管理層發言
Good day, and welcome to the Par Pacific Second Quarter 2026 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Jeff Hollis, Senior Vice President, General Counsel and Secretary. Please go ahead.
Thank you, operator. Welcome to Par Pacific's earnings conference call. Joining me today are Will Monteleone, President and CEO; Richard Creamer, EVP of Refining and Logistics; and Shawn Flores, CFO. Before we begin, note that our comments today may include forward-looking statements. Any forward-looking statements are subject to change and are not guarantees of future performance or events. They are subject to risks and uncertainties, and actual results may differ materially from these forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements, and we disclaim any obligation to update or revise them. I refer you to our investor presentation on our website and to our filings with the SEC for additional information. I'll now turn the call over to our President and CEO, Will Monteleone.
Thank you, Jeff, and good morning, everyone. We're pleased to report strong second quarter financial results, driven by excellent operational and commercial execution. Amidst extreme volatility, each of our business units executed crisply and used the full commercial flexibility of our asset base to capture market conditions. System throughput ran at elevated levels through the peak margin window, and our commercial team optimized crude sourcing and product placement, generating excellent capture rates. Refined product cracks remained materially above historical norms for the quarter. Our combined market index averaged approximately $33 per barrel, well above the 2025 average of $12.40 per barrel and exceeding the second quarter 2022 when the Russia-Ukraine conflict was intensifying. Reduced Persian Gulf and Russian origin refined product exports, Asian refiners running conservatively to preserve crude supply chain duration and protectionist policies restricting free trade drove these favorable market conditions. Looking forward, global refined product inventories remain tight and the structural factors supporting margins remain. Turning to Retail. Same-store fuel volumes declined by 0.8%, while in-store sales increased by 1% compared to the second quarter of 2025. Despite pressure on fuel margins in a higher price environment, the merchandising and food programs continue to advance, strengthening the underlying earnings power of the segment. On the strategic front, our Hawaii Renewables business made steady progress. Renewable diesel production ramped through the quarter with June throughput reaching approximately 3,000 barrels per day before we commenced the Hawaii plant-wide turnaround. In addition, we completed first commercial renewable diesel sales during the quarter. Volumes were small and reflect the early-stage nature of the commercial ramp, but they established the operational pathway from production to sales. On the capital allocation front, we meaningfully strengthened the balance sheet during the quarter, reducing our term debt balance by over 20% via the inaugural senior unsecured notes issuance. We ended the quarter with total liquidity of approximately $1.4 billion, placing our balance sheet in a very strong position to pursue growth and continue to allocate capital thoughtfully through cycles. In closing, our through-cycle discipline on operations, commercial positioning and capital allocation is what allowed us to convert an exceptional market environment into a durably stronger balance sheet and strong per share earnings. We remain focused on maintaining that discipline as market conditions evolve. With that, I'll hand the call to Richard, who will walk through our Refining and Logistics results.
Thank you, Will. I want to begin by congratulating the Wyoming and Montana teams for the safe and efficient completion of their scheduled outages in April. In addition, the Tacoma team achieved a new record quarterly production rate of 41,200 barrels per day or 98.1% utilization through the second quarter. In Hawaii, the Q2 throughput was 73,200 barrels per day and production costs were $6.43 per barrel. The lower production versus plan was a result of the refinery experiencing end-of-cycle conditions. The team delivered on all customer fuel requirements despite challenges associated with the ongoing conflict in the Middle East. The turnaround in Hawaii began in late June, and I'm pleased to report that the team executed the turnaround safely and cleanly while also delivering cost and schedules near target. At this point, the Hawaii turnaround is substantially complete and major operations have been safely restarted. As I stated, Washington throughput set a new quarterly record at 41,200 barrels per day and production costs were $4.21 per barrel, capturing market conditions following the Q1 planned outage. Shifting to Wyoming, throughput was 14,000 barrels per day and production costs were $15.28 per barrel, reflecting the April outage downtime and costs. Following the outage, the refinery has shifted to routine operations supported by strong seasonal demand. Finally, in Montana, second quarter throughput was 53,000 barrels per day and production costs were $10.16 per barrel. The team executed the April crude outage safely, on time and on budget. In May and June, Par Montana Refining set new monthly throughput and OpEx per barrel records of approximately 62,000 barrels per day at $7.56 per barrel. Looking ahead to the third quarter, we expect Hawaii conventional throughput between 59,000 and 65,000 barrels per day and renewable throughput between 1,500 and 2,000 barrels per day, reflecting the turnaround event in July through early August. In the Mainland, Washington is expected between 40,000 and 42,000 barrels per day, Wyoming between 17,000 and 20,000 and Montana between 56,000 and 61,000. The Montana coker was down in July for routine maintenance and is expected to return to service by mid-August. From today's date, there are no significant planned downtime for the balance of the year. The Q3 midpoint throughput guidance is 182,000 barrels per day. And now I'll turn the call over to Shawn to cover our financial results.
