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HollyFrontier Corporation Reports 2021 Fourth Quarter and Full Year Results

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HollyFrontier Corporation (NYSE:HFC) reported a fourth quarter net loss of $(39.5) million or $(0.24) per diluted share for Q4 2021, an improvement from $(117.7) million in Q4 2020. The acquisition integration costs and adjustments related to the Cheyenne Refinery conversion impacted results, contributing $21.9 million to the net loss. Despite challenges, the company posted record earnings in its Lubricants and Specialties segment, with EBITDA of $915.7 million for the year. HEP reported EBITDA of $70.8 million for Q4 2021, down from $86.8 million in Q4 2020.

Positive
  • Record earnings in Lubricants and Specialties segment.
  • Fourth quarter EBITDA improved to $25 million from $7.5 million year-over-year.
Negative
  • Q4 2021 net loss of $(39.5) million impacted by $21.9 million in special charges.
  • HEP's EBITDA decreased to $70.8 million from $86.8 million year-over-year.
  • Reported net income attributable to HollyFrontier stockholders of $558.3 million or $3.39 per diluted share and adjusted net income of $250.1 million or $1.52 per diluted share, for the year
  • Reported EBITDA of $1,306.9 million and adjusted EBITDA of $915.7 million, for the year

DALLAS--(BUSINESS WIRE)-- HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”) today reported fourth quarter net loss attributable to HollyFrontier stockholders of $(39.5) million or $(0.24) per diluted share for the quarter ended December 31, 2021, compared to $(117.7) million or $(0.73) per diluted share for the quarter ended December 31, 2020.

The fourth quarter results reflect special items that collectively increased net loss by a total of $21.9 million. On a pre-tax basis, these items include acquisition integration costs of $15.8 million, a lower of cost or market inventory valuation adjustment of $8.7 million and charges related to the Cheyenne Refinery conversion to renewable diesel production, including decommissioning charges of $2.8 million. Excluding these items, adjusted net loss for the fourth quarter was $(17.6) million ($(0.11) per diluted share) compared to $(118.6) million ($(0.74) per diluted share) for the fourth quarter of 2020, which excludes certain items that collectively decreased net loss by $0.9 million for the three months ended December 31, 2020.

HollyFrontier’s CEO, Michael Jennings, commented, “Despite heavy planned and unplanned refining maintenance and weather-related downtime in the fourth quarter, HollyFrontier delivered solid financial results in 2021, highlighted by record earnings in our Lubricants and Specialties business and the closing of our acquisition of the Puget Sound Refinery. Looking forward to 2022, we remain constructive on the macro environment and are focused on the execution of our strategic initiatives: the successful completion and start-up of our renewables business, closing on our acquisition of Sinclair and accelerating returns of capital to our shareholders.”

Refining segment loss before interest and income taxes was $(63.5) million for the fourth quarter of 2021 compared to $(66.1) million in the fourth quarter of 2020. The segment reported EBITDA of $25.0 million for the fourth quarter of 2021 compared to $7.5 million for the fourth quarter of 2020. This increase was driven by stronger product demand, which resulted in a consolidated refinery gross margin of $8.70 per produced barrel, a 116% increase compared to $4.02 for the fourth quarter of 2020. Crude oil charge averaged 421,000 barrels per day (“BPD”) for the fourth quarter of 2021 compared to 379,910 BPD for the fourth quarter of 2020.

Lubricants and Specialty Products segment income before interest and income taxes was $53.7 million for the fourth quarter of 2021 compared to a loss before interest and income taxes of $(54.1) million in the fourth quarter of 2020. The segment reported EBITDA of $74.9 million for the fourth quarter of 2021 compared to $(32.7) million in the fourth quarter of 2020. Fourth quarter of 2020 included a goodwill impairment charge of $81.9 million related to Sonneborn.

Holly Energy Partners, L.P. (“HEP”) reported EBITDA of $70.8 million for the fourth quarter of 2021 compared to $86.8 million in the fourth quarter of 2020.

For the fourth quarter of 2021, net cash used for operations totaled $332.8 million. At December 31, 2021, the Company's cash and cash equivalents totaled $234.4 million, a $1,247.1 million decrease over cash and cash equivalents of $1,481.6 million at September 30, 2021 inclusive of our purchase of the Puget Sound Refinery. Additionally, the Company's consolidated debt was $3,072.7 million. The Company's debt, exclusive of HEP debt, which is nonrecourse to HollyFrontier, was $1,739.7 million at December 31, 2021.

The Company has scheduled a webcast conference call for today, February 23, 2022, at 8:30 AM Eastern Time to discuss fourth quarter financial results. This webcast may be accessed at: https://events.q4inc.com/attendee/868741482. An audio archive of this webcast will be available using the above noted link through March 9, 2022.

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 owns and operates refineries located in Kansas, Oklahoma, New Mexico, Washington 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. In addition, HollyFrontier produces base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57% limited partner interest and a non-economic general partner interest in HEP, a master limited partnership that provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including subsidiaries of HollyFrontier Corporation.

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. Forward-looking statements use words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “strategy,” “intend,” “should,” “would,” “could,” “believe,” “may,” and similar expressions and statements regarding our plans and objectives for future operations. 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, the Company’s ability to successfully close the pending acquisition by the Company and HEP of Sinclair Oil Corporation and Sinclair Transportation Company (collectively, “Sinclair”, and such transactions, the “Sinclair Transactions”), or once closed, integrate the operations of Sinclair with its existing operations and fully realize the expected synergies of the Sinclair Transactions or on the expected timeline; the satisfaction or waivers of the conditions precedent to the proposed Sinclair Transactions, including without limitation, regulatory approvals (including clearance by antitrust authorities necessary to complete the Sinclair Transactions on the terms and timeline desired), risks relating to the value of HF Sinclair common stock and the value of HEP’s limited partner common units to be issued at the closing of the Sinclair Transactions from sales in anticipation of closing and from sales by the Sinclair holders following the closing of the Sinclair Transactions; the cost and potential for a delay in closing as a result of litigation against the Company or HEP challenging the Sinclair Transactions; the Company's ability to successfully integrate the operation of the Puget Sound Refinery with the Company's existing operations; the demand for and supply of crude oil and refined products, including uncertainty regarding the effects of the continuing coronavirus (“COVID-19”) pandemic on future demand and increasing societal expectations that companies address climate change; risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products or lubricant and specialty products in the Company’s markets; the spread between market prices for refined products and market prices for crude oil; the possibility of constraints on the transportation of refined products or lubricant and specialty products; the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, whether due to infection in the workforce or in response to reductions in demand; the effects of current and/or future governmental and environmental regulations and policies, including the effects of current and/or future restrictions on various commercial and economic activities in response to the COVID-19 pandemic; 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 and consummating construction projects, including the Company's ability to complete announced capital projects, such as the construction of the Artesia renewable diesel unit and pretreatment unit, on time and within capital guidance; the Company's ability to timely obtain or maintain permits, including those necessary for operations or capital projects; the ability of the Company to acquire refined or lubricant product operations or pipeline and terminal operations on acceptable terms and to integrate any existing or future acquired operations; the possibility of terrorist or cyberattacks and the consequences of any such attacks; general economic conditions, including uncertainty regarding the timing, pace and extent of an economic recovery in the United States; a prolonged economic slowdown due to the COVID-19 pandemic which could result in an impairment of goodwill and/or long-lived asset impairments; 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 2020

 

2021

 

2020

 

Change

 

Percent

 

(In thousands, except per share data)

Sales and other revenues

$

5,622,667

 

 

$

2,900,768

 

 

$

2,721,899

 

 

94

%

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of products sold:

 

 

 

 

 

 

 

Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

 

4,958,160

 

 

 

2,510,845

 

