Monday, petroleum refiner and marketer Holly Corp. (HOC) reported an 80.6% rise in profit for the second quarter, driven by higher refining production and lower expenses, despite a sharp fall in sales. Quarterly earnings per share topped market projections.
Net income for the quarter surged to $21.57 million from prior year's $11.95 million. Second-quarter net income attributable to Holly Corp. stockholders was $14.61 million, up 27.5% from $11.45 million last year, and earnings per share grew 26.1% to $0.29 from $0.23 a year ago.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.27 per share for the quarter. Analysts' estimates typically exclude special items.
The Dallas, Texas -based company attributed the growth in second-quarter profit mainly to the effects of increased refining production, partially offset by an overall decrease in refinery gross margins.
Meanwhile, sales and other revenues plunged 40.5% to $1.04 billion from $1.74 billion in the same quarter a year earlier, missing three Wall Street analysts' consensus estimate of $1.07 billion.
According to the company, the drop in sales reflected a 48% decline in sales prices of produced refined products sold, partially offset by a 25% current quarter increase in volumes of refined products sold. In addition, direct sales of excess crude oil decreased in the current year.
For the quarter, income from operations surged 94.5% to $39.34 million from last year's $20.23 million, reflecting a 42% drop in total operating costs and expenses to $999.04 million, and cost of products sold declined 46% to $879.9 million, due mainly to lower crude oil acquisition costs.
Matthew Clifton, Chairman of the Board and Chief Executive Officer of Holly, stated, "Despite a challenging refining environment, we remained profitable for the quarter. Our EBITDA for the quarter was $56.8 million, a 59% increase over the second quarter of 2008. Although overall refining margins were tight in the second quarter, we experienced a small improvement in the markets served by our Navajo refinery averaging $8.39 per barrel, a 4% increase over last year's second quarter."
For the first six months of fiscal 2009, Holly Corp.'s net income grew 112.5% to $45.47 million from last year's $21.40 million. Net income attributable to Holly stockholders rose 81.8% to $36.55 million from prior year's $20.10 million, and earnings per share rose 87.2% to $0.73 from $0.39 in 2008. First-half sales and other revenues fell 47.6% to $1.69 billion from $3.22 billion last year.
Looking forward, Clifton said, "2009 will remain a challenging year for the refining industry. We do believe, however, that the markets we serve, the improvements and initiatives that we have recently executed, the quality of our employees and our strong balance sheet, position us to meet these challenges."
HOC is currently trading at $22.47, up $0.46 or 2.09%, on a volume of 34 thousand shares.
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