PAR PACIFIC HOLDINGS INC
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
PARR$68.06-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000821483-24-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000821483-24-000030
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 157 previous paragraphs and 159 current paragraphs.
75 unchanged; 76 reworded; 8 added; 4 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 36 previous and 36 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
(7)ANS crude price influences the Hawaii Refinery’s financial performance. Beginning in September 2024, the ANS index has been updated from a Platts marker to an Argus marker to better reflect the prompt ANS market.
Current report
Retail. Operating income for our retail segment was $18.3 million for the three months ended September 30, 2024, an increase of $5.0 million compared to $13.3 million for the three months ended September 30, 2023. The increase was primarily due to a $3.4 million increase in fuel margins, increased merchandise margins of $0.7 million, and a $0.4 million decrease in operating expenses primarily driven by lower outside services costs.
Current report
•Adjusted Gross Margin for the Montana refinery decreased by $14.07 per barrel from $26.49 per barrel during the three months ended September 30, 2023 to $12.42 per barrel during the three months ended September 30, 2024. The decrease in Adjusted Gross Margin was primarily due to declining crack spreads.The RVO Adjusted USGC 3-2-1 index decreased from $29.65 in the third quarter of 2023 to $14.14 in the third quarter of 2024.
Current report
Refining. For the nine months ended September 30, 2024, our refining Adjusted Gross Margin was $525.9 million, a decrease of $241.9 million compared to $767.8 million for the nine months ended September 30, 2023. The decrease was primarily driven by a decrease of $394.4 million reflecting lower crack spreads at the refineries in our legacy portfolio, partially offset by an increase of $61.3 million related to favorable changes in crude oil differentials at the refineries in our legacy portfolio, favorable realized derivative gains and losses of $66.8 million, and other factors as described below.
Current report
•Adjusted Gross Margin for the Washington refinery decreased by $5.88 per barrel from $9.91 per barrel during the nine months ended September 30, 2023 to $4.03 per barrel during the nine months ended September 30, 2024. The decrease was primarily due to declining crack spreads and an 9% decrease in refined product sales, partially offset by favorable changes in crude oil differentials. The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $28.51 in the nine months ended September 30, 2023 to $19.49 in the nine months ended September 30, 2024.
Current report
Cost of Revenues (Excluding Depreciation). For the three months ended September 30, 2024, cost of revenues (excluding depreciation) was $1.9 billion, a decrease of $0.3 billion when compared to $2.2 billion for the three months ended September 30, 2023. The decrease was primarily driven by lower crude oil prices, as discussed above, a favorable change of $0.1 billion related to the termination of the Washington Refinery Intermediation Agreement and Supply and Offtake Agreement, and favorable derivative activity of $0.1 billion, partially offset by $0.1 billion of unfavorable FIFO impacts. Please read Note 9—Inventory Financing Agreements for more information on the Washington Refinery Intermediation Agreement and Supply and Offtake Agreement terminations.
Current report
Interest Expense and Financing Costs, Net. For the three months ended September 30, 2024, our interest expense and financing costs were $23.4 million, an increase of $2.6 million compared to $20.8 million for the three months ended
Current report
Other income (expense), net. For the three months ended September 30, 2024, other income was $1.3 million primarily due to a $1.5 million reduction of2024 expenses for a legal settlement unrelated to operating activities with no similar 2023 expenses. For three months ended September 30, 2023, we incurred an immaterial amount of other expense.
Removed paragraphs (4)
Previous report
Retail. Operating income for our retail segment was $16.1 million for the three months ended June 30, 2024, an increase of $0.9 million compared to $15.2 million for the three months ended June 30, 2023. The increase was primarily due to a $1.2 million increase in fuel margins, and increased merchandise sales of $0.8 million, partially offset by a $1.6 million increase in operating expenses driven by higher employee costs.
Previous report
Refining. For the six months ended June 30, 2024, our refining Adjusted Gross Margin was $383.7 million, a decrease of $33.5 million compared to $417.2 million for the six months ended June 30, 2023. The decrease was primarily driven by a $157.3 million decline due to lower crack spreads, and a $27.0 million decrease related to a 5% decline in refined product sales volumes primarily from our Hawaii and Washington refineries, partially offset by increased Adjusted Gross Margin contributed by the Montana refinery of $66.6 million, $44.0 million lower purchased product expenses, $22.1 million benefit due to favorable derivative activities, and $12.7 million lower environmental expenses. Other factors impacting refining results are described below.
