Par Pacific Holdings, Inc. (NYSE: NYSE:) introduced its second quarter 2024 monetary outcomes, revealing an adjusted EBITDA of $82 million and adjusted web revenue at $0.49 per share. The corporate’s strategic planning and efficiency, notably within the Billings turnaround, have positioned it properly to satisfy market demand.
Retail operations are displaying energy with market share positive aspects, and development initiatives are advancing, notably in Billings and renewable initiatives in Hawaii. Par Pacific’s monetary well being stays strong, with a robust steadiness sheet and vital inventory repurchases, underlining its dedication to shareholder worth.
Key Takeaways
- Adjusted EBITDA stood at $82 million with adjusted web revenue at $0.49 per share.
- The Billings turnaround was highlighted as a key achievement, with upkeep completion supporting market calls for.
- Retail manufacturers are gaining market share with will increase in same-store gasoline and merchandise gross sales.
- Par Pacific has lowered its price of debt capital and repurchased over $65 million of its inventory.
- Robust steadiness sheet with liquidity of $520 million as of June 30, offering flexibility for strategic goals.
- Document throughput reported within the Wyoming refining phase, with system-wide throughput anticipated to be between 190,000 and 200,000 barrels per day in Q3.
Firm Outlook
- Par Pacific anticipates continued modest restocking of inventories and close to mid-cycle margin ranges.
- Progress initiatives, notably in Billings and renewable gasoline initiatives in Hawaii, are progressing properly.
- The corporate plans to take a position roughly $120 million in turnaround work in Billings over the subsequent 4 to 5 years.
Bearish Highlights
- The corporate acknowledges challenges within the West Coast margin setting resulting from competitors from renewable diesel and petroleum diesel exports.
- The need for deliberate upkeep of the Billings coker in Q3 may affect operations.
Bullish Highlights
- Par Pacific’s retail phase exhibits promising development with elevated same-store gross sales.
- The corporate advantages from supportive clear product margins and secondary product buying and selling.
- Restricted exports of refined merchandise from China and arbitrage alternatives between Asia and Northwest Europe are favorable for the corporate.
Misses
- There have been no particular monetary misses reported within the earnings name.
Q&A Highlights
- The corporate mentioned capital return technique, remaining opportunistic with concerns for money era, share value, and liquidity.
- Par Pacific is open to M&A alternatives however will prioritize capital allocation to worth creation, share repurchases, and natural initiatives.
- Updates got on the renewable venture in Hawaii, which is on monitor, and negotiations for an influence buy settlement for a cogeneration facility.
In conclusion, Par Pacific’s Q2 2024 earnings report displays an organization efficiently navigating the refining setting, with strategic development initiatives and robust monetary administration. The corporate’s outlook stays optimistic with a concentrate on operational excellence and strategic investments to boost shareholder worth.
InvestingPro Insights
Par Pacific Holdings, Inc. (NYSE: PARR) has proven a dedication to shareholder worth, as mirrored of their aggressive share buyback technique. That is underscored by the corporate’s repurchase of over $65 million of its inventory, a transfer that aligns with the InvestingPro Tip that administration has been actively shopping for again shares. Such actions can typically be interpreted as an indication of confidence from administration within the firm’s future prospects.
Regardless of the corporate’s robust efficiency within the current quarter, it is value noting that there have been some issues relating to its monetary outlook. In keeping with InvestingPro Ideas, three analysts have revised their earnings downwards for the upcoming interval, which may point out potential challenges forward. Moreover, the inventory has taken a big hit during the last week, with a 9.23% lower in value complete return, signaling potential market skepticism.
From a valuation standpoint, Par Pacific is buying and selling at a low income valuation a number of with a P/E Ratio (Adjusted) of two.89 as of the final twelve months ending Q2 2024, which can recommend that the inventory is undervalued relative to its earnings. The market cap stands at $1.4 billion, and the corporate is buying and selling close to its 52-week low, at 59.21% of its 52-week excessive, which may current a shopping for alternative for worth buyers.
InvestingPro supplies extra insights and suggestions for buyers trying to delve deeper into Par Pacific’s financials and market place. There are presently 8 extra InvestingPro Ideas out there that may supply additional steerage on the corporate’s efficiency and outlook. For these fascinated with exploring these extra suggestions, you possibly can go to https://www.investing.com/professional/PARR.
