Back to top

Image: Shutterstock

HollyFrontier (HFC) Incurs Wider-Than-Expected Loss in Q4

Read MoreHide Full Article

U.S. refiner HollyFrontier Corporation (HFC - Free Report) 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.

HollyFrontier Corporation Price, Consensus and EPS Surprise

HollyFrontier Corporation Price, Consensus and EPS Surprise

HollyFrontier Corporation price-consensus-eps-surprise-chart | HollyFrontier Corporation Quote

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 - Free 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.

Zacks Rank & Stock Picks

HollyFrontier currently carries a Zacks Rank #4 (Sell).

Some better-ranked players in the energy space are PDC Energy (PDCE - Free Report) and Royal Dutch Shell (RDS.A - Free Report) . Both the companies sport a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

PDC Energy has an expected earnings growth rate of 165.91% for the current year.  

Royal Dutch Shell has an expected earnings growth rate of 165.32% for the current year.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>