 

 

2,447,315

 

 

97

 

Lower of cost or market inventory valuation adjustment

 

8,739

 

 

 

(149,212

)

 

 

157,951

 

 

(106

)

 

 

4,966,899

 

 

 

2,361,633

 

 

 

2,605,266

 

 

110

 

Operating expenses

 

430,858

 

 

 

336,077

 

 

 

94,781

 

 

28

 

Selling, general and administrative expenses

 

111,225

 

 

 

76,041

 

 

 

35,184

 

 

46

 

Depreciation and amortization

 

134,198

 

 

 

124,879

 

 

 

9,319

 

 

7

 

Goodwill and long-lived asset impairments

 

 

 

 

108,385

 

 

 

(108,385

)

 

(100

)

Total operating costs and expenses

 

5,643,180

 

 

 

3,007,015

 

 

 

2,636,165

 

 

88

 

Loss from operations

 

(20,513

)

 

 

(106,247

)

 

 

85,734

 

 

(81

)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Earnings of equity method investments

 

3,557

 

 

 

1,461

 

 

 

2,096

 

 

143

 

Interest income

 

941

 

 

 

1,043

 

 

 

(102

)

 

(10

)

Interest expense

 

(30,955

)

 

 

(40,604

)

 

 

9,649

 

 

(24

)

Gain on foreign currency transactions

 

1,288

 

 

 

3,119

 

 

 

(1,831

)

 

(59

)

Gain on sale of assets and other

 

2,532

 

 

 

3,034

 

 

 

(502

)

 

(17

)

 

 

(22,637

)

 

 

(31,947

)

 

 

9,310

 

 

(29

)

Loss before income taxes

 

(43,150

)

 

 

(138,194

)

 

 

95,044

 

 

(69

)

Income tax benefit

 

(26,046

)

 

 

(43,643

)

 

 

17,597

 

 

(40

)

Net loss

 

(17,104

)

 

 

(94,551

)

 

 

77,447

 

 

(82

)

Less net income attributable to noncontrolling interest

 

22,426

 

 

 

23,196

 

 

 

(770

)

 

(3

)

Net loss attributable to HollyFrontier stockholders

$

(39,530

)

 

$

(117,747

)

 

$

78,217

 

 

(66

)%

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

Basic

$

(0.24

)

 

$

(0.73

)

 

$

0.49

 

 

(67

)%

Diluted

$

(0.24

)

 

$

(0.73

)

 

$

0.49

 

 

(67

)%

Cash dividends declared per common share

$

 

 

$

0.35

 

 

$

(0.35

)

 

(100

)%

Average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

162,721

 

 

 

162,151

 

 

 

570

 

 

%

Diluted

 

162,721

 

 

 

162,151

 

 

 

570

 

 

%

 

 

 

 

 

 

 

 

EBITDA

$

98,636

 

 

$

3,050

 

 

$

95,586

 

 

3,134

%

Adjusted EBITDA

$

126,026

 

 

$

(21,898

)

 

$

147,924

 

 

(676

)%

 

Years Ended
December 31,

 

Change from 2020

 

2021

 

2020

 

Change

 

Percent

 

(In thousands, except per share data)

Sales and other revenues

$

18,389,142

 

 

$

11,183,643

 

 

$

7,205,499

 

 

64

%

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of products sold:

 

 

 

 

 

 

 

Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

 

15,567,052

 

 

 

9,158,805

 

 

 

6,408,247

 

 

70

 

Lower of cost or market inventory valuation adjustment

 

 

(310,123

)

 

 

78,499

 

 

 

(388,622

)

 

(495

)

 

 

15,256,929

 

 

 

9,237,304

 

 

 

6,019,625

 

 

65

 

Operating expenses

 

1,517,478

 

 

 

1,300,277

 

 

 

217,201

 

 

17

 

Selling, general and administrative expenses

 

362,010

 

 

 

313,600

 

 

 

48,410

 

 

15

 

Depreciation and amortization

 

503,539

 

 

 

520,912

 

 

 

(17,373

)

 

(3

)

Goodwill and long-lived asset impairments

 

 

 

 

545,293

 

 

 

(545,293

)

 

(100

)

Total operating costs and expenses

 

17,639,956

 

 

 

11,917,386

 

 

 

5,722,570

 

 

48

 

Income (loss) from operations

 

749,186

 

 

 

(733,743

)

 

 

1,482,929

 

 

(202

)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Earnings of equity method investments

 

12,432

 

 

 

6,647

 

 

 

5,785

 

 

87

 

Interest income

 

4,019

 

 

 

7,633

 

 

 

(3,614

)

 

(47

)

Interest expense

 

(125,175

)

 

 

(126,527

)

 

 

1,352

 

 

(1

)

Gain on business interruption insurance settlement

 

 

 

 

81,000

 

 

 

(81,000

)

 

(100

)

Gain on tariff settlement

 

51,500

 

 

 

 

 

 

51,500

 

 

 

Gain on sales-type lease

 

 

 

 

33,834

 

 

 

(33,834

)

 

(100

)

Loss on early extinguishment of debt

 

 

 

 

(25,915

)

 

 

25,915

 

 

(100

)

Gain (loss) on foreign currency transactions

 

(2,938

)

 

 

2,201

 

 

 

(5,139

)

 

(233

)

Gain on sale of assets and other

 

98,128

 

 

 

7,824

 

 

 

90,304

 

 

1,154

 

 

 

37,966

 

 

 

(13,303

)

 

 

51,269

 

 

(385

)

Income (loss) before income taxes

 

787,152

 

 

 

(747,046

)

 

 

1,534,198

 

 

(205

)

Income tax expense (benefit)

 

123,898

 

 

 

(232,147

)

 

 

356,045

 

 

(153

)

Net income (loss)

 

663,254

 

 

 

(514,899

)

 

 

1,178,153

 

 

(229

)

Less net income attributable to noncontrolling interest

 

104,930

 

 

 

86,549

 

 

 

18,381

 

 

21

 

Net income (loss) attributable to HollyFrontier stockholders

$

558,324

 

 

$

(601,448

)

 

$

1,159,772

 

 

(193

)%

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

Basic

$

3.39

 

 

$

(3.72

)

 

$

7.11

 

 

(191

)%

Diluted

$

3.39

 

 

$

(3.72

)

 

$

7.11

 

 

(191

)%

Cash dividends declared per common share

$

0.35

 

 

$

1.40

 

 

$

(1.05

)

 

(75

)%

Average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

162,569

 

 

 

161,983

 

 

 

586

 

 

%

Diluted

 

162,569

 

 

 

161,983

 

 

 

586

 

 

%

 

 

 

 

 

 

 

 

EBITDA

$

1,306,917

 

 

$

(193,789

)

 

$

1,500,706

 

 

(774

)%

Adjusted EBITDA

$

915,665

 

 

$

412,220

 

 

$

503,445

 

 

122

%

Balance Sheet Data

 

Years Ended December 31,

 

2021

 

2020

 

(In thousands)

Cash and cash equivalents

$

234,444

 

$

1,368,318

Working capital

$

1,696,990

 

$

1,935,605

Total assets

$

12,916,613

 

$

11,506,864

Long-term debt

$

3,072,737

 

$

3,142,718

Total equity

$

6,294,465

 

$

5,722,203

Segment Information

Our operations are organized into three reportable segments: Refining, Lubricants and Specialty Products and HEP. Our operations that are not included in the Refining, Lubricants and Specialty Products and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under the Corporate, Other and Eliminations column.

