APA (APA) Q1 2025 Earnings Call May 08, 2025 11:00 AM ET Speaker0 thank you for standing by. Welcome to the APA Corporation's First Quarter twenty twenty five Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ben Rogers, Senior Vice President of Finance and Treasur ...

Financial Data and Key Metrics Changes - For Q1 2025, the company reported revenue of $210.5 million, a decrease of 17.3% compared to Q1 2024 [8][12] - Adjusted EBITDA for the quarter was $38.4 million, down 42.1% year-over-year, resulting in an adjusted EBITDA margin of 18.2%, a decrease of approximately 790 basis points from the prior year [15] - Adjusted net income was $17.7 million, a decrease of 51.6% from the previous year, with adjusted EPS at $0.13 [16] Business Line Data and Key Metrics Changes - The self-storage segment saw a revenue decline of 23.1%, attributed to decreased volume due to economic uncertainty [8][12] - New construction revenues decreased by 25.5%, primarily due to project delays linked to high interest rates [12] - The R3 segment experienced a revenue increase of 19.3%, driven by door replacement and renovation activities, despite a nearly 50% decrease in retail big box conversions [12][13] Market Data and Key Metrics Changes - The international segment's revenues increased by $6.5 million, or 44.2%, compared to the prior year, due to normalizing market conditions following a recession in the UK [13] - The commercial and other sales channel experienced a 1% decline, primarily due to softness in the rolling sheet door market, partially offset by contributions from the TMC acquisition [8][12] Company Strategy and Development Direction - The company is focused on operational excellence and disciplined capital allocation while investing for long-term success [6][7] - A cost reduction plan is in place, expected to yield annual pre-tax savings of $10 million to $12 million by the end of 2025 [9][15] - The company anticipates a shift in customer focus towards optimizing and upgrading existing properties rather than new construction [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying demand for self-storage solutions despite current market volatility [9][11] - The company expects to see strengthening results in the latter half of 2025, with a reaffirmation of full-year revenue guidance between $860 million and $890 million [17][18] - Management noted that the current tariff environment is manageable, with estimated impacts in the low single-digit millions for 2025 [10][11] Other Important Information - The company generated cash from operating activities of $48.3 million and free cash flow of $41.9 million in the quarter, representing a free cash flow conversion of 170% of adjusted net income [16] - The company repurchased 600,000 shares for $5.1 million during the quarter, with $16.3 million remaining on its share repurchase authorization [10][17] Q&A Session Summary Question: What is the latest on project delays and order activity in the pipeline? - Management noted that projects are moving through the pipeline, with steady small growth in both backlog and pipeline [25][27] Question: How is pricing expected to change given steel inflation and tariffs? - Management indicated that pricing would blend into the year, with Q1 not as impacted due to existing inventory [28][29] Question: What is the expected cadence of cost savings from structural reductions? - The company expects to reach a full run rate for cost savings by the end of Q2, with various initiatives in place to drive these savings [52] Question: How is the R3 segment performing and what are the expectations for retail conversions? - Management observed incremental increases in R3 projects and expects retail conversions to stabilize [39][40] Question: Are there signs of stabilization in the commercial segment? - Management confirmed stabilization in the commercial segment, with growth in certain product lines [46] Question: Are there more project starts moving forward or cancellations? - Management reported an increase in project starts, with no unusual cancellations noted [48]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported revenue of $210.5 million, a decrease of 17.3% compared to Q1 2024 [8][13] - Adjusted EBITDA for the quarter was $38.4 million, down 42.1% year-over-year, resulting in an adjusted EBITDA margin of 18.2%, a decrease of approximately 790 basis points from the prior year [15] - Adjusted net income was $17.7 million, a decrease of 51.6% from the previous year, with adjusted EPS at $0.13 [16] Business Line Data and Key Metrics Changes - The self-storage segment saw a revenue decline of 23.1%, attributed to reduced volume due to economic uncertainty [8][13] - New construction revenues decreased by 25.5%, primarily due to project delays linked to high interest rates [13] - The R3 segment experienced a revenue increase of 19.3%, although retail big box conversions and facility expansions were down nearly 50% [13][15] - The international segment's revenues increased by $6.5 million or 44.2% compared to the prior year, benefiting from normalizing market conditions [14] Market Data and Key Metrics Changes - The company noted ongoing macroeconomic volatility impacting customer liquidity and capital deployment [6][9] - The backlog and pipeline showed growth despite market uncertainty, indicating stability