Par Pacific(US:PARR)2024-11-06 04:01Financial Data and Key Metrics Changes - Third quarter adjusted EBITDA was $51 million, with an adjusted net loss of $0.10 per share, reflecting strong operational performance despite a challenging refining market [6][18] - The Refining segment reported adjusted EBITDA of $20 million, down from $60 million in the second quarter [18] - Net cash provided by operations totaled $79 million, including a $67 million working capital inflow [24] Business Line Data and Key Metrics Changes - Retail same-store fuel volumes declined by 1.4%, while merchandise sales grew by 3.8% compared to Q3 2023 [9] - Logistics segment reported adjusted EBITDA of $33 million, up from $26 million in the second quarter, driven by record refining throughput [23] - Retail segment reported adjusted EBITDA of $21 million, compared to $19 million in the second quarter, supported by expanding fuel margins and merchandise sales growth [23] Market Data and Key Metrics Changes - In Hawaii, throughput was 81,000 barrels per day with production costs of $4.58 per barrel, achieving 97% operational availability year-to-date [13] - Billings delivered 57,000 barrels per day of crude throughput with production costs of $11.61 per barrel [15] - Washington throughput was 41,000 barrels per day with production costs of $3.50 per barrel, demonstrating efficient operations despite market challenges [14] Company Strategy and Development Direction - The company is targeting to reduce fixed operating expenses by $30 million to $40 million in 2025, focusing on cost control amid market challenges [8][33] - The SAF project in Hawaii is on track for startup in the second half of 2025, seen as a key growth element [11] - The company aims to enhance capital and operational efficiency by extending turnaround cycles and optimizing maintenance schedules [16][40] Management's Comments on Operating Environment and Future Outlook - Management noted that the current refining margin environment is testing breakeven levels for many operators, with expectations of supply rationalization starting in 2025 [7] - The company remains optimistic about its diversified business model and the unique markets it serves, which provide resilience in challenging conditions [6] - Management highlighted the importance of maintaining a strong balance sheet to support strategic growth and capital investments [29][56] Other Important Information - Corporate expenses and adjusted EBITDA were $23 million in the third quarter, showing a $1 million improvement compared to the second quarter [24] - Total liquidity as of September 30 was $633 million, indicating a strong financial position [26] Q&A Session Summary Question: Share buybacks in light of a worsening crack environment - Management indicated a strong liquidity position and an opportunistic approach to share buybacks, balancing stock repurchase opportunities with maintaining a strong balance sheet [29] Question: Logistics segment performance sustainability - Management provided mid-cycle guidance of $115 million annualized for Logistics EBITDA, indicating potential for $30 million-plus in a low-90% utilization environment [30] Question: Cost reduction projects for 2025 - Management identified reductions in corporate expenses and a mix of Refining and Logistics costs as key areas for achieving the targeted $30 million to $40 million reduction [33] Question: Long-term outlook for the Washington refinery - Management emphasized the low-cost operational advantage of the Tacoma facility, which is expected to minimize cash consumption during poor margin environments [34] Question: Performance of Hawaiian assets amidst Asian refining margin concerns - Management attributed strong performance in Hawaii to years of operational improvements and favorable cost structures, allowing positive adjusted EBITDA even in challenging conditions [37] Question: Turnaround schedule adjustments - Management noted improvements in mechanical integrity programs that have allowed for extended turnaround periods, leading to better amortization of turnaround costs [40] Question: Billings refinery outlook and inventory dynamics - Management expressed confidence in Billings' ability to meet mid-cycle cash flow contributions, despite some operational challenges [48] Question: Value of the Retail business - Management highlighted the Retail segment's significant financial contributions and growth opportunities, indicating a strategic focus on enhancing this business [50] Question: CapEx guidance for 2024 and 2025 - Management expects elevated CapEx in Q4 2024 due to back-end weighted projects and provided directional guidance for 2025 CapEx related to turnarounds and renewable projects [54] Question: Balance sheet management and inventory financing - Management clarified the separation of ABL funding from term debt, emphasizing a significant reduction in working capital funding needs over the past year [56]