Earnings call transcript Q4 2022

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Operator

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

Ashimi Patel

Anthony. you, Thank Pacific's Par Earnings Call. Conference Welcome Fourth to Quarter

Logistics; Pate, Officer; and Chief Will Joining Refining Financial me President; Retail Executive William are and of EVP SVP today Officer. Monteleone, SVP Chief Shawn Richard Creamer, Danielle and Mattiussi, Officer; and Chief Flores,

These from are They Before begin, not future or and these events. statements. on revise guarantees subject our statements. are statements, to subject may obligation actual include comments of should we results place statements uncertainties, and any today materially not to differ and investors are risks forward-looking that forward-looking note may forward-looking disclaim change them. or and performance Accordingly, undue forward-looking to reliance update we

to additional with reconciliations I for non-GAAP our information. SEC refer to website filings investor you the and our presentation on and our

turn now I'll Chief our call to William the Executive Pate. Officer, over

William Pate

conference for pandemic Adjusted Good breakthrough rebounded was was $XXX Nearly year. $XXX last Ashimi. from was adjusted to financial morning income rest remained per for you, year, net $X.XX from or our million year a Thank participants. Early our the EBITDA lows throughout cash operations strong company. our XXXX the was cracks into adjusted and net all of product converted million, income and year. the call share.

Consequently, to to million. We built $XXX our and debt our approximately used hand down balance more $XX free million cash than in funded strengthen net nearly cash our year-end flow sheet. $XX debt million. We paid by our on declined

our capital. a a transaction. close well reducing month June This announced the us targeting Billings coupled of this with X positioned further liquidity, leaves Our funded cost comprehensive our closing. refinancing strong to team of debt We're financing, our also

to to continue which cracks tight. lockdown China, demand, markets is due principally remained strong our policy. product its abandoned due COVID to increasing zero XXXX, Global Entering be

refiners have in demand, growing the curtailed quarter. As evidence exports of Chinese first

costs reopening travel refinery cracks. which exports, boost a with element to of Chinese markets product declining tightened global sanctions offset slate. air demand, cost jet increased These trends overall are economics. key fuel Additional somewhat sales and and tend of products the improving petroleum The on to gas overall reduce our have combined Russian by prices, freight operating refining has European natural increased

Singapore, significant overall difference of government In our first or jet fuel given us progress that on regrade considerably occasionally diesel making the flipped ultra-low the positive market renewables on and price has the afford sulfur time jet We're between flexibility since and focus smaller-scale this the for XXXX. and credit area, pricing dynamics. maximum sourcing, feedstock our surrounding projects. projects In remains uncertainty narrowed

example, million cost but [indiscernible] cover project XX% will our $X than Tacoma less of shortfall. our will it For

project this expect to quarter. be running We next

produce in to sustainable feedstock We're for a the fuel. the this can conversion believe per less of for completing unit per Hawaii $X.XX we also aviation capacity. of annual project, complete pretreatment including gallon production than million-gallon We XX engineering year

its upstream affiliate their this replacing completed facility. new also loan preferred existing facility redeeming stock a a quarter, Our Laramie refinancing term credit with and

March in this distribution in million financing. $XX approximate conjunction an expect We with

I highly and want our they're new mission focused a and and Flores on and corporate Like for Will roles reason strategy, respectively. Shawn success. and their President colleagues, growth of to CFO, Monteleone, our passionate many in our congratulate key as

commercial call the turn and performance. now will Will our over to I to operational discuss

William Monteleone

Thank you, Bill.

big for and thank your hard growth. remarkable XX% team dedication all A for daily operations, I'd results, our for at you the fourth members quarter year, like laid the to XXXX. thank a future mechanical to run strong and the retail performance availability foundation you Despite the many to team complexities into our a the to of for work. contributions generated the success diving team managed over while Before collective financial their

Refining quarter market was utilization. utilization barrels Logistics Total or The rates. rewarding backdrop XX% fourth per refining day throughput remains XXX,XXX firm, refining and

barrel were our Hawaii, throughputs were During Hawaii which planned Production maintenance Wyoming, production was OpEx. impacted Washington costs barrel. and per per $X.XX by the activities was $X.XX in minor costs in barrel quarter, $X.XX modestly and and per impacted Wyoming