Previous report
•Adjusted Gross Margin for the Washington refinery decreased by $3.36 per barrel from $8.66 per barrel during the six months ended June 30, 2023 to $5.30 per barrel during the six months ended June 30, 2024, inclusive of a 15-day planned maintenance event in March 2024. The decrease was primarily due to declining crack spreads and an 11% decrease in refined product sales, partially offset by lower feedstock costs. The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $25.21 in the six months ended June 30, 2023 to $21.51 in the six months ended June 30, 2024.
Previous report
Cost of Revenues (Excluding Depreciation). For the three months ended June 30, 2024, cost of revenues (excluding depreciation) was $1.8 billion, an increase of $0.2 billion when compared to $1.6 billion for the three months ended June 30, 2023. The increase was primarily driven by a $0.3 billion increased contribution from the Billings Acquisition due to a full quarter under our ownership and higher crude oil prices, partially offset by decreases due to lower refining sales volumes, as discussed above, and lower environmental expenses.
Reworded paragraphs (76)
Previous wording
Crude oil pricing increased in the first half of 2024 compared to the first half of 2023. Brent crude oil pricing averaged $85.03 per barrel in the first half of 2024 compared to $77.73 per barrel in the first half of 2023. Average U.S. retail gasoline prices remained relatively stable from $3.59 per gallon in the first half of 2023 to $3.52 per gallon in the first half of 2024. Refined product crack spreads in the first half of 2024 decreased as compared to the first half of 2023. The U.S. Energy Information Administration (“EIA”) in its June 2024 short term energy outlook forecasts average Brent crude oil pricing of $85 per barrel in the second half of 2024 due to strong global inventory draws in the first half of 2024 driven by less Organization of the Petroleum Exporting Countries (“OPEC”) production. In 2023, OPEC announced several voluntary production cuts. Russia announced on February 10, 2023, that it would cut its oil production by 500,000 barrels a day (5% of its output), as a response to imposed sanctions on the country’s oil trade. In June 2023, OPEC extended oil output cuts of 3.66 million barrels a day, or about 5% of daily global demand, until the end of 2024, including a Russian cut in oil exports of 300,000 barrels a day until the end of 2023. In November 2023 OPEC announced additional voluntary production cuts of 1.7 million barrels a day, thus totaling about 2.2 million barrels a day, from January through March 2024. On March 3, 2024, OPEC announced an extension of its November 2023 voluntary production cut through June 2024, driving down supply, as demand increases due to spring and summer travel seasons in the Northern Hemisphere. On June 2, 2024, OPEC agreed to extend the latest cut of 2.2 million barrels a day until the end of September and gradually phase it out from October on a monthly basis. Additionally, geopolitical tensions in the Middle East and the Red Sea region continued to escalate in the first half of 2024 putting upward pressure on prices. The overall effect of these conflicts and associated actions taken to limit the purchase of Russian petroleum products impacted freight movements and raised the operating costs of many European and other refineries. Energy prices are, among other factors, indicators of inflation. The overall energy price index increased 4.3% year over year as of June 30, 2024. While inflation has worsened relative to the prior year, we do not believe that inflation has had a material effect on our business, financial condition, or results of operations in the first half of 2024. Please read Item 1A. — Risk Factors on our Annual Report on Form 10-K for the year ended December 31, 2023 for further information.
Current wording
Crude oil pricing decreased in the third quarter of 2024 compared to the third quarter of 2023. Brent crude oil pricing averaged $78.71 per barrel in the third quarter of 2024 compared to $85.92 per barrel in the third quarter of 2023. Average U.S. retail gasoline prices remained relatively stable from $3.69 per gallon in 2023 to $3.51 per gallon in 2024. Refined product crack spreads decreased in 2024 as compared to 2023. The U.S. Energy Information Administration (“EIA”) in its September 2024 short term energy outlook forecasts average Brent crude oil pricing of $84 per barrel in 2025 due to strong global inventory draws in the first half of 2024 driven by less Organization of the Petroleum Exporting Countries (“OPEC”) production. In addition, the International Energy Agency (“IEA”) reduced its forecast for global oil demand in 2024 and 2025 in its October report. This is primarily driven by reduced demand in China. In 2023, OPEC announced several voluntary production cuts. Russia announced on February 10, 2023, that it would cut its oil production by 500,000 barrels a day (5% of its output), in response to imposed sanctions on the country’s oil trade. In June 2023, OPEC extended oil output cuts of 3.66 million barrels a day, or about 5% of daily global demand, until the end of 2024, including a Russian cut in oil exports of 300,000 barrels a day until the end of 2023. In November 2023, OPEC announced additional voluntary production cuts of 1.7 million barrels a day, thus totaling about 2.2 million barrels a day, from January through March 2024. On March 3, 2024, OPEC announced an extension of its November 2023 voluntary production cut through June 2024, driving down supply, as demand increased due to spring and summer travel seasons in the Northern Hemisphere. On June 2, 2024, OPEC agreed to extend the latest cut of 2.2 million barrels a day until the end of September and gradually phase it out from October on a monthly basis. Additionally, geopolitical tensions in the Middle East and Red Sea region continued to escalate in 2024 putting upward pressure on prices. The overall effect of these conflicts and associated actions taken to limit the purchase of Russian petroleum products impacted freight movements and raised the operating costs of many European and other refineries. Energy prices are, among other factors, indicators of inflation. The overall energy price index increased 3.4% year over year as of September 30, 2024. While inflation has increased relative to the prior year, we do not believe that inflation has had a material effect on our business, financial condition, or results of operations in 2024. Please read Item 1A. — Risk Factors on our Annual Report on Form 10-K for the year ended December 31, 2023 for further information.
