Par Pacific Holdings Inc Aktie

Good day, and welcome to the Par Pacific First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Ashimi Patel, Vice President of Investor Relations. Please go ahead.

Thank you, Kim. Welcome to Par Pacific's First Quarter Earnings Conference Call. Joining me today are Will Monteleone, President and Chief Executive Officer; Richard Creamer, EVP of Refining & Logistics; and Shawn Flores, SVP and Chief Financial Officer.

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 non-GAAP reconciliations and additional information.

I'll now turn the call over to our President and Chief Executive Officer, Will Monteleone.

Thank you, Ashimi, and good morning, everyone. First quarter adjusted EBITDA was $91 million, and adjusted net income was $0.78 per share. First quarter results compare favorably against historical first quarter performances despite the lag effect of rapidly rising crude and distillate prices in Hawaii, off-season conditions in Wyoming, Montana and the planned Washington outage. Our facilities ran well across the system, setting a first quarter throughput record. This strong throughput allowed us to prebuild inventory ahead of planned maintenance outages. The Wyoming and Montana facilities have both completed their April outages on time and are prepared to run hard for the highly profitable summer months.

Over the past two months, refined product cracks surged to all-time highs, particularly in Asia due to the reduction of Persian Gulf Origin refined product exports, aging refiners reducing run rates and protectionist policies restricting free trade of waterborne refined products. As a result, the April Singapore 3-1-2 index is materially above historical norms, averaging over $72 per barrel compared with the 2025 average of $16 per barrel. These levels exceed prior highs observed during the early months of the Russia-Ukraine conflict. In addition, mainland seasonal cracks are also rallying to elevated levels.

Our commercial position and supply chain flexibility allows us to capture a substantial portion of the strong market environment. In addition, we have no crack spread hedges in place to position us to capture and improved market conditions. Looking forward, global refined product inventory buffers are drawing down aggressively, setting up for meaningful tightness over the summer months. We see many Asian refiners running at near minimum throughput rates, attempting to preserve crude supply chain duration versus maximizing profits.

Turning to the Retail segment. Quarterly same-store fuel and in-store sales decreased by 3.3% and 1% compared to the first quarter of 2025. Fuel volume and in-store results reflect shifting consumer refueling patterns associated with the rising flat price environment and the impact of 3 state level closures during the first quarter from Hawaii flooding events. On the strategic front, we achieved a major milestone with the successful start-up of the Hawaii Renewables Unit. This is a significant step for the renewables business, reflecting our disciplined commissioning approach.

We continue to test and optimize unit operations and are focused on establishing credit pathways. The policy backdrop continues to strengthen, and we remain constructive on the outlook for the project.

On the capital allocation front, we repurchased $28 million during the quarter at an average price of $38 per share. Since the program's inception, we've repurchased over 14 million shares or just over 20% of shares outstanding at an average price of $25 per share. Our total liquidity position of $938 million combined with a robust forward cash flow outlook, positions the balance sheet to support our strategic objectives and opportunistic share repurchase framework.

In closing, our consistent focus on reliable operations, commercial agility and disciplined capital allocation remains the foundation for capturing today's market opportunity and delivering long-term shareholder value.

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 with a moment of recognition for each of our refining teams for an outstanding first quarter. The Hawaii team achieved a record quarter throughput and Montana achieved a record winter season throughput. In addition, Washington successfully completed their February turnaround, restarted operations and are operating at maximum rates. We are pleased that both Montana and Wyoming teams completed their April outages safely and are operating under normal conditions.

Par Pacific's success lies in the foundation of delivering production safely and reliably for our communities. The entire refining and logistics team continues to demonstrate that commitment. As Will referenced, we are pleased with the early operational results from the Hawaii renewable fuels facility. As a reminder, we brought the pretreatment unit online early this year and achieved on-specification product using a mix of feedstocks with additional inbound waste oils to further test our capabilities. We are now operating the pretreatment in tandem with the renewable hydro treater and achieved on specification renewable diesel in late April. We are beginning to transition operations to validate the sustainable aviation fuel mode.

Our first quarter conventional refining throughput was 184,000 barrels per day and we'll begin reporting renewable fuel throughput in the second quarter. In Hawaii, throughput was a record 90,000 barrels per day and production costs were $4.67 per barrel. Hawaii will begin its planned turnaround in late June, which is expected to last between 30 and 45 days. The renewable fuels unit will be off-line during the turnaround.

The first quarter Washington throughput was 23,000 barrels per day and production costs were $7.53 per barrel, driven by reduced rates related to the February planned downtime. The refinery is operating well and delivering fully restored capability.

Shifting to Wyoming, throughput was 15,000 barrels per day and production costs were $11.68 per barrel, reflecting lower seasonal throughput. As I mentioned, the spring refinery outage to address routine maintenance was completed successfully and safely.

Finally, in Montana, first quarter throughput was 57,000 barrels per day and production costs were $9.05 per barrel. The team continues to deliver on their plan of efficient operations and OpEx control.

Looking ahead to the second quarter, we expect Hawaii throughput between 77,000 and 81,000 barrels per day, reflecting the turnaround and Washington between 40,000 and 42,000 barrels per day. Due to the April planned maintenance across the Rockies system, Wyoming quarterly throughput is expected to be between 14,000 and 16,000 barrels per day and Montana between 45,000 and 49,000. This results in a system-wide midpoint throughput of 182,000 barrels per day.

I'll now turn the call over to Shawn to cover the financial results.

Thank you, Richard. First quarter adjusted EBITDA was $91 million, and adjusted net income was $39 million or $0.78 per share. Our Refining segment reported adjusted EBITDA of $69 million in the first quarter compared to $88 million in the fourth quarter.

Starting in Hawaii, the Singapore 3-1-2 averaged $36 per barrel during the first quarter and our landed crude differential was $4.90, resulting in a Hawaii index of $31.11 per barrel. Hawaii capture was 42%, including a net price lag headwind of approximately $125 million. As a reminder, net price lag reflects the Hawaii refineries contractual sales that are structured on prior month and prior week average pricing. The lag impact was driven by the sharp increase in refined product prices in March, resulting in adjusted gross margin trailing current period market conditions. We would expect price lag to be neutral in a stable pricing environment and to reverse into a capture benefit during periods of declining prices. Normalized for the lag impact, Hawaii capture was 92%, reflecting wider West Coast discounts relative to Singapore and lower netbacks on secondary products, such as naphtha and LPG.

