- Reported net income attributable to HEP of $63.0 million or
$0.50 per unit
- Announced quarterly distribution of $0.35 per unit
- Reported EBITDA of $94.4 million and Adjusted EBITDA of $118.5
million
Holly Energy Partners, L.P. ("HEP") (NYSE: HEP) today reported
financial results for the third quarter of 2023. Net income
attributable to HEP for the third quarter of 2023 was $63.0 million
($0.50 per basic and diluted limited partner unit), compared to
$42.0 million ($0.33 per basic and diluted limited partner unit)
for the third quarter of 2022.
Results for the third quarters of 2023 and 2022 reflect
reductions to our equity in earnings of equity method investments
of $4.3 million and $20.3 million, respectively, for HEP's 50%
share of incurred and estimated environmental remediation and
recovery expenses and estimated fines and penalties, net of
insurance proceeds received, associated with a release of crude oil
on the Osage Pipe Line Company, LLC ("Osage") pipeline that
occurred on July 8, 2022. Excluding these reductions, net income
attributable to HEP for the third quarters of 2023 and 2022 was
$67.3 million ($0.53 per basic and diluted limited partner unit)
and $62.2 million ($0.49 per basic and diluted limited partner
unit), respectively. The increase in net income attributable to HEP
in the third quarter of 2023 was mainly due to higher revenues
associated with tariff increases that went into effect on July 1,
2023, partially offset by higher interest expense and higher
general and administrative expenses.
Distributable cash flow was $78.5 million for the third quarter
of 2023, a decrease of $0.3 million, or 0.3%, compared to the third
quarter of 2022. HEP declared a quarterly cash distribution of
$0.35 per unit on October 19, 2023.
Commenting on our 2023 third quarter results, Michael Jennings,
Chief Executive Officer and President, stated, “HEP generated solid
results during the quarter, supported by safe and reliable
operations and strong volumes across our transportation and storage
systems. We also announced a quarterly distribution of $0.35 per
unit to be paid on November 10, 2023 to unitholders of record on
October 30, 2023.”
Third Quarter 2023 Revenue Highlights
Revenues for the third quarter of 2023 were $158.4 million, an
increase of $9.4 million compared to the third quarter of 2022. The
increase was mainly due to tariff increases that went into effect
on July 1, 2023 as well as more customer billings recognized as
revenue rather than interest income under sales-type lease
accounting.
- Revenues from our refined product pipelines were $34.6
million, an increase of $3.2 million compared to the third quarter
of 2022. Shipments averaged 186.1 thousand barrels per day ("mbpd")
compared to 205.7 mbpd for the third quarter of 2022. The volume
decrease was mainly due to lower volumes on our product pipelines
serving HF Sinclair Corporation's ("HF Sinclair") Navajo refinery.
The increase in revenues was mainly due to tariff increases that
went into effect on July 1, 2023 as well as more customer billings
recognized as revenue rather than interest income under sales-type
lease accounting.
- Revenues from our intermediate pipelines were $9.1
million, an increase of $1.1 million compared to the third quarter
of 2022. Shipments averaged 107.0 mbpd for the third quarter of
2023 compared to 137.0 mbpd for the third quarter of 2022. The
decrease in volumes was mainly due to lower throughputs on our
intermediate pipelines servicing HF Sinclair's Navajo and Tulsa
refineries while revenues increased due to tariff increases on
contractual minimum volume guarantees.
- Revenues from our crude pipelines were $41.4 million, an
increase of $3.6 million compared to the third quarter of 2022.
Shipments averaged 631.4 mbpd compared to 639.0 mbpd for the third
quarter of 2022. The decrease in volumes was mainly attributable to
lower volumes on our New Mexico and Texas crude pipelines as well
as our crude pipeline servicing HF Sinclair's Tulsa refinery while
revenues increased due to tariff increases that went into effect on
July 1, 2023.
