PARR - Earnings call transcript Q1 2022 | Par Pacific Holdings, Inc.

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Operator

Good morning, and welcome to the Par Pacific First Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would like to turn the conference over to Ashimi Patel, Director of Investor Relations. Please go ahead.

Ashimi Patel

Thank you, Kate. First Conference Pacific's Par to Quarter Call. Earnings Welcome

Monteleone, Pate, Chief Refining Executive me and Logistics; today Richard and William are Will Retail; of of Joining Officer; President Creamer, Vaughn, EVP Financial Chief Officer. Matt and EVP

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

William Pate

Thank you, Good morning, Ashimi. everyone.

first $X $X.XX EBITDA compliance. noncash and adjusted RFS expense included results for and was $X mark-to-market a XXXX million adjusted share. These was our per loss XXXX net Our quarter million

opportunities of First in prices lost our reflected second profit the the conditions quarter. improved impact Market with Wyoming. quarter Hawaii turnaround, and rapidly results Washington oil crude conditions rising associated in off-season significantly in

we're us, in production maximizing turnaround a market on Washington focused environment. profitable the behind With highly

from to crack refined demand months, surged Over due supply product X costs, highs physical Russia. the increasing to past all-time and reduced increasing crude

Higher Wyoming Market X-X-X compared per of a prices in gas continues Consequently, prices per In war to and which volumes also and Notwithstanding refinery of of production levels as April. The highly on Washington, prices averaging Washington impacts, above natural for the above barrel and profitable. record improved the and up in $XXX oil are barrel. for generating the the first cracks. all Index these units $X.XX organic adverse refineries consequently, sales were with record stabilized and portion barrel throughput during trade steam historical well our at natural highly gas With levels. expenses and Cracks refinery up, the $XX norms, crude product our sanctions structure backward-dated, then We addition, costs. are electricity utilities progress rapid average are In operating is have stabilized our profits. made growth production rate almost hydrogen. XXXX increased. during capital sparked per systems conjunction Washington. and costs a strong increases have initiatives. first April considerable Singapore high capture on our our and driven reliant increased factors the quarter related at refinery offsets Hawaii in currently is logistics debottlenecked, with record be turnaround throughput oil also prices this refinery Several quarter quarter and affecting in units our several have

We're summer. work & this regulations to production in at Trade emerge renewable that to the for Washington that the completing create completed us as also allow in fuel record Wyoming in should run We Cap and low-carbon engineering state. standard levels co-feeding optionality

it delayed decision-making should not adverse as impact prior for Refining with agree Hawaii to that stint considers of recognize We're we The XXXX grants refinery against of us us and We petitioners, petrochemical impact that recognizing Flint from did new the rising with closing, We adverse as decisions our has and significant should on HF have decision to have also the capability a delayed experience He XXXX want as delighted I joins a outstanding petitions. Lyondell of this hedge our exemptions He wealth of Resources, the pleased EPA although view Head Refining small recent X-year RIN were reverse previously SRE EPA back. relief. in In and the a prices. on and Richard Richard, our Invista. Vice Logistics. & welcome and Richard Executive Sinclair introduce Operations. a worked refining Creamer, management. served him also of Hills rejoin us. President operations agency

Richard Creamer

Thank great be back. you, it's Bill, and to

our the well Our nameplate a of barrels around March capacity completed teams debottlenecking Washington, which performed to we throughput, during the begin successfully we in day turnaround XX,XXX project per operationally [oblate] to year. and larger crude. in of And increase the completed the percentage

refineries at planned major years. across X next any the turnarounds for have don't least we our Now

