HEP - Earnings call transcript Q2 2018 | Holly Energy Partners LP

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Operator

Good afternoon, and welcome to Holly Energy Partners Second Quarter 2018 Conference Call and Webcast. At this time, all participants have been placed in a listen-only mode. The floor will be open for your questions following the presentation. [Operator Instructions] Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Jared Harding. begin. may you Jared,

Jared Harding

you I joining Investor am Partners. Holly Thank XXXX Relations second earnings Energy call. Jared all Thasha. our for quarter for Thanks, Harding with

Rich George morning, This issued ending a results and Joining June and announcing we Damiris, release the today Vice President are CEO; us and for Voliva, press XX, Executive CFO. President quarter XXXX.

website copy you may on our If release, find press you'd at of like today's a hollyenergy.com. one

of Harbor remarks, results Before made in Harbor to disclosure on including to of expectations, are George statements Safe or provisions that not longer guarantees SEC any noted the Safe please provided factors Rich statements. transcript. the may call future note of and intended could summary, or our today's regarding webcast be statements information the Any statements covered speaks August are forward-looking These There judgments statement many no accurate time that reading their in press note differ says from please of In at Also, as Xst, with expectations, release. predictions Federal outcomes. XXXX. today's are today, under Laws. of time-sensitive cause be presented are the information replay filings. proceed it Today's management Securities those only

George. GAAP to may measures. over And of today's today's I'll non-GAAP to the discussions for include call reconciliations financial Finally, press with call measures. Please release see turn that,

George Damiris

for stable the in the flows in increasing our underpinned provides long-term increase this distribution to second distribution business, allows volume experienced Thanks, typical distribution HEP Jared. quarter, And thanks consecutive of minimum earnings by encouraged by record underlying unit. XXth the $X.XX are you we per seasonality our since which XXXX. our our the commitments. IPO cash quarter, Despite fundamental each march to distribution the growth, track This to continue afternoon. joining of generated solid for call which in

previously our leverage the as Malaga organically. oil for XXXX expansion to of primary we am has These completed happy that Our budget of is existing the been report pipelines. pipeline Lake I the grow the projects footprint a for focus announced well, completed under format to ahead City the will hard be which successfully schedule our system, crude of Frontier work and but testament on now the team. dedication Salt and have

Terminal HollyFrontier across opportunities lubricant to will As towards are to there truck with the the turn or of in that Terminals construct XX to year. second relationship the be HollyFrontier Lubricants opportunities, to of opportunities. HEP And take a million. regard the we we over and we expect to we HollyFrontier's approximately into call In serve Texas. the I'll is end approach HollyFrontier the This second intention barrels Orla, miles third rack otherwise position continue day half our XX,XXX this of expanding in with continue facility quarter, Permian With the May, to be demand able loading our is potential believe logistics Rich. new customer. from infrastructure roughly distillate look In party XXXX, announced plans Catoosa acquisition tuck like more primary of be the Basin. would Acquisitions leverage that to operational our a rail our is family. to the completed explore Construction to growing underway, up area. we of to to the plant $X deliver discipline by so rack the Catoosa diesel the per we M&A,

Rich Voliva

Thanks George.

Xth, to the unit, distribution the which distribution $X.XX increase second of scheduled Distribution Energy per on announced Holly quarterly as paid of Partners, As XXXX. of unitholders quarter on over record is previously mentioned, on of X.X% July July August XXth. represents XXth, a the be

the quarter, year. the last $X million, same During higher than $XX generated cash period of million flow distributable HEP

ratio expect second the a of the on effective improvement was for factors was contractual significant in Our typical we distribution to X.XX half quarter. coverage times tariff XXXX July Coverage adversely the while by escalators on UNEV, Xst. effected seasonal

to continue coverage approximately CapEx million times to quarter ratio be the by for CapEx We X and our HollyFrontier. million full reimbursed the were of Capital expenditures $X.X maintenance million or year XXXX. $X.X expect including higher for $X

million, CapEx between million full $X the includes CapEx we For of of reimbursement XXXX, $XX which million $X $XX year total and of report and maintenance CapEx.

billed second shortfall to of for differed shippers. quarter we revenue of $XXX,XXX recognized prior The XXXX,

rates quarter completed $X.X our of as due the As revenue. XXXX, XXth, to of in differed Interest a tack-on the senior of anticipate million, $X.X which on additional was in and of recognizing to quarter, an increased on we third credit differed million our quarter revolving than million revenue in of our expense interest $XXX,XXX notes ports offering carried compared HEP of second X% the June facilities. balance sheet of XXXX, well $XXX higher as third less

our roughly our leverage to the at X $XXX Including liquidity be XXXX. second still the leverage end to cash the of is trailing X.X and XX over end expect debt As of we months times million. and revolver was current quarter, adjusted times EBITDA availability, by

enable that the us equity planned organic growth, to strong weak liquidity despite confident market. will We achieve are this position our

turn the Now that call will over I to Thasha for with questions.

