Holly Corp.'s 3Q Profit Falls, But Beats Estimates
NEW YORK -(Dow Jones)- Holly Corp. (HOC) reported better-than-expected
earnings and revenue for the third quarter on higher refinery production levels
and improving margins.
The independent refiner posted earnings of $23.5 million, or 47 cents a share,
down from $49.9 million, or $1 a share, a year ago. Analysts surveyed by Thomson
Reuters were expecting a profit of 45 cents a share.
Revenue fell 13% to $1.49 billion from a year ago, but topped analysts'
average estimate of $1.38 billion. The company attributed the sales decline to
the 42% drop in refined product prices that was offset by an increase in volume
of refined products sold.
"Despite the continued challenging refining environment, our quarterly results
remained profitable," said Chairman and Chief Executive Matthew Clifton. He
expects the refining margin to "remain challenging until economic activity
increases and refined product inventories are reduced."
Holly's margins have narrowed considerably along with the rest of the refining
industry this year but they have held up better thanks to the niche markets the
company serves such as Salt Lake City. The Dallas-based company's refinery gross
margins for the third quarter fell 45% to $8.90 a barrel.
Overall refinery production levels spiked 79% from the third quarter of 2008
thanks to the acquisition of the 85,000-barrel-a-day Tulsa, Okla., refinery from
Sunoco Inc. (SUN) earlier this year and recent expansions at its New Mexico and
Utah plants. The cost of refined products sold fell to nearly 16% to nearly $1.3
billion for a year ago due to lower crude oil acquisition costs.
Last month, Holly acquired a second refinery in Oklahoma from Sinclair Oil
Corp. that will be integrated with the Tulsa refinery for combined production of
125,000 barrels a day. Holly also expects to complete the second phase of
operation upgrades at its New Mexico refinery in early 2010.
Shares of Holly were recently up 43 cents, or 1.5%, to $29.07.
-By Naureen S. Malik, Dow Jones Newswires; 212-416-4210; naureen.malik@
dowjones.com
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11-05-091015ET
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