Par Pacific Holdings, Inc. Q2 FY2025 earnings call

• Strong second quarter results: adjusted EBITDA $138M and adjusted net income $1.54/share. Retail business: same-store fuel and in-store revenue up 1.8% and 3% QoQ; last 12 months total adjusted EBITDA $85M.
• Montana team completed largest turnaround in site history; shifting focus to improving profitability via low-capital projects.
• Hawaii and Renewables team progressing SAF project, scheduled for startup in H2; joint venture with Mitsubishi and ENEOS Corporation, $100M investment for 36.5% equity, Par Pacific 63.5% controlling interest.
• Repurchased $28M of stock, year-to-date share count down nearly 8%; balance sheet in good shape with $650M liquidity.

Refining Segment

• Hawaii: Second quarter throughput was a record 88,000 barrels per day, production cost $4.18 per barrel. Singapore 312 averaged $13.56 per barrel, crude differential $4.99, Hawaii index $8.57 per barrel. Margin capture 119% (excluding headwinds 125%). Expected Q3 crude differential $5.75-$6.25 per barrel.
• Montana: Throughput 44,000 barrels per day, production cost $14.18 per barrel. Index averaged $20.29 per barrel, margin capture 110%. July indicator averaged $15.13 per barrel.
• Wyoming: Throughput 13,000 barrels per day, production cost $14.50 per barrel. Index averaged $21.41 per barrel, margin capture 87% due to recent outage, expected OpEx to revert to prior run rate in Q3.
• Washington: Throughput 41,000 barrels per day, production cost $3.73 per barrel. Index averaged $15.37 per barrel, margin capture 75% due to higher sales mix of asphalt and intermediate products.

Logistics Segment

• Second quarter adjusted EBITDA $30 million, consistent with mid-cycle run rate guidance.

Retail Segment

• Second quarter adjusted EBITDA $23 million, up from $19 million in Q1, driven by higher fuel margins, same-store sales growth, and lower operating costs.

• Hawaii crude differential expected $5.75-$6.25/bbl in Q3.
• Montana indicator averaged $15.13/bbl in July, supported by strong distillate margins but tighter heavy crude differentials.
• Wyoming returned to normal operations, expect OpEx to revert to prior run rate.
• Washington Index averaged $15.37/bbl, improvement from prior quarter, margin capture expected back to normal in Q3.
• Logistics segment adjusted EBITDA consistent with mid-cycle run rate guidance.
• Retail segment on track to achieve cost reduction initiatives targeting $30M-$40M annual savings.

• Policy uncertainty related to SAF project and other regulations.
• Volatility in crude differentials and product margins.
• Impact of operational outages (e.g., Wyoming crude heater outage) on profitability.
• Market risks related to global supply and demand dynamics, including Chinese exports and biodiesel production changes.

Q: Drivers behind strong capture rates in Hawaii?

A: Elevated clean product freight rates, higher throughput rates near nameplate capacity; over 18 months of work by Hawaii team deconstraining and improving heater efficiency.

Q: SAF JV details?

A: Partnership with Mitsubishi and ENEOS, $100M investment for 36.5% equity, Par Pacific 63.5% controlling interest; targeting H2 startup, EBITDA contribution expected in Q1 2026.

Q: Rockies performance and broader dynamics?

A: Tight distillate markets, export opportunities, reduced biodiesel production; PADD 4 and PADD 5 distillate markets tight due to global inventory drawdown and export relief.

Q: Use of cash and shareholder returns?

A: Active share buybacks, weighing growth prospects vs. capital allocation; nimble approach to weigh internal growth vs. repurchasing shares.

Q: Small refinery exemptions?

A: EPA process, RIN positioning; mainland refineries have ~$140M RIN unit gross exposure, retroactive SREs could provide cash proceeds.

Q: Singapore market and Chinese exports?

A: Chinese refining fleet focused on internal demand, Asia Pacific demand steady; Chinese exports relatively contained.

Q: Rockies and Pacific Northwest markets?

A: Durable margins driven by distillate market strength; watch California refining fleet changes impacting import/export parity.

Q: Excess cash position and M&A?

A: Liquidity target $250M-$300M; focused on internal opportunities and small-scale bolt-ons for cost reduction and market access.

Q: Global quality discounts?

A: Heavy sour barrels trading at elevated premiums to Brent; WCS market tightening, incremental supply expected to impact differentials.