Holly Energy Partners, L.P. (“HEP” or the “Partnership”) (NYSE:HEP)
today reported financial results for the third quarter of 2014. For the
quarter, distributable cash flow was $45.6 million, up $1.7 million, or
4% compared to the third quarter of 2013. HEP announced its 40th consecutive
distribution increase on October 23, 2014, raising the quarterly
distribution from $0.515 to $0.5225 per unit, representing a 6% increase
over the distribution for the third quarter of 2013.
Net income attributable to Holly Energy Partners for the third quarter
was $29.7 million ($0.35 per basic and diluted limited partner unit)
compared to $21.9 million ($0.25 per basic and diluted limited partner
unit) for the third quarter of 2013. The increase in earnings is
primarily due to higher pipeline volumes and annual tariff increases as
well as decreased interest expense due to the early retirement of our
8.25% Senior Notes in March 2014.
Commenting on the third quarter of 2014, Mike Jennings, Chief Executive
Officer, stated, “We are pleased our financial results for the third
quarter of 2014 allowed us to maintain our record of raising quarterly
distributions. Our expanded New Mexico gathering system is now
substantially complete, and we continue to see increasing volumes.
Additionally, we are pursuing potential new growth opportunities that
leverage our capabilities and HollyFrontier Corporation's refining
footprint."
“As we look forward, we believe HEP is well positioned for continued
growth due to the quality and geographic location of our assets, our
talented employee base, and our financially strong and supportive
general partner, HollyFrontier."
Third Quarter 2014 Revenue Highlights
Revenues for the quarter were $82.1 million, a $4.4 million increase
compared to the third quarter of 2013 due to the effect of higher
pipeline volumes and annual tariff increases. Overall pipeline volumes
were up 9% compared to the three months ended September 30, 2013.
-
Revenues from our refined product pipelines were $28.8 million,
an increase of $2.3 million compared to the third quarter of 2013
primarily due to increased volumes. Shipments averaged 188.0 mbpd
compared to 175.1 mbpd for the third quarter of 2013.
-
Revenues from our intermediate pipelines were $7.0 million, an
increase of $0.5 million, on shipments averaging 139.5 mbpd compared
to 136.3 mbpd for the third quarter of 2013. Revenues increased mainly
due to a $0.4 million increase in deferred revenue recognized.
-
Revenues from our crude pipelines were $14.6 million, an
increase of $1.6 million, on shipments averaging 199.6 mbpd compared
to 172.6 mbpd for the third quarter of 2013.
-
Revenues from terminal, tankage and loading rack fees were
$31.8 million, an increase of $0.1 million compared to the third
quarter of 2013. Refined products terminalled in our facilities
averaged 325.9 mbpd compared to 326.0 mbpd, for the third quarter of
2013. Although volumes were slightly down at the loading rack
facilities, revenue increased due to annual fee increases, higher tank
cost reimbursement receipts from HFC and minimum quarterly revenue
billings at facilities where volumes decreased.
Revenues for the three months ended September 30, 2014, include the
recognition of $0.6 million of prior shortfalls billed to shippers in
2013, as they did not meet their minimum volume commitments within the
contractual make-up period. As of September 30, 2014, shortfall deferred
revenue in our consolidated balance sheet was $11.4 million. Such
deferred revenue will be recognized in earnings either as (a) payment
for shipments in excess of guaranteed levels, if and to the extent the
pipeline system has the necessary capacity for shipments in excess of
guaranteed levels, or (b) when shipping rights expire unused over the
contractual make-up period.
Nine Months Ended September 30, 2014
Revenues for nine months ended September 30, 2014, were $244.1 million,
a $16.8 million increase compared to the first nine months of 2013. This
is due principally to increased pipeline shipments, the effect of annual
tariff increases, and a $2.6 million increase in deferred revenue
realized. Overall pipeline volumes were up 7.5% for the nine months
ended September 30, 2014, as compared to the nine months ended September
30, 2013.
-
Revenues from our refined product pipelines were $89.6 million,
an increase of $9.2 million compared to the nine months ended
September 30, 2013, primarily due to increased volumes and due to the
effects of a $2.0 million increase in deferred revenue realized.
