Business Wire | Nov 5, 2020 06:30AM EST

HollyFrontier Corporation Reports Quarterly Results

Nov. 05, 2020

DALLAS--(BUSINESS WIRE)--Nov. 05, 2020--HollyFrontier Corporation (NYSE:HFC) ("HollyFrontier" or the "Company") today reported third quarter net loss attributable to HollyFrontier stockholders of $(2.4) million, or $(0.01) per diluted share, for the quarter ended September 30, 2020, compared to net income of $261.8 million, or $1.58 per diluted share, for the quarter ended September 30, 2019.

The third quarter results reflect special items that collectively increased net income by a total of $64.5 million. On a pre-tax basis, these items include HollyFrontier's pro-rata share of a gain recognized upon the settlement of the Company's business interruption claim with its insurance carrier related to a loss at the Woods Cross Refinery totaling $77.1 million and a lower of cost or market inventory valuation adjustment of $62.8 million, partially offset by charges related to the Cheyenne Refinery conversion to renewable diesel production, including last-in, first-out ("LIFO") inventory liquidation costs of $33.8 million, decommissioning charges of $12.3 million and severance charges totaling $2.4 million. Excluding these items, net loss for the current quarter was $(66.9) million ($(0.41) per diluted share) compared to net income of $278.0 million ($1.68 per diluted share) for the third quarter of 2019, which excludes certain items that collectively decreased net income by $16.2 million.

HollyFrontier's President & CEO, Michael Jennings, commented, "Despite the difficult operating environment, HollyFrontier delivered solid results in the third quarter, led by resilient financial performances from our lubricants and midstream businesses. In August, we ran the last barrel of crude oil at Cheyenne and began the conversion to renewable diesel production. I would like to thank all of the employees at Cheyenne for safely achieving this milestone. In September, we reinforced our strong liquidity position through the successful $750.0 million bond offering, providing us the necessary capital to fully fund the previously announced renewable diesel projects at our Artesia, New Mexico and Cheyenne, Wyoming facilities."

The COVID-19 pandemic caused a decline in U.S. and global economic activity starting in the first quarter of 2020. This decrease reduced both volumes and unit margins across the Company's businesses, resulting in lower gross margins and earnings. During the third quarter of 2020, demand for transportation fuels remained challenged while lubricants and specialties saw meaningful improvement in industrial and transportation-related markets and increased global demand for base oils.

The Refining segment reported adjusted EBITDA of $(53.6) million for the third quarter of 2020 compared to $424.6 million for the third quarter of 2019. This decrease was primarily due to continued weak demand for gasoline and diesel coupled with compressed crude differentials. Refinery gross margin for the third quarter of 2020 was $4.93 per produced barrel, a 71% decrease compared to $17.23 for the third quarter of 2019. Crude oil charge averaged 390,580 barrels per day ("BPD") for the current quarter compared to 476,030 BPD for the third quarter of 2019.

The Lubricants and Specialty Products segment reported EBITDA of $60.6 million for the third quarter of 2020 compared to $38.0 million in the third quarter of 2019. This increase was driven by the strong recovery in global demand for finished lubricants and base oils, resulting in higher sales volumes and margins during the quarter.

Holly Energy Partners, L.P. ("HEP") reported EBITDA of $55.3 million for the third quarter of 2020 compared to $123.1 million in the third quarter of 2019. Reported EBITDA for the third quarter of 2020 included a $35.7 million goodwill impairment charge, and reported EBITDA for the third quarter of 2019 included a $35.2 million gain on sales-type leases, both of which eliminated on the Company's consolidation.

For the third quarter of 2020, net cash provided by operations totaled $81.7 million. During the period, HollyFrontier declared and paid a dividend of $0.35 per share to shareholders totaling $57.2 million. At September 30, 2020, the Company's cash and cash equivalents totaled $1,524.9 million, a $622.4 million increase over cash and cash equivalents of $902.5 million at June 30, 2020. Additionally, the Company's consolidated debt was $3,176.3 million. The Company's debt, exclusive of HEP debt, which is nonrecourse to HollyFrontier, was $1,736.5 million at September 30, 2020.

The Company has scheduled a webcast conference call for today, November 5, 2020, at 8:30 AM Eastern Time to discuss third quarter financial results. This webcast may be accessed at: https://event.on24.com/wcc/r/2628168/9BE4DA1E13C98135F6352CD76762D475. An audio archive of this webcast will be available using the above noted link through November 19, 2020.

HollyFrontier 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 other specialty products. HollyFrontier owns and operates refineries located in Kansas, Oklahoma, New Mexico and Utah and markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier produces base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57% limited partner interest and a non-economic general partner interest in Holly Energy Partners, L.P., a master limited partnership that provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HollyFrontier Corporation subsidiaries.

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, the extraordinary market environment and effects of the COVID-19 pandemic, including the continuation of a material decline in demand for refined petroleum products in markets the Company serves; risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products or lubricant and specialty products in the Company's markets; the spread between market prices for refined products and market prices for crude oil; the possibility of constraints on the transportation of refined products or lubricant and specialty products; the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, whether due to infection in the workforce or in response to reductions in demand; effects of governmental and environmental regulations and policies, including the effects of current restrictions on various commercial and economic activities in response to the COVID-19 pandemic; 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 and consummating construction projects, including the Company's ability to complete announced capital projects, such as the conversion of the Cheyenne Refinery to a renewable diesel facility and the construction of the Artesia renewable diesel unit and pretreatment unit, on time and within budget; the Company's ability to timely obtain or maintain permits, including those necessary for operations or capital projects; the ability of the Company to acquire refined or lubricant product operations or pipeline and terminal operations on acceptable terms and to integrate any existing or future acquired operations; the possibility of terrorist or cyberattacks and the consequences of any such attacks; general economic conditions, including uncertainty regarding the timing, pace and extent of an economic recovery in the United States; further deterioration in gross margins or a prolonged economic slowdown due to COVID-19 could result in an impairment of goodwill and / or additional long-lived asset impairments; 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 OPERATIONS

Financial Data (all information in this release is unaudited)

Three Months Ended Change from 2019 September 30,

2020 2019 Change Percent

(In thousands, except per share data)

Sales and other $ 2,819,400 $ 4,424,828 $ (1,605,428 ) (36 )%revenues

Operating costs and expenses:

Cost of products sold:

Cost of productssold (exclusiveof lower of costor market 2,377,238 3,403,767 (1,026,529 ) (30 )inventoryvaluationadjustment)

Lower of cost ormarket inventory (62,849 ) 34,062 (96,911 ) (285 )valuationadjustment

2,314,389 3,437,829 (1,123,440 ) (33 )

Operating 332,496 345,578 (13,082 ) (4 )expenses

Selling, generaland 74,453 87,626 (13,173 ) (15 )administrativeexpenses

Depreciation and 125,280 127,016 (1,736 ) (1 )amortization

Total operatingcosts and 2,846,618 3,998,049 (1,151,431 ) (29 )expenses

Income (loss) (27,218 ) 426,779 (453,997 ) (106 )from operations



Other income (expense):

Earnings ofequity method 1,316 1,334 (18 ) (1 )investments

Interest income 1,011 6,164 (5,153 ) (84 )

Interest expense (30,589 ) (36,027 ) 5,438 (15 )

Gain on businessinterruption 81,000 - 81,000 - insurancesettlement

Gain on foreigncurrency 1,030 395 635 161 transactions

Other, net 1,368 2,356 (988 ) (42 )

55,136 (25,778 ) 80,914 (314 )

Income before 27,918 401,001 (373,083 ) (93 )income taxes

Income tax 4,573 103,021 (98,448 ) (96 )expense

Net income 23,345 297,980 (274,635 ) (92 )

Less net incomeattributable to 25,746 36,167 (10,421 ) (29 )noncontrollinginterest

Net income(loss)attributable to $ (2,401 ) $ 261,813 $ (264,214 ) (101 )%HollyFrontierstockholders



Earnings (loss)per shareattributable to HollyFrontierstockholders:

Basic $ (0.01 ) $ 1.60 $ (1.61 ) (101 )%

Diluted $ (0.01 ) $ 1.58 $ (1.59 ) (101 )%

Cash dividendsdeclared per $ 0.35 $ 0.33 $ 0.02 6 %common share

Average numberof common shares outstanding:

Basic 162,015 163,676 (1,661 ) (1 )%

Diluted 162,015 165,011 (2,996 ) (2 )%



EBITDA $ 157,030 $ 521,713 $ (364,683 ) (70 )%

Adjusted EBITDA $ 65,638 $ 523,082 $ (457,444 ) (87 )%

Nine Months EndedSeptember 30,

Change from 2019

2020

2019

Change

Percent

(In thousands, except per share data)

Sales and other revenues

$

8,282,875

$

13,104,690

$

(4,821,815

)

(37

)%

Operating costs and expenses:

Cost of products sold:

Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

6,647,960

10,307,856

(3,659,896

)

(36

)

Lower of cost or market inventory valuation adjustment

227,711

(150,483

)

378,194

(251

)

6,875,671

10,157,373

(3,281,702

)

(32

)

Operating expenses

964,200

1,010,422

(46,222

)

(5

)

Selling, general and administrative expenses

237,559

260,977

(23,418

)

(9

)

Depreciation and amortization

396,033

375,345

20,688

6

Long-lived asset and goodwill impairments

436,908

152,712

284,196

186

Total operating costs and expenses

8,910,371

11,956,829

(3,046,458

)

(25

)

Income (loss) from operations

(627,496

)

1,147,861

(1,775,357

)

(155

)

Other income (expense):

Earnings of equity method investments

5,186

5,217

(31

)

(1

)

Interest income

6,590

17,127

(10,537

)

(62

)

Interest expense

(85,923

)

(106,938

)

21,015

(20

)

Gain on business interruption insurance settlement

81,000

-

81,000

-

Gain on sales-type leases

33,834

-

33,834

-

Loss on early extinguishment of debt

(25,915

)

-

(25,915

)

-

Gain (loss) on foreign currency transactions

(918

)

4,873

(5,791

)

(119

)

Other, net

4,790

3,005

1,785

59

18,644

(76,716

)

95,360

(124

)

Income (loss) before income taxes

(608,852

)

1,071,145

(1,679,997

)

(157

)

Income tax expense (benefit)

(188,504

)

279,862

(468,366

)

(167

)

Net income (loss)

(420,348

)

791,283

(1,211,631

)

(153

)

Less net income attributable to noncontrolling interest

63,353

79,500

(16,147

)

(20

)

Net income (loss) attributable to HollyFrontier stockholders

$

(483,701

)

$

711,783

$

(1,195,484

)

(168

)%

Earnings (loss) per share attributable to HollyFrontier stockholders:

Basic

$

(2.99

)

$

4.23

$

(7.22

)

(171

)%

Diluted

$

(2.99

)

$

4.20

$

(7.19

)

(171

)%

Cash dividends declared per common share

$

1.05

$

0.99

$

0.06

6

%

Average number of common shares outstanding:

Basic

161,927

167,935

(6,008

)

(4

)%

Diluted

161,927

169,125

(7,198

)

(4

)%

EBITDA

$

(196,839

)

$

1,456,801

$

(1,653,640

)

(114

)%

Adjusted EBITDA

$

434,118

$

1,451,864

$

(1,017,746

)

(70

)%

Nine Months Ended Change from 2019 September 30,

2020 2019 Change Percent

(In thousands, except per share data)

Sales and other $ 8,282,875 $ 13,104,690 $ (4,821,815 ) (37 )%revenues

Operating costs and expenses:

Cost of products sold:

Cost ofproducts sold(exclusive oflower of cost 6,647,960 10,307,856 (3,659,896 ) (36 )or marketinventoryvaluationadjustment)

Lower of costor marketinventory 227,711 (150,483 ) 378,194 (251 )valuationadjustment

6,875,671 10,157,373 (3,281,702 ) (32 )

Operating 964,200 1,010,422 (46,222 ) (5 )expenses

Selling,general and 237,559 260,977 (23,418 ) (9 )administrativeexpenses

Depreciationand 396,033 375,345 20,688 6 amortization

Long-livedasset and 436,908 152,712 284,196 186 goodwillimpairments

Total operatingcosts and 8,910,371 11,956,829 (3,046,458 ) (25 )expenses

Income (loss) (627,496 ) 1,147,861 (1,775,357 ) (155 )from operations



Other income (expense):

Earnings ofequity method 5,186 5,217 (31 ) (1 )investments

Interest income 6,590 17,127 (10,537 ) (62 )

Interest (85,923 ) (106,938 ) 21,015 (20 )expense

Gain onbusinessinterruption 81,000 - 81,000 - insurancesettlement

Gain onsales-type 33,834 - 33,834 - leases

Loss on earlyextinguishment (25,915 ) - (25,915 ) - of debt

Gain (loss) onforeign (918 ) 4,873 (5,791 ) (119 )currencytransactions

Other, net 4,790 3,005 1,785 59

18,644 (76,716 ) 95,360 (124 )

Income (loss)before income (608,852 ) 1,071,145 (1,679,997 ) (157 )taxes

Income taxexpense (188,504 ) 279,862 (468,366 ) (167 )(benefit)

Net income (420,348 ) 791,283 (1,211,631 ) (153 )(loss)

Less net incomeattributable to 63,353 79,500 (16,147 ) (20 )noncontrollinginterest

Net income(loss)attributable to $ (483,701 ) $ 711,783 $ (1,195,484 ) (168 )%HollyFrontierstockholders



Earnings (loss)per shareattributable to HollyFrontierstockholders:

Basic $ (2.99 ) $ 4.23 $ (7.22 ) (171 )%

Diluted $ (2.99 ) $ 4.20 $ (7.19 ) (171 )%

Cash dividendsdeclared per $ 1.05 $ 0.99 $ 0.06 6 %common share

Average numberof common sharesoutstanding:

Basic 161,927 167,935 (6,008 ) (4 )%

Diluted 161,927 169,125 (7,198 ) (4 )%



EBITDA $ (196,839 ) $ 1,456,801 $ (1,653,640 ) (114 )%

Adjusted EBITDA $ 434,118 $ 1,451,864 $ (1,017,746 ) (70 )%

Balance Sheet Data

September 30,

December 31,

2020

2019

(In thousands)

Cash and cash equivalents

$

1,524,888

$

885,162

Working capital

$

2,081,978

$

1,620,261

Total assets

$

11,579,741

$

12,164,841

Long-term debt

$

3,176,349

$

2,455,640

Total equity

$

5,876,569

$

6,509,426

Segment Information

Our operations are organized into three reportable segments, Refining, Lubricants and Specialty Products and HEP. Our operations that are not included in the Refining, Lubricants and Specialty Products and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under the Corporate, Other and Eliminations column.

The Refining segment includes the operations of our El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross refineries and HollyFrontier Asphalt Company LLC ("HFC Asphalt") (aggregated as a reportable segment). Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. HFC Asphalt operates various terminals in Arizona, New Mexico and Oklahoma.

The Lubricants and Specialty Products segment involves Petro-Canada Lubricants Inc.'s ("PCLI") production operations, located in Mississauga, Ontario, that include lubricant products such as base oils, white oils, specialty products and finished lubricants and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States, Europe and China. Additionally, the Lubricants and Specialty Products segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America, the operations of Red Giant Oil, one of the largest suppliers of locomotive engine oil in North America and the operations of Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

The HEP segment involves all of the operations of HEP, a consolidated variable interest entity, which owns and operates logistics assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. The HEP segment also includes a 75% interest in UNEV Pipeline, LLC (an HEP consolidated subsidiary), and a 50% ownership interest in each of Osage Pipeline Company, LLC, Cheyenne Pipeline LLC and Cushing Connect Pipeline & Terminal LLC. 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. Due to certain basis differences, our reported amounts for the HEP segment may not agree to amounts reported in HEP's periodic public filings.

Balance Sheet Data

September 30, December 31,

2020 2019

(In thousands)

Cash and cash equivalents $ 1,524,888 $ 885,162

Working capital $ 2,081,978 $ 1,620,261

Total assets $ 11,579,741 $ 12,164,841

Long-term debt $ 3,176,349 $ 2,455,640

Total equity $ 5,876,569 $ 6,509,426

Segment Information

Our operations are organized into three reportable segments, Refining, Lubricants and Specialty Products and HEP. Our operations that are not included in the Refining, Lubricants and Specialty Products and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under the Corporate, Other and Eliminations column.

The Refining segment includes the operations of our El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross refineries and HollyFrontier Asphalt Company LLC ("HFC Asphalt") (aggregated as a reportable segment). Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. HFC Asphalt operates various terminals in Arizona, New Mexico and Oklahoma.

