Par Pacific Holdings, Inc. Q4 FY2025 earnings call

2025 was a year of meaningful progress. Executed major turnaround activity safely and on schedule, minimized impact from Wyoming crude heater event, advanced and started up Hawaii Renewables unit, delivered on cost reduction commitments. Achieved record annual refining throughput. Hawaii throughput averaged 84,000 barrels per day, approximately 4% above prior 3-year average. Logistics organization generated record segment profits. Retail delivered growing results, setting new financial records. Hawaii renewable fuels project progressed into commissioning and early start-up phases in fourth quarter, focusing on safe start-up and operational stability.

Refining segment: Fourth quarter adjusted EBITDA was $88 million; full year adjusted EBITDA was $634 million. Logistics segment: Fourth quarter adjusted EBITDA was $30 million; full year logistics adjusted EBITDA reached a record $126 million. Retail segment: Fourth quarter adjusted EBITDA was $22 million; full year retail achieved a record $86 million in adjusted EBITDA.

Priorities for 2026: improve mid-cycle earnings contribution of Rocky Mountain assets through targeted high-return projects; execute Hawaii turnaround safely and on schedule; successfully start up and optimize renewable fuels unit; maintain disciplined and opportunistic capital allocation. Expect first quarter Hawaii throughput between 85,000 and 89,000 barrels per day, Washington between 24,000 and 28,000 barrels per day, etc.

Wyoming event was a reminder of the importance of safely and reliably operating facilities. Refining markets are cyclical, posing risks to short-term performance.

Q: I wanted to start on capital allocation. You talked about starting to monetize the access RIN bank. How should we expect that cash to be used? And then how are you thinking about share repurchases, particularly with the stock at these levels?

A: Yes. I think, our capital allocation framework remains consistent with how we've approached it in the past. I think we are looking at a mix of both the opportunity to repurchase our shares as well as internal growth opportunities and even potentially external opportunities. So I think if you look at our past, you'll see that we've used really all of the above when appropriate, to try and generate shareholder returns. And I think, we'll continue to deploy a dynamic approach to that given our strong excess capital position, we have a lot of flexibility.

Q: Can you talk a little about Q4 on captures? I think Rockies was a little softer than maybe what we think about mid-cycle captures. Can you kind of walk us through some of the moving pieces there? And then how 1Q is shaping up so far?

A: Alexa, it's Shawn. Yes, I think in my prepared remarks, I touched on the softness that we saw in the Rockies. In Montana, we had 72% capture relative to our sort of annual guidance of 90% to 100%. And I think it's really driven by the coker downtime. We lightened up our crude slate while the coker was offline, and it also results in incremental asphalt sales. And we estimate about a $10 million margin impact. That translates to about 19% capture. So I think when you normalize for that, you're back within sort of that 90% to 100% range. And then I think a similar story in Wyoming, we -- as Richard referenced, we had the regional power outage that impacted most of the state for a few days and led to a multiple-week downtime. And ultimately, I think it impacted diesel sales, which was about $4 million. And I think adjusting for that margin loss, Wyoming Capture would have been in the high 80s. So I think that the story is as simple as that.

Q: Will, maybe to just follow up on your comment there about looking at external growth opportunities. Could you talk a little bit more about what opportunities could that might be? Would that include retail integration, additional retail integration? Or are you also open to refinery acquisitions or even corporate acquisitions?

A: Yes, Matthew, happy to talk a little bit more about it. I think the best way to think about our framework is probably to look at our track record and to think about how we've operated in the past is a pretty good indicator of how we'll approach the future. And so I think, from our perspective, I think we are focused on growing the scale of the business when it's accretive. And again, I think we're trying to find opportunities that are synergistic with our existing portfolio where we can really generate an edge. And so that's our focus. And I think we hold 2 things to be true at the same time. I mean if you look at our history, we've grown this business through M&A., but I think we also fully understand that if you pursue growth at any price, you can destroy shareholder value very quickly, so being disciplined is important. And I think what we found on the retail side is generally, we can be competitive in small acquisitions, 1 to 5 store and then we can be competitive on new builds and generate real returns in that area. Given the current market, larger-scale M&A and retail is less likely and more challenging given our competitors' cost of capital versus our own.

Q: I had a very quick clarification. Can you remind us of your sensitivity to the WCS differential? I think it was about $14 million per $1 of widening, but if you could reflect on that and then your view on the WCS differential itself with more Venezuelan crude coming into the United States?

A: Sure, Manav. Yes, so I think kind of a mid-cycle, we're roughly running between 40,000 and 50,000 barrels a day of WCS. And so it's basically every dollar is worth around $15 million to $16 million a year. So that's, I think, the best way to think about our sensitivity on that. And I think at the end of the day, we are an indirect beneficiary of incremental Venezuelan barrels on the Gulf Coast, really as it cascades and pushes Canadian barrels back up into the Mid-Continent. And so we're seeing less volume flowing out of Vancouver and West Ridge to the Far East, more barrels in Canada and increasing apportionment on the lines, which is all favorable for crude differentials moving back out towards our mid-cycle range of, let's call it, $15 to $16 under WTI.