- Revenues from terminal, tankage and loading rack fees
were $48.3 million, an increase of $3.9 million compared to the
third quarter of 2022. Refined products and crude oil terminalled
in the facilities averaged 802.4 mbpd compared to 620.9 mbpd for
the third quarter of 2022. The increase in volumes was mainly due
to higher volumes on the Sinclair Transportation Company LLC
("Sinclair Transportation") assets we acquired on March 14, 2022
and certain crude tanks. Revenues increased mainly due to higher
revenues from the increased volumes on the acquired Sinclair
Transportation assets as well as rate increases that went into
effect on July 1, 2023.
- Revenues from refinery processing units were $25.0
million, a decrease of $2.4 million compared to the third quarter
of 2022, and throughputs averaged 67.2 mbpd compared to 72.1 mbpd
for the third quarter of 2022. The decrease in volumes was due to
decreased throughputs at our El Dorado and Woods Cross refinery
processing units. Revenues decreased mainly due to lower natural
gas cost recoveries partially offset by rate increases on
contractual minimum volume guarantees.
Nine Months Ended September 30, 2023 Revenue
Highlights
Revenues for the nine months ended September 30, 2023 were
$441.4 million, an increase of $36.4 million compared to the nine
months ended September 30, 2022. The increase was mainly
attributable to revenues from our Sinclair Transportation assets
acquired on March 14, 2022, higher revenues on our Woods Cross
refinery processing units, which were down for a scheduled
turnaround in March 2022, and rate increases that went into effect
on July 1, 2023, partially offset by lower revenues on our product
pipelines servicing HF Sinclair's Navajo refinery.
- Revenues from our refined product pipelines were $88.4
million, an increase of $4.7 million compared to the nine months
ended September 30, 2022. Shipments averaged 182.8 mbpd compared to
180.3 mbpd for the nine months ended September 30, 2022. The volume
and revenue increases were mainly due to volumes on the acquired
Sinclair Transportation assets, partially offset by lower volumes
on our product pipelines servicing HF Sinclair's Navajo refinery
due to lower throughput at the refinery.
- Revenues from our intermediate pipelines were $25.7
million, an increase of $2.6 million compared to the nine months
ended September 30, 2022. Shipments averaged 108.6 mbpd compared to
126.6 mbpd for the nine months ended September 30, 2022. The
decrease in volumes was mainly due to lower throughputs on our
intermediate pipelines servicing HF Sinclair's Navajo refinery
while revenues increased due to the acquired Sinclair
Transportation intermediate pipelines as well as contractual
minimum volume guarantees and rate increases that went into effect
on July 1, 2023.
- Revenues from our crude pipelines were $112.6 million,
an increase of $9.1 million compared to the nine months ended
September 30, 2022. Shipments averaged 626.5 mbpd compared to 594.2
mbpd for the nine months ended September 30, 2022. The increase in
volumes was mainly attributable to volumes on the acquired Sinclair
Transportation crude pipelines. The increase in revenues was mainly
due to the acquired Sinclair Transportation crude pipelines, higher
revenues on our crude pipeline systems in New Mexico and Texas and
rate increases that went into effect on July 1, 2023.
- Revenues from terminal, tankage and loading rack fees
were $140.3 million, an increase of $14.3 million compared to the
nine months ended September 30, 2022. Refined products and crude
oil terminalled in the facilities averaged 755.2 mbpd compared to
575.2 mbpd for the nine months ended September 30, 2022. Volumes
increased mainly due to volumes on the acquired Sinclair
Transportation assets and certain crude tanks. Revenues increased
mainly due to revenues from the increased volumes on the acquired
Sinclair Transportation assets, higher butane blending revenues,
and rate increases that went into effect on July 1, 2023.
- Revenues from refinery processing units were $74.4
million, an increase of $5.7 million compared to the nine months
ended September 30, 2022. Throughputs averaged 60.1 mbpd compared
to 69.9 mbpd for the nine months ended September 30, 2022. Revenues
increased mainly due to higher revenues from our Woods Cross
refinery processing units, which were down for a scheduled
turnaround in March 2022, as well as rate increases. The decrease
in volumes was primarily due to a turnaround at the El Dorado
refinery.
