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Press release from PR Newswire

Holly Corporation Reports Second Quarter 2010 Results

Thursday, August 05, 2010

Holly Corporation Reports Second Quarter 2010 Results07:00 EDT Thursday, August 05, 2010Announces Regular Quarterly Cash DividendDALLAS, Aug. 5 /PRNewswire-FirstCall/ -- Holly Corporation (NYSE: HOC) ("Holly" or the "Company") today reported second quarter 2010 financial results.  For the quarter, net income attributable to Holly stockholders was $66.2 million ($1.24 per basic and diluted share) compared to $14.6 million ($0.29 per basic and diluted share) for the second quarter of 2009.  For the six months, net income attributable to Holly stockholders was $38.1 million ($0.72 per basic and $0.71 per diluted share) compared to $36.6 million ($0.73 per basic and diluted share) for the six months ended June 30, 2009.Holly also announced that its Board of Directors has declared a regular quarterly cash dividend in the amount of $0.15 per share, payable October 4, 2010 to holders of record on September 21, 2010.For the quarter, net income attributable to our stockholders increased by $51.6 million compared to the same period of 2009.  This increase was due principally to significantly higher refinery gross margins during the current year second quarter combined with increased sales volumes of produced refined products sold.  Overall refinery gross margins were $11.01 per produced barrel, a 41% increase compared to $7.82 for the second quarter of 2009.  For the quarter, our overall refinery production levels averaged 233,460 barrels per day ("BPD"), an increase of 65% over the same period of 2009 due to production from our Tulsa refinery facilities acquired in June and December 2009. For the six months ended June 30, 2010, net income attributable to our stockholders increased by $1.5 million compared to the same period of 2009.  This increase was due principally to increased sales volumes of produced refined products, partially offset by an overall decrease in current year-to-date refinery gross margins.  Overall refinery gross margins were $8.43 per produced barrel, a 10% decrease compared to $9.41 for the first six months of 2009.  For the current year-to-date period, our overall refinery production levels averaged 225,250 BPD, an increase of 96% over the same period of 2009 due to production from our Tulsa refinery facilities and production increases at our Navajo and Woods Cross refineries.  "We are pleased with our second quarter results," said Matthew Clifton, Chairman of the Board and Chief Executive Officer of Holly.  "Year over year industry-wide increases in distillate cracks and improvements in our Rocky Mountain and Southwest product values relative to benchmark Gulf Coast prices combined with a substantial contribution from our 2009 Tulsa refinery acquisitions drove the strong increase in profitability in the quarter compared to the second quarter of 2009.  For the quarter, EBITDA was $155 million, an increase of $99.1 million or 177% over last year's second quarter. Our Tulsa refinery, which accounted for a little over 50% of our year over year EBITDA increase, is the combined operation of the two refineries acquired by Holly in June and December 2009.  The two facilities operated in an integrated manner during the quarter utilizing an existing third-party pipeline to move intermediates between the facilities for upgrading.  This phase one integration process allowed us to capture the bulk of the overall integration benefits, although at slightly higher operating expenses and subject to certain fuel balance and other constraints.  Full integration is expected in the first quarter of 2011 when we expect to have installed additional pipelines between the two facilities.  During the quarter, the Tulsa facility processed 118,000 barrels per day of crude oil.  Strong distillate and lube oil cracks and increased lube volumes led to Tulsa operating income for the quarter of $46.7 million compared to the one month, one refinery second quarter of 2009 operating loss of $4.1 million.With our lowest crude costs and our highest product values, our Woods Cross refinery continued to contribute nicely to earnings.  Second quarter 2010 gross margins for Woods Cross were $22.36 per barrel.  Margins at our Navajo and Tulsa refineries also were at good levels averaging over $9 per barrel.  Operationally, at the Navajo Refinery, production was somewhat reduced as we lined out modifications made to our crude and vacuum unit during the first quarter of 2010.  In June 2010 we began processing small amounts of heavy Canadian crude to test the various modifications and additions we have made to the facility to allow for a more diverse crude slate.  We plan to increase heavy Canadian crude rates over time as new equipment and modifications are lined out and economics dictate.In July the product margin environment for our refineries remained  at approximately the same level as the average for the second quarter. Looking forward, while cautiously optimistic with respect to our nation's economic recovery, we remain confident that the enhanced capabilities and scale of our assets and the markets we serve, combined with our conservative financial condition, will continue to serve our shareholders well," Clifton said. Sales and other revenues for the second quarter of 2010 were $2,145.9 million, a 107% increase compared to the three months ended June 30, 2009.  This increase was due to the effects of a 33% year-over-year increase in second quarter refined product sales prices combined with a 67% increase in volumes of produced refined products sold.  The volume increase was primarily due to volumes attributable to our Tulsa refinery operations.  