Thank you, Richard. Second quarter adjusted EBITDA was $571 million and adjusted net income was $499 million or $10.10 per share. Our Refining segment reported adjusted EBITDA of $552 million in the second quarter compared to $69 million in the first quarter, reflecting a sharp step-up in market conditions driven by the disruptions in crude and refined product supply. Our combined refining index averaged approximately $33 per barrel, an increase of roughly $14 per barrel compared to the first quarter. System-wide refining capture was 125% or 112% on a normalized basis after adjusting for Hawaii price lag and Wyoming FIFO impacts. Starting in Hawaii, the Singapore 3-1-2 averaged approximately $50 per barrel and our landed crude differential was $3.93, resulting in a Hawaii index of approximately $46 per barrel. Hawaii capture was 124%, including a net price lag benefit of approximately $77 million or $11.49 per barrel. Normalized for the price lag impact, Hawaii capture was 99%. In Montana, the second quarter index averaged $25.76 per barrel with margin capture of 144%. Capture was well above our target range, driven by favorable clean product to asphalt sales mix and refined product inventory drawdowns that sustained volumes during the April outage. In Wyoming, the second quarter index averaged $28.73 per barrel. Margin capture was 118%, including the benefit of refined product inventory draws during the April outage, partially offset by a $3 million FIFO headwind from declining crude oil prices. In Washington, our index averaged $20.27 per barrel. Margin capture was 100%, supported by continued jet to diesel strength on the West Coast. Turning to the Logistics segment. Adjusted EBITDA was $30 million in the second quarter compared to $32 million in the first quarter, reflecting reduced crude imports ahead of the Hawaii turnaround. In the Retail segment, adjusted EBITDA was $17 million compared to $15 million in the first quarter. The sequential improvement was driven by a partial recovery in fuel margins and continued growth in food service sales in both regions. Moving to cash flow. Second quarter cash from operations totaled $614 million, excluding working capital outflows of $312 million and deferred turnaround costs of $19 million. The working capital outflows were primarily driven by building refined product inventories ahead of the Hawaii turnaround and higher commodity prices, which increased the value of hydrocarbon inventories. We expect a substantial portion of these working capital outflows to reverse as inventory levels normalize after the Hawaii turnaround and commodity prices stabilize. Second quarter capital expenditures, including deferred turnaround costs, totaled approximately $59 million. During the quarter, we continued to benefit from our excess RIN inventories associated with the prior period small refinery exemptions. As a reminder, our adjusted EBITDA and adjusted net income reflect full RIN expense at current period RIN prices, which does not reflect the benefit of our excess RIN position. Our GAAP results by contrast include approximately $35 million gain in the quarter, representing the difference between current RIN prices and the book value of our RIN assets on our balance sheet. Shifting to the balance sheet. We completed a $500 million offering of senior unsecured notes, reducing gross term debt by more than $130 million during the quarter. We also reduced ABL borrowings by $78 million, resulting in a total net debt reduction of over $220 million. Given the heightened market volatility during the period, we moderated our opportunistic share repurchase activity in favor of strengthening the balance sheet through debt reduction. Year-to-date, through the second quarter, we have repurchased approximately $48 million of common stock, including cash settled options. As of June 30, total liquidity was approximately $1.4 billion, and our cash balance was $185 million. Looking to the third quarter, our July consolidated refining index was $31.34 per barrel or approximately $1.60 below the Q2 average. In Hawaii, the financial impact of the refinery turnaround will be concentrated in the third quarter, increased refined product imports are expected to hold capture below our typical guidance range. Our third quarter Hawaii crude differential is expected to land between $11.50 and $13.50 per barrel, reflecting higher freight costs and steeper backwardation. Across our mainland system, distillate margins have remained firm and seasonal demand