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Holly Energy Partners LP (HEP)
Q2 2019 Earnings Call
Jul 31, 2019, 4:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Welcome to the Holly Energy Partners Second Quarter 2019 Conference Call and Webcast. [Operator Instructions] The floor will be open for your questions, following the presentation. [Operator Instructions]
It is now my pleasure to turn the floor over to Jared Harding. Jared, you may begin.
Jared Harding -- Investor Relations
Thanks, Angela. And thank you all for joining our second quarter 2019 earnings call. I'm Jared Harding, with Investor Relations for Holly Energy Partners. Joining us today are, George Damiris, President and CEO; and Rich Voliva, Executive Vice President and CFO. This morning, we issued a press release announcing results for the quarter ending June 30, 2019. If you'd like a copy of today's press release, you may find one on our website at hollyenergy.com.
Before George and Rich proceed with their remarks, please note the Safe Harbor disclosure statement in today's press release. In summary, it's a statements made regarding management expectations, judgments or predictions are forward-looking statements. These statements are intended to be covered under the Safe Harbor provisions of federal securities laws. There are many factors that could cause results to differ from expectations, including those noted in our SEC filings.
Today's statements are not guarantees of future outcomes. Also, please note that information presented on the call speaks only as of today, July 31, 2019. Any time-sensitive information provided may no longer be accurate at the time of any webcast replay or reading of the transcript. Finally, today's call may include discussion of non-GAAP measures. Please see today's press release for reconciliations to GAAP financial measures.
And with that, I'll turn the call over to George.
George J. Damiris -- Chief Executive Officer and President
Thanks, Jared. And thanks to each of you for joining the call this afternoon. HEP delivered strong earnings in the second quarter, which allowed us to continue our track record of distribution growth, increasing our distribution from $0.6700 to $0.6725 per unit. It marks the 59th consecutive quarterly distribution increase since our IPO in 2004, and represents a 1.9% increase over the same period last year. This distribution is scheduled to be paid on August 13, the unit holders on record as of July 29.
In the second quarter, HEP's total volumes increased by 10% year-on-year. This increase is attributed to higher crude oil pipeline volumes around the Permian Basin and our crude pipeline systems in Wyoming and Utah. High refining utilization rates among Salt Lake City refineries led to record volumes on the Salt Lake City and Frontier pipelines. Volumes that our recently constructed Orla diesel terminal saw an increase in the second quarter as diesel demand in the Permian Basin remains very strong. We continue to see growth opportunities around our crude and product systems in the Permian Basin and look for organic projects to grow our footprint in the region.
Looking forward, we expect strong performance in the second quarter of this year, driven by the increase in contractual tariff escalators and healthy demand for pipeline volumes.
And with that, I'll turn the call over to Rich.
Richard L. Voliva -- Executive Vice President and Chief Financial Officer
Thanks, George. For the second quarter of 2019, net income attributable to HEP was $46 million compared to $40 million in the second quarter of 2018. This increase was driven by stronger crude pipeline volumes and contractual tariff escalators, which were partially offset by higher operating costs and interest expense.
During the period, HEP generated distributable cash flow of The $67 million, a $2 million increase over the same period last year. Our distribution coverage ratio was 0.99 for the quarter and 1.01 for year-to-date. While we expect seasonal weakness in the third quarter, we remain committed to growing our distribution and expect the full year coverage ratio to be one times or higher. Our capital expenditures for the quarter were approximately $7 million, including roughly $600,000 in maintenance capex and $2 million of capital reimbursed by HollyFrontier.
In 2019, we still expect to spend approximately $7 million to $10 million for maintenance capex and $20 million to $25 million for expansion capital, excluding any acquisitions and capex reimbursed by HFC. Interest expense increased $1.6 million compared to the second quarter of 2018, primarily due to the increases in interest rates. As of June 30, HEP had $1.4 billion of total debt outstanding, resulting in a debt to EBITDA ratio of 4 times. Including cash and revolver availability, our current liquidity is over $460 million. We believe this strong liquidity position provides flexibility and that will enable us to pursue future organic growth and third-party growth opportunities.
With that, I will turn the call over to Angela for any questions.
Questions and Answers:
Operator
The floor is now open for questions. [Operator Instructions] Thank you. Your first question comes from Jeremy Tonet with JP Morgan.
Joe Martoglio -- JPMorgan -- Analyst
Hi. This is Joe for Jeremy. I wanted to ask about the refinery processing unit volumes and it looked like they stepped up a bit for the quarter. Was there anything in particular that drove that, or was that just high utilization at the refinery?
Richard L. Voliva -- Executive Vice President and Chief Financial Officer
Yeah. Joe, it's Rich Voliva. The big difference there was -- we had good utilization at our refinery. Please recall it with cross, we did have some downtime in the second quarter of 2018. So the comp, if you will, is a little skewed.
Joe Martoglio -- JPMorgan -- Analyst
Okay. That makes sense. And then kind of along those same lines, I think you mentioned in the past some downtime also for the remaining of the year. Do you mind just reminding us, I guess what's the outlook for downtime at refineries for the remainder of the year.
George J. Damiris -- Chief Executive Officer and President
Yeah. Joe, we have some upcoming maintenance primarily associated with Cheyenne and El Dorado starting in the second half of September and October, that's primarily -- that's primary downtime at HollyFrontier coming up in the fall. We do have a smaller unit turnaround around Navajo around that same period. But it's not have much subsequent.
Richard L. Voliva -- Executive Vice President and Chief Financial Officer
And Joe, I don't -- given the minimum volume commitments around all those assets, it should not be a material impact to HEP.
Joe Martoglio -- JPMorgan -- Analyst
Okay. That's helpful. And then maybe just one last question, I know you've talked about it before, but do you mind just, I guess giving your updated thoughts and some refiners have absorbed their MLPs in the past. Could you talk about at what point you'd get [Phonetic] guys think that would make sense?
George J. Damiris -- Chief Executive Officer and President
Yeah, Joe. We've obviously seen that. At this point, we don't see any value in doing that, but we'll continue to pay attention to the market. Obviously, in HEP originally was created that really serve two purposes to highlight the value in the great midstream portfolio that originally Holly Corp owned and it continues to do that. The obvious other reason was to access the capital markets and clearly the equity capital markets are not there at the moment. I think it's -- you're probably smarter than we are frankly on what the longer-term outlook is for that. But at this point, we don't see any value in doing that, but we'll continue to look in the interest of all of our stakeholders.
Joe Martoglio -- JPMorgan -- Analyst
Okay. Thank you. That's helpful. That's all for me.
George J. Damiris -- Chief Executive Officer and President
Thank you.
Operator
[Operator Instructions] If there are no further questions, I'll turn the floor back over to Jared for any closing remarks.
Jared Harding -- Investor Relations
Thanks again for joining the call today. Feel free to reach out to Investor Relations, if you have any question
Operator
[Operator Closing Remarks]
Duration: 50 minutes
Call participants:
Jared Harding -- Investor Relations
George J. Damiris -- Chief Executive Officer and President
Richard L. Voliva -- Executive Vice President and Chief Financial Officer
Joe Martoglio -- JPMorgan -- Analyst
