PARR - Earnings call transcript Q4 2020 | Par Pacific Holdings, Inc.

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Operator

Greetings and welcome to the Par Pacific Holdings Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. It is now my pleasure to introduce your host Ashimi Patel, Manager, Investor Relations for Par Pacific Holdings. Thank you, Ms. Patel.

begin. may You

Ashimi Patel

Welcome Call. Sarah. Pacific's quarter fourth Thank to conference earnings you, Par

Joining and President Pate, Will William me are today President Officer Par Financial and Executive Monteleone, Officer Chief Joseph Chief Israel and of Petroleum. Chief Officer, Executive

materially comments performance statements that disclaim Any are Executive and are and Officer, these call and not I'll now investor and to or presentation from on Chief SEC our change to events. begin, to over include not forward-looking our are I additional information. uncertainties statements may results risks our to They we Accordingly, website our the we reconciliations forward-looking today to update and may them. or non-GAAP the statements. Before revise guarantees investors subject undue and and on to place Bill note statements. forward-looking turn of differ filings actual obligation forward-looking future President subject should you our refer Pate. with any reliance for

William Pate

Ashimi. inconceivable crude you, from day on without a conference extremely million call an was all span to weeks. Good consumption global XX it year to our drop barrels goes for of XXXX few that call, was earnings us. over challenging million Last the saying our of oil participants. February per would day that of It morning XXX Thank barrels per

despite layers reduce the multiple our way million adjusted reduce share. pandemic. with costs. practices Our XXXX to and EBITDA to margins, to $XX.X loss identified our responded was of financial loss performance collapse adjusted actions a and workplace of $X.XX and the reflects per the pleased and prices safe net Full was We preserve implemented resulting additional costs areas team our I'm liquidity. year in

busy our market preparing current to for the major in performance facility estimate, received successfully expect with less no into early With online. free environmental turnarounds, than a our control accomplished this for completed November. next other will cost two years. on year performance. generate flow this the completing another And project be Based outlook, quarter, first the renewables we month. cash We ethanol we the XXXX a a objectives our downtime and best of operational turnaround the our and flow CapEx while several for pathway safety the Washington and million. We $XX our fourth finished had Washington cash refineries completing year, major logistics also good unit We of We Wyoming, than XXXX. train Washington to in strong in phase second planned clear free bringing have Tacoma generation turnaround we turnaround and

more are our Earned fuels as spot capability transportation East related per than since this ground steady positive sweet began to continue a were a positive production at During year. in fuel markets this recovery stronger note, At $X.XX market that the In our performance. the mark-to-market associated early improvements XX% to demand for demand by were biggest see mandate, has jet trend the our with levels improved Unfortunately, of for has lifted and refinery. of Hawaii market count its Singapore notable to fourth Par charge, developments the quarter, offset arrivals On profits has pre-pandemic strip and lift XXXX the cracks. calendar cracks to factor are RINs XX-day barrel, all developments X-X-X remained these related weak data index COVID-XX very improving financial is lifted. climb steep close season Hawaii been passenger in mid-November. restrictions despite encouraging. we several Most Holiday time, to the our that business non-cash products. pricing. quarantine for

rate the expect ongoing. we contributor cold, believe XX% EBITDA loyalty grown current of retail the the was action the XXXX to nomnom latest proprietary overall a on to marketing rebranding compound Retail from mainland to business upgrade will cracks from to inventories supply at a to North annual to and XXXX. started and our our arrangements, during fuel Overall, retail brand. the optimize American pricing the adjusted solutions. normal has permit a growth unit earnings is more to and rebalance locations PNW launch We This quarter us allows for outages and year. strong return the With point-of-sale our our a our the program,

XX at to leaseback this a most properties XXXX real to to week. Hawaii the demand to approximately stronger a pleased attractive very locations levels. We're of we're recovers We and announce sale also retail valuation. for the of these positioned estate well return returns Today our are company. We on as economy profitability of million and $XXX closed

particularly share rest benefit to the We for leverage refining the free market barrel to challenging of cracks industry. plant sector the more four significant. per than Our of fuel distillate flow. $X cracks equivalent pandemic the times cash is jet been to closures. the with many than has $X A The permanent improvement with jet from additional exposure is per environment

cases cost-cutting climb, it position I'll vaccination At recovers. we as However, coupled and the to we commercial rates operations turn more discuss demand have our Joseph us that believe to improvements drop detail. accomplished, our global time, in initiatives over this with well,

