• Par Pacific Holdings Reports Second Quarter 2024 Results

    المصدر: Nasdaq GlobeNewswire / 06 أغسطس 2024 15:15:01   America/Chicago

    HOUSTON, Aug. 06, 2024 (GLOBE NEWSWIRE) -- Par Pacific Holdings, Inc. (NYSE: PARR) (“Par Pacific” or the “Company”) today reported its financial results for the quarter ended June 30, 2024.

    • Net Income of $18.6 million, or $0.32 per diluted share
    • Adjusted Net Income of $28.5 million, or $0.49 per diluted share
    • Adjusted EBITDA of $81.6 million
    • Executed Billings turnaround on time and on budget
    • Completed comprehensive working capital refinancing as of May 31, 2024
    • Repurchased $66 million of common stock in the second quarter

    Par Pacific reported net income of $18.6 million, or $0.32 per diluted share, for the quarter ended June 30, 2024, compared to net income of $30.0 million, or $0.49 per diluted share, for the same quarter in 2023. Second quarter 2024 Adjusted Net Income was $28.5 million, compared to $105.0 million in the second quarter of 2023. Second quarter 2024 Adjusted EBITDA was $81.6 million, compared to $150.8 million in the second quarter of 2023. A reconciliation of reported non-GAAP financial measures to their most directly comparable GAAP financial measures can be found in the tables accompanying this news release.

    “Consistent refining operations and steady contributions from our retail and logistics segments drove solid financial results,” said Will Monteleone, President and Chief Executive Officer. “Additionally, the successful Billings turnaround was a major step towards achieving our longer-term throughput objectives at the site. Safe and reliable operations and crisp project execution across our system remain our key focus areas.”

    Refining
    The Refining segment reported operating income of $41.2 million in the second quarter of 2024, compared to $44.1 million in the second quarter of 2023. Adjusted Gross Margin for the Refining segment was $176.6 million in the second quarter of 2024, compared to $205.6 million in the second quarter of 2023.

    Refining segment Adjusted EBITDA was $60.1 million in the second quarter of 2024, compared to $128.6 million in the second quarter of 2023.

    Hawaii
    The 3-1-2 Singapore Crack Spread was $12.49 per barrel in the second quarter of 2024, compared to $13.72 per barrel in the second quarter of 2023. Throughput in the second quarter of 2024 was 81 thousand barrels per day (Mbpd), compared to 84 Mbpd for the same quarter in 2023. Production costs were $4.50 per throughput barrel in the second quarter of 2024, compared to $4.33 per throughput barrel in the same period of 2023.

    The Hawaii refinery’s Adjusted Gross Margin was $10.07 per barrel during the second quarter of 2024, including a net price lag impact of approximately $1.7 million, or $0.23 per barrel, compared to $12.08 per barrel during the second quarter of 2023.

    Montana
    The RVO Adjusted USGC 3-2-1 Index averaged $17.93 per barrel in the second quarter of 2024, compared to $23.20 in the second quarter of 2023. The Montana refinery’s throughput in the second quarter of 2024 was 38 Mbpd, including the turnaround impact, compared to 63 Mbpd for the same quarter in 2023. Production costs were $16.18 per throughput barrel, compared to $8.07 per throughput barrel in the same period of 2023.

    The Montana refinery’s Adjusted Gross Margin was $16.89 per barrel during the second quarter of 2024, compared to $30.98 per barrel during the second quarter of 2023.

    Washington
    The RVO Adjusted Pacific Northwest 3-1-1-1 Index averaged $22.54 per barrel in the second quarter of 2024, compared to $25.13 per barrel in the second quarter of 2023. The Washington refinery’s throughput was 41 Mbpd in the second quarter of 2024, compared to 41 Mbpd in the second quarter of 2023. Production costs were $3.66 per throughput barrel in the second quarter of 2024, compared to $3.98 per throughput barrel in the same period of 2023.

    The Washington refinery’s Adjusted Gross Margin was $4.67 per barrel during the second quarter of 2024, compared to $6.37 per barrel during the second quarter of 2023.

    Wyoming
    The RVO Adjusted USGC 3-2-1 Index averaged $17.93 per barrel in the second quarter of 2024, compared to $21.65 per barrel in the second quarter of 2023. The Wyoming refinery’s throughput was 20 Mbpd in the second quarter of 2024, compared to 17 Mbpd in the second quarter of 2023. Production costs were $7.08 per throughput barrel in the second quarter of 2024, compared to $8.30 per throughput barrel in the same period of 2023.

    The Wyoming refinery's Adjusted Gross Margin was $14.74 per barrel during the second quarter of 2024, compared to $20.56 per barrel during the second quarter of 2023. Adjusted Gross Margin includes an immaterial FIFO impact during the second quarter of 2024.

