Holly Energy Partners(US:HEP)2022-08-08 18:31Financial Performance - Revenues for the three months ended June 30, 2022, were $135,770 thousand, a 7.9% increase from $126,235 thousand in the same period of 2021[17]. - Operating income for the six months ended June 30, 2022, was $101,289 thousand, slightly down from $103,068 thousand in 2021, reflecting a decrease of 1.7%[17]. - Net income attributable to partners for the three months ended June 30, 2022, was $56,792 thousand, compared to $55,745 thousand in 2021, indicating an increase of 1.9%[17]. - For the six months ended June 30, 2022, total revenues were $255.97 million, slightly up from $253.42 million in 2021, indicating a growth of about 1.0%[80]. - Operating income for the three months ended June 30, 2022, was $50,215,000, compared to $56,317,000 in the same period of 2021, reflecting a decrease of approximately 12.5%[162]. - Net income attributable to partners for the six months ended June 30, 2022, was $106.351 million, consistent with the same period in 2021, indicating stable performance year-over-year[164]. Assets and Liabilities - Total assets increased to $2,775,038 thousand as of June 30, 2022, up from $2,165,867 thousand on December 31, 2021, representing a growth of approximately 28.2%[14]. - Long-term debt rose to $1,608,460 thousand as of June 30, 2022, compared to $1,333,049 thousand at the end of 2021, marking an increase of approximately 20.6%[14]. - Total equity increased to $907,190 thousand as of June 30, 2022, compared to $590,549 thousand at the end of 2021, representing a growth of approximately 53.5%[14]. - The total liabilities from senior notes were valued at $887,460 thousand as of June 30, 2022, with a carrying value of $808,706 thousand[102]. - The carrying amount of properties and equipment as of June 30, 2022, was $1,426,492 thousand, an increase from $1,329,028 thousand in December 2021[106]. Cash Flow and Distributions - Cash flows from operating activities for the six months ended June 30, 2022, were $152,486 thousand, down from $162,108 thousand in 2021, a decrease of about 5.0%[21]. - The company announced a cash distribution of $0.35 per unit for the second quarter of 2022, payable on August 12, 2022[138]. - Distributable cash flow increased to $78.46 million in Q2 2022, up by $11.78 million from $66.68 million in Q2 2021[195]. - Distributable cash flow for the six months ended June 30, 2022, was $142.912 million, up by $3.013 million from $139.899 million in 2021, showing a growth of about 2.2%[198]. Acquisitions and Investments - The company acquired Sinclair Transportation for $321,366 thousand during the six months ended June 30, 2022, as part of its investment strategy[21]. - The acquisition of Sinclair Transportation was valued at approximately $670.4 million, which included $321.4 million in cash and 21 million newly issued common limited partner units[28]. - The company completed the acquisition of Sinclair Transportation on March 14, 2022, for a total transaction value of $670.4 million, which included 21 million newly issued HEP Units valued at approximately $349 million and cash consideration of $321.4 million[57][63]. - The acquisition resulted in the recognition of $90.8 million in goodwill, with total assets acquired valued at $684.1 million and total liabilities assumed at $13.7 million[62][65]. Revenue Sources and Segments - The company operates in two reportable segments: Pipelines and Terminals, and Refinery Processing Unit, which are critical for revenue generation through tariffs and fees[34]. - Revenues from HF Sinclair accounted for 81% of total revenues for the three months ended June 30, 2022, with minimum annualized payments required of $445.9 million[130]. - Total segment revenues for the three months ended June 30, 2022, were $135.77 million, an increase of 7.9% from $126.24 million in the same period of 2021[147]. - The refinery processing units segment generated revenues of $22.89 million for the three months ended June 30, 2022, up from $21.03 million in 2021, an increase of 8.8%[147]. Operational Metrics - The company owns and operates approximately 1,200 miles of integrated crude and refined product pipelines and terminal assets, with a storage capacity of approximately 4.5 million barrels[29]. - Total pipeline volumes increased to 1,599,570 bpd in Q2 2022, up by 344,689 bpd from 1,254,881 bpd in Q2 2021[195]. - The total volume for pipelines and terminal and refinery processing unit assets increased to 1,480,854 bpd in the six months ended June 30, 2022, from 1,169,346 bpd in 2021, reflecting a growth of about 26.5%[198]. Financial Obligations and Covenants - The company maintained compliance with financial covenants under the Credit Agreement as of June 30, 2022[123]. - The company amended its senior secured revolving credit facility, reducing the size from $1.4 billion to $1.2 billion, with a maturity date extended to July 27, 2025[121]. - The company issued $400 million in 6.375% senior unsecured notes due in 2027, generating net proceeds of approximately $393 million, which were used to partially repay borrowings under the Credit Agreement[124]. Challenges and Impairments - An impairment charge of $11.0 million was recorded for the Cheyenne reporting unit in Q1 2021, indicating potential challenges in asset valuation[43]. - The company recorded an impairment charge of $11.0 million for its Cheyenne reporting unit during the three months ended March 31, 2021[193].