The Refining segment represents the operations of our El Dorado, Tulsa, Navajo and Woods Cross refineries, HollyFrontier Asphalt Company LLC (“HFC Asphalt”) and also our recently acquired Puget Sound Refinery from the closing date on November 1, 2021 (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 Mountains extending into the Pacific Northwest geographic regions of the United States. HFC Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma. The Refining segment also included the operations of our Cheyenne Refinery until it permanently ceased petroleum refining operations during the third quarter of 2020.

Beginning in the fourth quarter of 2020, activities associated with the conversion of Cheyenne Refinery to renewable diesel production, along with the construction of renewable diesel and pre-treatment units in Artesia, New Mexico were reported in Corporate and Other. The Cheyenne renewable diesel unit was mechanically complete in the fourth quarter of 2021. The pre-treatment unit is expected to be completed in the first quarter of 2022, and the Artesia renewable diesel unit is expected to be completed in the second quarter of 2022. Beginning in the first quarter of 2022, renewable diesel operations will cease to be reported in Corporate and Other and will be reported under a new Renewables segment.

The Lubricants and Specialty Products segment involves Petro-Canada Lubricants Inc.’s (“PCLI”) production operations, located in Mississauga, Ontario, that include lubricant products such as base oils, white oils, specialty products and finished lubricants and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States, Europe and China. Additionally, the Lubricants and Specialty Products segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America, the operations of Red Giant Oil, one of the largest suppliers of locomotive engine oil in North America and the operations of Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

The HEP segment includes all of the operations of HEP, a consolidated variable interest entity, which owns and operates logistics and refinery assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units in the Mid-Continent, Southwest and Rocky Mountain geographic regions of the United States. The HEP segment also includes a 75% ownership interest in UNEV Pipeline, LLC (an HEP consolidated subsidiary), and a 50% ownership interest in each of Osage Pipeline Company, LLC, Cheyenne Pipeline LLC and Cushing Connect Pipeline & Terminal LLC. 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

 

Lubricants
and Specialty
Products

 

HEP

 

Corporate,
Other and
Eliminations

 

Consolidated
Total

 

 

(In thousands)

Three Months Ended December 31, 2021

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

4,896,994

 

 

$

699,838

 

 

$

25,837

 

$

(2

)

 

$

5,622,667

 

Intersegment revenues

 

 

168,599

 

 

 

488

 

 

 

92,656

 

 

(261,743

)

 

 

 

 

 

$

5,065,593

 

 

$

700,326

 

 

$

118,493

 

$

(261,745

)

 

$

5,622,667

 

Cost of products sold (exclusive of lower of cost or market inventory adjustment)

 

$

4,686,200

 

 

$

510,528

 

 

$

 

$

(238,568

)

 

$

4,958,160

 

Lower of cost or market inventory valuation adjustment

 

$

 

 

$

 

 

$

 

$

8,739

 

 

$

8,739

 

Operating expenses

 

$

317,831

 

 

$

69,453

 

 

$

44,298

 

$

(724

)

 

$

430,858

 

Selling, general and administrative expenses

 

$

36,586

 

 

$

45,543

 

 

$

2,973

 

$

26,123

 

 

$

111,225

 

Depreciation and amortization

 

$

88,455

 

 

$

21,268

 

 

$

20,090

 

$

4,385

 

 

$

134,198

 

Income (loss) from operations

 

$

(63,479

)

 

$

53,534

 

 

$

51,132

 

$

(61,700

)

 

$

(20,513

)

Income (loss) before interest and income taxes

 

$

(63,479

)

 

$

53,665

 

 

$

54,873

 

$

(58,195

)

 

$

(13,136

)

Net income attributable to noncontrolling interest

 

$

 

 

$

 

 

$

3,190

 

$

19,236

 

 

$

22,426

 

Earnings of equity method investments

 

$

 

 

$

 

 

$

3,557

 

$

 

 

$

3,557

 

Capital expenditures

 

$

46,106

 

 

$

13,344

 

 

$

11,403

 

$

194,211

 

 

$

265,064

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2020

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

2,406,214

 

 

$

462,724

 

 

$

25,629

 

$

6,201

 

 

$

2,900,768

 

Intersegment revenues

 

 

74,492

 

 

 

1,554

 

 

 

101,827

 

 

(177,873

)

 

 

 

 

 

$

2,480,706

 

 

$

464,278

 

 

$

127,456

 

$

(171,672

)

 

$

2,900,768

 

Cost of products sold (exclusive of lower of cost or market inventory adjustment)

 

$

2,326,150

 

 

$

318,857

 

 

$

 

$

(134,162

)

 

$

2,510,845

 

Lower of cost or market inventory valuation adjustment

 

$

(145,497

)

 

$

 

 

$

 

$

(3,715

)

 

$

(149,212

)

Operating expenses

 

$

233,433

 

 

$

59,609

 

 

$

37,971

 

$

5,064

 

 

$

336,077

 

Selling, general and administrative expenses

 

$

32,621

 

 

$

36,162

 

 

$

2,420

 

$

4,838

 

 

$

76,041

 

Depreciation and amortization

 

$

73,598

 

 

$

21,396

 

 

$

23,350

 

$

6,535

 

 

$

124,879

 

Goodwill and long-lived asset impairments

 

$

26,518

 

 

$

81,867

 

 

$

 

$

 

 

$

108,385

 

Income (loss) from operations

 

$

(66,117

)

 

$

(53,613

)

 

$

63,715

 

$

(50,232

)

 

$

(106,247

)

Income (loss) before interest and income taxes

 

$

(66,117

)

 

$

(54,056

)

 

$

65,428

 

$

(43,888

)

 

$

(98,633

)

Net income attributable to noncontrolling interest

 

$

 

 

$

 

 

$

1,124

 

$

22,072

 

 

$

23,196

 

Earnings of equity method investments

 

$

 

 

$

 

 

$

1,461

 

$

 

 

$

1,461

 

Capital expenditures

 

$

45,870

 

 

$

12,086

 

 

$

20,641

 

$

38,555

 

 

$

117,152

 

 

Refining

 

Lubricants
and Specialty
Products

 

HEP

 

Corporate,
Other and
Eliminations

 

Consolidated
Total

 

(In thousands)

Year Ended December 31, 2021

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

15,734,870

 

 

$

2,550,624

 

 

$

103,646

 

$

2

 

 

$

18,389,142

 

Intersegment revenues

 

623,688

 

 

 

9,988

 

 

 

390,849

 

 

(1,024,525

)

 

 

 

 

$

16,358,558

 

 

$

2,560,612

 

 

$

494,495

 

$

(1,024,523

)

 

$

18,389,142

 

Cost of products sold (exclusive of lower of cost or market inventory adjustment)

$

14,673,062

 

 

$

1,815,802

 

 

$

 

$

(921,812

)

 

$

15,567,052

 

Lower of cost or market inventory valuation adjustment

$

(318,353

)

 

$

 

 

$

 

$

8,230

 

 

$

(310,123

)

Operating expenses

$

1,090,424

 

 

$

252,456

 

 

$

170,524

 

$

4,074

 

 

$

1,517,478

 

Selling, general and administrative expenses

$

127,563

 

 

$

170,155

 

 

$

12,637

 

$

51,655

 

 

$

362,010

 

Depreciation and amortization

$

334,365

 

 

$

79,767

 

 

$

86,998

 

$

2,409

 

 

$

503,539

 

Income (loss) from operations

$

451,497

 

 

$

242,432

 

 

$

224,336

 

$

(169,079

)

 

$

749,186

 

Income (loss) before interest and income taxes

$

449,747

 

 

$

329,203

 

 

$

267,623

 

$

(138,265

)

 

$

908,308

 

Net income attributable to noncontrolling interest

$

 

 

$

 

 

$

7,217

 

$

97,713

 

 

$

104,930

 

Earnings of equity method investments

$

 

 

$

 

 

$

12,432

 

$

 

 

$

12,432

 

