HollyFrontier Corporation Reports Quarterly Results
Dallas, Texas, May 3, 2017 ‑‑ HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”) today reported first quarter net loss attributable to HollyFrontier stockholders of $(45.5) million or $(0.26) per diluted share for the quarter ended March 31, 2017, compared to net income of $21.3 million or $0.12 per diluted share for the quarter ended March 31, 2016.
The first quarter included several special items that reduced net income by a total of $12.0 million. On a pre-tax basis, these items included a lower of cost or market inventory valuation charge of $11.8 million, direct acquisition and integration costs of Petro-Canada Lubricants Inc. (“PCLI”) totaling $15.6 million, incremental cost of products sold attributable to our PCLI inventory value step-up of $10.2 million, HollyFrontier's pro-rata share of Holly Energy Partners' loss on early extinguishment of debt of $4.5 million, and a gain of $24.5 million on foreign currency swaps related to the purchase of PCLI.
Excluding these items, net loss for the current quarter was $(33.5) million versus a loss of $(10.0) million for the same period of 2016. This decrease was driven by lower product sales due to maintenance at the El Dorado, Tulsa and Navajo refineries, partially offset by $8.4 million in earnings attributable to our recently acquired PCLI operations. Production levels averaged approximately 392,000 barrels per day (“BPD”) and crude oil charges averaged 371,000 BPD for the current quarter. On a per barrel basis, consolidated refinery gross margin was $7.74 per produced barrel, a 2% increase compared to $7.59 for the first quarter of 2016. Total operating expenses for the quarter were $307.1 million compared to $252.6 million for the first quarter of last year and include $36.0 million in costs attributable to our PCLI operations.
HollyFrontier’s President & CEO, George Damiris, commented, “First quarter crude rate was negatively impacted by our planned turnaround at Navajo, planned maintenance at the El Dorado vacuum tower, unplanned maintenance at the Tulsa CCR reformer, and the crude supply pipeline outage to our Woods Cross refinery. We are pleased with the results from the Navajo turnaround and the efficiency and debottleneck projects that were implemented during the turnaround. During the Tulsa outage, we were able to accelerate other maintenance and a catalyst upgrade originally planned for later this year, all of which will allow us to benefit from higher liquid yields and octane during the summer driving season. We are also encouraged by the results we have begun to see from our focused efforts to improve operations and reliability at Cheyenne; crude rate was over 48,000 barrels per day in March. With no major planned downtime until November, our refineries are well positioned for strong operational and financial performance for the remainder of the year.
We closed the PCLI acquisition on February 1st and PCLI continues to meet or exceed our expectations. Adjusted EBITDA for February and March was $28.0 million, in line with our annual guidance range. We remain confident in our $20.0 million per year synergy target and in the potential for significant margin uplift by increasing Group III base oil production through feedstock optimization. We are excited about our growing presence in the lubricants industry and are encouraged by our progress integrating PCLI into HFC.”
For the first quarter of 2017, net cash used for operations totaled $39.4 million including $48.0 million of turnaround expenses. During the period, we declared a dividend of $0.33 per share to shareholders totaling $59.0 million. At March 31, 2017, our cash and cash equivalents totaled $129.5 million and our consolidated debt was $2,231.5 million. Our debt, exclusive of Holly Energy Partners' debt, which is nonrecourse to HollyFrontier, was $991.0 million at March 31, 2017.
The following information was filed by Hollyfrontier Corp (HFC) on Wednesday, May 3, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.