February 24, 2016 - 6:30 AM EST
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HollyFrontier Corporation Reports Quarterly Net Income

HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”) today reported a fourth quarter net loss attributable to HollyFrontier stockholders of $43.9 million or $(0.24) per diluted share for the quarter ended December 31, 2015, compared to a net loss of $222.2 million or $(1.13) per diluted share for the quarter ended December 31, 2014. Included in the current quarter results was a non-cash inventory valuation charge that decreased after-tax earnings by $88.0 million or $0.48 per share compared to $244.0 million or $1.25 per share for the quarter ended December 31, 2014. Excluding this inventory valuation charge, after-tax earnings were $44.1 million, or $0.24 per share compared to $21.8 million, or $0.12 per share for the quarter ended December 31, 2014.

Net income attributable to our stockholders (exclusive of fourth quarter 2015 and 2014 inventory valuation charges) increased by $22.3 million for the quarter compared to the same period of 2014. This increase principally reflects lower operating costs and increased sales volumes, partially offset by a decrease in refining margins. For the fourth quarter, crude oil charges averaged 407,000 barrels per day ("BPD") and production levels averaged approximately 421,000 BPD. On a per barrel basis, consolidated refinery gross margin was $9.91 per produced barrel compared to $10.76 for the fourth quarter of 2014. Total operating expenses for the quarter were $285.2 million compared to $318.4 million for the fourth quarter of last year.

HollyFrontier’s President & CEO, George Damiris, commented, “We have begun to see the benefits from the successful execution of our business improvement plan in our 2015 results. For the year, our reliability and process safety initiatives drove our refinery utilization rate to 97.6%, the highest level achieved since our merger and a 6% increase compared to our 2014 utilization rate of 91.7%. Additionally, improved operational reliability, our cost management initiative and lower natural gas costs contributed to a 7% reduction in operating expenses compared to 2014. Strong operational performance, improved realized margins and lower operating costs drove a 74% increase in earnings per share compared to 2014 (exclusive of inventory valuation charges).”

For the fourth quarter of 2015, net cash provided by operations totaled $76.3 million. During the period, we declared a regular dividend of $0.33 per share to shareholders totaling approximately $60.1 million and spent $261.1 million on stock repurchases. At December 31, 2015, our combined balance of cash and short-term investments totaled $210.6 million, and our consolidated debt was $1.0 billion. Our debt, exclusive of Holly Energy Partners' debt which is nonrecourse to HollyFrontier, was $31.3 million at December 31, 2015. We had no cash borrowings or outstanding principal under the HollyFrontier credit facility during the quarter.

The Company has scheduled a webcast conference call for today, February 24, 2016, at 8:30 AM Eastern Time to discuss fourth quarter financial results. This webcast may be accessed at: https://event.webcasts.com/starthere.jsp?ei=1089438. An audio archive of this webcast will be available using the above noted link through March 9, 2016.

HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high-value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier operates through its subsidiaries a 135,000 barrels per stream day (“BPSD”) refinery located in El Dorado, Kansas, two refinery facilities with a combined capacity of 125,000 BPSD located in Tulsa, Oklahoma, a 100,000 BPSD refinery located in Artesia, New Mexico, a 52,000 BPSD refinery located in Cheyenne, Wyoming and a 31,000 BPSD refinery in Woods Cross, Utah. HollyFrontier markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. A subsidiary of HollyFrontier also owns a 39% interest (including the general partner interest) in Holly Energy Partners, L.P.

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are “forward-looking statements” based on management’s beliefs and assumptions 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. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Any differences could be caused by a number of factors, including, but not limited to, risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in the Company’s markets, the demand for and supply of crude oil and refined products, the spread between market prices for refined products and market prices for crude oil, the possibility of constraints on the transportation of refined products, the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, effects of governmental and environmental regulations and policies, the availability and cost of financing to the Company, the effectiveness of the Company’s capital investments and marketing strategies, the Company’s efficiency in carrying out construction projects, the ability of the Company to acquire refined product operations or pipeline and terminal operations on acceptable terms and to integrate any future acquired operations, the possibility of terrorist attacks and the consequences of any such attacks, general economic conditions and other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission 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

Financial Data (all information in this release is unaudited)

         