Capital expenditures

$

160,431

 

 

$

30,878

 

 

$

88,336

 

$

533,764

 

 

$

813,409

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2020

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

Revenues from external customers

$

9,286,658

 

 

$

1,792,745

 

 

$

98,039

 

$

6,201

 

 

$

11,183,643

 

Intersegment revenues

 

252,531

 

 

 

10,465

 

 

 

399,809

 

 

(662,805

)

 

 

 

 

$

9,539,189

 

 

$

1,803,210

 

 

$

497,848

 

$

(656,604

)

 

$

11,183,643

 

Cost of products sold (exclusive of lower of cost or market inventory adjustment)

$

8,439,680

 

 

$

1,271,287

 

 

$

 

$

(552,162

)

 

$

9,158,805

 

Lower of cost or market inventory valuation adjustment

$

82,214

 

 

$

 

 

$

 

$

(3,715

)

 

$

78,499

 

Operating expenses

$

988,045

 

 

$

216,068

 

 

$

147,692

 

$

(51,528

)

 

$

1,300,277

 

Selling, general and administrative expenses

$

127,298

 

 

$

157,816

 

 

$

9,989

 

$

18,497

 

 

$

313,600

 

Depreciation and amortization

$

324,617

 

 

$

80,656

 

 

$

95,445

 

$

20,194

 

 

$

520,912

 

Goodwill impairment

$

241,760

 

 

$

286,575

 

 

$

16,958

 

$

 

 

$

545,293

 

Income (loss) from operations

$

(664,425

)

 

$

(209,192

)

 

$

227,764

 

$

(87,890

)

 

$

(733,743

)

Income (loss) before interest and income taxes

$

(664,425

)

 

$

(209,903

)

 

$

251,021

 

$

(4,845

)

 

$

(628,152

)

Net income attributable to noncontrolling interest

$

 

 

$

 

 

$

5,282

 

$

81,267

 

 

$

86,549

 

Earnings of equity method investments

$

 

 

$

 

 

$

6,647

 

$

 

 

$

6,647

 

Capital expenditures

$

152,726

 

 

$

32,473

 

 

$

59,283

 

$

85,678

 

 

$

330,160

 

 

 

Refining

 

Lubricants
and Specialty
Products

 

HEP

 

Corporate,
Other and
Eliminations

 

Consolidated
Total

 

 

(In thousands)

December 31, 2021

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

$

113,474

 

$

14,381

 

$

106,589

 

 

$

234,444

Total assets

 

$

9,736,851

 

$

2,073,638

 

$

2,250,115

 

$

(1,143,991

)

 

$

12,916,613

Long-term debt

 

$

 

$

 

$

1,333,049

 

$

1,739,688

 

 

$

3,072,737

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,106

 

$

163,729

 

$

21,990

 

$

1,179,493

 

 

$

1,368,318

Total assets

 

$

6,203,847

 

$

1,864,313

 

$

2,198,478

 

$

1,240,226

 

 

$

11,506,864

Long-term debt

 

$

 

$

 

$

1,405,603

 

$

1,737,115

 

 

$

3,142,718

Refining Segment Operating Data

As of December 31, 2021, our refinery operations included the El Dorado, Tulsa, Puget Sound, Navajo and Woods Cross Refineries. The refinery operations of the Puget Sound Refinery are included for the period November 1, 2021 (date of acquisition) through December 31, 2021. The following tables set forth information, including non-GAAP (Generally Accepted Accounting Principles) performance measures about our refinery operations. Refinery gross and net operating margins do not include the non-cash effects of long-lived asset impairment charges, 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,

 

 

2021

 

2020

 

2021

 

2020

Mid-Continent Region (El Dorado and Tulsa Refineries)

 

 

 

 

 

 

Crude charge (BPD) (1)

 

 

265,770

 

 

 

260,780

 

 

 

260,350

 

 

 

241,140

 

Refinery throughput (BPD) (2)

 

 

287,300

 

 

 

279,670

 

 

 

276,430

 

 

 

257,030

 

Sales of produced refined products (BPD) (3)

 

 

285,250

 

 

 

273,710

 

 

 

265,470

 

 

 

248,320

 

Refinery utilization (4)

 

 

102.2

%

 

 

100.3

%

 

 

100.1

%

 

 

92.7

%

 

 

 

 

 

 

 

 

 

Average per produced barrel (5)

 

 

 

 

 

 

 

 

Refinery gross margin

 

$

6.18

 

 

$

1.93

 

 

$

9.44

 

 

$

5.17

 

Refinery operating expenses (6)

 

 

5.73

 

 

 

5.42

 

 

 

6.42

 

 

 

5.46

 

Net operating margin

 

$

0.45

 

 

$

(3.49

)

 

$

3.02

 

 

$

(0.29

)

 

 

 

 

 

 

 

 

 

Refinery operating expenses per throughput barrel (7)

 

$

5.69

 

 

$

5.30

 

 

$

6.17

 

 

$

5.27

 

 

 

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

 

Sweet crude oil

 

 

55

%

 

 

59

%

 

 

61

%

 

 

58

%

Sour crude oil

 

 

21

%

 

 

19

%

 

 

15

%

 

 

19

%

Heavy sour crude oil

 

 

17

%

 

 

15

%

 

 

18

%

 

 

17

%

Other feedstocks and blends

 

 

7

%

 

 

7

%

 

 

6

%

 

 

6

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

Sales of produced refined products:

 

 

 

 

 

 

 

 

Gasolines

 

 

53

%

 

 

54

%

 

 

52

%

 

 

52

%

Diesel fuels

 

 

32

%

 

 

33

%

 

 

33

%

 

 

34

%

Jet fuels

 

 

6

%

 

 

4

%

 

 

5

%

 

 

4

%

Fuel oil

 

 

1

%

 

 

1

%

 

 

1

%

 

 

1

%

Asphalt

 

 

2

%

 

 

3

%

 

 

3

%

 

 

3

%

Base oils

 

 

4

%

 

 

4

%

 

 

4

%

 

 

4

%

LPG and other

 

 

2

%

 

 

1

%

 

 

2

%

 

 

2

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2021 (8)

 

2020

 

2021 (8)

 

2020

West Region (Puget Sound, Navajo and Wood Cross Refineries)

 

 

 

 

 

 

 

 

Crude charge (BPD) (1)

 

 

155,230

 

 

 

119,130

 

 

 

140,370

 

 

 

124,050

 

Refinery throughput (BPD) (2)

 

 

175,440

 

 

 

133,110

 

 

 

155,440

 

 

 

138,050

 

Sales of produced refined products (BPD) (3)

 

 

188,980

 

 

 

144,280

 

 

 

158,630

 

 

 

143,350

 

Refinery utilization (4)

 

 

63.7

%

 

 

82.2

%

 

 

82.7

%

 

 

85.6

%

 

 

 

 

 

 

 

 

 

Average per produced barrel (5)

 

 

 

 

 

 

 

 

Refinery gross margin

 

$

12.50

 

 

$

7.98

 

 

$

13.32

 

 

$

10.97

 

Refinery operating expenses (6)

 

 

9.63

 

 

 

7.31

 

 

 

8.09

 

 

 

7.07

 

Net operating margin

 

$

2.87

 

 

$

0.67

 

 

$

5.23

 

 

$

3.90

 

 

 

 

 

 

 

 

 

 

Refinery operating expenses per throughput barrel (7)

 

$

10.38

 

 

$

7.93

 

 

$

9.27

 

 

$

7.34

 

 

 

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

 

Sweet crude oil

 

 

20

%

 

 

29

%

 

 

22

%

 

 

30

%

Sour crude oil

 

 

56

%

 

 

48

%

 

 

58

%

 

 

49

%

Heavy sour crude oil

 