In Montana, the first quarter index averaged $4.84 per barrel with a margin capture of 143%. Capture was above our target range driven by lower asphalt production and favorable sales mix relative to the index.

In Wyoming, the first quarter index averaged $19.30 per barrel, margin capture was 139%, including an $18 million FIFO benefit from rising crude oil prices.

In Washington, our index averaged $8.20 per barrel. Margin capture was 100% supported by favorable jet to diesel spreads.

Turning to the Logistics segment. Adjusted EBITDA was $32 million in the first quarter, in line with our mid-cycle run rate. Strong system utilization in Hawaii and Montana was partially offset by reduced crude activity in Washington during the planned turnaround. In the Retail segment, adjusted EBITDA was $15 million compared to $22 million in the fourth quarter. The sequential decline was driven by lower fuel margins, reflecting rapid increases in wholesale prices during the quarter.

Moving to cash flow. First quarter cash from operations totaled $162 million excluding working capital outflows of $185 million and deferred turnaround costs of $18 million. Working capital outflows reflect rising flat prices and higher inventory levels ahead of the April planned maintenance across our Rockies system.

Turning to RINs. We remain in an excess RIN position at the end of the first quarter, having monetized less than half of the RINs associated with the prior period small refinery exemptions. This position is expected to provide additional working capital inflows over the coming quarters. It's also worth noting that our first quarter adjusted EBITDA and adjusted net income reflect full RIN expense at current period market prices which does not capture the benefit of our excess RIN asset position. Our GAAP results by contrast, included an approximately $30 million gain in the quarter, representing the difference between current period RIN prices and the book value of RIN assets on our balance sheet. First quarter capital expenditures, including deferred turnaround costs, totaled $61 million.

Shifting to capital allocation. We repurchased $28 million of common stock during the quarter at an average price of $38 per share. Gross term debt at quarter end was $638 million remaining below the low end of our leverage targets. Looking ahead to the second quarter, our April consolidated refining index averaged $42 per barrel, an increase of $23 per barrel compared to the first quarter. In Hawaii, refining margins continue to reflect a tight refined product supply environment across the Pacific Basin. We expect our second quarter crude differential to be between $4 to $5 per barrel reflecting the extended crude supply chain we built earlier this year. From a financial standpoint, the impact of the upcoming Hawaii turnaround is expected to be limited in the second quarter with most of the impact shifting into the third quarter.

Across our mainland system, April refining indices increased by approximately $17 per barrel versus the first quarter, driven by strong distillate margins. As Richard noted, we had planned downtime in April across the Rockies system, but expect minimal financial impact as we drew down inventories previously built during the first quarter.

In renewables, we expect sales volumes and earnings contribution to be modest in the second quarter as we optimize operations and build inventory with a more meaningful ramp in the back half of the year following the Hawaii refinery turnaround. Overall, we are well positioned to deliver robust cash flow in the current margin environment, enabling us to further strengthen the balance sheet, pursue accretive growth opportunities and opportunistically repurchase our common stock.

This concludes our prepared remarks. Operator, we'll turn it to you for Q&A.

[Operator Instructions] Our first question comes from Matthew Blair with Tudor, Pickering & Holt.

I think that Par has probably the highest jet yield in the group. We believe it's roughly 15% or so, could you confirm if that's the correct estimate? And could you talk a little bit about dynamics in the jet market, both on the supply side as well as demand side. We are seeing wider jet versus diesel spreads, which looked like a nice tailwind into the second quarter.

Sure, Matt. This is Will. I think 15% is probably reasonable. And again, I some of this depends on some of our jet versus ULSD objectives. But as you indicated, given the spreads between jet and ULSD, we see a high -- an attractive economic incentive to try and maximize jet yields, particularly in the Pacific. And again, I think we have a number of projects underway to maximize jet yield in the Rockies.

And in terms of just the overall regrade spread or the spread between jet and gas oil, again, continue to see that to be strong as -- again, I think it's one of the more difficult molecules to make. And with the amount of crude distillation offline globally, it's a challenge. And again, given the loss in the Persian Gulf origin exports, which was a material supplier to Europe, we're seeing the Asian Market and the Indian refiners need to try and attempt to backfill some of Europe's jet requirements.

Sounds good. And then this Hawaii product lag headwind in the first quarter, $126 million, it sounds like that would likely reverse in the second quarter, but would you also get an additional benefit from the drop in Singapore gas oil prices so far? And I guess, do you have an estimate so far in April on what that might look like?

Matt, it's Shawn. Yes, I think it's too early to give an estimate on price lag. As you know, it really depends on where Singapore prices end up in June relative to March. I think you're right, it's down in the prop market, and it would suggest a reversal -- a partial reversal of the $125 million impact. But I think that's how you should think about it and look at June pricing once available.

Our next question comes from Alexa Petrick with Goldman Sachs.

I want to just jump in a little more to the Hawaii captures, recognize there was that price lag impact. But even if we adjust for it, I think captures looked like they were in the low 90% compared to your target of over 105%. So, can you just talk about some of the drivers there and then how that's tracking for Q2?

Alexa, it's Shawn. Yes, I'd call out two other elements that I think drove a 10% to 15% capture hit. One was typically we see West Coast pricing to a premium to Singapore in most historical periods. That flipped to a significant discount, particularly LA jet versus Singapore jet and LA diesel versus Singapore gas oil. We do have some contractual exposure to the West Coast. And so that was -- let's call it, 5% to 10% capture headwind.

And then the other sort of factor I called out is we do produce and sell naphtha and LPGs and whenever you see a blowout like we did where gas, oil and jet is pricing at such a premium to the secondary products, it creates a capture headwind. I think both of those dynamics have normalized heading into Q2. If anything, I think West Coast is pricing at a premium to Singapore. So, it's something that we're watching, not trying to make a call right now given the volatility, but those are the elements to keep an eye on.

Okay. That's helpful. And then maybe just a follow-up, sticking on Hawaii. It sounds like the planned turnaround is still tracking for end of June start-up. Can you just talk about the planning behind that? Is there any flex given the macro and just how investors should be thinking about the impact? It sounds like the majority of it is going to be a Q3 impact.

That's correct, Alexa. We already shifted it, I'll say, weeks and I think that's probably the extent of the flexibility that we have. And again, I think we really tie our decision on turnaround timing toward hydrocracker catalyst life. That's one of the key drivers in Hawaii. It's been roughly 6 years since we changed that catalyst out. And again, I think, have the objective of completing this over the summer periods just given the scheduling, the timing of the contractors and the work that we've done. So I think we have limited flexibility beyond where we sit today and have kind of the supply chain contractors and all the moving pieces in place to execute that on time and on budget.