    Retail
    The Retail segment reported operating income of $16.1 million in the second quarter of 2024, compared to $15.2 million in the second quarter of 2023. Adjusted Gross Margin for the Retail segment was $41.6 million in the second quarter of 2024, compared to $39.2 million in the same quarter of 2023.

    Retail segment Adjusted EBITDA was $18.7 million in the second quarter of 2024, compared to $18.0 million in the second quarter of 2023. The Retail segment reported sales volumes of 30.5 million gallons in the second quarter of 2024, compared to 29.4 million gallons in the same quarter of 2023. Second quarter 2024 same store sales fuel volumes and merchandise revenue increased by 1.3% and 1.8%, respectively, compared to the second quarter of 2023.

    Logistics
    The Logistics segment reported operating income of $18.0 million in the second quarter of 2024, compared to $20.7 million in the second quarter of 2023. Adjusted Gross Margin for the Logistics segment was $30.8 million in the second quarter of 2024, compared to $29.6 million in the same quarter of 2023.

    Logistics segment Adjusted EBITDA was $26.1 million in the second quarter of 2024, compared to $26.0 million in the second quarter of 2023.

    Liquidity
    Net cash used in operations totaled $(4.7) million for the three months ended June 30, 2024, including working capital outflows of $(61.3) million and deferred turnaround expenditures of $(28.8) million. Excluding these items, net cash provided by operations was $85.4 million for the three months ended June 30, 2024. Net cash provided by operations was $173.1 million for the three months ended June 30, 2023. Net cash used in investing activities totaled $(35.4) million for the three months ended June 30, 2024, consisting primarily of capital expenditures, compared to $(623.6) million for the three months ended June 30, 2023, consisting primarily of cash used to fund the Billings acquisition purchase price and the purchase of the related hydrocarbon inventory. Net cash used in financing activities totaled $(8.6) million for the three months ended June 30, 2024, compared to $(19.9) million for the three months ended June 30, 2023.

    On May 31, 2024, Par Pacific successfully completed its previously announced comprehensive refinancing. The Company’s ABL credit facility was upsized to $1.4 billion in conjunction with the replacement of its Hawaii intermediation facility with a new crude-only intermediation. These financing activities, coupled with the previously announced term loan repricing, are expected to result in annual cash savings of approximately $13 million.

    At June 30, 2024, Par Pacific’s cash balance totaled $179.7 million, gross term debt was $547.6 million, and total liquidity was $520.4 million. Net term debt was $367.9 million at June 30, 2024. In the second quarter of 2024, the Company repurchased $66.2 million of common stock. Through August 5, 2024, the Company repurchased an additional $17.6 million of common stock.

    Laramie Energy
    In conjunction with Laramie Energy LLC’s (“Laramie’s”) refinancing and subsequent cash distribution to Par Pacific during the first quarter of 2023, we resumed the application of equity method accounting for our investment in Laramie effective February 21, 2023. During the second quarter of 2024, we received a cash distribution of $1.5 million from Laramie and recorded $(1.4) million of equity losses. Laramie’s total net loss was $(6.5) million in the second quarter of 2024, including unrealized losses on derivatives of $(3.3) million, compared to net income of $6.7 million in the second quarter of 2023. Laramie’s total Adjusted EBITDAX was $10.0 million in the second quarter of 2024, compared to $10.2 million in the second quarter of 2023.

    Conference Call Information
    A conference call is scheduled for Wednesday, August 7, 2024 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). To access the call, please dial 1-833-974-2377 inside the U.S. or 1-412-317-5782 outside of the U.S. and ask for the Par Pacific call. Please dial in at least 10 minutes early to register. The webcast may be accessed online through the Company’s website at http://www.parpacific.com on the Investors page. A telephone replay will be available until August 21, 2024 and may be accessed by calling 1-877-344-7529 inside the U.S. or 1-412-317-0088 outside the U.S. and using the conference ID 1873246.

    About Par Pacific
    Par Pacific Holdings, Inc. (NYSE: PARR), headquartered in Houston, Texas, is a growing energy company providing both renewable and conventional fuels to the western United States. Par Pacific owns and operates 219,000 bpd of combined refining capacity across four locations in Hawaii, the Pacific Northwest and the Rockies, and an extensive energy infrastructure network, including 13 million barrels of storage, and marine, rail, rack, and pipeline assets. In addition, Par Pacific operates the Hele retail brand in Hawaii and the “nomnom” convenience store chain in the Pacific Northwest. Par Pacific also owns 46% of Laramie Energy, LLC, a natural gas production company with operations and assets concentrated in Western Colorado. More information is available at www.parpacific.com.