Shipments averaged 180.2 mbpd compared to 169.7 mbpd for the nine
months ended September 30, 2013.
-
Revenues from our intermediate pipelines were $21.6 million, an
increase of $1.6 million, on shipments averaging 140.5 mbpd compared
to 133.2 mbpd for the nine months ended September 30, 2013. Overall
intermediate pipeline shipments were up and revenues also increased
due to a $0.6 million increase in deferred revenue realized.
-
Revenues from our crude pipelines were $40.2 million, an
increase of $3.4 million, on shipments averaging 185.1 mbpd compared
to 167.7 mbpd for the nine months ended September 30, 2013.
-
Revenues from terminal, tankage and loading rack fees were
$92.7 million, an increase of $2.6 million compared to the nine months
ended September 30, 2013. This increase is due principally to
increased volumes. Refined products terminalled in our facilities
averaged 330.6 mbpd compared to 325.2 mbpd for the nine months ended
September 30, 2013.
Revenues for the nine months ended September 30, 2014, include the
recognition of $10.2 million of prior shortfalls billed to shippers in
2013, as they did not meet their minimum volume commitments within the
contractual make-up period.
Operating Costs and Expenses Highlights
Operating costs and expenses were $43.2 million and $127.7 million for
the three and nine months ended September 30, 2014, respectively,
representing decreases of $0.3 million and $1.8 million over the same
periods last year. The decreases are primarily due to lower depreciation
and amortization caused by lower abandonment charges related to tankage
permanently removed from service offset by a $3.5 million tax refund
related to payroll costs recorded in the third quarter of 2013. In
addition, maintenance costs are lower for the nine months ended
September 30, 2014.
Interest expense was $8.6 million and $27.4 million for the three and
nine months ended September 30, 2014, representing decreases of $3.2
million and $8.6 million over the same periods of 2013. The decreases
are principally due to the early retirement of our 8.25% Senior Notes in
March 2014. Also, we recognized a loss of $7.7 million on the early
extinguishment of our 8.25% Senior Notes in March 2014.
We have scheduled a webcast conference call today at 4:00 PM Eastern
Time to discuss financial results. This webcast may be accessed at: https://event.webcasts.com/starthere.jsp?ei=1044060.
An audio archive of this webcast will be available using the above noted
link through November 18, 2014.
About Holly Energy Partners, L.P.
Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides
petroleum product and crude oil transportation, terminalling, storage
and throughput services to the petroleum industry, including
HollyFrontier Corporation subsidiaries. The Partnership owns and
operates petroleum product and crude gathering pipelines, tankage and
terminals in Texas, New Mexico, Arizona, Washington, Idaho, Oklahoma,
Utah, Wyoming and Kansas. In addition, the Partnership owns a 75%
interest in UNEV Pipeline, L.L.C., the owner of a Holly Energy operated
refined products pipeline running from Salt Lake City, Utah to Las
Vegas, Nevada, and related product terminals and a 25% interest in SLC
Pipeline, L.L.C., a 95-mile intrastate pipeline system serving
refineries in the Salt Lake City, Utah area.
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, a 125,000 bpsd refinery 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 statements in this press release relating to matters that are not
historical facts are “forward-looking statements” within the meaning of
the federal securities laws. Forward-looking statements use words such
as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,”
“intend,” “should,” “would,” “could,” “believe,” “may,” and similar
expressions and statements regarding our plans and objectives for future
operations. These statements are based on our beliefs and assumptions
and those of our general partner using currently available information
and expectations as of the date hereof, are not guarantees of future
performance and involve certain risks and uncertainties. Although we and
our general partner believe that such expectations reflected in such
forward-looking statements are reasonable, neither we nor our general
partner can give assurance that our expectations will prove to be
correct. All statements concerning our expectations for future results
of operations are based on forecasts for our existing operations and do
not include the potential impact of any future acquisitions. Our
forward-looking statements are subject to a variety of risks,
uncertainties and assumptions. If one or more of these risks or
uncertainties materialize, or if underlying assumptions prove incorrect,
our actual results may vary materially from those anticipated,
estimated, projected or expected. Certain factors could cause actual
results to differ materially from results anticipated in the
forward-looking statements. These factors include, but are not limited
to:
-
risks and uncertainties with respect to the actual quantities of
petroleum products and crude oil shipped on our pipelines and/or
terminalled, stored and throughput in our terminals;
-
the economic viability of HollyFrontier Corporation, Alon USA, Inc.
