Par Pacific(PARR) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements and accompanying notes for the interim periods Condensed Consolidated Balance Sheets The balance sheets show the company's financial position at June 30, 2025, and December 31, 2024 Financial Position Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $3,895,542 | $3,829,371 | | Total liabilities | $2,747,127 | $2,638,069 | | Total stockholders' equity | $1,148,415 | $1,191,302 | Condensed Consolidated Statements of Operations The statements of operations summarize revenues, expenses, and net income for the interim periods Operations Summary | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenues | $1,893,438 | $2,017,468 | $3,638,474 | $3,998,303 | | Operating income | $96,760 | $48,641 | $80,984 | $58,156 | | Net income | $59,460 | $18,638 | $29,060 | $14,887 | | Basic income per share | $1.18 | $0.33 | $0.56 | $0.26 | | Diluted income per share | $1.17 | $0.32 | $0.55 | $0.25 | Condensed Consolidated Statements of Comprehensive Income (Loss) This statement details comprehensive income, including net income and other comprehensive income items Comprehensive Income Summary | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income | $59,460 | $18,638 | $29,060 | $14,887 | | Other comprehensive loss, net of tax | $(77) | $(55) | $(153) | $(109) | | Comprehensive income | $59,383 | $18,583 | $28,907 | $14,778 | Condensed Consolidated Statements of Cash Flows The statements of cash flows present cash generated from or used in operating, investing, and financing activities Cash Flow Summary | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $132,179 | $20,755 | | Net cash used in investing activities | $(86,788) | $(57,987) | | Net cash used in financing activities | $(68,114) | $(62,213) | | Net decrease in cash, cash equivalents, and restricted cash | $(22,723) | $(99,445) | | Cash, cash equivalents, and restricted cash at end of period | $169,544 | $180,001 | Condensed Consolidated Statements of Changes in Stockholders' Equity This statement outlines changes in each component of stockholders' equity for the reported periods Stockholders' Equity Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Common Stock (shares) | 50,759 | 55,265 | | Common Stock (amount) | $507 | $552 | | Additional Paid-In Capital | $892,152 | $884,548 | | Accumulated Earnings | $245,553 | $295,846 | | Accumulated Other Comprehensive Income | $10,203 | $10,356 | | Total Stockholders' Equity | $1,148,415 | $1,191,302 | Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations and disclosures for the condensed consolidated financial statements Note 1—Overview The company operates in Refining, Retail, and Logistics and reports a recent operational incident - Par Pacific Holdings, Inc. operates in three primary business segments: Refining, Retail, and Logistics, serving the western United States with renewable and conventional fuels[18][19][20] - The Wyoming refinery experienced an operational incident on February 12, 2025, and resumed full crude operations in late April 2025[21] Note 2—Summary of Significant Accounting Policies This note outlines the principles of consolidation, basis of presentation, and use of estimates - The company's condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information, with all intercompany balances and transactions eliminated[23][24] - ASU 2023-09, 'Improvements to Income Tax Disclosure,' effective for annual periods beginning after December 15, 2024, will require expanded tax disclosures in the full year financial statements for 2025[32] Note 3—Refining and Logistics Equity Investments The company details its equity method investments in YELP and YPLC, noting increased earnings Change in Equity Investment in YELP (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $57,167 | $5 | | Equity earnings from YELP | $11,479 | $ | | Ending balance | $67,950 | $6 | Change in Equity Investment in YPLC (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $29,144 | $2 | | Equity earnings from YPLC | $3,960 | $ | | Dividends received | $(5,840) | $( | | Ending balance | $27,340 | $2 | Note 4—Investment in Laramie Energy The company holds a 46% equity investment in Laramie Energy, accounted for under the equity method - As of June 30, 2025, the company owned a 46.0% equity investment in Laramie Energy, LLC, focused on natural gas development[38] - The equity in Laramie Energy's net assets exceeded the carrying value of the investment by approximately $61.4 million as of June 30, 2025, primarily due to prior impairments[40] Change in Equity Investment in Laramie Energy (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $12,498 | $14,279 | | Equity earnings (losses) from Laramie Energy | $(646) | $(26) | | Accretion of basis difference | $3,228 | $3,229 | | Dividends received | — | $(1,485) | | Ending