PARR - Earnings call transcript Q2 2022 | Par Pacific Holdings, Inc.

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Operator

Good day, and welcome to the Par Pacific Second Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Ashimi Patel, Director of Investor Relations. Please go ahead.

Ashimi Patel

Thank you, Jason. Welcome to Par Pacific's second quarter earnings conference call.

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

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

William Pate

morning historical our call market to second Thank you, results improved strong to the favorable supply-demand conference a pleased due Ashimi, above participants. well to quarter conditions during as financial report norms good balance. and We're

EBITDA adjusted was per million, and was adjusted $X.XX net income $XXX share. quarter Second

system-wide throughput lowest cost due and outstanding quarter, income. conditions addition to local operational market to supplier high last the record significant our on as the over us were maintain role importantly, attractive team's feed had drove net reliability market the summary, excellent first capitalize most quarter Sales in our and our rates. allowed In levels execution lack markets. we Most refinery outages. driving increased In conditions, to planned any of as we reliable strong

strong. continues profitability to quarter Third be

XX% have remain the markers. our levels, materially, distillate of declined we Almost product within yield at While have record the are sales to cracks industry. cracks indexed gasoline highest distillate and distillate

X.X% high price convenience. Overall, are market compared share demand, unit over increase typically the savings also environments, by XXXX. business second volumes In market has faced down only the reduced discount decreased same high compared as challenges but which period increased volumes prices, to year. not to retailers emphasize X.X% competition. year-to-date to Retail due quarter consumers Accordingly, Our of same-store last pump of fuel same-store

a and successful growth structure affected logistics string we're continue we capital market turn reduce second back pandemic of programs improving. the we and our ahead, capital rapidly to flow, to of focused continues $XXX company. demand. to net efforts posture over to focus and Looking growth for on by Today, our were maintaining to additional structure cash all fuel leveraging we're acquisitions on improving refining strategic is Richard into our recovering to quarter. I'll debt liquidity. completed now pricing share With on now be the aggressively XXXX, the our when strong We We we're discuss our poised Cash allowing pursuing our loyalty a focused and to robust pump. then third the generation million the increase reduce in At end the than more by pleased quarter, throughout liquidity. us and growth operations. and initiatives debt at call

Richard Creamer

Bill. Thank you,

quarter averaged XX.X%. and worked locations production each teams successfully at pre operational the our to availability Our hard maximize second site this for the quarter

we throughput As XXX,XXX near of In a per at quarter. refineries target rates result, three quarterly operated through Hawaii, barrels our day. the achieved a

we day. expenses Washington, be XX,XXX margins as XX,XXX with to the day. asphalt barrel to and Production Production us and impacted In were we energy resolved barrels nameplate rates constraint, high per at product a we record capture and the during operated a during barrels Elevated $X.XX the achieved throughput were barrel by new crude rates, was a is quarter cost third barrel we're costs demand. Importantly, on-island stabilized. and allowing asphalt balancing operational operating a the expected maximize day. unit June, to quarter and crude record XX,XXX of was a XX,XXX per per loading able $X.XX near prices throughput quarter through to costs barrels $X.XX throughput

were in barrel to quarter early per per day production throughput Wyoming. XX,XXX to during Third work was and completed achieved capitalizing Production XX,XXX throughput day. second expected We is barrels in XX,XXX second be barrels quarter. record day, per XX,XXX Shifting on to $X.XX exceeding costs a barrels the quarter. rates the June,

XX,XXX quarter per XX,XXX to be barrels is Third expected day. throughput to

to third the to now for crude maximize financial product I'll continuing continue strength. meet turn the to market to operational will reliability to over be goals capture safe the demand discuss results. principal Our deliver Will call quarter throughput and to and

William Monteleone

Richard. you, Thank

of Refining adjusted million and impact the in QX believe Second strong the $XXX the the and million million EBITDA We adjusted of seasonal products our contribution sequentially share. sales a was business. million, RIN ongoing diluted $XX We mark-to-market first $XX up adjusted to to quarter $X.XX segment demand increase volumes million. income better quarter largely earnings adjusted were by was quarter. quarter.. charges, market. post and by approximately earnings each the EBITDA $X adjusted made million this from reflects driven and $XXX for of EBITDA fully Logistics which per EBITDA this was $XXX Washington the this quarter remove to net definition or first our compared The was noncash adjusted million turnaround in return approximately segment $X change of

on Focusing Hawaii first.

