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HollyFrontier (HFC) Q4 Earnings Lag, Sales Top Estimates

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HollyFrontier Corp. (HFC - Free Report) reported fourth-quarter 2019 net income per share (excluding special items) of 48 cents per share, missing the Zacks Consensus Estimate of 50 cents. This weak performance stemmed from lower contribution from the Refining segment. Moreover, the bottom line is 78.6% lower than the year-ago adjusted earnings of $2.25.

However, revenues of $4.38 billion surpassed the Zacks Consensus Estimate of $3.81 billion and also inched up 0.85% from the fourth-quarter 2018 sales of $4.34 billion owing to improved product sales at the Lubricants and Specialty Products segment.

Segmental Information

Refining: Adjusted EBITDA from the Refining segment — the main contributor to HollyFrontier’s earnings — was $171.56 million, plunging 71% from the year-ago quarterly income of $583.4 million due to lower product margins, which declined 39% to $13.58 per barrel.

Total refined product sales volumes averaged 418,800 barrels per day (bpd), down 5.6% from 443,670 bpd in the year-ago quarter. Moreover, throughput decreased from 440,550 bpd in the year-ago quarter to 408,730 bpd. The same also missed the Zacks Consensus Estimate of 413,000 bpd. Further, capacity utilization was 83.3%, down from 88.7% in fourth-quarter 2018.

Lubricants and Specialty Products: The segment recorded an EBITDA of $34.6 million in the quarter under review against a negative EBITDA of $3.5 million in the year-ago period, courtesy of the contributions from the company’s Sonneborn finished lubricants business. Moreover, product sales averaged 34,392 bpd, up from the prior-year level of 27,550 bpd. Further, throughput rose 26.4% year over year to 21,229 bpd in the reported quarter from 16,790 in the prior year.

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 $87.8 million, down 2.33% from $89.9 million in fourth-quarter 2018.

HollyFrontier Corporation Price, Consensus and EPS Surprise

HollyFrontier Corporation Price, Consensus and EPS Surprise

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

Balance Sheet

U.S. refiner HollyFrontier’s total capital expenditure was $98.7 million in the fourth quarter. As of Dec 31, 2019, the company had approximately $885.2 million in cash and cash equivalents and $2.4 billion in long-term debt, representing a debt-to-capitalization ratio of 27.4%.

The company paid out $57.2 million in dividends during the quarter and bought back shares worth $61.1 million.

Zacks Rank & Key Picks

HollyFrontier has a Zacks Rank #5 (Strong Sell).

Some better-ranked players in the energy space are Concho Resources Inc. CXO, Devon Energy Corporation DVN and California Resources Corporation CRC, each carrying a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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