Previous wording
Net Income. Our financial results for the second quarter of 2024 declined from net income of $30.0 million for the three months ended June 30, 2023 to $18.6 million for the three months ended June 30, 2024. The decrease was primarily driven by a $5.5 million increase in interest expense and financing costs, net, a $4.7 million increase in income tax expense, a $2.9 million decrease in our refining segment operating income, a $2.7 million decrease in our logistics segment operating income, a $1.5 million increase in debt extinguishment and commitment costs, and a $1.4 million decrease in equity earnings from Laramie Energy, LLC, partially offset by a $7.4 million decrease in acquisition and integration expenses related to our Billings Acquisition. Please read the discussions of segment and consolidated results below for additional information.
Current wording
Net Income. Our financial results for the third quarter of 2024 declined from net income of $171.4 million for the three months ended September 30, 2023 to $7.5 million for the three months ended September 30, 2024. The decrease was primarily driven by a $175.8 million decrease in our refining segment operating income and a $2.6 million increase in interest expense and financing costs, net, partially offset by a $5.5 million increase in our logistics segment operating income, a $5.0 million increase in our retail segment operating income, and a $4.7 million decrease in acquisition and integration expenses related to our Billings Acquisition. Please read the discussions of segment and consolidated results below for additional information.
Previous wording
Adjusted EBITDA and Adjusted Net Income. For the three months ended June 30, 2024, Adjusted EBITDA was $81.6 million compared to $150.8 million for the three months ended June 30, 2023. The $69.2 million decrease was primarily related to a $42.3 million increase in operating expenses and a decrease of $29.0 million in refining segment Adjusted Gross Margin. Please read the discussion of Adjusted Gross Margin by Segment and the Discussion of Consolidated Results below for additional information.
Current wording
Adjusted EBITDA and Adjusted Net Income (Loss). For the three months ended September 30, 2024, Adjusted EBITDA was $51.4 million compared to $255.7 million for the three months ended September 30, 2023. The $204.3 million decrease was primarily due to a decrease of $208.4 million in refining segment Adjusted Gross Margin, partially offset by an increase of $4.4 million in our retail segment Adjusted Gross Margin. Please read the discussion of Adjusted Gross Margin by Segment and the Discussion of Consolidated Results below for additional information.
Previous wording
For the three months ended June 30, 2024, Adjusted Net Income was $28.5 million compared to $105.0 million for the three months ended June 30, 2023. The decline was primarily related to the factors described above for the decrease in Adjusted EBITDA, an increase of $5.0 million in interest expense and financing costs, excluding unrealized interest rate derivative losses (gains), and an increase of $3.9 million of D&A, partially offset by a cash distribution of $1.5 million received from Laramie Energy, LLC in the second quarter of 2024.
Current wording
For the three months ended September 30, 2024, Adjusted Net Loss was $5.5 million compared to Adjusted Net Income of $193.4 million for the three months ended September 30, 2023. The decline was primarily related to the factors described above for the decrease in Adjusted EBITDA, combined with an increase of $1.9 million in interest expense and financing costs, excluding unrealized interest rate derivative losses (gains), partially offset by a decrease of $3.8 million in income tax expense and a decrease of $3.4 million in D&A.
Previous wording
Net Income. Our financial results declined from net income of $267.9 million for the six months ended June 30, 2023 to $14.9 million for the six months ended June 30, 2024. The decrease was driven by a $243.5 million decrease in refining segment operating income, a $22.5 million increase in general and administrative expenses, and a $1.6 million decrease in retail segment operating income, partially offset by a $12.5 million decrease in acquisitions and integration expenses related to our Billings Acquisition and a $5.1 million increase in logistics segment operating income. Please read the discussions of segment and consolidated results below for additional information.