    Forward-Looking Statements
    This news release (and oral statements regarding the subject matter of this news release, including those made on the conference call and webcast announced herein) includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements include, without limitation, statements about: expected market conditions; anticipated free cash flows; anticipated refinery throughput; anticipated cost savings; anticipated capital expenditures, including major maintenance costs, and their effect on our financial and operating results, including earnings per share and free cash flow; anticipated retail sales volumes and on-island sales; the anticipated financial and operational results of Laramie Energy, LLC; the amount of our discounted net cash flows and the impact of our NOL carryforwards thereon; our ability to identify, acquire, and develop energy, related retailing, and infrastructure businesses; the timing and expected results of certain development projects, as well as the impact of such investments on our product mix and sales; the anticipated synergies and other benefits of the Billings refinery and associated marketing and logistics assets (“Billings Acquisition”), including renewable growth opportunities, the anticipated financial and operating results of the Billings Acquisition and the effect on Par Pacific's cash flows and profitability (including Adjusted EBITDA and Adjusted Net Income and Free Cash Flow per share), and other risks and uncertainties detailed in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any other documents that we file with the Securities and Exchange Commission. Additionally, forward-looking statements are subject to certain risks, trends, and uncertainties, such as changes to our financial condition and liquidity; the volatility of crude oil and refined product prices; the Russia-Ukraine war, Israel-Palestine conflict, Houthi attacks in the Red Sea, Iranian activities in the Strait of Hormuz and their potential impacts on global crude oil markets and our business; operating disruptions at our refineries resulting from unplanned maintenance events or natural disasters; environmental risks; changes in the labor market; and risks of political or regulatory changes. We cannot provide assurances that the assumptions upon which these forward-looking statements are based will prove to have been correct. Should one of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied in any forward-looking statements, and investors are cautioned not to place undue reliance on these forward-looking statements, which are current only as of this date. We do not intend to update or revise any forward-looking statements made herein or any other forward-looking statements as a result of new information, future events, or otherwise. We further expressly disclaim any written or oral statements made by a third party regarding the subject matter of this news release.

    Contact:
    Ashimi Patel
    VP, Investor Relations & Sustainability
    (832) 916-3355
    apatel@parpacific.com


    Condensed Consolidated Statements of Operations
    (Unaudited)
    (in thousands, except per share data)

     Three Months Ended June 30, Six Months Ended June 30,
     2024 2023 2024 2023
    Revenues$2,017,468  $1,783,927  $3,998,303  $3,469,136 
    Operating expenses       
    Cost of revenues (excluding depreciation) 1,770,197   1,574,806   3,517,675   2,863,826 
    Operating expense (excluding depreciation) 144,080   101,843   297,340   184,963 
    Depreciation and amortization 32,144   28,216   64,800   52,576 
    General and administrative expense (excluding depreciation) 23,168   23,168   64,923   42,454 
    Equity earnings from refining and logistics investments (3,744)  (425)  (9,838)  (425)
    Acquisition and integration costs (152)  7,273   91   12,544 
    Par West redevelopment and other costs 3,071   2,613   5,042   5,363 
    Loss on sale of assets, net 63   —   114   — 
    Total operating expenses 1,968,827   1,737,494   3,940,147   3,161,301 
    Operating income 48,641   46,433   58,156   307,835 
    Other income (expense)       
    Interest expense and financing costs, net (20,434)  (14,909)  (38,318)  (31,159)
    Debt extinguishment and commitment costs (1,418)  38   (1,418)  (17,682)
    Other income (loss), net (124)  379   (2,700)  344 
    Equity earnings (losses) from Laramie Energy, LLC (1,360)  —   3,203   10,706 
    Total other expense, net (23,336)  (14,492)  (39,233)  (37,791)
    Income before income taxes 25,305   31,941   18,923   270,044 
    Income tax expense (6,667)  (1,928)  (4,036)  (2,141)
    Net income$18,638  $30,013  $14,887  $267,903 


    Weighted-average shares outstanding       
    Basic 57,239   60,399   57,936   60,255 
    Diluted 58,045   60,993   58,402   61,020 
            
    Income per share       
    Basic$0.33  $0.50  $0.26  $4.45 
    Diluted$0.32  $0.49  $0.25  $4.39 
                    


    Balance Sheet Data
    (Unaudited)
    (in thousands)

     June 30, 2024 December 31, 2023
    Balance Sheet Data   
    Cash and cash equivalents$179,658  $279,107 
    Working capital (1) 589,809   190,042 
    ABL Credit Facility 525,000   115,000 
    Term debt (2) 547,556   550,621 
    Total debt, including current portion 1,058,755   650,858 
    Total stockholders’ equity 1,265,780   1,335,424 

    _______________________________________
    (1) Working capital is calculated as (i) total current assets excluding cash and cash equivalents less (ii) total current liabilities excluding current portion of long-term debt. Total current assets include inventories stated at the lower of cost or net realizable value.
    (2) Term debt includes the Term Loan Credit Agreement and other long-term debt.

