A month has gone by since the last earnings report for HollyFrontier . Shares have lost about 4.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is HollyFrontier due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
HollyFrontier Q4 Loss Wider Than Expected
HollyFrontier Corp. reported fourth-quarter 2020 net loss per share (excluding special items) of 74 cents, wider than the Zacks Consensus Estimate of a loss of 72 cents. In the year-ago period, the company had earned 48 cents per share.
The underperformance reflects weak refining margins, partially offset by stronger-than-expected throughput and robust results from the pipeline division.
Revenues of $2.9 billion beat the Zacks Consensus Estimate of $2.7 billion but slumped 33.8% from the fourth-quarter 2019 sales of $4.4 billion.
Segmental Information
Refining: Adjusted loss from the Refining segment, which is the main contributor to HollyFrontier’s earnings, was $111.5 million. This reflected a massive plunge from the year-ago quarter’s income of $171.6 million, primarily due to sharply narrower gross margins, which was down 71% to $4.02 per barrel as steps to limit the spread of coronavirus significantly disrupted product demand. Moreover, margins came below the Zacks Consensus Estimate of $5.31 per barrel.
On a somewhat positive note, total refined product sales volumes averaged 417,990 barrels per day (bpd), up 4.9% from 398,360 bpd in the year-ago quarter. Moreover, throughput increased from 385,773 bpd in the year-ago quarter to 412,780 bpd and outpaced the Zacks Consensus Estimate of 397,000 bpd. Meanwhile, capacity utilization was 93.8%, up from 88.8% in fourth-quarter 2019.
Lubricants and Specialty Products: The segment loss totaled $32.7 million, compared to adjusted EBITDA of $34.6 million reported in the year-ago quarter, primarily reflecting a goodwill impairment charge. Excluding that, the segment EBITDA improved to $49.2 million. Product sales averaged 33,559 bpd, decreasing from the prior-year level of 34,392 bpd. However, throughput edged up 0.9% year over year to 21,425 bpd in the reported quarter.
HEP: This unit includes HollyFrontier’s majority interest in Holly Energy Partners L.P. (HEP Quick QuoteHEP - Research Report) , a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
Segment EBITDA was $86.8 million, essentially unchanged from $87.8 million in fourth-quarter 2019. Earnings were buoyed by minimum volume commitments, offset by lower shipments.
Balance Sheet
As of Dec 31, HollyFrontier had approximately $1.4 billion in cash and cash equivalents, and $3.1 billion in long-term debt, representing a debt-to-capitalization of 35.5%.
During the quarter, the company paid $57.9 million in dividends.
However, the bottom fell marginally from the year-ago adjusted earnings of 54 cents due to weaker refinery gross margins.
Revenues of $3.4 billion fell shy of the Zacks Consensus Estimate of $3.79 billion and also dropped 12.8% from the first-quarter 2019 sales of $3.9 billion.
Segmental Information
Refining: Adjusted EBITDA from the Refining segment, the main contributor to HollyFrontier’s earnings, was $175.9 million, down 9% from the year-ago quarterly income of $193.4 million. This downside is due to lower product margins and increased laid-in crude costs resulting in a consolidated refinery gross margin of $11.32 per produced barrel. The figure reflects an 11% decline from $12.74 in the first quarter of 2019.
Total refined product sales volumes averaged 452,290 barrels per day (bpd), up 6.9% from 423,030 bpd in the year-ago quarter. Moreover, throughput rose from 433,720 bpd in the year-ago quarter to 471,560 bpd. The same also outpaced the Zacks Consensus Estimate of 464,000 bpd. Further, capacity utilization was 95.5%, up from 87.6% in first-quarter 2019.
Lubricants and Specialty Products: The segment recorded an EBITDA worth $32.3 million in the quarter under review, skyrocketing 188% from $11.2 million in the year-ago period. Moreover, product sales averaged 36,800 bpd, up from the prior-year level of 34,770 bpd. Further, throughput improved 9.8% year over year to 21,750 bpd in the reported quarter from 19,800 in the prior-year period.
HEP: This unit includes HollyFrontier’s 57% interest in Holly Energy Partners L.P. (HEP), a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. Segmental EBITDA was $64.4 million, down 31% from $93.5 million in first-quarter 2019.
Balance Sheet
U.S. refiner HollyFrontier’s total capital expenditure was $83.7 million in the first quarter. As of Mar 31, 2020, the company had approximately $909 million in cash and cash equivalents and $2.5 billion in long-term debt, representing a debt-to-capitalization of 29%.
The company paid out $57.2 million in dividends during the quarter and bought back shares worth $61.1 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -6.81% due to these changes.
VGM Scores
At this time, HollyFrontier has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
HollyFrontier has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is HollyFrontier (HFC) Down 4.5% Since Last Earnings Report?
A month has gone by since the last earnings report for HollyFrontier . Shares have lost about 4.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is HollyFrontier due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
HollyFrontier Q4 Loss Wider Than Expected
HollyFrontier Corp. reported fourth-quarter 2020 net loss per share (excluding special items) of 74 cents, wider than the Zacks Consensus Estimate of a loss of 72 cents. In the year-ago period, the company had earned 48 cents per share.
The underperformance reflects weak refining margins, partially offset by stronger-than-expected throughput and robust results from the pipeline division.
Revenues of $2.9 billion beat the Zacks Consensus Estimate of $2.7 billion but slumped 33.8% from the fourth-quarter 2019 sales of $4.4 billion.
Segmental Information
Refining: Adjusted loss from the Refining segment, which is the main contributor to HollyFrontier’s earnings, was $111.5 million. This reflected a massive plunge from the year-ago quarter’s income of $171.6 million, primarily due to sharply narrower gross margins, which was down 71% to $4.02 per barrel as steps to limit the spread of coronavirus significantly disrupted product demand. Moreover, margins came below the Zacks Consensus Estimate of $5.31 per barrel.
On a somewhat positive note, total refined product sales volumes averaged 417,990 barrels per day (bpd), up 4.9% from 398,360 bpd in the year-ago quarter. Moreover, throughput increased from 385,773 bpd in the year-ago quarter to 412,780 bpd and outpaced the Zacks Consensus Estimate of 397,000 bpd. Meanwhile, capacity utilization was 93.8%, up from 88.8% in fourth-quarter 2019.
Lubricants and Specialty Products: The segment loss totaled $32.7 million, compared to adjusted EBITDA of $34.6 million reported in the year-ago quarter, primarily reflecting a goodwill impairment charge. Excluding that, the segment EBITDA improved to $49.2 million. Product sales averaged 33,559 bpd, decreasing from the prior-year level of 34,392 bpd. However, throughput edged up 0.9% year over year to 21,425 bpd in the reported quarter.
HEP: This unit includes HollyFrontier’s majority interest in Holly Energy Partners L.P. (HEP Quick QuoteHEP - Research Report) , a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
Segment EBITDA was $86.8 million, essentially unchanged from $87.8 million in fourth-quarter 2019. Earnings were buoyed by minimum volume commitments, offset by lower shipments.
Balance Sheet
As of Dec 31, HollyFrontier had approximately $1.4 billion in cash and cash equivalents, and $3.1 billion in long-term debt, representing a debt-to-capitalization of 35.5%.
During the quarter, the company paid $57.9 million in dividends.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -6.81% due to these changes.
VGM Scores
At this time, HollyFrontier has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
HollyFrontier has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.