The Lubricants and Specialty Products segment involves Petro-Canada Lubricants Inc.'s ("PCLI") production operations, located in Mississauga, Ontario, that include lubricant products such as base oils, white oils, specialty products and finished lubricants and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States, Europe and China. Additionally, the Lubricants and Specialty Products segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America, the operations of Red Giant Oil, one of the largest suppliers of locomotive engine oil in North America and the operations of Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

The HEP segment involves all of the operations of HEP, a consolidated variable interest entity, which owns and operates logistics assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. The HEP segment also includes a 75% interest in UNEV Pipeline, LLC (an HEP consolidated subsidiary), and a 50% ownership interest in each of Osage Pipeline Company, LLC, Cheyenne Pipeline LLC and Cushing Connect Pipeline & Terminal LLC. 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. Due to certain basis differences, our reported amounts for the HEP segment may not agree to amounts reported in HEP's periodic public filings.

Lubricants Corporate, Refining and HEP Other and Consolidated Specialty Eliminations Total Products

(In thousands)

Three Months Ended September 30, 2020

Sales andother revenues:

Revenues fromexternal $ 2,339,782 $ 452,878 $ 26,740 $ - $ 2,819,400 customers

Intersegment 56,331 2,164 100,991 (159,486 ) - revenues

$ 2,396,113 $ 455,042 $ 127,731 $ (159,486 ) $ 2,819,400

Cost ofproducts sold(exclusive of $ 2,211,342 $ 302,703 $ - $ (136,807 ) $ 2,377,238 lower of costor marketinventory)

Lower of costor marketinventory $ (62,849 ) $ - $ - $ - $ (62,849 )valuationadjustment

Operating $ 256,079 $ 54,488 $ 40,003 $ (18,074 ) $ 332,496 expenses

Selling,general and $ 30,866 $ 36,773 $ 2,332 $ 4,482 $ 74,453 administrativeexpenses

Depreciationand $ 79,146 $ 17,432 $ 24,109 $ 4,593 $ 125,280 amortization

Income (loss)from $ (118,471 ) $ 43,646 $ 61,287 $ (13,680 ) $ (27,218 )operations

Income (loss)before $ (118,471 ) $ 43,120 $ 70,067 $ 62,780 $ 57,496 interest andincome taxes

Net incomeattributableto $ - $ - $ 2,293 $ 23,453 $ 25,746 noncontrollinginterest

Earnings ofequity method $ - $ - $ 1,316 $ - $ 1,316 investments

Capital $ 41,740 $ 6,995 $ 7,902 $ 26,635 $ 83,272 expenditures



Three Months Ended September 30, 2019

Sales andother revenues:

Revenues fromexternal $ 3,865,399 $ 529,561 $ 29,868 $ - $ 4,424,828 customers

Intersegment 81,571 8,157 106,027 (195,755 ) - revenues

$ 3,946,970 $ 537,718 $ 135,895 $ (195,755 ) $ 4,424,828

Cost ofproducts sold(exclusive of $ 3,177,167 $ 397,926 $ - $ (171,326 ) $ 3,403,767 lower of costor marketinventory)

Lower of costor marketinventory $ 34,062 $ - $ - $ - $ 34,062 valuationadjustment

Operating $ 276,869 $ 57,974 $ 44,924 $ (34,189 ) $ 345,578 expenses

Selling,general and $ 31,707 $ 43,875 $ 2,714 $ 9,330 $ 87,626 administrativeexpenses

Depreciationand $ 76,765 $ 22,700 $ 24,121 $ 3,430 $ 127,016 amortization

Income (loss)from $ 350,400 $ 15,243 $ 64,136 $ (3,000 ) $ 426,779 operations

Income (loss)before $ 350,400 $ 15,325 $ 100,778 $ (35,639 ) $ 430,864 interest andincome taxes

Net incomeattributableto $ - $ - $ 1,004 $ 35,163 $ 36,167 noncontrollinginterest

Earnings ofequity method $ - $ - $ 1,334 $ - $ 1,334 investments

Capital $ 53,506 $ 8,697 $ 6,076 $ 6,310 $ 74,589 expenditures

Refining

Lubricants and Specialty Products

HEP

Corporate, Other and Eliminations

Consolidated Total

(In thousands)

Nine Months Ended September 30, 2020

Sales and other revenues:

Revenues from external customers

$

6,880,444

$

1,330,021

$

72,410

$

-

$

8,282,875

Intersegment revenues

178,039

8,911

297,982

(484,932

)

-

$

7,058,483

$

1,338,932

$

370,392

$

(484,932

)

$

8,282,875

Cost of products sold (exclusive of lower of cost or market inventory)

$

6,113,530

$

952,430

$

-

$

(418,000

)

$

6,647,960

Lower of cost or market inventory valuation adjustment

$

227,711

$

-

$

-

$

-

$

227,711

Operating expenses

$

754,612

$

156,459

$

109,721

$

(56,592

)

$

964,200

Selling, general and administrative expenses

$

94,677

$

121,654

$

7,569

$

13,659

$

237,559

Depreciation and amortization

$

251,019

$

59,260

$

72,095

$

13,659

$

396,033

Long-lived asset impairment

$

215,242

$

204,708

$

16,958

$

-

$

436,908

Income (loss) from operations

$

(598,308

)

$

(155,579

)

$

164,049

$

(37,658

)

$

(627,496

)

Income (loss) before interest and income taxes

$

(598,308

)

$

(155,847

)

$

185,593

$

39,043

$

(529,519

)

Net income attributable to noncontrolling interest

$

-

$

-

$

4,158

$

59,195

$

63,353

Earnings of equity method investments

$

-

$

-

$

5,186

$

-

$

5,186

Capital expenditures

$

106,856

$

20,387

$

38,642

$

47,123

$

213,008

Nine Months Ended September 30, 2019

Sales and other revenues:

Revenues from external customers

$

11,446,841

$

1,568,241

$

89,388

$

220

$

13,104,690

Intersegment revenues

244,799

8,157

311,755

(564,711

)

-

$

11,691,640

$

1,576,398

$

401,143

$

(564,491

)

$

13,104,690

Cost of products sold (exclusive of lower of cost or market inventory)

$

9,598,539

$

1,202,296

$

-

$

(492,979

)

$

10,307,856

Lower of cost or market inventory valuation adjustment

$

(150,483

)

$

-

$

-

$

-

$

(150,483

)

Operating expenses

$

794,081

$

170,655

$

123,045

$

(77,359

)

$

1,010,422

Selling, general and administrative expenses

$

88,322

$

125,681

$

7,322

$

39,652

$

260,977

Depreciation and amortization

$

227,405

$

65,891

$

72,192

$

9,857

$

375,345

Goodwill impairment

$

-

$

152,712

$

-

$

-

$

152,712

Income (loss) from operations

$

1,133,776

$

(140,837

)

$

198,584

$

(43,662

)

$

1,147,861

Income (loss) before interest and income taxes

$

1,133,776

$

(140,518

)

$

238,910

$

(71,212

)

$

1,160,956

Net income attributable to noncontrolling interest

$

-

$

-

$

3,524

$

75,976

$

79,500

Earnings of equity method investments

$

-

$

-

$

5,217

$

-

$

5,217

Capital expenditures

$

129,167

$

25,887

$

23,828

$

16,175

$

195,057

Lubricants Corporate, Consolidated Refining and Specialty HEP Other and Total Products Eliminations

(In thousands)

Nine Months Ended September 30, 2020

Sales andother revenues:

Revenues fromexternal $ 6,880,444 $ 1,330,021 $ 72,410 $ - $ 8,282,875 customers

Intersegment 178,039 8,911 297,982 (484,932 ) - revenues

$ 7,058,483 $ 1,338,932 $ 370,392 $ (484,932 ) $ 8,282,875

Cost ofproducts sold(exclusive of $ 6,113,530 $ 952,430 $ - $ (418,000 ) $ 6,647,960 lower of costor marketinventory)

Lower of costor marketinventory $ 227,711 $ - $ - $ - $ 227,711 valuationadjustment

Operating $ 754,612 $ 156,459 $ 109,721 $ (56,592 ) $ 964,200 expenses

Selling,general and $ 94,677 $ 121,654 $ 7,569 $ 13,659 $ 237,559 administrativeexpenses