Hold on, Richard's got a couple of things to add. So Richard go ahead.

Yes. Thanks, Will. Just one other comment that one of our primary goals is to absolutely ensure the product supply in the state of Hawaii as the only producer there. So timing around that is significantly considered in the execution start of the turnaround.

Our next question comes from Jason Gabelman with TD Cowen.

Maybe sticking with the Hawaii turnaround planning, throughput guidance is a bit light for Hawaii in 2Q. And I wonder to what extent that's some conservatism baked into guidance versus the Hawaii turnaround really starting in earnest the last week or two of the quarter. And then could you also discuss kind of how the landed crude cost dynamics will trend once Hawaii comes back online? Will that reflect the impacts of the conflict and higher freight and backwardation we're seeing in the market?

Yes. Sure, Jason. I think the throughput guidance reflects our estimate on the start time of the outage. And then again, I think working through, I'll just say, optimizing our crude supply chain, both extending the turnaround as well as our plans exiting the turnaround. So again, I think we're focused on kind of margin optimization through both the inbound and outbound elements of the turnaround.

In terms of landed crude differentials, I think it's too early to call. I'll say the third quarter differentials. I'd just keep in mind a couple of things. One is given the turnaround is ongoing and the length of our supply chain, we've been able to, I'd say, stay out of the market and the kind of teeth of the most extreme kind of hoarding events that we've seen over the last 30 to 60 days. That said, I think when you look at backwardation alone, our first half of the year, crude differentials reflect probably a near flat market structure. And if you just look at the current market structure today, between the front month contract and the third month contract, you're moving between $6 and $8 a barrel. So again, that's consistent with our risk management framework and ensuring that we're not taking flat price risk between the origin loading point and the delivery to Hawaii. So again, too early to call, but I think those are the factors to watch.

Great. I was also hoping to get your color on Singapore cracks more broadly. They obviously were extremely strong in the start of the conflict in -- through April, and it seems like they've converged with rest of world cracks. And I guess it's to be expected given if there are arbitrage opportunities, those are going to be taken advantage of and the differentials are going to tighten between regions. So are we in more of a, call it, stable is probably not the right word, but from a relative basis, are we in an environment where relative cracks make more sense here? Or just given the refinery capacity shut ins in Asia, there's potential for cracks to spike again moving forward?

Yes, it's a good question. I mean, I think our observations would be at the beginning of the conflict. Obviously, the most, I'll say, hoarding of product and I'll say, disruption between physical and financial markets, I think, emerged. And again, I think if anybody was short, Singapore cracks financially going into that, I think there was a fair amount of rush to cover that position. I think now you're seeing freight normalize. And again, kind of the ability to arbitrage products between the Atlantic and Pacific Basin, you're getting back into, I'll just say, transport parity economics, between Atlantic and Pacific Basin. So again, I think that's probably the right way to think about it assuming that no other major factors change, which I think is a big assumption. Again, I think for Asia to price materially above Europe, given that they're both in, I'm going to say, deficit positions needing to import product. Again, I think it's going to be a call on a competition between those two points to source and attract barrels.

Got it. And if I could just sneak one final one in. Just on the small refinery exemptions. I think you received $60 million RINs worth of exemptions last year. It sounds like you haven't monetized a large part of that. So if you get the exemptions this year reflecting 2025 exemptions, should we expect you to monetize most of that position?

Jason, it's Shawn. Yes, I think that's probably a fair assumption. We've monetized less than half to date. I think we're -- would prefer to have clarity from the EPA on 2025 exemptions before further monetizing both the historical excess and then any new relief that we would get related to 2025.

Our next question comes from Zach Parham with JPMorgan.

Can you just talk a little bit about how you're thinking about the buyback going forward? It seems like you slowed down as the stock price moved higher post Iran. With cracks where they are today, you're set to generate a significant amount of free cash flow in 2Q. Do you plan to be active in the market buying back your stock? Or are you comfortable with the cash just going to the balance sheet in the near term?

Zach, this is Will. I think our historical framework still holds today. And again, I think we've been in an excess capital position and I've taken an opportunistic framework towards our share repurchases. And so again, I think the cadence of our repurchase is going to be driven by our excess capital position forward outlook and really our view of intrinsic value. And I think when we see it trade materially below that, we'll seize that opportunity. So I think our framework is the right way to allocate capital through the cycle. And again, I think you should expect us to be more aggressive in our share repurchasing when we see deeper discounts, intrinsic value and then, I'll say, more moderate in our approach as we see it less attractive discounts to intrinsic value.

This concludes our question-and-answer session. I would like to turn the conference back over to Will Monteleone for any closing remarks.

Thank you, Kim. Q1 was a strong start to 2026, notably solid operational performance across the system, the successful April start-up of our renewable fuels unit and attractive share repurchases. Our focus remains on disciplined execution as the durable path to growing earnings and free cash flow per share over time. Thank you to our employees, and thank you all for joining us today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the Par Pacific's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Ashimi Patel, Vice President of Investor Relations. Please go ahead.

Thank you, Drew. Welcome to Par Pacific's Fourth Quarter Earnings Conference Call. Joining me today are Will Monteleone, President and Chief Executive Officer; Richard Creamer, EVP of Refining & Logistics; and Shawn Flores, SVP and Chief Financial Officer.

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 non-GAAP reconciliations and additional information.

I'll now turn the call over to our President and Chief Executive Officer, Will Monteleone.

Thank you, Ashimi, and good morning, everyone. 2025 was a year of meaningful progress. We navigated challenges, advanced key strategic initiatives, and generated substantial profits along the way. Full year adjusted EBITDA was $634 million, and adjusted net income was $7.56 per share.

2025 represents an excellent year for the enterprise and further validates the structural improvements we've made to the business. At the beginning of 2025, we laid out clear priorities for the year: one, execute major turnaround activity safely and on schedule; two, minimize the impact from the Wyoming crude heater event; three, advance and start up our Hawaii Renewables unit; and four, deliver on our cost reduction commitments.

Despite a volatile refining backdrop, we've largely achieved those objectives. We executed the Montana turnaround work safely and effectively, restored Wyoming to reliable operations, advanced the Hawaii Renewables project into commissioning, while forming a joint venture with world-class partners at an attractive valuation and strengthened our cost structure.