Current wording
Net Income. Our financial results declined from net income of $439.3 million for the nine months ended September 30, 2023 to $22.4 million for the nine months ended September 30, 2024. The decrease was driven by a $419.3 million decrease in refining segment operating income, a $21.2 million increase in general and administrative expenses, a $9.7 million increase in Interest expense and financing costs, net, and a $7.8 million increase in Equity earnings from Laramie Energy, LLC, partially offset by a $17.1 million decrease in acquisitions and integration expenses related to our Billings Acquisition, a $16.3 million decrease in Debt extinguishment and commitment costs, and a $10.6 million increase in logistics segment operating income. Please read the discussions of segment and consolidated results below for additional information.
Previous wording
Adjusted EBITDA and Adjusted Net Income. For the six months ended June 30, 2024, Adjusted EBITDA was $176.3 million compared to $318.5 million for the six months ended June 30, 2023. The $142.2 million decrease was primarily related to a $112.3 million increase in operating expenses and a decrease of $33.5 million in our refining segment Adjusted Gross Margin. Please read the discussion of Adjusted Gross Margin by Segment and the Discussion of Consolidated Results below for additional information.
Current wording
Adjusted EBITDA and Adjusted Net Income. For the nine months ended September 30, 2024, Adjusted EBITDA was $227.7 million compared to $574.2 million for the nine months ended September 30, 2023. The $346.5 million decrease was primarily due to a decrease of $241.9 million in our refining segment Adjusted Gross Margin, a $114.2 million increase in operating expenses, a $21.2 million increase in General and administrative expense (excluding depreciation),partially offset by increases of $13.1 million and $6.5 million in our logistics and retail segment Adjusted Gross Margins, respectively. Please read the discussion of Adjusted Gross Margin by Segment and the Discussion of Consolidated Results below for additional information.
Previous wording
For the six months ended June 30, 2024, Adjusted Net Income was $70.2 million compared to $242.5 million for the six months ended June 30, 2023. The decline was primarily related to the same factors described above for the decrease in Adjusted EBITDA, an increase of $12.2 million of D&A, a decrease of $9.2 million of cash distributions received from Laramie Energy, LLC, and an increase of $7.5 million of interest expense and financing costs, excluding unrealized interest rate derivative losses (gains) .
Current wording
For the nine months ended September 30, 2024, Adjusted Net Income was $64.7 million compared to $435.9 million for the nine months ended September 30, 2023. The decline was primarily related to the same factors described above for the decrease in Adjusted EBITDA, combined with an increase of $9.4 million of interest expense and financing costs, excluding unrealized interest rate derivative losses (gains), an increase of $8.8 million of D&A, and a decrease of $9.2 million of cash distributions received from Laramie Energy, LLC, partially offset by a decrease in Income tax expense, net of impacts due to changes in the valuation allowance and other deferred tax items of $5.5 million.
Previous wording
The following tables summarize our consolidated results of operations for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 (in thousands). The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
The following tables summarize our consolidated results of operations for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 (in thousands). The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
The following tables summarize our operating income (loss) by segment for the three and six months ended June 30, 2024 and 2023 (in thousands). The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
The following tables summarize our operating income (loss) by segment for the three and nine months ended September 30, 2024 and 2023 (in thousands). The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
(2)Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $165.1 million and $137.7 million for the three months ended June 30, 2024 and 2023, respectively.
Current wording
(2)Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $164.6 million and $176.2 million for the three months ended September 30, 2024 and 2023, respectively.
Previous wording
(2)Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $322.9 million and $255.9 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
(2)Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $487.4 million and $432.1 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
Below is a summary of key operating statistics for the refining segment for the three and six months ended June 30, 2024 and 2023:
Current wording
Below is a summary of key operating statistics for the refining segment for the three and nine months ended September 30, 2024 and 2023:
Previous wording
(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 during the three and six months ended June 30, 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 period 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.
Current wording
(1)Feedstocks throughput and sales volumes per day for the Montana refinery for the three and nine months ended September 30, 2023 are calculated based on the 92 and 122-day periods for which we owned the Montana refinery during the three and nine months ended September 30, 2023, respectively. 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 nine months ended September 30, 2023, plus the Montana refinery’s throughput or sales volumes averaged over the periods from July 1, 2023 to September 30, 2023 and June 1, 2023, to September 30, 2023, respectively. 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 nine months ended September 30, 2024.
Previous wording
(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.
Current wording
(5)We believe the RVO Adjusted Pacific Northwest 3-1-1-1 Index (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.
Previous wording
(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.
Current wording
(6)We believe the RVO Adjusted USGC 3-2-1 Index (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.