$X.XX quarter some costs to turnaround the additional the throughput day production days impacting rates. extended we discovery throughput as X per barrels XX,XXX First by of completed were turnaround. work, Due reduced Washington a reflecting barrel, we

is to Second barrels to quarter be throughput expected up to back day. XX,XXX per XX,XXX

next progressing We our Tacoma expect operation were a we Production day quarter. costs outage to to early project driving per referenced, completed on barrel first the the throughput are to year. summer and Bill catalysts $X over Shifting season. replace of was co-feeding As barrels dissipation by limited renewables a begin during our XX,XXX Wyoming. coprocessing and and

during throughput quarter barrels higher utility of price are costs the which tied first $X.XX production expected to be the were Second day. a is XX,XXX to costs, quarter, per XX,XXX Hawaii crude. to barrel reflecting

results on quarter our throughput market crude and this our to given over strong initiatives. turn be day Distillate goals maximizing our I'll all per reliability quarter the First is regions, and to and and environment. cracks very XX,XXX strong now principal throughput per strategic in discuss barrels demand expected call to across Matt XX,XXX update barrels the operational quarter was XX,XXX are are throughput day. retail to second

James Vaughn

Notwithstanding $XX.X including able margin our This Retail The of a additional quarter for position of quarter a the Adjusted for million year, resulting to million. to volumes and Thank from challenges number drive segment year. The the grew driving offerings. in sharp quarter expense we same we million hurdles, year. million February our international you, further to the and gross our $X.X sale-leaseback an rose merchandise our by with 'XX shortages increasing Fuel the the compared sales these in margins and to gallons expect towards the to million in closed Hawaii and volumes first compared we from reflects Richard. operating summer to grew stores and quarter, grow gross of by season, offerings prices third of eye segment while these first Merchandise retail compared of in were $XXX,XXX quarter increases in the second increase million sales to during in $XX.X product the EBITDA additional the X.X% tourists well, refined inside continue last in to first Food adjusted are quarter beverage prepared faced from reported in the food the working margin return last X.X% fuel regions transaction of that of categories. to growth. in of we approximately XX.X XX.X continuing $X.X lease quarter perform the segment our XXXX. to XXXX. first quarters the across to expand continuing gallons

quarter. Washington last with the scheduled our announced we segment fourth operations store Spokane, the during retail the As of new to outside expanding we break ground in are quarter,

additional opportunities in other are evaluating development. including the several area, We growth greenfield

our and the across including customers continue plan providing We're by ahead, at expanded during service expand in their we home food to the needs, excited delivery options, Looking for more to focus a our options offerings convenience launch second quarter pay to self-checkout to our network. and on loyalty to pump. Northwest program maximizing the develop

the While fuel and Will yet the the I levels, merchandise as of to financials. increases year prices volumes recovered over not to pre-COVID crude have will balance now turn continued to anticipate continue the over to address we call stabilize.

William Monteleone

Matt. you, Thank

adjusted were $XX adjusted share. $X.XX a loss $X and per quarter fully EBITDA earnings First and million or diluted million of

mark-to-market Refining Focusing $X include XXXX related the compliance on results and XXXX noncash items RFS accounting years. to loss a first. million

by Excluding RINs to per $XX share, planned $X $XX segment from loss Shifting The reduced activity adjusted our mark-to-market EBITDA driver EBITDA related sequentially fourth maintenance. earnings and a was results. The the million. largest of of quarter throughput approximately million share respectively. Washington segment the in adjusted down our $X.XX was to decline per contribution was the million, and adjusted expense, Logistics

mark-to-market RIN compared was to million the Refining segment the $X million in quarter. impacts, adjusted fourth Excluding $X EBITDA

Focusing first. Hawaii on

$X costs The Putting about margin premium. per $X indexes versus the increased improvement backwardation first items quarter approximately Singapore market and caused $X.XX prices barrel the impact barrel yield headwind, quarter. Feedstock increased to per per impact $X.XX spread per Index were $X.XX premium initially fourth improved Brent of capture largely rising crack and the X-X-X together, compared and other offset to $XX.XX. another increased rapidly overall approximate to approximately environment hedging, of the an the and $X.XX estimate barrel the of and provided The feedstock costs barrel. net X-X-X

continue the $X.XX $X.XX tighter with backwardation to X-X-X be Looking per almost crude and crude forward, per improve between market averaging anticipate in during reflecting We increasing a will barrel barrel second April. and differentials landed quarter, the physical conditions market. $XX