and our other customers;
-
the demand for refined petroleum products in markets we serve;
-
our ability to purchase and integrate future acquired operations;
-
our ability to complete previously announced or contemplated
acquisitions;
-
the availability and cost of additional debt and equity financing;
-
the possibility of reductions in production or shutdowns at refineries
utilizing our pipeline and terminal facilities;
-
the effects of current and future government regulations and policies;
-
our operational efficiency in carrying out routine operations and
capital construction projects;
-
the possibility of terrorist attacks and the consequences of any such
attacks;
-
general economic conditions; and
-
other financial, operations and legal risks and uncertainties detailed
from time to time in our 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 (Unaudited)
|
|
|
|
|
|
|
|
Income, Distributable Cash Flow and Volumes
|
|
The following tables present income, distributable cash flow and
volume information for the three and nine months ended September
30, 2014.
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Change from
|
|
|
|
2014
|
|
|
2013
|
|
|
2013
|
|
|
|
|
(In thousands, except per unit data)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
$
|
17,811
|
|
|
$
|
17,196
|
|
|
$
|
615
|
|
|
Affiliates – intermediate pipelines
|
|
7,038
|
|
|
6,567
|
|
|
471
|
|
|
Affiliates – crude pipelines
|
|
14,557
|
|
|
12,994
|
|
|
1,563
|
|
|
|
|
39,406
|
|
|
36,757
|
|
|
2,649
|
|
|
Third parties – refined product pipelines
|
|
10,939
|
|
|
9,246
|
|
|
1,693
|
|
|
|
|
50,345
|
|
|
46,003
|
|
|
4,342
|
|
|
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
28,044
|
|
|
28,766
|
|
|
(722
|
)
|
|
Third parties
|
|
3,741
|
|
|
2,954
|
|
|
787
|
|
|
|
|
31,785
|
|
|
31,720
|
|
|
65
|
|
|
Total revenues
|
|
82,130
|
|
|
77,723
|
|
|
4,407
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
25,456
|
|
|
21,686
|
|
|
3,770
|
|
|
Depreciation and amortization
|
|
15,483
|
|
|
19,449
|
|
|
(3,966
|
)
|
|
General and administrative
|
|
2,266
|
|
|
2,415
|
|
|
(149
|
)
|
|
|
|
43,205
|
|
|
43,550
|
|
|
(345
|
)
|
|
Operating income
|
|
38,925
|
|
|
34,173
|
|
|
4,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of SLC Pipeline
|
|
880
|
|
|
835
|
|
|
45
|
|
|
Interest expense, including amortization
|
|
(8,585
|
)
|
|
(11,816
|
)
|
|
3,231
|
|
|
Interest income
|
|
—
|
|
|
3
|
|
|
(3
|
)
|
|
Gain on sale of assets
|
|
—
|
|
|
(159
|
)
|
|
159
|
|
|
Other income
|
|
11
|
|
|
61
|
|
|
(50
|
)
|
|
|
|
(7,694
|
)
|
|
(11,076
|
)
|
|
3,382
|
|
|
Income before income taxes
|
|
31,231
|
|
|
23,097
|
|
|
8,134
|
|
|
State income tax expense
|
|
(42
|
)
|
|
(40
|
)
|
|
(2
|
)
|
|
Net income
|
|
31,189
|
|
|
23,057
|
|
|
8,132
|
|
|
Allocation of net income attributable to noncontrolling interests
|
|
(1,509
|
)
|
|
(1,172
|
)
|
|
(337
|
)
|
|
Net income attributable to Holly Energy Partners
|
|
29,680
|
|
|
21,885
|
|
|
7,795
|
|
|
General partner interest in net income, including incentive
distributions(1)
|
|
(8,940
|
)
|
|
(7,128
|
)
|
|
(1,812
|
)
|
|
Limited partners’ interest in net income
|
|
$
|
20,740
|
|
|
$
|
14,757
|
|
|
$
|
5,983
|
|
|
Limited partners’ earnings per unit – basic and diluted:(1)
|
|
$
|
0.35
|
|
|
$
|
0.25
|
|
|
$
|
