osage
was partially offset by equity in earnings from Pioneer Investments
Corp., which was acquired as part of our Sinclair Transportation
acquisition.
We have scheduled a conference call today at 8:30 AM Eastern
Time to discuss financial results. This webcast may be accessed
at:
https://events.q4inc.com/attendee/908108663
An audio archive of this webcast will be available using the
above noted link through November 21, 2022.
About Holly Energy Partners, L.P.
Holly Energy Partners, L.P. ("HEP"), headquartered in Dallas,
Texas, provides petroleum product and crude oil transportation,
terminalling, storage and throughput services to the petroleum
industry, including subsidiaries of HF Sinclair Corporation. HEP,
through its subsidiaries and joint ventures, owns and/or operates
petroleum product and crude pipelines, tankage and terminals in
Colorado, Idaho, Iowa, Kansas, Missouri, Nevada, New Mexico,
Oklahoma, Texas, Utah, Washington, and Wyoming, as well as refinery
processing units in Kansas and Utah.
HF Sinclair Corporation, headquartered in Dallas, Texas, is an
independent energy company that produces and markets high value
light products such as gasoline, diesel fuel, jet fuel, renewable
diesel and other specialty products. HF Sinclair owns and operates
refineries located in Kansas, Oklahoma, New Mexico, Washington,
Wyoming 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. HF Sinclair
supplies high-quality fuels to more than 1,300 Sinclair branded
stations and licenses the use of the Sinclair brand at more than
300 additional locations throughout the country. In addition,
subsidiaries of HF Sinclair produce and market base oils and other
specialized lubricants in the U.S., Canada and the Netherlands, and
exports products to more than 80 countries. Through its
subsidiaries, HF Sinclair produces renewable diesel at two of its
facilities in Wyoming and also at its facility in Artesia, New
Mexico. HF Sinclair also owns a 47% limited partner interest and a
non-economic general partner interest in Holly Energy Partners,
L.P.
This press release contains various “forward-looking statements”
within the meaning of the federal securities laws. These
forward-looking statements are identified as any statement that
does not relate strictly to historical or current facts. When used
in this press release, words such as “anticipate,” “project,”
“expect,” “will,” “plan,” “goal,” “forecast,” “strategy,” “intend,”
“should,” “would,” “could,” “believe,” “may,” and similar
expressions and statements regarding our plans and objectives for
future operations are intended to identify forward-looking
statements. These forward-looking statements are based on our
beliefs and assumptions and those of our general partner 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 (the “SEC”).
Although we and our general partner believe that such expectations
reflected in such forward-looking statements are reasonable,
neither we nor our general partner can give assurance that our
expectations will prove to be correct. All statements concerning
our expectations for future results of operations are based on
forecasts for our existing operations and do not include the
potential impact of any future acquisitions. Our forward-looking
statements are subject to a variety of risks, uncertainties and
assumptions. If one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect, our
actual results may vary materially from those anticipated,
estimated, projected or expected. Certain factors could cause
actual results to differ materially from results anticipated in the
forward-looking statements. These factors include, but are not
limited to:
- HF Sinclair’s and HEP’s ability to successfully integrate the
Sinclair Oil Corporation (now known as Sinclair Oil LLC) and
Sinclair Transportation businesses acquired from The Sinclair
Companies (now known as REH Company) (collectively, the “Sinclair
Transactions”), with its existing operations and fully realize the
expected synergies of the Sinclair Transactions or on the expected
timeline;
- the demand for and supply of crude oil and refined products,
including uncertainty regarding the effects of the continuing
COVID-19 pandemic on future demand and increasing societal
expectations that companies address climate change;
- risks and uncertainties with respect to the actual quantities
of petroleum products and crude oil shipped on our pipelines and/or
terminalled, stored or throughput in our terminals and refinery
processing units;
- the economic viability of HF Sinclair, our other customers and
