HEP - Earnings call transcript Q1 2020 | Holly Energy Partners LP

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Operator

Welcome to Holly Energy Partners First Quarter 2020 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 Trey Schonter. begin. may you Trey,

Trey Schonter

thank quarter all Trey XXXX for Investor and joining Schonter you our Relations Partners. Energy first earnings Holly you Julian, of to for with Thanks, call. I'm

CFO. President today us Harrison, President are Voliva, Joining and Rich Senior John Vice and

we announcing results This quarter issued for press XXXX. XX, March a the release morning the ending

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

including today's John proceed expectations, Harbor be statements with their release. are note says covered that Please to of could it not Safe in are judgments provisions forward-looking of the management and remarks. disclosure expectations, our statements. Harbor are the results statements statement guarantees many These noted Rich, filings. SEC press federal those securities predictions are future in Today's regarding summary, In factors Safe laws. statements outcomes. Before, made to cause intended or There from under differ

only today's time of Also, please may transcript. the be at note replay speaks information accurate time-sensitive XXXX. no that today, on longer provided any information call X, Any May reading as the of or presented webcast of

GAAP call release non-GAAP today's of Finally, for include measures. measures, see reconciliations please may today's discussion to financial press

the with Rich. call I'll And that, turn to over

Rich Voliva

time. you Thanks, families your are On thank Good Energy Trey. afternoon, call hope everyone during you and safe unprecedented for today. Partners this the joining and behalf well we of Holly and

We team. the protect actions a safety challenging response work our several our In has health help for and The applaud hard with employees to our top is would our of COVID-XX created COVID-XX continued to and and to priority. employees and their implemented pandemic environment all I for like dedication.

actions pipeline developments the continue staff going operation include These these center to staggering operational for control allowed everyone closely policies to and our in shifts monitor for COVID-XX and to These forward. address certain and only, from employees. work we monitoring have policy seamless health for home onsite personnel properly limiting essential

XXXX Despite by by the presented safe and challenges COVID-XX, quarter operations. delivered reliable solid results, driven first HEP

As context minimum commitments in long-term, by always, of revenue. commitments And these for assets. represented these results across approximately our are our XX% supported XXXX volume

to our area and City uncommitted assets. revenue majority Lake is tied of our Salt The Southwest

from the and primary source Las to crude Southern pipelines the markets. as Aside City are The the Vegas Frontier UNEV product the Salt supply from Basin, similar the pipeline Salt a Uinta SLC and to plays the refiners. of oil route Lake role Utah Lake

and the reduced data, to our run see customers. ahead across Looking second we consistent public disclosure expect with rates to quarter,

a continued these However, strategic related support to these expect assets play the role non-MVC to we and see these across assets. in from and revenue operational regions refineries

note approximately from XX% Additionally, it's that important of grade XXXX was revenue to investment customers. generated our

announce portion excited barrels approximately storage of updates. generate project EBITDA our of the HEP. million The in Connect joint venture. the of to crude $X.X We're annualized is to to terminal to Turning Cushing start the X.X million projected

in XXXX. first Connect an remains Cushing on start with THE the schedule quarter anticipated of date pipeline

EBITDA to annualized Both minimum are by term We of supported HEP. long $X expect commitment. venture produce to pipeline joint the million assets volume

Falls, to connects addition that our Big pipeline Spring effective Cushing the re-contracted April in unused terminal In X, we Connect have the Wichita to assets Texas.

We $X expect contract revenue. the new over annualized provide in million to

is strength for projected has retain announced, The incremental previously partner improved per term and $X.XX HEP to or annually an unit flexibility. of $X.XX As new quarterly distribution allow changed million and per its year. limited $XXX cash a financial we long strategy distribution near to

capital leverage ratio forward. and cash stronger projects provide strategic flow, coverage to This disciplined going measure prudent reducing within shift while a HEP and intended is will all and a with growth fund

our the as the continuity top health continue we support responsibly we navigate an to infrastructure to remain order during period. Again, focused of employees essential pandemic, healthy business stays during hope and operating remains COVID-XX this priority in on safety and safely our our the As this everyone and we business, time. of challenging

the over that, with turn to John. I'll call And

John Harrison

Rich. Thanks,

$XX.X net the For the XXXX XXXX. the million income of first attributable The was senior quarter of $XX.X to of to HEP redemption our of million compared million a notes. to due decrease related primarily was quarter first X% $XX.X in to charge early

attributable charge, to million. net HEP income was that Excluding $XX.X

$XX.X to of First quarter adjusted XXXX. quarter million was first $XX.X EBITDA million the compared in

provided in press release. have reflecting a We our adjustments table these

the a the During period is distributable generated increase last $XX.X over same which million, $XXX,XXX quarter HEP year. of cash flow

LP we the distribution over for first new quarterly previously Rich distribution quarter. our a in mentioned, over announced unit cash coverage a times. significantly term is X.X target This X.X times per As resulting just of of $X,XX long ratio

capital investments Capital venture expenditures venture CapEx venture. the maintenance remain expenditures unchanged Cushing of share million in million quarter at to and the were including joint $X $XX projected $XX for and $XX Connect joint investments joint during and approximately million, for million XXXX HEPs $XX million.