Three Months Ended
December 31,

Change from 2014
2015     2014 Change     Percent
(In thousands, except per share data)
Sales and other revenues $ 2,943,559 $ 4,283,119 $ (1,339,560 ) (31 )%
Operating costs and expenses:
Cost of products sold:
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) 2,446,511 3,789,026 (1,342,515 ) (35 )
Lower of cost or market inventory adjustment   143,554     397,478     (253,924 ) (64 )
2,590,065 4,186,504 (1,596,439 ) (38 )
Operating expenses 285,214 318,363 (33,149 ) (10 )
General and administrative expenses 34,414 32,172 2,242 7
Depreciation and amortization   90,572     100,498     (9,926 ) (10 )
Total operating costs and expenses   3,000,265     4,637,537     (1,637,272 ) (35 )
Loss from operations (56,706 ) (354,418 ) 297,712 (84 )
Other income (expense):
Earnings of equity method investments 2,169 949 1,220 129
Interest income 988 837 151 18
Interest expense (11,657 ) (10,125 ) (1,532 ) 15
Gain on sale of assets and other   535     1,422     (887 ) (62 )
  (7,965 )   (6,917 )   (1,048 ) 15
Loss before income taxes (64,671 ) (361,335 ) 296,664 (82 )
Income tax benefit   (40,724 )   (150,990 )   110,266   (73 )
Net loss (23,947 ) (210,345 ) 186,398 (89 )
Less net income attributable to noncontrolling interest   19,974     11,859     8,115   68
Net loss attributable to HollyFrontier stockholders $ (43,921 ) $ (222,204 ) $ 178,283   (80 )%
Loss per share attributable to HollyFrontier stockholders:
Basic $ (0.24 ) $ (1.13 ) $ 0.89   (79 )%
Diluted $ (0.24 ) $ (1.13 ) $ 0.89   (79 )%
Cash dividends declared per common share $ 0.33   $ 0.82   $ (0.49 ) (60 )%
Average number of common shares outstanding:
Basic 181,460 195,310 (13,850 ) (7 )%
Diluted 181,460 195,310 (13,850 ) (7 )%
EBITDA $ 16,596 $ (263,408 ) $ 280,004 106 %
 
             

Years Ended
December 31,

Change from 2014
2015     2014 Change Percent
(In thousands, except per share data)
Sales and other revenues $ 13,237,920 $ 19,764,327

$

(6,526,407

)

(33

)%

Operating costs and expenses:
Cost of products sold:
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) 10,239,218 17,228,385 (6,989,167 ) (41 )
Lower of cost or market inventory adjustment   226,979     397,478     (170,499 ) (43 )
10,466,197 17,625,863 (7,159,666 ) (41 )
Operating expenses 1,060,373 1,144,940 (84,567 ) (7 )
General and administrative expenses 120,846 114,609 6,237 5
Depreciation and amortization   346,151     363,381     (17,230 ) (5 )
Total operating costs and expenses   11,993,567     19,248,793     (7,255,226 ) (38 )
Income from operations 1,244,353 515,534 728,819 141
Other income (expense):
Loss of equity method investments (3,738 ) (2,007 ) (1,731 ) 86
Interest income 3,391 4,430 (1,039 ) (23 )
Interest expense (43,470 ) (43,646 ) 176
Loss on early extinguishment of debt (1,370 )

(7,677

)

6,307 (82 )
Gain on sale of assets and other   9,402     866     8,536   986
  (35,785 )   (48,034 )   12,249   (26 )
Income before income taxes 1,208,568 467,500 741,068 159
Income tax provision   406,060     141,172     264,888   188
Net income 802,508 326,328 476,180 146
Less net income attributable to noncontrolling interest   62,407     45,036     17,371   39
Net income attributable to HollyFrontier stockholders $ 740,101   $ 281,292   $ 458,809   163 %
Earnings per share attributable to HollyFrontier stockholders:
Basic $ 3.91   $ 1.42   $ 2.49   175 %
Diluted $ 3.90   $ 1.42   $ 2.48   175 %
Cash dividends declared per common share $ 1.31   $ 3.26   $ (1.95 ) (60 )%
Average number of common shares outstanding:
Basic 188,731 197,243 (8,512 ) (4 )%
Diluted 188,940 197,428 (8,488 ) (4 )%
EBITDA $ 1,533,761 $ 832,738 $ 701,023 84 %
 