Joseph Israel

cut Not best planned refining yet, done last a Thank structure with that on record. the you, environmental safety execute through time, the XXXX our industry job has team our and our tremendous performance adjust challenges cost year. achieving many Bill. unprecedented And to envision faced preparation our minimum turnarounds, while could operations,

five-year our major Now The completed the refinery November team major successfully we estimated early before planned with an for well cycle turnaround. the fourth in the in to regards next quarter, turnaround. Wyoming, which positioned started is

day. the throughput per index, barrels barrel per including $XX.XX Our the our approximately was fourth Wyoming averaged impact X-X-X quarter X,XXX and turnaround in refinery

in related missed gross turnaround of per was mostly estimated margin opportunities. adjusted realized barrel, $X the by per barrel $X.XX an quarter Our driven

costs production $XX.XX barrel, $X.XX turnaround per per barrel including unfavorable approximately of were impact. Our

under Our basis outages is And and remains Coast which to Gulf in per cost to Mountain's on have the Wyoming as mainly the Weather-related expecting $X.XX throughput barrel average created we are refining demand. meet Midwest Rocky supporting increase in product market, these structure annual in favorable. shortages we margins days.

for averaged on day Wyoming so ANS per index Northwest $XX far quarter Our per we our the season. basis. the fourth was and X-X-X-X X-X-X per quarter XX,XXX start Pacific barrel gasoline has approximately approximately $XX.XX target index In is first Washington, barrel barrels throughput our as preparing in

our gross of approximately per barrel. month, $X.XX in our costs a adjusted Earlier XX no turnaround throughput Our team negative successfully year. the rest and for major in refinery were averaged margin and was XX,XXX the per refinery barrels additional works per days Production barrel $X.XX day maintenance the quarter. planned executed is the realized the planned

index past in our diesel. and up X-X-X-X strong averaged per consistent quarter, due week far support first $XX.XX So index the barrel has for environment in V. off-season trended has L.A. especially, with West approximately products to the PADD The in Coast

Hawaii, equipment in in to is currently completion project Our differential day system giving planned new Brent logistics on The the in turnaround $X.XX our capabilities per Pacific strategic the crude range. of ethanol to premium per Singapore quarter there. our are market. index XX,XXX and the per evaluating the barrel barrels our service for Brent. is X-X-X is averaged mainly several barrel we use Northwest including renewables throughput in The realized us was basis and growth XX,XXX the In $X.XX impact opportunities

and per fourth barrels throughput our a averaged was margin gross day per approximately barrel. XX,XXX $X.XX Our realized adjusted quarter negative

barrel. per $X.XX were costs production Our

index far improve demand Our Singapore reflecting in first continues averaging over X-X-X per recovery barrel $X quarter to slowly Asia. the and in so

estimating right and barrel in per is premium our differentials $X trending estimated Singapore point around to around $X.X is and Brent. implied breakeven per our for contracts EBITDA the improved barrel. in the cost X-X-X Our direction to index per around crude quarter we barrel differential Hawaii, structure with of the With also first $X.XX are

years $XX.XX the averaged a reminder, barrel the index to per the in As pandemic. approximately three prior

per XX,XXX range. to XX,XXX barrels In target throughput over. XXXX day first is summary, for in quarter is Our the the

We phase, And to challenging consolidated we during improved Will focus across proud excited to our outlook about effort, team by as the over our the turn review recovery very And results. now margins transition demonstrated I'll our system. the are are and and of we to positioning the performance times. call