While no year is without challenges, the consistency of our execution reinforces our organization's commitment to excellence. In our business, financial success starts with operational reliability and safety. Overall, we made strong progress during the year, achieving record annual refining throughput. However, the Wyoming event was a reminder to the organization that we are never finished when it comes to safely and reliably operating our facilities.

One notable operational success was the sustained improvement in Hawaii throughput rates, following several years of focused effort by the team. Hawaii throughput averaged 84,000 barrels per day, approximately 4% above the prior 3-year average, reflecting sustained operational improvement by the team.

The logistics organization progressed key initiatives throughout the year and generated record segment profits, and retail once again delivered growing results, setting new financial records in 2025. Full year adjusted EBITDA increased approximately 13% versus 2024. 2025 same-store fuel and in-store sales grew approximately 1.6% and 1.5%, respectively, reflecting continued traction in merchandising initiatives and food programs.

In Hawaii, the renewable fuels project has progressed into commissioning and early start-up phases during the fourth quarter. We prioritized the readiness of the pretreatment unit and have successfully achieved on-specification feedstock with a range of inputs. We are in the final phases of operational readiness and expect to introduce post-treated feedstocks into the renewables unit in the next few weeks. While timing has extended modestly beyond original expectations, there have been no material operational issues. Our focus remains on safe start-up, operational stability and optimization towards steady-state performance. We are constructive on the medium-term economic outlook as the policy backdrop continues to improve.

A significant highlight for the year was the strengthening of our balance sheet. During the fourth quarter, we received proceeds from the Hawaii Renewables joint venture and began monetizing excess RIN inventory. Combined with solid underlying cash generation, these actions materially improved liquidity.

We ended the year with approximately $915 million in liquidity and 49.7 million shares outstanding, improving liquidity by 49% and reducing our share count by 10%, while competing -- completing key growth and reliability projects. A stronger balance sheet provides flexibility to invest through cycles, execute high-return internal projects and opportunistically repurchase shares when appropriate.

We enter 2026 positioned to continue expanding the earnings power of the business and driving long-term shareholder value. Refining markets are cyclical, and our strategy is not to predict short-term movements, but to structurally improve our position within the cycle, increasing distillate yield, enhancing logistics integration, improving capture rates and lowering our cost structure.

Over time, these efforts expand our mid-cycle earnings profile and strengthen durability. Our priorities for the year are clear and consistent with our long-term strategy. One, improve the mid-cycle earnings contribution of our Rocky Mountain assets through targeted high-return projects that enhance flexibility and capture; two, execute the Hawaii turnaround safely and on schedule; three, successfully start up and optimize the renewable fuels unit; and four, maintain disciplined and opportunistic capital allocation.

I'll now turn the call over to Richard to discuss Refining and Logistics operations.

Thank you, Will. 2025 reflected significant operational progress and improvement across Refining and Logistics business. Reliability is a cornerstone to success and last year's performance is representative of that. We were challenged early in the year by the heater outage in Wyoming, and the team there delivered an exceptional recovery. Throughout the year, we executed disciplined operating and capital spending across the system. The Refining and Logistics team delivered another record throughput year of 188,000 barrels per day, led by Hawaii's increased production rates.

I want to commend the Montana team for the execution of their largest-ever turnaround. Following this event, we reported record quarterly throughput of 58,000 barrels per day, demonstrating the site's potential. We continue to see the benefits of our reliability investments, and the team has made great strides in improving OpEx per barrel. I'd like to recognize Wyoming team for safely restoring operations after the Q1 crude heater incident, more than 1 month ahead of schedule.

Shifting to quarterly results. Fourth quarter combined throughput was 191,000 barrels per day. In Hawaii, throughput was strong at 87,000 barrels per day. This represents Hawaii's efforts to deliver at maximum capacity through the team's focus on high-reliability operations. Production costs were $4.15 per barrel. Washington throughput was 37,000 barrels per day, reflecting reduced rates ahead of the first quarter planned downtime and production costs were $4.57 per barrel.

Maintenance activities are now complete, and the plant restart is underway. Shifting to Wyoming, throughput was 14,000 barrels per day, and production costs were elevated at $13.27 per barrel due to a third-party power outage in Northern Wyoming and lower seasonal throughput.

Finally, in Montana, fourth quarter throughput was 52,000 barrels per day, and production costs were $11.74 per barrel, elevated by approximately $1.50 per barrel due to coker maintenance. Looking ahead to the first quarter, we expect Hawaii throughput between 85,000 and 89,000 barrels per day and Washington between 24,000 and 28,000 barrels per day, reflecting the Q1 planned outage.

Wyoming is expected to operate between 13,000 and 16,000 barrels per day with Montana between 52,000 and 56,000 barrels per day, both reflective of Q1 seasonality. This results in a system-wide anticipated midpoint throughput of 182,000 barrels per day.

I'll now turn the call over to Shawn to cover our financial results.

Thank you, Richard. Fourth quarter adjusted EBITDA was $113 million, and adjusted net income was $60 million, or $1.17 per share. For the full year, adjusted EBITDA was $634 million and adjusted net income was $390 million or $7.56 per share. The Refining segment generated $88 million of adjusted EBITDA in the fourth quarter, compared to $135 million in the third quarter, excluding the SRE impact. Our combined Refining index averaged $13.13 per barrel in the fourth quarter, down approximately $1.60 from the prior quarter, reflecting seasonal conditions in the Rockies and the Pacific Northwest.

System-wide Refining capture was 93% for the quarter and 94% for the full year. In Hawaii, the Singapore 3-1-2 averaged $21.43 per barrel during the fourth quarter, and our landed crude differential was $6.05, resulting in a Hawaii index of $15.38 per barrel. Hawaii capture was 104%, including a net $7 million loss from product crack hedging and price lag. Excluding these items, Hawaii capture was 110%.

In Montana, the fourth quarter index averaged $11.14 per barrel with margin capture of 72%. Capture was impacted by elevated asphalt sales and a lighter, higher cost crude slate due to coker downtime, reducing margins by approximately $10 million. Montana production costs include approximately $7 million related to coker maintenance.

In Wyoming, the fourth quarter index averaged $18.31 per barrel. Normalized capture was approximately 70%, excluding a $3 million FIFO impact from declining crude prices. As Richard mentioned, a regional power outage and subsequent maintenance activities reduced throughput and impacted both margins and production costs during the quarter. Lower diesel sales during the downtime impacted margins by approximately $4 million, while maintenance-related activity increased operating costs by $3 million.