balance | $15,080 | $15,997 | Note 5—Revenue Recognition This note details disaggregated revenue by major product line and segment for the interim periods Total Segment Revenues (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Refining | $1,826,509 | $1,957,273 | $3,512,638 | $3,883,889 | | Logistics | $73,005 | $72,475 | $144,420 | $144,317 | | Retail | $146,685 | $152,842 | $283,117 | $292,976 | Note 6—Inventories The company's inventories consist of crude oil, refined products, and environmental credits - Inventories include $171.2 million (June 30, 2025) and $195.0 million (December 31, 2024) of RINs and environmental credits[50] - As of June 30, 2025, there was no reserve for the lower of cost or net realizable value of inventory, compared to $2.3 million as of December 31, 2024[51] Inventories (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Crude oil and feedstocks | $286,607 | $302,980 | | Refined products and blendstock | $490,853 | $504,456 | | Warehouse stock and other | $264,019 | $281,882 | | Total | $1,041,479 | $1,089,318 | Note 7—Prepaid and Other Current Assets This note details the components of prepaid and other current assets, including derivative assets Prepaid and Other Current Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :-------------- | :---------------- | | Collateral posted with broker for derivative instruments | $9,553 | $38,618 | | Derivative assets | $42,558 | $12,855 | | Prepaid environmental credits | $45,053 | — | | Total | $122,515 | $92,527 | Note 8—Inventory Financing Agreements The company utilizes inventory financing agreements to support its Hawaii refining operations - The company entered into an Inventory Intermediation Agreement with Citi on May 31, 2024, to finance crude oil for its Hawaii refinery, with $161.0 million outstanding as of June 30, 2025[55] - A new Product Financing Agreement with Citi was established on June 27, 2025, to finance RINs, with $25.1 million in obligations as of June 30, 2025[56] Inventory Intermediation Fees and Interest Expense (in thousands) | Agreement | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Inventory Intermediation Agreement fees | $10,877 | $6,036 | $16,477 | $6,036 | | Inventory Intermediation Agreement interest | $332 | $105 | $664 | $105 | | Supply and Offtake Agreement fees | — | $11,880 | — | $30,918 | | Supply and Offtake Agreement interest | — | $1,088 | — | $2,872 | Note 9—Other Accrued Liabilities Other accrued liabilities include payroll, environmental credit obligations, and derivative liabilities Other Accrued Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Accrued payroll and other employee benefits | $29,259 | $34,130 | | Environmental credit obligations | $301,217 | $231,982 | | Derivative liabilities | $70,212 | $19,548 | | Deferred revenue | $4,109 | $16,247 | | Total | $435,194 | $344,188 | Note 10—Debt The company's outstanding debt primarily consists of an ABL Credit Facility and a Term Loan - The ABL Credit Facility was increased to $1.4 billion in March 2024, with $485 million outstanding and $477.8 million availability as of June 30, 2025[68] - The Term Loan Credit Agreement was increased to $650.0 million in November 2024 and matures on February 28, 2030[72][73] Outstanding Debt (in thousands) | Debt Instrument | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | ABL Credit Facility due 2028 | $485,000 | $483,000 | | Term Loan Credit Agreement due 2030 | $636,875 | $640,125 | | Other long-term debt | $3,778 | $4,108 | | Total debt, net of unamortized discount and deferred financing costs | $1,112,473 | $1,112,967 | | Long-term debt, net of current maturities | $1,107,743 | $1,108,082 | Note 11—Derivatives The company uses commodity and interest rate derivatives to manage market risks - The company entered into five additional interest rate collar transactions during Q2 2025, effective from May 2026 to May 2029, with a total notional amount of $250.0 million, to reduce variable interest rate risk[80] Open Commodity Derivative Contracts (in thousands of barrels) as of June 30, 2025 | Contract Type | Purchases | Sales | Net | | :------------ | :-------- | :------ | :---- | | Futures | 2,170 | (2,595) | (425) | | Swaps | 105,583 | (133,973) | (28,390) | | Total | 107,753 | (136,568) | (28,815) | Fair Value of Derivatives (in thousands) | Balance Sheet Location | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Commodity derivatives (asset) | $40,564 | $10,591 | | Commodity derivatives (liability) | $(3,361) | $(13,456) | | Citi repurchase obligation derivative | $(3,678) | $(1,588) | | Interest rate derivatives | $(758) | $(24) | Note 12—Fair Value Measurements This note describes how financial assets and liabilities are measured and categorized at fair value - Financial assets and liabilities are classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (significant