Also included in revenues and contributing to the earnings increase for the three months ended June 30, 2010 was a final settlement received from SFPP, L.P. in June 2010 of $8.6 million that relates to tariff refunds for shipments of refined products for the period of January 1992 through May 2006.  In the 2009 second quarter, we received a settlement payment of $2.9 million also related to tariff refunds.  Cost of products sold was $1,848.2 million, a 110% increase compared to the three months ended June 30, 2009 due mainly to higher crude oil acquisition costs and increased volumes of produced refined products sold.  Sales and other revenues for the six months ended June 30, 2010 were $4,020.2 million, a 139% increase compared to the six months ended June 30, 2009.  This increase was due to the effects of a 41% year-over-year increase in year-to-date refined product sales prices combined with a 95% increase in volumes of produced refined products sold.  The volume increase was attributable to our Tulsa refinery operations and year-to-date production increases at our Navajo and Woods Cross refineries.  Cost of products sold was $3,572.1 million, a 157% increase compared to the six months ended June 30, 2009 due mainly to higher crude oil acquisition costs and increased volumes of produced refined products sold.Operating costs and expenses for the three and the six months ended June 30, 2010 increased mainly due to the inclusion of costs attributable to the operations of our Tulsa refinery facilities.  Interest expense for the three and the six months ended June 30, 2010 increased by $13.8 million and $25.3 million, respectively, primarily due to interest incurred on the $300 million Holly senior notes and the $150 million 8.25% senior notes issued by HEP in March 2010.The Company has scheduled a webcast conference call for today, August 5, 2010 at 4:00 PM Eastern Time to discuss financial results.  This webcast may be accessed at: http://www.videonewswire.com/event.asp?id=70657.  An audio archive of this webcast will be available using the above noted link through August 18, 2010.Holly Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and specialty lubricant products.  Holly operates through its subsidiaries a 100,000 BPSD refinery located in Artesia, New Mexico, a 31,000 BPSD refinery in Woods Cross, Utah and a 125,000 BPSD refinery located in Tulsa, Oklahoma.  Also, a subsidiary of Holly owns a 34% interest (including the 2% general partner interest) in Holly Energy Partners, L.P., which through subsidiaries owns or leases approximately 2,500 miles of petroleum product and crude oil pipelines in Texas, New Mexico, Utah and Oklahoma and tankage and refined product terminals in several Southwest and Rocky Mountain states.The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are "forward-looking statements" based on management's beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission.  Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct.  Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.  Any differences could be caused by a number of factors, including, but not limited to, risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in the Company's markets, the demand for and supply of crude oil and refined products, the spread between market prices for refined products and market prices for crude oil, the possibility of constraints on the transportation of refined products, the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, effects of governmental and environmental regulations and policies, the availability and cost of financing to the Company, the effectiveness of the Company's capital investments and marketing strategies, the Company's efficiency in carrying out construction projects, the ability of the Company to acquire refined product operations or pipeline and terminal operations on acceptable terms and to integrate any future acquired operations, the possibility of terrorist attacks and the consequences of any such attacks, general economic conditions, and other financial, operational and legal risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings.  The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.RESULTS OF OPERATIONSFinancial Data (all information in this release is unaudited)Three Months EndedJune 30,Change from 200920102009 ChangePercent(In thousands, except per share data)Sales and other revenues                                   $  2,145,860$  1,035,778$  1,110,082107.2%Operating costs and expenses: Cost of products sold (exclusive of depreciation and amortization) 1,848,212879,926968,286110.0 Operating expenses (exclusive of depreciation and amortization)  120,83178,05342,77854.8 General and administrative expenses (exclusive of depreciation   and amortization)                                     15,82915,0887414.9 Depreciation and amortization                               28,82425,2603,56414.1  Total operating costs and expenses                       2,013,696998,3271,015,369101.7Income from operations                                     132,16437,45194,713252.9Other income (expense): Equity in earnings of SLC Pipeline                           5444885611.5 Interest income                                          635134501373.9 Interest expense                                         (21,023)(7,203)(13,820)191.9 Acquisition costs - Tulsa refinery                           -(1,610)1,610(100.0)(19,844)(8,191)(11,653)142.3Income from continuing operations before income taxes           112,32029,26083,060283.9Income tax provision                                       39,6549,32230,332325.4Income from continuing operations                             72,66619,93852,728264.5Income from discontinued operations (1)                       -1,206(1,206)(100.0)Net income                                               72,66621,14451,522243.7Less noncontrolling interest in net income                       6,5046,539(35)(0.5)Net income attributable to Holly Corporation stockholders           $  66,162$  14,605$  51,557353.0%Earnings attributable to Holly Corporation stockholders: Income from continuing operations                           $  66,162$  14,248$  51,914364.4% Income from discontinued operations                         -357(357)(100.0) Net income                                             $       66,162$       14,605$       51,557353.0%Earnings per share attributable to Holly Corporation  stockholders ? basic: Income from continuing operations                           $  1.24$  0.28$  0.96342.9% Income from discontinued operations (1)                     -0.01(0.01)(100.0) Net income                                             $  1.24$  0.29$  0.95327.6%Earnings per share attributable to Holly Corporation  stockholders ? diluted: Income from continuing operations                           $  1.24$  0.28$  0.96342.9% Income from discontinued operations (1)                     -0.01(0.01)(100.0) Net income                                             $  1.24$  0.29$  0.95327.6%Cash dividends declared per common share                     $  0.15$  0.15$  --%Average number of common shares outstanding: Basic                                                 53,20650,1703,0366.1% Diluted                                                 53,40850,2263,1826.3%EBITDA from continuing operations                            $  155,028$  55,899$  99,129177.3%Six Months EndedJune 30,Change from 200920102009 ChangePercent(In thousands, except per share data)Sales and other revenues                                   $  4,020,150$  1,683,808$  2,336,342138.8%Operating costs and expenses: Cost of products sold (exclusive of depreciation and amortization) 3,572,0761,391,5802,180,496156.7 Operating expenses (exclusive of depreciation and amortization)  248,375144,801103,57471.5 General and administrative expenses (exclusive of depreciation   and amortization)                                     33,69826,8446,85425.5 Depreciation and amortization                               56,58145,34111,24024.8  Total operating costs and expenses                       3,910,7301,608,5662,302,164143.1Income from operations                                     109,42075,24234,17845.4Other income (expense): Equity in earnings of SLC Pipeline                           1,02566336254.6 Interest income                                          6942,330(1,636)(70.2) Interest expense                                         (38,745)(13,442)(25,303)188.2 Acquisition costs - Tulsa refinery                           -(1,610)1,610(100.0)(37,026)(12,059)(24,967)207.0Income from continuing operations before income taxes           72,39463,1839,21114.6Income tax provision                                       22,98221,1711,8118.6Income from continuing operations                             49,41242,0127,40017.6Income from discontinued operations (1)                       -2,537(2,537)(100.0)Net income                                               49,41244,5494,86310.9Less noncontrolling interest in net income                       11,3447,9993,34541.8Net income attributable to Holly Corporation stockholders           $  38,068$  36,550$  1,5184.2%Earnings attributable to Holly Corporation stockholders: Income from continuing operations                           $  38,068$  35,801$  2,2676.3% Income from discontinued operations                         -749(749)(100.0) Net income                                             $       38,068$       36,550$       1,5184.2%Earnings per share attributable to Holly Corporation  stockholders ? basic: Income from continuing operations                           $  0.72$  0.71$  0.011.4% Income from discontinued operations (1)                     -0.02(0.02)(100.0) Net income                                             $  0.72$  0.73$  (0.01)(1.4)%Earnings per share attributable to Holly Corporation  stockholders ? diluted: Income from continuing operations                           $  0.71$  0.71$  0.00-% Income from discontinued operations (1)                     -0.02(0.02)(100.0) Net income                                             $  0.71$  0.73$  (0.02)(2.7)%Cash dividends declared per common share                     $  0.30$  0.30$  --%Average number of common shares outstanding: Basic                                                 53,15250,1063,0466.1% Diluted                                                 53,37550,1893,1866.3%EBITDA from continuing operations                            $  155,682$  113,425$  42,25737.3%(1) On December 1, 2009, HEP sold its interest in Rio Grande.  Results of operations of Rio Grande are presented in discontinued operations.Balance Sheet DataJune 30,December 31,20102009(In thousands)Cash, cash equivalents and investments in marketable securities                       $  141,428$  125,819Working capital                                                              $  319,633$  257,899Total assets                                                                 $  3,283,579$  3,145,939Long-term debt                                                              $  805,336$  707,458Total equity                                                                 $  1,220,756$  1,207,871Segment Information Our operations are currently organized into two reportable segments, Refining and HEP.  Our operations that are not included in the Refining and HEP segments are included in Corporate and Other.  