Operator

Instructions] line Morgan. Thank Tonet And first the comes Thank of you. from from you. [Operator JP Jeremy our question

is open. line Your

Jeremy Tonet

Good afternoon.

George Damiris

Good afternoon, Jeremy.

Jeremy Tonet

of the release just whole so forward, do process to touch and on study you expect a there that recently are I when the hoping, pipeline kind could for feasibility conclude? was you looking the for going if guys Permian steps product you bit just press what more you had

George Damiris

is this George. Yeah, Jeremy,

our also it's a to markets markets. that Midland, in to think market looking I demand we're where feasibility study pricing get such typical to to get as other but process the only cost those at

develop cost work specific the doing benefits good have progress but our volumes or make of we're over the guideline, to so. sides HEP. we the expect a for and tariff develop So in next quarter equation on potential We don't both to

Jeremy Tonet

here, here, helpful. any which about you watching had wondering That's the there as items finally issues, or turnarounds those HEP? there the back of half should What kind any just be if year thinking we the balance other normal for quarter in of out should we of items year? are to And you is Thanks. be think the about this as seasonality expect

George Damiris

have in volume around more and in to impact given you expect one we be Jeremy, finally turnaround generally out that the I'll we We and think assets. but So do just planned don't we see expecting really that huge is those quarter. call a fourth commitments the minimum seasonality

Jeremy Tonet

for it That's Thanks my taking me. Great. questions. for

George Damiris

you, Thank Jeremy.

Operator

next Justin from Raymond James. Jenkins our the comes And question line of of

line Your is open.

Justin Jenkins

on to to Jeremy's Permian on Great. the I supply diesel? you Thanks. long Permian. are supply diesel should the concerned maybe over about longer term for quickly kind guess afternoon, that term we George, demand on Good the pictures number about of or think the project question how are looking following-up plan of medium guys. competing of

George Damiris

Well, is demand I growing think obviously in area. the

familiar diesel there diesel markets. only the area. of with announced. already Permian. refineries, of our the actual from our HFCs to short into or - we from market all it's using in and are think have also other rig large the get be We're railed seeing especially that, top going owners are natural get but not customers the supply matter is competition through is the HollyFrontier the other that closer refinery. has from just first so Artesia It's been we've is product, for that drilling the tankage We we business. to previously drivers do We been marketing area the is in short always a demand trucked the supply building and market There from extension pipeline rack The this to better directly through as

advantage We positioned think are that and well of take we we're opportunity. of afraid competition to

Justin Jenkins

on That's for more you is but my mentioned shortage if that? side, of to maybe them the Permian. the system call an HFC it's curious the to great. opportunity access of Transitioning across drivers in least beside barrels made there And rest truck get I'm to question on Perfect. Permian refining at on, HFC the next credit

George Damiris

that sure I am what Justin. you get

out about getting to barrels or? other refineries You're the Permian talking

Justin Jenkins

Yes.

George Damiris

bit quiet So last that up HEP, it's all from Permian the talk I Cushing we about for the done the bring in of better HFC that the a to past, for again to think primarily but barrels a HFC down. way is

Justin Jenkins

Thanks, I'll guys. there. Perfect. it leave

George Damiris

Thanks, Justin.

Operator

[Operator from Instructions] of Our Theresa line from next question Barclays. Chen comes

Your line is open.

Theresa Chen

Hi.

Red for some logistics Oil Giant these parents or idea to the maybe sit assets there, to intention NLP? given ask and about wanted way make its to assets plans Just any to acquire the that

George Damiris

Yeah.

I probably parent better leaving the we're to that think question half tomorrow.

Theresa Chen

Thank Okay. you.

George Damiris

Thasha? else, Anything

Operator

George you to questions, further no are the over there remarks. I as any call turn like to back would closing And for

George Damiris

our you everyone again reach have any free Thanks Feel if to joining. out Relations follow-ups. for Investor

Operator

conference This concludes you. Thank call. today's

great have You may now a day. and disconnect. Thanks for joining

Holly Energy Partners (HEP) 1 Aug 182018 Q2 Earnings call transcript