barrel. per X-X-X costs compared to Singapore to premium of Brent quarter. $XX the barrel approximately per Feedstock $X first X-X-X record the estimate the indexes, overall about quarter, initially $X.XX $XX versus to Combining provided $X.XX feedstock improved a approximately second margin were The barrel per environment $XX.XX. and increased to the

approximately $XX adjusted the our differentials first million to with X-X-X $X.XX approximately or and Product of compared $X.XX barrel. market On be able are conditions almost combined approximately per most barrel adjusted a percentage this averaging $X versus hedges increase by margin the We remained quarter. reduced We increased capture to improved will crude to as between margin basis, gross XX% to per per $XX increasing strong $XX reflecting crack $XX.XX gross third backwardation. gross of ICE per landed over indicators. barrel anticipate margin barrel. quarter market Brent, the adjusted July

per driven hedged We VGO Washington have have these of market Washington, conditions rates strongly sales, per of $XX wider and Adjusted our on strong In million gross crack index to framework conditions by almost increased rebounded XX% an were barrel. X-X-X QX $XX with currently $XX barrel. continued inland XX% average our at the hedging margin $XX approximately Improving to market increasing over to improved largely and or capture discounts Backwardation partial and relative to improvements. per lag crude offsets asphalt price barrel. were ANS. sales

Index $XX per benefit also July barrel. EBITDAX conditions market Wyoming has remained adjusted Wyoming the adjusted hedge with X-X-X-X barrel. per was conditions per or July unhedged of averaged million, market forward, $X.XX $X the $XX strong PNW approximately X-X-X Laramie generated a the approximately estimated $XX per progressing million improved well, averaging develop barrel. to the million FIFO Wyoming improving $XX $XX expenditures $XX program Looking of to barrel, as X-X-X the during XXXX. June of production derivatives equivalent. was totaled Laramie Laramie is $XX of XX million another net XX the second million. day development of and EBITDAX quarter. half and XX second cubic Exit for unrealized excluding wells expects income, pad feet Capital million of approximately with

over to expect X-rig to program we XX% XX% With production the increase the XX months. next

During $X the debt million, by million. quarter, net to $XX improved down

were of positive these second X. activities. was totaled back quarter outflows and capital Par financial funding $XX hedging Laramie in and Par the capital turnaround not excluding cash in support results ramping reminder, Hawaii The do we collateral working post turnaround currently the cash flow drivers Washington largest million. Pacific through our first carry excluding sales to flow quarter Shifting million. from Pacific's statements activities Working given a As investment increased flow posting commercial the the statement. at $XXX operations to outflows turnarounds,

this portion above reverse million. outflow with a liquidity significant seen recent expenditures have Capital We million. already $XXX totaled $XX of tracking

our approximately now market at of gross open debt addition, sits debt approximately by including million totaling Gross quarter, reduced million notes. our million. value this In $XXX face repurchases $XX we $XX

for average Brent the weighted XXXX upon RFS of per Our price XXXX net and years liability compliance as a based million of totaled unit $XXX $X.XX approximately X/XX.

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

plans structure. formal With the we'd target capital lay like regarding more to backdrop, our strong out market

and the stated are between retail this the We consistent upon current load with term solely and and level financing supported of segments. objective of and logistics. We gross equity targeting million retail believe is debt our $XXX business logistics size refining based our of the debt million by of debt $XXX

level prepared remarks. commodity We current to of our total also with Operator, turn it price higher expect back for to Q&A. I'll the liquidity carry concludes environment. you a This higher

Operator

Instructions] Please [Operator from Carly Davenport ahead. from question Sachs. first go Goldman comes Our