in demand for self-storage solutions [7][20] - Tariff impacts are expected to be low single-digit millions for 2025, with potential ongoing annual impacts estimated at $10 million to $12 million beyond 2025 [11][12] Company Strategy and Development Direction - The company is focused on operational excellence and disciplined capital allocation while investing for long-term success [6][7] - A cost reduction plan is in place, expected to yield annual pre-tax savings of approximately $10 million to $12 million by the end of 2025 [10][15] - The company anticipates a shift in customer focus towards optimizing and upgrading existing properties rather than new construction [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals of the self-storage industry, citing strong underlying demand drivers [12][20] - The company expects results to strengthen in the latter half of 2025, with an increase in R3 project activity [18][19] - Management acknowledged the challenges posed by high interest rates but noted that project timelines are beginning to normalize [26][49] Other Important Information - The company generated cash from operating activities of $48.3 million and free cash flow of $41.9 million in the quarter, representing a free cash flow conversion of 170% of adjusted net income [16][17] - The company repurchased 600,000 shares for $5.1 million during the quarter, with $16.3 million remaining on its share repurchase authorization [17][18] Q&A Session Summary Question: What is the latest on project delays and order activity in the pipeline? - Management noted that projects are moving through the pipeline, with steady growth in both orders and backlog since the beginning of the year [26][28] Question: How is pricing being affected by tariffs and steel inflation? - Management indicated that pricing impacts are expected to blend into the year, with Q1 not as affected due to existing inventory [29][30] Question: What is the expected cadence of cost savings from structural reductions? - Management expects to reach a full run rate for cost savings by the end of Q2, with various initiatives in place to drive these savings [53][54] Question: How is the R3 segment performing and what are the expectations for retail conversions? - Management observed an increase in R3 project activity and expects steady state performance in retail conversions moving forward [40][41] Question: Are there signs of stabilization in the commercial segment? - Management confirmed stabilization in the commercial segment, with growth in certain product lines, although the commercial sheet door sector remains depressed [47]

Financial Data and Key Metrics Changes - The company reported flat sequential sales and flat year-over-year sales on a pro forma basis, attributed to a successful new business program despite a softening base business [6][7] - Adjusted gross margins were 16.9%, with a target to reach 19% to 20% over five years [14] - Adjusted EBITDA for the quarter was $10,600,000, with a full-year guidance range of $53,000,000 to $63,000,000 [15][48] - Working capital was $84,800,000, down $4,600,000 year-over-year, representing 19.1% of trailing twelve-month sales [16][36] Business Line Data and Key Metrics Changes - In the Power Solutions segment, net sales were $43,500,000, down from $48,200,000, primarily due to the impact of the Lubbock facility and unfavorable foreign exchange [42] - The Mobile Solutions segment reported net sales of $62,200,000, down from $73,100,000, impacted by rationalized business and lower automotive volumes [45] Market Data and Key Metrics Changes - The automotive market is experiencing a shift towards hybrid vehicles, which is beneficial for the company as it allows for the use of existing assets [57][58] - The company is seeing increased activity in tariff-related RFQs, particularly in reshoring opportunities from Canada and China [53][56] Company Strategy and Development Direction - The company is focusing on a profitable immediate growth strategy (PIGS) to ramp up new business, with 120 programs worth $55,000,000 in annualized sales expected to ramp up this year [8][10] - A significant transformation plan is underway, with 70% completion, focusing on enhancing leadership and addressing underperforming areas [17][18] Management's Comments on Operating Environment and Future Outlook - Management noted that business uncertainty has increased, leading to lighter sales than planned, particularly in global automotive [6][9] - The company is optimistic about both 2025 and long-term goals, with a focus on cost reduction and operational efficiency [12][49] Other Important Information - The company is initiating free cash flow guidance in the range of $14,000,000 to $16,000,000 for the year, reflecting improved margin capture and anticipated proceeds from the CARES Act [48] Q&A Session Summary Question: Can you provide more detail on tariff-related RFQs? - Management indicated that there is significant activity in reshoring opportunities from Canada and China, with a mix of new capital and reuse of existing capital [53][56] Question: How is the automotive market affecting new business opportunities? - The shift towards hybrid vehicles is seen as beneficial, allowing the company to utilize existing assets while also entering new markets for EV components [57][58] Question: Can you elaborate on the $55,000,000 in new business wins? - The timing for these wins is expected to be weighted towards the second half of the year, with a ramp-up period of three to six months for immediate programs [65][66] Question: What about the $15,000,000 cost savings target? - The cost savings are expected to be evenly distributed throughout the year, with some back-end loading [70] Question: Are there any more plant closures expected? - There are two additional plants under evaluation for potential closure, but no firm plans have been established yet [72]