our joint ventures’ other customers, including any refusal or
inability of our or our joint ventures’ customers or counterparties
to perform their obligations under their contracts;
- the demand for refined petroleum products in the markets we
serve;
- our ability to purchase and integrate future acquired
operations;
- our ability to complete previously announced or contemplated
acquisitions;
- the availability and cost of additional debt and equity
financing;
- the possibility of temporary or permanent reductions in
production or shutdowns at refineries utilizing our pipelines,
terminal facilities and refinery processing units, due to reasons
such as infection in the workforce, in response to reductions in
demand, accidents, unexpected leaks or spills, unscheduled
shutdowns, weather events, civil unrest, expropriation of assets,
and other economic, diplomatic, legislative, or political events or
developments, terrorism, cyberattacks, or other catastrophes or
disruptions affecting our operations, terminal facilities,
machinery, pipelines and other logistics assets, equipment, or
information systems, or any of the foregoing of our suppliers,
customers, or third-party providers or lower gross margins due to
the economic impact of the COVID-19 pandemic, inflation and labor
costs, and any potential asset impairments resulting from, or the
failure to have adequate insurance coverage for or receive
insurance recoveries from, such actions;
- the effects of current and future government regulations and
policies, including the effects of current and future restrictions
on various commercial and economic activities in response to the
COVID-19 pandemic and increases in interest rates;
- delay by government authorities in issuing permits necessary
for our business or our capital projects;
- our and our joint venture partners' ability to complete and
maintain operational efficiency in carrying out routine operations
and capital construction projects;
- the possibility of terrorist or cyberattacks and the
consequences of any such attacks;
- uncertainty regarding the effects and duration of global
hostilities, including the Russia-Ukraine war, and any associated
military campaigns which may disrupt crude oil supplies and markets
for refined products and create instability in the financial
markets that could restrict our ability to raise capital;
- general economic conditions, including uncertainty regarding
the timing, pace and extent of an economic recovery in the United
States;
- the impact of recent or proposed changes in the tax laws and
regulations that affect master limited partnerships; and
- other financial, operational and legal risks and uncertainties
detailed from time to time in our SEC 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 (Unaudited)
Income, Distributable Cash Flow and Volumes The following
tables present income, distributable cash flow and volume
information for the three and nine months ended September 30, 2022
and 2021.
Three Months Ended September
30,
Change from
2022
2021
2021
(In thousands, except per unit
data)
Revenues
Pipelines:
Affiliates – refined product pipelines
$
24,731
$
18,702
$
6,029
Affiliates – intermediate pipelines
7,988
7,537
451
Affiliates – crude pipelines
23,169
19,536
3,633
55,888
45,775
10,113
Third parties – refined product
pipelines
6,694
8,799
(2,105
)
Third parties – crude pipelines
14,565
12,780
1,785
77,147
67,354
9,793
Terminals, tanks and loading racks:
Affiliates
39,557
29,436
10,121
Third parties
4,875
3,881
994
44,432
33,317
11,115
Refinery processing units - Affiliates
27,423
21,913
5,510
Total revenues
149,002
122,584
26,418
Operating costs and expenses
Operations
60,470
42,793
17,677
Depreciation and amortization
25,236
21,826
3,410
General and administrative
3,751
3,849
(98
)
89,457
68,468
20,989
Operating income
59,545
54,116
5,429
Equity in earnings of equity method
investments
(16,334
)
3,689
(20,023
)
Interest expense, including
amortization
(22,965
)
(13,417
)
(9,548
)
Interest income
24,234
6,835
17,399
Gain on sale of assets and other
494
77
417
(14,571
)
(2,816
)
(11,755
)
Income before income taxes
44,974
51,300
(6,326
)
State income tax expense
(38
)
4
(42
)
Net income
44,936
51,304
(6,368
)
Allocation of net income attributable to
noncontrolling interests
(2,985
)
(2,144
)
(841
)
Net income attributable to Holly Energy
Partners
$
41,951
$
49,160
$
(7,209
)
Limited partners’ earnings per unit –
basic and diluted
$
0.33
$
0.46
$
(0.13
)
Weighted average limited partners’
units outstanding
126,440