From For and would and the major Washington quarter per barrel. $X the Washington between planned expect $X and we full costs in we and activities and $X.XX maintenance $X.XX was barrel. overall $X $XX planned In and between Henry near was barrel per $X.XX production barrel, small year, Hawaii an production turnaround standpoint, per Hawaii reliability operations and Wyoming. Wyoming were Hub price barrel Hawaii energy $X.XX per costs and in costs, no Wyoming increases in per an per $X.XX per maintenance environment, $X.XX barrel Brent first have barrel, Despite XXXX. Washington

feedstock provided matters. Combining estimate barrel. per approximately feedstock Shifting Landed of $X were $XX.XX. compressed third the overall per fourth margin combined by to to declined the to quarter a index. commercial The amount, XXX% initially costs Adjusted margin per the X-X-X $X.XX commensurate versus index us allowing capture to $X.XX $X Singapore the to of declined X-X-X maintain barrel and about barrel near by environment premium indexes, gross to compared the $X quarter. Brent approximately rates

Despite in drop margins rates $XX remained strong softening per ANS approximately this crude at conditions but backwardation. conditions quarter. to declined we market able by $X per early In by in seasonally index, the capture barrel. barrel $X per barrel relative inland driven the to wider per nearly very strong Washington, were with increase Improving largely and discounts to approximately were gross $XX adjusted barrel,

to per $X approximately by the third declined conditions barrel quarter. compared market Wyoming

to margin declined FIFO barrel, lower by adjusted impacts. due Wyoming $X approximately largely only inventory per However, gross

barrels day we Hawaii and and day, total between XX,XXX throughput seasonally this expect day to run midpoint in XX,XXX a per In barrels or XX% utilization. ahead Looking per first strong between XX,XXX. XXX,XXX the and XX,XXX and Washington XX,XXX XX,XXX between to quarter, of Wyoming results total, per barrels

gas $XX X-X-X with gasoline jet averaged Singapore has to the fuel in softening. per strength notable In oil barrel Hawaii, offsetting and

expect between we the modest side, to crude a land feedstock quarter from the and average QX versus X levels. X.XX Brent, On fourth improvement

XXX-day on market conditions. costs a operate lag a XX- quarter to average landed about prompt feedstock As versus reminder,

In outages. index to Washington, barrel Wyoming is approximately averaged notable barrel, largely per due refinery with the regional has X-X-X-X strength averaging $XX $XX per index quarter PNW counter-seasonal today.

to Moving Retail segment. the

operations to First has with a fuel of I'm convenience I'm the and stabilizing very experience Danielle all, her across next margins our to lead in team excited The and that level. and financial volumes merchandise. wealth generated Retail to has both joined quarter work record to expanding closely our Danielle the segment with take announce fuel of retail, business excited to unit. Mattiussi retail a

X sales respective up XXXX to X.X%, under future growing the same-store levels. ramped volumes regions and and quarter Hele X% fuel merchandise acquisition completed The Fourth construction. and and sites in also growth. brands for had We nicely store industry their are nomnom positioned respectively, new X well versus

are confident X maintaining Significant operational Billings, a focus in impressed targets. integrating Billings, areas renewable quality growing and XXXX for underway with we With brands remain transition to Key the closing respect and strong we our June successfully high be to our transaction and efforts retail our continue of synergy reliability, team. logistics are refinery projects. progressing the

to Shawn to over review our it turn now will financial results. I

Shawn Flores

adjusted $XXX Refining and or EBITDA adjusted $X.XX EBITDA $XXX earnings fourth the $XXX adjusted earnings million million $XXX and the share. per were The Full $XXX segment quarter. year million quarter $X.XX and third of or Will. in compared in $XXX were share. per Thanks, Fourth million and reported EBITDA million quarter adjusted to adjusted million

crack by million, net offset Fourth in benefit in a Hawaii loss negative hedge of million a quarter adjusted a $XX $X lag of product in million $X and of price EBITDA FIFO impact includes Hawaii. Wyoming

continued marginally quarter volumes conditions. higher our crack XX% than have at levels framework in apparently Hawaii approximately We the current have our hedging hedged of first sales and market