   

Balance Sheet Data

 
December 31,
2015     2014
(In thousands)
Cash, cash equivalents and investments in marketable securities $ 210,552 $ 1,042,095
Working capital $ 587,450 $ 1,549,004
Total assets $ 8,388,299 $ 9,230,047
Long-term debt $ 1,040,040 $ 1,054,297
Total equity $ 5,809,773 $ 6,100,719
 
 

Segment Information

Our operations are organized into two reportable segments, Refining and HEP. Our operations that are not included in the Refining and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Consolidations and Eliminations. The Refining segment includes the operations of our El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross refineries and HFC Asphalt (aggregated as a reportable segment). Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. Additionally, the Refining Segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America. HFC Asphalt operates various terminals in Arizona, New Mexico and Oklahoma.

The HEP segment involves all of the operations of HEP, a consolidated variable interest entity, which owns and operates logistics assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery process units in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. The HEP segment also includes a 75% interest in UNEV Pipeline (an HEP consolidated subsidiary) and 50% and 25% ownership interests in Frontier Pipeline and SLC Pipeline, respectively. Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations. Due to certain basis differences, our reported amounts for the HEP segment may not agree to amounts reported in HEP's periodic public filings.

    Refining     HEP    

Corporate
and Other

   

Consolidations
and
Eliminations

   

Consolidated
Total

(In thousands)
Three Months Ended December 31, 2015
Sales and other revenues $ 2,924,218 $ 97,251 $ 190 $ (78,100 ) $ 2,943,559
Depreciation and amortization $ 71,113 $ 16,367 $ 3,299 $ (207 ) $ 90,572
Income (loss) from operations $ (73,149 ) $ 53,032 $ (36,020 ) $ (569 ) $ (56,706 )
Capital expenditures $ 187,392 $ 11,716 $ 3,150 $ $ 202,258
 
Three Months Ended December 31, 2014
Sales and other revenues $ 4,266,178 $ 88,449 $ 301 $ (71,809 ) $ 4,283,119
Depreciation and amortization $ 83,381 $ 14,809 $ 2,515 $ (207 ) $ 100,498
Income (loss) from operations $ (344,449 ) $ 38,783 $ (48,204 ) $ (548 ) $ (354,418 )
Capital expenditures $ 164,189 $ 29,053 $ 2,446 $ $ 195,688
 
Year Ended December 31, 2015
Sales and other revenues $ 13,171,183 $ 358,875 $ 663 $ (292,801 ) $ 13,237,920
Depreciation and amortization $ 273,799 $ 61,236 $ 11,944 $ (828 ) $ 346,151
Income (loss) from operations $ 1,187,875 $ 181,778 $ (123,004 ) $ (2,296 ) $ 1,244,353
Capital expenditures $ 567,616 $ 94,516 $ 14,023 $ $ 676,155
 
Year Ended December 31, 2014
Sales and other revenues $ 19,706,225 $ 332,626 $ 2,103 $ (276,627 ) $ 19,764,327
Depreciation and amortization $ 293,871 $ 60,548 $ 9,790 $ (828 ) $ 363,381
Income (loss) from operations $ 491,106 $ 156,453 $ (129,874 ) $ (2,151 ) $ 515,534
Capital expenditures $ 435,598 $ 109,693 $ 19,530 $ $ 564,821
 
December 31, 2015
Cash, cash equivalents and investments in marketable securities $ 91 $ 15,013 $ 195,448 $ $ 210,552
Total assets $ 6,840,545 $ 1,569,089 $ 289,225 $ (310,560 ) $ 8,388,299
Long-term debt $ $ 1,008,752 $ 31,288 $ $ 1,040,040
 
December 31, 2014
Cash, cash equivalents and investments in marketable securities $ 88 $ 2,830 $ 1,039,177 $ $ 1,042,095
Total assets $ 6,927,126 $ 1,472,098 $ 1,150,865 $ (320,042 ) $ 9,230,047
Long-term debt $ $ 866,986 $ 187,311 $ $ 1,054,297
 
 

Refining Operating Data

The following tables set forth information, including non-GAAP performance measures about our refinery operations. The cost of products and refinery gross and net operating margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.