unobservable inputs)[86] - The valuation of the embedded derivative related to the Citi repurchase obligation is classified as a Level 3 instrument due to unobservable contractual price differentials[86] Fair Value Amounts by Hierarchy Level (in thousands) as of June 30, 2025 | Category | Level 1 | Level 2 | Level 3 | Gross Fair Value | Net Carrying Value | | :-------------------------- | :------ | :------ | :------ | :--------------- | :----------------- | | Commodity derivatives (assets) | $10,746 | $391,564 | — | $402,310 | $38,950 | | Commodity derivatives (liabilities) | $(12,563) | $(354,158) | — | $(366,721) | $(3,361) | | Citi repurchase obligation derivative | — | — | $(3,678) | $(3,678) | $(3,678) | | Interest rate derivatives | — | $(758) | — | $(758) | $(758) | | Gross environmental credit obligations | — | $(85,381) | — | $(85,381) | $(85,381) | Note 13—Leases The company has finance and operating lease liabilities for various assets, including land and facilities Lease Information (in thousands) as of June 30, 2025 | Metric | Finance Leases | Operating Leases | | :------------------------------------ | :------------- | :--------------- | | ROU assets, net | $15,273 | $435,227 | | Total lease liabilities | $13,225 | $453,235 | | Weighted-average remaining lease term (years) | 10.17 | 6.74 | | Weighted-average discount rate | 7.03% | 7.72% | Net Lease Cost (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | $37,622 | $30,864 | | Six Months Ended June 30, | $75,411 | $61,489 | Estimated Future Undiscounted Cash Flows for Leases (in thousands) as of June 30, 2025 | Year | Finance Leases | Operating Leases | Total | | :----------------------- | :------------- | :--------------- | :---- | | 2025 (July 1 - Dec 31) | $1,499 | $60,698 | $62,197 | | 2026 | $2,772 | $126,030 | $128,802 | | Thereafter | $7,872 | $112,633 | $120,505 | | Total lease payments | $18,532 | $556,953 | $575,485 | Note 14—Commitments and Contingencies The company is involved in various legal, tax, and environmental matters that could result in material costs - The company is appealing a $1.4 million tax assessment from the Washington Department of Revenue and is being audited for prior state tax exemptions in Hawaii's foreign trade zone[107] - The Hawaii refinery is subject to a Consent Decree with the EPA, with alleged air emission violations that could lead to material financial penalties or capital expenditures[112] - The Wyoming refinery has accrued $12.7 million for environmental remediation efforts and faces potential penalties exceeding $300,000 for wastewater discharge exceedances[113][114][115] - The company incurs costs for emission allowances and compliance credits to meet obligations under Washington state and federal regulations[116][118][119][120] Note 15—Stockholders' Equity The Board authorized a new $250 million share repurchase program in February 2025 - A new share repurchase program for up to $250 million of common stock was authorized on February 21, 2025, replacing the prior program[122] - As of June 30, 2025, $181.3 million of authorization remained under the current share repurchase program[122] Share Repurchases (in millions) | Period | Shares Repurchased | Value | | :-------------------------- | :----------------- | :------ | | Three Months Ended June 30, 2025 | 1.6 | $28.2 | | Six Months Ended June 30, 2025 | 5.2 | $79.4 | | Three Months Ended June 30, 2024 | 2.2 | $67.1 | | Six Months Ended June 30, 2024 | 3.1 | $99.5 | Compensation Costs (in thousands) | Award Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Restricted Stock Awards | $3,170 | $2,105 | $5,668 | $6,301 | | Restricted Stock Units | $721 | $497 | $1,399 | $3,218 | | Stock Option Awards | $358 | $279 | $728 | $9,772 | Note 16—Income (Loss) per Share This note provides the computation of basic and diluted income per share for the interim periods Income Per Share (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net income | $59,460 | $18,638 | $29,060 | $14,887 | | Basic income per common share | $1.18 | $0.33 | $0.56 | $0.26 | | Diluted income per common share | $1.17 | $0.32 | $0.55 | $0.25 | | Basic weighted-average common stock shares outstanding | 50,373 | 57,239 | 52,052 | 57,936 | | Diluted weighted-average common stock shares outstanding | 50,836 | 58,045 | 52,390 | 58,402 | Note 17—Income Taxes The income tax provision is determined using an estimated annual effective tax rate, adjusted for discrete items - The effective tax rate for the interim periods differed from statutory rates due to state income tax apportionment, equity compensation, and equity method investments[129][130] - The company expects to incur state tax liabilities as NOL carryforwards may not offset taxable income apportioned to all states[131] - The company is evaluating the impact of the newly enacted One Big Beautiful Bill