    Operating Statistics
    The following table summarizes key operational data:

     Three Months Ended June 30, Six Months Ended June 30,
     2024 2023 2024 2023
    Total Refining Segment       
    Feedstocks throughput (Mbpd) (1) 179.8   162.3   180.0   147.7 
    Refined product sales volume (Mbpd) (1) 191.2   168.8   192.0   159.1 
            
    Hawaii Refinery       
    Feedstocks throughput (Mbpd) 81.0   84.1   80.2   80.2 
            
    Yield (% of total throughput)       
    Gasoline and gasoline blendstocks 27.3%  26.8%  26.2%  26.8%
    Distillates 37.9%  41.0%  38.0%  40.1%
    Fuel oils 30.0%  28.2%  32.0%  28.8%
    Other products 1.4%  0.8%  0.1%  1.2%
    Total yield 96.6%  96.8%  96.3%  96.9%
            
    Refined product sales volume (Mbpd) 82.2   87.2   84.9   88.8 
            
    Adjusted Gross Margin per bbl ($/throughput bbl) (2)$10.07  $12.08  $12.02  $15.41 
    Production costs per bbl ($/throughput bbl) (3) 4.50   4.33   4.67   4.43 
    D&A per bbl ($/throughput bbl) 0.57   0.67   0.58   0.70 
            
    Montana Refinery       
    Feedstocks Throughput (Mbpd) (1) 37.7   62.6   45.1   62.6 
            
    Yield (% of total throughput)       
    Gasoline and gasoline blendstocks 56.6%  46.3%  51.3%  46.3%
    Distillates 25.2%  29.3%  29.6%  29.3%
    Asphalt 6.9%  13.3%  8.7%  13.3%
    Other products 5.0%  6.1%  4.5%  6.1%
    Total yield 93.7%  95.0%  94.1%  95.0%
            
    Refined product sales volume (Mbpd) (1) 48.2   59.3   49.9   59.3 
            
    Adjusted Gross Margin per bbl ($/throughput bbl) (2)$16.89  $30.98  $15.20  $30.98 
    Production costs per bbl ($/throughput bbl) (3) 16.18   8.07   14.09   8.07 
    D&A per bbl ($/throughput bbl) 1.84   1.85   1.59   1.85 
            
     Three Months Ended June 30, Six Months Ended June 30,
     2024
    		 2023
    		 2024
    		 2023
    Washington Refinery       
    Feedstocks throughput (Mbpd) 41.2   40.9   36.3   40.3 
            
    Yield (% of total throughput)       
    Gasoline and gasoline blendstocks 24.7%  24.0%  24.2%  23.8%
    Distillate 34.4%  34.8%  34.0%  34.6%
    Asphalt 18.0%  19.5%  19.3%  19.0%
    Other products 20.0%  18.3%  19.1%  18.7%
    Total yield 97.1%  96.6%  96.6%  96.1%
            
    Refined product sales volume (Mbpd) 40.2   44.8   38.2   42.8 
            
    Adjusted Gross Margin per bbl ($/throughput bbl) (2)$4.67  $6.37  $5.30  $8.66 
    Production costs per bbl ($/throughput bbl) (3) 3.66   3.98   4.70   4.11 
    D&A per bbl ($/throughput bbl) 1.83   1.82   2.09   1.81 
            
    Wyoming Refinery       
    Feedstocks throughput (Mbpd) 19.9   16.7   18.4   16.8 
            
    Yield (% of total throughput)       
    Gasoline and gasoline blendstocks 44.3%  43.7%  46.8%  45.6%
    Distillate 48.9%  48.7%  47.6%  47.3%
    Fuel oils 2.2%  2.6%  2.1%  2.5%
    Other products 3.1%  2.5%  2.1%  1.7%
    Total yield 98.5%  97.5%  98.6%  97.1%
            
    Refined product sales volume (Mbpd) 20.6   17.3   19.0   17.7 
            
    Adjusted Gross Margin per bbl ($/throughput bbl) (2)$14.74  $20.56  $14.83  $24.05 
    Production costs per bbl ($/throughput bbl) (3) 7.08   8.30   7.46   7.85 
    D&A per bbl ($/throughput bbl) 2.36   2.93   2.56   2.85 
            