   

Three Months Ended
December 31,

     

Years Ended
December 31,

2015     2014 2015     2014
Mid-Continent Region (El Dorado and Tulsa Refineries)
Crude charge (BPD) (1) 238,280 200,060 263,340 243,240
Refinery throughput (BPD) (2) 250,080 211,460 277,260 255,020
Refinery production (BPD) (3) 240,010 202,310 266,170 249,350
Sales of produced refined products (BPD) 238,240 213,200 258,420 245,600
Sales of refined products (BPD) (4) 308,110 270,790 295,470 273,630
Refinery utilization (5) 91.6 % 76.9 % 101.3 % 93.6 %
 
Average per produced barrel (6)
Net sales $ 62.38 $ 95.88 $ 72.33 $ 110.79
Cost of products (7)   52.30     87.83     56.88     98.39  
Refinery gross margin (8) 10.08 8.05 15.45 12.40
Refinery operating expenses (9)   5.82     6.99     4.95     5.73  
Net operating margin (8) $ 4.26   $ 1.06   $ 10.50   $ 6.67  
 
Refinery operating expenses per throughput barrel (10) $ 5.54 $ 7.05 $ 4.61 $ 5.52
 
Feedstocks:
Sweet crude oil 56 % 63 % 59 % 71 %
Sour crude oil 23 % 27 % 21 % 11 %
Heavy sour crude oil 16 % 5 % 15 % 14 %
Other feedstocks and blends   5 %   5 %   5 %   4 %
Total   100 %   100 %   100 %   100 %
 
Sales of produced refined products:
Gasolines 53 % 48 % 50 % 47 %
Diesel fuels 29 % 33 % 33 % 33 %
Jet fuels 8 % 7 % 7 % 7 %
Fuel oil 1 % 1 % 1 % 1 %
Asphalt 2 % 3 % 2 % 3 %
Lubricants 4 % 4 % 4 % 4 %
LPG and other   3 %   4 %   3 %   5 %
Total   100 %   100 %   100 %   100 %
 
         

Three Months Ended
December 31,

Years Ended
December 31,

2015     2014 2015     2014
Southwest Region (Navajo Refinery)
Crude charge (BPD) (1) 101,500 95,430 100,450 98,120
Refinery throughput (BPD) (2) 112,850 108,990 111,840 110,250
Refinery production (BPD) (3) 111,590 105,260 110,210 107,520
Sales of produced refined products (BPD) 112,320 105,450 111,580 106,870
Sales of refined products (BPD) (4) 118,160 116,540 119,560 115,620
Refinery utilization (5) 101.5 % 95.4 % 100.5 % 98.1 %
 
Average per produced barrel (6)
Net sales $ 59.14 $ 87.97 $ 69.76 $ 110.54
Cost of products (7)   50.96     72.47     53.57     94.58  
Refinery gross margin (8) 8.18 15.50 16.19 15.96
Refinery operating expenses (9)   5.07     5.73     4.92     5.43  
Net operating margin (8) $ 3.11   $ 9.77   $ 11.27   $ 10.53  
 
Refinery operating expenses per throughput barrel (10) $ 5.05 $ 5.54 $ 4.91 $ 5.26
 
Feedstocks:
Sweet crude oil 42 % 24 % 36 % 13 %
Sour crude oil 48 % 63 % 54 % 74 %
Heavy sour crude oil % 1 % % 2 %
Other feedstocks and blends   10 %   12 %   10 %   11 %
Total   100 %   100 %   100 %   100 %
 
Sales of produced refined products:
Gasolines 56 % 58 % 55 % 54 %
Diesel fuels 40 % 34 % 39 % 38 %
Fuel oil 1 % 3 % 2 % 4 %
Asphalt 1 % 1 % 1 % 1 %
LPG and other   2 %   4 %   3 %   3 %
Total   100 %   100 %   100 %   100 %
 
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
Crude charge (BPD) (1) 67,530 65,020 68,770 64,820
Refinery throughput (BPD) (2) 73,650 70,190 74,480 71,130
Refinery production (BPD) (3) 69,600 66,400 70,180 68,140
Sales of produced refined products (BPD) 68,940 67,740 68,000 68,520
Sales of refined products (BPD) (4) 75,700 73,420 73,320 72,390
Refinery utilization (5) 81.4 % 78.3 % 82.9 % 78.1 %
 