flat to in are crack our barrel the we levels. $XX.XX in price. margin slightly QX are to increased to price average barrel. backwardation elevated range Major the relative market currently and well peak lower expense levels due In versus in sales history, improved X-X-X the don't throughput fourth hedged remains consistent to price X compression impacts. conditions an levels below framework $X.XX currently continued average pieces quarter. XX% related compared Washington, the of at further month per month to quarter increases flat versus and we to approximately With to XX% hedging have We quarter. first X per of were the lag with March, QX Backwardation have Current realized backwardation turnaround, our stable moving project down albeit asphalt fourth currently the compared

profits million. us to While purchase X outlays, we turnaround million throughput products. refined were loss maintain and the turnaround additional the extended was were impacting rates approximately turnaround causing days budgeted related to to $XX $XX Total to able by

market forward, barrel, with conditions $XX.XX X-X-X-X $XX market X-X-X FIFO $XX first barrel. The totaled Laramie. improving with adjusted million, margins. the nearly $XX estimated to was XXXX. of to of April income Wyoming April by hedged Wyoming Index improving improved increased Looking are of fourth $XX.XX net to $XX.XX $XX per slightly per Capital to the the million. PNW a quarter. unhedged led improving EBITDAX distillate expenditures in during million from barrel improving million per the during the or Wyoming $XX EBITDAX million adjusted conditions X-X-X approximately $X.X of generated April. quarter and Shifting Laramie benefit $XX.XX

approximately for Shifting million XXX was is million. million in Par funding, to XX totaled wells, of program. quarter, cubic Capital we $XX to by from totaled evaluating excluding flow first ending a cash larger the $XXX the March a small development quarter balance. prior commencing improved Exit was program equivalent. excluding from a back a $XX quarter of million. million messaged development expenditures fourth the million $XX capital Working feet net X This Laramie Pacific During $XX production as day totaling and million turnaround a $XX million. reflects Par turnaround, cash flow reversal communications. $XX inflows, operations, outflows Pacific's debt statement.

million stock repurchased of at In an the $X of $XX.XX. addition, average price quarter during we

$XXX net the a March RFS compliance totaled of XX. and of weighted liability $X.XX million price as average Our RIN XXXX based for upon XXXX years

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

liquidity it remainder you our back expect strong we the the the concludes environment for for Operator, This completion build I'll remarks. of market Q&A. With to turn to activities, of prepared and year. turnaround

Operator

first Goldman [Operator is from Sachs. of Davenport The question Instructions] Carly

Carly Davenport

in to there, environment refining impacting in start the Obviously, wanted the just pieces Hawaii. lot I moving a first of quarter. margins on

of strong are the quarter? So of of the second a how margin bit the kind margins kind seeing could pieces tracking ability in levels you thus flesh just out at profitability type characterize those on in we're tracking these far could you'd see kind screen your and XQ, you how to of some ultimately of capture where

William Monteleone

Sure, Carly. It's Will.

during we about referenced the best the that Hawaii think lag was ultimately way the to $X.XX. in quarter is price was about think I that impact

current again, that we environment, with the price expect And repeat. so to don't

the that's current yield And spread think, crack I factors But will quarter. improving I during slot so think expect think play the Hawaii we're costs factor other are factors again, backwardation, biggest rates the an the are I And environment Hawaii. we continue. at improve to single that think again, that the dynamics increased capture capture then in I expecting nonetheless, that given all and price hedging, in

Carly Davenport

Washington. coprocessing around Great. I And about in follow-up appreciate you've of the at renewables talked the was that. opportunity then just that kind

about mentioned just on fuels we over kind As project? day terms in investment of about number I the time the we you But should benefit the line the frame rents renewable of think mitigation just driving referenced then to ramp of early think volume of side, the call current there, think it, kind of start-up the versus we to kind X,XXX kind rationale of around XXXX. you of economics that how in should And in that barrel in a the, deck? how producing

