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Holly Energy Partners, L.P. Reports Fourth Quarter Earnings
DALLAS, Feb. 5 /PRNewswire-FirstCall/ -- Holly Energy Partners, L.P. (NYSE: HEP) today reported fourth quarter net income of $10.1 million ($0.58 per basic and diluted limited partner unit) for the three months ended December 31, 2007 as compared to $9.7 million ($0.56 per basic and diluted limited partner unit) for the three months ended December 31, 2006. For the year ended December 31, 2007, net income was $39.3 million ($2.26 per basic and diluted limited partner unit) as compared to $27.5 million ($1.60 per basic and diluted limited partner unit) for the year ended December 31, 2006. Net income for the three months and year ended December 31, 2007 increased $0.5 million and $11.7 million, respectively, as compared to the same periods in 2006. The increase in net income for the three months ended December 31, 2007 was principally due to an increase in volumes transported on our pipeline systems, the effects of annual tariff increases on product shipments and the realization of certain previously deferred revenue, partially offset by an increase in operating costs and expenses. The increase in net income for the year ended December 31, 2007 was principally due to an increase in volumes transported and terminalled on our pipeline and terminal systems, the effects of annual tariff increases on product shipments, the realization of certain previously deferred revenue, and revenue related to the sale of inventory of accumulated terminal overages of refined product to Holly Corporation ("Holly"), partially offset by an increase in operating costs and expenses. The increase in volumes transported on our pipeline systems for the year ended December 31, 2007 as compared to 2006 was principally due to significant downtime at all of the refineries served by our product distribution network in the second quarter of 2006. Refiners were generally required to start producing ultra low sulfur diesel fuel ("ULSD") by June 2006. To meet this requirement, many refiners, including Holly's Navajo refinery and Alon's Big Spring refinery, required downtime at their refineries so that ULSD-associated projects could be brought on line. Additionally, Holly completed an expansion of the Navajo refinery during this period of downtime which resulted in increased refinery production and has contributed to increased volume shipments on our pipeline systems. Revenues increased by $1.9 million from $25.3 million for the three months ended December 31, 2006 to $27.2 million for the three months ended December 31, 2007. This increase in revenue was principally due to an increase in volumes transported on our pipelines systems, the effects of annual tariff increases on product shipments and an increase in previously deferred revenue realized. Revenues from refined product pipelines increased by $1.7 million from $17.9 million for the three months ended December 31, 2006 to $19.6 million for the three months ended December 31, 2007. This increase was principally due to an increase in volumes shipped on our refined product pipelines, the effect of the annual tariff increase on refined product shipments and the realization of $1.1 million of previously deferred revenue. Shipments on our refined product pipelines increased to an average of 145.0 thousand barrels per day ("mbpd") for the three months ended December 31, 2007 as compared to 143.6 mbpd for the three months ended December 31, 2006. Revenues from the intermediate pipelines decreased by $0.1 million from $3.4 million for the quarter ended December 31, 2006 to $3.3 million for the quarter ended December 31, 2007. This decrease was principally due to a $0.3 million decrease in previously deferred revenue realized, partially offset by an increase in volumes shipped on our intermediate pipelines and the effect of the annual tariff increase on intermediate pipeline shipments. Shipments on our intermediate product pipelines increased to an average of 70.0 mbpd for the three months ended December 31, 2007 as compared to 65.8 mbpd for the three months ended December 31, 2006. Revenues from terminal and truck loading rack service fees increased by $0.2 million from $4.0 million for the three months ended December 31, 2006 to $4.2 million for the three months ended December 31, 2007. Operating costs and expenses increased by $1.5 million from $12.1 million for the three months ended December 31, 2006 to $13.6 million for the three months ended December 31, 2007. This includes pipeline maintenance costs associated with repairs to our Rio Grande pipeline during the fourth quarter of 2007. Revenues increased by $16.2 million from $89.2 million for the year ended December 31, 2006 to $105.4 million for the ended December 31, 2007. This increase was principally due to an increase in volumes transported and terminalled on our pipeline and terminal systems, the effects of annual tariff increases on product shipments, an increase in previously deferred revenue realized and revenue related to the sale to Holly of inventory of accumulated terminal overages of refined product. Revenues from refined product pipelines increased by $9.2 million from $63.4 million for the year ended December 31, 2006 to $72.6 million for the year ended December 31, 2007. This increase was principally due to an increase in volumes shipped on our refined product pipelines, the effect of the annual tariff