0.10
|
|
|
Weighted average limited partners’ units outstanding
|
|
58,657
|
|
|
58,657
|
|
|
—
|
|
|
EBITDA(2)
|
|
$
|
53,790
|
|
|
$
|
53,187
|
|
|
$
|
603
|
|
|
Distributable cash flow(3)
|
|
$
|
45,581
|
|
|
$
|
43,865
|
|
|
$
|
1,716
|
|
|
Volumes (bpd)
|
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
116,727
|
|
|
116,078
|
|
|
649
|
|
|
Affiliates – intermediate pipelines
|
|
139,502
|
|
|
136,312
|
|
|
3,190
|
|
|
Affiliates – crude pipelines
|
|
199,627
|
|
|
172,569
|
|
|
27,058
|
|
|
|
|
455,856
|
|
|
424,959
|
|
|
30,897
|
|
|
Third parties – refined product pipelines
|
|
71,271
|
|
|
59,036
|
|
|
12,235
|
|
|
|
|
527,127
|
|
|
483,995
|
|
|
43,132
|
|
|
Terminals and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
255,556
|
|
|
261,431
|
|
|
(5,875
|
)
|
|
Third parties
|
|
70,364
|
|
|
64,615
|
|
|
5,749
|
|
|
|
|
325,920
|
|
|
326,046
|
|
|
(126
|
)
|
|
Total for pipelines and terminal assets (bpd)
|
|
853,047
|
|
|
810,041
|
|
|
43,006
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
Change from
|
|
|
|
2014
|
|
2013
|
|
2013
|
|
|
|
(In thousands, except per unit data)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates—refined product pipelines
|
|
$
|
59,520
|
|
|
$
|
50,918
|
|
|
$
|
8,602
|
|
|
Affiliates—intermediate pipelines
|
|
21,632
|
|
|
20,030
|
|
|
1,602
|
|
|
Affiliates—crude pipelines
|
|
40,207
|
|
|
36,760
|
|
|
3,447
|
|
|
|
|
121,359
|
|
|
107,708
|
|
|
13,651
|
|
|
Third parties—refined product pipelines
|
|
30,037
|
|
|
29,412
|
|
|
625
|
|
|
|
|
151,396
|
|
|
137,120
|
|
|
14,276
|
|
|
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
82,403
|
|
|
82,514
|
|
|
(111
|
)
|
|
Third parties
|
|
10,333
|
|
|
7,672
|
|
|
2,661
|
|
|
|
|
92,736
|
|
|
90,186
|
|
|
2,550
|
|
|
Total revenues
|
|
244,132
|
|
|
227,306
|
|
|
16,826
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Operations (exclusive of depreciation and amortization)
|
|
72,835
|
|
|
72,089
|
|
|
746
|
|
|
Depreciation and amortization
|
|
46,953
|
|
|
48,730
|
|
|
(1,777
|
)
|
|
General and administrative
|
|
7,933
|
|
|
8,747
|
|
|
(814
|
)
|
|
|
|
127,721
|
|
|
129,566
|
|
|
(1,845
|
)
|
|
Operating income
|
|
116,411
|
|
|
97,740
|
|
|
18,671
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of SLC Pipeline
|
|
2,150
|
|
|
2,238
|
|
|
(88
|
)
|
|
Interest expense, including amortization
|
|
(27,368
|
)
|
|
(35,929
|
)
|
|
8,561
|
|
|
Interest income
|
|
3
|
|
|
110
|
|
|
(107
|
)
|
|
Loss on early extinguishment of debt
|
|
(7,677
|
)
|
|
—
|
|
|
(7,677
|
)
|
|
Gain on sale of assets
|
|
—
|
|
|
1,863
|
|
|
(1,863
|
)
|
|
Other income
|
|
45
|
|
|
61
|
|
|
(16
|
)
|
|
|
|
(32,847
|
)
|
|
(31,657
|
)
|
|
(1,190
|
)
|
|
Income before income taxes
|
|
83,564
|
|
|
66,083
|
|
|
17,481
|
|
|
State income tax
|
|
(145
|
)
|
|
(440
|
)
|
|
295
|
|
|
Net income
|
|
83,419
|
|
|
65,643
|
|
|
17,776
|
|
|
Allocation of net income attributable to noncontrolling interests
|
|
(6,562
|
)
|
|
(5,192
|
)
|
|
(1,370
|
)
|
|
Net income attributable to Holly Energy Partners
|
|
76,857
|
|
|
60,451
|
|
|
16,406
|
|
|
General partner interest in net income, including incentive
distributions (1)
|
|
(25,334
|
)
|
|
(20,038
|
)
|
|
(5,296
|
)
|
|
Limited partners’ interest in net income
|
|
$
|
51,523
|
|
|
$
|
40,413
|
|
|
$
|