Financial Data and Key Metrics Changes - The company reported a net loss of $72.9 million or a loss of $1.14 per share for Q1 2025, compared to a net loss of $51.4 million or $0.81 per share in Q1 2024 [23] - Revenue for the quarter was $601.5 million, up 0.7% year over year [24] - Adjusted EBITDA excluding restructuring charges was a loss of $24.2 million, compared to a negative $21.5 million in Q1 last year [26] - SG&A totaled $42.9 million, an increase of $11.1 million from the prior year due to restructuring and severance charges [27] Business Line Data and Key Metrics Changes - The company achieved a record 100% utilization rate across its nine operating plants, demonstrating strong asset performance [25] - The anticipated consolidated SG&A run rate is expected to decline from $118 million in 2024 to approximately $93 million by year-end 2025 [8][27] - The company has achieved $30 million in annualized cost savings and expects to reach a total of $50 million in cost reductions [6][7] Market Data and Key Metrics Changes - U.S. ethanol exports are expected to surpass last year's record of nearly 2 billion gallons in 2025 [18] - Ethanol market fundamentals showed typical seasonal weakness in Q1, but margins have strengthened heading into Q2 and Q3 [17] - Current ethanol inventory levels are at 25 million barrels, with expectations to drop towards 23 million as the driving season begins [81] Company Strategy and Development Direction - The company is focused on returning to sustained profitability and has executed a zero-based approach to its cost structure [5][6] - A strategic marketing partnership with EcoEnergy has been established to enhance scale and optimize transportation and marketing economics [19] - The company is pausing its clean sugar technology initiative to maximize ethanol production and improve operational efficiency [15][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive EBITDA for the remainder of the year based on current market conditions and actions taken [34] - The carbon strategy remains on track, with construction of carbon compression infrastructure advancing as planned [30] - Management acknowledged the challenges faced in the protein business but remains committed to executing the strategy [91] Other Important Information - The company has strengthened its liquidity position, with $126.6 million in cash equivalents and restricted cash at quarter-end [28] - Capital expenditures in Q1 were $16.7 million, with expectations for the remainder of 2025 to be around $20 million [29] - The company is actively engaged in a strategic review, considering various paths including a company sale or asset divestitures [32] Q&A Session Summary Question: Can you provide insight into the hedging framework and its reestablishment? - Management emphasized that hedging is a good practice for managing risk and that they are locking in margins when market opportunities arise [39][41] Question: What is the status of the CEO search? - The process is ongoing, nearing final stages, with a focus on candidates who can bring relevant industry experience [44] Question: Can you provide updates on carbon capture construction timelines? - Construction is on track for early Q4 startup, with no major delays anticipated [48] Question: What are the potential impacts of tariffs on product exports? - Currently, there has been no adverse impact from tariffs, but the situation remains unpredictable [49][52] Question: How is the company addressing the protein market dynamics? - The domestic protein market is expected to be flat, but the company is focusing on higher-margin segments like pet food and aquaculture [62]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $63.2 million, down 8% from the prior year, with professional services down 4.2% and property management down 14.9% [6][13] - Adjusted EBITDA was $2.4 million with an EBITDA margin of 3.8%, showing improvement from $1.4 million or 2.2% in the previous quarter [15] - Adjusted EPS was $0.05 per share, while the GAAP loss was $0.07 per diluted share [15] Business Line Data and Key Metrics Changes - Professional segment revenues increased sequentially by 5.6% compared to the previous quarter, despite a year-over-year decline of 4.2% [6][13] - Property management revenues declined over 14% on both a sequential and year-over-year basis, but there are signs of improvement with revenues per billing day increasing [14][10] Market Data and Key Metrics Changes - The U.S. apartment rental rates are starting to elevate again, which is expected to improve the economics for property management companies [11] - The company signed 23 new logos in Q1 2025, up over 60% from 14 in Q1 2024, indicating positive momentum [10] Company Strategy and Development Direction - The company is