 

2

%

 

 

%

 

 

1

%

 

 

%

Black wax crude oil

 

 

11

%

 

 

12

%

 

 

10

%

 

 

11

%

Other feedstocks and blends

 

 

11

%

 

 

11

%

 

 

9

%

 

 

10

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

Sales of produced refined products:

 

 

 

 

 

 

 

 

Gasolines

 

 

56

%

 

 

57

%

 

 

54

%

 

 

56

%

Diesel fuels

 

 

29

%

 

 

34

%

 

 

35

%

 

 

35

%

Jet fuels

 

 

4

%

 

 

%

 

 

1

%

 

 

%

Fuel oil

 

 

3

%

 

 

3

%

 

 

3

%

 

 

3

%

Asphalt

 

 

3

%

 

 

3

%

 

 

4

%

 

 

4

%

LPG and other

 

 

5

%

 

 

3

%

 

 

3

%

 

 

2

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

Consolidated

 

 

 

 

 

 

 

 

Crude charge (BPD) (1)

 

 

421,000

 

 

 

379,910

 

 

 

400,720

 

 

 

365,190

 

Refinery throughput (BPD) (2)

 

 

462,740

 

 

 

412,780

 

 

 

431,870

 

 

 

395,080

 

Sales of produced refined products (BPD) (3)

 

 

474,230

 

 

 

417,990

 

 

 

424,100

 

 

 

391,670

 

Refinery utilization (4)

 

 

83.6

%

 

 

93.8

%

 

 

93.1

%

 

 

90.2

%

 

 

 

 

 

 

 

 

 

Average per produced barrel (5)

 

 

 

 

 

 

 

 

Refinery gross margin

 

$

8.70

 

 

$

4.02

 

 

$

10.89

 

 

$

7.29

 

Refinery operating expenses (6)

 

 

7.28

 

 

 

6.07

 

 

 

7.04

 

 

 

6.05

 

Net operating margin

 

$

1.42

 

 

$

(2.05

)

 

$

3.85

 

 

$

1.24

 

 

 

 

 

 

 

 

 

 

Refinery operating expenses per throughput barrel (7)

 

$

7.47

 

 

$

6.15

 

 

$

6.92

 

 

$

6.00

 

 

 

 

 

 

 

 

 

 

Feedstocks:

 

 

 

 

 

 

 

 

Sweet crude oil

 

 

41

%

 

 

49

%

 

 

47

%

 

 

48

%

Sour crude oil

 

 

34

%

 

 

29

%

 

 

31

%

 

 

29

%

Heavy sour crude oil

 

 

12

%

 

 

10

%

 

 

12

%

 

 

11

%

Black wax crude oil

 

 

4

%

 

 

4

%

 

 

4

%

 

 

4

%

Other feedstocks and blends

 

 

9

%

 

 

8

%

 

 

6

%

 

 

8

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

Consolidated

 

 

 

 

 

 

 

 

Sales of produced refined products:

 

 

 

 

 

 

 

 

Gasolines

 

54

%

 

55

%

 

53

%

 

54

%

Diesel fuels

 

31

%

 

33

%

 

34

%

 

34

%

Jet fuels

 

6

%

 

3

%

 

4

%

 

3

%

Fuel oil

 

1

%

 

2

%

 

1

%

 

1

%

Asphalt

 

3

%

 

3

%

 

3

%

 

4

%

Base oils

 

2

%

 

2

%

 

2

%

 

2

%

LPG and other

 

3

%

 

2

%

 

3

%

 

2

%

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)

Represents barrels sold of refined products produced at our refineries (including HFC Asphalt) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold.

(4)

Represents crude charge divided by total crude capacity ("BPSD"). As a result of our acquisition of the Puget Sound Refinery on November 1, 2021, our consolidated crude capacity increased from 405,000 BPSD to 554,000 BPSD.

(5)

Represents average amount per produced barrel 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.

(6)

Represents total Mid-Continent and West regions operating expenses, exclusive of long-lived asset impairment charges and depreciation and amortization, divided by sales volumes of refined products produced at our refineries.

(7)

Represents total Mid-Continent and West regions operating expenses, exclusive of long-lived asset impairment charges and depreciation and amortization, divided by refinery throughput.

(8)

We acquired the Puget Sound Refinery on November 1, 2021. Refining operating data for the quarter and year ended December 31, 2021 includes crude oil and feedstocks processed and refined products sold at our Puget Sound Refinery for the period November 1, 2021 through December 31, 2021 only, averaged over the 92 days and 365 days in the quarter and year ended December 31, 2021, respectively.

Lubricants and Specialty Products Segment Operating Data

The following table sets forth information about our lubricants and specialty products operations.

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

Lubricants and Specialty Products

 

 

 

 

 

 

 

 

Throughput (BPD)

 

18,760

 

 

21,425

 

 

19,177

 

 

19,645

 

Sales of produced products (BPD)

 

35,120

 

 

33,559

 

 

34,016

 

 

32,902

 

 

 

 

 

 

 

 

 

 

Sales of produced products:

 

 

 

 

 

 

 

 

Finished products

 

46

%

 

49

%

 

51

%

 

49

%

Base oils

 

26

%

 

28

%

 

27

%

 

26

%

Other

 

28

%

 

23

%

 

22

%

 

25

%

Total

 

100

%

 

100

%

 

100

%

 

100

%

Our Lubricants and Specialty Products segment includes base oil production activities, by-product sales to third parties and intra-segment base oil sales to rack forward, referred to as “Rack Back.” “Rack Forward” includes the purchase of base oils and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties. Supplemental financial data attributable to our Lubricants and Specialty Products segment is presented below:

 

 

Rack Back (1)

 

Rack
Forward (2)

 

Eliminations (3)

 

Total
Lubricants
and Specialty
Products

 

 

(In thousands)

Three Months Ended December 31, 2021

 

 

 

 

 

 

 

 

Sales and other revenues

 

$

307,018

 

 

$

631,221

 

 

$

(237,913

)

 

$

700,326

 

Cost of products sold

 

$

202,124

 

 

$

546,317

 

 

$

(237,913

)

 

$

510,528

 

Operating expenses

 

$

33,977

 

 

$

35,476

 

 

$

 

 

$

69,453

 

Selling, general and administrative expenses

 

$

7,360

 

 

$

38,183

 

 

$

 

 

$

45,543

 

Depreciation and amortization

 

$

8,183

 

 

$

13,085

 

 

$

 

 

$

21,268

 

Income (loss) from operations

 

$

55,374

 

 

$

(1,840

)

 

$

 

 

$

53,534

 

Income (loss) before interest and income taxes

 

$

55,374

 

 

$

(1,709

)

 

$

 

 

$

53,665

 

EBITDA

 

$

63,557

 

 

$

11,376

 

 

$

 

 

$

74,933

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2020

 

 

 

 

 

 

 

 

Sales and other revenues

 

$

143,786

 

 

$

426,407

 

 

$

(105,915

)

 

$

464,278

 

Cost of products sold

 

$

110,351

 

 

$

314,421

 

 

$

(105,915

)

 

$

318,857

 

Operating expenses

 

$

26,760

 

 

$

32,849

 

 

$

 

 

$

59,609

 

Selling, general and administrative expenses

 

$

5,680

 

 

$

30,482

 

 

$

 

 

$

36,162

 

Depreciation and amortization

 

$

6,908

 

 

$

14,488

 

 

$

 

 

$

21,396

 

Goodwill impairment

 

$

 

 

$

81,867

 

 

$

 

 

$

81,867

 

Loss from operations

 

$

(5,913

)

 

$

(47,700

)

 

$

 

 

$

(53,613

)

Loss before interest and income taxes

 

$

(5,913

)

 

$

(48,143

)