In Washington, our index averaged $8.60 per barrel. Margin capture was 97%, reflecting a normalization of jet to diesel spreads and favorable sales mix during the Olympic pipeline outage in November.

Looking to the first quarter, our combined Refining index has averaged approximately $6.70 per barrel quarter-to-date with February month-to-date improving by $2 per barrel versus January. In both the Rockies and the Pacific Northwest, prompt distillate margins have strengthened by roughly $15 per barrel compared to January averages.

On the West Coast, tighter jet balances have driven jet fuel to trade at a premium to diesel, supporting margin capture in Washington. In Hawaii, Singapore distillate cracks remain firm, and we expect our first quarter crude differential to be in the range of $4.75 and $5.25 per barrel, reflecting easing backwardation and favorable access to waterborne crude supply.

Moving to the Logistics segment. Adjusted EBITDA was $30 million in the fourth quarter compared to $37 million in the third quarter. Full year logistics adjusted EBITDA reached a record $126 million, reflecting strong system utilization and a $6 million reduction in annual costs. Retail delivered $22 million of adjusted EBITDA in the fourth quarter, in line with the third quarter.

For the full year. Retail achieved a record $86 million in adjusted EBITDA, up from $76 million in 2024, driven by favorable fuel and inside store margins and a $4 million reduction in operating costs.

Turning to cash flow. Full year cash from operations was $568 million excluding working capital outflows of $21 million and deferred turnaround costs of $101 million. Cash from ops in the fourth quarter was $134 million, excluding working capital outflows of $40 million and deferred turnaround costs of $1 million. Q4 working capital outflows were primarily related to prepaid annual insurance premiums and trade credit timing in Hawaii, partially offset by RIN proceeds.

At year-end, we had monetized less than half of the SRE-related excess RIN inventory, providing favorable working capital visibility into 2026. Full year accrued CapEx, including deferred turnaround costs totaled approximately $246 million, or $6 million above our prior guidance. Cash used in financing activities totaled $64 million, driven by an ABL paydown of $163 million, share repurchases of $28 million, partially offset by $100 million in proceeds from the Hawaii Renewables joint venture.

For the full year, we repurchased 6.5 million shares, reducing shares outstanding by 10%, while lowering gross debt by $310 million. Total liquidity was a record $915 million at year-end. Gross term debt was approximately $640 million, positioning us at the low end of our leverage targets.

During the quarter, we repriced our existing term loan, reducing the spread by 50 basis points and lowering our annual cash interest by over $3 million. With improving market conditions and reduced capital requirements, we are entering 2026 from a position of financial strength with the flexibility to invest in growth, maintain a strong balance sheet and opportunistically repurchase shares.

This concludes our prepared remarks. Operator, we'll turn it back to you for Q&A.

[Operator Instructions] The first question comes from Alexa Petrick with Goldman Sachs.

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?

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.

Okay. That's helpful. And then maybe just a follow-up. 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?

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.

The next question comes from Matthew Blair with Tudor, Pickering, Holt.

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?

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.

Sounds good. And then, Will, you also mentioned the cash coming in from the RIN sales. Do you have any update on potentially monetizing the Hawaii land, the excess land out there or potentially monetizing the Laramie E&P investment?

Sure. So on the land position in Hawaii, we're continuing to progress the redevelopment of that. And again, I think, are nearing completing, getting the equipment to grade, and are again, working through the process to rehabilitate that and get it back into, I'll say, into commerce. And so I wouldn't plan on that being an immediate benefit. I think this is a long-term project for us, that's going to take us several years, but I do think it's an attractive asset.

With respect to Laramie, I think the business there has continued to do well and has generated cash with its existing production, improved its balance sheet and has continued to improve, I would say, like I've mentioned in the past, we own 46% of Laramie, so we have influence, but we don't have control. And our view is that the best way to generate maximum value for our stake is to align with the other shareholders who have different time horizons than we do and ensure that we maximize the value of the business when they're ready to monetize.

And so again, I think the gas business is noncore to us. At the end of the day, though, we need to, I think, ensure that we are aligned with our partners to maximize the value and aren't selling a minority noncontrolling position.

[Operator Instructions] The next question comes from Manav Gupta with UBS.

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?

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.

This concludes our question-and-answer session. I would like to turn the conference back over to Will Monteleone for any closing remarks.

Thank you, Drew. 2025 was a year of meaningful progress. We set clear objectives, and we largely achieved them. We strengthened the balance sheet. We expanded the structural earnings power of the portfolio, and we continue to build a more diversified and durable business. Our objective remains constant to increase the mid-cycle earnings power and grow the free cash flow per share over time through disciplined execution. I want to thank all of our employees across the organization for their continued focus on safe and reliable execution. Thank you all, and have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the Par Pacific Third Quarter Earnings Call. [Operator Instructions] I would now like to turn the conference over to Ashimi Patel, Vice President of Investor Relations. Please go ahead.

Thank you, George. Welcome to Par Pacific's Third Quarter Earnings Conference Call. Joining me today are William Monteleone, President and Chief Executive Officer; Richard Creamer, EVP of Refining and Logistics; and Shawn Flores, SVP and Chief Financial Officer.

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 non-GAAP reconciliations and additional information.

I'll now turn the call over to our President and Chief Executive Officer, William Monteleone.

Thank you, Ashimi, and good morning, everyone. We are pleased to announce strong third quarter operating and financial results. The organization fired on all cylinders as we safely and reliably throughput a near record 198,000 barrels per day, maximized logistics system utilization and delivered above industry trend retail results.

This crisp commercial and operational execution drove core financial results of $170 million and $2.10 in adjusted EBITDA and adjusted EPS, respectively. In addition, we captured the benefit of small refinery exemptions, resulting in an earnings boost of approximately $200 million. In total, third quarter adjusted EBITDA was $372 million and adjusted net income was $5.95 per share.

As we enter November, we are optimistic about the market outlook. Product margins are rallying in response to tight fundamental supply and demand balances and heightened geopolitical disruptions.

Our fourth quarter combined index averaged $15.55 per barrel in October, up from the third quarter. While we typically expect fourth quarter seasonal market conditions to taper off due to lower gasoline margins, our distillate production orientation is lifting our combined index.

