U.S. Markets closed

HollyFrontier (HFC) Tops Q4 Earnings, Lags Sales Estimates

Zacks Equity Research

HollyFrontier Corp. HFC reported fourth-quarter 2018 net income per share (excluding special items) of $2.25, beating the Zacks Consensus Estimate of $1.99 and also exceeding the year-ago level of $0.70, thanks to improving refining margins. Notably, HollyFrontier's competitors, including Valero Energy Corporation VLO, Marathon Petroleum Corporation MPC and Phillips 66 PSX also topped earnings estimates in their latest quarterly releases.


HollyFrontier generated revenues of $4.3 billion, which missed the consensus mark of $5.9 billion but were ahead of fourth-quarter 2017 sales of $4 billion. 

HollyFrontier Corporation Price, Consensus and EPS Surprise

HollyFrontier Corporation Price, Consensus and EPS Surprise | HollyFrontier Corporation Quote

Segmental Information


Refining: Adjusted EBITDA from the Refining segment, which is the main contributor to HollyFrontier’s earnings, was $583.4 million. This reflected a healthy improvement from the year-ago income of $233.1 million, thanks to wider gross margins, which jumped 76.7% to $22.17 per barrel.


Total refined product sales volumes averaged 443,670 barrels per day (bpd), down 8% from 482,860 bpd in the year-ago quarter amid lower volumes from the Mid-Continent region that accounts for a bulk of the company’s total throughput. Throughput decreased from 497,450 bpd in the year-ago quarter to 440,670 bpd. Meanwhile, capacity utilization was 88.7%, down from 100.9% in fourth-quarter 2017. Planned turnaround at El Dorado facility impacted throughput levels and refinery utilization. 


Lubricants and Specialty Products: The segment recorded a negative EBITDA of $3.9 million against $40.5-million profit reported in the year-ago quarter, owing to continued weakness in base oil market and turnaround activities in the Mississauga plant in the quarterunderreview. Product sales averaged 27,550 bpd, decreasing from the prior-year level of 29,670 bpd. Throughput fell20% year over year to 16,790 bpd in the reported quarter. 


HEP: This unit includes HollyFrontier’s 57% interest in Holly Energy Partners L.P. (HEP), which is a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines, as well as other midstream assets.


Segment EBITDA was $89.9 million, down from $124.6 million in the prior-year period amid lower volumes from the UNEV pipeline and maintenance downtime at Woods Cross during the quarter.  


Balance Sheet


As of Dec 31, 2018, the U.S. refiner had approximately $1.1 billion in cash and cash equivalents, and $2.4 billion in net long-term debt, representing a debt-to-capitalization ratio of 27.3%.


During the quarter, the Zacks Rank #5 (Strong Sell) company paid $57.6 million in dividends and bought back shares worth $185.2 million.


You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Zacks' Top 10 Stocks for 2019


In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year? 


Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.