Par Pacific(PARR) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported fourth quarter adjusted EBITDA of $122 million and adjusted earnings of$65 million, or $1.08 per share, with full year adjusted EBITDA reaching$696 million and adjusted earnings of $501 million, or$8.21 per share, reflecting a 3% increase over 2022 [28][62] - Cash provided by operations during the fourth quarter totaled $130 million, excluding a net working capital outflow of$132 million, primarily due to a cash settlement of prior periods environmental credits [3][46] - Total liquidity at year-end was $644 million, consisting of$279 million in cash and $365 million in availability [3][46] Business Line Data and Key Metrics Changes - The Logistics segment reported adjusted EBITDA of$24 million in the fourth quarter, down from $29 million in the third quarter, attributed to elevated maintenance costs [2] - The Retail segment achieved adjusted EBITDA of$68 million for the full year, with fourth quarter same-store sales growth of 7.3% for fuel and 4.2% for merchandise [26][62] - The Refining segment's adjusted EBITDA was $107 million in the fourth quarter, a decrease from$234 million in the third quarter, impacted by net price lag benefits and a negative FIFO impact [29] Market Data and Key Metrics Changes - Fourth quarter throughput was 186,000 barrels per day, with Hawaii throughput at 81,000 barrels per day and production costs of $4.80 per barrel [20][21] - In Washington, fourth quarter throughput was 38,000 barrels per day, with production costs of$4.53 per barrel, and capture improved to 44% [22] - Montana throughput was 50,000 barrels per day, with production costs totaling $12.03 per barrel, elevated due to reliability projects and seasonal energy costs [24] Company Strategy and Development Direction - The company aims to focus on lower capital, higher return opportunities, such as the$90 million Hawaii SAF conversion project, expected to begin production in 2025 [48] - The company is committed to sustainability and renewable energy, particularly in Hawaii and Tacoma initiatives, while also pursuing M&A opportunities to grow its footprint [49][73] - The management emphasized the importance of improving reliability and capitalizing on market strength to ensure well-supplied markets [72] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market outlook, citing robust Singapore cracks and favorable local production conditions due to high freight costs [56] - The company plans to address heater system constraints with a 15-day outage in the first quarter, which is expected to impact profitability by $5 million to$8 million [23] - The management highlighted a strong operational year for 2023, with significant improvements in safety metrics and energy efficiency [19][47] Other Important Information - The company completed a comprehensive refinancing, consolidating high-cost debt into a single-term loan, which is expected to reduce cash funding costs by over $10 million this year [5][6] - The company repurchased over$62 million of common stock last year at an average cost well below the current share price [46] Q&A Session Summary Question: M&A market interest and deal flow - Management indicated that while M&A remains a key part of the strategy, the current refining market presents challenges due to high seller expectations [9][10] Question: Business mix and distillate yield - Management confirmed a focus on distillate production, aiming to increase flexibility in production to meet community needs [15][16] Question: Upcoming turnaround schedule - Management noted a small 15-day outage planned in Washington, with no major turnarounds scheduled for the year [81]