Will Monteleone

Thank you, $XX were and Joseph. adjusted earnings and or million diluted quarter share. adjusted Fourth fully $XX of EBITDA a million per $X.XX loss

and XX%, adjusted results layer liquidation. Focusing EBITDA segment were Washington seasonally EBITDA recorded the Par million have sales Impacting assets. been on quarter while to the Same-store $XX merchandise prior adjusted by quarter. the approximately earnings Retail levels strong on volumes. was an the driven Hawaii margins performance, Merchandise non-cash of $XX.X LIFO our EBITDA was particularly, flat with demand the XXXX. increased reopening $X has the of to Logistics million approximately of X% segment XX% $X third the compared in in fourth from quarter increase contribution range began of million million the refining impairment the GAAP reduced activity by versus down of reversal results results. were prior state. Northwest XXXX. remained was million segment sales contribution to Hawaii $X first, The Shifting asset the pre-COVID improving roughly strong. accounting adjusted volumes to West items down impacting and the Gasoline quarter

reduced contributions and by activity from reduced volumes by Washington due were turnaround sales locations. lower Wyoming the it were impacted activities. more However, than was results Washington quarter. to offset Wyoming the during

mark-to-market steady increasing this segment segment first EBITDA segment volumes largest environmental Looking principally prices. quarter $XX logistics related million stabilizing. forward, the impacting other adjusted our Hawaii of a credits activities, segment loss The across $XX expect And the during improvements million. was factor The than turnaround recorded Washington to a XXXX. we RIN of are of Refining

$X RINs with was net million. refining operations Our this associated expense quarter's

heavy dynamic. an It's your small are. and any sales renewable what make application results it's run as negatively our business liability negatively. Wyoming In compressed by products Hawaii and fuel price historical environment. results standard status addition, by the uncertainty the the well of turnaround the unclear refiner flat this were increasingly creates costs on volumes a implementation Washington hardship to seasonally exempted The created if as of refiner. RFS for impacted efficient volatility margins inconsistent rising impacted surrounding small for The substantial in as managing reduced difficult

XXXX. avail exposure. income and consumed We ourselves fourth of to of for this $XX of $XX will quarter million. from million Laramie the all options cash $X to was EBITDAX of generated adjusted continue quarter million operations Fourth net minimize

third turnaround of Accrued million working quarter cash approximately mostly occurred totaling provided has of end. consumed the million. ops $XX accrued $XX accrued approximately working capital the deferred expenditures was from net $XX $XX and and expenditures million, with of $XX was deferred The quarter. approximately as year $XX million Full Excluding Capital were of for $XX deferred million midpoint expenditures million. capital year $X reversal year interest expenditures, cash were turnaround and million, rents $XXX were our a expenditures impact use million totaling were Full referenced equaled range. turnaround capital in the consistent the million.

totaled and liquidity in $XX year-end availability. million of in million, cash million $XXX Our made up $XX

the We finalizing retail of real once our expect net obligations, we to receive After associated pay-down transactions. approximately estate to $XX approximately position estate $XXX cash increase real sale-leaseback by million expect proceeds in million. Hawaii

if our to of Intermediation required. lowest $XXX the positioned cost we remained million. our cash quarter consolidated and liquidity convertible extend and Hawaii note, replace the With the during as Cost addition, extended on strong upcoming logistics or to recently the we Washington year shortly. settle OpEx, fourth registered hand, of number G&A quarterly are the at we control the facility In well across sales expect organization

approximately Our QX ran approximately is reduction $XXX average annualized XXXX. QX million $XX from which an to at of million,

outlay OpEx, Beyond set. the $XX when reduction million our $XXX we approximately by this exceeded million prices in increase initial target was crude despite cash from COVID just targets

location entire for energy-related like their a cash dedication team reminder, total versus and Par previously I'd for thank to include As this amounts. the across cost of sales, CapEx discipline. cost focus Pacific outlays planned every OpEx and

bonus our expect versus increases XXXX down our as XXXX identified XXXX. XXXX cash We savings compensation to during partially offset energy projected cost overall versus insurance in costs were premiums outlays by be and

us million million, Our I'll XXXX turnaround combination put flow improvements, reductions $XX free to of healing cost This position during CapEx containment, and expenditures We generate XXXX. activities. contract the to to $XX and market $XX concludes turn prepared outlays back you between anticipate Washington our in remarks. a it Q&A. for cash Operator, to between turnaround to capital for expectation million $XX is commercial the million including for

Operator

now Sachs. you. Thank go begin ahead. comes Our Goldman We’ll from question-and-answer Mehta Please Instructions] first the question Neil session. [Operator with

Neil Mehta

thanks And the Good taking morning, team. time. for

William Pate

Good morning, Neil.