Intersegment transactions are eliminated in our consolidated financial statements and are included in Consolidations and Eliminations. The Refining segment includes the operations of our Navajo, Woods Cross and Tulsa refineries and Holly Asphalt Company ("Holly Asphalt").  The Refining segment involves the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel, jet fuel and specialty lubricant products.  The petroleum products produced by the Refining segment are primarily marketed in the Southwest, Rocky Mountain and Mid-Continent regions of the United States and northern Mexico.  Additionally, the Refining segment includes specialty lubricant products produced at our Tulsa refinery that are marketed throughout North America and are distributed in Central and South America.  Holly Asphalt manufactures and markets asphalt and asphalt products in Arizona, New Mexico, Texas and northern Mexico.The HEP segment involves all of the operations of HEP.  HEP owns and operates a system of petroleum product and crude gathering pipelines in Texas, New Mexico, Oklahoma and Utah, distribution terminals in Texas, New Mexico, Arizona, Utah, Idaho, and Washington and refinery tankage in New Mexico, Utah and Oklahoma.  Revenues are generated by charging tariffs for transporting petroleum products and crude oil through its pipelines, by leasing certain pipeline capacity to Alon USA, Inc., by charging fees for terminalling refined products and other hydrocarbons, and storing and providing other services at its storage tanks and terminals. The HEP segment also includes a 25% interest in SLC Pipeline LLC ("SLC Pipeline") that services refineries in the Salt Lake City, Utah area.  Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations. RefiningHEPCorporateand OtherConsolidationsand EliminationsConsolidated Total(In thousands)Three Months Ended June 30, 2010 Sales and other revenues            $  2,137,360$  45,483$  151$  (37,134)$  2,145,860 Operating expenses                 $  107,451$  13,495$  12$  (127)$  120,831 General and administrative expenses   $  -$  1,913$  13,916$  -$  15,829 Depreciation and amortization         $  20,599$  7,187$  1,333$  (295)$  28,824 Income (loss) from operations         $  124,548$  22,888$  (15,110)$  (162)$  132,164Three Months Ended June 30, 2009 Sales and other revenues            $  1,019,919$  37,999$  2,979$  (25,119)$  1,035,778 Operating expenses                 $  67,640$  10,631$  8$  (226)$  78,053 General and administrative expenses   $  -$  1,797$  13,193$  98$  15,088 Depreciation and amortization         $  17,832$  6,242$  1,186$  -$  25,260 Income (loss) from operations         $  29,530$  19,329$  (11,408)$  -$  37,451RefiningHEPCorporateand OtherConsolidationsandEliminationsConsolidatedTotal(In thousands)Six Months Ended June 30, 2010 Sales and other revenues           $  4,004,534$  86,172$  217$  (70,773)$  4,020,150 Operating expenses               $  222,045$  26,555$  18$  (243)$  248,375 General and administrative expenses  $  -$  4,476$  29,222$  -$  33,698 Depreciation and amortization        $  41,325$  13,992$  1,854$  (590)$  56,581 Income (loss) from operations       $  99,969$  41,149$  (30,877)$  (821)$  109,420Six Months Ended June 30, 2009 Sales and other revenues           $  1,656,829$  67,331$  3,078$  (43,430)$  1,683,808 Operating expenses               $  124,055$  20,973$  27$  (254)$  144,801 General and administrative expenses  $  -$  3,131$  23,713$  -$  26,844 Depreciation and amortization        $  29,783$  11,820$  3,738$  -$  45,341 Income (loss) from operations        $  68,235$  31,407$  (24,400)$  -$  75,242June 30, 2010 Cash, cash equivalents and    investments in marketable securities$  -$    2,806$    138,622$    -$  141,428 Total assets                      $  2,267,727$    671,555$    375,987$    (31,690)$  3,283,579December 31, 2009 Cash, cash equivalents and    investments in marketable securities$  -$    2,508$    123,311$  -$  125,819 Total assets                      $  2,142,317$    641,775$    392,007$  (30,160)$  3,145,939Refining Operating DataOur refinery operations include the Navajo, Woods Cross and Tulsa refineries.  The following tables set forth information, including non-GAAP performance measures about our consolidated refinery operations.  The cost of products and refinery gross margin do not include the effect of depreciation and amortization.  Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below.Three Months EndedJune 30,Six Months EndedJune 30,2010200920102009Navajo RefineryCrude charge (BPD) (1)                                  82,37085,75680,65071,798Refinery production (BPD) (2)                             91,75096,67089,65079,960Sales of produced refined products (BPD)                   93,04095,81290,00079,072Sales of refined products (BPD) (3)                         96,28096,34293,22083,809Refinery utilization (4)                                   82.4%85.8%80.7%71.8%Average per produced barrel (5) Net sales                                           $  91.21$  67.93$  89.70$  63.80 Cost of products (6)                                   82.0859.5482.5053.83 Refinery gross margin                                 9.138.397.209.97 Refinery operating expenses (7)                         4.614.564.885.19 Net operating margin                                   $  4.52$  3.83$  2.32$  4.78Feedstocks: Sour crude oil                                        85%83%86%83% Sweet crude oil                                       4%6%4%7% Other feedstocks and blends                            11%11%10%10% Total                                               100%100%100%100%Three Months Ended June 30,Six Months EndedJune 30,2010200920102009Sales of produced refined products: Gasolines                                   57%57%57%58% Diesel fuels                                 31%34%31%33% Jet