Full transcript – Par Pacific Holdings Inc (PARR) Q2 2024:
Operator: Good day, and welcome to the Par Pacific Second Quarter 2024 Earnings Convention Name. All contributors might be in a listen-only mode. [Operator Instructions] Please notice, this occasion is being recorded. I might now like to show the convention over to Ashimi Patel, Vice President of Investor Relations. Please go forward.
Ashimi Patel: Thanks, Cole. Welcome to Par Pacific’s second quarter earnings convention name. Becoming a member of me at the moment are Will Monteleone, President and Chief Govt Officer; Richard Creamer, EVP of Refining and Logistics; and Shawn Flores, SVP and Chief Monetary Officer. Earlier than we start, notice that our feedback at the moment could embrace forward-looking statements. Any forward-looking statements are topic to alter and will not be ensures of future efficiency or occasions. They’re topic to dangers and uncertainties, and precise outcomes could differ materially from these forward-looking statements. Accordingly, buyers shouldn’t place undue reliance on forward-looking statements, and we disclaim any obligation to replace or revise them. I refer you to our investor presentation on our web site and to our filings with the SEC for non-GAAP reconciliations and extra info. I am going to now flip the decision over to our President and Chief Govt Officer, Will Monteleone.
Will Monteleone: Thanks, Ashimi, and good morning, everybody. Second quarter adjusted EBITDA was $82 million and adjusted web revenue was $0.49 per share. These monetary outcomes mirror robust reliability and crisp deliberate upkeep execution. Notably, the Billings turnaround planning and efficiency was wonderful. As well as, our retail and logistics segments continued to ship regular earnings. The completion of the Billings upkeep positions us to push utilization charges within the third quarter with the intention to meet market demand. Every of our markets is brief refined product in the summertime months, requiring long-haul imports to steadiness provide and demand. Shifting to the broader refining setting, world product inventories are approaching beneath our finish of the five-year vary. The mix of elevated utilization charges and comparatively flat refined product demand have allowed for modest stock restocking. Margins have responded in our close to mid cycle ranges in most areas. Regional dynamics in PADD IV have largely returned to typical premiums versus the Gulf Coast. Nevertheless, the Southern Rockies has been barely much less engaging as entry Mid Continent inventories pressured markets like Denver and Speedy Metropolis. Our retail manufacturers proceed to realize market share with similar retailer gasoline and merchandise gross sales development of 1.3% and 1.8% respectively. Retail group is concentrated on rising meals service gross margin, enhancing methods to higher handle in retailer prices and constructing a pipeline of rework and new to business websites. Our younger manufacturers proceed to be properly acquired within the native markets we serve. On the strategic entrance, our development initiatives are progressing. Billings reliability initiatives are delivering encouraging early outcomes. In Hawaii, our renewable hydrotreater conversion is on price range and the renewable gasoline cogeneration venture is progressing in the direction of potential energy buy settlement with Hawaiian Electrical. On the monetary aspect, we additional lowered our cost-to-debt capital and we repurchased greater than $65 million of our inventory. Our steadiness sheet stays robust affording us the pliability to each opportunistically repurchase inventory and pursue our strategic goals. In closing, we’re centered on protected and dependable operations and crisp venture execution. Whereas the margin setting is moderated, concentrate on these key areas will enable us to generate robust free money movement and wholesome returns to the cycle. I am going to now flip the decision over to Richard to debate our refining and logistics operations.
