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HollyFrontier’s Q1 Earnings Fell but Beat Estimate

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HollyFrontier’s first-quarter earnings brief

HollyFrontier (HFC) posted its Q1 2019 results on May 2. In Q1 2019, the company’s revenues of $3.9 billion surpassed Wall Street analysts’ mean estimate. Also, HollyFrontier’s adjusted EPS of $0.54 surpassed Wall Street analysts’ estimated EPS of $0.43. However, the adjusted EPS fell by 30% YoY in the first quarter.

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HollyFrontier’s Q1 2019 earnings review

HollyFrontier’s net earnings, attributable to its shareholders, fell from $268 million in Q1 2018 to $253 million in Q1 2019. Also, the company’s adjusted EBITDA fell by 11% YoY to $282 million in Q1 2019, which was due to lower Refining and Lubricants & Specialty Products’ earnings partly offset by higher HEP (or midstream) earnings.

Adjusted EBITDA from HollyFrontier’s Refining segment fell by 4% YoY to $193 million in Q1 2019. This was due to the fall in refining margins and throughputs. HollyFrontier’s refining margin fell from $12.8 per barrel in Q1 2018 to $12.7 per barrel in Q1 2019.

Also, HollyFrontier’s Lubricants segment adjusted EBITDA fell by 51% YoY to $20 million. This was due to the decline in rack back as well as rack forward earnings. Also, the segment’s earnings included two months of earnings from Sonneborn, which was acquired in the first quarter. This acquisition has strengthened HFC’s position in the lubricants industry. However, HollyFrontier’s HEP EBITDA rose by 6% YoY in the first quarter.

Peers’ performance

Valero Energy (VLO) and Phillips 66’s (PSX) first-quarter adjusted EPS fell by 66% YoY and 62% YoY, respectively. Further, Marathon Petroleum (MPC) and Delek US Holdings’ (DK) earnings are expected to rise in the first quarter. MPC’s earnings could increase from $0.04 per share in Q1 2018 to $0.06 per share in Q1 2019. Delek is expected to post positive EPS of $0.45 in Q1 2019 compared to a loss in Q1 2018.

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