Holly Energy Partners LP (HEP) Reports 50% Increase in Net Income for Q3 2023
HEP reported a net income of $63.0 million, a 50% increase from Q3 2022
Revenues for Q3 2023 were $158.4 million, a $9.4 million increase from Q3 2022
Distributable cash flow slightly decreased by 0.3% compared to Q3 2022
HEP announced a quarterly distribution of $0.35 per unit
On November 2, 2023, Holly Energy Partners LP (NYSE:HEP) released its financial results for the third quarter of 2023. The company reported a net income attributable to HEP of $63.0 million, marking a significant 50% increase from the $42.0 million reported in the third quarter of 2022. This increase was primarily due to higher revenues associated with tariff increases that took effect on July 1, 2023.
Financial Highlights
HEP's revenues for the third quarter of 2023 were $158.4 million, a $9.4 million increase compared to the third quarter of 2022. This increase was mainly due to tariff increases that went into effect on July 1, 2023, as well as more customer billings recognized as revenue rather than interest income under sales-type lease accounting.
Despite the positive results in net income and revenues, HEP's distributable cash flow was $78.5 million for the third quarter of 2023, a slight decrease of $0.3 million, or 0.3%, compared to the third quarter of 2022. The company declared a quarterly cash distribution of $0.35 per unit on October 19, 2023.
Commentary on Results
Michael Jennings, Chief Executive Officer and President of HEP, commented on the results, stating,
HEP generated solid results during the quarter, supported by safe and reliable operations and strong volumes across our transportation and storage systems. We also announced a quarterly distribution of $0.35 per unit to be paid on November 10, 2023 to unitholders of record on October 30, 2023."
Revenue Breakdown
Revenues from HEP's refined product pipelines were $34.6 million, an increase of $3.2 million compared to the third quarter of 2022. Revenues from intermediate pipelines were $9.1 million, an increase of $1.1 million compared to the third quarter of 2022. Revenues from crude pipelines were $41.4 million, an increase of $3.6 million compared to the third quarter of 2022. Revenues from terminal, tankage and loading rack fees were $48.3 million, an increase of $3.9 million compared to the third quarter of 2022.
Looking Ahead
Despite the minor setback in distributable cash flow, HEP's significant increase in net income and revenues for Q3 2023 demonstrates the company's strong financial performance. The company's ability to generate solid results amidst the challenges of the current economic climate indicates its resilience and potential for continued growth.
Explore the complete 8-K earnings release (here) from Holly Energy Partners LP for further details.
This article first appeared on GuruFocus.