Operating Costs and Expenses Highlights
Operating costs and expenses were $90.7 million and $256.7
million for the three and nine months ended September 30, 2023,
respectively, representing increases of $1.3 million and $12.6
million from the three and nine months ended September 30, 2022,
respectively. The nine-month increase was mainly due to operating
costs and expenses associated with the acquired Sinclair
Transportation assets as well as higher employee costs, partially
offset by lower natural gas costs.
Interest Expense and Interest Income Highlights
Interest expense was $27.3 million and $79.7 million for the
three and nine months ended September 30, 2023, respectively,
representing increases of $4.3 million and $22.8 million from the
three and nine months ended September 30, 2022, respectively. The
increases were mainly due to higher interest rates on our long-term
debt due to market interest rate increases on our senior secured
revolving credit facility and our April 2022 issuance of $400
million in aggregate principal amount of 6.375% senior unsecured
notes maturing in April 2027, the proceeds of which were used to
partially repay outstanding borrowings under our senior secured
credit facility following the funding of the cash portion of the
Sinclair Transportation acquisition.
Interest income for the three and nine months ended September
30, 2023 totaled $20.3 million and $61.1 million, representing
decreases of $3.9 million and $0.2 million compared to the three
and nine months ended September 30, 2022, respectively. The
decreases were mainly due to more pipeline tariffs recognized as
revenue rather than interest income under sales-type lease
accounting.
HEP and HF Sinclair have scheduled a joint webcast conference on
November 2, 2023 at 9:30 a.m. Eastern time to discuss financial
results.
This webcast may be accessed at:
https://events.q4inc.com/attendee/172908001
An audio archive of this webcast will be available using the
above noted link through November 16, 2023.
About Holly Energy Partners, L.P.
Holly Energy Partners, L.P. (“HEP” or the “Partnership”),
headquartered in Dallas, Texas, provides petroleum product and
crude oil transportation, terminalling, storage and throughput
services to the petroleum industry, including subsidiaries of HF
Sinclair Corporation ("HF Sinclair"). The Partnership, through its
subsidiaries and joint ventures, owns and/or operates petroleum
product and crude pipelines, tankage and terminals in Colorado,
Idaho, Iowa, Kansas, Missouri, Nevada, New Mexico, Oklahoma, Texas,
Utah, Washington and Wyoming, as well as refinery processing units
in Kansas and Utah.
HF Sinclair, headquartered in Dallas, Texas, is an independent
energy company that produces and markets high value light products
such as gasoline, diesel fuel, jet fuel, renewable diesel and other
specialty products. HF Sinclair owns and operates refineries
located in Kansas, Oklahoma, New Mexico, Washington, Wyoming and
Utah and markets its refined products principally in the Southwest
U.S., the Rocky Mountains extending into the Pacific Northwest and
in other neighboring Plains states. HF Sinclair supplies
high-quality fuels to more than 1,500 branded stations and licenses
the use of the Sinclair brand at more than 300 additional locations
throughout the country. In addition, subsidiaries of HF Sinclair
produce and market base oils and other specialized lubricants in
the U.S., Canada and the Netherlands, and export products to more
than 80 countries. Through its subsidiaries, HF Sinclair produces
renewable diesel at two of its facilities in Wyoming and also at
its facility in Artesia, New Mexico. HF Sinclair also owns a 47%
limited partner interest and a non-economic general partner
interest in HEP.