Depreciationand $ 251,019 $ 59,260 $ 72,095 $ 13,659 $ 396,033 amortization

Long-livedasset $ 215,242 $ 204,708 $ 16,958 $ - $ 436,908 impairment

Income (loss)from $ (598,308 ) $ (155,579 ) $ 164,049 $ (37,658 ) $ (627,496 )operations

Income (loss)before $ (598,308 ) $ (155,847 ) $ 185,593 $ 39,043 $ (529,519 )interest andincome taxes

Net incomeattributableto $ - $ - $ 4,158 $ 59,195 $ 63,353 noncontrollinginterest

Earnings ofequity method $ - $ - $ 5,186 $ - $ 5,186 investments

Capital $ 106,856 $ 20,387 $ 38,642 $ 47,123 $ 213,008 expenditures



Nine Months Ended September 30, 2019

Sales andother revenues:

Revenues fromexternal $ 11,446,841 $ 1,568,241 $ 89,388 $ 220 $ 13,104,690 customers

Intersegment 244,799 8,157 311,755 (564,711 ) - revenues

$ 11,691,640 $ 1,576,398 $ 401,143 $ (564,491 ) $ 13,104,690

Cost ofproducts sold(exclusive of $ 9,598,539 $ 1,202,296 $ - $ (492,979 ) $ 10,307,856 lower of costor marketinventory)

Lower of costor marketinventory $ (150,483 ) $ - $ - $ - $ (150,483 )valuationadjustment

Operating $ 794,081 $ 170,655 $ 123,045 $ (77,359 ) $ 1,010,422 expenses

Selling,general and $ 88,322 $ 125,681 $ 7,322 $ 39,652 $ 260,977 administrativeexpenses

Depreciationand $ 227,405 $ 65,891 $ 72,192 $ 9,857 $ 375,345 amortization

Goodwill $ - $ 152,712 $ - $ - $ 152,712 impairment

Income (loss)from $ 1,133,776 $ (140,837 ) $ 198,584 $ (43,662 ) $ 1,147,861 operations

Income (loss)before $ 1,133,776 $ (140,518 ) $ 238,910 $ (71,212 ) $ 1,160,956 interest andincome taxes

Net incomeattributableto $ - $ - $ 3,524 $ 75,976 $ 79,500 noncontrollinginterest

Earnings ofequity method $ - $ - $ 5,217 $ - $ 5,217 investments

Capital $ 129,167 $ 25,887 $ 23,828 $ 16,175 $ 195,057 expenditures

Refining

Lubricants and Specialty Products

HEP

Corporate, Other and Eliminations

Consolidated Total

(In thousands)

September 30, 2020

Cash and cash equivalents

$

6,085

$

211,646

$

18,091

$

1,289,066

$

1,524,888

Total assets

$

6,197,301

$

1,933,482

$

2,193,770

$

1,255,188

$

11,579,741

Long-term debt

$

-

$

-

$

1,439,874

$

1,736,475

$

3,176,349

December 31, 2019

Cash and cash equivalents

$

9,755

$

169,277

$

13,287

$

692,843

$

885,162

Total assets

$

7,189,094

$

2,223,418

$

2,205,437

$

546,892

$

12,164,841

Long-term debt

$

-

$

-

$

1,462,031

$

993,609

$

2,455,640

Refining Segment Operating Data

The following tables set forth information, including non-GAAP (Generally Accepted Accounting Principles) performance measures about our refinery operations. Refinery gross and net operating margins do not include the non-cash effects of long-lived asset impairment charges, lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below.

Lubricants Corporate, Consolidated Refining and Specialty HEP Other and Total Products Eliminations

(In thousands)

September 30, 2020

Cash andcash $ 6,085 $ 211,646 $ 18,091 $ 1,289,066 $ 1,524,888 equivalents

Total $ 6,197,301 $ 1,933,482 $ 2,193,770 $ 1,255,188 $ 11,579,741 assets

Long-term $ - $ - $ 1,439,874 $ 1,736,475 $ 3,176,349 debt



December 31, 2019

Cash andcash $ 9,755 $ 169,277 $ 13,287 $ 692,843 $ 885,162 equivalents

Total $ 7,189,094 $ 2,223,418 $ 2,205,437 $ 546,892 $ 12,164,841 assets

Long-term $ - $ - $ 1,462,031 $ 993,609 $ 2,455,640 debt

Refining Segment Operating Data

The following tables set forth information, including non-GAAP (Generally Accepted Accounting Principles) performance measures about our refinery operations. Refinery gross and net operating margins do not include the non-cash effects of long-lived asset impairment charges, lower of cost or market inventory valuation adjustments and depreciation and amortization. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below.

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Mid-Continent Region (El Dorado and Tulsa Refineries)

Crude charge (BPD) ^(1) 244,200 294,380 234,550 257,590

Refinery throughput (BPD)^ (2) 257,280 307,720 249,430 272,440

Sales of produced refined 243,830 290,930 239,800 260,780 products (BPD) ^(3)

Refinery utilization ^(4) 93.9 % 113.2 % 90.2 % 99.1 %



Average per produced barrel ^ (5)

Refinery gross margin $ 3.21 $ 14.61 $ 6.41 $ 14.55

Refinery operating expenses ^ 5.47 5.05 5.47 5.48 (6)

Net operating margin $ (2.26) $ 9.56 $ 0.94 $ 9.07



Refinery operating expenses $ 5.19 $ 4.77 $ 5.26 $ 5.25 per throughput barrel ^(7)



Feedstocks:

Sweet crude oil 62 % 59 % 58 % 56 %

Sour crude oil 18 % 21 % 19 % 23 %

Heavy sour crude oil 15 % 16 % 17 % 16 %

Other feedstocks and blends 5 % 4 % 6 % 5 %

Total 100 % 100 % 100 % 100 %



Sales of produced refined products:

Gasolines 53 % 49 % 52 % 51 %

Diesel fuels 35 % 34 % 34 % 32 %

Jet fuels 3 % 6 % 4 % 7 %

Fuel oil 1 % 1 % 1 % 1 %

Asphalt 2 % 4 % 3 % 3 %

Base oils 4 % 4 % 4 % 4 %

LPG and other 2 % 2 % 2 % 2 %

Total 100 % 100 % 100 % 100 %

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2020

2019

2020

2019

Southwest Region (Navajo Refinery) (8)

Crude charge (BPD) (1)

96,660

106,860

94,320

107,330

Refinery throughput (BPD) (2)

106,780

117,250

104,570

117,660

Sales of produced refined products (BPD) (3)

106,350

116,890

107,270

120,760

Refinery utilization (4)

96.7

%

106.9

%

94.3

%

107.3

%

Average per produced barrel (5)

Refinery gross margin

$

9.70

$

18.61

$

11.16

$

19.35

Refinery operating expenses (6)

5.07

5.25

5.17

4.90

Net operating margin

$

4.63

$

13.36

$

5.99

$

14.45

Refinery operating expenses per throughput barrel (7)

$

5.05

$

5.23

$

5.31

$

5.03

Feedstocks:

Sweet crude oil

25

%

22

%

24

%

21

%

Sour crude oil

66

%

69

%

66

%

70

%

Other feedstocks and blends

9

%

9

%

10

%

9

%

Total

100

%

100

%

100

%

100

%

Sales of produced refined products:

Gasolines

55

%

50

%

54

%

51

%

Diesel fuels

34

%

40

%

36

%

39

%

Fuel oil

2

%

3

%

2

%

3

%

Asphalt

8

%

5

%

6

%

5

%

LPG and other

1

%

2

%

2

%

2

%

Total

100

%

100

%

100

%

100

%

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Southwest Region (Navajo Refinery) ^(8)

Crude charge (BPD) ^(1) 96,660 106,860 94,320 107,330

Refinery throughput (BPD)^ (2) 106,780 117,250 104,570 117,660

Sales of produced refined 106,350 116,890 107,270 120,760 products (BPD) ^(3)

Refinery utilization ^(4) 96.7 % 106.9 % 94.3 % 107.3 %



Average per produced barrel ^ (5)

Refinery gross margin $ 9.70 $ 18.61 $ 11.16 $ 19.35

Refinery operating expenses ^ 5.07 5.25 5.17 4.90 (6)

Net operating margin $ 4.63 $ 13.36 $ 5.99 $ 14.45



Refinery operating expenses per $ 5.05 $ 5.23 $ 5.31 $ 5.03 throughput barrel ^(7)



Feedstocks:

Sweet crude oil 25 % 22 % 24 % 21 %

Sour crude oil 66 % 69 % 66 % 70 %

Other feedstocks and blends 9 % 9 % 10 % 9 %

Total 100 % 100 % 100 % 100 %



Sales of produced refined products:

Gasolines 55 % 50 % 54 % 51 %

Diesel fuels 34 % 40 % 36 % 39 %

Fuel oil 2 % 3 % 2 % 3 %

Asphalt 8 % 5 % 6 % 5 %

LPG and other 1 % 2 % 2 % 2 %

Total 100 % 100 % 100 % 100 %

Rocky Mountain Region (Cheyenne and Woods Cross Refineries) (8)

Crude charge (BPD) (1)

49,720

74,790

63,300

78,530

Refinery throughput (BPD) (2)

57,040

81,830

69,370

85,300

Sales of produced refined products (BPD) (3)

57,110

77,680

67,070

77,890

Refinery utilization (4)

51.3

%

77.1

%

65.3

%

81.0

%

Average per produced barrel (5)

Refinery gross margin

$

3.39

$

24.97

$

10.63

$

19.73

Refinery operating expenses (6)

15.94

11.95

13.25

11.39

Net operating margin

$

(12.55

)

$

13.02

$

(2.62

)

$

8.34

Refinery operating expenses per throughput barrel (7)

$

15.96

$

11.34

$

12.81

$

10.40

Feedstocks:

Sweet crude oil

38

%

38

%

36

%

36

%

Heavy sour crude oil

19

%

30

%

33

%

33

%

Black wax crude oil

30

%

23

%

22

%

23

%

Other feedstocks and blends

13

%

9

%

9

%

8

%

Total

100

%

100

%

100

%

100

%

Rocky Mountain Region (Cheyenne and Woods Cross Refineries) ^(8)

Crude charge (BPD) ^(1) 49,720 74,790 63,300 78,530

Refinery throughput (BPD)^ (2) 57,040 81,830 69,370 85,300

Sales of produced refined 57,110 77,680 67,070 77,890 products (BPD) ^(3)

Refinery utilization ^(4) 51.3 % 77.1 % 65.3 % 81.0 %



Average per produced barrel ^ (5)

Refinery gross margin $ 3.39 $ 24.97 $ 10.63 $ 19.73

Refinery operating expenses ^ 15.94 11.95 13.25 11.39 (6)

Net operating margin $ (12.55 ) $ 13.02 $ (2.62 ) $ 8.34



Refinery operating expenses $ 15.96 $ 11.34 $ 12.81 $ 10.40 per throughput barrel ^(7)



Feedstocks:

Sweet crude oil 38 % 38 % 36 % 36 %

Heavy sour crude oil 19 % 30 % 33 % 33 %

Black wax crude oil 30 % 23 % 22 % 23 %

Other feedstocks and blends 13 % 9 % 9 % 8 %

Total 100 % 100 % 100 % 100 %

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2020

2019

2020

2019

Rocky Mountain Region (Cheyenne and Woods Cross Refineries) (8)

Sales of produced refined products:

Gasolines

57

%

54

%

56

%

53

%

Diesel fuels

31

%

32

%

33

%

34

%

Fuel oil

3

%

4

%

3

%

4

%

Asphalt

5

%

5

%

5

%

5

%

LPG and other

4

%

5

%

3

%

4

%

Total

100

%

100

%

100

%

100

%

Three Months Nine Months Ended Ended September 30, September 30,

2020 2019 2020 2019

Rocky Mountain Region (Cheyenne and Woods Cross Refineries)^ (8)

Sales of produced refined products:

Gasolines 57 % 54 % 56 % 53 %

Diesel fuels 31 % 32 % 33 % 34 %

Fuel oil 3 % 4 % 3 % 4 %

Asphalt 5 % 5 % 5 % 5 %

LPG and other 4 % 5 % 3 % 4 %

Total 100 % 100 % 100 % 100 %

Consolidated

Crude charge (BPD) (1)

390,580

476,030

392,170

443,450

Refinery throughput (BPD) (2)

421,100

506,800

423,370

475,400

Sales of produced refined products (BPD) (3)

407,280

485,500

414,140

459,440

Refinery utilization (4)

85.5

%

104.2

%

85.8

%

97.0

%

Average per produced barrel (5)

Refinery gross margin

$

4.93

$

17.23

$

8.33

$

16.69

Refinery operating expenses (6)

6.83

6.20

6.65

6.33

Net operating margin

$

(1.90

)

$

11.03

$

1.68

$

10.36

Refinery operating expenses per throughput barrel (7)

$

6.61

$

5.94

$

6.50

$

6.12

Feedstocks:

Sweet crude oil

50

%

47

%

46

%

44

%

Sour crude oil

27

%

29

%

27

%

30

%

Heavy sour crude oil

12

%

14

%

16

%

15

%

Black wax crude oil

4

%

4

%

4

%

4

%

Other feedstocks and blends

7

%

6

%

7

%

7

%

Total

100

%

100

%

100

%

100

%

Consolidated

Crude charge (BPD) ^(1) 390,580 476,030 392,170 443,450

Refinery throughput (BPD)^ (2) 421,100 506,800 423,370 475,400

Sales of produced refined 407,280 485,500 414,140 459,440 products (BPD) ^(3)

Refinery utilization ^(4) 85.5 % 104.2 % 85.8 % 97.0 %



Average per produced barrel ^ (5)

Refinery gross margin $ 4.93 $ 17.23 $ 8.33 $ 16.69

Refinery operating expenses ^ 6.83 6.20 6.65 6.33 (6)

Net operating margin $ (1.90 ) $ 11.03 $ 1.68 $ 10.36



Refinery operating expenses per $ 6.61 $ 5.94 $ 6.50 $ 6.12 throughput barrel ^(7)



Feedstocks:

Sweet crude oil 50 % 47 % 46 % 44 %

Sour crude oil 27 % 29 % 27 % 30 %

Heavy sour crude oil 12 % 14 % 16 % 15 %

Black wax crude oil 4 % 4 % 4 % 4 %

Other feedstocks and blends 7 % 6 % 7 % 7 %

Total 100 % 100 % 100 % 100 %

Sales of produced refined products:

Gasolines

54

%

50

%

54

%

51

%

Diesel fuels

34

%

35

%

34

%

35

%

Jet fuels

2

%

4

%

2

%

4

%

Fuel oil

1

%

2

%

1

%

2

%

Asphalt

4

%

4

%

4

%

4

%

Base oils

3

%

2

%

2

%

2

%

LPG and other

2

%

3

%

3

%

2

%

Total

100

%

100

%

100

%

100

%

Sales of produced refined products:

Gasolines 54 % 50 % 54 % 51 %

Diesel fuels 34 % 35 % 34 % 35 %

Jet fuels 2 % 4 % 2 % 4 %

Fuel oil 1 % 2 % 1 % 2 %

Asphalt 4 % 4 % 4 % 4 %

Base oils 3 % 2 % 2 % 2 %

LPG and other 2 % 3 % 3 % 2 %

Total 100 % 100 % 100 % 100 %

(1)

Crude charge represents the barrels per day of crude oil processed at our refineries.

(2)

Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries.

(3)

Represents barrels sold of refined products produced at our refineries (including HFC Asphalt) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold.

(4)

Represents crude charge divided by total crude capacity ("BPSD"). Our consolidated crude capacity is 457,000 BPSD.

(5)

Represents average amount per produced barrel 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)

Represents total refining segment operating expenses, exclusive of depreciation and amortization, divided by sales volumes of refined products produced at our refineries.

(7)

Represents total refining segment operating expenses, exclusive of depreciation and amortization, divided by refinery throughput.

(8)

As previously disclosed, our Cheyenne Refinery ceased petroleum refining operations in the third quarter of 2020. Beginning with the fourth quarter of 2020, activities associated with the conversion of our Cheyenne Refinery to renewable diesel production will be reported in the Corporate and Other segment, and the disaggregation of our refining geographic operating data will be presented in two regions, Mid-Continent and West, to best reflect the economic drivers of our refining operations. The Mid-Continent region will continue to be comprised of our El Dorado and Tulsa Refineries, and the new West region will be comprised of our Navajo and Woods Cross Refineries.

Lubricants and Specialty Products Segment Operating Data

We acquired our Sonneborn business on February 1, 2019. For the nine months ended September 30, 2019 our lubricants and specialty product operating results reflect the operations of our Sonneborn business for the period February 1, 2019 through September 30, 2019.

The following table sets forth information about our lubricants and specialty products operations.