11,110
|
|
|
Limited partners’ earnings per unit—basic and diluted (1)
|
|
$
|
0.87
|
|
|
$
|
0.69
|
|
|
$
|
0.18
|
|
|
Weighted average limited partners’ units outstanding
|
|
58,657
|
|
|
58,108
|
|
|
549
|
|
|
EBITDA (2)
|
|
$
|
158,997
|
|
|
$
|
145,440
|
|
|
$
|
13,557
|
|
|
Distributable cash flow (3)
|
|
$
|
130,883
|
|
|
$
|
112,316
|
|
|
$
|
18,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volumes (bpd)
|
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates—refined product pipelines
|
|
119,718
|
|
|
109,995
|
|
|
9,723
|
|
|
Affiliates—intermediate pipelines
|
|
140,505
|
|
|
133,222
|
|
|
7,283
|
|
|
Affiliates—crude pipelines
|
|
185,131
|
|
|
167,685
|
|
|
17,446
|
|
|
|
|
445,354
|
|
|
410,902
|
|
|
34,452
|
|
|
Third parties—refined product pipelines
|
|
60,492
|
|
|
59,711
|
|
|
781
|
|
|
|
|
505,846
|
|
|
470,613
|
|
|
35,233
|
|
|
Terminals and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
262,458
|
|
|
265,242
|
|
|
(2,784
|
)
|
|
Third parties
|
|
68,185
|
|
|
59,995
|
|
|
8,190
|
|
|
|
|
330,643
|
|
|
325,237
|
|
|
5,406
|
|
|
Total for pipelines and terminal assets (bpd)
|
|
836,489
|
|
|
795,850
|
|
|
40,639
|
|
(1) Net income attributable to Holly Energy Partners is allocated
between limited partners and the general partner interest in accordance
with the provisions of the partnership agreement. Net income allocated
to the general partner includes incentive distributions declared
subsequent to quarter end. General partner incentive distributions were
$8.5 million and $6.8 million for the three months ended September 30,
2014 and 2013, respectively, and $24.3 million and $19.2 million for the
nine months ended September 30, 2014 and 2013, respectively.
(2) Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) is calculated as net income attributable to Holly Energy
Partners plus (i) interest expense, net of interest income, (ii) state
income tax and (iii) depreciation and amortization. EBITDA is not a
calculation based upon GAAP. 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 attributable to Holly Energy Partners 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 also is used by
our management for internal analysis and as a basis for compliance with
financial covenants.
Set forth below is our calculation of EBITDA.
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
(In thousands)
|
|
Net income attributable to Holly Energy Partners
|
|
$
|
29,680
|
|
|
$
|
21,885
|
|
|
$
|
76,857
|
|
|
$
|
60,451
|
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
8,148
|
|
|
11,289
|
|
|
25,984
|
|
|
33,490
|
|
|
Interest Income
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(110
|
)
|
|
Amortization of discount and deferred debt charges
|
|
437
|
|
|
527
|
|
|
1,384
|
|
|
1,590
|
|
|
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
7,677
|
|
|
—
|
|
|
Amortization of unrecognized loss attributable to terminated cash
flow hedge
|
|
—
|
|
|
—
|
|
|
—
|
|
|
849
|
|
|
State income tax
|
|
42
|
|
|
40
|
|
|
145
|
|
|
440
|
|
|
Depreciation and amortization
|
|
15,483
|
|
|
19,449
|
|
|
46,953
|
|
|
48,730
|
|
|
EBITDA
|
|
$
|
53,790
|
|
|
$
|
53,187
|
|
|
$
|
158,997
|
|
|
$
|
145,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Distributable cash flow is not a calculation based upon GAAP.