 

$

 

 

$

(54,056

)

EBITDA

 

$

995

 

 

$

(33,655

)

 

$

 

 

$

(32,660

)

 

 

Rack Back (1)

 

Rack
Forward (2)

 

Eliminations (3)

 

Total
Lubricants
and Specialty
Products

 

 

(In thousands)

Year Ended December 31, 2021

 

 

 

 

 

 

 

 

Sales and other revenues

 

$

1,005,152

 

 

$

2,378,332

 

$

(822,872

)

 

$

2,560,612

 

Cost of products sold

 

$

646,107

 

 

$

1,992,567

 

$

(822,872

)

 

$

1,815,802

 

Operating expenses

 

$

120,750

 

 

$

131,706

 

$

 

 

$

252,456

 

Selling, general and administrative expenses

 

$

27,071

 

 

$

143,084

 

$

 

 

$

170,155

 

Depreciation and amortization

 

$

28,093

 

 

$

51,674

 

$

 

 

$

79,767

 

Income from operations

 

$

183,131

 

 

$

59,301

 

$

 

 

$

242,432

 

Income before interest and income taxes

 

$

269,149

 

 

$

60,054

 

$

 

 

$

329,203

 

EBITDA

 

$

297,242

 

 

$

111,728

 

$

 

 

$

408,970

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2020

 

 

 

 

 

 

 

 

Sales and other revenues

 

$

505,424

 

 

$

1,667,809

 

$

(370,023

)

 

$

1,803,210

 

Cost of products sold

 

$

456,194

 

 

$

1,185,116

 

$

(370,023

)

 

$

1,271,287

 

Operating expenses

 

$

96,463

 

 

$

119,605

 

$

 

 

$

216,068

 

Selling, general and administrative expenses

 

$

22,276

 

 

$

135,540

 

$

 

 

$

157,816

 

Depreciation and amortization

 

$

29,071

 

 

$

51,585

 

$

 

 

$

80,656

 

Goodwill impairment

 

$

167,017

 

 

$

119,558

 

$

 

 

$

286,575

 

Income (loss) from operations

 

$

(265,597

)

 

$

56,405

 

$

 

 

$

(209,192

)

Income (loss) before interest and income taxes

 

$

(265,597

)

 

$

55,694

 

$

 

 

$

(209,903

)

EBITDA

 

$

(236,526

)

 

$

107,279

 

$

 

 

$

(129,247

)

(1)

Rack Back consists of the PCLI base oil production activities, by-product sales to third parties and intra-segment base oil sales to rack forward.

(2)

Rack Forward activities include the purchase of base oils from Rack Back and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties.

(3)

Intra-segment sales of Rack Back produced base oils to rack forward are eliminated under the “Eliminations” column.

Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

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

Earnings before interest, taxes, depreciation and amortization, referred 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. Adjusted EBITDA is calculated as EBITDA plus or minus (i) lower of cost or market inventory valuation adjustments, (ii) gain on sale of real property, (iii) goodwill impairment, (iv) HollyFrontier's pro-rata share of gain on business interruption insurance settlement, (v) long-lived asset impairment, inclusive of pro-rata share of impairment in HEP segment, (vi) HollyFrontier's pro-rata share of HEP's gain on sales-type leases, (vii) HollyFrontier's pro-rata share of HEP's loss on early extinguishment of debt, (viii) severance costs, (ix) restructuring charges, (x) Cheyenne Refinery LIFO inventory liquidation costs, (xi) decommissioning costs, (xii) pre-close acquisition integration costs, (xiii) acquisition integration and regulatory costs and (xiv) gain on tariff settlement.

EBITDA and Adjusted EBITDA are not calculations provided for under accounting principles generally accepted in the United States; however, the amounts included in these calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives 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 and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. These 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 financial covenants.

Set forth below is our calculation of EBITDA and Adjusted EBITDA.

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

(In thousands)

Net income (loss) attributable to HollyFrontier stockholders

 

$

(39,530

)

 

$

(117,747

)

 

$

558,324

 

 

$

(601,448

)

Add (subtract) income tax expense (benefit)

 

 

(26,046

)

 

 

(43,643

)

 

 

123,898

 

 

 

(232,147

)

Add interest expense

 

 

30,955

 

 

 

40,604

 

 

 

125,175

 

 

 

126,527

 

Subtract interest income

 

 

(941

)

 

 

(1,043

)

 

 

(4,019

)

 

 

(7,633

)

Add depreciation and amortization

 

 

134,198

 

 

 

124,879

 

 

 

503,539

 

 

 

520,912

 

EBITDA

 

$

98,636

 

 

$

3,050

 

 

$

1,306,917

 

 

$

(193,789

)

Add (subtract) lower of cost or market inventory valuation adjustment

 

 

8,739

 

 

 

(149,212

)

 

 

(310,123

)

 

 

78,499

 

Subtract gain on sale of real property

 

 

 

 

 

 

 

 

(86,018

)

 

 

 

Add goodwill impairment

 

 

 

 

 

81,867

 

 

 

 

 

 

81,867

 

Subtract HollyFrontier's pro-rata share of gain on business interruption insurance settlement

 

 

 

 

 

 

 

 

 

 

 

(77,143

)

Add long-lived asset impairment, inclusive of pro-rata share of impairment in HEP segment

 

 

 

 

 

26,518

 

 

 

 

 

 

456,058

 

Subtract HollyFrontier's pro-rata share of HEP's gain on sales-type leases

 

 

 

 

 

 

 

 

 

 

 

(19,134

)

Add HollyFrontier's pro-rata share of HEP's loss on early extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

14,656

 

Add severance costs

 

 

82

 

 

 

296

 

 

 

988

 

 

 

3,842

 

Add restructuring charges

 

 

 

 

 

 

 

 

7,813

 

 

 

3,679

 

Add Cheyenne Refinery LIFO inventory liquidation costs

 

 

 

 

 

3,129

 

 

 

923

 

 

 

36,943

 

Add decommissioning costs

 

 

2,774

 

 

 

12,439

 

 

 

25,835

 

 

 

24,748

 

Add pre-close acquisition integration costs

 

 

12,278

 

 

 

 

 

 

17,313

 

 

 

 

Add acquisition integration and regulatory costs

 

 

3,517

 

 

 

15

 

 

 

3,517

 

 

 

1,994

 

Subtract gain on tariff settlement

 

 

 

 

 

 

 

 

(51,500

)

 

 

 

Adjusted EBITDA

 

$

126,026

 

 

$

(21,898

)

 

$

915,665

 

 

$

412,220

 

EBITDA and Adjusted EBITDA attributable to our Refining segment is presented below:

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

Refining Segment

 

2021

 

2020

 

2021

 

2020

 

 

(In thousands)

Income (loss) before interest and income taxes (1)

 

$

(63,479

)

 

$

(66,117

)

 

$

449,747

 

 

$

(664,425

)

Add depreciation and amortization

 

 

88,455

 

 

 

73,598

 

 

 

334,365

 

 

 

324,617

 

EBITDA

 

$

24,976

 

 

$

7,481

 

 

$

784,112

 

 

$

(339,808

)

Add (subtract) lower of cost or market inventory valuation adjustment

 

 

 

 

 

(145,497

)

 

 

(318,353

)

 

 

82,214

 

Add long-lived asset impairment

 

 

 

 

 

26,518

 

 

 

 

 

 

241,760

 

Add severance costs

 

 

 

 

 

 

 

 

 

 

 

3,546

 

Add restructuring charges

 

 

 

 

 

 

 

 

 

 

 

2,009

 

Add Cheyenne Refinery LIFO inventory liquidation costs

 

 

 

 

 

 

 

 

 

 

 

33,814

 

Add decommissioning costs

 

 

 

 

 

 

 

 

 

 

 

12,309

 

Adjusted EBITDA

 

$

24,976

 

 

$

(111,498

)

 

$

465,759

 

 

$

35,844

 

(1)

Income (loss) before interest and income taxes of our Refining segment represents income (loss) plus (i) interest expense, net of interest income and (ii) income tax provision.