    Market Indices ($ per barrel)       
    3-1-2 Singapore Crack Spread (4)$12.49  $13.72  $15.58  $17.45 
    RVO Adj. Pacific Northwest 3-1-1-1 Index (5) 22.54   25.13   21.51   25.21 
    RVO Adj. USGC 3-2-1 Index (6) 17.93   21.65   19.63   24.09 
            
    Crude Oil Prices ($ per barrel)       
    Brent$85.03  $77.73  $83.39  $79.90 
    WTI 80.66   73.56   78.78   74.77 
    ANS 86.42   78.26   83.87   78.63 
    Bakken Clearbrook 79.95   75.37   77.13   77.25 
    WCS Hardisty 67.21   60.07   63.33   58.38 
    Brent M1-M3 1.30   0.44   1.18   0.48 
            
    Retail Segment       
    Retail sales volumes (thousands of gallons) 30,523   29,373   59,953   56,572 

    ________________________________________
    (1) Feedstocks throughput and sales volumes per day for the Montana refinery for the three and six months ended June 30, 2023, are calculated based on the 30-day period for which we owned the Montana refinery in the second quarter of 2023. As such, the amounts for the total refining segment represent the sum of the Hawaii, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the three and six months ended June 30, 2023, plus the Montana refinery’s throughput or sales volumes averaged over the periods from June 1, 2023, to June 30, 2023. The 2024 amounts for the total refining segment represent the sum of the Hawaii, Montana, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the three and six months ended June 30, 2024.
    (2) We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput. Adjusted Gross Margin for our Washington refinery is determined under the last-in, first-out (“LIFO”) inventory costing method. Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method.
    (3) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry. There are a variety of ways to calculate production costs per barrel; different companies within the industry calculate it in different ways. We calculate production costs per barrel by dividing all direct production costs, which include the costs to run the refineries including personnel costs, repair and maintenance costs, insurance, utilities, and other miscellaneous costs, by total refining throughput. Our production costs are included in Operating expense (excluding depreciation) on our condensed consolidated statements of operations, which also includes costs related to our bulk marketing operations and severance costs.
    (4) We believe the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) is the most representative market indicator for our operations in Hawaii.
    (5) We believe the RVO Adjusted Pacific Northwest 3-1-1-1 (or three barrels of WTI crude oil converted into one barrel of Pacific Northwest gasoline, one barrel of Pacific Northwest ULSD and one barrel of USGC VGO, less 100% of the RVO cost for gasoline and ULSD) is the most representative market indicator for our operations in Washington.
    (6) We believe the RVO Adjusted USGC 3-2-1 (or three barrels of WTI crude oil converted into two barrels of USGC gasoline and one barrel of USGC ULSD, less 100% of the RVO cost) is the most representative market indicator for our operations in Montana and Wyoming.

    Non-GAAP Performance Measures

    Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures. These measures should not be considered in isolation or as substitutes or alternatives to their most directly comparable GAAP financial measures or any other measure of financial performance or liquidity presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies since each company may define these terms differently.

    We believe Adjusted Gross Margin (as defined below) provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost and net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation and amortization. Management uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks. We believe Adjusted Net Income (Loss) and Adjusted EBITDA (as defined below) are useful supplemental financial measures that allow investors to assess the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis, the ability of our assets to generate cash to pay interest on our indebtedness, and our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure. We believe Adjusted EBITDA by segment (as defined below) is a useful supplemental financial measure to evaluate the economic performance of our segments without regard to financing methods, capital structure, or historical cost basis.

    Beginning with financial results reported for the second quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA also exclude our portion of interest, taxes, and depreciation expense from our refining and logistics investments acquired on June 1, 2023, as part of the Billings Acquisition.

    Beginning with financial results reported for the fourth quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA excludes all hedge losses (gains) associated with our Washington ending inventory and LIFO layer increment impacts associated with our Washington inventory. In addition, we have modified our environmental obligation mark-to-market adjustment to include only the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington Climate Commitment Act (“Washington CCA”) and Clean Fuel Standard. This modification was made as part of our change in how we estimate our environmental obligation liabilities.

    Beginning with financial results reported for the fourth quarter of 2023, Adjusted Net Income (loss) excludes unrealized interest rate derivative losses (gains) and all Laramie Energy related impacts with the exception of cash distributions. We have recast Adjusted Net Income (Loss) for prior periods when reported to conform to the modified presentation.

    Beginning with financial results reported for the first quarter of 2024, Adjusted Net Income (loss) also excludes other non-operating income and expenses. This modification improves comparability between periods by excluding income and expenses resulting from non-operating activities.

    Adjusted Gross Margin

    Adjusted Gross Margin is defined as operating income (loss) excluding:

    • operating expense (excluding depreciation);
    • depreciation and amortization (“D&A”);
    • Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments;
    • impairment expense;
    • loss (gain) on sale of assets, net;
    • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory);
    • Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington CCA and Clean Fuel Standard); and
    • unrealized loss (gain) on derivatives.
       