Richard Creamer: Thanks, Will. The Refining phase’s second quarter mixed throughput was on plan at 180,000 barrels per day. In Hawaii, throughput was 81,000 barrels per day and manufacturing prices have been $4.50 per barrel. Refinery operations carried out properly delivering 99% operational availability. With Hawaii’s constant throughput and robust catalyst efficiency, we might be extending the scheduled 2025 turnaround into 2026. Shifting to Wyoming, throughput was a brand new report of 19.9 thousand barrels per day and manufacturing prices have been $7.08 per barrel. This represents nice work by the Wyoming group to maintain nameplate capability all through the quarter. Shifting to Washington, second quarter throughput was 41,000 barrels per day and manufacturing prices have been $3.66 per barrel. Washington group did a wonderful job of safely restarting in April, following their deliberate outage in March. Lastly, I am happy to report that the Billings executed considered one of their largest turnarounds on report, efficiently assembly all well being, security and environmental targets, and as Will acknowledged ending on schedule and on price range. The plant restart went properly and has met or exceeded all operational goals. Given the turnaround downtime in Billings, Q2 throughput and manufacturing prices have been 38,000 barrels per day $16.18 per barrel. We do have deliberate upkeep of the Billings coker within the Q3 and Shawn will cowl these financials. Seeking to the third quarter, we count on throughput in Hawaii between 78,000 barrels and 82,000 barrels per day, Wyoming between 18,000 barrels and 20,000 barrels, Washington between 38,000 barrels and 41,000 barrels and Billings between 55,000 barrels and 59,000 barrels. Leading to system huge throughput between 190,000 barrels and 200,000 barrels per day. I am going to now flip the decision over to Sean to cowl the monetary outcomes.
Shawn Flores: Thanks, Richard. Second quarter adjusted EBITDA and adjusted earnings have been $82 million and $29 million or $0.49 per share. The Refining phase reported adjusted EBITDA of $60 million in comparison with $81 million within the first quarter. In Hawaii, the Singapore index averaged $12.49 per barrel and our landed crude differential was $5.08 leading to a mixed index of $7.41 per barrel. Hawaii margin seize was 136%, together with a product crack hedge acquire of $12 million and continued margin help from elevated clear product freight. Looking forward to the third quarter, we count on the Hawaii crude differential to land between $6.25 and $6.75 per barrel and we now have hedged roughly 10% of our third quarter gross sales at a median crack of $18 per barrel. In Billings, our U.S. Gulf Coast index averaged $17.93 per barrel, gross margin seize was 94%, reflecting seasonally robust clear product differentials within the Higher Rockies and advantages from our lag price accrued differentials. Offsetting the improved margin backdrop was an approximate $25 third quarter affect from the crude unit turnaround actions, pushed by lowered clear product gross sales and better bought product. Looking forward to the third quarter in Billings, clear product premiums to the Gulf Coast remained robust trending barely above Q2 ranges quarter-to-date. Value-to-crude differentials within the third quarter are anticipated to extend by roughly $5 per barrel, reflecting tighter heavy and ship crude differentials through the second quarter. As a reminder, feedstock prices and Billings will sometimes lag crude pricing by one quarter underneath our LIFO stock accounting. Third third quarter working prices will mirror an incremental $7 million to $8 million associated to the keep actions within the coker unit. In Wyoming, seize to the Gulf Coast index was 82%, reflecting softer premiums within the Southern Rockies, native demand continues to strengthen into the third quarter and clear product spreads to the Gulf Coast have returned to typical summer time ranges. Lastly, in Washington, the PNW index averaged $22.54 per barrel within the second quarter, margin seize was 21%, pushed by slim heavy crude differentials and decrease secondary product margins. Trying forward, quarter-to-date heavy crude diffs have widened $3 per barrel, which is predicted to supply extra fast advantages to Washington underneath LIFO accounting. Immediate secondary product margins have additionally improved with the current decline in flat value. The Logistics phase reported adjusted EBITDA of $26 million within the second quarter in comparison with $28 million within the first quarter, down barely resulting from lowered pipeline throughput associated to the Billings turnaround. Our retail phase reported adjusted EBITDA of $19 million through the second quarter in comparison with $14 million within the first quarter. Robust retail efficiency was pushed by expanded gasoline margins and continued development in similar retailer gasoline volumes and merchandise income. Company bills and adjusted EBITDA have been $23 million within the second quarter in comparison with $29 million within the first quarter. Decreased prices have been pushed by decrease renewable improvement exercise and worker prices. Web money utilized in operations through the second quarter totaled $5 million together with a $61 million working capital outflow associated to a brief improve in inventories and deferred turnaround expenditures of $29 million. Excluding this stuff, money from operations was $85 million through the second quarter. Money utilized in investing actions totaled $35 million together with $37 million of capital expenditures, partially offset by $1.5 million annual tax distribution from Laramie. Shifting to financing actions, we just lately accomplished the working capital refinancing in Hawaii, changing the legacy stock intermediation with a mix of borrowings underneath the expanded ABL and a crude solely intermediation. In reference to the refinancing, complete intermediation liabilities decreased by $412 million offset by a rise in ABL funding of $420 million. As beforehand introduced, the Hawaii refinancing is predicted to cut back funding prices by roughly $10 million per yr. We continued our opportunistic strategy to share repurchases with 66 million through the second quarter and 116 million year-to-date via August 5. Since finishing the Billings acquisition final June, we now have repurchased a complete of 5.6 million shares or equal to 10% of our present shares excellent. Whole liquidity as of June 30 was $520 million made up of $180 million in money and $340 million in availability. With a robust steadiness sheet, we’re properly positioned to advance our strategic development priorities, whereas sustaining an opportunistic strategy to share repurchases. This concludes our ready remarks. Operator, we’ll flip it to you for Q&A.