Previous wording
Below is a summary of key operating statistics for the retail segment for the three and six months ended June 30, 2024 and 2023:
Current wording
Below is a summary of key operating statistics for the retail segment for the three and nine months ended September 30, 2024 and 2023:
Previous wording
(1)For the three and six months ended June 30, 2024 and 2023, there was no impairment expense or LIFO liquidation adjustment 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.
Current wording
(1)For the three and nine months ended September 30, 2024 and 2023, there was no impairment expense in Operating income. For the three months ended September 30, 2024 and the three and nine months ended September 30, 2023, there was no (gain) loss on sale of assets recorded in Operating income.
Previous wording
•Par’s share of equity losses from Laramie Energy, LLC, excluding cash distributions.
Current wording
•Par’s share of equity (earnings) losses from Laramie Energy, LLC, excluding cash distributions.
Previous wording
(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. This tax benefit is included in Income tax expense (benefit) on our consolidated statements of operations. For the three and six months ended June 30, 2023, we did not have any adjustments to our valuation allowance and other deferred tax items.
Current wording
(1)For the three and nine months ended September 30, 2024, we recognized a non-cash deferred tax expense of $5.7 million and $9.2 million, respectively, related to deferred state and federal tax liabilities. This tax benefit is included in Income tax expense (benefit) on our consolidated statements of operations. For the three and nine months ended September 30, 2023, we did not have any adjustments to our valuation allowance and other deferred tax items.
Previous wording
(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.
Current wording
(2)For the nine months ended September 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.
Previous wording
(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, impairments associated with our investment in Laramie Energy, or our share of Laramie Energy’s asset impairment losses in excess of our basis difference. Please read the Non-
Current wording
(3)For the three and nine months ended September 30, 2024 and 2023, there was no change in value of contingent consideration, change in value of common stock warrants, impairment expense, impairments associated with our investment in Laramie Energy, or our share of Laramie Energy’s asset impairment losses in excess of our basis difference.
Previous wording
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.
Current wording
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.
Previous wording
Refining. Operating income for our refining segment was $41.2 million for the three months ended June 30, 2024, a decrease of $2.9 million compared to operating income of $44.1 million for the three months ended June 30, 2023. The decrease was primarily driven by lower crack spreads across all the refineries in our legacy portfolio and higher feedstock costs, partially offset by an $11.2 million increase related to a full quarter contribution from the Billings Acquisition and an $8.1 million decrease in environmental costs incurred by our legacy refinery portfolio. Please read the Adjusted Gross Margin discussion below for additional information.
Current wording
Refining. Operating income for our refining segment was $19.0 million for the three months ended September 30, 2024, a decrease of $175.8 million compared to operating income of $194.8 million for the three months ended September 30, 2023. The decrease was primarily driven by lower crack spreads across all of our refineries combined with unfavorable FIFO impacts, partially offset by a favorable change of $126.6 million in the step-out obligations associated with our inventory intermediation agreements. Please read the Adjusted Gross Margin discussion below for additional information.
Previous wording
Logistics. Operating income for our logistics segment was $18.0 million for the three months ended June 30, 2024, a decrease of $2.7 million compared to $20.7 million for the three months ended June 30, 2023. The decrease was primarily due to a decrease of $3.7 million in third-party contracts and vessel revenue, partially offset by a decrease in vessel and fuel costs of $1.3 million.
Current wording
Logistics. Operating income for our logistics segment was $26.2 million for the three months ended September 30, 2024, an increase of $5.5 million compared to $20.7 million for the three months ended September 30, 2023. The increase was primarily due to a decrease of $2.8 million in operating expenses and a $1.8 million decrease in depreciation and amortization. The operating expense decrease primarily reflects lower outside services costs and repair and maintenance expenses, partially offset by lower rental expenses and employee costs.
Previous wording
Refining. Operating income for our refining segment was $63.8 million for the six months ended June 30, 2024, a decrease of $243.5 million compared to $307.3 million for the six months ended June 30, 2023. The decrease in operating income was primarily driven by:
Current wording
Refining. Operating income for our refining segment was $82.8 million for the nine months ended September 30, 2024, a decrease of $419.3 million compared to $502.1 million for the nine months ended September 30, 2023. The decrease in operating income was primarily driven by:
Previous wording
Logistics. Operating income for our logistics segment was $38.4 million for the six months ended June 30, 2024, an increase of $5.1 million compared to $33.3 million for the six months ended June 30, 2023. The increase was primarily due to a $7.3 million increase in contribution from the Billings Acquisition logistics assets acquired in June 2023 partially offset by a $2.5 million decrease in third-party contracts for our logistics services. Our legacy logistics portfolio consists of our logistics assets, excluding logistics assets from the Billings Acquisition.