         

Three Months Ended
December 31,

Years Ended
December 31,

2015     2014 2015     2014
Rocky Mountain Region (Cheyenne and Woods Cross Refineries)
Average per produced barrel (6)
Net sales $ 59.13 $ 87.19 $ 70.05 $ 107.51
Cost of products (7)   46.92     75.26     51.80     90.95  
Refinery gross margin (8) 12.21 11.93 18.25 16.56
Refinery operating expenses (9)   10.60     10.66     9.89     10.20  
Net operating margin (8) $ 1.61   $ 1.27   $ 8.36   $ 6.36  
 
Refinery operating expenses per throughput barrel (10) $ 9.92 $ 10.29 $ 9.03 $ 9.83
 
Feedstocks:
Sweet crude oil 40 % 46 % 42 % 44 %
Sour crude oil % 1 % % 2 %
Heavy sour crude oil 36 % 33 % 37 % 30 %
Black wax crude oil 16 % 13 % 13 % 15 %
Other feedstocks and blends   8 %   7 %   8 %   9 %
Total   100 %   100 %   100 %   100 %
 
Sales of produced refined products:
Gasolines 59 % 61 % 57 % 56 %
Diesel fuels 32 % 33 % 36 % 33 %
Jet fuels 1 % % % %
Fuel oil 3 % 1 % 3 % 1 %
Asphalt 2 % 2 % 2 % 5 %
LPG and other   3 %   3 %   2 %   5 %
Total   100 %   100 %   100 %   100 %
 
Consolidated
Crude charge (BPD) (1) 407,310 360,510 432,560 406,180
Refinery throughput (BPD) (2) 436,580 390,640 463,580 436,400
Refinery production (BPD) (3) 421,200 373,970 446,560 425,010
Sales of produced refined products (BPD) 419,500 386,390 438,000 420,990
Sales of refined products (BPD) (4) 501,970 460,750 488,350 461,640
Refinery utilization (5) 91.9 % 81.4 % 97.6 % 91.7 %
 
Average per produced barrel (6)
Net sales $ 60.97 $ 92.20 $ 71.32 $ 110.19
Cost of products (7)   51.06     81.44     55.25     96.21  
Refinery gross margin (8) 9.91 10.76 16.07 13.98
Refinery operating expenses (9)   6.40     7.29     5.71     6.38  
Net operating margin (8) $ 3.51   $ 3.47   $ 10.36   $ 7.60  
 
Refinery operating expenses per throughput barrel (10) $ 6.15 $ 7.21 $ 5.39 $ 6.16
 
Feedstocks:
Sweet crude oil 49 % 49 % 51 % 53 %
Sour crude oil 26 % 32 % 25 % 23 %
Heavy sour crude oil 15 % 9 % 15 % 15 %
Black wax crude oil 3 % 2 % 2 % 2 %
Other feedstocks and blends   7 %   8 %   7 %   7 %
Total   100 %   100 %   100 %   100 %
 
         

Three Months Ended
December 31,

Years Ended
December 31,

2015     2014 2015     2014
Consolidated
Sales of produced refined products:
Gasolines 55 % 53 % 52 % 50 %
Diesel fuels 32 % 33 % 35 % 34 %
Jet fuels 4 % 4 % 4 % 4 %
Fuel oil 2 % 2 % 1 % 2 %
Asphalt 2 % 2 % 2 % 3 %
Lubricants 2 % 2 % 3 % 2 %
LPG and other 3 % 4 % 3 % 5 %
Total 100 % 100 % 100 % 100 %
 
(1)   Crude charge represents the barrels per day of crude oil processed at our refineries.
(2) Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries.
(3) Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at our refineries.
(4) Includes refined products purchased for resale.
(5) Represents crude charge divided by total crude capacity (BPSD). Our consolidated crude capacity is 443,000 BPSD.
(6) Represents average per barrel amount for produced refined products sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” below.
(7) Transportation, terminal and refinery storage costs billed from HEP are included in cost of products.
(8) Excludes lower of cost or market inventory valuation adjustment charges of $143.6 million and $227.0 million for the three months and year ended December 31, 2015, respectively and $397.5 million for the three months and year ended December 31, 2014.
(9) Represents operating expenses of our refineries, exclusive of depreciation and amortization.
(10) Represents refinery operating expenses, exclusive of depreciation and amortization, divided by refinery throughput.
 

Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to amounts reported under generally accepted accounting principles in financial statements.

Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income (loss) attributable to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization. EBITDA is not a calculation provided for under accounting principles generally accepted in the United States; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants.

Set forth below is our calculation of EBITDA.

   

Three Months Ended
December 31,

     

Years Ended
December 31,

2015     2014 2015     2014
(In thousands)
 
Net income (loss) attributable to HollyFrontier stockholders $ (43,921 ) $ (222,204 ) $ 740,101 $ 281,292
Add (subtract) income tax provision (benefit) (40,724 ) (150,990 ) 406,060 141,172
Add interest expense (1) 11,657 10,125 44,840 51,323
Subtract interest income (988 ) (837 ) (3,391 ) (4,430 )
Add depreciation and amortization   90,572     100,498     346,151     363,381  
EBITDA $ 16,596   $ (263,408 ) $ 1,533,761   $ 832,738  
 

(1) Includes loss on early extinguishment of debt of $1.4 million and $7.7 million for the years ended December 31, 2015 and 2014, respectively.

Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry. We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis.

Refinery gross margin per barrel is the difference between average net sales price and average cost of produced refined products. Net operating margin per barrel is the difference between refinery gross margin and refinery operating expenses per barrel of produced refined products. These two margins do not include the non-cash effects of lower of cost or market inventory valuation adjustments and depreciation and amortization. Each of these component performance measures can be reconciled directly to our consolidated statements of income.

Other companies in our industry may not calculate these performance measures in the same manner.

Refinery Gross and Net Operating Margins

Below are reconciliations to our consolidated statements of income for (i) net sales, cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) and operating expenses, in each case averaged per produced barrel sold, and (ii) net operating margin and refinery gross margin. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of produced refined product sales to total sales and other revenues

   

Three Months Ended
December 31,

     

Years Ended
December 31,

2015     2014 2015     2014
(Dollars in thousands, except per barrel amounts)
 
Consolidated
Average sales price per produced barrel sold $ 60.97 $ 92.20 $ 71.32 $ 110.19
Times sales of produced refined products (BPD) 419,500 386,390 438,000 420,990
Times number of days in period   92     92     365     365  
Produced refined product sales $ 2,353,076   $ 3,277,515   $ 11,401,928   $ 16,931,944  
 
Total produced refined product sales $ 2,353,076 $ 3,277,515 $ 11,401,928 $ 16,931,944
Add refined product sales from purchased products and rounding (1)   438,809     634,860     1,214,920     1,566,925  
Total refined product sales 2,791,885 3,912,375 12,616,848 18,498,869
Add direct sales of excess crude oil (2) 91,435 318,820 352,113 1,060,354
Add other refining segment revenue (3)   40,898     34,983     202,222     147,002  
Total refining segment revenue 2,924,218 4,266,178 13,171,183 19,706,225
Add HEP segment sales and other revenues 97,251 88,449 358,875 332,626
Add corporate and other revenues 190 301 663 2,103
Subtract consolidations and eliminations   (78,100 )   (71,809 )   (292,801 )   (276,627 )
Sales and other revenues $ 2,943,559   $ 4,283,119   $ 13,237,920   $ 19,764,327  
 
 

Reconciliation of average cost of products per produced barrel sold to cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

   

Three Months Ended
December 31,

     

Years Ended
December 31,

2015     2014 2015     2014
(Dollars in thousands, except per barrel amounts)
Consolidated
Average cost of products per produced barrel sold $ 51.06 $ 81.44 $ 55.25 $ 96.21
Times sales of produced refined products (BPD) 419,500 386,390 438,000 420,990
Times number of days in period   92     92     365     365  
Cost of products for produced products sold $ 1,970,610   $ 2,895,019   $ 8,832,818   $ 14,783,758  
 