EBITDA and Adjusted EBITDA attributable to our Lubricants and Specialty Products segment is set forth below.

Lubricants and Specialty Products Segment

 

Rack Back

 

Rack Forward

 

Total Lubricants
and Specialty
Products

 

 

(In thousands)

Three Months Ended December 31, 2021

 

 

 

 

 

 

Income (loss) before interest and income taxes (1)

 

$

55,374

 

 

$

(1,709

)

 

$

53,665

 

Add depreciation and amortization

 

 

8,183

 

 

 

13,085

 

 

 

21,268

 

EBITDA

 

$

63,557

 

 

$

11,376

 

 

$

74,933

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2020

 

 

 

 

 

 

Loss before interest and income taxes (1)

 

$

(5,913

)

 

$

(48,143

)

 

$

(54,056

)

Add depreciation and amortization

 

 

6,908

 

 

 

14,488

 

 

 

21,396

 

EBITDA

 

$

995

 

 

$

(33,655

)

 

$

(32,660

)

Add goodwill impairment

 

 

 

 

 

81,867

 

 

 

81,867

 

Adjusted EBITDA

 

$

995

 

 

$

48,212

 

 

$

49,207

 

 

 

 

 

 

 

 

Year Ended December 31, 2021

 

 

 

 

 

 

Income before interest and income taxes (1)

 

$

269,149

 

 

$

60,054

 

 

$

329,203

 

Add depreciation and amortization

 

 

28,093

 

 

 

51,674

 

 

 

79,767

 

EBITDA

 

 

297,242

 

 

 

111,728

 

 

 

408,970

 

Subtract gain on sale of real property

 

 

(86,018

)

 

 

 

 

 

(86,018

)

Add restructuring charges

 

$

1,079

 

 

$

6,734

 

 

$

7,813

 

Adjusted EBITDA

 

$

212,303

 

 

$

118,462

 

 

$

330,765

 

 

 

 

 

 

 

 

Year Ended December 31, 2020

 

 

 

 

 

 

Income (loss) before interest and income taxes (1)

 

$

(265,597

)

 

$

55,694

 

 

$

(209,903

)

Add depreciation and amortization

 

 

29,071

 

 

 

51,585

 

 

 

80,656

 

EBITDA

 

 

(236,526

)

 

 

107,279

 

 

 

(129,247

)

Add goodwill impairment

 

 

167,017

 

 

 

119,558

 

 

 

286,575

 

Adjusted EBITDA

 

$

(69,509

)

 

$

226,837

 

 

$

157,328

 

(1)

Income (loss) before interest and income taxes of our Lubricants and Specialty Products segment represents income (loss) plus (i) interest expense, net of interest income and (ii) income tax provision.

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 produced barrel sold is total refining segment revenues less total refining segment cost of products sold, exclusive of lower of cost or market inventory valuation adjustments, divided by sales volumes of produced refined products sold. Net operating margin per barrel sold is the difference between refinery gross margin and refinery operating expenses per produced barrel sold. These two margins do not include the non-cash effects of long-lived asset impairment charges, lower of cost or market inventory valuation adjustments or 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.

Below are reconciliations to our consolidated statements of income for refinery net operating and gross margin and operating expenses, in each case averaged per produced barrel sold. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of average refining segment net operating margin per produced barrel sold to refinery gross margin to total sales and other revenues

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

(Dollars in thousands, except per barrel amounts)

Consolidated

 

 

 

 

 

 

 

 

Net operating margin per produced barrel sold

 

$

1.42

 

 

$

(2.05

)

 

$

3.85

 

 

$

1.24

 

Add average refinery operating expenses per produced barrel sold

 

 

7.28

 

 

 

6.07

 

 

 

7.04

 

 

 

6.05

 

Refinery gross margin per produced barrel sold

 

$

8.70

 

 

$

4.02

 

 

$

10.89

 

 

$

7.29

 

Times produced barrels sold (BPD)

 

 

474,230

 

 

 

417,990

 

 

 

424,100

 

 

 

391,670

 

Times number of days in period

 

 

92

 

 

 

92

 

 

 

365

 

 

 

366

 

Refining gross margin

 

$

379,574

 

 

$

154,589

 

 

$

1,685,734

 

 

$

1,045,030

 

Add (subtract) rounding

 

 

(181

)

 

 

(33

)

 

 

(238

)

 

 

523

 

West and Mid-Continent regions gross margin

 

 

379,393

 

 

 

154,556

 

 

 

1,685,496

 

 

 

1,045,553

 

Add West and Mid-Continent regions cost of products sold

 

 

4,686,200

 

 

 

2,326,150

 

 

 

14,673,062

 

 

 

7,992,047

 

Add Cheyenne Refinery sales and other revenues

 

 

 

 

 

 

 

 

 

 

 

501,589

 

Refining segment sales and other revenues

 

 

5,065,593

 

 

 

2,480,706

 

 

 

16,358,558

 

 

 

9,539,189

 

Add lubricants and specialty products segment sales and other revenues

 

 

700,326

 

 

 

464,278

 

 

 

2,560,612

 

 

 

1,803,210

 

Add HEP segment sales and other revenues

 

 

118,493

 

 

 

127,456

 

 

 

494,495

 

 

 

497,848

 

Subtract corporate, other and eliminations

 

 

(261,745

)

 

 

(171,672

)

 

 

(1,024,523

)

 

 

(656,604

)

Sales and other revenues

 

$

5,622,667

 

 

$

2,900,768

 

 

$

18,389,142

 

 

$

11,183,643

 

Reconciliation of average refining segment operating expenses per produced barrel sold to total operating expenses

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

(Dollars in thousands, except per barrel amounts)

Consolidated

 

 

 

 

 

 

 

 

Average operating expenses per produced barrel sold

 

$

7.28

 

 

$

6.07

 

$

7.04

 

$

6.05

 

Times produced barrels sold (BPD)

 

 

474,230

 

 

 

417,990

 

 

424,100

 

 

391,670

 

Times number of days in period

 

 

92

 

 

 

92

 

 

365

 

 

366

 

Refining operating expenses

 

$

317,620

 

 

$

233,422

 

$

1,089,767

 

$

867,275

 

Add (subtract) rounding

 

 

211

 

 

 

11

 

 

657

 

 

(381

)

West and Mid-Continent regions operating expenses

 

 

317,831

 

 

 

233,433

 

 

1,090,424

 

 

866,894

 

Add Cheyenne Refinery operating expenses

 

 

 

 

 

 

 

 

 

121,151

 

Total refining segment operating expenses

 

 

317,831

 

 

 

233,433

 

 

1,090,424

 

 

988,045

 

Add lubricants and specialty products segment operating expenses

 

 

69,453

 

 

 

59,609

 

 

252,456

 

 

216,068

 

Add HEP segment operating expenses

 

 

44,298

 

 

 

37,971

 

 

170,524

 

 

147,692

 

Add (subtract) corporate, other and eliminations

 

 

(724

)

 

 

5,064

 

 

4,074

 

 

(51,528

)

Operating expenses (exclusive of depreciation and amortization)

 

$

430,858

 

 

$

336,077

 

$

1,517,478

 

$

1,300,277

 

Reconciliation of net income (loss) attributable to HollyFrontier stockholders to adjusted net income (loss) attributable to HollyFrontier stockholders

Adjusted net income (loss) attributable to HollyFrontier stockholders is a non-GAAP financial measure that excludes non-cash lower of cost or market inventory valuation adjustments, gain on sale of real property, goodwill and long-lived asset impairments, gain on business interruption insurance settlement, HEP's gain on sales-type leases, HEP's loss on early extinguishment of debt, severance costs, restructuring charges, Cheyenne Refinery LIFO inventory liquidation costs, decommissioning costs, pre-close acquisition integration costs, acquisition integration and regulatory costs and gain on tariff settlement. We believe this measure is helpful to investors and others in evaluating our financial performance and to compare our results to that of other companies in our industry. Similarly titled performance measures of other companies may not be calculated in the same manner.