Carly Davenport

Good seeing the start morning, pieces to on kind the on strong and Wanted thanks the moving refining for capture been and and taking quarter. we've rates. congrats the questions of side around that margins

the bit Pacific here along the the around between off should in backwardation and captures moving come pricing system? the mind, but the gasoline we Singapore a the strength differentials, think with about for with mentioned indicators in across have that Northwest distillate July, moves in You flat and pieces and relative how

William Monteleone

your Carly, thanks question. for

So to as think strong. about that going referenced. expect I forward, I remain offsetting of think And rates factors we capture I would think number think again, capture we a you

environment, a impacts would price offset prices remain, by price to So partially extent Wyoming. in say, Hawaii. the to that in expect stable FIFO lag we be current in the benefit I'll That occur

in the prior a market laid the crack a extent the hedging. really Again, on remain marginal then spread $XX other X-X-X, expect similar the spread periods trend gain And barrel current to level flat crack that slightly out per factor with we the price. is So on very changes think in conditions flat or impact do I hedging we've side. with in

watch two then But the we'd think in the remain reported basis quarter. summary continue I again, largest to single and is are here I think those backwardation factors. second And a capture levels trend. we've So percentage again, we'll rates expect think with I the on the to consistent the strong

Carly Davenport

flag in follow-up seeing on there, And the That's strategic of any price helpful. Are Great. given terms we've evaluating process is alternatives there the been to side? what just updates gas then to on the Laramie.

William Monteleone

Sure.

think one rig laid to is a objectives And three out strategically on get So there. we've in field. the I Laramie,

receiving to The is point ultimately common where to from to of capital position. And is get distributions second reduce our we're there of equity senior is Laramie. ahead cost cash the the third

So again, the growing environment. unhedged production with the and I think operating rig first price we've achieved in the current

to seeing the elevated. will that we're and think continue can going I on able on distributions to receive for and in a evaluating So to think providers. and in up progress divestitures, three we're capital a And mature be to where the position confident to market we've the end on laid I again, ultimately then and we objectives capital out. - and alternative second, traditional I again, put we'll which, I continues evaluate be cash change And - us both alternatives. able the think Laramie's as asset front, stay position with that achieve think, strategic prices are

Carly Davenport

the Got so color. for it. Great, much thanks

Operator

next question ahead. Royall Please John from go JPMorgan. The from comes

John Royall

taking Hey, good for morning question. guys. my Thanks

come over Singapore dig the diesel much better. held bit in They've cracks Just last on in more in gasoline a wanted two, in little cracks. a quite and month bit or but has the particularly the to

the the So on half you could And that Asia have cracks? expectations share what there? the for drivers seeing you you're back are any

William Pate

Sure, John. This Bill. is

going to because the mean, cracks of Xst as the it's at in are East-West the down to connected Gulf largely trends are in of Atlantic XX%. as Coast I tends I Pacific example, think And XX% only in well. you cracks base that July, I if on the for down the the you arb market, Atlantic June connect Asian Basin end the the mean Singapore the broader drivers - look from through we're Singapore about and Basin. Basin are similar distillate know, seeing

because fact obviously think that of driving are with high the lot substantial I fears invasion really the there's So to the The that drastic And The it's stalled reduction factor related the then same risk Ukraine. have than got supply-demand has months, some a going in unrelated be we've premium - think to gas the product until risk the to normal a balances more into cracks ends. that oil of energy just will winter the with and dissipated, are premium switching to factors. Russian to today factors more of going related but that oil are is and and the you've of think more higher the that conflict a what's on increased supplies. on out, associated heating given war natural I demand risk I And market. it continue likely side cracks got going premiums gas distillate to a stronger

have but eventually will or gasoline with pump gasoline I I think by toward refiners to impacted shift distillate adjust, stronger or So strength, shift and be you're distillate going will probably byproducts. see a to demand - and distillate I prices. going mean, distillate you're think market, a And a high

product back are some will near extremely probably it categories the so swing overall, And positioned But over the in both term. well direction. other

- the to - be of there'll be remainder And strong throughout so cracks going into think we year. the continue