William Pate

is renewable us this intend that if really first Carly, that not millions, at address and to to we're producing expect a renewable diesel next run. completing this to I RIN's and diesel. this requirement we credit LCFS starts address positions look solely Bill. an be again, to availability producing But project The that of have a of we is we're the project be relatively would early single-digit market units talking as say, year. low It's all, LCFS optionality pricing. capable we to small about project project, to very where capital

Operator

The Tudor, Pickering, next is of Blair question Holt. Matthew from

Matthew Blair

hoping U.S. looks It better they're Hawaii. like was trending traffic averages. than you trends could about I the in talk air actually

see your segment? if in we logistics would demand? that's to then your also, wondering through jet help And coming out expect Just that

William Pate

and travel We're most helps different Matt in are Matt, international the Vaughn the to travelers, see I'm this we importantly. stay this more tend in some to increasing number let And areas, also actually us of But They to around international It front. seeing yes, of retail is Bill. longer. Hawaii. travelers a travel starting on more. address going

So I hiring the resorts, frankly, there's more more. consumption. And think, are

here, to probably consumption on an barrel, really is front. a this jet the utilized. at impact Matt, in to on retail think a I logistics we're in the point going So want barrel import I the of state heavily have seeing I jet, area we're start in pickup to pretty know because that's see a is that? our we're benefit to significant at terms where so this don't the system that going you do marginal think, And address point

James Vaughn

Yes, is this Matt.

that's correct. I think

So compared of impact well to stores the island, jet of end into Xx volume flights Oahu consumption up of in Japan from they derive from the inbound well. That where as both will April XXXX. as that as April were as flights to far retail were about the we the

William Monteleone

And is Matt, this Will.

sense, fuel Just rebounded probably think and side I prepandemic ultimately think travel again, as levels. I XX% Oahu to you a the aggregate prepandemic leg the I referenced, And in still at there again, in And we're Bill volumes international Hawaii volume the give principally. hadn't the fully levels last is employment, think seeing the market. then on of in

Matthew Blair

up? given on then could the And been provide any that's an good. earnings of potential update putting strength, Sounds Laramie just you monetization strong the

William Monteleone

gas set fundamentals, prices there us are for with And Yes, Matt, driving we're growing as I for strategic of improving think consider. materially to and alternatives speak. natural really our think we Laramie, evaluating I options in

I sale structure, an mean think profits can its are from of annual we're that to I ultimately its Laramie take everything and to But leverage steps and be markedly. a fundamentals could So business the again, Laramie capital so on distributed simplify basis. improving valuing

Operator

Magana of The from Alejandra next JPMorgan. question is

Alejandra Magana

for This Phil covering is I'm Alejandra Gresh. Magana.

second cracks debt about the no think materially that how steps and reduction? do you maintenance, flow in quarter versus up Assuming cash with stronger buybacks

William Pate

is Bill. this Alejandra,

retail expanding cost us Our be of highest logistics I on capital. requirements has capability business, it haven't or really the just of to reducing that reducing our increasing most funding our continue necessarily refining changed. And focus to whether require base And capital priorities believe our debt significant really our priorities our the store growth certainly, our be will impact.

we noted, repurchased assess have our and continue and the also when Will we opportunistically act equity As attractive, to accordingly. it's will market

Alejandra Magana

you any would about? And energy is around my it. you projects transition the Got particularly environment the of opportunities that that stronger are question there today, seeing second we're consider some talked accelerating in

William Pate

the we're number government, of doesn't to either working support market transition A a changing work really the and energy the or projects government government with environment. require on respond

energy be think of transition don't will our I So accelerated. projects any

a really partners. our hydrogen the for simplify federal with be in coming a For refineries hydrogen is to that pursued out sheet. example, of funds can up The going hub turnarounds, reality our project and we've build our local function support got will be think in generate flow. amount running. regional that using we structure Washington conjunction a and is to fair We cash be We'll balance of of capital

Operator

next from Cowen. Gabelman The of is question Jason

Jason Gabelman

of couple a questions. have I Yes.

of to on trying that first just one, The impact business. understand prices the net the rising

price these a Hawaii, in offsetting inventory noted are lag there but You then benefits.