fuels                                   5%1%4%1% Fuel oil                                     3%3%4%3% Asphalt                                    2%3%2%3% LPG and other                               2%2%2%2% Total                                       100%100%100%100%Woods Cross RefineryCrude charge (BPD) (1)                         27,45025,93726,57024,631Refinery production (BPD) (2)                     28,85027,69927,70025,505Sales of produced refined products (BPD)           29,07027,05928,62027,042Sales of refined products (BPD) (3)                29,14027,75128,75027,708Refinery utilization (4)                           88.5%83.7%85.7%79.5%Average per produced barrel (5) Net sales                                   $  96.62$  69.05$  93.15$  59.74 Cost of products (6)                          74.2660.1074.4849.90 Refinery gross margin                        22.368.9518.679.84 Refinery operating expenses (7)                5.305.985.746.45 Net operating margin                          $  17.06$  2.97$  12.93$       3.39Feedstocks: Sour crude oil                               5%3%6%3% Sweet crude oil                             60%62%60%64% Black wax crude oil                           29%27%29%27% Other feedstocks and blends                   6%8%5%6% Total                                       100%100%100%100%Sales of produced refined products: Gasolines                                   62%66%63%67% Diesel fuels                                 31%28%29%26% Jet fuels                                   1%-%1%-% Fuel oil                                     1%3%1%4% Asphalt                                    3%2%3%1% LPG and other                               2%1%3%2% Total                                       100%100%100%100%Tulsa Refinery (8)Crude charge (BPD) (1)                         118,48017,930111,0809,010Refinery production (BPD) (2)                     112,86017,275107,9009,685Sales of produced refined products (BPD)           111,88016,971105,3608,532Sales of refined products (BPD) (3)                111,88017,245106,2808,670Refinery utilization (4)                           94.8%64.0%88.9%64.0%Average per produced barrel (5) Net sales                                   $  90.93$  76.14$  88.74$  76.14 Cost of products (6)                          81.3273.3182.0573.31 Refinery gross margin                        9.612.836.692.83 Refinery operating expenses (7)                4.705.215.265.21 Net operating margin                          $  4.91$       (2.38)$  1.43$       (2.38)Feedstocks: Sour crude oil                               8%-%5%-% Sweet crude oil                             92%100%95%100% Total                                       100%100%100%100%Three Months Ended June 30,Six Months EndedJune 30,2010200920102009Sales of produced refined products:         Gasolines       37%23%39%23%         Diesel fuels     32%28%31%28%         Jet fuels       9%9%9%9%         Lubricants      10%22%10%22%         Gas oil / intermediates     3%16%3%16%         Asphalt 4%-%4%-%         LPG and other   5%2%4%2%         Total   100%100%100%100%ConsolidatedCrude charge (BPD) (1)     228,300129,623218,300105,443Refinery production (BPD) (2)       233,460141,648225,250115,150Sales of produced refined products (BPD)233,990139,842223,980114,646Sales of refined products (BPD) (3)   237,300141,338228,250120,187Refinery utilization (4)      89.2%81.5%85.3%77.0%Average per produced barrel (5)         Net sales       $  91.75$  69.14$  89.69$  63.76         Cost of products (6)      80.7461.3281.2654.35         Refinery gross margin    11.017.828.439.41         Refinery operating expenses (7)4.744.915.175.49         Net operating margin      $  6.27$  2.91$  3.26$  3.92Feedstocks:         Sour crude oil   37%56%37%59%         Sweet crude oil  54%29%55%27%         Black wax crude oil       4%5%3%6%         Other feedstocks and blends5%10%5%8%         Total   100%100%100%100%Sales of produced refined products:         Gasolines       48%54%49%58%         Diesel fuels     32%32%31%31%         Jet fuels       6%1%6%1%         Fuel oil 1%3%2%3%         Asphalt 3%3%3%2%         Lubricants      5%3%5%2%         Gas oil / intermediates     2%2%1%1%         LPG and other   3%2%3%2%         Total   100%100%100%100%(1) Crude charge represents the barrels per day of crude oil processed at our refineries.(2) Refinery production represents the barrels per day of refined products yielded from processing crude and other refinery feedstocks through the crude units and other conversion units at our refineries.(3) Includes refined products purchased for resale.(4) Represents crude charge divided by total crude capacity (BPSD).  Our consolidated crude capacity was increased by 15,000 BPSD effective April 1, 2009 (our Navajo refinery expansion), 85,000 BPSD effective June 1, 2009 (our Tulsa Refinery west facility acquisition) and 40,000 BPSD effective December 1, 2009 (our Tulsa refinery east facility acquisition), increasing our consolidated crude capacity to 256,000 BPSD.(5) Represents average per barrel amount for produced refined products sold, which is a non-GAAP measure.  Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below.(6) Transportation, terminal and refinery storage costs billed from HEP are included in cost of products.  (7) Represents operating expenses of our refineries, exclusive of depreciation and amortization.(8) The amounts reported for the Tulsa Refinery for the three and six months ended June 30, 2009 include crude oil processed and products yielded from the Tulsa Refinery west facility for the period from June 1, 2009 (date of Tulsa Refinery west facility acquisition) through June 30, 2009 only, and averaged over the number of days in the periods (91 days and 182 days for the three and six months ended, respectively).  