    The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands):

    Three months ended June 30, 2024Refining Logistics Retail
    Operating income$41,206  $18,041  $16,053 
    Operating expense (excluding depreciation) 116,509   4,701   22,870 
    Depreciation and amortization 21,691   7,193   2,675 
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 661   761   — 
    Inventory valuation adjustment (21,101)  —   — 
    Environmental obligation mark-to-market adjustments (3,504)  —   — 
    Unrealized loss on commodity derivatives 21,141   —   — 
    Loss on sale of assets, net —   63   — 
    Adjusted Gross Margin (1)$176,603  $30,759  $41,598 


    Three months ended June 30, 2023Refining Logistics Retail
    Operating income$44,139  $20,691  $15,220 
    Operating expense (excluding depreciation) 76,971   3,596   21,276 
    Depreciation and amortization 19,826   5,059   2,732 
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments —   207   — 
    Inventory valuation adjustment 33,118   —   — 
    Environmental obligation mark-to-market adjustments 9,343   —   — 
    Unrealized loss on commodity derivatives 22,178   —   — 
    Adjusted Gross Margin (1)$205,575  $29,553  $39,228 


    Six Months Ended June 30, 2024Refining Logistics Retail
    Operating income$63,806  $38,415  $27,049 
    Operating expense (excluding depreciation) 242,977   8,513   45,850 
    Depreciation and amortization 43,961   13,968   5,791 
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 1,379   1,689   — 
    Inventory valuation adjustment (20,476)  —   — 
    Environmental obligation mark-to-market adjustments (13,767)  —   — 
    Unrealized loss on commodity derivatives 65,833   —   — 
    Loss (gain) on sale of assets, net —   124   (10)
    Adjusted Gross Margin (1)$383,713  $62,709  $78,680 


    Six Months Ended June 30, 2023Refining Logistics Retail
    Operating income$307,276  $33,299  $28,694 
    Operating expense (excluding depreciation) 135,853   7,043   42,067 
    Depreciation and amortization 35,549   10,093   5,811 
    Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments —   207   — 
    Inventory valuation adjustment 53,976   —   — 
    Environmental obligation mark-to-market adjustments (123,958)  —   — 
    Unrealized loss on commodity derivatives 8,508   —   — 
    Adjusted Gross Margin (1)$417,204  $50,642  $76,572 

    ________________________________________
    (1) For the three and six months ended June 30, 2024 and 2023, there was no impairment expense recorded in Operating income. For the three and six months ended June 30, 2023, there was no (gain) loss on sale of assets recorded in Operating income.


    Adjusted Net Income (Loss) and Adjusted EBITDA

    Adjusted Net Income (Loss) is defined as Net income (loss) excluding:

    • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory);
    • Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington CCA and Clean Fuel Standard);
    • unrealized (gain) loss on derivatives;
    • acquisition and integration costs;
    • redevelopment and other costs related to Par West;
    • debt extinguishment and commitment costs;
    • increase in (release of) tax valuation allowance and other deferred tax items;
    • changes in the value of contingent consideration and common stock warrants;
    • severance costs and other non-operating expense (income);
    • (gain) loss on sale of assets;
    • impairment expense;
    • impairment expense associated with our investment in Laramie Energy; and
    • Par’s share of equity losses from Laramie Energy, LLC, excluding cash distributions.
       

    Adjusted EBITDA is defined as Adjusted Net Income (Loss) excluding:

    • D&A;
    • interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain);
    • cash distributions from Laramie Energy, LLC to Par;
    • Par's portion of interest, taxes, and depreciation expense from refining and logistics investments; and
    • income tax expense (benefit) excluding the increase in (release of) tax valuation allowance.
       

    The following table presents a reconciliation of Adjusted Net Income (Loss) and Adjusted EBITDA to the most directly comparable GAAP financial measure, net income (loss), on a historical basis for the periods indicated (in thousands):        

