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HollyFrontier (HFC) Incurs Wider-Than-Expected Loss in Q1

Zacks Equity Research
·3 min read

U.S. refiner HollyFrontier Corporation HFC reported first-quarter 2021 net loss per share (excluding special items) of 53 cents, wider than the Zacks Consensus Estimate of a loss of 45 cents. In the year-ago period, the company earned 53 cents per share.

The underperformance reflects a decline in refining margins and throughput, partially offset by robust results from the lubricants and the pipeline divisions.

Revenues of $3.5 billion beat the Zacks Consensus Estimate of $2.8 billion and improved 3.1% from first-quarter 2020 sales of $3.4 billion.

HollyFrontier Corporation Price, Consensus and EPS Surprise

HollyFrontier Corporation Price, Consensus and EPS Surprise
HollyFrontier Corporation Price, Consensus and EPS Surprise

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

Segmental Information

Refining: Adjusted loss from the Refining segment, which is the main contributor to HollyFrontier’s earnings, was $65.8 million. This reflected a massive plunge from the year-ago quarter’s income of $175.9 million, primarily due to sharply narrower gross margins, which were down 28% to $8 per barrel. On a somewhat positive note, margins came above the Zacks Consensus Estimate of $6.88 per barrel.

Total refined product sales volumes averaged 354,940 barrels per day (bpd), down 13.4% from 409,850 bpd in the year-ago quarter. Moreover, throughput decreased from 425,260 bpd in the year-ago quarter to 374,160 bpd and fell short of the Zacks Consensus Estimate of 395,000 bpd. Meanwhile, capacity utilization was 86%, down from 96.9% in first-quarter 2020.

Lubricants and Specialty Products: The segment EBITDA totaled $87.1 million, compared to $32.3 million reported in the year-ago quarter, primarily reflecting a strong base oil market. Product sales averaged 32,570 bpd, decreasing from the prior-year level of 36,800 bpd. Throughput was also down 6.2% year over year to 20,410 bpd in the reported quarter.

HEP: This unit includes HollyFrontier’s majority 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.

Segment EBITDA was $96.2 million, up from $64.4 million in first-quarter 2020. Earnings were buoyed by minimum volume commitments.

Balance Sheet

As of Mar 31, HollyFrontier had approximately $1.2 billion in cash and cash equivalents, and $3.1 billion in long-term debt, representing a debt-to-capitalization of 34.9%.

During the quarter, the company paid $57.7 million in dividends.

Zacks Rank & Stock Picks

HollyFrontier currently carries a Zacks Rank #4 (Sell).

Some better-ranked players in the energy space are Exxon Mobil Corporation XOM and Suncor Energy SU. Both the companies sport a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil has an expected earnings growth rate of 1,139.39% for the current year.

Suncor Energy has an expected earnings growth rate of 223.64% for the current year.

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