Current wording
Logistics. Operating income for our logistics segment was $64.6 million for the nine months ended September 30, 2024, an increase of $10.6 million compared to $54.0 million for the nine months ended September 30, 2023. The increase was primarily due to a $11.7 million increase in contribution from the Billings Acquisition logistics assets acquired in June 2023.
Previous wording
Retail. Operating income for our retail segment was $27.0 million for the six months ended June 30, 2024, a decrease of $1.6 million compared to $28.7 million for the six months ended June 30, 2023. The decrease in operating income was primarily due to higher operating expenses of $3.8 million driven by an increase in employee costs, partially offset by increased merchandise sales of $1.8 million, and a $0.5 million increase related to 6% higher fuel sales volumes in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current wording
Retail. Operating income for our retail segment was $45.3 million for the nine months ended September 30, 2024, an increase of $3.3 million compared to $42.0 million for the nine months ended September 30, 2023. The increase in operating income was primarily due to a $3.6 million increase in fuel volumes and increased merchandise revenues of $2.8 million, partially offset by higher operating expenses of $3.3 million driven by an increase in employee costs.
Previous wording
Refining. For the three months ended June 30, 2024, our refining Adjusted Gross Margin was $176.6 million, a decrease of $29.0 million compared to $205.6 million for the three months ended June 30, 2023. The decrease was primarily driven by a decrease of $29.8 million related to decreased crack spreads across our legacy refining portfolio and a $9.7 million decline in refined product sales volumes primarily from our Hawaii and Washington refineries, partially offset by lower feedstock costs, and $4.7 million lower environmental expenses. Other factors impacting refining results are described below.
Current wording
Refining. For the three months ended September 30, 2024, our refining Adjusted Gross Margin was $142.2 million, a decrease of $208.4 million compared to $350.6 million for the three months ended September 30, 2023. The decrease was primarily driven by a $164.4 million decrease due to lower crack spreads across our legacy refining portfolio and other factors described below.
Previous wording
•Adjusted Gross Margin for the Hawaii refinery decreased by $2.01 per barrel from $12.08 per barrel during the three months ended June 30, 2023 to $10.07 per barrel during the three months ended June 30, 2024. The decrease in Adjusted Gross Margin was primarily due to declining crack spreads and a 5.7% decrease in refined product sales, partially offset by lower feedstock costs. The Singapore 3-1-2 index declined from $13.72 in the second quarter of 2023 to $12.49 in the second quarter of 2024.
Current wording
•Adjusted Gross Margin for the Hawaii refinery decreased by $7.37 per barrel from $13.47 per barrel during the three months ended September 30, 2023 to $6.10 per barrel during the three months ended September 30, 2024. The decrease in Adjusted Gross Margin was primarily due to declining crack spreads and a 3.9% decrease in refined product sales, partially offset by lower feedstock costs. The Singapore 3-1-2 index declined from $23.39 in the third quarter of 2023 to $11.00 in the third quarter of 2024.
Previous wording
•Adjusted Gross Margin for the Washington refinery decreased by $1.70 per barrel from $6.37 per barrel during the three months ended June 30, 2023 to $4.67 per barrel during the three months ended June 30, 2024. The decrease was primarily due to declining crack spreads, and a 10% decrease in refined product sales, partially offset by lower feedstock costs and favorable environmental costs. The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $25.13 in the second quarter of 2023 to $22.54 in the second quarter of 2024.
Current wording
•Adjusted Gross Margin for the Washington refinery decreased by $10.54 per barrel from $12.30 per barrel during the three months ended September 30, 2023 to $1.76 per barrel during the three months ended September 30, 2024. The decrease was primarily due to declining crack spreads, and a 4% decrease in refined product sales, partially offset by lower feedstock costs and favorable environmental costs. The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $35.00 in the third quarter of 2023 to $15.48 in the third quarter of 2024.
Previous wording
•Adjusted Gross Margin for the Wyoming refinery decreased by $5.82 per barrel from $20.56 per barrel during the three months ended June 30, 2023 to $14.74 per barrel during the three months ended June 30, 2024, primarily due to lower regional crack spreads, partially offset by a 19% increase in refined product sales, and lower feedstock costs. The RVO Adjusted USGC 3-2-1 index decreased from $21.65 in the second quarter of 2023 to $17.93 in the second quarter of 2024.
Current wording
•Adjusted Gross Margin for the Wyoming refinery decreased by $23.36 per barrel from $37.01 per barrel during the three months ended September 30, 2023 to $13.65 per barrel during the three months ended September 30, 2024, primarily due to lower regional crack spreads. The RVO Adjusted USGC 3-2-1 index decreased from $29.65 in the third quarter of 2023 to $14.14 in the third quarter of 2024.