Operator: Thanks. [Operator Instructions]. Our first query at the moment will come from Neil Mehta with Goldman Sachs. Please go forward.
Neil Mehta: Good morning, group and thanks for taking my questions. That is Adam Wijaya on for Neil Mehta. Needed to first get your ideas on Singapore margins and a key space of focus in our current conversations that focus on extra disappointing Asia demand and in consequence Singapore margins and it seems to be like primarily based on the PARR market indicators seen a tick up in margins over current weeks. So what are you guys seeing when it comes to actual time demand after which how do you see that margin setting evolving over the approaching months? Thanks.
Will Monteleone: Positive, Adam. Good morning. So I believe on the Singapore entrance, we’re most likely hovering between $11 and $13 a barrel for the Singapore 3-1-2 and I believe these are ranges we characterize as mid cycle. I believe on the provision aspect, you are ranges the place the less complicated refining fleet in Asia is up towards unfavorable gross margins. So I believe you’ve gotten some provide aspect help with respect to the place the clear product margins are and I believe importantly the place secondary merchandise are buying and selling like gasoline oil and naphtha. I believe importantly, I believe you’ve got seen restricted exports of refined product out of China regardless of a number of the issues on the demand aspect and finally, I nonetheless suppose you are seeing the world operated in a related trend the place barrels are arbitraging between Asia and Northwest Europe. So once more, I believe that is the web driver of final refining throughput within the Northeast Asian market and no main modifications and with elevated freight impacting each inputs and the price of arbitrage, I believe the provision aspect has restricted incentive to ratchet charges up additional.
Neil Mehta: Received it. Okay, that is tremendous useful. After which I assume my subsequent query is simply on capital returns. The buyback quantity got here in actually robust this quarter, which is nice to see continued progress on the buybacks to this point into 3Q. So I wished to get the group’s up to date ideas on capital returns expectations within the context of the present refining margin setting and in addition the place are the share costs as properly? Thanks.
Will Monteleone: Positive, Adam. So I believe on the share repurchase cadence, I believe we’ll stay opportunistic in how we give it some thought and finally, our strategy goes to be influenced by our money era, our outlook, the share value relative our view of intrinsic worth and finally our liquidity place. So we’ll proceed to have a look at all these elements and finally work to ship a share repurchase cadence that I believe is in line with driving most shareholder returns.
Neil Mehta: Received it. Tremendous useful. Thanks.
Operator: Our subsequent query will come from John Broyal with J.P. Morgan. Please go forward.
John Royall: Hello, good morning. Thanks for taking my query. So my first query is on Billings. You have bought the 2024 work now behind you and sounds prefer it went fairly properly. Are you able to discuss concerning the work you’ve gotten scheduled for 2025 and the way it compares in scope and in price to the see work?
Will Monteleone: Positive, John. I believe as we have messaged, our intent with Billings is basically over the course of 2024 and 2025 to show round each main unit within the refinery, and once more, the foremost work that was accomplished this yr was a primary step in the proper course. I believe finally once you take a look at our anticipated amortized turnaround cycle and Billings, it is about $120 million over a roughly 4 to five-year interval and so once more, I believe you possibly can count on for us to spend the overall quantity between $24 million and $25 million in that vary, and there is most likely an incremental $10 million to $20 million of labor that we’re specializing in to make sure that we get a stable run day out of the cat cracker, which is the foremost focus space for 2025.