increase on refined product shipments and the realization of $3.1 million of previously deferred revenue. Shipments on our refined product pipelines increased to an average of 140.2 mbpd for the year ended December 31, 2007 as compared to 131.9 mbpd for the year ended December 31, 2006. Revenues from the intermediate pipelines increased by $3.0 million from $10.7 million for the year ended December 31, 2006 to $13.7 million for the year ended December 31, 2007. This increase was principally due to an increase in volumes shipped on our intermediate pipelines, the effect of the annual tariff increase on intermediate pipeline shipments and a $1.4 million increase in previously deferred revenue realized. Shipments on our intermediate product pipelines increased to an average of 65.0 mbpd for the year ended December 31, 2007 as compared to 57.7 mbpd for the year ended December 31, 2006. Revenues from terminal and truck loading rack service fees increased by $1.3 million from $15.1 million for the year ended December 31, 2006 to $16.4 million for the year ended December 31, 2007. Other revenues for the year ended December 31, 2007 consisted of $2.7 million related to the sale of inventory of accumulated terminal overages of refined product to Holly. Operating costs and expenses increased by $3.5 million from $48.8 million for the year ended December 31, 2006 to $52.3 million for the year ended December 31, 2007 principally due to an increase in pipeline and terminal maintenance expense. Commenting on the results for 2007, Matt Clifton, Chairman of the Board and Chief Executive Officer stated: "We are pleased with our progress during 2007 and our continuing ability to consistently raise distribution levels. As previously announced, our cash distribution for the fourth quarter of 2007 will be $0.725 per unit, an increase over our distribution of $0.715 per unit for the third quarter of 2007 and a 7% increase over our distribution of $0.675 per unit for the fourth quarter of 2006. Looking forward, we are very enthusiastic about 2008 as we press forward on our planned growth initiatives." We have scheduled a conference call today at 10:00 AM EST to discuss financial results. Listeners may access this call by dialing (888) 548-4639. The ID# for this call is #30971742. Additionally, listeners may access the call via the internet at: http://www.videonewswire.com/event.asp?id=45072. Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides petroleum product transportation and terminal services to the petroleum industry, including Holly Corporation, which owns a 45% interest (including the general partner interest) in the Partnership. The Partnership owns and operates petroleum product pipelines and terminals primarily in Texas, New Mexico, Arizona, Washington, Idaho, Oklahoma and Utah. In addition, the Partnership owns a 70% interest in Rio Grande Pipeline Company, a transporter of LPGs from West Texas to Northern Mexico. Holly Corporation operates through its subsidiaries an 85,000 barrels-per-day ("bpsd") refinery located in Artesia, New Mexico and a 26,000 bpsd refinery in Woods Cross, Utah. 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" within the meaning of the federal securities laws. These statements are 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. 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 differ materially from what is expressed, implied or forecast in these statements. Any differences could be caused by a number of factors, including, but not limited to:
-- Risks and uncertainties with respect to the actual quantities of
petroleum products shipped on our pipelines and/or terminalled in our
terminals;
-- The economic viability of Holly Corporation, Alon USA, Inc. and our
other customers;
-- The demand for refined petroleum products in markets we serve;
-- Our ability to successfully purchase and integrate additional
operations in the future;
-- Our ability to complete previously announced pending or contemplated
acquisitions;
-- The availability and cost of our financing;
-- The possibility of reductions in production or shutdowns at refineries
utilizing our pipeline and terminal facilities;
-- The effects of current or 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 months and years ended December 31, 2007 and
2006.
Three Months Ended
December 31, Change from
2007 2006 2006
(In thousands, except per unit data)
Revenues
Pipelines:
Affiliates -
refined product pipelines $9,817 $9,319 $498
Third parties -
refined product pipelines 9,798 8,583 1,215
19,615 17,902 1,713
Affiliates - intermediate
pipelines 3,341 3,396 (55)
22,956 21,298 1,658
Terminals and truck loading racks:
Affiliates 2,861 2,825 36
Third parties 1,374 1,207 167
4,235 4,032 203
Total revenues 27,191 25,330 1,861
Operating costs and expenses
Operations 9,050 7,010 2,040
Depreciation and amortization 3,509 3,917 (408)
General and administrative 1,081 1,164 (83)
13,640 12,091 1,549
Operating income 13,551 13,239 312
Interest income 102 197 (95)
Interest expense,
including amortization (3,177) (3,332) 155
Minority interest in Rio Grande (253) (445) 192
Income before income taxes 10,223 9,659 564
State income tax (82) - (82)
Net income 10,141 9,659 482
Less general partner interest
in net income, including
incentive distributions (1) 832 576 256
Limited partners' interest
in net income $9,309 $9,083 $226
Net income per unit applicable
to limited partners (1) $0.58 $0.56 $0.02
Weighted average limited
