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HollyFrontier’s Earnings Rise Sharply, Beat Estimate

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HollyFrontier (HFC) posted its second-quarter results on August 1. HollyFrontier’s earnings reached $2.18 per share on an adjusted basis, exceeding analysts’ estimated EPS of $1.65 by 33%.

In the second quarter, HollyFrontier’s earnings rose 50% YoY. In the second quarter, the company’s revenues of $4.8 billion surpassed Wall Street analysts’ mean estimate of $4.2 billion by 14%.

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HollyFrontier’s earnings review

On an adjusted basis, HollyFrontier’s earnings rose 44% YoY to $372 million in the second quarter. Also, the company’s adjusted EBITDA increased 33% YoY to $647 million in the second quarter. Holly Frontier’s earnings rose due to higher Refining and HEP (or Midstream) earnings, and they were partially offset by lower Lubricants (Lubricants & Specialty Products) earnings.

Adjusted EBITDA from HollyFrontier’s Refining segment rose 44% YoY to $556 million in the second quarter. HollyFrontier’s earnings in its Refining segment rose due to higher refining margins and were partially offset by lower throughputs.

HollyFrontier’s refining margin rose from $16.60 per barrel in Q2 2018 to $19.60 per barrel in Q2 2019. Also, HollyFrontier’s HEP EBITDA rose 8% YoY in the second quarter.

However, HollyFrontier’s Lubricants segment’s adjusted EBITDA fell 27% YoY to $29 million in the second quarter. The company’s Lubricants segment’s earnings declined due to a loss in rack back earnings, partially offset by a rise in rack forward earnings. Holly Frontier’s earnings for this segment included earnings from Sonneborn, which was acquired in the first quarter. This acquisition has strengthened the company’s foothold in the lubricants industry.

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HollyFrontier’s margin by region

HollyFrontier’s Midcontinent area’s refining margin rose from $11.90 per barrel in Q2 2018 to $17.20 per barrel in Q2 2019. The area includes the company’s El Dorado and Tulsa refineries. Also, the Southwest region’s refining margin rose from $21.10 per barrel in Q2 2018 to $23.50 per barrel in Q2 2019. Combined, the Midcon and Southwest regions accounted for 82% of HollyFrontier’s refining throughput in the second quarter.

However, refining margins fell in HollyFrontier’s Rockies region, which has its Cheyenne and Woods Cross refineries. The margin fell from $27.90 per barrel in Q2 2018 to $22.50 per barrel in Q2 2019.

Overall, the year-over-year rise in refining margins in the Midcon and Southwest regions led to an increase in HollyFrontier’s consolidated refining margin.

Peers’ performance

Marathon Petroleum’s (MPC) EPS of $1.73 surpassed analysts’ estimate of $1.32 in the second quarter. Also, Phillips 66’s (PSX) adjusted EPS of $3.02 exceeded analysts’ mean estimate of $2.74. Valero Energy’s (VLO) earnings fell 30% YoY to $1.50 per share in the second quarter. To learn more, read Valero’s Earnings Fall but Beat the Estimate.

Analysts expect Delek US Holdings’ (DK) earnings to drop 38% YoY in the second quarter.

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