John Royall: Nice. Thanks. After which simply sticking with the Rockies area, I hoped for a bit of extra shade on the drivers of the crack foundation between Rockies and Gulf Coast and the way that is improved and perhaps your expectations for the second half and specifically, Will famous the southern market not doing fairly as properly. For those who can simply give some extra element on that bifurcation you are seeing there that’d be useful.
Will Monteleone: Positive. So I believe finally, the Southern Rockies has a good quantity of interconnectivity with the Mid Continent and I believe our remark could be in June July, whilst you sometimes count on to see vital rail borne imports into the Southern Rockies. Finally, we did not see the spreads that you’d sometimes count on in these markets. As you’ve got moved later into July August, I might say it is starting to normalize to greater ranges that might be extra in line with rail-born imports into PADD IV to steadiness provide and demand throughout peak demand season. The Northern Rockies once more, I believe is extra principally served by rail and finally demand seasonality is extra pronounced I believe within the Northern Rockies. So I believe these are the largest elements which might be driving the distinctions and variations and finally, I believe we’re seeing good demand throughout our system and finally, we’re nonetheless seeing demand properly in extra of provide in the summertime intervals.
John Royall: Thanks. And our subsequent query will come from Jason Gabelman with TD Cowen. Please go forward.
Jason Gabelman: Yeah, hey, morning. Thanks for taking my questions. I wished to return to Billings and it seemed like I simply wished to substantiate there was going to be some work on the coker in 3Q 2024, if I heard appropriately. Was that a part of the preliminary plan for this yr or was that associated to one thing you maybe noticed in whilst you had the asset down in 2Q and had count on that to affect seize in 3Q?
Will Monteleone: Positive, Jason. So that is in line with our plan. It impacts OpEx, not CapEx and turnarounds, and once more, that is largely as a result of typical upkeep cycle lengths on our fluid coker. So finally that is one thing that’s going to be a 9-month to 18-month interval and we did speed up the downtime primarily based on some efficiency, however I would not say it was a cloth discount within the deliberate run time. So once more, this can be a actually 9-month to 18-month affect and so I believe it’s best to actually unfold out these prices over that timeframe and give it some thought as amortized prices for working that unit.
Jason Gabelman: Okay, after which, you’ve gotten publicity to West Coast cracks each from Washington after which what you export from Hawaii to the West Coast. Might you simply remind us on particularly Hawaii what that publicity is and the way that impacted your ends in 2Q and sort of the way you’re fascinated about that impacting your ends in 3Q?
Will Monteleone: Positive. Jason, I do not suppose it might be acceptable to particularly present a share on our contract index publicity, however I might let you know that Hawaii does have a smaller share affect by each Pacific Northwest and Los Angeles markets. So once more, I believe Singapore is the primary issue and that is why the index for Hawaii is ready primarily based on Singapore. That stated, we’re observing actually the weird weak point within the West Coast margin setting. That is mirrored in our PMW Index, particularly for summer time intervals. Once more, I believe that has extra to do with inflow of refined product imports within the Could timeframe that once you take a look at them on a standalone foundation seem like very uneconomic given the place the markets trended and once more, that is a really tough arbitrage to seize worth and finally, once you look ahead, the amount of imports seems to be lowering, notably on the gasoline aspect of the equation. That stated, I believe the West Coast is in a difficult setting, given the fabric will increase in renewable diesel into the market and the marginal barrel of standard petroleum diesel being exported constantly. So once more, I believe we’re in a very good place as a low price operator in Washington and finally are properly positioned with our Hawaii enterprise to seize alternatives once they emerge.
Jason Gabelman: Okay, nice. If I may simply sneak yet another in. As you’ve got absorbed Billings and gone via the primary main turnaround, how do you concentrate on M&A transferring ahead? It sounds such as you’re nonetheless rising the retail enterprise. There’s been some public exercise, from considered one of your friends there. Are you continue to a purchaser of retail and simply broad extra broadly on the M&A setting?