Operating data for the period from June 1, 2009 through June 30, 2009 is as follows:Tulsa RefineryCrude charge (BPD)54,390Refinery production (BPD)52,400Sales of produced refined products (BPD)51,480Sales of refined products (BPD)52,310Refinery utilization64.0%Reconciliations to Amounts Reported Under Generally Accepted Accounting PrinciplesReconciliations of earnings before interest, taxes, depreciation and amortization ("EBITDA") to amounts reported under generally accepted accounting principles in financial statements.Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income attributable to Holly Corporation stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and amortization.  EBITDA is not a calculation provided for under accounting principles generally accepted in the United States; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements.  EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity.  EBITDA is not necessarily comparable to similarly titled measures of other companies.  EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance.  EBITDA is also used by our management for internal analysis and as a basis for financial covenants. Set forth below is our calculation of EBITDA from continuing operations.  Three Months EndedJune 30,Six Months Ended June 30,2010200920102009(In thousands)Income from continuing operations$  72,666$  19,938$  49,412$  42,012Subtract noncontrolling interest in income from continuingoperations(6,504)(5,690)(11,344)(6,211)Add income tax provision39,6549,32222,98221,171Add interest expense21,0237,20338,74513,442Subtract interest income(635)(134)(694)(2,330)Add depreciation and amortization28,82425,26056,58145,341EBITDA from continuing operations$  155,028$  55,899$  155,682$  113,425Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.Refinery gross margin and net operating margin are non-GAAP performance measures that are used by our management and others to compare our refining performance to that of other companies in our industry.  We believe these margin measures are helpful to investors in evaluating our refining performance on a relative and absolute basis.We calculate refinery gross margin and net operating margin using net sales, cost of products and operating expenses, in each case averaged per produced barrel sold.  These two margins do not include the effect of depreciation and amortization.  Each of these component performance measures can be reconciled directly to our Consolidated Statements of Income.Other companies in our industry may not calculate these performance measures in the same manner.Refinery Gross MarginRefinery gross margin per barrel is the difference between average net sales price and average cost of products per barrel of produced refined products.  Refinery gross margin for each of our refineries and for all of our refineries on a consolidated basis is calculated as shown below.Three Months Ended June 30,Six Months EndedJune 30,2010200920102009Average per produced barrel:Navajo RefineryNet sales$  91.21$  67.93$  89.70$  63.80Less cost of products82.0859.5482.5053.83Refinery gross margin$  9.13$  8.39$  7.20$  9.97Woods Cross RefineryNet sales$  96.62$  69.05$  93.15$  59.74Less cost of products74.2660.1074.4849.90Refinery gross margin$  22.36$  8.95$  18.67$  9.84Tulsa RefineryNet sales$  90.93$  76.14$  88.74$  76.14Less cost of products81.3273.3182.0573.31Refinery gross margin$  9.61$  2.83$  6.69$  2.83ConsolidatedNet sales$  91.75$  69.14$  89.69$  63.76Less cost of products80.7461.3281.2654.35Refinery gross margin$  11.01$  7.82$  8.43$  9.41Net Operating MarginNet operating margin per barrel is the difference between refinery gross margin and refinery operating expenses per barrel of produced refined products.  Net operating margin for each of our refineries and for all of our refineries on a consolidated basis is calculated as shown below.Three Months Ended June 30,Six Months EndedJune 30,2010200920102009Average per produced barrel:Navajo RefineryRefinery gross margin$  9.13$  8.39$  7.20$  9.97Less refinery operating expenses4.614.564.885.19Net operating margin$  4.52$  3.83$  2.32$  4.78Woods Cross RefineryRefinery gross margin$  22.36$  8.95$  18.67$  9.84Less refinery operating expenses5.305.985.746.45Net operating margin$  17.06$  2.97$  12.93$  3.39Tulsa RefineryRefinery gross margin$  9.61$  2.83$  6.69$  2.83Less refinery operating expenses4.705.215.265.21Net operating margin$  4.91$    (2.38)$  1.43$  (2.38)ConsolidatedRefinery gross margin$  11.01$  7.82$  8.43$  9.41Less refinery operating expenses4.744.915.175.49Net operating margin$  6.27$  2.91$  3.26$  3.92Below are reconciliations to our Consolidated Statements of Income for (i) net sales, cost of products and operating expenses, in each case averaged per produced barrel sold, and (ii) net operating margin and refinery gross margin.  Due to rounding of reported numbers, some amounts may not calculate exactly.Reconciliations of refined product sales from produced products sold to total sales and other revenueThree Months EndedJune 30,Six Months EndedJune 30,2010200920102009(Dollars in thousands, except per barrel amounts)Navajo RefineryAverage sales price per produced barrel sold$  91.21$  67.93$  89.70$  63.80Times sales of produced refined products sold (BPD)93,04095,81290,00079,072Times number of days in period9191181181Refined product sales from produced products sold$  772,242$  592,274$  1,461,213$  913,108Woods Cross RefineryAverage sales price per produced barrel sold$  96.62$  69.05$  93.15$  59.74Times sales of produced refined products sold (BPD)29,07027,05928,62027,042Times number of days in period9191181181Refined product sales from produced products sold$  255,596$  170,027$  482,537$  