segment in Logistics quarter to resulting the and during compared adjusted Logistics of Retail in The lower fourth million onetime $XX in increased EBITDA $XX adjusted of results utilization. operating the were reported The million Hawaii, by in third EBITDA million driven The the pipeline $XX quarterly quarter. the costs maintenance primarily to in marginally quarter million third reported record $XX activities compared fourth quarter. segment asset

by previously, As and sales. we were increased results in referenced strong driven primarily margin merchandise the fuel Retail

provided outflows deposit for million made outflows quarter. during a quarter Billings up activities Cash and quarter $XXX $XX we outflows excluding cash operations totaled effectively Working million, XX% net acquisition. upcoming capital from was obligation cash flow at the the cash Cash in Total settled the were the of of primarily fourth activity by million, XXXX year-end capital include million during our in liquidity as by RIN driven RIN to Shifting during $XXX $XX million. impact million million $XX the working the settlement fourth of statement. increased net availability. $XXX $XX investing of of

Earlier I'd by XXX the to announced senior Next, existing secured and update facility to of and The facility our market on successful capital used future the term early to will proceeds senior B our is The cost Loan expected by this Term new debt recent opportunities. and we term million provide our secured like notes. be capital growth basis company to of simplify month, allocation position approximately our and pricing reduce better points the loan. an take structure, a March, $XXX pursue close will out activities.

sheet. which million XXXX we company. year from for to flow $XXX balance mentioned, over of Bill a was our As generated our breakthrough operations, bolster used We cash

repurchased net Billings reduced the approximately our use million, Last fund position key loss million debt carryover increased by achieving objectives. $XXX our down paid reduction to operating cash $XX term federal cash debt, our factor and in liability Our we we in million a stock, was by upcoming acquisition. tax which of $XXX will million $X year,

integrated opportunities growth-oriented As our attractive identify will we across supply continue enhance a network to to our markets. core development company,

for Operator, our back prepared remarks. you to we'll concludes Q&A. it turn This

Operator

[Operator Instructions].

question from Goldman will first with Mehta Our come Sachs. Neil

Nicolette Slusser

for Will Neil This congrats, respective And Mehta. Shawn, Nicolette on new roles. Slusser is the on and

what XQ on here would date you then the close quarter? approach thoughts just ahead as be we should targeted the So looking the factors out timing first expected for can about Billings. we transaction, of within for around the talk And be any And key close? question

William Monteleone

Will. Nicolette, it's

I identified necessary. key low the the X on capital deploy Again, to I to that. relate again again, terms will think achieving key for think increase we've and we're on I laid again, high up carve-out are the to us -- on So think targeting We focused the factors project, I items in since again, spend items standing the we confident remain overhead, think of we're and it's June audit achievable. date, to targets. think team. again, belief And overall overall the the the Again, And are that date commercial I our ultimately track technology and on of out that our that for targets time on and synergy operating a And in lot top returns as focused that with again, that opportunities ground reliability. of generate closing.

Nicolette Slusser

the question about what sense outlook may color. think And to trying EBITDA more I second for business. on driving structural Thank you a higher just refining longer-term normalized and you may be talk is that here Hawaii, to the capture forward? for rate Can the better most a for get then are factors be Hawaii of going

William Pate

XXXX, is cover in The it's year. for want highs. overall diesel seeing rebound demand you of for basis But And XXs gasoline the have most of as with a trading X-X-X comes and market just we're peaked $XX let a jet built trading right very regrade to this parity now the capture. improved give the Singapore in me the on the off market telltale have seems to their jet prepared think and lockdown generally, premium cessation European my color, in continues up the in products to trading Chinese and I market in COVID a refined really to just teens economics. interesting the it's the to policy. that of say, with I low one Nicolette, diesel. of coming And do remarks, been mentioned with related of zero is What to all Shawn, high barrel first little be the in kind at just that arbitrage June And strong. of

and be the I product they exports message think to Shawn, capture? a do term, want the to continue Longer cease XXXX. supportive ahead refined longer-term deliver clean healthy on their delivery the very Chinese -- other of they factors to line you will the by policy of I will that of that market. focus think is go actions cover