Previous wording
Logistics. For the three months ended June 30, 2024, our logistics Adjusted Gross Margin was $30.8 million, an increase of $1.2 million compared to $29.6 million for the three months ended June 30, 2023. The increase is primarily due to a $4.0 million increase in contribution from the Billings Acquisition logistics assets acquired in June 2023, partially offset by a decrease of $1.8 million driven by a 3% reduction in Hawaii throughput.
Current wording
Logistics. For the three months ended September 30, 2024, our logistics Adjusted Gross Margin was $36.3 million, an increase of $1.0 million compared to $35.3 million for the three months ended September 30, 2023. The increase is primarily due to higher throughput across our logistics system in the three months ended September 30, 2024 compared to the comparable period in 2023.
Previous wording
Retail. For the three months ended June 30, 2024, our retail Adjusted Gross Margin was $41.6 million, an increase of $2.4 million compared to $39.2 million for the three months ended June 30, 2023. The increase was primarily due to 9% higher merchandise sales margins and 4% higher fuel sales volumes in the three months ended June 30, 2024 compared to the comparable period in 2023.
Current wording
Retail. For the three months ended September 30, 2024, our retail Adjusted Gross Margin was $42.6 million, an increase of $4.4 million compared to $38.2 million for the three months ended September 30, 2023. The increase was primarily due to a $3.4 million increase in fuel margins and increased merchandise margins of $0.7 million in the three months ended September 30, 2024 compared to the comparable period in 2023.
Previous wording
•Adjusted Gross Margin for the Hawaii refinery declined by $3.39 per barrel from $15.41 per barrel during the six months ended June 30, 2023 to $12.02 per barrel during the six months ended June 30, 2024, inclusive of 10 days of reduced production for required maintenance in March 2024. The decrease was primarily due to lower crack spreads, and a 4.4% decrease in sales volumes, partially offset by $44.0 million decrease of purchased product costs. The Singapore 3-2-1 index declined from $17.45 in the six months ended June 30, 2023 to $15.58 in the six months ended June 30, 2024.
Current wording
•Adjusted Gross Margin for the Hawaii refinery declined by $4.68 per barrel from $14.74 per barrel during the nine months ended September 30, 2023 to $10.06 per barrel during the nine months ended September 30, 2024. The decrease was primarily due to lower crack spreads partially offset by favorable derivative costs. The Singapore 3-2-1 index declined from $19.45 in the nine months ended September 30, 2023 to $14.04 in the nine months ended September 30, 2024.
Previous wording
•Adjusted Gross Margin for the Wyoming refinery decreased by $9.22 from $24.05 per barrel during the six months ended June 30, 2023 to $14.83 per barrel during the six months ended June 30, 2024, primarily due to lower regional crack spreads and higher environmental expenses, partially offset by a 7% increase in refined product sales volumes, a favorable FIFO impact of $9.0 million, and an $8.0 million decline in feedstock costs. The RVO Adjusted USGC 3-2-1 index declined from $24.09 in the six months ended June 30, 2023 to $19.63 in the six months ended June 30, 2024.
Current wording
•Adjusted Gross Margin for the Wyoming refinery decreased by $14.46 from $28.88 per barrel during the nine months ended September 30, 2023 to $14.42 per barrel during the nine months ended September 30, 2024, primarily due to lower regional crack spreads. The RVO Adjusted USGC 3-2-1 index declined from $25.96 in the nine months ended September 30, 2023 to $17.79 in the nine months ended September 30, 2024.
Previous wording
Logistics. For the six months ended June 30, 2024, our logistics Adjusted Gross Margin was $62.7 million, an increase of $12.1 million compared to $50.6 million for the six months ended June 30, 2023. The increase was primarily due to a $14.2 million increased contribution from the Billings Acquisition logistics assets acquired in June 2023 partially offset by an increase in cost of sales driven by $1.3 million of higher fees and variable expenses.
Current wording
Logistics. For the nine months ended September 30, 2024, our logistics Adjusted Gross Margin was $99.0 million, an increase of $13.1 million compared to $85.9 million for the nine months ended September 30, 2023. The increase was primarily due to a $15.6 million increased contribution from the Billings Acquisition logistics assets acquired in June 2023.
Previous wording
Retail. For the six months ended June 30, 2024, our retail Adjusted Gross Margin was $78.7 million, an increase of $2.1 million compared to $76.6 million for the six months ended June 30, 2023. The increase was primarily due to a 2% increase in merchandise sales. Other factors impacting results include a 6% increase in fuel sales volumes and a 34% decrease in fuel margins.