Act (OBBBA) but does not expect it to materially impact the effective tax rate or cash flows in the current fiscal year[132] Note 18—Segment Information The company reports financial results for four segments: Refining, Retail, Logistics, and Corporate Operating Income (Loss) by Segment (in thousands) for Three Months Ended June 30 | Segment | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Refining | $81,320 | $41,206 | | Logistics | $23,741 | $18,041 | | Retail | $20,793 | $16,053 | | Corporate, Eliminations and Other | $(29,094) | $(26,659) | | Total Operating Income | $96,760 | $48,641 | Operating Income (Loss) by Segment (in thousands) for Six Months Ended June 30 | Segment | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Refining | $56,599 | $63,806 | | Logistics | $45,630 | $38,415 | | Retail | $36,754 | $27,049 | | Corporate, Eliminations and Other | $(57,999) | $(71,114) | | Total Operating Income | $80,984 | $58,156 | Note 19—Subsequent Events The company entered into a joint venture agreement for a renewable fuels manufacturing facility - On July 21, 2025, the company entered into an Equity Contribution Agreement to form a joint venture with Alohi Renewable Energy, LLC for a renewable fuels manufacturing facility in Hawaii[146] - Alohi will own a 36.5% equity interest in the joint venture, with the company owning the remainder[146] - The company will contribute certain assets and up to $21 million in cash, while Alohi will contribute $100 million in cash, with the facility expected to be operational by the end of 2025[146] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management provides its perspective on financial results, segment performance, liquidity, and capital resources Overview Par Pacific Holdings, Inc. is a growing energy company providing fuels to the western United States - Par Pacific Holdings, Inc. is an energy company supplying renewable and conventional fuels to the western U.S[148] Recent Events Affecting Comparability of Periods Recent events impacting financial comparability include a refinery incident and a new joint venture Operational Update The Wyoming refinery experienced an operational incident leading to a 66-day idle period for repairs - The Wyoming refinery was idled for 66 days from February 12, 2025, to late April 2025, due to an operational incident, affecting comparability of financial results[149] Renewable Fuels Facility Joint Venture A joint venture was formed to develop a renewable fuels manufacturing facility in Hawaii - A joint venture with Alohi Renewable Energy, LLC was established on July 21, 2025, for a renewable fuels manufacturing facility at the Hawaii refinery, expected to be operational by year-end 2025[150] - Alohi will hold a 36.5% equity interest, and Par Pacific Holdings, Inc. will operate and manage the facility[150] Economic Update Crude oil and gasoline prices decreased in the first half of 2025 compared to 2024 - OPEC agreed to gradually increase oil production starting April 2025, reversing 2.2 million barrels per day cuts over 18 months[151] - Geopolitical tensions in the Middle East and Red Sea continue to exert upward pressure on prices and increase freight and operating costs[152] Average Crude Oil and Gasoline Prices | Metric | First Half 2025 | First Half 2024 | | :-------------------------- | :-------------- | :-------------- | | Brent crude oil (per barrel) | $70.82 | $83.39 | | U.S. retail gasoline (per gallon) | $3.25 | $3.52 | Results of Operations The company's financial results showed significant improvement in net income for the interim periods Three months ended June 30, 2025 compared to the three months ended June 30, 2024 (Consolidated) Net income for Q2 2025 increased significantly to $59.5 million, up from $18.6 million in the prior year - Adjusted EBITDA increased by $56.2 million to $137.8 million, driven by a $55.2 million increase in refining segment Adjusted Gross Margin[155] - Adjusted Net Income improved by $49.8 million to $78.3 million, reflecting higher Adjusted EBITDA and the absence of cash distributions from Laramie Energy in 2025[156] Consolidated Financial Results (in thousands) | Metric | Q2 2025 | Q2 2024 | $ Change | % Change | | :--------------------------------------- | :------ | :------ | :------- | :------- | | Revenues | $1,893,438 | $2,017,468 | $(124,030) | (6)% | | Operating income | $96,760 | $48,641 | $48,119 | 99% | | Net income | $59,460 | $18,638 | $40,822 | 219% | | Income tax expense | $(16,887) | $(6,667) | $(10,220) | 153% | Six months ended June 30, 2025 compared to the six months ended June 30, 2024 (Consolidated) Net income for H1 2025 increased to $29.1 million from $14.9 million in the prior year - Adjusted EBITDA decreased by $28.3 million to $148.0 million, mainly due to a $47.6 million decrease in refining segment Adjusted Gross Margin[158] - Adjusted