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Holly Energy Partners, L.P. Reports Third Quarter Results

Stocks in this article: HEP

RESULTS OF OPERATIONS (Unaudited)

Income, Distributable Cash Flow and Volumes The following tables present income, distributable cash flow and volume information for the three and nine months ended September 30, 2013.

    Three Months Ended September 30,    

Change from

2013     2012 2012
(In thousands, except per unit data)
Revenues
Pipelines:
Affiliates – refined product pipelines $ 17,196 $ 16,351 $ 845
Affiliates – intermediate pipelines 6,567 7,319 (752 )
Affiliates – crude pipelines   12,994     12,306     688  
36,757 35,976 781
Third parties – refined product pipelines   9,246     9,538     (292 )
46,003 45,514 489
Terminals, tanks and loading racks:
Affiliates 28,766 26,139 2,627
Third parties   2,954     2,401     553  
  31,720     28,540     3,180  
Total revenues 77,723 74,054 3,669
Operating costs and expenses:
Operations 21,686 22,732 (1,046 )
Depreciation and amortization 19,449 14,351 5,098
General and administrative   2,415     1,399     1,016  
  43,550     38,482     5,068  
Operating income 34,173 35,572 (1,399 )
Equity in earnings of SLC Pipeline 835 877 (42 )
Interest expense, including amortization (11,816 ) (12,540 ) 724
Interest income 3 3
Other income 61 61
Gain (loss) on sale of assets   (159 )       (159 )
  (11,076 )   (11,663 )   587  
Income before income taxes 23,097 23,909 (812 )
State income tax expense   (40 )   (137 )   97  
Net income 23,057 23,772 (715 )
Allocation of net loss attributable to Predecessors 146 (146 )
Allocation of net income attributable to noncontrolling interests   (1,172 )   (582 )   (590 )
Net income attributable to Holly Energy Partners 21,885 23,336 (1,451 )
General partner interest in net income, including incentive distributions (1)   (7,128 )   (5,276 )   (1,852 )
Limited partners’ interest in net income $ 14,757   $ 18,060   $ (3,303 )
Limited partners’ earnings per unit – basic and diluted: (1) $ 0.25   $ 0.32   $ (0.07 )
Weighted average limited partners’ units outstanding   58,657     56,536     2,121  
EBITDA (2) $ 53,187   $ 49,920   $ 3,267  
Distributable cash flow (3) $ 43,865   $ 40,431   $ 3,434  
 
Volumes (bpd)
Pipelines:
Affiliates – refined product pipelines 116,078 114,113 1,965
Affiliates – intermediate pipelines 136,312 132,220 4,092
Affiliates – crude pipelines   172,569     187,861     (15,292 )
424,959 434,194 (9,235 )
Third parties – refined product pipelines   59,036     66,274     (7,238 )
483,995 500,468 (16,473 )
Terminals and loading racks:
Affiliates 261,431 267,638 (6,207 )
Third parties   64,615     57,496     7,119  
  326,046     325,134     912  
Total for pipelines and terminal assets (bpd)   810,041     825,602     (15,561 )
 
       
Nine Months Ended September 30, Change from
2013     2012 2012
(In thousands, except per unit data)
Revenues
Pipelines:
Affiliates—refined product pipelines $ 50,918 $ 46,727 $ 4,191
Affiliates—intermediate pipelines 20,030 21,076 (1,046 )
Affiliates—crude pipelines   36,760     33,844     2,916  
107,708 101,647 6,061
Third parties—refined product pipelines   29,412     27,856     1,556  
137,120 129,503 7,617
Terminals, tanks and loading racks:
Affiliates 82,514 74,773 7,741
Third parties   7,672     6,853     819  
  90,186     81,626     8,560  
Total revenues 227,306 211,129 16,177
Operating costs and expenses
Operations 72,089 65,114 6,975
Depreciation and amortization 48,730 42,801 5,929
General and administrative   8,747     5,925     2,822  
  129,566     113,840     15,726  
Operating income 97,740 97,289 451
Equity in earnings of SLC Pipeline 2,238 2,502 (264 )
Interest expense, including amortization (35,929 ) (34,269 ) (1,660 )
Interest income 110 110
Other income 61 61
Loss on early extinguishment of debt (2,979 ) 2,979
Gain (loss) on sale of assets   1,863         1,863  
  (31,657 )   (34,746 )   3,089  
Income before income taxes 66,083 62,543 3,540
State income tax expense   (440 )   (287 )   (153 )
Net income 65,643 62,256 3,387
Allocation of net loss attributable to Predecessors 4,199 (4,199 )
Allocation of net loss (income) attributable to noncontrolling interests   (5,192 )   658     (5,850 )
Net income attributable to Holly Energy Partners 60,451 67,113 (6,662 )
General partner interest in net income, including incentive distributions (1)   20,038     16,674     3,364  
Limited partners’ interest in net income $ 40,413   $ 50,439   $ (10,026 )
Limited partners’ earnings per unit—basic and diluted (1) $ 0.69   $ 0.91   $ (0.22 )
Weighted average limited partners’ units outstanding   58,108     55,332     2,776  
EBITDA (2) $ 145,440   $ 139,546   $ 5,894  
Distributable cash flow (3) $ 112,316   $ 111,506   $ 810  
 
Volumes (bpd)
Pipelines:
Affiliates—refined product pipelines 109,995 104,444 5,551
Affiliates—intermediate pipelines 133,222 130,972 2,250
Affiliates—crude pipelines   167,685     169,922     (2,237 )
410,902 405,338 5,564
Third parties—refined product pipelines   59,711     62,301     (2,590 )
470,613 467,639 2,974
Terminals and loading racks:
Affiliates 265,242 265,958 (716 )
Third parties   59,995     52,918     7,077  
  325,237     318,876     6,361  
Total for pipelines and terminal assets (bpd)   795,850     786,515     9,335  
 

(1) Net income is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. Net income allocated to the general partner includes incentive distributions declared subsequent to quarter end. General partner incentive distributions were $6.8 million and $4.9 million for the three months ended September 30, 2013 and 2012, respectively, and $19.2 million and $15.6 million for the nine months ended September 30, 2013 and 2012, respectively. Net income attributable to the limited partners is divided by the weighted average limited partner units outstanding in computing the limited partners’ per unit interest in net income.

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