has been strong quarter-to-date. As Richard mentioned, Montana will complete its annual coker maintenance during the third quarter, resulting in roughly $6 million to $8 million of incremental OpEx and a heavier asphalt sales mix. In Renewables, we expect a gradual ramp in third-party sales volumes and earnings contribution as we restart the units following the Hawaii turnaround. Overall, the second quarter demonstrated the significant earnings power of our business in a favorable market. Our strong balance sheet and liquidity position will provide financial flexibility to invest in strategic growth opportunities while maintaining an opportunistic approach to share repurchases. This concludes our prepared remarks. Sarah, we'll turn it back to you for the Q&A.
分析師問答
Your first question comes from Matthew Blair with TPH.
Congrats on the strong results. I was hoping you could talk just a little bit more about the moving parts in Hawaii for the third quarter. So you mentioned with the turnaround in July, the capture would likely be below typical guidance. I think you also mentioned that you've been building inventory. So is it reasonable to assume that you're monetizing inventory throughout July to help offset the impact of the turnaround? Also, is there any increase in OpEx from the turnaround? And then finally, should we expect a timing headwind just based on quarter-to-date prices so far in Q3 in Hawaii?
Matt, it's Shawn. I'll take your last one first. I think it's too early to call the price lag impact. It's really, as you know, the last month of each quarter and you look at Singapore distillate prices. So I think just watch September Singapore pricing relative to June once that month prices out. On capture, I referred to it in the prepared remarks. We are expecting a more concentrated impact of the turnaround activities in Q3. We built refined products through imports late in Q2. From a costing perspective, most of those imported barrels will be costed in Q3. So I would expect capture to likely come in below the typical normalized guidance of 100% to 110% because of those factors. On OpEx, I would say a marginal increase. Most of the expenditures incurred during the turnaround are capitalized.
And just lower total crude throughputs, Matt, as you think about it, as the plant comes back online, it won't be at full rates for the entire quarter.
Okay. Sounds good. And then, Will, could you share any insights on the Singapore market? We have seen China refinery utilization pick up a little bit over the past month. It still is relatively low; you reported that China has been increasing product. Have you seen any of that? And yes, the inventory picture in Singapore is, I guess, still at a new five-year highest. But what are the moving parts you're seeing in the Singapore market?
Yes, Matt, I think continue to watch Chinese behavior closely. Obviously, it moves month-to-month. Despite some announcements and potentially some increases in crude throughputs, we've not seen any material change in exports of refined product as we look in July and even the forward planning that we've seen at least through August. As you know, the data out of China is opaque and the best thing to do is to watch the vessel movements. What we're seeing is limited increases in waterborne refined exports at this point in time. As a reminder, over the last decade there's been a focus in China on internalizing their capabilities, and you are seeing that behavior play out amidst this shock. That internal focus is probably the primary objective, and it's something to continue to watch over the course of years rather than months.
Your next question comes from Alexa Breno with Goldman Sachs.
Are you able to give us any more color on the Hawaii turnaround? It sounds like from an operational perspective, it's tracking. Anything that surprised upside or downside? And then on the 'substantially complete' piece, what specific units are left? Any thoughts on timeline?
Sure, Alexa. The turnaround was scheduled for 30 to 45 days, 30 being the return of some of the early equipment, and we followed pretty well on track with that, with the crude unit and reforming unit to produce gasoline on that 30-day window. The 45-day window is really centered around the hydrocracker. The mechanical work is completed on it, and it's in the middle of catalyst activation and start-up at this point. So that's the status of the major equipment. The cost and schedule all came in in close range to target. No significant issues there.