Net Income declined by $42.2 million to $28.0 million, reflecting the decrease in Adjusted EBITDA and higher D&A[159] Consolidated Financial Results (in thousands) | Metric | H1 2025 | H1 2024 | $ Change | % Change | | :--------------------------------------- | :------ | :------ | :------- | :------- | | Revenues | $3,638,474 | $3,998,303 | $(359,829) | (9)% | | Operating income | $80,984 | $58,156 | $22,828 | 39% | | Net income | $29,060 | $14,887 | $14,173 | 95% | | General and administrative expense (excluding depreciation) | $47,891 | $64,923 | $(17,032) | (26)% | | Income tax expense | $(9,993) | $(4,036) | $(5,957) | 148% | Operating Income by Segment (Three Months) For Q2 2025, all operating segments showed increased operating income compared to the prior year Operating Income (Loss) by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | | :-------------------------- | :------ | :------ | | Refining | $81,320 | $41,206 | | Logistics | $23,741 | $18,041 | | Retail | $20,793 | $16,053 | | Corporate, Eliminations and Other | $(29,094) | $(26,659) | | Total Operating Income | $96,760 | $48,641 | Operating Income by Segment (Six Months) For H1 2025, Logistics and Retail segments reported increased operating income, while Refining decreased Operating Income (Loss) by Segment (in thousands) | Segment | H1 2025 | H1 2024 | | :-------------------------- | :------ | :------ | | Refining | $56,599 | $63,806 | | Logistics | $45,630 | $38,415 | | Retail | $36,754 | $27,049 | | Corporate, Eliminations and Other | $(57,999) | $(71,114) | | Total Operating Income | $80,984 | $58,156 | Non-GAAP Performance Measures Management uses non-GAAP measures like Adjusted EBITDA to evaluate operating performance - Adjusted Gross Margin is used to evaluate operating performance and compare profitability, eliminating the gross impact of volatile commodity prices[176][177] - Adjusted Net Income (Loss) and Adjusted EBITDA are supplemental measures to assess financial performance without regard to financing methods or capital structure[177] - Effective Q4 2024, the definition of non-GAAP measures was modified to align accounting treatment for deferred turnaround costs from refining and logistics investments[180] Adjusted Gross Margin Adjusted Gross Margin excludes certain operating expenses and non-cash items from operating income Adjusted Gross Margin by Segment (in thousands) for Three Months Ended June 30 | Segment | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Refining | $231,780 | $176,603 | | Logistics | $34,402 | $30,759 | | Retail | $43,589 | $41,598 | Adjusted Gross Margin by Segment (in thousands) for Six Months Ended June 30 | Segment | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Refining | $336,108 | $383,713 | | Logistics | $68,441 | $62,709 | | Retail | $83,382 | $78,680 | Adjusted Net Income (Loss) and Adjusted EBITDA These non-GAAP measures exclude non-operating and non-cash items to show core operational performance - Adjusted Net Income (loss) excludes non-operating income and expenses to improve comparability[178] - Adjusted EBITDA further excludes D&A, interest expense, Laramie Energy cash distributions, and income tax expense[188] Adjusted Net Income and Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net Income | $59,460 | $18,638 | $29,060 | $14,887 | | Adjusted Net Income | $78,291 | $28,544 | $27,970 | $70,212 | | Adjusted EBITDA | $137,829 | $81,601 | $147,975 | $176,299 | Adjusted EBITDA by Segment Adjusted EBITDA by segment provides a detailed view of the operational performance of each business unit Adjusted EBITDA by Segment (in thousands) for Three Months Ended June 30 | Segment | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Refining | $108,384 | $60,094 | | Logistics | $29,798 | $26,058 | | Retail | $23,347 | $18,728 | | Corporate and Other | $(23,700) | $(23,279) | | Total Adjusted EBITDA | $137,829 | $81,601 | Adjusted EBITDA by Segment (in thousands) for Six Months Ended June 30 | Segment | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Refining | $94,092 | $141,378 | | Logistics | $59,472 | $54,196 | | Retail | $41,971 | $32,830 | | Corporate and Other | $(47,560) | $(52,105) | | Total Adjusted EBITDA | $147,975 | $176,299 | Factors Impacting Segment Results This section analyzes the key drivers behind changes in operating income and Adjusted Gross Margin Operating Income (Three Months) Refining operating income increased by $40.1 million due to higher crack spreads and favorable derivatives - Refining operating income increased by $40.1 million, driven by a $58.4 million increase in crack spreads and $51.7 million from favorable derivative impacts[195] - Logistics operating income increased by $5.7 million due to lower repair and maintenance costs, lower variable costs, and a $1.2 million gain on sale of assets[195] - Retail operating income