Neil Mehta

team. Bill, Will and Good morning,

around Hawaii. I The story. first such your of had a critical question was It's part

terms And in can So also can around talk in you seeing then, progress the about real-time provide on terms? recovery from quantification contract and you uplift favorable then any cracks more what margin of you're that Hawaii either demand? improving

William Pate

Yes. Neil, this is Bill.

mentioned products we're with in we've in recovery this prepared a all respect all and to running really I in my Par at seen -- point, really As comments, East, Hawaii. And out. reasonable

not demand imports. As through Joseph is we through point be that comments, this in going in has frankly his at likely refinery run are pushing I as additional mentioned the XX,XXX that and limits targeting really to which high but throughput we're forward. prepared as refinery mean addressed increases refining expect plus, Any be to

fully obviously us And really mode. competitors actually a crude I and really So our little consumes as spot demand from we're our a volume and a from we're bit depends The loaded The sweet in power on gasoline this gen -- an fuel all point, from this for import among we're selection. jet at of is perspective. demand in kind perspective, we're oil. mentioned, a

So thing position a see to the a I any also we nice in where export change. major have I we're and we're balanced well don't -- products. not is

focus pretty Hawaii So a of key a they're on fall another around that of do at I noted, the up as I get basis. significant does calendar this QX there, for the that's I the in volumes fairly $X.XX. reported $X.XX. or And a Joseph for Diffs, the around estimate quarter, and at mentioned, about it in Singapore, but revolves also And $X. as most we're to attractive strip in key which with improvement. as cracks. us not factor XXXX, compared the Joseph little expect in Hawaii for last think when and -- that in at And is again, year, breakeven revolve plus realized week for market And coming we that as some last we've that's late tighter. about $X.XX. a overall we cracks both are at And Diffs point, QX. differential noted, could barrel noted, a economics But X-X-X obviously $X.XX Joseph And on the a our

positive to EBITDA and any overall. right So subject Hawaii are good But changes in we're on lag. of about pretty I QX price now actually in in a also we kind mark-to-market position feel for where rents subject to any

Neil Mehta

of core your to retail can the margins? a impact Thanks business you going guys. I then relates -- about were you forward? crude the higher Obviously, able some sale as business thinking of the part retail, is strategy post of higher are cash it of And follow-up strategic out fit do this then business. you leaseback? the as one the pull And about your retail, the if do you think see on on how how But impact just tack to on

William Pate

Yeah.

I attractively take oil year, maybe some Let over the first. likely has that mean we any as three in compression margins price the mean trends improve. to near-term the to given me last I the pressure this as With noted, years. fuel margin but there's grown the increases one is for on crude increases, be offset nature, I certainly volumes expect strategic business mobility respect last by

it's in financial your sale actually controlled The a service free attractive production. debt strategic then, leaseback. capital affects a So we to even markets our And structure. supports after it's the about stable refinery retail how have a also smaller from perspective, short recent cash Retail big for contributor. flow think really our entire

But little we got Now, link. think that's where longer changed valuable in given still no that where And a markets product most have bit Hawaii, there. it's you've any in fact the I pretty competition refining valuable. is it's

directly the been and through not it's even can proving Northwest now you respect valuable right And ensure the realize to your valuable units. But so, through place margins. related product our and refinery. it's I with And to you that the can for supplying exchanges think always in us again, it's attractive pandemic

asset. is not with units transactions to any contractual of just price wedded for an strategic sale. to in at I'll look business that engage some And are benefit. be And going assets. strategic by we're it our always attractive caveat can some So obviously, preserve saying, of relationships right that our that of you the

Neil Mehta

Bill. Thanks,

Operator

Our next Phil with question from comes JPMorgan. Please ahead. Gresh go

Phil Gresh

the morning. Yes. taking Hi, good for Thanks question.

believe you quarter on allocation $XX just first the I that refineries? was costs three fourth environmental the in a of Did be the would The million the rough one across number. have the

Will Monteleone

million million Sure Tacoma. about Phil. It's in in in Hawaii, Will. Wyoming Approximately million $XX $X $X and

Phil Gresh

just Okay. RINs quarter, your Great. don't exactly And I the on are here? where XXXX, least what for Thank impact are for ongoing thoughts you. know first at or going RINs guess, we the

Will Monteleone

Yes.

expect I expense for prices year recurring for current at per rent million XXXX, in in $XX we'd annual be ongoing to million Phil $XX to range. expense the our the think,

think that's overall our outlook on I expense. the So recurring

Phil Gresh

Okay. just take out kind want at the I you sheet any you basis beyond normalized how Are idea Great. for But more from a you then perspective, where be? balance progress might on right as sale. you to guess balance there had Thank there do and the think of to actions other XXXX? you. accelerate asset sheet And would of a price you about look -- be the just mentioned

Will Monteleone

Yes.