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

(Dollars in thousands, except per share amounts)

Consolidated

 

 

 

 

 

 

 

 

GAAP:

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

$

(43,150

)

 

$

(138,194

)

 

$

787,152

 

 

$

(747,046

)

Income tax expense (benefit)

 

 

(26,046

)

 

 

(43,643

)

 

 

123,898

 

 

 

(232,147

)

Net income (loss)

 

 

(17,104

)

 

 

(94,551

)

 

 

663,254

 

 

 

(514,899

)

Less net income attributable to noncontrolling interest

 

 

22,426

 

 

 

23,196

 

 

 

104,930

 

 

 

86,549

 

Net income (loss) attributable to HollyFrontier stockholders

 

 

(39,530

)

 

 

(117,747

)

 

 

558,324

 

 

 

(601,448

)

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments to arrive at adjusted results:

 

 

 

 

 

 

 

 

Lower of cost or market inventory valuation adjustment

 

 

8,739

 

 

 

(149,212

)

 

 

(310,123

)

 

 

78,499

 

Gain on sale of real property

 

 

 

 

 

 

 

 

(86,018

)

 

 

 

Gain on business interruption insurance settlement

 

 

 

 

 

 

 

 

 

 

 

(81,000

)

Goodwill and long-lived asset impairments

 

 

 

 

 

108,385

 

 

 

 

 

 

545,293

 

HEP's gain on sales-type lease

 

 

 

 

 

 

 

 

 

 

 

(33,834

)

HEP's loss on early extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

25,915

 

Severance costs

 

 

82

 

 

 

296

 

 

 

988

 

 

 

3,842

 

Restructuring charges

 

 

 

 

 

 

 

 

7,813

 

 

 

3,679

 

Cheyenne Refinery LIFO inventory liquidation costs

 

 

 

 

 

3,129

 

 

 

923

 

 

 

36,943

 

Decommissioning costs

 

 

2,774

 

 

 

12,439

 

 

 

25,835

 

 

 

24,748

 

Pre-close acquisition and regulatory costs

 

 

12,278

 

 

 

 

 

 

17,313

 

 

 

 

Acquisition integration and regulatory costs

 

 

3,517

 

 

 

15

 

 

 

3,517

 

 

 

1,994

 

Gain on tariff settlement

 

 

 

 

 

 

 

 

(51,500

)

 

 

 

Total adjustments to income (loss) before income taxes

 

 

27,390

 

 

 

(24,948

)

 

 

(391,252

)

 

 

606,079

 

Adjustment to income tax expense (benefit) (1)

 

 

5,443

 

 

 

(24,077

)

 

 

(83,049

)

 

 

144,424

 

Adjustment to net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

70

 

Total adjustments, net of tax

 

 

21,947

 

 

 

(871

)

 

 

(308,203

)

 

 

461,585

 

 

 

 

 

 

 

 

 

 

Adjusted results - Non-GAAP:

 

 

 

 

 

 

 

 

Adjusted income (loss) before income taxes

 

 

(15,760

)

 

 

(163,142

)

 

 

395,900

 

 

 

(140,967

)

Adjusted income tax expense (benefit) (2)

 

 

(20,603

)

 

 

(67,720

)

 

 

40,849

 

 

 

(87,723

)

Adjusted net income (loss)

 

 

4,843

 

 

 

(95,422

)

 

 

355,051

 

 

 

(53,244

)

Less net income attributable to noncontrolling interest

 

 

22,426

 

 

 

23,196

 

 

 

104,930

 

 

 

86,619

 

Adjusted net income (loss) attributable to HollyFrontier stockholders

 

$

(17,583

)

 

$

(118,618

)

 

$

250,121

 

 

$

(139,863

)

Adjusted earnings (loss) per share - diluted (3)

 

$

(0.11

)

 

$

(0.74

)

 

$

1.52

 

 

$

(0.87

)

(1)

Represents adjustment to GAAP income tax expense to arrive at adjusted income tax expense, which is computed as follows:

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Non-GAAP income tax expense (benefit) (2)

 

$

(20,603

)

 

$

(67,720

)

 

$

40,849

 

 

$

(87,723

)

Subtract GAAP income tax expense (benefit)

 

 

(26,046

)

 

 

(43,643

)

 

 

123,898

 

 

 

(232,147

)

Non-GAAP adjustment to income tax expense

 

$

5,443

 

 

$

(24,077

)

 

$

(83,049

)

 

$

144,424

 

(2)

Non-GAAP income tax expense (benefit) is computed by a) adjusting HFC's consolidated estimated Annual Effective Tax Rate (“AETR”) for GAAP purposes for the effects of the above Non-GAAP adjustments, b) applying the resulting Adjusted Non-GAAP AETR to Non-GAAP adjusted income before income taxes and c) adjusting for discrete tax items applicable to the period.

(3)

Adjusted earnings per share - diluted is calculated as adjusted net income (loss) attributable to HollyFrontier stockholders divided by the average number of shares of common stock outstanding assuming dilution, which is based on weighted-average diluted shares outstanding as that used in the GAAP diluted earnings per share calculation. Income allocated to participating securities, if applicable, in the adjusted earnings per share calculation is the same as that used in GAAP diluted earnings per share calculation.

Reconciliation of effective tax rate to adjusted effective tax rate

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

(Dollars in thousands)

GAAP:

 

 

 

 

 

 

 

 

Income before income taxes

 

$

(43,150

)

 

$

(138,194

)

 

$

787,152

 

 

$

(747,046

)

Income tax expense

 

$

(26,046

)

 

$

(43,643

)

 

$

123,898

 

 

$

(232,147

)

Effective tax rate for GAAP financial statements

 

 

60.4

%

 

 

31.6

%

 

 

15.7

%

 

 

31.1

%

Adjusted - Non-GAAP:

 

 

 

 

 

 

 

 

Effect of Non-GAAP adjustments

 

 

70.4

%

 

 

9.9

%

 

 

(5.4

) %

 

 

31.1

%

Effective tax rate for adjusted results

 

 

130.8

%

 

 

41.5

%

 

 

10.3

%

 

 

62.2

%

 

Richard L. Voliva III, Executive Vice President and

Chief Financial Officer

Craig Biery, Vice President,

Investor Relations

HollyFrontier Corporation

214-954-6510

Source: HollyFrontier Corporation

FAQ

What were HollyFrontier's fourth quarter 2021 financial results?

HollyFrontier reported a fourth quarter net loss of $(39.5) million or $(0.24) per diluted share, versus a net loss of $(117.7) million or $(0.73) per diluted share in Q4 2020.

How did HollyFrontier's EBITDA perform in 2021?

HollyFrontier's adjusted EBITDA for the year reached $915.7 million, highlighting substantial improvement over the previous year.

What impact did special items have on HollyFrontier's earnings in Q4 2021?

Special items totaled $21.9 million in Q4 2021, primarily due to acquisition integration costs and charges related to the Cheyenne Refinery.

How did Holly Energy Partners (HEP) perform in Q4 2021?

HEP reported EBITDA of $70.8 million for Q4 2021, a decline from $86.8 million in Q4 2020.

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