The statements in this press release contain various
"forward-looking statements" within the meaning of the federal
securities laws. These forward-looking statements are identified as
any statement that does not relate strictly to historical or
current facts. When used in this press release, words such as
“anticipate,” “project,” “expect,” “will,” “plan,” “goal,”
“forecast,” “strategy,” “intend,” “should,” “would,” “could,”
“believe,” “may,” and similar expressions and statements regarding
our plans and objectives for future operations are intended to
identify forward-looking statements. These forward-looking
statements are based on our beliefs and assumptions and those of
our general partner using currently available information and
expectations as of the date hereof, are not guarantees of future
performance and involve certain risks and uncertainties, including
those contained in our filings with the Securities and Exchange
Commission (the “SEC”). Although we and our general partner believe
that such expectations reflected in such forward-looking statements
are reasonable, neither we nor our general partner can give
assurance that our expectations will prove to be correct. All
statements concerning our expectations for future results of
operations are based on forecasts for our existing operations and
do not include the potential impact of any future acquisitions. Our
forward-looking statements are subject to a variety of risks,
uncertainties and assumptions. If one or more of these risks or
uncertainties materialize, or if underlying assumptions prove
incorrect, our actual results may vary materially from those
anticipated, estimated, projected or expected. Certain factors
could cause actual results to differ materially from results
anticipated in the forward-looking statements or affect our unit
price. These factors include, but are not limited to:
- the risk that the transactions contemplated by the Agreement
and Plan of Merger, dated August 15, 2023 (the “Merger Agreement”),
which provides for the merger of a subsidiary of HF Sinclair with
and into HEP, with HEP surviving as an indirect wholly owned
subsidiary of HF Sinclair (such merger, together with the other
transactions contemplated by the Merger Agreement, being referred
to herein as the “HF Sinclair Merger Transaction”) are not
consummated during the expected timeframe, or at all;
- failure to obtain the required approvals for the HF Sinclair
Merger Transaction, including the ability to obtain the requisite
approvals from HF Sinclair stockholders or our unitholders;
- the substantial transaction-related costs that may be incurred
by HF Sinclair and us in connection with the HF Sinclair Merger
Transaction;
- the possibility that financial projections by us may not prove
to be reflective of actual future results;
- the focus of management time and attention on the HF Sinclair
Merger Transaction and other disruptions arising from the HF
Sinclair Merger Transaction, which may make it more difficult to
maintain relationships with customers, employees or suppliers;
- legal proceedings that may be instituted against HF Sinclair or
us in connection with the HF Sinclair Merger Transaction;
- the demand for and supply of crude oil and refined products,
including uncertainty regarding the increasing societal
expectations that companies address climate change;
- risks and uncertainties with respect to the actual quantities
of petroleum products and crude oil shipped on our pipelines and/or
terminalled, stored or throughput in our terminals and refinery
processing units;
- the economic viability of HF Sinclair, our other customers and
our joint ventures’ other customers, including any refusal or
inability of our or our joint ventures’ customers or counterparties
to perform their obligations under their contracts;
- the demand for refined petroleum products in the markets we
serve;
- our ability to purchase operations and integrate the operations
we have acquired or may acquire, including the acquired Sinclair
Transportation business;
- our ability to complete previously announced or contemplated
acquisitions;
- the availability and cost of additional debt and equity
financing;
- the possibility of temporary or permanent reductions in
production or shutdowns at refineries utilizing our pipelines,
terminal facilities and refinery processing units, due to
reductions in demand, accidents, unexpected leaks or spills,
unscheduled shutdowns, infection in the workforce, weather events,
global health events, civil unrest, expropriation of assets, and
other economic, diplomatic, legislative, or political events or
developments, terrorism, cyberattacks, or other catastrophes or
disruptions affecting our operations, terminal facilities,
machinery, pipelines and other logistics assets, equipment, or
information systems, or any of the foregoing of our suppliers,
customers, or third-party providers or lower gross margins due to
the economic impact of inflation and labor costs, and any potential
asset impairments resulting from, or the failure to have adequate
insurance coverage for or receive insurance recoveries from, such
actions;
- the effects of current and future government regulations and
policies, including increases in interest rates;
- delay by government authorities in issuing permits necessary
for our business or our capital projects;
- our and our joint venture partners' ability to complete and
maintain operational efficiency in carrying out routine operations
and capital construction projects;
- the possibility of terrorist or cyberattacks and the
consequences of any such attacks;
- uncertainty regarding the effects and duration of global
hostilities, including the Israel-Gaza conflict, the Russia-Ukraine
war, and any associated military campaigns which may disrupt crude
oil supplies and markets for refined products and create
instability in the financial markets that could restrict our
ability to raise capital;
- general economic conditions, including economic slowdowns
caused by a local or national recession or other adverse economic
condition, such as periods of increased or prolonged
inflation;
- the impact of recent or proposed changes in the tax laws and
regulations that affect master limited partnerships; and
- other business, financial, operational and legal risks and
uncertainties detailed from time to time in our SEC filings.