The Retail business continues to deliver exceptional results, reflecting encouraging trends from improved focus on inside sales and gross margin. In particular, we're seeing improving food top and bottom line results. Quarterly same-store fuel and in-store revenue increased by 1.8% and 0.9% compared to the third quarter of 2024.

Looking forward, our development pipeline is expanding with the recent groundbreaking on our second new-to-industry store in the Pacific Northwest and an expanding list of attractive redevelopment or new-to-industry opportunities in Hawaii.

We've made considerable progress on our key strategic objectives this year. In Montana, we're pleased with a strong third quarter result, reflected both by record quarterly throughput and OpEx per barrel under our ownership. As throughput increases, we're quickly debottlenecking new constraints.

Like our other acquisitions, we have developed an attractive list of low-capital, high-return projects that will allow us to increase the mid-cycle earnings power of the Billings asset from our original expectations. These projects focus on improved logistics flexibility and efficiency, lighter crude processing, expanded hydrotreating capacity and enhanced jet and diesel production capabilities.

The Hawaii SAF project continues to progress towards startup. We've achieved mechanical completion and startup of the pretreatment unit and are encouraged by the early results. Focus has turned towards completing construction of the remaining reactors and associated systems. We are targeting mechanical completion by the late fourth quarter and startup shortly thereafter.

We are also pleased to announce the closing of the Hawaii Renewables joint venture with Mitsubishi and ENEOS in late October. We've received $100 million in proceeds and are excited by the prospects of this newly formed partnership.

Our balance sheet continues to strengthen, and we expect further improvement as we convert this quarter's strong earnings to cash and record the inflow associated with the Hawaii SAF joint venture. The combination of our strong financial position and solid operating momentum positions us to pursue growth and continue opportunistic share repurchases.

I'll now turn the call over to Richard to discuss Refining and Logistics operations.

Thank you, Will. Third quarter combined throughput was a strong 198,000 barrels per day, reflecting exceptional performance across all of our locations. We also achieved a new record low in Refining production costs at $6.13 per barrel.

In Hawaii, throughput was 82,000 barrels per day. In September, the team set a new monthly throughput record of nearly 90,000 barrels per day, partially offsetting crude delivery delays that occurred in July. Production costs were $4.66 per barrel.

Washington throughput was 39,000 barrels per day and production costs were $4.31 per barrel. Washington continues to excel in reliability and efficiency, capturing the benefits of a strong market environment.

Shifting to Wyoming, throughput was 19,000 barrels per day and production costs were $8.11 per barrel. The strong operating results and return to normalized production costs are reflective of the Wyoming team's execution and resilience to operational challenges earlier this year.

Finally, in Montana, third quarter throughput was a record high 58,000 barrels per day and production costs were a record low at $8.76 per barrel.

This quarter's performance is an example of the Billings refinery potential. Effective reliability investment and the team's strong execution is yielding operational and cultural benefits that are consistent with our acquisition objectives. In the fourth quarter, we do anticipate lower throughput and increased costs associated with routine [ coker ] maintenance.

Looking further into the fourth quarter, we expect system-wide throughput between 184,000 and 193,000 barrels per day. Hawaii throughput is expected between 84,000 and 87,000 barrels per day and Washington between 35,000 and 37,000.

Wyoming is forecasted to be between 15,000 and 16,000 barrels per day and Montana between 50,000 and 53,000. Both are reflective of seasonal market demand conditions. And Washington's lower Q4 throughput guidance reflects crude unit inefficiencies that will be addressed during the Q1 2026 planned outage.

I'll now turn the call over to Shawn to cover our financial results.

Thank you, Richard. Third quarter adjusted EBITDA and adjusted earnings were $372 million and $303 million or $5.95 per share. The Refining segment generated adjusted EBITDA of $338 million compared to $108 million in the second quarter.

Third quarter results include a $203 million gain associated with the full and partial small refinery exemptions granted for the 2019 through 2024 compliance periods. This gain reflects the expected cash benefit based on September 30 RIN prices and is included in our adjusted results since the related obligations were expensed in prior periods.

For comparability, our regional commentary on margin capture will exclude the impact of the SRE benefits. Starting with Hawaii, the Singapore 3-1-2 averaged $16.34 per barrel and our crude diff was $6.07, resulting in a Hawaii Index of $10.27 per barrel.

Hawaii margin capture was 111%, including a combined $11 million impact from product crack hedging and price lag. Excluding these items, capture was 125%, reflecting lower purchase product costs and steady clean product freight rates.

In Montana and Wyoming, margin capture was 93% and 91%, respectively, consistent with our target range and reflecting a return to normal operations following the second quarter turnaround and maintenance activity.

Lastly, in Washington, our index averaged $16.66 per barrel, margin capture was 69%, reflecting the widening discount of jet relative to diesel during the third quarter.

Looking to the fourth quarter, our combined Refining index averaged $15.55 per barrel in October, up nearly $1 per barrel compared to the third quarter, primarily driven by strength in the Singapore market. The Singapore 3-1-2 Index averaged $20.52 per barrel in October, an increase of over $4 per barrel compared to the third quarter average. We expect our fourth quarter Hawaii crude differential to land between $5.50 and $6 per barrel.

In the Rockies and the Pacific Northwest, distillate margins remained strong, partially offset by seasonal declines in gasoline and asphalt netbacks. Unplanned outages on the West Coast have narrowed jet to diesel spreads in October with prompt jet now trading at typical spreads to diesel in the Pacific Northwest.

Moving to the Logistics segment, third quarter adjusted EBITDA was a record $37 million, up $7 million from the second quarter. The improvement reflects the return to normal summer operations in Montana and Wyoming and higher system utilization in Hawaii.

In our Retail segment, third quarter adjusted EBITDA was $22 million compared to $23 million in the second quarter. Retail results continue to outperform our mid-cycle target, supported by strong in-store sales growth, improved cost control and solid fuel margins. This marks the third consecutive quarter of record LTM retail adjusted EBITDA, which now stands at $86 million.

Turning to cash flow, cash provided by operations was $219 million, including a working capital outflow of $147 million, primarily driven by higher RIN inventory associated with the small refinery exemptions. We expect the working capital impact to reverse over the next few quarters as we monetize our excess RIN position.

Additionally, our federal tax assets continue to enhance the cash conversion of our earnings. We began the year with an NOL balance of approximately $1 billion and have utilized over $375 million year-to-date, reducing our cash tax payments by $80 million.