John Royall

And for on then the color really gross Great. the That's thanks target. helpful. debt

bit talk thinking that's little you to just you to $XXX you it think $XXX about leverage? get number? just more $XXX little will you're right why If Logistics million to to a on get take effectively million about And the to how million how number, supporting the And $XXX could Retail it long the number? that then a how that and million maybe do color you with

William Pate

of going all, corporate an the to deploy account that we ensure really we a we just have that first our sheet such start and take we then $XXX first But avenues and And strengthening talk turn strategy. think important into element our capital our to is several growth our Yes, I'm we we opportunities. when important remains underscore of it I funding capital it's target also want And our have about John, because is we're base. over to start, and allocation size, to Will we balance million prospects making today when given of this that, capital decisions, Bill. can I'll growth, that, strong base. attractive priority these believe that to our

really and the and million specifically to how turn $XXX - to got numbers, that, get goes I'll that's Will these the us into there. it talk with the $XXX will million how I'll and process about take over So rationale we that thought long and it let to

William Monteleone

we we're can the that just more it. easily. it's that support, probably $XXX Logistics well. and you Retail as from and perspective, back we of So again, the John, if million and again, excess get kind combine thinking as moved our cohort of the business, let's the to about to million of how the And way Again, available our ultimately to historically and leverage a of between stable retail And I again, refining servicing base the there'd think off to from circle And then our Retail $XXX the the obligations that's as you we capital there's at really portion target the fundamentally multiple allocation think look business think and three right it significant four Retail and deduction segment. we off support that levels And of level logistics that's million frankly, segment about overhead contribution, segment, two related combined about at kind to just think without fixed small times. target we a debt that is any the the and supporting of Logistics but be overhead a quite and think that Logistics about operations. a would $XXX I call

the term. ultimately think to set So targets to we again, I levels down got to are near those looking we get in the that's and how that

John Royall

Thanks very much.

Operator

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

Matthew Blair

I you're the could potentially Hey, good the throughout Bill, And I about for, side comment this company. Hawaii? your the talk intrigued morning, other include Would by guess, that strategic was pursuing M&A? restarting of you growth initiatives refinery prospects

William Pate

the restart other market while over the the principally, order. reverse that's don't to in respect With because I - would additional don't market of take it, Hawaii. sense refinery I those in the certain it support And makes long Hawaii, think likely. in an me to Let think side run, markets

Hawaii, have we where - Hawaii it supports our our have So frankly, changes in production market local we think to and and also levels up made refining well. to system the

refinery, So turned if just anything, operating starting down have up that probably the we'd other that refinery we today.

to that on system. So lower-cost we more avenues a kind question - opportunities. opportunities add within our footprint our of mentioned, positioning maybe market. our within refining With and and the your crude Retail not to and other Refining to feedstocks, both we additional to think Logistics multiple low Hawaii our we importantly, lastly we're in positioned extending there's believe the system opportunities see oil the refinery have there's be and there's our footprint, we We growth in is at as can in renewables. just invest operating probably ability to think Mainland. I that. efficient think one - on given we certainly reliable grow And think within the - and by looking of supplier well continue for growth, we're Spokane most served we We and different acquisitions, but and within Rocky with renewable system, Mountain we to than cost with materially with respect community

Matthew Blair

to point, given be you last Or that you co-feed run still sort just on out think some year? cracks? pushed Washington this that in guess do will expect diesel of do I later strong

William Pate

oil. to be will oils the crude frankly, mean what certainly crude the driven we of mean that our at make that basis, the the LCFS of profitability have certainly to right gallon. I system beginning but $X.XX co it sure versus a whether less Washington, can are do needs will in end makes and that what It XXXX. optionality optionality. community to than have We're by driven sure standards sense be we on focus on at And Fed the want is of markets co-Fed running change. going the we now, I to by a make oil, we cost the vegetable looking

us lot going and it. creates the and of we at it look not optionality, it's way a to So cost that's much,

Matthew Blair

incremental the shut fuel that Okay. is your Hawaii from set I Has demand coal any resulted think power to then almost plant oil And in or refineries? is in closed.