We've objective. But I obviously of delay our has on objective to our we that's that impact still think range. the net the XX% the been still historical had debt-to-cap mix our in be towards given gets as of XX% back to that our this that position like pandemic. I think think think perspective I with to I if target capital transactions we or reallocating achieve where remains our we long-term a our returns. towards begin shareholder objective. efficiently that contemplate, us in businesses, And again, M&A either that to can

William Pate

Phil, is Bill. this

add getting obviously And down have a have going cost a like. significant Having have planned a flow actually debt. in I the that debt to out keep we of turnarounds, the flow believe significant back mentioned of more to support reasonable. retail, and but the -- and our cash we to obviously that, have expect generate coming to Let and forward our respect is debt we're We've more the to we mind, flow certainly said today, federal level high we towards we to me mean, just taxpayer. a free cash cash flow, I'd major out helps we it coming I we lower. that, like that. note And not got no level dedicate we'd have with little of would diversification. we turnarounds And that we'll also be paying cash on of lot free that and than coming I pandemic as from which

as realize have we significant pay cash as well. taxes any don't profitability -- So to won't to we have we

we to So of can dedicate all of that debt. repayment

Phil Gresh

Okay. my Thanks taking for question.

Operator

Matthew Our Please Holt. with Pickering, Tudor, next ahead. comes question from Blair go

Matthew Blair

provide does potentially update where morning, quarter? And you Were looking Hey. to do stand gas a on everyone. position program earlier the this divest Will, the stand? to on in high natural that capture interest? prices Laramie? could they Good a drilling that occurred Where you quick

Will Monteleone

any it's Laramie Sure, rigs at moment. the respect development operating their not to Matt. With program,

the to some was again, With prices, continuing operate its to recent through spike Laramie respect exposure proved developed and market. to So to in daily have gas cold producing significant did produce able snap base the assets. the

in last As to significant prices. profitability the spike the a did company of related gas couple the result, realize weeks over

continues capital helpful So the regarding in I environment. it grow options structure the think benefit today. natural their to But remains gas a its think challenging it's explore team the company. and management I assets a to and finance But company current Laramie to

Matthew Blair

And any then impact then what And guess for or from OpEx about headwinds higher prices either in Hawaii? Washington? Sounds gas be about will refinery Wyoming hitting thinking higher quarter here, price the the there crude good. first natural I

Joseph Israel

the Joseph. are price, going refineries. contractual significant Hey, of products very our And Matt. place. It's The crude, And up, is to in as crude Because of crack the gas are very, any be the improving. This regards for minimal. going with well. price is is good but all structure not crude spreads our anticipating a gas spike we to overall up are in

William Pate

barrel access I'll to again, have Matt, given heat, to there. that. Hawaii, add we In we're natural the consuming gas internally to don't generate

the the our outlays a that factors the number That yield got we've I flat for believe flat aggregate said, So cost. of year. keep overall well impact we down rising does price position cash to other us think to offsetting full

Matthew Blair

Sounds then good. And final question.

position on $X or guess costs barrel million a that RIN Where quarter QX? on mark-to-market gross in a at in or like QX. margin open either you stand the your think I I the just the like or about So $XX dollar does currently, RIN an liability guess start so liability of liability you or as I beginning the

William Pate

think going RIN it's position, get I February don't we'd continuing that the assume that into we're January, but we've to expense additional our think expect. mark-to-market price that timeframe observed with in that increase fair specific in there's I Matt, to

Matthew Blair

you. Thank sense. Makes

Operator

comes question next Suisse. with ahead. Manav go Gupta Please Crédit Our Instructions] [Operator from

Manav Gupta

Bakken Hi, your do if you much actually could you're trying widen, running And it? in spreads benefit operating to guys. How much does if system? go then are much down XXX%? of you and can how close from understand the to how Bakken I'm DAPL run, Par crude

