Par Pacific(PARR) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Second quarter adjusted EBITDA was $82 million and adjusted net income was$0.49 per share, reflecting strong reliability and planned maintenance execution [3][9] - The refining segment reported adjusted EBITDA of $60 million, down from$81 million in the first quarter [9] - The logistics segment reported adjusted EBITDA of $26 million, slightly down from$28 million in the first quarter [12] - The retail segment reported adjusted EBITDA of $19 million, up from$14 million in the first quarter [12] Business Line Data and Key Metrics Changes - Refining segment's combined throughput was 180,000 barrels per day, with Hawaii at 81,000 barrels per day and production costs at $4.50 per barrel [7] - Wyoming achieved a new record throughput of 19.9 thousand barrels per day with production costs at$7.08 per barrel [7] - Washington's throughput was 41,000 barrels per day with production costs at $3.66 per barrel [7] - Billings throughput was impacted by turnaround activities, resulting in 38,000 barrels per day and production costs at$16.18 per barrel [8] Market Data and Key Metrics Changes - Global product inventories are approaching below the end of the five-year range, with modest inventory restocking due to elevated utilization rates [4] - Regional dynamics in PADD IV have returned to typical premiums versus the Gulf Coast, while the Southern Rockies market has been less attractive due to Mid Continent inventory pressures [4] Company Strategy and Development Direction - The company is focused on safe and reliable operations, project execution, and generating strong free cash flow [6] - Growth initiatives include reliability improvements in Billings and renewable fuel projects in Hawaii, with a renewable hydrotreater conversion on budget [5] - The company has repurchased over $65 million of its stock, maintaining a strong balance sheet to support strategic objectives [5][14] Management's Comments on Operating Environment and Future Outlook - Management noted that while the margin environment is moderated, focusing on key operational areas will allow for strong free cash flow [6] - The company expects throughput in Hawaii to range between 78,000 and 82,000 barrels per day in the third quarter [8] - Management expressed confidence in the operational performance and the execution of turnaround activities [38] Other Important Information - Net cash used in operations during the second quarter totaled$5 million, with a working capital outflow of $61 million [13] - Total liquidity as of June 30 was$520 million, consisting of $180 million in cash and$340 million in availability [14] Q&A Session Summary Question: Thoughts on Singapore margins and Asia demand - Management indicated Singapore margins are hovering between $11 and$13 per barrel, with limited exports from China impacting the market [16][17] Question: Capital returns expectations in the current refining margin environment - Management stated they will remain opportunistic regarding share repurchases, influenced by cash generation and share price relative to intrinsic value [19] Question: Billings turnaround and future work - Management confirmed plans to turn around every major unit in the refinery, with expected spending of $120 million over four to five years [22] Question: Drivers of crack basis between Rockies and Gulf Coast - Management noted that the Southern Rockies market has normalized to higher levels, with good demand across the system [24] Question: Work on the coker in Q3 - Management confirmed that the work on the coker is consistent with their plan and will impact operational expenses [26] Question: Exposure to West Coast cracks and Hawaii's performance - Management highlighted that Hawaii's performance is influenced by Singapore, with unusual weakness in the West Coast margin environment [28] Question: Update on Hawaii's renewable project - Management reported that the renewable project is on track, with major equipment ordered and critical permits awaited [35][36]