partners' units outstanding 16,108 16,108 -
EBITDA (2) $16,807 $16,711 $96
Distributable cash flow (3) $12,346 $14,374 $(2,028)
Volumes (bpd)
Pipelines:
Affiliates - refined
product pipelines 82,791 80,988 1,803
Third parties - refined
product pipelines 62,253 62,609 (356)
145,044 143,597 1,447
Affiliates - intermediate
pipelines 69,957 65,849 4,108
215,001 209,446 5,555
Terminals and truck loading racks:
Affiliates 125,705 127,894 (2,189)
Third parties 43,507 43,222 285
169,212 171,116 (1,904)
Total for petroleum pipelines
and terminal assets (bpd) 384,213 380,562 3,651
Year Ended
December 31, Change from
2007 2006 2006
(In thousands, except per unit data)
Revenues
Pipelines:
Affiliates -
refined product pipelines $36,281 $31,723 $4,558
Third parties -
refined product pipelines 36,271 31,685 4,586
72,552 63,408 9,144
Affiliates -
intermediate pipelines 13,731 10,733 2,998
86,283 74,141 12,142
Terminals and truck loading racks:
Affiliates 10,949 10,422 527
Third parties 5,427 4,631 796
16,376 15,053 1,323
Other - affiliates 2,748 - 2,748
Total revenues 105,407 89,194 16,213
Operating costs and expenses
Operations 32,911 28,630 4,281
Depreciation and
amortization 14,382 15,330 (948)
General and administrative 5,043 4,854 189
52,336 48,814 3,522
Operating income 53,071 40,380 12,691
Interest income 533 899 (366)
Interest expense, including
amortization (13,289) (13,056) (233)
Gain on sale of assets 298 - 298
Minority interest in Rio Grande (1,067) (680) (387)
Income before income taxes 39,546 27,543 12,003
State income tax (275) - (275)
Net income 39,271 27,543 11,728
Less general partner
interest in net income,
including incentive
distributions (1) 2,932 1,710 1,222
Limited partners' interest
in net income $36,339 $25,833 $10,506
Net income per unit applicable
to limited partners (1) $2.26 $1.60 $0.66
Weighted average limited
partners' units outstanding 16,108 16,108 -
EBITDA(2) $66,684 $55,030 $11,654
Distributable cash flow (3) $51,012 $47,219 $3,793
Volumes (bpd)
Pipelines:
Affiliates -
refined product pipelines 77,441 69,271 8,170
Third parties -
refined product pipelines 62,720 62,655 65
140,161 131,926 8,235
Affiliates -
intermediate pipelines 65,006 57,658 7,348
205,167 189,584 15,583
Terminals and truck loading racks:
Affiliates 119,910 118,202 1,708
Third parties 45,457 43,285 2,172
165,367 161,487 3,880
Total for petroleum pipelines
and terminal assets (bpd) 370,534 351,071 19,463
(1) Net income is allocated between limited partners and the general
partner interest in accordance with the provisions of the partnership
agreement. Incentive distributions of $0.6 million and $0.4 million
were declared during the three months ended December 31, 2007 and
2006, respectively. Incentive distributions of $2.2 million and $1.2
million were declared during the year ended December 31, 2007 and
2006, respectively. The net income applicable to the limited partners
is divided by the weighted average limited partner units outstanding
in computing the net income per unit applicable to limited partners.
(2) Earnings before interest, taxes, depreciation and amortization
("EBITDA") is calculated as net income plus (i) interest expense net
of interest income and (ii) depreciation and amortization. EBITDA is
not a calculation based upon U.S. generally accepted accounting
principles ("U.S. 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 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 accepted financial indicator used by
investors and analysts to measure performance. EBITDA is also used by
our management for internal analysis and as a basis for compliance
with financial covenants.
Set forth below is our calculation of EBITDA.
Three Months Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
(In thousands)
Net income $10,141 $9,659 $39,271 $27,543
Add interest expense 3,068 3,090 12,281 12,088
Add amortization of discount and
deferred debt issuance costs 109 242 1,008 968
Subtract interest income (102) (197) (533) (899)
Add state income tax 82 - 275 -
Add depreciation and amortization 3,509 3,917 14,382 15,330
EBITDA $16,807 $16,711 $66,684 $55,030
(3) Distributable cash flow is not a calculation based upon U.S. GAAP.
However, the amounts included in the calculation are derived from
amounts separately presented in our consolidated financial statements,
with the exception of maintenance capital expenditures. Distributable
cash flow should not be considered in isolation or as an alternative
to net income or operating income, as an indication of our operating
performance or as an alternative to operating cash flow as a measure
of liquidity. 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. 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 Year Ended
December 31, December 31,
2007 2006 2007 2006
(In thousands)
Net income $10,141 $9,659 $39,271 $27,543
Add depreciation and amortization 3,509 3,917 14,382 15,330
Add amortization of discount and
deferred debt issuance costs 109 242 1,008 968
Add (subtract) increase (decrease)
in deferred revenue (916) 791 (1,786) 4,473
Subtract maintenance capital
expenditures* (497) (235) (1,863) (1,095)
Distributable cash flow $12,346 $14,374 $51,012 $47,219
* Maintenance capital expenditures are capital expenditures made to
partially or fully depreciated assets in order to maintain the existing
operating capacity of our assets and to extend their useful lives.
Website: http://www.hollyenergy.com/Website: http://www.hollycorp.com/ |
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