Shawn Flores

Nicolette. Yes,

each had think recent forward, of ahead, benefits environment far those got we we QX some As those are as capture capture in Hawaii, should looking hike hike we that in QX price price looking of easing Obviously, as offset rates we feel benefits the like I sustainable. look back in quarters. last recent quarters. year and backwardation the to But

And closely I pretty quarters. expect in X hold so the capture with to prior

Operator

will with Blair question next from Holt. come Our Matthew Tudor, Pickering,

Matthew Blair

on But distributions now release future on the million $XX place, from coming the Par in Congrats results. refinancing. just which talk from The debt for at Laramie? better the it profitability distribution the based could is to you mentioned it prospects a like the sounds from that Laramie QX Laramie, underlying about stems the

William Pate

And that you're took in distribution. distribution essentially permitted We yes, The and in to $XXX refinancing. and $XXX Sure. million million Matthew. related is correct, completed million out funded the facility, liabilities $XX

share. our getting rata we're So pro

and the reserve minimum strong The continues coverage permit the on ratio, that of the in on expect levels, they forward, I we expect based which conditions think Coast actually, the distributions going over this distributions West the early just subject winter, asset level shares in Going base debt. well to would of current extent the the February the facility But most from levels. to investment wouldn't and will forward particular, market a an is benefited perform was the our company on annual. which part strip and distributions of receive common then NPV facilitated of I to based than be reason hedge drilling more distribution. to to

Matthew Blair

a current on Any like strip sense distribution based might Par? look to on what XXXX

William Pate

the again, commit this point. depend how on really we that, at and going on drilling Not strip. will to It's depend much to

counterintuitive lower which lead going somewhat The greater base, likely money to distribution. going the we're to to post higher be price, distributions grow to will there's a more more the fashion, a in So the likely our probably XXXX. price, work reserve to put

Matthew Blair

that on Okay. fuel Washington believe start on January And scheduled I to is standard XXXX. clean CFS then my or program. the follow-up is X,

capture side, as could a project going on? about you're you then Washington your on on would hoping And side, forward? was the you talk rate you credits this I do impact that So that refining to these refining anticipate see do coprocessing boost buying renewables working this the at

William Monteleone

Sure.

rack is way think fuels Washington it's So of kind to in is aspects the of we've the of the Matthew, operating observed kind California, the at or impacts. does similar similar I that clean it where very what to the cap

see price pricing wholesale OPIS versus that [indiscernible] so principally it's rack And impacting the sub-octane that you publishes.

impact. this is impact So versus a I a think, price again, rack wholesale largely

So first the part. that's

settlement So I will as major It capture. this. impacts impact capital wouldn't about expect to in will overall play think we likely working frames that items multiyear and out some the time other

So kind we need recoup ultimately again, I that to manage we're the but environmental well given strong balances, our credit of I feel think network. cost going where think overall to positioned the scheme logistics of another to

function. still I the going the to some coprocessing in then is the in state very way the of the And think the rolling out terms of specifics is regs and project, around coprocessing early

TBD over logic ultimately you the I But would for tell time. whether on So reducing it of intensity the carbon qualify should fuel. think coprocessing will

Operator

Our Royall next John with question come from JPMorgan. will

John Royall

the CapEx longer-term this think and Billings. I annually about including for relatedly, question major $XX So cycle update then you should how How about on stagger refinery, this Billings said CapEx. have Billings. an I to business turnaround my is expect look know system, is one after you maintenance the once complete? no But we how Billings complete? maintenance maintenance And maintenance should think year. so you and major entire them is just on the year? million should maybe we With per we in the think can fourth first have you

William Monteleone

Sure.

a a any typically our amortized year. CapEx of we've regulatory been assets. million refer then our out a maintenance of had to $XX level as turnaround for think to changes and existing I I for wouldn't maintenance cycle cycle -- year. what running overall and And turnarounds we'll about about to refresh So just Again, $XX million think you, We've I call right?

again, on is lot the you a $XX say So where see million spend. it's a given don't I spending turnarounds a XXXX overall a that's would about timing. been year us year lumpy. together,

So called turnaround again, I requirement our think specific wouldn't with amortized a existing call I of Billings, the base. million asset we year about a a maintenance out of $XX any -- changes respect on turnaround plans and regulatory and to Again, it to million about $XX then year.