Total cost of products for produced products sold $ 1,970,610 $ 2,895,019 $ 8,832,818 $ 14,783,758
Add refined product costs from purchased products sold and rounding (1)   439,110     636,647     1,245,451     1,572,944  
Total cost of refined products sold 2,409,720 3,531,666 10,078,269 16,356,702
Add crude oil cost of direct sales of excess crude oil (2) 93,833 304,639 348,362 1,030,235
Add other refining segment cost of products sold (4)   17,430     23,399     98,979     113,664  
Total refining segment cost of products sold 2,520,983 3,859,704 10,525,610 17,500,601
Subtract consolidations and eliminations   (74,472 )   (70,678 )   (286,392 )   (272,216 )
Costs of products sold (exclusive of lower of cost or market inventory valuation adjustment) $ 2,446,511   $ 3,789,026   $ 10,239,218   $ 17,228,385  
 
 

Reconciliation of average refinery operating expenses per produced barrel sold to total operating expenses

   

Three Months Ended
December 31,

     

Years Ended
December 31,

2015     2014 2015     2014
(Dollars in thousands, except per barrel amounts)
Consolidated
Average refinery operating expenses per produced barrel sold $ 6.40 $ 7.29 $ 5.71 $ 6.38
Times sales of produced refined products (BPD) 419,500 386,390 438,000 420,990
Times number of days in period   92     92     365     365  
Refinery operating expenses for produced products sold $ 247,002   $ 259,144   $ 912,858   $ 980,359  
 
Total refinery operating expenses for produced products sold $ 247,002 $ 259,144 $ 912,858 $ 980,359
Add other refining segment operating expenses and rounding (5)   14,715     10,920     44,062     42,810  
Total refining segment operating expenses 261,717 270,064 956,920 1,023,169
Add HEP segment operating expenses 24,955 31,966 103,305 104,801
Add corporate and other costs 1,394 16,709 3,433 18,402
Subtract consolidations and eliminations   (2,852 )   (376 )   (3,285 )   (1,432 )
Operating expenses $ 285,214   $ 318,363   $ 1,060,373   $ 1,144,940  
 
 

Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenues

   

Three Months Ended
December 31,

     

Years Ended
December 31,

2015     2014 2015     2014
(Dollars in thousands, except per barrel amounts)
Consolidated
Net operating margin per barrel $ 3.51 $ 3.47 $ 10.36 $ 7.60
Add average refinery operating expenses per produced barrel   6.40     7.29     5.71     6.38  
Refinery gross margin per barrel 9.91 10.76 16.07 13.98
Add average cost of products per produced barrel sold   51.06     81.44     55.25     96.21  
Average sales price per produced barrel sold $ 60.97 $ 92.20 $ 71.32 $ 110.19
Times sales of produced refined products (BPD) 419,500 386,390 438,000 420,990
Times number of days in period   92     92     365     365  
Produced refined product sales $ 2,353,076   $ 3,277,515   $ 11,401,928   $ 16,931,944  
 
Total produced refined product sales $ 2,353,076 $ 3,277,515 $ 11,401,928 $ 16,931,944
Add refined product sales from purchased products and rounding (1)   438,809     634,860     1,214,920     1,566,925  
Total refined product sales 2,791,885 3,912,375 12,616,848 18,498,869
Add direct sales of excess crude oil (2) 91,435 318,820 352,113 1,060,354
Add other refining segment revenue (3)   40,898     34,983     202,222     147,002  
Total refining segment revenue 2,924,218 4,266,178 13,171,183 19,706,225
Add HEP segment sales and other revenues 97,251 88,449 358,875 332,626
Add corporate and other revenues 190 301 663 2,103
Subtract consolidations and eliminations   (78,100 )   (71,809 )   (292,801 )   (276,627 )
Sales and other revenues $ 2,943,559   $ 4,283,119   $ 13,237,920   $ 19,764,327  
 
(1)   We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments.
(2) We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold. Additionally, at times we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at cost.
(3) Other refining segment revenue includes the incremental revenues associated with HFC Asphalt and miscellaneous revenue.
(4) Other refining segment cost of products sold includes the incremental cost of products for HFC Asphalt and miscellaneous costs.
(5) Other refining segment operating expenses include the marketing costs associated with our refining segment and the operating expenses of HFC Asphalt.

HollyFrontier Corporation
Douglas S. Aron, 214-954-6510
Executive Vice President and
Chief Financial Officer
or
Julia Heidenreich, 214-954-6510
Vice President, Investor Relations


Source: Business Wire (February 24, 2016 - 6:30 AM EST)

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