X% the due with will due X% This we years. During XXXX. refinanced issuance of a notes refinancing million in maturity other four save $X expense, approximately new extending of XXX per of senior quarter, year while our million XXXX interest notes senior

$X.X of approximately of outstanding, billion restrictions. on notes $X July of to XXXX debt does have March $X.X in drawn dollar senior any revolver credit XXXX, consisting XXXX As base and of XX, and borrowing XXX million of facility. not matures billion The our billion revolving HEP total had due

end month ratio covenant the below X.XX our was quarter times. well times leverage trailing X.X Our first liquidity at is which $XXX current of EBITDA million our the over was XX and to of adjusted debt

retained leverage flow flow all to we'll intend we revised ahead, cash and investment times. to long from with operations Looking incremental use X.X A capital target cash X reduce now to leverage. fund is term

quarter In summary, challenging be despite improve. solid and environment believe we'll conditions HEP well-positioned market the we delivered a when

questions. And with for call that, I back operator will to turn the the

Operator

Spiro question Credit from first comes Your Dounis Suisse. [Operator from Instructions]

Your is open. line

Spiro Dounis

guys. Afternoon, Hey.

with start Let's MVCs…

Rich Voliva

Hi, Spiro.

Spiro Dounis

your think of we XQ XXXX. should Richard XX% XX% think down. is excess the Hi, you about utilization? see running that with fair? How on downturn. But through about this of sounds not MVC Is revenues, in they're It revenues move expect like guess, about entire here, in mentioned I with you based to I Rich. that Thinking impact that might refineries below absorb actually MVCs some

Rich Voliva

you When non-committed XXX% you MVC say that's mean of absorbing the fair, revenue.

Spiro Dounis

Yeah.

as in So in XX%, way runs XX%. running Are refinery if are down part the that you at other other of words, any refineries down in decrease? words shielded

Rich Voliva

absolutely. Yeah,

Frontier represents So of a the our commitment uncommitted no portion you this And think pipelines. SLC example and on those give lines. large can revenue. that effectively logic best be would I the and There's I extends, on

plants off running the - That probably on at crude The value are production. and perfect, without of these to lines depending said, is utilized it's XX%, are Uinta magnitude. Salt run Basin reality Lake be in order can't not around it's that the going you know, that system. But moving

to more on its So don't kind here your week so concept to think basis of can a going XX% now And as that quarter. imagine revenue, get the absorb year-over-year we our right, weeks, not correct, of hard close shift I in that on that. But is down. expect specific you to to we're little to its second lose that anywhere even changing

Spiro Dounis

everyone's sense. And a Okay. is think ball days. yes, That bit I these makes crystal foggy

little in you brought there. appreciate I color a So

you walk rate? HFC looking and but through expirations upcoming And in sticking the the Second current a just MVC, place here. with mechanisms bit maintaining little just us forward tariff maybe to any are specifically? when renewals it question, what comes already Can with automatic

Rich Voliva

here. checking just I'm Yeah.

sleep with expiry specifically both to assets that next and I renewals there lose XXXX. a realistically, HFC desire is of Our to list on HEP critical Look, HFC is is HFC HEP strong are on not list. high over, the and do things continue owns business. the to on sides that in infrastructure The

drop-down I of year think how will if a will, executed some go probably forward. for renewal is initial good last on guidebook renewals you assets, these the we going the

Spiro Dounis

Okay. just for around remind how kind just of metrics benefit, went? the of some or us that that And then maybe our

Rich Voliva

design similar the the contract edges the commitment, end at and both e day really are and the Yeah, prior. was to moved of some renewed - of effectively but from pieces economics that we the very the sides at the the

Spiro Dounis

Be today, Perfect. well. Thanks your for guys. time

Rich Voliva

thank. Absolutely,

You too.

Operator

are will closing there over floor to Trey the further no remarks. for back turn questions, If I

Trey Schonter

if joining again for Feel have the any relations Thanks call you questions. today. investor out reach free to to

Operator

concludes This call. today's conference

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

Holly Energy Partners (HEP) 6 May 202020 Q1 Earnings call transcript