again, on So in, shy million and just of all maintenance basis. of $XXX requirements normalized a turnaround

we're Billings, the In disclosing specifically of turnaround limited still timing terms schedule. for on

say would I we amortized to we to going is don't referenced see good year a be turnaround 'XX. is Cash lumpy. major second include. the we items what of think again, a as I in $XX is the think And number million half

larger period, models. this should But good over than to for your be years a others. Some you into plug a X-year number time

John Royall

shown then any the retail bit about a shape maybe up? on of XXXX throughout dynamics And spoke think And more other can nice there drivers XXXX, helpful. in side, That's on talk around improvement some the you've you opener, you the strength? that you and could little just tourism it but how a

William Monteleone

Sure.

moving to seen on store So side, think inching in retail weighted I and pre-pandemic of, particular, tourism little In towards Hawaii its the the XX% is of I towards Hawaii. full think I bit the we've -- heavily mainland Japanese Hawaii. back, Again, market, think than is ranges different and recovery XX% the not levels. again, It's our probably footprint particular, markets. way a

again, well very we've the to continue overall And grow the more I market in some received mainland Hele portfolio momentum some new-to-industry to Pacific it brand to there that business grow look that that's construction closely further. we our feel that And for brand I in And probably -- But the We've this the and in again, to shift there. I in got with we X is good ways in mix to Danielle look gotten to then that as with think location again, under about similar positive market. others. again, feedback. Hawaii. online been some be markets overall follow got should the trends on relates market. to for relatively in think then has year. store market, the and The strong Northwest, new So nomnom again, working tourism that forward respect think positive positioning there's you overall that macro with And

So a good foundation.

have continue still some to to we opportunity improve. think I

Operator

Instructions]. [Operator

will question Cowen. Gabelman from next come with Our Jason

Jason Gabelman

I allocation you're carrying wanted debt to target of well sheet in what's on ask on given Billings levels excess balance capital acquisition. and the just close needed the to cash

and be So allocation how growth. helpful. would capital of on do taking deploying think all you forward cash dividend, X moving buyback, priorities about Comments

Shawn Flores

Jason, this is Shawn.

to I policies get capital on through will we we some mentioned that capital attractive. reliability, will Will and a think growth-oriented the increase projects I near-term strategy. company, to reflect it. We integrate to referenced, table as want be which said we that we're really Billings. what our allocation we And want is think are think

Billings anything identifying we'll after if unable to turn evaluate other our to enhance projects, we're to attractive returning capital network. certainly think focus to opportunities period our add? is a after we'll capital then time, think I Bill, integrated, you'd shareholders. I of identify And

William Pate

No.

Jason Gabelman

And type? inorganic either asset the in by terms regionally are or of growth attractive, are aspect, there areas Got that more it.

William Pate

integrating recent with growth, acquisitions. But continue avenues communities we're look well adding can the do; same our Billings. look additional say quite is to renewables, X which the Bill. and beyond PADD right and now, we going said I'll continue at builds first on we closing at market, within this to same -- well. through which obviously, serve even to retail we to doing the the our and acquisition, investing which is we communities really, doing it and we're as footprint, area, continue additional we'll to then of refinery new-to-industry that, in to before, at And as PADD this all, of expect we're continue that X, that Jason, again, and focused look I've

Jason Gabelman

of there disclose that to? -- from an what Understood. on one more on And cash almost you $XX I inflow Can think, was million. related was just financing,

William Pate

it small items. Jason, Yes, number I think of was a

I premiums. think one prefunding our I'd $XX our insurance $XX roughly to finance It's call out million million. we on is

-- And so X located in that's of sort it's places.

an in outflow as financing inflow see an and in from You'll it the the section cash ops.

under item but draw Hawaii facility, just funding big. small was general in our not The capital and working other the a

Operator

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

William Pate

you, of want acquisition, integrating Pacific. This And to everybody market for with good for Anthony. Par growth morning. and the time this thank an company. and exciting to Thank we continued Have us a is outlook, favorable Billings the joining forward closing look I day. a our

Operator

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

may now You disconnect.

Par Pacific (PARR) 23 Feb 232022 Q4 Earnings call transcript