(1) Crude charge represents the barrels per day of crude oil processed at our refineries.

Refinery throughput represents the barrels per day of crude and other (2) refinery feedstocks input to the crude units and other conversion units at our refineries.

Represents barrels sold of refined products produced at our refineries (3) (including HFC Asphalt) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold.

(4) Represents crude charge divided by total crude capacity ("BPSD"). Our consolidated crude capacity is 457,000 BPSD.

Represents average amount per produced barrel sold, which is a non-GAAP (5) measure. Reconciliations to amounts reported under GAAP are provided under "Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles" below.

Represents total refining segment operating expenses, exclusive of (6) depreciation and amortization, divided by sales volumes of refined products produced at our refineries.

(7) Represents total refining segment operating expenses, exclusive of depreciation and amortization, divided by refinery throughput.

As previously disclosed, our Cheyenne Refinery ceased petroleum refining operations in the third quarter of 2020. Beginning with the fourth quarter of 2020, activities associated with the conversion of our Cheyenne Refinery to renewable diesel production will be reported in the (8) Corporate and Other segment, and the disaggregation of our refining geographic operating data will be presented in two regions, Mid-Continent and West, to best reflect the economic drivers of our refining operations. The Mid-Continent region will continue to be comprised of our El Dorado and Tulsa Refineries, and the new West region will be comprised of our Navajo and Woods Cross Refineries.

Lubricants and Specialty Products Segment Operating Data

We acquired our Sonneborn business on February 1, 2019. For the nine months ended September 30, 2019 our lubricants and specialty product operating results reflect the operations of our Sonneborn business for the period February 1, 2019 through September 30, 2019.

The following table sets forth information about our lubricants and specialty products operations.

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Lubricants and Specialty Products

Throughput (BPD) 19,020 23,190 19,050 19,920

Sales of produced 33,560 36,160 32,460 34,740 products (BPD)



Sales of produced products:

Finished products 50 % 50 % 51 % 50 %

Base oils 27 % 24 % 24 % 27 %

Other 23 % 26 % 25 % 23 %

Total 100 % 100 % 100 % 100 %

Our Lubricants and Specialty Products segment includes base oil production activities, by-product sales to third parties and intra-segment base oil sales to rack forward, referred to as "Rack Back." "Rack Forward" includes the purchase of base oils and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties. Supplemental financial data attributable to our Lubricants and Specialty Products segment is presented below:

Total Rack Back ^ Rack Eliminations Lubricants (1) Forward ^ ^(3) and (2) Specialty Products

(In thousands)

Three months ended September 30, 2020

Sales and other $ 110,952 $ 423,418 $ (79,328 ) $ 455,042 revenues

Cost of products sold $ 98,033 $ 283,998 $ (79,328 ) $ 302,703

Operating expenses $ 25,400 $ 29,088 $ - $ 54,488

Selling, general and $ 5,616 $ 31,157 $ - $ 36,773 administrative expenses

Depreciation and $ 5,419 $ 12,013 $ - $ 17,432 amortization

Income (loss) from $ (23,516 ) $ 67,162 $ - $ 43,646 operations

Income (loss) beforeinterest and income $ (23,516 ) $ 66,636 $ - $ 43,120 taxes

EBITDA $ (18,097 ) $ 78,649 $ - $ 60,552



Three months ended September 30, 2019

Sales and other $ 196,355 $ 477,261 $ (135,898 ) $ 537,718 revenues

Cost of products sold $ 175,976 $ 357,848 $ (135,898 ) $ 397,926

Operating expenses $ 27,825 $ 30,149 $ - $ 57,974

Selling, general and $ 5,862 $ 38,013 $ - $ 43,875 administrative expenses

Depreciation and $ 11,390 $ 11,310 $ - $ 22,700 amortization

Income (loss) from $ (24,698 ) $ 39,941 $ - $ 15,243 operations

Income (loss) beforeinterest and income $ (24,698 ) $ 40,023 $ - $ 15,325 taxes

EBITDA $ (13,308 ) $ 51,333 $ - $ 38,025

Rack Back (1)

Rack Forward (2)

Eliminations (3)

Total Lubricants and Specialty Products

(In thousands)

Nine months ended September 30, 2020

Sales and other revenues

$

361,638

$

1,241,402

$

(264,108

)

$

1,338,932

Cost of products sold

$

345,843

$

870,695

$

(264,108

)

$

952,430

Operating expenses

$

69,703

$

86,756

$

-

$

156,459

Selling, general and administrative expenses

$

16,596

$

105,058

$

-

$

121,654

Depreciation and amortization

$

22,163

$

37,097

$

-

$

59,260

Long-lived asset impairment

$

167,017

$

37,691

$

-

$

204,708

Income (loss) from operations

$

(259,684

)

$

104,105

$

-

$

(155,579

)

Income (loss) before interest and income taxes

$

(259,684

)

$

103,837

$

-

$

(155,847

)

EBITDA

$

(237,521

)

$

140,934

$

-

$

(96,587

)

Nine months ended September 30, 2019

Sales and other revenues

$

486,035

$

1,428,786

$

(338,423

)

$

1,576,398

Cost of products sold

$

453,519

$

1,087,200

$

(338,423

)

$

1,202,296

Operating expenses

$

87,970

$

82,685

$

-

$

170,655

Selling, general and administrative expenses

$

25,707

$

99,974

$

-

$

125,681

Depreciation and amortization

$

32,991

$

32,900

$

-

$

65,891

Goodwill impairment

$

152,712

$

-

$

-

$

152,712

Income (loss) from operations

$

(266,864

)

$

126,027

$

-

$

(140,837

)

Income (loss) before interest and income taxes

$

(266,864

)

$

126,346

$

-

$

(140,518

)

EBITDA

$

(233,873

)

$

159,246

$

-

$

(74,627

)

Total Rack Back ^ Rack Forward Eliminations Lubricants (1) ^(2) ^(3) and Specialty Products

(In thousands)

Nine months endedSeptember 30, 2020

Sales and other $ 361,638 $ 1,241,402 $ (264,108 ) $ 1,338,932 revenues

Cost of products $ 345,843 $ 870,695 $ (264,108 ) $ 952,430 sold

Operating $ 69,703 $ 86,756 $ - $ 156,459 expenses

Selling, generaland $ 16,596 $ 105,058 $ - $ 121,654 administrativeexpenses

Depreciation and $ 22,163 $ 37,097 $ - $ 59,260 amortization

Long-lived asset $ 167,017 $ 37,691 $ - $ 204,708 impairment

Income (loss) $ (259,684 ) $ 104,105 $ - $ (155,579 )from operations

Income (loss)before interest $ (259,684 ) $ 103,837 $ - $ (155,847 )and income taxes

EBITDA $ (237,521 ) $ 140,934 $ - $ (96,587 )



Nine months endedSeptember 30, 2019

Sales and other $ 486,035 $ 1,428,786 $ (338,423 ) $ 1,576,398 revenues

Cost of products $ 453,519 $ 1,087,200 $ (338,423 ) $ 1,202,296 sold

Operating $ 87,970 $ 82,685 $ - $ 170,655 expenses

Selling, generaland $ 25,707 $ 99,974 $ - $ 125,681 administrativeexpenses

Depreciation and $ 32,991 $ 32,900 $ - $ 65,891 amortization

Goodwill $ 152,712 $ - $ - $ 152,712 impairment

Income (loss) $ (266,864 ) $ 126,027 $ - $ (140,837 )from operations

Income (loss)before interest $ (266,864 ) $ 126,346 $ - $ (140,518 )and income taxes

EBITDA $ (233,873 ) $ 159,246 $ - $ (74,627 )

(1)

Rack Back consists of the PCLI base oil production activities, by-product sales to third parties and intra-segment base oil sales to rack forward.

(2)

Rack Forward activities include the purchase of base oils from Rack Back and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties.

(3)

Intra-segment sales of Rack Back produced base oils to rack forward are eliminated under the "Eliminations" column.

Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization ("EBITDA") and EBITDA excluding special items ("Adjusted EBITDA") to amounts reported under generally accepted accounting principles ("GAAP") in financial statements.

Earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, is calculated as net income (loss) attributable to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax expense, and (iii) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA plus or minus (i) lower of cost or market inventory valuation adjustments, (ii) HollyFrontier's pro-rata share of gain on business interruption insurance settlement, (iii) long-lived asset impairment, inclusive of pro-rata share of impairment in HEP segment, (iv) goodwill impairment, (v) HollyFrontier's pro-rata share of HEP's gain on sales-type leases, (vi) HollyFrontier's pro-rata share of HEP's loss on early extinguishment of debt, (vii) severance costs, (viii) restructuring charges, (ix) Cheyenne Refinery LIFO inventory liquidation costs, (x) decommissioning costs, (xi) acquisition integration and regulatory costs, (xii) incremental cost of products sold attributable to our Sonneborn inventory value step-up and (xiii) RINs cost reductions.

EBITDA and Adjusted EBITDA are not calculations provided for under accounting principles generally accepted in the United States; however, the amounts included in these calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives 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 and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. These are presented here because they are widely used financial indicators used by investors and analysts to measure performance. EBITDA and Adjusted EBITDA are also used by our management for internal analysis and as a basis for financial covenants.

Set forth below is our calculation of EBITDA and adjusted EBITDA.

(1) Rack Back consists of the PCLI base oil production activities, by-product sales to third parties and intra-segment base oil sales to rack forward.

Rack Forward activities include the purchase of base oils from Rack Back (2) and the blending, packaging, marketing and distribution and sales of finished lubricants and specialty products to third parties.

(3) Intra-segment sales of Rack Back produced base oils to rack forward are eliminated under the "Eliminations" column.

Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization ("EBITDA") and EBITDA excluding special items ("Adjusted EBITDA") to amounts reported under generally accepted accounting principles ("GAAP") in financial statements.

Earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, is calculated as net income (loss) attributable to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax expense, and (iii) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA plus or minus (i) lower of cost or market inventory valuation adjustments, (ii) HollyFrontier's pro-rata share of gain on business interruption insurance settlement, (iii) long-lived asset impairment, inclusive of pro-rata share of impairment in HEP segment, (iv) goodwill impairment, (v) HollyFrontier's pro-rata share of HEP's gain on sales-type leases, (vi) HollyFrontier's pro-rata share of HEP's loss on early extinguishment of debt, (vii) severance costs, (viii) restructuring charges, (ix) Cheyenne Refinery LIFO inventory liquidation costs, (x) decommissioning costs, (xi) acquisition integration and regulatory costs, (xii) incremental cost of products sold attributable to our Sonneborn inventory value step-up and (xiii) RINs cost reductions.

EBITDA and Adjusted EBITDA are not calculations provided for under accounting principles generally accepted in the United States; however, the amounts included in these calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives 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 and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. These are presented here because they are widely used financial indicators used by investors and analysts to measure performance. EBITDA and Adjusted EBITDA are also used by our management for internal analysis and as a basis for financial covenants.

Set forth below is our calculation of EBITDA and adjusted EBITDA.

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

(In thousands)

Net income (loss)attributable to $ (2,401 ) $ 261,813 $ (483,701 ) $ 711,783 HollyFrontierstockholders

Add interest expense 30,589 36,027 85,923 106,938

Subtract interest (1,011 ) (6,164 ) (6,590 ) (17,127 )income

Add (subtract)income tax expense 4,573 103,021 (188,504 ) 279,862 (benefit)

Add depreciation and 125,280 127,016 396,033 375,345 amortization

EBITDA $ 157,030 $ 521,713 $ (196,839 ) $ 1,456,801

Add (subtract) lowerof cost or market (62,849 ) 34,062 227,711 (150,483 )inventory valuationadjustment

SubtractHollyFrontier'spro-rata share of (77,143 ) - (77,143 ) - gain on businessinterruptioninsurance settlement

Add long-lived assetimpairment,inclusive of - - 429,540 - pro-rata share ofimpairment in HEPsegment

Add goodwill - - - 152,712 impairment

SubtractHollyFrontier'spro-rata share of - - (19,134 ) - HEP's gain onsales-type leases

Add HollyFrontier'spro-rata share ofHEP's loss on early - - 14,656 - extinguishment ofdebt

Add severance costs 2,429 - 3,546 -

Add restructuring - - 3,679 - charges

Add CheyenneRefinery LIFO 33,814 - 33,814 - inventoryliquidation costs

Add decommissioning 12,309 - 12,309 - costs

Add acquisitionintegration and 48 3,887 1,979 20,076 regulatory costs

Add incremental costof products soldattributable to - - - 9,338 Sonneborn inventoryvalue step-up

Subtract RINs cost - (36,580 ) - (36,580 )reduction

Adjusted EBITDA $ 65,638 $ 523,082 $ 434,118 $ 1,451,864

EBITDA and Adjusted EBITDA attributable to our Refining segment is presented below:

Three Months Ended Nine Months Ended September 30, September 30,

Refining Segment 2020 2019 2020 2019

(In thousands)

Income (loss) from $ (118,471 ) $ 350,400 $ (598,308 ) $ 1,133,776 operations ^(1)

Add depreciation 79,146 76,765 251,019 227,405 and amortization

EBITDA (39,325 ) 427,165 (347,289 ) 1,361,181

Add (subtract)lower of cost ormarket inventory (62,849 ) 34,062 227,711 (150,483 )valuationadjustment

Subtract RINs cost - (36,580 ) - (36,580 )reduction

Add long-lived - - 215,242 - asset impairment

Add severance costs 2,429 - 3,546 -

Add restructuring - - 2,009 - charges

Add CheyenneRefinery LIFO 33,814 - 33,814 - inventoryliquidation costs

Add decommissioning 12,309 - 12,309 - costs

Adjusted EBITDA $ (53,622 ) $ 424,647 $ 147,342 $ 1,174,118

(1) Income from operations of our Refining segment represents income plus (i)interest expense, net of interest income and (ii) income tax provision.

EBITDA and Adjusted EBITDA attributable to our Lubricants and Specialty Products segment is set forth below.

TotalLubricants and Specialty Products Rack LubricantsSegment Rack Back Forward and Specialty Products

(In thousands)

Three months ended September 30, 2020

Income (loss) before interest and $ (23,516 ) $ 66,636 $ 43,120 income taxes^ (1)

Add depreciation and amortization 5,419 12,013 17,432

EBITDA (18,097 ) 78,649 60,552



Three months ended September 30, 2019

Income (loss) before interest and $ (24,698 ) $ 40,023 $ 15,325 income taxes ^(1)

Add depreciation and amortization 11,390 11,310 22,700

EBITDA $ (13,308 ) $ 51,333 $ 38,025



Nine months ended September 30, 2020

Income (loss) before interest and $ (259,684 ) $ 103,837 $ (155,847 )income taxes ^(1)

Add depreciation and amortization 22,163 37,097 59,260

EBITDA $ (237,521 ) $ 140,934 $ (96,587 )

Add long-lived asset impairment 167,017 37,691 204,708

Adjusted EBITDA $ (70,504 ) $ 178,625 $ 108,121



Nine months ended September 30, 2019

Income (loss) before interest and $ (266,864 ) $ 126,346 $ (140,518 )income taxes ^(1)

Add depreciation and amortization 32,991 32,900 65,891

EBITDA (233,873 ) 159,246 (74,627 )

Add goodwill impairment 152,712 - 152,712

Add incremental cost of products soldattributable to Sonneborn inventory - 9,338 9,338 value step-up

Adjusted EBITDA $ (81,161 ) $ 168,584 $ 87,423

(1) Income (loss) before interest and income taxes of our Lubricants andSpecialty Products segment represents income (loss) plus (i) interest expense,net of interest income and (ii) income tax provision.

Reconciliations 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. Refinery gross margin per produced barrel sold is total refining segment revenues less total refining segment cost of products sold, exclusive of lower of cost or market inventory valuation adjustments, divided by sales volumes of produced refined products sold. Net operating margin per barrel sold is the difference between refinery gross margin and refinery operating expenses per produced barrel sold. These two margins do not include the non-cash effects of long-lived asset impairment charges, lower of cost or market inventory valuation adjustments or 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.