Cash used in investing activities totaled $32 million in the third quarter. Year-to-date, accrued CapEx and deferred turnaround expenditures totaled $204 million with our full year outlook trending toward the upper end of our $240 million guidance.

Cash used in financing activities totaled $197 million, driven by an ABL paydown of $147 million and share repurchases of 16 million. Year-to-date, we've repurchased 5.7 million shares, reducing our basic share count by over 9%.

Shifting to the balance sheet, gross term debt as of September 30 was $642 million or 3x our LTM Retail and Logistics EBITDA, positioning us at the low end of our 3 to 4x leverage target. Quarter end liquidity increased 14% to $735 million, reflecting an excess capital position relative to our minimum liquidity of $300 million to $400 million.

Looking ahead, cash proceeds from the Hawaii Renewables JV and future monetization of excess RINS are expected to further bolster our liquidity position. With a strong balance sheet and constructive outlook, we're well positioned to pursue strategic growth and continue opportunistic share repurchases.

This concludes our prepared remarks. George, we'll turn it back to you for Q&A.

[Operator Instructions] Our first question comes from Matthew Blair with Tudor, Pickering, Holt.

Congrats on the strong results overall. I would say that Washington capture might have been a little bit lower than our expectations. Was that primarily due to the dynamics on jet versus diesel in the quarter? And if so, would you expect that to reverse out in the fourth quarter?

Matt, it's Shawn. That's correct. We sell a fair amount of jet fuel out of our Tacoma facility. Our index really reflects the diesel market dynamics. And we saw, at least in the Pacific Northwest, jet to diesel spreads north of $20 per barrel.

And as I mentioned in my prepared remarks, this spread is now compressed down to more typical levels. I think this morning, it's trading $4 to $5 per barrel discount to diesel. So we estimated that was about a 15% capture impact to Q3. I think adjusting for that, we're right sort of within our range of 85% to 95%.

Sounds good. And then could you also discuss the turnaround schedule for 2026? I think you might have mentioned some upcoming work at Washington. Are you also expecting any work at Hawaii or Wyoming? And what -- any further comments on the timing and total capital cost of this planned activity next year?

Matthew, it's Will. I think consistent with our prior disclosures, we're planning to conduct a turnaround in Hawaii next year. And we're going to have a small planned outage in Washington, as Richard referenced, to address some of the crude unit inefficiencies that we're seeing.

And then we have elected to defer the Wyoming turnaround, given the time we had inside the units during the outage earlier this year. So that's the main update on that front, and we'll be back in front of everybody in December with our expectations on capital requirements.

Our next question comes from Ryan Todd with Piper Sandler.

Maybe one first on cash. You should see a significant influx in cash over the next few quarters in the form of JV -- the payment from the JV and the reversal of the 3Q working capital headwind as you monetize the RINS from the SREs. And that's on top of the organic free cash flow that you're generating.

During the third quarter, you were more active strengthening the balance sheet compared to share buybacks. How should we think about your priorities for the use of all this cash going forward?

Sure, Ryan. It's Will. You're correct. I mean I think our balance sheet is improving quickly and is in good a shape as I've seen it. And again, I think that really positions us to both pursue growth as well as consider and weigh that against our share repurchase opportunity.

And so I'd say over the near term, we're focused on completing the construction on Hawaii Renewables project. And then as we kind of look into the future, we're looking at projects that can propel the Montana business mid-cycle EBITDA generation higher.

I'd say we see a mix of low capital and high-return implant projects as well as some enhanced logistics capabilities and market access opportunities that we see as most attractive in that area. And I would say, as always, we'll weigh that against the opportunity to repurchase shares. And I think given our capital position, we can really do all of the above.

Great. And then maybe just a follow-up to some of your comments earlier. I mean you're seeing quite a bit of strength in the Singapore margin environment. Can you maybe talk about what you're seeing there in terms of drivers, sustainability of that strength? And how you think about the sustainability outlook there at the Hawaii refinery?

Sure. You're correct, Ryan. I think we're seeing the Singapore margin environment at levels that would be almost consistent with, call it, the third quarter of 2023. So I think this morning, we saw gas, oil cracks at $30. It's the first time I've seen that in a long time.

And again, I think the drivers of this are you've got really -- you do have existing tight and low inventories across the OECD kind of major tankage positions. And then I think you overlay that on top of the disruptions that you're seeing from sanctions and the potential impacts on crude flows into both India and into China, and again, I think that's what has the market really focused on overall availability and supply of distillate as we head into the winter and as we work through pretty elevated and strong demand that we're seeing on the harvest side.

So I think those are the key things that we're seeing. And again, it is a strong backdrop, particularly for our distillate-oriented refineries.

[Operator Instructions] Our next question comes from Alexa Petrick with Goldman Sachs.

I wanted to ask, can you provide some color on early thoughts on how Q4 is shaping out? How should we think about captures quarter-over-quarter? You talked a little about the jet diesel differential, but maybe if you could expand on some of the moving pieces.

Alexa, it's Shawn. Yes, I think the Refining index overall, as we mentioned, at $15.55 per barrel up relative to the Q3. I would expect some seasonal dynamics to take hold as we get into the latter half of the quarter, particularly in the Rockies, as it relates to gasoline and asphalt netbacks. But as far as capture, I'll maybe just take through the different regions.

In Hawaii, our guidance is still around that 110% capture level. I think when you look over the last 2 to 3 years, we've averaged between 110% and 120%. And the elevated capture has really been linked to the elevated clean product freight rates, and we haven't really seen that change.

So I think the one thing I'd call out in Hawaii is we do have a small crack hedge book position. We typically layer that in 2 to 3 months in advance. And so like in Q3, I think it's fair to assume it's a marginal headwind going into Q4. But again, we typically only hedge about 15% to 25% of our Singapore exposure. So pretty minor impact in Hawaii.

In Tacoma, our mid-cycle guidance continues to be in the 85% to 95% range, should expect to see some favorable impacts on the jet to diesel dynamics. And partially offsetting those dynamics will be the asphalt netbacks worsening as you get into late November and December.

I think Montana and Wyoming, the market conditions are strong. Diesel margins, in particular, north of $45 per barrel in the upper Rockies. But again, I think as you get into December, we would expect some seasonal dynamics to take hold.

Okay. That's helpful. And then maybe to follow up, I mean, you guys have a high distillate yield relative to a lot of your peers. So curious as we think about incremental heavy barrels entering the market, how are you thinking about distillate going forward maybe relative to gasoline cracks? Or -- I'll kind of turn it to you on how you're thinking about the products.

