Par Pacific(PARR) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter adjusted EBITDA was a loss of $43 million and adjusted net loss was$1.55 per share, which included a $47 million non-cash prior period mark-to-market expense [8][28] - Current liquidity stands at$287 million, significantly higher than the end of 2019 levels, and net debt is down to $462 million, more than$45 million below year-end 2019 [15][37] Business Line Data and Key Metrics Changes - The retail segment adjusted EBITDA contribution was $8 million, down from$16 million in the fourth quarter of 2020, primarily due to margin compression and lower volumes [30] - The Logistics segment adjusted EBITDA contribution was $16 million, up$7 million from the fourth quarter of 2020, driven by increased demand in Hawaii and Wyoming [31] - The Refining segment recorded an adjusted EBITDA loss of $55 million, but excluding the prior period mark-to-market expense, the loss would be$9 million [32] Market Data and Key Metrics Changes - Air travel to Hawaii increased significantly, with passenger arrivals now approximately 65% of pre-pandemic levels, primarily due to domestic travel [9] - The Wyoming 3-2-1 Index averaged $20.97 per barrel in Q1, with throughput averaging approximately 15,000 barrels per day [19] - The Singapore 3-1-2 Index averaged$3.80 per barrel in Q1, with throughput averaging approximately 81,000 barrels per day [23] Company Strategy and Development Direction - The company is transitioning its Northwest retail unit to its proprietary nomnom convenience store brand, which is expected to boost segment profit [13] - The company is well-positioned for new greenhouse gas regulations due to low emissions and a completed renewables logistics system [14] - The company anticipates improving profitability as the economy recovers and expects much of the global demand growth to be in distillates [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted a key inflection point in the industry due to increasing vaccination rates and improving mobility trends [7] - The company expects a rebound in retail performance as crude oil prices stabilize and traffic volumes increase [12] - Management expressed confidence in the recovery of refining profitability, particularly in Hawaii, as market conditions improve [44] Other Important Information - The company completed a $116 million sale-leaseback of certain real estate properties and an$87 million equity issuance to enhance liquidity [14][37] - The company is focused on maximizing asset utilization and transitioning back to positive profitability territory [26] Q&A Session Summary Question: Trends in second quarter performance and Hawaii - Management observed significant changes in profitability from January and February to March, with increased runs at refineries and improved market indices [43] Question: Singapore crack spreads and demand recovery - Management indicated that while supply has increased, the Singapore market is affected by international factors and may return to historical means with ongoing volatility [50] Question: Retail segment performance in Q1 - Management noted that volume lagged behind Q4 due to fewer days and a lull in markets, but March showed improvement [56] Question: RINs obligations and Supreme Court case - Management expects the Supreme Court to reverse a lower court decision, allowing for waivers for 2019 and 2020 RINs obligations [62][66] Question: Crude guidance in Hawaii - Management clarified that the increase in crude costs is due to a lag in pricing and not a change in crude quality [69] Question: Laramie's performance and cash generation - Management stated that Laramie's cash generation will primarily be used for debt reduction [72] Question: Logic behind equity raise - Management explained that the equity raise aims to lower the cost of senior debt funding and improve liquidity [83]