105,440
21,000
EBITDA(1)
$
65,956
$
77,564
$
(11,608
)
Adjusted EBITDA(1)
$
110,092
$
83,270
$
26,822
Distributable cash flow(2)
$
78,731
$
66,810
$
11,921
Volumes (bpd)
Pipelines:
Affiliates – refined product pipelines
167,618
115,507
52,111
Affiliates – intermediate pipelines
137,049
136,398
651
Affiliates – crude pipelines
507,419
271,717
235,702
812,086
523,622
288,464
Third parties – refined product
pipelines
38,040
46,834
(8,794
)
Third parties – crude pipelines
131,622
136,247
(4,625
)
981,748
706,703
275,045
Terminals and loading racks:
Affiliates
583,089
419,665
163,424
Third parties
37,782
52,541
(14,759
)
620,871
472,206
148,665
Refinery processing units - Affiliates
72,065
72,297
(232
)
Total for pipelines and terminal assets
(bpd)
1,674,684
1,251,206
423,478
Nine Months Ended September
30,
Change from
2022
2021
2021
(In thousands, except per unit
data)
Revenues
Pipelines:
Affiliates – refined product pipelines
$
62,511
$
56,520
$
5,991
Affiliates – intermediate pipelines
23,015
22,564
451
Affiliates – crude pipelines
62,417
58,241
4,176
147,943
137,325
10,618
Third parties – refined product
pipelines
21,169
28,188
(7,019
)
Third parties – crude pipelines
41,134
36,667
4,467
210,246
202,180
8,066
Terminals, tanks and loading racks:
Affiliates
108,997
95,431
13,566
Third parties
17,008
12,955
4,053
126,005
108,386
17,619
Refinery processing units - Affiliates
68,719
65,436
3,283
Total revenues
404,970
376,002
28,968
Operating costs and expenses
Operations
156,994
126,226
30,768
Depreciation and amortization
74,397
71,894
2,503
General and administrative
12,745
9,664
3,081
Goodwill impairment
—
11,034
(11,034
)
244,136
218,818
25,318
Operating income
160,834
157,184
3,650
Equity in earnings of equity method
investments
(7,261
)
8,875
(16,136
)
Interest expense, including
amortization
(56,951
)
(40,595
)
(16,356
)
Interest income
61,212
19,997
41,215
Gain on sales-type leases
—
24,677
(24,677
)
Other income (loss)
640
5,994
(5,354
)
(2,360
)
18,948
(21,308
)
Income before income taxes
158,474
176,132
(17,658
)
State income tax expense
(83
)
(60
)
(23
)
Net income
158,391
176,072
(17,681
)
Allocation of net income attributable to
noncontrolling interests
(10,089
)
(6,770
)
(3,319
)
Net income attributable to Holly Energy
Partners
$
148,302
$
169,302
$
(21,000
)
Limited partners’ earnings per
unit—basic and diluted
$
1.22
$
1.60
$
(0.38
)
Weighted average limited partners’
units outstanding
120,902
105,440
15,462
EBITDA(1)
$
218,521
$
261,854
$
(43,333
)
Adjusted EBITDA(1)
$
299,673
$
259,466
$
40,207
Distributable cash flow(2)
$
221,643
$
206,707
$
14,936
Volumes (bpd)
Pipelines:
Affiliates – refined product pipelines
138,608
118,033
20,575
Affiliates – intermediate pipelines
126,550
131,873
(5,323
)
Affiliates – crude pipelines
460,641
261,117
199,524
725,799
511,023
214,776
Third parties – refined product
pipelines
41,646
47,805
(6,159
)
Third parties – crude pipelines
133,598
131,842
1,756
901,043
690,670
210,373
Terminals and loading racks:
Affiliates
534,305
386,400
147,905
Third parties
40,923
50,542
(9,619
)
575,228
436,942
138,286
Refinery processing units - Affiliates
69,903
69,904
(1
)
Total for pipelines and terminal assets
(bpd)
1,546,174
1,197,516
348,658
(1)
Earnings before interest, taxes,
depreciation and amortization (“EBITDA”) is calculated as net
income attributable to Holly Energy Partners, L.P. ("Holly Energy
Partners") plus (i) interest expense, net of interest income, (ii)
state income tax expense and (iii) depreciation and amortization.
Adjusted EBITDA is calculated as EBITDA plus (i) goodwill
impairment, (ii) acquisition integration and regulatory costs,
(iii) our share of Osage environmental remediation expenses
included in equity in earnings of equity method investments and
(iv) tariffs and fees not included in revenues due to impacts from
lease accounting for certain tariffs and fees minus (v) gain on
sales-type leases, (vi) gain on significant asset sales and (vii)
pipeline lease payments not included in operating costs and
expenses. Portions of our minimum guaranteed pipeline and terminal
tariffs and fees for assets subject to sales-type lease accounting
are recorded as interest income with the remaining amounts recorded
as a reduction in net investment in leases. Similarly, certain
pipeline lease payments were previously recorded as operating costs
and expenses, but the underlying lease was reclassified from an
operating lease to a financing lease, and these payments are now
recorded as interest expense and reductions in the lease liability.