focused on strategic alternatives and restructuring initiatives to recalibrate costs and improve efficiency [5] - There is a commitment to growth initiatives and managing controllable factors amidst macroeconomic uncertainties [19] - The company aims to leverage prior investments in technology and processes to drive long-term shareholder value [19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consulting projects and business spending, despite uncertainties in trade policies [7][18] - The labor market remains solid, with job additions indicating potential for future growth [19] - Management is optimistic about the property management segment as rental rates improve, but acknowledges ongoing challenges [12][11] Other Important Information - The company entered into waivers and amendments with lenders due to non-compliance with financial covenants at the end of 2024 [16] - The company is continuously looking for ways to improve cost effectiveness and operational efficiency [28] Q&A Session Summary Question: Could you provide context around the new logos and average deal size? - Management indicated that several contracts were signed in March, and they would follow up with specific data [22][23] Question: Are there discussions regarding pent-up demand due to tariff uncertainties? - Management believes there is pent-up demand, but clients are currently in a cautious "wait and see" mode [24][25] Question: Is the technology platform fully rolled out? - The technology platform is fully rolled out, with ongoing improvements being made to enhance efficiency [26][27] Question: How much of the expense reductions were factored into Q1 results? - Approximately 65% to 70% of the expense reductions were realized in Q1, with full benefits expected in Q2 [28] Question: What is the competitive dynamic within property management? - The competitive environment remains stable, and the company continues to secure preferred partner agreements [29][30] Question: When might property management return to year-over-year stability? - Management is working towards regaining growth trajectory and is seeing positive signs [31] Question: How comfortable is management with street estimates? - Management beat estimates for Q1 but has not yet reviewed Q2 estimates [37] Question: How does the company reconcile the cautious mindset of customers with the increase in new logos? - It varies by sector, with some sectors showing movement while others remain cautious [44] Question: Is there a shift in professional services performance? - Professional segment revenues increased in Q1 compared to Q4, indicating a positive trend [46][47] Question: What is the historical behavior in spending post-recession? - Historically, the industry rebounds quickly, but current conditions are unique, with cautious spending observed [54]

Financial Performance & Guidance - NN's Q1 2025 net sales were $105.7 million, flat year-over-year on a pro forma basis, but down $15.5 million as reported[14, 40] - Adjusted EBITDA for Q1 2025 was $10.6 million, with an adjusted EBITDA margin of 10.0%, reconfirming FY 2025 guidance of $53-$63 million[14] - The company is lowering its 2025 net sales guidance to $430-$460 million due to GDP uncertainties, but reiterating adjusted EBITDA guidance of $53-$63 million and new business awards guidance of $60-$70 million[12] - NN initiates 2025 guidance for free cash flow at $14 to $16 million[12] Business Transformation & New Business - NN is launching 120 new programs in 2025, expected to add approximately $55 million in peak annual sales[11] - The company's new business program has secured $160 million of new business from January 2023 to May YTD 2025[16, 18, 21] - NN Europe achieved $6.7 million in new wins in Q1 2025, with an estimated total program value of over $50 million[25] - The company's working capital has been reduced by 20%, or $21.6 million, over the last two years, from $106.4 million in Q1 2023 to $84.8 million in Q1 2025[37, 38] Cost Reduction & Operational Efficiency - NN has reduced its global staff by 16%, or 525 people, over two years, with further reductions planned for 2025[29, 33] - The company is implementing a $6.5 million payroll reduction plan in 2025[33] - NN is advancing its organic transition into non-auto areas by leveraging $340 million of installed assets and investing $10-$14 million additional cash capex per year[12]

Financial Data and Key Metrics Changes - Net sales for Q1 2025 decreased by 10.5% to $425.4 million from $475.2 million in Q1 2024, with a significant decline of almost 20% in January [6][19] - Adjusted EBITDA fell by $15.9 million to $59.1 million, representing 13.9% of net sales compared to 15.8% in Q1 2024 [7][27] - Adjusted net income was $3.4 million or $0.04 per adjusted diluted share, down from $14.4 million or $0.18 per adjusted diluted share in Q1 2024 [28] Business Line Data and Key Metrics Changes - Specialty segment net sales decreased by 13.1% to $134.4 million, with adjusted EBITDA down by 9.9% [28][29] - Meals segment net sales fell by 11.6% to $106.1 million, with adjusted EBITDA decreasing by approximately $700,000 [29][30] - Frozen and vegetables segment net sales dropped by 11.2% to $93.1 million, with adjusted EBITDA turning negative at -$1.5 million compared to $7.8 million in the prior year [30][31] - Spices and Flavor Solutions