Current wording
Retail. For the nine months ended September 30, 2024, our retail Adjusted Gross Margin was $121.3 million, an increase of $6.5 million compared to $114.8 million for the nine months ended September 30, 2023. The increase was primarily due to a $3.6 million increase in fuel volumes and increased merchandise margins of $2.8 million.
Previous wording
Revenues. For the three months ended June 30, 2024, revenues were $2.0 billion, a $0.2 billion increase compared to $1.8 billion for the three months ended June 30, 2023. The increase was primarily due to a $0.3 billion increased contribution from the Billings Acquisition, which closed June 1, 2023, and $0.1 billion due to higher crude oil prices discussed below, partially offset by a 4% decrease in refining sales volumes primarily driven by our Hawaii and Washington refinery operations during the quarter and a decrease in average product crack spreads also discussed below. Average WTI crude oil prices increased 10% and average Brent crude oil prices increased 9% as compared to the prior period. The RVO Adjusted USGC 3-2-1, RVO Adjusted Pacific Northwest 3-1-1-1, and 3-1-2 Singapore Crack Spread declined 17%, 10%, and 9%, respectively, compared to the second quarter of 2023. Please read our key operating statistics for further information. Revenues at our retail segment increased $4.4 million primarily due to a 4% increase in fuel sales volumes.
Current wording
Revenues. For the three months ended September 30, 2024, revenues were $2.1 billion, a $0.5 billion decrease compared to $2.6 billion for the three months ended September 30, 2023. The decrease was primarily due to a $0.3 billion decrease to refining revenue reflecting lower average product crack spreads discussed below, $0.1 billion due to lower crude oil prices also discussed below. These lower average crack spreads are reflective of larger market trends. The IEA’s September 2024 report noted a slowdown in global and U.S. oil demand growth post-pandemic and its October 2024 report noted declining refining margins, primarily driven by reduced demand in China. The RVO Adjusted Pacific Northwest 3-1-1-1 index, 3-1-2 Singapore Crack Spread, and RVO Adjusted USGC 3-2-1 index declined 56%, 53%, and 52%, respectively, compared to the third quarter of 2023. Average WTI crude oil prices decreased 8% and average Brent crude oil prices decreased 8% as compared to the prior period. Please read our key operating statistics for further information. Revenues at our retail segment decreased $8.3 million primarily due to an 8% decline in fuel sales prices.
Previous wording
Operating Expense (Excluding Depreciation). For the three months ended June 30, 2024, operating expense (excluding depreciation) was $144.1 million, a $42.3 million increase when compared to $101.8 million for the three months ended June 30, 2023. The increase was driven by a $41.1 million increased contribution from the Billings Acquisition.
Current wording
Operating Expense (Excluding Depreciation). For the three months ended September 30, 2024, operating expense (excluding depreciation) was $147.0 million, a $1.8 million increase when compared to $145.2 million for the three months ended September 30, 2023. The increase was driven by a $4.1 million increase related to our Montana operations, primarily repairs and maintenance and outside service costs. This increase was partially offset by a net decrease of $2.3 million across our legacy operations.
Previous wording
Depreciation and Amortization. For the six months ended June 30, 2024, D&A was $64.8 million, an increase of $12.2 million compared to $52.6 million for the six months ended June 30, 2023. The increase was primarily driven by $13.4 million of D&A attributable to the Billings Acquisition, partially offset by a $1.0 million decrease related to catalyst in Hawaii that was fully depreciated in 2023.
Current wording
Depreciation and Amortization. For the three months ended September 30, 2024, D&A was $31.9 million, a decrease of $3.4 million compared to $35.3 million for the three months ended September 30, 2023. The decrease was primarily driven by a $2.4 million decrease in D&A from our Hawaii Refinery primarily driven by assets that became fully depreciated in the second quarter of 2024.
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Previous report — wording carried elsewhere
Debt Extinguishment and Commitment Costs. During the three months ended June 30, 2024, we incurred $1.4 million of debt extinguishment and commitment costs related to the repricing of our Term Loan Credit Agreement, the termination of our LC Facility and the expiration of our Supply and Offtake Agreement in the second quarter of 2024. For the three months ended June 30, 2023, we incurred an immaterial amount of debt extinguishment and commitment costs. Please read Note 9—Inventory Financing Agreements, and Note 11—Debt for further information.
Previous report — wording carried elsewhere
Term Loan Credit Agreement may also require annual prepayments of principal with a variable percentage of our excess cash flow, 50% or 25% depending on our consolidated year end secured leverage ratio (as defined in the Term Loan Credit Agreement).