increased by $4.7 million, primarily from a $2.6 million decrease in operating expenses and higher fuel and merchandise margins[196] Operating Income (Six Months) Refining operating income decreased by $7.2 million due to unfavorable feedstock and environmental costs - Refining operating income decreased by $7.2 million, primarily due to a $128.8 million decrease related to unfavorable feedstock costs and a $55.0 million increase in environmental costs[197][198] - Logistics operating income increased by $7.2 million, driven by a $5.3 million decrease in cost of revenues and a $1.2 million gain on sale of assets[197] - Retail operating income increased by $9.8 million, mainly due to a $4.4 million decrease in operating expenses and a $4.2 million increase in fuel margins[198][200] Adjusted Gross Margin (Three Months) Refining Adjusted Gross Margin increased by $55.2 million, driven by higher crack spreads - Refining Adjusted Gross Margin increased by $55.2 million, primarily due to a $58.4 million increase in crack spreads[201] - Hawaii refinery's Adjusted Gross Margin per barrel increased by $0.11 to $10.18[205] - Montana refinery's Adjusted Gross Margin per barrel increased by $5.41 to $22.30[205] - Washington refinery's Adjusted Gross Margin per barrel increased by $6.80 to $11.47[205] - Wyoming refinery's Adjusted Gross Margin per barrel increased by $3.83 to $18.57[205] - Logistics Adjusted Gross Margin increased by $3.6 million, mainly due to decreased repair and maintenance expenses and higher third-party revenues[202] - Retail Adjusted Gross Margin increased by $2.0 million, attributed to a $1.2 million increase in fuel margins and a $0.7 million increase in merchandise margins[203] Adjusted Gross Margin (Six Months) Refining Adjusted Gross Margin decreased by $47.6 million due to unfavorable feedstock costs - Refining Adjusted Gross Margin decreased by $47.6 million, mainly due to a $108.2 million decrease related to unfavorable feedstock costs and a $34.8 million increase in environmental costs[204] - Hawaii refinery's Adjusted Gross Margin per barrel decreased by $2.45 to $9.57[204] - Montana refinery's Adjusted Gross Margin per barrel decreased by $2.18 to $13.02[213] - Washington refinery's Adjusted Gross Margin per barrel increased by $1.64 to $6.94[213] - Wyoming refinery's Adjusted Gross Margin per barrel increased by $4.18 to $19.01[213] - Logistics Adjusted Gross Margin increased by $5.7 million, driven by higher marine revenues and lower variable expenses[206] - Retail Adjusted Gross Margin increased by $4.7 million, primarily due to a $4.2 million increase in fuel margins and an 8% increase in merchandise margins[207] Discussion of Consolidated Results This section analyzes consolidated revenues, operating expenses, and other income/expense items Three months ended June 30, 2025 compared to the three months ended June 30, 2024 (Detailed) Revenues decreased by $0.1 billion due to lower crude oil prices, despite increased sales volumes - Revenues decreased by $0.1 billion (6%) to $1.9 billion, primarily due to a 22% decrease in Brent crude oil prices[208] - Cost of revenues decreased by $0.2 billion (10%) to $1.6 billion, driven by lower crude oil prices and favorable derivative activity[209] - Operating expense increased by $4.6 million (3%) to $148.7 million, mainly due to higher repair and maintenance costs from the Wyoming operational incident[210] - Depreciation and amortization increased by $2.6 million (8%) to $34.7 million, primarily due to Montana deferred turnaround asset amortization[211] - Equity earnings from refining and logistics investments increased by $3.6 million to $7.3 million[213][214] - Interest expense and financing costs, net, increased by $1.7 million (8%) to $22.1 million[217] - Income tax expense increased by $10.2 million (153%) to $16.9 million, related to higher pre-tax net income[220] Six months ended June 30, 2025 compared to the six months ended June 30, 2024 (Detailed) Revenues decreased by $0.4 billion due to lower crude prices and the Wyoming operational incident - Revenues decreased by $0.4 billion (9%) to $3.6 billion, primarily due to lower crude prices and the Wyoming operational incident[221] - Cost of revenues decreased by $0.3 billion (10%) to $3.2 billion, mainly due to lower crude oil prices[222] - Operating expense decreased by $4.5 million (2%) to $292.8 million, driven by lower costs at the Montana refinery and Retail segment[223] - Depreciation and amortization increased by $6.5 million (10%) to $71.3 million, primarily due to increases at Montana and Wyoming[224] - General and administrative expense decreased by $17.0 million (26%) to $47.9 million, mainly due to lower stock-based compensation[226] - Equity earnings from refining and logistics investments increased by $5.0 million to $14.8 million[227] - Interest expense