     Three Months Ended June 30, Six Months Ended June 30,
     2024 2023 2024 2023
    Net income$18,638  $30,013  $14,887  $267,903 
    Inventory valuation adjustment (21,101)  33,118   (20,476)  53,976 
    Environmental obligation mark-to-market adjustments (3,504)  9,343   (13,767)  (123,958)
    Unrealized loss on derivatives 21,104   21,635   64,952   7,965 
    Acquisition and integration costs (152)  7,273   91   12,544 
    Par West redevelopment and other costs 3,071   2,613   5,042   5,363 
    Debt extinguishment and commitment costs 1,418   (38)  1,418   17,682 
    Changes in valuation allowance and other deferred tax items (1) 6,162   —   3,531   — 
    Severance costs and other non-operating expense (2) —   1,070   16,138   1,070 
    Loss on sale of assets, net 63   —   114   — 
    Equity earnings from Laramie Energy, LLC, excluding cash distributions 2,845   —   (1,718)  — 
    Adjusted Net Income 28,544   105,027   70,212   242,545 
    Depreciation and amortization 32,144   28,216   64,800   52,576 
    Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 20,471   15,452   39,199   31,702 
    Laramie Energy, LLC cash distributions to Par (1,485)  —   (1,485)  (10,706)
    Par's portion of interest, taxes, and depreciation expense from refining and logistics investments 1,422   207   3,068   207 
    Income tax expense (benefit) 505   1,928   505   2,141 
    Adjusted EBITDA (3)$81,601  $150,830  $176,299  $318,465 

    ___________________________________
    (1) For the three and six months ended June 30, 2024, we recognized a non-cash deferred tax expense of $6.2 million and $3.5 million, respectively, related to deferred state and federal tax liabilities, respectively. This tax benefit is included in Income tax expense (benefit) on our consolidated statements of operations. For the three and six months ended ended June 30, 2023, we did not have any adjustments to our valuation allowance and other deferred tax items.
    (2) For the six months ended June 30, 2024, we incurred $13.1 million of stock-based compensation expenses associated with accelerated vesting of equity awards and modification of vested equity awards related to our CEO transition and $2.3 million for an estimated legal settlement unrelated to current operating activities.
    (3) For the three and six months ended June 30, 2024 and 2023, there was no change in value of contingent consideration, change in value of common stock warrants, impairment expense, or impairments associated with our investment in Laramie Energy. Please read the Non-GAAP Performance Measures discussion above for information regarding changes to the components of Adjusted Net Income (Loss) and Adjusted EBITDA made during the reporting periods.


    The following table sets forth the computation of basic and diluted Adjusted Net Income (Loss) per share (in thousands, except per share amounts):

     Three Months Ended June 30, Six Months Ended June 30,
     2024
    		 2023
    		 2024
    		 2023
    Adjusted Net Income$28,544  $105,027  $70,212  $242,545 
    Plus: effect of convertible securities —   —   —   — 
    Numerator for diluted income per common share$28,544  $105,027  $70,212  $242,545 
            
    Basic weighted-average common stock shares outstanding 57,239   60,399   57,936   60,255 
    Add dilutive effects of common stock equivalents 806   594   466   765 
    Diluted weighted-average common stock shares outstanding 58,045   60,993   58,402   61,020 
            
    Basic Adjusted Net Income per common share$0.50  $1.74  $1.21  $4.03 
    Diluted Adjusted Net Income per common share$0.49  $1.72  $1.20  $3.97 
                    

    Adjusted EBITDA by Segment

    Adjusted EBITDA by segment is defined as Operating income (loss) excluding:

    • D&A;
    • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory);
    • Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington CCA and Clean Fuel Standard);
    • unrealized (gain) loss on derivatives;
    • acquisition and integration costs;
    • redevelopment and other costs related to Par West;
    • severance costs and other non-operating expense (income);
    • (gain) loss on sale of assets;
    • impairment expense; and
    • Par's portion of interest, taxes, and depreciation expense from refining and logistics investments.
       

    Adjusted EBITDA by segment also includes Gain on curtailment of pension obligation and Other income (loss), net, which are presented below operating income (loss) on our condensed consolidated statements of operations.

    The following table presents a reconciliation of Adjusted EBITDA by segment to the most directly comparable GAAP financial measure, operating income (loss) by segment, on a historical basis, for selected segments, for the periods indicated (in thousands):

     Three Months Ended June 30, 2024
     Refining Logistics Retail Corporate and Other
    Operating income (loss) by segment$41,206  $18,041  $16,053  $(26,659)
    Depreciation and amortization 21,691   7,193   2,675   585 
    Inventory valuation adjustment (21,101)  —   —   — 
    Environmental obligation mark-to-market adjustments (3,504)  —   —   — 
    Unrealized loss on commodity derivatives 21,141   —   —   — 
    Acquisition and integration costs —   —   —   (152)
    Par West redevelopment and other costs —   —   —   3,071 
    Severance costs and other non-operating expense —   —   —   — 
    Loss on sale of assets, net —   63   —   — 
    Par's portion of interest, taxes, and depreciation expense from refining and logistics investments 661   761   —   — 
    Other loss, net —   —   —   (124)
    Adjusted EBITDA (1)$60,094  $26,058  $18,728  $(23,279)