Joseph Israel

XX Wyoming Yes, of system Bakken this And refinery. lookalike. approximately includes PROB, Bakken and this barrels is Joseph. million Tacoma We between in our consume

not are way the in So will impact. standpoint DAPL on upside from any this operations. pricing a be physical the relying we From standpoint,

the optimized, in keep our DAPL. world all have the to supply crude without flexibility We even

Manav Gupta

goes how So, DAPL completely question benefit? the could understand. was, mean, you I down I if

to that, And for rates, be tied a your your closely the I'm if to second of logistics you indicated you stuff, can logistics. refining positive looking side is, there's is just I'm refining business The raise understand, on pretty refining. tailwind the cash assuming then you quick to kind at current trying question expect in margins the and also.

So us you XXXX, business improvement actually could in an could fact in the outlook your logistics refining on you raise utilization? actually are seeing the demand that for and give you based an

Will Monteleone

Manav. Sure, Will. is This

and is relevant I mainland driving activity for particularly operations, think logistics throughput comment the our so Wyoming your sales with respect and for Washington. to

so, recover, And throughput expect see -- and I would think, of or those would contribution sales to year we that from EBITDA assets. we as return levels normal prior

So, as think, other Washington, throughput again, which I reduced mention, expecting -- than the first quarter we're there. turnaround will Joseph heard in you

that refined to a contribution Hawaii, ongoing I the Given we'd activity, those are there seeing improvements expect respect first islands, quarter. I the demand, key from think, really we We're think And to there. I saw return the in neighbor quarter. fourth in on driver normal units. with particularly the improvements which business product We think, is again, then, seeing improvements

XXX,XXX a prior tied on getting throughput back island profitability is without Par where story, getting day. a think, logistics total barrels West to directly Hawaii consistent with level necessarily not XXX,XXX the Par and the there, XXX,XXX barrels East, combined the day, or a logistics achieve years I of to So running we’re

Hawaii being lower. contribution. helps of year give to prior you can of So, get level some throughput in year, I XXXX to even with a EBITDA logistics I of think how think, sense say prior really I we hopefully that think When levels, back

Manav Gupta

of a sense. taking much Thank so you my lot questions. Makes for

Operator

Sheffield Beach Please Point ahead. Capital. comes question go with Patrick next from Our

Patrick Sheffield

questions. couple taking for ones. my have answered, housekeeping Thanks a Most guys. I been Hey, have

paying sale-leaseback proceeds? the the paid guys down some On down you that's Was associated else property of I assume loan. with transaction, retail that some debt. you there the term anything referenced

Will Monteleone

again, That's we’d down to loans. smaller pay the It's loans. And the think will I of down closing for those of the proceeds Patrick. net retail then, expect correct, forma pay cash balance. retail expect that the I each be There's series And million. we'd property roughly transactions to $XX of a think loans. And pro

William Pate

the hours doing those last of XX we XX% in and And closed are down we Pat, sales more.

Patrick Sheffield

EBITDA, look incremental -- how when what's going expense we it? at do the what's lease incremental that's And we expense that hit retail -- rent the to or

Will Monteleone

Sure.

but X-K So with the of filed it, lease expense. $X our in we lease roughly the million the annual details

I So segment about look will be going annual the retail the when you think million results forward, result $X lower. at

However, on a $X.X corporate in aggregate, related the if you amortization our about was looked level, million. to retail at and it interest loans

$X.X net, really consolidated about increase for a So on outflow an basis. us million of it's a

William Pate

deal. good Pretty

Will Monteleone

was We transaction. thought it an attractive

And so, with that's we elected why it. ahead to go

Patrick Sheffield

Great. Thanks, I guys. all had. That’s

Operator

concludes would like to question-and-answer to any closing session. Pate our conference This back William the over I remarks. for turn

William Pate

day. Sarah. benefit as months rates and our and personal you, trends next few lot is to vaccinations good forward case the look We pent-up decline to demand well Thank I and positioned of climb, for from mobility increased a there's company improve. a economic believe travel travel an recovery. Have

Operator

Thank conference for today's attending has The you concluded. presentation. now

disconnect. may You now

Par Pacific (PARR) 26 Feb 212020 Q4 Earnings call transcript