William Pate

Yes, I this at September. of month for plant that it end think And in It's has. shuts days. next down the - that's the XX

Matthew Blair

you thank Great, much. very

Operator

Jason next from comes Our question Cowen. Gabelman ahead. go from Please

Jason Gabelman

thanks guys, my questions. taking for Hey

The first in I ask wanted aspects. the to just Act Inflation two one is on Reduction

some taxpayer or First, the just exposure the is any the of NOL make the taxes? the passes a it credit about gets does to with Airlines does the specifically? large more that second momentum then following and MOU biofuel to the of if know signed of behind you you wondering you project change I part that of projects harvest that to time talking And given the extensions, the IRI? you're more NOL, an the were question not have Hawaiian length given IRA attractive, related other with

William Pate

that just of With have minimum going frankly exhausted the tax still company. we're would Jason, Act. parity a to positive one apply, Hawaiian at But helpful size in we we credit that certainly Preliminarily, think the think with for the will the if fuel our tax NOL minimum us be the it aviation federal diesel. markets. with does given actually is and at other could a size biofuels, aspects would the say be don't be Reduction to SAF it that provide to I to be point. think Inflation to I credit, key our where the were And studying going renewable we would we partnership of think, affect having is Yes, I for sustainable with respect

Jason Gabelman

Got it.

record ability demand But as I have just And back. to the continues Hawaii Maybe think run levels running to at to that. the the island continue fully at new plant? second a rebound, at is higher do Okay. was on comment on Hawaii jet then my follow-up you demand don't you on could in rates.

William Pate

handle want you do Richard, to that?

Richard Creamer

Yes, sure.

we is the at I to XX,XXX the And quarter, into think X,XXX that our in what barrels this going day. pushing next second quarter. see up X,XXX we per posted than operating refinery XX,XXX, barrels rates higher that's

push third So to higher we continue higher is at through ability to to pretty the up see run possible. these the and levels quarter the rates

William Monteleone

serve of Jason, again, portion think needs, and market we can jet what to import to supports And level. requirements - continue market that we in already. try again, via push met hair the the rates significant

Jason Gabelman

And couple one, the a side. my on last modeling then Okay. just

working the You then mentioned has reversed? much on second already some just reversed capital of And modeling. has the How part quarter-to-date?

this into another crude You that Can see pretty you the if diff crude could you large higher you what's any to a have impact a later high XQ? quarter, take driving barrel that And diff in mitigate $X year discuss quarter-over-quarter. actions persisting headwind?

William Monteleone

respect So pieces Jason, I recently versus there the our of side, working with a tried at where and end million. million at to think volumes $XXX between again, see number $XXX again, liquidity to capital lots we quarter the moving price. on give I But

$XXX think perspective, - at So Again, working precise of mix capital way reversal about that's partial reversal. difficult a I to a million outflow. earnings modeling this of the so working the from juncture. it But capital more again, think be to and a

you've which I seen to On you've seen down go which the physical over, Europe. barrel freight especially think $X and are XX spread quite is is the a price ICE think high that's tight, the seen think start factors Brent backwardation, still last the versus unusual. dated Again, in backwardation as to are I XX again Brent days, that And crude between impacting abate the within notwithstanding reflected crude by as two come quite side, market contracts, as the crude differential. that we've really again, biggest ultimately, flat I

I there think are think are we'll So again, opportunistic. aspects that continue be I of tight market certainly the to crude

But differential and really biggest drive shifted freight quarter, there second some that think out our the are crude crudes going in ultimately, We I forward. and that the slate high-cost the at our avoided the factors are the backwardation world and I time. two in opportunistic were of think will

Jason Gabelman

for those thanks Great, answers.

Operator

are William questions conference session. turn any Pate the to over the This for no would our There I closing back queue. concludes more in question-and-answer like to remarks.

William Pate

for thank want results I for us our for their very today, believe the to joining the We're I year. profitability team quarter's and excellent this we're a want for strong you rest positioned and the Have thank execution with quarter. of to financial well pleased good day.

Operator

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

may now You disconnect.

Par Pacific (PARR) 12 Aug 222022 Q2 Earnings call transcript