you the impact at there to all? So about if of how think rising net one business do is the prices

William Monteleone

I inventory the Yes, lag again, Jason, addition, in impacts Wyoming And Washington, also. of asphalt in benefits and again in probably the with it's that million, about impacts think in offset $XX impact quarter, Hawaii, Hawaii and approximately. in we then the the referenced price

So again, for to way it, I the think quarter. net best think that's about the probably

Jason Gabelman

Got were then how sounds my you're I other with last it. of it one, you cash. back sheet. like, guess balance uses the just And comfortable going discussing of kind Bill, quarter, to

then over market to of large generating seller the debt. there want that you're sounds kind connected pay you remove more a your be that, down like overhang? just engagement on of some those of just it Is pressure going lot that any given cash and couple the outlook try quarters. share price. to And to next putting probably obviously clarify Can in there's maybe statements? that's to Now you the And a

William Pate

over general, appropriate of it major quarter, last with the on Well, think high-cost of a last We that's generated recent in in equity well. we But the continue think do did investor. just quarters. think repurchase even don't going is about sales believe market liquidity to I like that some context, comment take our we debt, debt to the accretive and to the out. it'd We be couple as be we'd so that to

reducing cost well. And reducing will ultimately should our as way cost the say, I debt think to so just let's in debt our basis. a share lower eventually price on, that impact your we allow think favorable And us markets access a of credit

above we bit of the liquidity. a So it's say context, mean generate to expect to do when this. a but market little I available, hate -- of on I all the little It's depending

We have mind that obligations, liquidity this in And want take that about have morass as keep account we also we're think in we to we EPA. when RINS these appropriate with of and to well. the level into

Operator

The of next from Andrew question Capital. Shapiro is Lawndale

Andrew Shapiro

question. the and Just if it's how a current number. what's now it's much quick about or number year NOL I expiring? But year-end don't the tax at know the just a is

William Monteleone

And billion. Andrew, don't the Will. balance XXXX it's $X.X until is and time beyond current I think the ultimately, The frame. expiries about begin

period no NOL we're going to about. So forward. current able profits are again, concerned I the shield expiries manage balance confident think and flows cash And that to we're we

Andrew Shapiro

were we -- would words, Sure. of then and get term other loss sell there NOL? off that, the in would the the of the the XXXX, risk rest the works and expiries that the the even is of sizable event to it the XXXX, less XXXX would And up, Laramie would expiries, be in chew gain, used nearest and you way up have does it would a gain

William Monteleone

Yes.

of the gain a a we think of into the we'd Laramie balances, I sort conduct any sale, manner. could on getting specifics I the NOL tax-efficient versus potential Andrew, to say have is think we think, what extent I

we go-forward and think utilize any impact I again, -- on foresee so to the And I for basis. don't think NOL a ability again,

William Pate

really expiring. profits? offset using business, Andrew, our just on anticipate be for NOLs we'll attributes that the based also say, tax those outlook I'd We don't see we to

Operator

The next from follow-up question is Matthew of Blair a Pickering, Tudor, Holt.

Matthew Blair

far a Hawaii XX% for about Will. that this in we mention should correct? that? XX% the like on mark-to-market so Is QX $XX.XX you QX it's negative mark-to-market, strike. hedging think that probably at is in I be But thinking did to And there a then at

William Monteleone

to you've I you of XX% can can Matt, up sales the at follow think, level. $XX.XX again, take And numbers got XX% the the correct, But ultimately, I offline. with you calculate think average by use -- volume projected our typical price the the moving our -- what quickly I the you for X-X-X to and input want mark-to-market day. to sales is

give a to that trying their we're number around sensitivities that. own people think I help create So

Operator

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

William Pate

you Thank We're for we all market a we and you, outages. And turnarounds operator. today. our as we have up growing this completed and our with a pleased joining liquidity to products no I want enter major to outlook. refined think of thank near-term have units good profitability, of for us day. Have recently favorable all with bright

Operator

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

disconnect. You may now

Par Pacific (PARR) 7 May 222022 Q1 Earnings call transcript