292,404Tulsa RefineryAverage sales price per produced barrel sold$  90.93$  76.14$  88.74$  76.14Times sales of produced refined products sold (BPD)111,88016,971105,3608,532Times number of days in period9191181181Refined product sales from produced products sold$  925,766$  117,588$  1,692,286$  117,582Sum of refined products sales from produced products sold from our three refineries (1)$  1,953,604$  879,889$  3,636,036$1,323,094Add refined product sales from purchased products and rounding (2)27,2968,30368,68061,984Total refined products sales1,980,900888,1923,704,7161,385,078Add direct sales of excess crude oil (3)114,155100,621249,017221,876Add other refining segment revenue (4)42,30531,10650,80149,875Total refining segment revenue2,137,3601,019,9194,004,5341,656,829Add HEP segment sales and other revenue45,48337,99986,17267,331Add corporate and other revenues1512,9792173,078Subtract consolidations and eliminations(37,134)(25,119)(70,773)(43,430)Sales and other revenues$  2,145,860$1,035,778$  4,020,150$  1,683,808(1) The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis.  These amounts may not calculate exactly due to rounding of reported numbers.(2) We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments.(3) We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold.  Additionally, we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at carryover cost.(4) Other refining segment revenue includes the revenues associated with Holly Asphalt and revenue derived from feedstock and sulfur credit sales.Three Months EndedJune 30,Six Months EndedJune 30,2010200920102009(Dollars in thousands, except per barrel amounts)Average sales price per produced barrel sold$  91.75$  69.14$  89.69$  63.76Times sales of produced refined products sold (BPD)233,990139,842223,980114,646Times number of days in period9191181181Refined product sales from produced products sold$  1,953,604$  879,889$  3,636,036$  1,323,094Reconciliation of average cost of products per produced barrel sold to total cost of products soldThree Months Ended June 30,Six Months EndedJune 30,2010200920102009(Dollars in thousands, except per barrel amounts)Navajo RefineryAverage cost of products per produced barrel sold$  82.08$  59.54$  82.50$    53.83Times sales of produced refined products sold (BPD)93,04095,81290,00079,072Times number of days in period9191181181Cost of products for produced products sold$  694,942$  519,123$  1,343,925$    770,417Woods Cross RefineryAverage cost of products per produced barrel sold$  74.26$  60.10$  74.48$    49.90Times sales of produced refined products sold (BPD)29,07027,05928,62027,042Times number of days in period9191181181Cost of products for produced products sold$  196,445$  147,988$  385,823$    244,241Tulsa RefineryAverage cost of products per produced barrel sold$  81.32$  73.31$  82.05$    73.31Times sales of produced refined products sold (BPD)111,88016,971105,3608,532Times number of days in period9191181181Cost of products for produced products sold$  827,925$  113,217$  1,564,707$    113,212Sum of cost of products for produced products sold from our three refineries (1)$  1,719,312$  780,328$3,294,455$  1,127,870Add refined product costs from purchased products sold and rounding (2)27,8279,18069,32966,859Total refined cost of products sold1,747,139789,5083,363,7841,194,729Add crude oil cost of direct sales of excess crude oil (3)112,88599,872246,552220,554Add other refining segment costs of products sold (4)24,73815,53730,85919,473Total refining segment cost of products sold1,884,762904,9173,641,1951,434,756Subtract consolidations and eliminations(36,550)(24,991)(69,119)(43,176)Costs of products sold (exclusive of depreciation and amortization)$  1,848,212$  879,926$  3,572,076$    1,391,580(1) The above calculations of cost of products for produced products sold can also be computed on a consolidated basis.  These amounts may not calculate exactly due to rounding of reported numbers.(2) We purchase finished products when opportunities arise that provide a profit on the sale of such products, or to meet delivery commitments.(3) We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold.  Additionally, we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at carryover cost. (4) Other refining segment cost of products sold includes the cost of products for Holly Asphalt and costs attributable to feedstock and sulfur credit sales.Three Months EndedJune 30,Six Months EndedJune 30,2010200920102009(Dollars in thousands, except per barrel amounts)Average cost of products per produced barrel sold$  80.74$  61.32$  81.26$  54.35Times sales of produced refined products sold (BPD)233,990139,842223,980114,646Times number of days in period9191181181Cost of products for produced products sold$  1,719,312$  780,328$  3,294,455$  1,127,870Reconciliation of average refinery operating expenses per produced barrel sold to total operating expensesThree Months EndedJune 30,Six Months EndedJune 30,2010200920102009(Dollars in thousands, except per barrel amounts)Navajo RefineryAverage refinery operating expenses per produced barrel sold$  4.61$  4.56$  4.88$  5.19Times sales of produced refined products sold (BPD)93,04095,81290,00079,072Times number of days in period9191181181Refinery operating expenses for produced products sold$  39,031$  39,758$  79,495$  74,279Woods Cross RefineryAverage refinery operating expenses per produced barrel sold$  5.30$  5.98$  5.74$  6.45Times sales of produced refined products sold (BPD)29,07027,05928,62027,042Times number of days in period9191181181Refinery operating expenses for produced products sold$  14,020$  14,725$  29,734$  31,570Tulsa  RefineryAverage refinery operating expenses per produced barrel sold$  4.70$  5.21$  5.26$         5.21Times sales of produced refined products sold (BPD)111,88016,971105,3608,532Times number of days in period9191181181Refinery operating expenses for produced products sold$  47,851$  8,046$  100,309$  8,046Sum of refinery operating expenses per produced products sold from our three refineries (1)$  100,902$  62,529$  209,538$  113,895Add other refining segment operating expenses and rounding (2)6,5495,11112,50710,160Total refining segment operating expenses107,45167,640222,045124,055Add HEP segment operating expenses13,49510,63126,55520,973Add corporate and other costs1281827Subtract consolidations and eliminations(127)(226)(243)(254)Operating expenses (exclusive of depreciation and amortization)$  120,831$  78,053$  248,375$  144,801(1) The above calculations of refinery operating expenses from produced products sold can also be computed on a consolidated basis.  