     Three Months Ended June 30, 2023
     Refining Logistics Retail Corporate and Other
    Operating income (loss) by segment$44,139  $20,691  $15,220  $(33,617)
    Depreciation and amortization 19,826   5,059   2,732   599 
    Inventory valuation adjustment 33,118   —   —   — 
    Environmental obligation mark-to-market adjustments 9,343   —   —   — 
    Unrealized loss on commodity derivatives 22,178   —   —   — 
    Acquisition and integration costs —   —   —   7,273 
    Par West redevelopment and other costs —   —   —   2,613 
    Severance costs and other non-operating expenses —   —   —   1,070 
    Par's portion of interest, taxes, and depreciation expense from refining and logistics investments —   207   —   — 
    Other income, net —   —   —   379 
    Adjusted EBITDA (1)$128,604  $25,957  $17,952  $(21,683)


     Six Months Ended June 30, 2024
     Refining Logistics Retail Corporate and Other
    Operating income (loss) by segment$63,806  $38,415  $27,049  $(71,114)
    Depreciation and amortization 43,961   13,968   5,791   1,080 
    Inventory valuation adjustment (20,476)  —   —   — 
    Environmental obligation mark-to-market adjustments (13,767)  —   —   — 
    Unrealized loss on commodity derivatives 65,833   —   —   — 
    Acquisition and integration costs —   —   —   91 
    Severance costs and other non-operating expenses 642   —   —   15,496 
    Par West redevelopment and other costs —   —   —   5,042 
    Loss (gain) on sale of assets, net —   124   (10)  — 
    Par's portion of interest, taxes, and depreciation expense from refining and logistics investments 1,379   1,689   —   — 
    Other loss, net —   —   —   (2,700)
    Adjusted EBITDA (1)$141,378  $54,196  $32,830  $(52,105)


     Six Months Ended June 30, 2023
     Refining Logistics Retail Corporate and Other
    Operating income (loss) by segment$307,276  $33,299  $28,694  $(61,434)
    Depreciation and amortization 35,549   10,093   5,811   1,123 
    Inventory valuation adjustment 53,976   —   —   — 
    Environmental obligation mark-to-market adjustments (123,958)  —   —   — 
    Unrealized loss on commodity derivatives 8,508   —   —   — 
    Acquisition and integration costs —   —   —   12,544 
    Severance costs and other non-operating expenses —   —   —   1,070 
    Par West redevelopment and other costs —   —   —   5,363 
    Par's portion of interest, taxes, and depreciation expense from refining and logistics investments —   207   —   — 
    Other income, net —   —   —   344 
    Adjusted EBITDA (1)$281,351  $43,599  $34,505  $(40,990)

    ________________________________________
    (1) For the three and six months ended June 30, 2024 and 2023, there was no change in value of contingent consideration, change in value of common stock warrants, impairment expense, or impairments associated with our investment in Laramie Energy. For the three and six months ended June 30, 2023, there was no loss (gain) on sale of assets.


    Laramie Energy Adjusted EBITDAX

    Adjusted EBITDAX is defined as net income (loss) excluding commodity derivative loss (gain), loss (gain) on settled derivative instruments, interest expense, gain on extinguishment of debt, non-cash preferred dividend, depreciation, depletion, amortization, and accretion, exploration and geological and geographical expense, bonus accrual, equity-based compensation expense, loss (gain) on disposal of assets, phantom units, and expired acreage (non-cash). We believe Adjusted EBITDAX is a useful supplemental financial measure to evaluate the economic and operational performance of exploration and production companies such as Laramie Energy.

    The following table presents a reconciliation of Laramie Energy’s Adjusted EBITDAX to the most directly comparable GAAP financial measure, net income (loss) for the periods indicated (in thousands):

     Three Months Ended June 30, Six Months Ended June 30,
     2024 2023 2024 2023
    Net income (loss)$(6,466) $6,709  $(57) $57,527 
    Commodity derivative income (4,560)  (12,384)  (10,587)  (34,840)
    Gain (loss) on settled derivative instruments 7,815   4,411   8,636   (4,208)
    Interest expense and loan fees 4,908   4,974   10,038   8,959 
    Gain on extinguishment of debt —   —   —   10,098 
    Non-cash preferred dividend —   —   —   2,910 
    Depreciation, depletion, amortization, and accretion 8,788   6,193   16,555   13,217 
    Phantom units (859)  147   (286)  746 
    Loss on sale of assets, net —   58   —   68 
    Expired acreage (non-cash) 398   116   565   112 
    Total Adjusted EBITDAX (1)$10,024  $10,224  $24,864  $54,589 

    ________________________________________
    (1) For the three and six months ended June 30, 2024 and 2023, there was no exploration and geological and geographical expense, bonus accrual, or equity-based compensation expense.


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