HollyFrontier Corporation (NYSE:HFC) Q1 2019 Earnings Conference Call - Final Transcript

May 02, 2019 • 08:30 am ET

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HollyFrontier Corporation (NYSE:HFC) Q1 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to the HollyFrontier Corporation's First Quarter 2019 Conference Call and Webcast. Hosting the call today from HollyFrontier is George Damiris, President and Chief Executive Officer. He is joined by Rich Voliva, Executive Vice President and Chief Financial Officer; Jim Stump, Senior Vice President of Refinery Operations; and Tom Creery, President, Refining and Marketing.

At this time, all participants have been placed in a listen-only mode and the floor will open for your question following the presentation. (Operator Instructions) Please note that this conference is being recorded.

It is now my pleasure to turn the floor over to Craig Biery, Director, Investor Relations. Craig, you may begin.

Executive
Craig Biery

Thank you, Tania. Good morning, everyone, and welcome to HollyFrontier Corporation's first quarter 2019 earnings call. This morning we issued a press release announcing results for the quarter ending March 31, 2019. If you would like a copy of the press release, you may find one on our website at hollyfrontier.com.

Before we proceed with remarks, please note the Safe Harbor disclosure statement in today's press release. In summary, it says statements made regarding management expectations, judgments or predictions are forward-looking statements. These statements are intended to be covered under the Safe Harbor provisions of federal security laws. There are many factors that could cause results to differ from expectations, including those noted in our SEC filings.

The call also may include discussion of non-GAAP measures. Please see the press release for reconciliations to GAAP financial measures. Also please note any time-sensitive information provided on today's call may no longer be accurate at the time of any webcast replay or rereading of the transcript.

And with that, I'll turn the call over to George Damiris.

Executive
George Damiris

Thanks, Craig. Good morning, everyone. Today we reported first quarter net income attributable to HollyFrontier shareholders of $253 million or $1.47 per diluted share. Certain items detailed in our earnings release, increased net income by $160 million on an after-tax basis. Excluding these items, net income for the current quarter was $93 million or $0.54 per diluted share versus adjusted net income of $137 million or $0.77 per diluted share for the same period last year.

Adjusted EBITDA for the period was $282 million, $34 million less than the first quarter of 2018, principally driven by maintenance in our Refining and Marketing segment and weaker base oil margins in our Lubricants business, which were partially offset by stronger earnings at HEP and two months of contributions from our Sonneborn acquisition. Our Lubricants and Specialty Products business reported adjusted EBITDA of $20 million despite a very challenging base oil market.

Rack Forward adjusted EBITDA was $53 million for the quarter and adjusted EBITDA margin was 12% of sales. Our integration of Sonneborn is going well and as of May 1 we have achieved run rate synergies of $7 million and continue to expect long-term synergies of $20 million per year.

Holly Energy Partners reported EBITDA of $94 million for the first quarter compared to $88 million in the first quarter