The forward-looking statements speak only as of the date made
and, other than as required by law, we undertake no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
RESULTS OF OPERATIONS
(Unaudited)
Income, Distributable Cash Flow and
Volumes
The following tables present income,
distributable cash flow and volume information for the nine months
ended September 30, 2023 and 2022.
Three Months Ended September
30,
Change from
2023
2022
2022
(In thousands, except per unit
data)
Revenues
Pipelines:
Affiliates – refined product pipelines
$
25,972
$
24,731
$
1,241
Affiliates – intermediate pipelines
9,059
7,988
1,071
Affiliates – crude pipelines
25,540
23,169
2,371
60,571
55,888
4,683
Third parties – refined product
pipelines
8,640
6,694
1,946
Third parties – crude pipelines
15,831
14,565
1,266
85,042
77,147
7,895
Terminals, tanks and loading racks:
Affiliates
43,722
39,557
4,165
Third parties
4,602
4,875
(273
)
48,324
44,432
3,892
Refinery processing units - Affiliates
24,994
27,423
(2,429
)
Total revenues
158,360
149,002
9,358
Operating costs and expenses
Operations (exclusive of depreciation and
amortization)
58,422
60,470
(2,048
)
Depreciation and amortization
24,362
25,236
(874
)
General and administrative
7,947
3,751
4,196
90,731
89,457
1,274
Operating income
67,629
59,545
8,084
Equity in earnings of equity method
investments
3,581
(16,334
)
19,915
Interest expense, including
amortization
(27,285
)
(22,965
)
(4,320
)
Interest income
20,294
24,234
(3,940
)
Gain on sale of assets and other
708
494
214
(2,702
)
(14,571
)
11,869
Income before income taxes
64,927
44,974
19,953
State income tax expense
(16
)
(38
)
22
Net income
64,911
44,936
19,975
Allocation of net income attributable to
noncontrolling interests
(1,886
)
(2,985
)
1,099
Net income attributable to Holly Energy
Partners
$
63,025
$
41,951
$
21,074
Limited partners’ earnings per unit –
basic and diluted
$
0.50
$
0.33
$
0.17
Weighted average limited partners’
units outstanding
126,440
126,440
—
EBITDA(1)
$
94,394
$
65,956
$
28,438
Adjusted EBITDA(1)
$
118,514
$
110,092
$
8,422
Distributable cash flow(2)
$
78,465
$
78,731
$
(266
)
Volumes (bpd)
Pipelines:
Affiliates – refined product pipelines
152,541
167,618
(15,077
)
Affiliates – intermediate pipelines
107,019
137,049
(30,030
)
Affiliates – crude pipelines
426,418
507,419
(81,001
)
685,978
812,086
(126,108
)
Third parties – refined product
pipelines
33,549
38,040
(4,491
)
Third parties – crude pipelines
204,970
131,622
73,348
924,497
981,748
(57,251
)
Terminals and loading racks:
Affiliates
761,956
583,089
178,867
Third parties
40,440
37,782
2,658
802,396
620,871
181,525
Refinery processing units - Affiliates
67,192
72,065
(4,873
)
Total for pipelines and terminal assets
(bpd)
1,794,085
1,674,684
119,401
Nine Months Ended September
30,
Change from
2023
2022
2022
(In thousands, except per unit
data)
Revenues
Pipelines:
Affiliates – refined product pipelines
$
64,092
$
62,511
$
1,581
Affiliates – intermediate pipelines
25,659
23,015
2,644
Affiliates – crude pipelines
70,872
62,417
8,455
160,623
147,943
12,680
Third parties – refined product
pipelines
24,288
21,169
3,119
Third parties – crude pipelines
41,731
41,134
597
226,642
210,246
16,396
Terminals, tanks and loading racks:
Affiliates
121,039
108,997
12,042
Third parties
19,303
17,008
2,295
140,342
126,005
14,337
Refinery processing units - Affiliates
74,425
68,719
5,706
Total revenues
441,409
404,970
36,439
Operating costs and expenses
Operations
163,706
156,994
6,712
Depreciation and amortization
74,922
74,397
525
General and administrative
18,094
12,745
5,349
256,722
244,136