Below are reconciliations to our consolidated statements of income for refinery net operating and gross margin and operating expenses, in each case averaged per produced barrel sold. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of average refining segment net operating margin per produced barrel sold to refinery gross margin to total sales and other revenues

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

(Dollars in thousands, except per barrel amounts)

Consolidated

Net operatingmargin per $ (1.90 ) $ 11.03 $ 1.68 $ 10.36 produced barrel sold

Add averagerefineryoperating 6.83 6.20 6.65 6.33 expenses perproducedbarrel sold

Refinery grossmargin per $ 4.93 $ 17.23 $ 8.33 $ 16.69 producedbarrel sold

Times producedbarrels sold 407,280 485,500 414,140 459,440 (BPD)

Times numberof days in 92 92 274 273 period

Refiningsegment gross $ 184,726 $ 769,595 $ 945,241 $ 2,093,379 margin

Add (subtract) 45 208 (288 ) (278 )rounding

Total refiningsegment gross 184,771 769,803 944,953 2,093,101 margin

Add refiningsegment cost 2,211,342 3,177,167 6,113,530 9,598,539 of productssold

Refiningsegment sales 2,396,113 3,946,970 7,058,483 11,691,640 and otherrevenues

Add lubricantsand specialtyproducts 455,042 537,718 1,338,932 1,576,398 segment salesand otherrevenues

Add HEPsegment sales 127,731 135,895 370,392 401,143 and otherrevenues

Subtractcorporate, (159,486 ) (195,755 ) (484,932 ) (564,491 )other and eliminations

Sales and $ 2,819,400 $ 4,424,828 $ 8,282,875 $ 13,104,690 other revenues

Reconciliation of average refining segment operating expenses per produced barrel sold to total operating expenses

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

(Dollars in thousands, except per barrel amounts)

Consolidated

Average operatingexpenses per produced $ 6.83 $ 6.20 $ 6.65 $ 6.33 barrel sold

Times produced 407,280 485,500 414,140 459,440 barrels sold (BPD)

Times number of days 92 92 274 273 in period

Refining segment $ 255,918 $ 276,929 $ 754,604 $ 793,954 operating expenses

Add (subtract) 161 (60 ) 8 127 rounding

Total refiningsegment operating 256,079 276,869 754,612 794,081 expenses

Add lubricants andspecialty products 54,488 57,974 156,459 170,655 segment operatingexpenses

Add HEP segment 40,003 44,924 109,721 123,045 operating expenses

Subtract corporate,other and (18,074 ) (34,189 ) (56,592 ) (77,359 )eliminations

Operating expenses(exclusive of $ 332,496 $ 345,578 $ 964,200 $ 1,010,422 depreciation andamortization)

Reconciliation of net income (loss) attributable to HollyFrontier stockholders to adjusted net income attributable to HollyFrontier stockholders

Adjusted net income (loss) attributable to HollyFrontier stockholders is a non-GAAP financial measure that excludes non-cash lower of cost or market inventory valuation adjustments, gain on business interruption insurance settlement, long-lived asset and goodwill impairments, HEP's gain on sales-type leases, HEP's loss on early extinguishment of debt, severance costs, restructuring charges, Cheyenne Refinery LIFO inventory liquidation costs, decommissioning costs, acquisition integration and regulatory costs, incremental cost of products sold due to Sonneborn inventory value step-up and RINs cost reductions. We believe this measure is helpful to investors and others in evaluating our financial performance and to compare our results to that of other companies in our industry. Similarly titled performance measures of other companies may not be calculated in the same manner.

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

(In thousands, except per share amounts)

Consolidated

GAAP:

Income (loss) before $ 27,918 $ 401,001 $ (608,852 ) $ 1,071,145 income taxes

Income tax expense 4,573 103,021 (188,504 ) 279,862 (benefit)

Net income (loss) 23,345 297,980 (420,348 ) 791,283

Less net incomeattributable to 25,746 36,167 63,353 79,500 noncontrollinginterest

Net income (loss)attributable to (2,401 ) 261,813 (483,701 ) 711,783 HollyFrontierstockholders



Non-GAAP adjustmentsto arrive at adjusted results:

Lower of cost ormarket inventory (62,849 ) 34,062 227,711 (150,483 )valuation adjustment

Gain on businessinterruption (81,000 ) - (81,000 ) - insurance settlement

Long-lived asset and - - 436,908 152,712 goodwill impairments

HEP's gain on - - (33,834 ) - sales-type leases

HEP's loss on earlyextinguishment of - - 25,915 - debt

Severance costs 2,429 - 3,546 -

Restructuring - - 3,679 - charges

Cheyenne RefineryLIFO inventory 33,814 - 33,814 - liquidation costs

Decommissioning 12,309 - 12,309 - costs

Acquisitionintegration and 48 3,887 1,979 20,076 regulatory costs

Incremental cost ofproducts soldattributable to - - - 9,338 Sonneborn inventoryvalue step-up

RINs cost reduction - (36,580 ) - (36,580 )

Total adjustments toincome (loss) before (95,249 ) 1,369 631,027 (4,937 )income taxes

Adjustment to income (26,907 ) (14,818 ) 168,497 (36,553 )tax expense ^(1)

Adjustment to netincome attributable (3,857 ) - 70 - to noncontrollinginterest

Total adjustments, (64,485 ) 16,187 462,460 31,616 net of tax



Adjusted results - Non-GAAP:

Adjusted income (67,331 ) 402,370 22,175 1,066,208 before income taxes

Adjusted income tax (22,334 ) 88,203 (20,007 ) 243,309 expense ^(2)

Adjusted net income (44,997 ) 314,167 42,182 822,899

Adjusted net incomeattributable to 21,889 36,167 63,423 79,500 noncontrollinginterest

Adjusted net income(loss) attributable $ (66,886 ) $ 278,000 $ (21,241 ) $ 743,399 to HollyFrontierstockholders

Adjusted earningsper shareattributable to $ (0.41 ) $ 1.68 $ (0.13 ) $ 4.39 HollyFrontierstockholders -diluted ^(3)

Average number ofcommon shares 162,015 165,011 161,927 169,125 outstanding -diluted

(1) Represents adjustment to GAAP income tax expense to arrive at adjustedincome tax expense, which is computed as follows:

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2020

2019

2020

2019

(In thousands)

Non-GAAP income tax expense (2)

$

(22,334

)

$

88,203

$

(20,007

)

$

243,309

Subtract GAAP income tax expense (benefit)

4,573

103,021

(188,504

)

279,862

Non-GAAP adjustment to income tax expense

$

(26,907

)

$

(14,818

)

$

168,497

$

(36,553

)

(2) Non-GAAP income tax expense is computed by a) adjusting HFC's consolidated estimated Annual Effective Tax Rate ("AETR") for GAAP purposes for the effects of the above Non-GAAP adjustments b) applying the resulting Adjusted Non-GAAP AETR to Non-GAAP adjusted income before income taxes and c) adjusting for discrete tax items applicable to the period.

(3) Adjusted earnings per share attributable to HollyFrontier stockholders - diluted is calculated as adjusted net income attributable to HollyFrontier stockholders divided by the average number of shares of common stock outstanding assuming dilution.

Reconciliation of effective tax rate to adjusted effective tax rate

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

(In thousands)



Non-GAAP income tax $ (22,334 ) $ 88,203 $ (20,007 ) $ 243,309 expense^ (2)

Subtract GAAP income tax 4,573 103,021 (188,504 ) 279,862 expense (benefit)

Non-GAAP adjustment to $ (26,907 ) $ (14,818 ) $ 168,497 $ (36,553 )income tax expense

(2) Non-GAAP income tax expense is computed by a) adjusting HFC's consolidatedestimated Annual Effective Tax Rate ("AETR") for GAAP purposes for the effectsof the above Non-GAAP adjustments b) applying the resulting Adjusted Non-GAAPAETR to Non-GAAP adjusted income before income taxes and c) adjusting fordiscrete tax items applicable to the period.

(3) Adjusted earnings per share attributable to HollyFrontier stockholders -diluted is calculated as adjusted net income attributable to HollyFrontierstockholders divided by the average number of shares of common stockoutstanding assuming dilution.

Reconciliation of effective tax rate to adjusted effective tax rate

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

(Dollars in thousands)

GAAP:

Income (loss) before $ 27,918 $ 401,001 $ (608,852 ) $ 1,071,145 income taxes

Income tax expense $ 4,573 $ 103,021 $ (188,504 ) $ 279,862 (benefit)

Effective tax rate forGAAP financial 16.4 % 25.7 % 31.0 % 26.1 %statements

Adjusted - Non-GAAP:

Effect of Non-GAAP 16.8 % (3.8 ) (121.2 ) (3.3 )adjustments % % %

Effective tax rate for 33.2 % 21.9 % (90.2 ) 22.8 %adjusted results %

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CONTACT: Richard L. Voliva III, Executive Vice President and Chief Financial Officer Craig Biery, Vice President, Investor Relations HollyFrontier Corporation 214-954-6510