and financing costs, net, increased by $5.7 million (15%) to $44.0 million[230] - Income tax expense increased by $6.0 million (148%) to $10.0 million, related to higher pre-tax net income[234] Consolidating Condensed Financial Information This section provides supplemental condensed consolidating financial information for guarantors - The Term Loan Credit Agreement is guaranteed on a senior unsecured basis by Par Pacific Holdings, Inc. (Parent) and on a senior secured basis by all subsidiaries of Par Borrower[235] Consolidating Balance Sheet (in thousands) as of June 30, 2025 | Category | Parent Guarantor | Par Borrower and Subsidiaries | Non-Guarantor Subsidiaries and Eliminations | Par Pacific Holdings, Inc. and Subsidiaries | | :-------------------------------- | :--------------- | :---------------------------- | :------------------------------------------ | :------------------------------------------ | | Total assets | $1,382,151 | $3,630,885 | $(1,117,494) | $3,895,542 | | Total liabilities | $233,736 | $3,113,135 | $(599,744) | $2,747,127 | | Total stockholders' equity | $1,148,415 | $517,750 | $(517,750) | $1,148,415 | Consolidating Statement of Operations (in thousands) for Three Months Ended June 30, 2025 | Category | Parent Guarantor | Par Borrower and Subsidiaries | Non-Guarantor Subsidiaries and Eliminations | Par Pacific Holdings, Inc. and Subsidiaries | | :-------------------------------- | :--------------- | :---------------------------- | :------------------------------------------ | :------------------------------------------ | | Revenues | — | $1,893,435 | $3 | $1,893,438 | | Operating income (loss) | $(7,750) | $97,248 | $7,262 | $96,760 | | Net income (loss) | $59,460 | $58,443 | $(58,443) | $59,460 | | Adjusted EBITDA | $(7,212) | $136,304 | $8,737 | $137,829 | Liquidity and Capital Resources The company's liquidity is derived from cash flows, cash on hand, and available credit facilities - As of June 30, 2025, total liquidity was $647.0 million, consisting of $169.2 million in cash and $477.8 million available under the ABL Credit Facility[252] - The company believes current cash flows and capital resources are sufficient to meet requirements for the next 12 months[253] - The Board authorized a $250 million share repurchase program on February 21, 2025, with $181.3 million remaining as of June 30, 2025[254] Cash Flows This section summarizes cash flow activities for the six months ended June 30, 2025, and 2024 Summary of Cash Activities (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $132,179 | $20,755 | | Net cash used in investing activities | $(86,788) | $(57,987) | | Net cash used in financing activities | $(68,114) | $(62,213) | Cash flows for the six months ended June 30, 2025 Net cash provided by operating activities was $132.2 million, driven by changes in working capital - Net cash provided by operating activities was $132.2 million, primarily from changes in operating assets and liabilities, non-cash charges, and net income[258] - Key operating cash inflows included a $144.6 million increase in Accounts payable and Other accrued liabilities and a $46.6 million decrease in Inventories[258] - Net cash used in investing activities was $86.8 million, mainly for $89.1 million in capital expenditures for refinery projects and repairs[258] - Net cash used in financing activities was $68.1 million, primarily due to $80.8 million in common stock repurchases and $13.6 million in net debt repayments[259] Cash flows for the six months ended June 30, 2024 Net cash provided by operating activities was $20.8 million, driven by net income and non-cash charges - Net cash provided by operating activities was $20.8 million, driven by $14.9 million net income and $153.2 million non-cash charges, offset by working capital changes[261] - Key operating cash outflows included a $114.0 million increase in accounts receivable and a $101.3 million increase in inventories[261] - Net cash used in investing activities was $58.0 million, primarily for $59.5 million in capital expenditures[261] - Net cash used in financing activities was $62.2 million, including $547.6 million for inventory financing agreement terminations and $103.5 million for common stock repurchases[262] Critical Accounting Estimates There have been no material changes to critical accounting estimates for the interim period - No material changes to critical accounting estimates were reported for the six months ended June 30, 2025[263] Forward-Looking Statements This section contains cautionary statements regarding forward-looking information - Forward-looking statements involve known and unknown risks, including geopolitical events, tariffs, and global crude oil market developments[265] - Actual results may differ materially from forward-looking statements due to factors described in the Annual Report on Form 10-K