12,586
Operating income
184,687
160,834
23,853
Equity in earnings of equity method
investments
11,008
(7,261
)
18,269
Interest expense, including
amortization
(79,711
)
(56,951
)
(22,760
)
Interest income
61,050
61,212
(162
)
Gain on sale of assets and other
983
640
343
(6,670
)
(2,360
)
(4,310
)
Income before income taxes
178,017
158,474
19,543
State income tax expense
(18
)
(83
)
65
Net income
177,999
158,391
19,608
Allocation of net income attributable to
noncontrolling interests
(7,223
)
(10,089
)
2,866
Net income attributable to Holly Energy
Partners
$
170,776
$
148,302
$
22,474
Limited partners’ earnings per
unit—basic and diluted
$
1.35
$
1.22
$
0.13
Weighted average limited partners’
units outstanding
126,440
120,902
5,538
EBITDA(1)
$
264,377
$
218,521
$
45,856
Adjusted EBITDA(1)
$
330,591
$
299,673
$
30,918
Distributable cash flow(2)
$
235,648
$
221,643
$
14,005
Volumes (bpd)
Pipelines:
Affiliates – refined product pipelines
144,082
138,608
5,474
Affiliates – intermediate pipelines
108,579
126,550
(17,971
)
Affiliates – crude pipelines
429,965
460,641
(30,676
)
682,626
725,799
(43,173
)
Third parties – refined product
pipelines
38,702
41,646
(2,944
)
Third parties – crude pipelines
196,552
133,598
62,954
917,880
901,043
16,837
Terminals and loading racks:
Affiliates
710,905
534,305
176,600
Third parties
44,263
40,923
3,340
755,168
575,228
179,940
Refinery processing units - Affiliates
60,131
69,903
(9,772
)
Total for pipelines and terminal assets
(bpd)
1,733,179
1,546,174
187,005
(1)
Earnings before interest, taxes,
depreciation and amortization (“EBITDA”) is calculated as net
income attributable to Holly Energy Partners plus or minus (i)
interest expense, (ii) interest income, (iii) state income tax
expense and (iv) depreciation and amortization. Adjusted EBITDA is
calculated as EBITDA plus or minus (i) our share of Osage
environmental remediation costs included in equity in earnings of
equity method investments, (ii) acquisition integration and
regulatory costs, (iii) tariffs and fees not included in revenues
due to impacts from lease accounting for certain tariffs and fees
and (iv) pipeline lease payments not included in operating costs
and expenses. Portions of our minimum guaranteed tariffs for assets
subject to sales-type lease accounting are recorded as interest
income with the remaining amounts recorded as a reduction in net
investment in leases. Similarly, certain pipeline lease payments
were previously recorded as operating costs and expenses, but the
underlying lease was reclassified from an operating lease to a
financing lease, and these payments are now recorded as interest
expense and reductions in the lease liability. EBITDA and Adjusted
EBITDA are not calculations based upon generally accepted
accounting principles ("GAAP"). However, the amounts included in
the EBITDA and Adjusted EBITDA calculations are derived from
amounts included in our consolidated financial statements. EBITDA
and Adjusted EBITDA should not be considered as alternatives to net
income attributable to Holly Energy Partners or operating income,
as indications of our operating performance or as alternatives to
operating cash flow as a measure of liquidity. EBITDA and Adjusted
EBITDA are not necessarily comparable to similarly titled measures
of other companies. EBITDA and Adjusted EBITDA are presented here
because they are widely used financial indicators used by investors
and analysts to measure performance. EBITDA and Adjusted EBITDA are
also used by our management for internal analysis and as a basis
for compliance with financial covenants.