Will Monteleone: Positive. So I believe we have grown our enterprise over time via an energetic M&A program and finally I believe it is considered one of our core competencies. That stated, I believe we’re disciplined and considerate on worth always, and I believe we’ll proceed to weigh actually the chance for us to redeploy capital to repurchase our shares in addition to extra C-store improvement and actually the alternatives to put money into natural initiatives inside our current refining fleet to enhance the effectivity of our operations. We’ll weigh all these items and consider the chance set. And I believe try to take advantage of considerate capital allocation determination. So once more, I believe it is going to stay dynamic. I might say finally the M&A market remains to be extremely influenced by the final 24 months, which I believe makes it tough for a purchaser and vendor to agree on worth. That stated, given the outlook, I believe you are more likely to see a extra rational framework emerge as issues of or the return in the direction of mid cycle setting turns into extra evident.
Jason Gabelman: Received it. Is sensible. Thanks for the colour.
Operator: Our subsequent query will come from Matthew Blair with – Tudor, Pickering, Holt & Co. Please go forward.
Matthew Blair: Thanks and good morning. On the refining aspect, may you discuss WCS availability on the West Coast with TMX beginning up? And in your Washington refinery, is that also solely accrued by rail provide association or are you ready have you ever began working a few of these TMX WCS barrels at Washington?
Will Monteleone: Positive, Matthew. Thanks for the query. So we’re seeing growing availability of Canadian grades alongside the West Coast, and I believe finally in Washington, we do have the potential to obtain waterborne cargoes. And so we do have an incredible logistics system there that affords us the pliability to each ship rail in addition to waterborne. Finally, I believe the WCS market or the provision of Canadian crude is starting to affect A and S pricing and broader West Coast crude alternate options. We’re seeing lighter Canadian grades supplied and I believe that is presenting a brand new alternative for our Hawaii enterprise. Once more, I believe that is going to be dynamic over time. I believe the winter interval might be a very good check is basically the primary cargoes loaded in Could and you have seen volumes improve as we have got into June, however I believe that is a dynamic issue and the Trans Mountain barrels are studying to supply in primarily based on the standard waterborne commerce cycle, which is totally different than the inland market commerce cycle.
Matthew Blair: Sounds good. After which in Hawaii, we thought the seize development was fairly encouraging. I believe the discharge talked about a tailwind from the gasoline oil lagged contract, however may you discuss another drivers right here? I assume, specifically, any profit out of your product crack hedging in Hawaii and any profit from the gorgeous strong clear product tanker market? Thanks.
Shawn Flores: Hey, Matthew, it is Shawn. Q2 seize in Hawaii was 136%, so properly above our 100% steerage and I known as out the $12 million crack hedge acquire. We additionally known as out within the launch the $2 million value hike profit. So, I believe once you again out these type of tailwinds which might be working in our favor in Q2 captures about 110%. I believe that type of delta, the 110 versus the 100 is basically reflective of the elevated clear product freight that we’re persevering with to see.
Matthew Blair: Nice. Thanks in your feedback.
Operator: Our subsequent query will come from Manav Gupta with UBS. Please go forward.
Manav Gupta: Sorry, if I missed this earlier, I simply wished a bit of little bit of replace in your Hawaii’s renewable venture, like what is the progress over there? You have been already conducting an preliminary engineering design on the cogeneration facility. Any updates you might present over there?
Will Monteleone: Positive, Manav. So the venture there stays on monitor. Once more, as a reminder, it is a $90 million capital venture that we’re focusing on to convey on-line within the second half of 2025, and finally, I believe main tools has been ordered. We have accomplished a minimum of two of the feedstock tanks that might be vital and once more, are engaged on and have main bids in hand from important distributors and suppliers to start executing that and are awaiting one or two important permits, however I believe really feel assured on the timeline there to obtain and transfer forward with these objects. So, be ok with the place that venture is, and on the renewable cogeneration venture, once more, transferring via the facility buy settlement negotiation with Hawaiian Electrical and that is one thing that’s focused to be accomplished, I believe by the tip of this yr, and so I believe from there, we’ll have firmer estimates on our engineering and finally the facility buy settlement timeline and might make a ultimate funding determination.
Manav Gupta: Thanks a lot. I am going to flip it over.
Operator: This may conclude our query and reply session. I would like to show the convention again over to Will Monteleone for any closing remarks.
Will Monteleone: Nice. Thanks all for becoming a member of us at the moment. We’re happy with the robust operational efficiency of every of our groups and specifically, the well-executed turnaround actions. Have a very good day.
Operator: The convention is now concluded. [Operator Closing Remarks].
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