Okay. That's helpful. And then just a follow-up. Can you talk about your latest thoughts on capital allocation priorities, whether that be around capital returns or potential for any bolt-on M&A or any other considerations?
Sure, Alexa. I think capital allocation continues to be dynamic. Our past history is a good indicator of the framework we deploy. At times, M&A is the most attractive capital deployment. At others, we've invested in growth inside the business like in our renewable fuels project. There have also been times where we've repurchased our own shares at attractive discounts to our view of intrinsic value. These opportunities come and go and are based on many different variables. Ultimately, our focus is a disciplined view on creating long-term value on a per share basis. At this point in time, we are spending significant effort developing internal small-scale projects that I describe as singles and doubles that give us flexibility to achieve unlevered returns in the low 20s for refining and logistics projects. Those are within our control. Other opportunities involve many external market forces. Being prepared and ready to move is a significant strategic asset. Our historical framework guides the way we think about the future.
Your next question comes from Jason Gabelman with TD Cowen.
I was hoping to get an update on how much of the NOL is left? When do you expect that to be exhausted given the very strong earnings we've seen and then updated guidance on where the tax rate can go once that is exhausted?
Jason, it's Shawn. At the beginning of the year, our NOL balance was around $700 million. Given the year-to-date performance, I would expect to utilize a substantial portion of that NOL this year. If current margins persist, we'll likely transition to a more typical federal tax position beginning in 2027.
Okay. Understood. And then maybe I was hoping to get your updated thoughts around small refinery exemptions. Any kind of sense on when you can expect to hear on your 2025 petitions and outlook for what that could do from a cash standpoint?
Sure, Jason. Any specific dates would be speculation. There are deadlines and legal obligations, and they rarely seem to be binding on behalf of the EPA. The key date we're watching is the September 1 compliance deadline for 2025. It's early August now, so we would hope to hear with adequate time ahead of that compliance deadline. As a reminder, we're in a favorable position with respect to the 2025 RIN positioning at this juncture. I'll let Shawn go into the dollar magnitudes based on different scenarios for your benefit.
Yes, Jason, our mainland RVO is about 140 million RIN units for 2025. So a full exemption at all three of our refineries and at current RIN prices would be about $300 million and a partial exemption would be half of that.
Got it. Maybe if I could just ask a follow-up on the Hawaii turnaround and kind of the outlook. I know you mentioned some of the working capital headwind in 2Q was related to Hawaii. I was hoping you could disclose around what proportion of the headwind we should expect to come back once Hawaii comes back online? And then based on what you're seeing in the market, do you anticipate landed crude costs to normalize beyond 3Q?
I'll take the first one. I would say roughly half of the outflow this quarter was directly related to building up refined product inventories in Hawaii. The balance is mostly related to just higher flat price and inventory values.
Yes, Jason. The waterborne crude market has been volatile. As a proxy, amidst the peak concerns on crude supply, we saw ANS for June crude deliveries trade as high as ICE Brent plus $18 in the April-May time frame. When the straits appeared to be opening, we saw substantial excess waterborne crude available and ANS deliveries for September delivery dropped to minus $6. So you can see it's almost a $25 per barrel swing in the span of three months in terms of crude delivery and it expresses the volatility we're seeing. That said, despite the conflict reintensifying, we're not seeing crude differentials at peak levels like in the early stage of the conflict in the March-April timeframe in the current market environment.
This concludes the question-and-answer session. I will now turn the call over to Will for closing remarks.
Great. This quarter represents an example of what strong execution can deliver against a favorable market backdrop. Looking forward, our focus remains on disciplined execution as the durable path to growing earnings and free cash flow per share over time. Thank you to the entire Par Pacific team for your focused efforts throughout the quarter, and thank you all for joining us today.
This concludes today's conference call. Thank you for joining. You may now disconnect.