These amounts may not calculate exactly due to rounding of reported numbers. (2) Other refining segment operating expenses include the marketing costs associated with our refining segment and the operating expenses of Holly Asphalt.Three Months EndedJune 30,Six Months EndedJune 30,2010200920102009(Dollars in thousands, except per barrel amounts)Average refinery operating expenses per produced barrel sold$  4.74$  4.91$  5.17$  5.49Times sales of produced refined products sold (BPD)233,990139,842223,980114,646Times number of days in period9191181181Refinery operating expenses for produced products sold$  100,902$  62,529$  209,538$  113,895Reconciliation of net operating margin per barrel to refinery gross margin per barrel to total sales and other revenuesThree Months EndedJune 30,Six Months EndedJune 30,2010200920102009(Dollars in thousands, except per barrel amounts)Navajo RefineryNet operating margin per barrel$  4.52$  3.83$  2.32$  4.78Add average refinery operating expenses per produced barrel4.614.564.885.19Refinery gross margin per barrel9.138.397.209.97Add average cost of products per produced barrel sold82.0859.5482.5053.83Average sales price per produced barrel sold$  91.21$  67.93$  89.70$  63.80Times sales of produced refined products sold (BPD)93,04095,81290,00079,072Times number of days in period9191181181Refined products sales from produced products sold$  772,242$  592,274$  1,461,213$  913,108Woods Cross RefineryNet operating margin per barrel$  17.06$  2.97$  12.93$  3.39Add average refinery operating expenses per produced barrel5.305.985.746.45Refinery gross margin per barrel22.368.9518.679.84Add average cost of products per produced barrel sold74.2660.1074.4849.90Average net sales per produced barrel sold$  96.62$  69.05$  93.15$  59.74Times sales of produced refined products sold (BPD)29,07027,05928,62027,042Times number of days in period9191181181Refined products sales from produced products sold$  255,596$  170,027$  482,537$  292,404Tulsa  RefineryNet operating margin per barrel$  4.91$  (2.38)$  1.43$  (2.38)Add average refinery operating expenses per produced barrel4.705.215.265.21Refinery gross margin per barrel9.612.836.692.83Add average cost of products per produced barrel sold81.3273.3182.0573.31Average net sales per produced barrel sold$  90.93$  76.14$  88.74$  76.14Times sales of produced refined products sold (BPD)111,88016,971105,3608,532Times number of days in period9191181181Refined products sales from produced products sold$  925,766$  117,588$  1,692,286$  117,582Sum of refined products sales from produced products sold from our three refineries (1)$  1,953,604$  879,889$  3,636,036$  1,323,094Add refined product sales from purchased products and rounding (2)27,2968,30368,68061,984Total refined products sales1,980,900888,1923,704,7161,385,078Add direct sales of excess crude oil (3)114,155100,621249,017221,876Add other refining segment revenue (4)42,30531,10650,80149,875Total refining segment revenue2,137,3601,019,9194,004,5341,656,829Add HEP segment sales and other revenues45,48337,99986,17267,331Add corporate and other revenues1512,9792173,078Subtract consolidations and eliminations(37,134)(25,119)(70,773)(43,430)Sales and other revenues$2,145,860$  1,035,778$  4,020,150$1,683,808(1) The above calculations of refined product sales from produced products sold can also be computed on a consolidated basis.  These amounts may not calculate exactly due to rounding of reported numbers.(2) We purchase finished products when opportunities arise that provide a profit on the sale of such products or to meet delivery commitments.(3) We purchase crude oil that at times exceeds the supply needs of our refineries. Quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as inventory and then upon sale as cost of products sold.  Additionally, we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at carryover cost.(4) Other refining segment revenue includes the revenues associated with Holly Asphalt and revenue derived from feedstock and sulfur credit sales.Three Months EndedJune 30,Six Months EndedJune 30,2010200920102009(Dollars in thousands, except per barrel amounts)Net operating margin per barrel$  6.27$  2.91$  3.26$  3.92Add average refinery operating expenses per produced barrel4.744.915.175.49Refinery gross margin per barrel11.017.828.439.41Add average cost of products per produced barrel sold80.7461.3281.2654.35Average sales price per produced barrel sold$  91.75$  69.14$  89.69$  63.76Times sales of produced refined products sold (BPD)233,990139,842223,980114,646Times number of days in period9191181181Refined product sales from produced products sold$  1,953,604$  879,889$  3,636,036$1,323,094SOURCE Holly CorporationFor further information: Bruce R. Shaw, Senior Vice President and Chief Financial Officer, or M. Neale Hickerson, Vice President, Investor Relations, both of Holly Corporation, +1-214-871-3555