EBITDA and Adjusted EBITDA are not calculations based upon
generally accepted accounting principles ("GAAP"). However, the
amounts included in the EBITDA and Adjusted EBITDA calculations are
derived from amounts included in our consolidated financial
statements. EBITDA and Adjusted EBITDA should not be considered as
alternatives to net income attributable to Holly Energy Partners or
operating income, as indications of our operating performance or as
alternatives to operating cash flow as a measure of liquidity.
EBITDA and Adjusted EBITDA are not necessarily comparable to
similarly titled measures of other companies. EBITDA and Adjusted
EBITDA 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 compliance with financial
covenants.
Set forth below is our calculation of
EBITDA and Adjusted EBITDA.
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
(In thousands)
Net income attributable to Holly Energy
Partners
$
41,951
$
49,160
$
148,302
$
169,302
Add (subtract):
Interest expense
22,965
13,417
56,951
40,595
Interest income
(24,234
)
(6,835
)
(61,212
)
(19,997
)
State income tax expense
38
(4
)
83
60
Depreciation and amortization
25,236
21,826
74,397
71,894
EBITDA
65,956
77,564
218,521
261,854
Gain on sales-type leases
—
—
—
(24,677
)
Gain on significant asset sales
—
—
—
(5,263
)
Goodwill impairment
—
—
—
11,034
Share of Osage environmental remediation
costs
20,297
—
20,297
—
Acquisition integration and regulatory
costs
373
—
2,095
—
Tariffs and fees not included in
revenues
25,072
7,312
63,579
21,337
Lease payments not included in operating
costs
(1,606
)
(1,606
)
(4,819
)
(4,819
)
Adjusted EBITDA
$
110,092
$
83,270
$
299,673
$
259,466
(2)
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 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. Distributable cash
flow is not necessarily comparable to similarly titled measures of
other companies. Distributable cash flow is presented here because
it is a widely accepted financial indicator used by investors to
compare partnership performance. It is also used by management for
internal analysis and our performance units. We believe that this
measure provides investors an enhanced perspective of the operating
performance of our assets and the cash our business is
generating.
Set forth below is our calculation of
distributable cash flow.
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
(In thousands)
Net income attributable to Holly Energy
Partners
$
41,951
$
49,160
$
148,302
$
169,302
Add (subtract):
Depreciation and amortization
25,236
21,826
74,397
71,894
Amortization of discount and deferred debt
charges
1,060
763
2,863
2,992
Customer billings greater (less) than net
income recognized
(587
)
(122
)
34
(301
)
Maintenance capital expenditures(3)
(4,679
)
(3,351
)
(15,262
)
(8,834
)
Increase (decrease) in environmental
liability
5,364
271
5,120
36
Share of Osage insurance coverage
12,500
—
12,500
—
Decrease in reimbursable deferred
revenue
(3,538
)
(2,991
)
(10,127
)
(10,507
)
Gain on sales-type leases
—
—
—
(24,677
)
Gain on significant asset sales
—
—
—
(5,263
)
Goodwill impairment
—
—
—
11,034
Other
1,424
1,254
3,816
1,031
Distributable cash flow
$
78,731
$
66,810
$
221,643
$
206,707
(3)
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, safety and to address
environmental regulations.
Set forth below is certain balance sheet
data.
September 30,
December 31,
2022
2021
(In thousands)
Balance Sheet Data
Cash and cash equivalents
$
15,551
$
14,381
Working capital
$
20,570
$
17,461
Total assets
$
2,764,971
$
2,165,867
Long-term debt
$
1,593,797
$
1,333,049
Partners' equity
$
835,178
$
443,017
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221107005377/en/
John Harrison, Senior Vice President, Chief Financial Officer
and Treasurer Craig Biery, Vice President, Investor Relations Holly
Energy Partners, L.P. 214-954-6511
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