However, the amounts included in the calculation are derived from
amounts presented in our consolidated financial statements, with the
general exception of maintenance capital expenditures. Distributable
cash flow should not be considered in isolation or as an alternative to
net income attributable to Holly Energy Partners or operating income, as
an indication of our operating performance, or as an alternative to
operating cash flow as a measure of liquidity. Distributable cash flow
is not necessarily comparable to similarly titled measures of other
companies. Distributable cash flow is presented here because it is a
widely accepted financial indicator used by investors to compare
partnership performance. It is also used by management for internal
analysis and our performance units. We believe that this measure
provides investors an enhanced perspective of the operating performance
of our assets and the cash our business is generating.
Set forth below is our calculation of distributable cash flow.
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
(In thousands)
|
|
Net income attributable to Holly Energy Partners
|
|
$
|
29,680
|
|
|
$
|
21,885
|
|
|
$
|
76,857
|
|
|
$
|
60,451
|
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
15,483
|
|
|
19,449
|
|
|
46,953
|
|
|
48,730
|
|
|
Amortization of discount and deferred debt charges
|
|
437
|
|
|
527
|
|
|
1,384
|
|
|
1,590
|
|
|
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
7,677
|
|
|
—
|
|
|
Amortization of unrecognized loss attributable to terminated cash
flow hedge
|
|
—
|
|
|
—
|
|
|
—
|
|
|
849
|
|
|
Increase (decrease) in deferred revenue attributable to shortfall
billings
|
|
1,090
|
|
|
3,472
|
|
|
(49
|
)
|
|
3,624
|
|
|
Maintenance capital expenditures*
|
|
(653
|
)
|
|
(2,045
|
)
|
|
(2,344
|
)
|
|
(6,557
|
)
|
|
Billed crude revenue settlement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
918
|
|
|
Other non-cash adjustments
|
|
(456
|
)
|
|
577
|
|
|
405
|
|
|
2,711
|
|
|
Distributable cash flow
|
|
$
|
45,581
|
|
|
$
|
43,865
|
|
|
$
|
130,883
|
|
|
$
|
112,316
|
|
* Maintenance capital expenditures are capital expenditures made to
replace partially or fully depreciated assets in order to maintain the
existing operating capacity of our assets and to extend their useful
lives. Maintenance capital expenditures include expenditures required to
maintain equipment reliability, tankage and pipeline integrity, and
safety and to address environmental regulations.
|
|
|
September 30,
|
|
December 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
(In thousands)
|
|
Balance Sheet Data
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,667
|
|
|
$
|
6,352
|
|
|
Working capital (deficit)
|
|
$
|
1,548
|
|
|
$
|
(6,604
|
)
|
|
Total assets
|
|
$
|
1,386,169
|
|
|
$
|
1,382,508
|
|
|
Long-term debt
|
|
$
|
851,416
|
|
|
$
|
807,630
|
|
|
Partners' equity(4)
|
|
$
|
333,513
|
|
|
$
|
369,446
|
|
(4) As a master limited partnership, we distribute our available cash,
which historically has exceeded our net income attributable to Holly
Energy Partners because depreciation and amortization expense represents
a non-cash charge against income. The result is a decline in partners’
equity since our regular quarterly distributions have exceeded our
quarterly net income attributable to Holly Energy Partners.
Additionally, if the assets contributed and acquired from HollyFrontier
while we were a consolidated variable interest entity of HollyFrontier
had been acquired from third parties, our acquisition cost in excess of
HollyFrontier’s basis in the transferred assets of $305.3 million would
have been recorded as increases to our properties and equipment and
intangible assets at the time of acquisition instead of decreases to
partners’ equity.
Copyright Business Wire 2014