PAR PACIFIC HOLDINGS, INC. Q4 FY2024 earnings call

• 2024 adjusted EBITDA was $239 million with strong operational performance, including record refining throughput and safety improvements.
• Hawaii refining business unit performed strongly. Wyoming facility had an operational incident, with no serious injuries, and the team is working to restore full operations by Memorial Day.
• Refining outlook improved due to tight supply and demand balances, higher European natural gas prices, Chinese policy impacts, and operational challenges in the industry.
• Retail segment had exceptional results with 2024 adjusted EBITDA up over 10% from 2023, in-store gross margins grew 11%, and fuel volumes expanded. Key projects for 2025 include executing Montana FCC and Alky turnaround, restarting Wyoming units, starting Hawaii SAF unit in H2 2025, and achieving cost reduction targets.
• Balance sheet is well-positioned with $250 million common stock repurchase authorization reauthorized, and $5 million shares repurchased in 2024.

Refining and Logistics: 2024 annual system-wide throughput was 187,000 barrels per day. Fourth quarter: Hawaii throughput was 83,000 barrels per day with production costs $4.42 per barrel; Washington throughput was 39,000 barrels per day with production costs $4.34 per barrel; Wyoming throughput was 14,000 barrels per day with production costs $11.49 per barrel; Billings throughput was 52,000 barrels per day with production costs $10.48 per barrel. Logistics segment: Fourth-quarter adjusted EBITDA was $33 million, a quarterly record. Retail segment: Fourth-quarter adjusted EBITDA was $22 million, up from $21 million in the third quarter. Full-year adjusted EBITDA was $239 million, and adjusted net income was $21 million or $0.37 per share.

• First quarter Hawaii crude differential expected to land between $4.75 and $5.25 per barrel.
• Montana index improved by over $10 per barrel in February compared to January.
• Washington index improved by approximately $7 per barrel in February compared to January.
• Full-year deferred turnaround and CapEx totaled $209 million on a cash basis and $234 million on an accrued basis, in line with original guidance of $220 million to $250 million.
• Board reauthorized management to purchase up to $250 million of common stock.

• Wyoming facility operational incident with potential impact on operations and margins.
• Market volatility affecting refining margins and product pricing.
• Operational challenges and unplanned refinery outages that could impact performance.

Q: Could you talk about how you expect the balance and what the considerations are between additional share repurchases in 2025 compared to incremental debt reduction?

A: The reauthorization is about opening up additional capacity. We are comfortable with our balance sheet, watching forward margin outlook and liquidity cushion, and balance sheet is well hedged with ABL for working capital.

Q: What is giving you confidence to continue moving forward with the SAF project in Hawaii despite some other SAF projects being canceled?

A: The project is inside the refinery fence line with low operating costs, logistics advantage with existing marine freight and distribution, and pipeline/distribution network in Hawaii for SAF distribution. It's a $92 million project within $1.50 per gallon.

Q: Does the Wyoming outage present an opportunity to get some turnaround work done now while down? And on unit ramp-up from 50% to full.

A: Opportunities to pull work scope forward are early to determine. Expect to start up crude unit at reduced rates in April, maintain 50% in April, and rebuild main heater to get to full rate by end of May.

Q: Thoughts on monetizing the Laramie asset given current gas market conditions?

A: Laramie has ongoing cash flow and deep inventory. It's non-core but valuable. Encouraged by increased interest and capital formation in the gas business, working with partners to maximize unitholder value.

Q: Insurance coverage for Wyoming outage and impact on lost profits?

A: Adequate property and PI coverage above certain thresholds. Lost profits depend on market response. Using Q1 group lead guidance to estimate loss production and capture guidance.

Q: Diverging trends at Hawaii and Washington in capture. What's driving Hawaii's strength and Washington's weakness?

A: Hawaii capture above guidance due to clean product freight averaging $5 to $5.50/bbl vs longer-term $3.50 to $4. It's contractual structure dependent. Washington's weakness due to asphalt weakness, paving demand, and seasonality, but well-positioned for West Coast volatility with low-cost structure.

Q: Thoughts on M&A and current M&A opportunities?

A: Most focus is internal execution. M&A opportunity needs to be spectacular to compete with alternatives given current cost of capital and share pricing.

Q: Clarification on Washington index improvement and West Coast tightness impact?

A: Washington index up $7 in February since competitor asset downtime. West Coast tightness from refinery downtimes could benefit PAD 5 dynamics, with uncertainty on downtime duration but potential tailwind for Par Pacific.