segment net sales decreased by 4% to $91.7 million, with adjusted EBITDA down by 8.4% [32] Market Data and Key Metrics Changes - Consumption trends across measured and unmeasured channels were approximately -6% in Q1, with improvement noted in April to -2% [8][12] - Retailer inventories were significantly reduced, impacting net sales by an estimated $15 million in Q1 [9] - The Canadian market showed mid-single-digit net sales growth for frozen and vegetables despite currency translation impacts [22] Company Strategy and Development Direction - The company is focused on reshaping its portfolio to improve margins and cash flow, with a target of adjusted EBITDA as a percentage of net sales approaching 20% [13][14] - Plans include evaluating divestitures of non-core businesses and potential sales of frozen and vegetable assets [14][15] - The company aims to reduce leverage to below five times through divestitures and excess cash flow [37] Management Comments on Operating Environment and Future Outlook - Management acknowledged a challenging start to 2025 but noted improving trends in April and early May [5][12] - The company revised its fiscal year 2025 guidance down to net sales of $1.86 billion to $1.91 billion and adjusted EBITDA of $280 million to $290 million [12][34] - There is uncertainty regarding consumer behavior and inflation impacts, but management expects to lap negative comps by mid-2025 [12][60] Other Important Information - Promotional trade spending increased significantly, impacting gross profit margins [24][27] - The company is monitoring input cost inflation and foreign exchange impacts, particularly related to the Mexican peso [25][26] Q&A Session Summary Question: Impact of tariffs on potential sale of Frozen - Management indicated that ongoing M&A discussions are not typically commented on, but the Green Giant business is compliant under USMCA, minimizing tariff impacts [39][41] Question: Accelerating portfolio changes due to stock reaction - Management confirmed that efforts to accelerate portfolio shaping and cost reduction programs were already in progress prior to the stock reaction [49][50] Question: Clarification on consumption trends and Easter effects - Management noted that while there may be some Easter benefits, the underlying consumption trends are improving gradually [52] Question: Retailer inventory reduction and potential volume recoup - Management believes the inventory reductions are largely permanent, with limited expectations for recouping lost volume [59] Question: Promotional spending moving forward - Management plans to resume more normal promotional spending rates after the aggressive promotional investments made in Q1 [77][78]

Financial Data and Key Metrics Changes - Net sales for Q1 2025 decreased by 10.5% to $425.4 million from $475.2 million in Q1 2024, with a significant decline of almost 20% in January [6][15][18] - Adjusted EBITDA fell by $15.9 million to $59.1 million, representing 13.9% of net sales compared to 15.8% in Q1 2024 [6][15][26] - Adjusted net income was $3.4 million or $0.04 per adjusted diluted share, down from $14.4 million or $0.18 per adjusted diluted share in Q1 2024 [27] Business Line Data and Key Metrics Changes - Specialty segment net sales decreased by 13.1% to $134.4 million, with adjusted EBITDA down by 9.9% [27][28] - Meals segment net sales fell by 11.6% to $106.1 million, with adjusted EBITDA decreasing by approximately $700,000 [28][29] - Frozen and vegetables segment net sales dropped by 11.2% to $93.5 million, with adjusted EBITDA turning negative at -$1.5 million compared to $7.8 million in the previous year [29][30] - Spices and Flavor Solutions segment net sales decreased by 4% to $91.7 million, with adjusted EBITDA down by 8.4% [30][31] Market Data and Key Metrics Changes - Consumption trends across measured and unmeasured channels were approximately -6% in Q1, with an improvement to -2% in April [7][11] - Retailer inventories were reduced by almost two weeks, impacting net sales by approximately $15 million [8][16] - The Canadian market showed mid-single-digit net sales growth for frozen and vegetables despite currency translation impacts [20] Company Strategy and Development Direction - The company is focused on reshaping its portfolio to improve margins and cash flow, with a target of adjusted EBITDA as a percentage of net sales approaching 20% [12][13] - Plans include divesting non-core businesses and utilizing proceeds to pay down debt [13][14] - The company aims to reduce leverage below 5.5 times through divestitures and excess cash flow [37] Management Comments on Operating Environment and Future Outlook - Management noted a challenging start to 2025 but expressed optimism about improving trends in April and early May [5][11] - The company revised its fiscal year 2025 guidance down to net sales of $1.86 billion to $1.91 billion and adjusted EBITDA of $280 million to $290 million [11][34] - Management highlighted the uncertainty in consumer behavior and the impact of tariffs on future operations [35][36] Other Important Information - The company implemented cost reduction efforts expected to yield $10 million in savings for the year, with a run rate of $15 million to $20 million [12][34] - Input cost inflation remains modest, but certain categories like black pepper and garlic are