Set forth below is our calculation
of EBITDA and Adjusted EBITDA.
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(In thousands)
Net income attributable to Holly Energy
Partners
$
63,025
$
41,951
$
170,776
$
148,302
Add (subtract):
Interest expense
27,285
22,965
79,711
56,951
Interest income
(20,294
)
(24,234
)
(61,050
)
(61,212
)
State income tax expense
16
38
18
83
Depreciation and amortization
24,362
25,236
74,922
74,397
EBITDA
94,394
65,956
264,377
218,521
Share of Osage environmental remediation
costs
69
20,297
1,289
20,297
Acquisition integration and regulatory
costs
4,285
373
5,757
2,095
Tariffs and fees not included in
revenues
21,372
25,072
63,987
63,579
Lease payments not included in operating
costs
(1,606
)
(1,606
)
(4,819
)
(4,819
)
Adjusted EBITDA
$
118,514
$
110,092
$
330,591
$
299,673
(2)
Distributable cash flow is not a
calculation based upon GAAP. However, the amounts included in the
calculation are derived from amounts presented in our consolidated
financial statements, with the general exception of maintenance
capital expenditures. Distributable cash flow should not be
considered in isolation or as an alternative to net income
attributable to Holly Energy Partners or operating income, as an
indication of our operating performance, or as an alternative to
operating cash flow as a measure of liquidity. Distributable cash
flow is not necessarily comparable to similarly titled measures of
other companies. Distributable cash flow is presented here because
it is a widely accepted financial indicator used by investors to
compare partnership performance. It is also used by
management for internal analysis and our performance units. We
believe that this measure provides investors an enhanced
perspective of the operating performance of our assets and the cash
our business is generating.
Set forth below is our calculation of
distributable cash flow.
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(In thousands)
Net income attributable to Holly Energy
Partners
$
63,025
$
41,951
$
170,776
$
148,302
Add (subtract):
Depreciation and amortization
24,362
25,236
74,922
74,397
Amortization of discount and deferred debt
charges
1,088
1,060
3,241
2,863
Customer billings greater than net income
recognized
2,138
(587
)
11,908
34
Maintenance capital expenditures(3)
(5,859
)
(4,679
)
(13,597
)
(15,262
)
Increase (decrease) in environmental
liability
(1,550
)
5,364
(2,553
)
5,120
Share of Osage insurance coverage
—
12,500
500
12,500
Reimbursable deferred revenue
(3,620
)
(3,538
)
(12,534
)
(10,127
)
Other
(1,119
)
1,424
2,985
3,816
Distributable cash flow
$
78,465
$
78,731
$
235,648
$
221,643
(3)
Maintenance capital expenditures are
capital expenditures made to replace partially or fully depreciated
assets in order to maintain the existing operating capacity of our
assets and to extend their useful lives. Maintenance capital
expenditures include expenditures required to maintain equipment
reliability, tankage and pipeline integrity, safety and to address
environmental regulations.
Set forth below is certain balance sheet
data.
September 30,
December 31,
2023
2022
(In thousands)
Balance Sheet Data
Cash and cash equivalents
$
11,223
$
10,917
Working capital
$
15,594
$
17,293
Total assets
$
2,707,434
$
2,747,502
Long-term debt
$
1,468,505
$
1,556,334
Partners' equity
$
896,066
$
857,126
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102867247/en/
John Harrison, Senior Vice President, Chief Financial Officer
and Treasurer Craig Biery, Vice President, Investor Relations Holly
Energy Partners, L.P. 214-954-6511
Holly Energy Partners (NYSE:HEP)
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