and this Quarterly Report[266] - The company does not intend to update or revise any forward-looking statements based on new information or future events[266] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to commodity price, compliance, interest rate, and credit risks Commodity Price Risk The company's earnings are significantly affected by commodity price volatility - A $1 per barrel change in average gross refining margins would change annualized operating income by approximately $67.2 million[267] - A $1 change in crude oil price would result in an approximate $28.7 million change to the fair value of derivative instruments and Cost of revenues[268] - The company uses option collars to economically hedge internally consumed fuel costs at its refineries[269] Compliance Program Price Risk The company is exposed to price volatility of RINs and other environmental compliance credits - The company is exposed to market risks from the volatility in RINs prices for Renewable Fuel Standard compliance and credits for Washington's climate programs[270][271] - To mitigate risk, the company purchases RINs and compliance credits when prices are deemed favorable[270][271] Interest Rate Risk The company is exposed to interest rate volatility on its $1.1 billion of floating-rate debt - As of June 30, 2025, $1.1 billion in debt principal was subject to floating interest rates[272] - A 1% increase in the variable rate would increase annual interest expense by approximately $11.2 million[272] - The company uses interest rate collars with a maximum cap of 5.50% to manage interest rate risk[272] Credit Risk The company is exposed to credit risk from nonperformance by its counterparties - The company is exposed to credit risk from nonpayment or nonperformance by counterparties[273] - Creditworthiness of customers is closely monitored, and credit limits are established in accordance with the company's credit policy[273] Item 4. Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025 Evaluation of Disclosure Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[275] Changes in Internal Control over Financial Reporting There were no material changes in internal control over financial reporting during the quarter - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[276] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings arising from ordinary business operations - The company is involved in various legal proceedings in the ordinary course of business, with details provided in Note 14[278] Item 1A. Risk Factors This section updates risk factors, highlighting new risks from U.S. trade policy and a joint venture - Changes in U.S. trade policy and tariffs, such as a 10% tariff on product imports, could adversely affect the business by increasing production costs[280] - The pending Renewable Fuels Facility joint venture faces risks including delays in commencement, integration challenges, and obligations to fund capital expenditures[281][282][284] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company details common stock repurchases and its dividend policy Dividends The company has not paid dividends and does not anticipate doing so in the near future - The company has not paid, and does not expect to pay, dividends on its common stock in the foreseeable future[285] - Subsidiaries are restricted from paying dividends or making other equity distributions under the ABL Credit Facility and Term Loan Credit Agreement[285] Repurchases The company repurchased 1.62 million shares during the quarter under its repurchase program - The repurchases were made under a $250 million share repurchase program authorized on February 21, 2025[286] Common Stock Repurchases (Quarter Ended June 30, 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Maximum Remaining Authorization | | :----------------------- | :--------------------- | :--------------------------- | :------------------------------ | | April 1 - April 30, 2025 | 770,654 | $13.63 | $198,690,419 | | May 1 - May 31, 2025 | 445,758 | $19.45 | $190,058,671 | | June 1 - June 30, 2025 | 406,829 | $22.29 | $181,262,216 | | Total | 1,623,241 | $17.40 | | Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period Item 4. Mine Safety Disclosures This item is not applicable to the company for the reporting period Item 5. Other Information No director or officer adopted or terminated any Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[289] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements and certifications - Exhibit 2.13 is the Equity Contribution Agreement dated July 21, 2025, for the Hawaii Renewables, LLC joint venture[292] - Exhibit 10.1 is a Letter Agreement dated June 27, 2025, amending the Inventory Intermediation Agreement[294] - Includes certifications from the CEO and CFO pursuant to Sections 302 and 1350 of the Sarbanes-Oxley Act of 2002[294]