experiencing elevated costs [23][24] Q&A Session Summary Question: Impact of tariffs on potential sale of Frozen - Management indicated that ongoing M&A discussions are not typically commented on, but the Green Giant business is compliant under USMCA, minimizing tariff impacts [38][40] Question: Accelerating portfolio changes due to stock reaction - Management confirmed that they were already accelerating portfolio shaping efforts and cost reduction programs prior to the stock reaction [47][48] Question: Expectations of recouping lost volume from retailer inventory reduction - Management believes the inventory reduction is largely permanent, with minimal expectation of recouping lost volume [58] Question: Confidence in consumer behavior changes - Management expressed that the process of lapping negative consumer behavior will be gradual, with expectations for improvement in the second half of the year [60][62] Question: Promotional spending moving forward - Management plans to resume more normal promotional spending rates after the aggressive promotional investments made in Q1 [76][77]

Financial Data and Key Metrics Changes - The company reported flat net production quarter over quarter at 141,000 barrels of oil equivalent per day, with realized prices at 98% of Brent [11] - Adjusted EBITDAX was $328 million, net cash flow before changes in working capital was $252 million, and free cash flow totaled $131 million, all exceeding consensus expectations [11] - Operating and G&A costs were $388 million, approximately 5% better than guidance, with expectations to reduce operating costs by nearly 10% in the first half of 2025 compared to the second half of 2024 [12] Business Line Data and Key Metrics Changes - The company achieved over 70% of its total $235 million in announced annual synergies from the Era merger, with full target expected by early 2026 [6][8] - The integrated strategy in power and natural gas marketing is delivering meaningful margins, supporting debt service and shareholder returns [6] Market Data and Key Metrics Changes - Approximately 70% of oil production and natural gas consumption is hedged at attractive levels relative to current market prices [6] - The company can generate free cash flow at Brent prices down to approximately $34 per barrel, indicating resilience against commodity price fluctuations [6] Company Strategy and Development Direction - The company is focused on mitigating commodity price volatility, generating cash flow, maintaining a strong balance sheet, and sustainably returning cash to shareholders [4] - The strategic steps taken to strengthen the business include achieving critical scale through the Era merger, which has provided opportunities for cost savings and improved returns [5] - The company is pursuing multiple new opportunities in carbon management and power generation, including California's first CCS project at the Elk Hills Cryogenic Gas Plant [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to withstand macroeconomic uncertainties and highlighted the strength of its business model [5][20] - The company is optimistic about the progress in permitting and regulatory environments, which are expected to support future growth [94] Other Important Information - The company returned a record $258 million to stakeholders through dividends, share buybacks, and debt redemption in the first quarter [8] - The company has more than $1 billion in liquidity and nearly $200 million in available cash, indicating strong financial health [14] Q&A Session Summary Question: How is the company achieving similar EBITDA with lower Brent assumptions? - Management highlighted that synergy targets and cost savings from the Era merger are key factors, with ongoing integration efforts exceeding expectations [23][25] Question: What does the breakeven look like on an unhedged basis? - The corporate breakeven is around $34 Brent or about $30 WTI, supported by low decline, predictable assets and proactive cost management [28] Question: Is there concern about refinery shutdowns affecting sales? - Management indicated no concern, as existing refineries are built for California crude, and the company is positioned to meet local demand [32] Question: What progress is being made on CO2 pipeline regulation and permitting? - Management reported encouraging progress in both Sacramento and Washington, with constructive engagement on CO2 pipelines and oil and gas permitting [40] Question: Update on Huntington Beach real estate marketing and remediation timeline? - The company is preparing to market the property for mixed-use development, with a timeline of approximately three years for approvals [46] Question: Insights on the Elk Hills PPA and funding for carbon capture? - Management emphasized the importance of securing a long-term partner for the Elk Hills project, with ongoing discussions to optimize costs and funding [50][56] Question: What is the outlook for maintenance capital in an unconstrained permitting environment? - Management stated that while they are not ready to guide on unconstrained scenarios, they are seeing strong performance with low capital expenditures [82] Question: Clarification on the potential PPA discussions? - The company is engaged with multiple large-scale industrial customers for PPAs, expanding interest beyond data centers [99]