Sure. Yes, we're typically in max diesel mode, I would say, across the majority of our refineries. I would say, max distillate mode. pretty much 100% of the time. And again, that's been the case in each of the markets that we're serving.

And I don't think we see a significant incentive to move to heavier barrels. And generally speaking, we're ensuring the crudes we're buying have adequate amounts of intermediates to fill up our downstream processing units, so we maximize the overall distillate yield.

So I don't see any major changes. And in general, the average barrel in the world definitely continues to get lighter, given our complexity configuration and location that tends to match up pretty well with what we do.

Our next question comes from Jason Gabelman with TD Cowen.

I wanted to ask about the RINS received from the small refinery exemptions. Are you going to pursue additional opportunities there for exemptions that you didn't receive in your refinery?

Some of your peers have discussed trying to submit additional petitions for 2018 to 2024 on refineries they think should have received RINS. So wondering if you're going to do the same or if you're satisfied with the outcome.

Yes, Jason, I mean, I think I'd tell you, we will avail ourselves of all opportunities that we think are consistent with the law and what the EPA is proposing and how the DOE is scoring the exemption petitions. And again, we've spent significant time on this over the last 7 to 8 years and I think have generally a good feel for how the EPA approaches and the DOE is approaching the scoring here.

So I wouldn't point out anything that I think is material to us right now. I think there are probably some things where we've -- we'll see clarifications over time, but I don't think it's anything I'd point out as material.

Okay. And connected to that, are you going to change the way that you go about managing your RIN liability moving forward and more directly ask just purchasing less RINS to cover your liability than you have in the past?

Yes. I think I'd prefer not to get into our commercial strategy and positioning on RINS. That said, I would tell you, at the end of the day, I think the law and the approach that the EPA and the DOE have taken or the approach they've taken is consistent with the law. I think we'd expect that approach to continue forward.

That said, I think in this area, as history would tell you, you have to be prepared for a wide range of outcomes. And again, I think we manage our commercial position as such, recognizing that there are, I'll just say, tail risks out there that we have to constantly be thinking about how we want to manage it.

But I'd say, our system gives us a fair amount of flexibility to ensure we can capture the benefit of the smaller refinery exemptions over time and certainly see this as a benefit and consistent with the law.

Yes. Understood. My follow-up is on Montana, which seem to run very well out of its turnaround. As you look forward, do you expect it to sustain these lower operating costs that are below, I think, your base case assumptions? Or do you view this more as a onetime benefit and OpEx should kind of move back above that $9 per barrel range?

Yes. Thanks, Jason. And I think you're right, it was a great and strong performance of the Montana team. I think you should expect seasonal improvements on OpEx per barrel as we ramp rates in the summer. And then I think as you get into the softer quarters, you'll see that start to taper down.

In general, what I'd tell you is we still think the $10 per barrel annual target is the right number for the Montana team. And again, I think we feel confident we're moving in the right direction to achieving that.

Ladies and gentlemen, this was our last question. I would like to turn the conference back over to William Monteleone any closing remarks.

Great. Thank you, George. With a high distillate yield and strong balance sheet, our enterprise is well positioned to grow and thrive in the current market environment. I want to congratulate our entire team on a strong operational and financial quarter. I hope everyone has a great day. Thank you.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Goodbye.

Good morning, and welcome to the Par Pacific's Second Quarter 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ashimi Patel, Vice President of Investor Relations. Please go ahead.

Thank you, Jason. Welcome to Par Pacific's second quarter earnings conference call.

Joining me today are Will Monteleone, President and Chief Executive Officer; Richard Creamer, EVP of Refining and Logistics; and Shawn Flores, SVP and Chief Financial Officer.

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 non-GAAP reconciliations and additional information.

I'll now turn the call over to our President and Chief Executive Officer, Will Monteleone.

Thank you, Ashimi, and good morning, everyone. Second quarter adjusted EBITDA was $138 million and adjusted net income was $1.54 per share. Strong operations, combined with improving market conditions enabled us to generate solid profits during the quarter. We set a quarterly operational throughput record in Hawaii and the commercial organization was well positioned to capture improving market conditions during the Montana turnaround. Product margins remained firm with a combined index of approximately $13 per barrel so far in the third quarter, especially favoring our distillate-oriented yield profile.

The Asian market outlook remains favorable with minimal increases in Chinese exports despite arbitrage opportunities to Europe. Each of our businesses is well positioned to maximize rates as we enter the third quarter. Our retail business continues to shine. Quarterly, same-store fuel and in-store revenue increased by 1.8% and 3% compared to the second quarter of 2024. Underlying profitability also improved, as demonstrated by our last 12 months total adjusted EBITDA climbing to $85 million.

We also made considerable progress on key objectives during the quarter, and we are well on our way towards achieving our strategic priorities for the year. Montana team delivered solid results, executing the largest turnaround in the site's history. The completion of this event marks the approximate 2-year anniversary of the Montana acquisition. During this time, we addressed many of the higher risk reliability items. As we've done in prior acquisitions, we will now shift our focus towards improving the profitability of the site through a series of low capital, high-return projects.

The Hawaii and Renewables team progressed the SAF project and remain scheduled for start-up in the second half of the year, and we are nearing mechanical completion and commissioning of the pretreatment unit. We're also pleased to announce the joint venture with Mitsubishi and ENEOS Corporation. Together, Mitsubishi and ENEOS will contribute $100 million for a 36.5% equity interest in the joint venture, while par Pacific will remain with a 63.5% controlling interest. This strategic partnership will strengthen our renewable fuels capabilities, including our partners' expertise and global feedstock procurement and product update.

Following regulatory clearance, we expect to receive the $100 million investment, which will cover the cost of our project. Despite policy uncertainty, our outlook remains constructive due to the flexibility and structural cost advantages of the project. Amidst this solid operational and strategic execution, we repurchased an additional $28 million of stock at a weighted average price of $17.63 bringing the year-to-date share count down by nearly 8%. Our current share count is approaching 50 million shares, and we continue to measure our financial performance by evaluating our free cash flow on a per share basis.

Our balance sheet is in good shape, with ending liquidity of nearly $650 million, providing flexibility to pursue our strategic objectives and opportunistically repurchase shares.

Looking forward, strong market conditions, reduced capital spending requirements and the expected receipt of [indiscernible] proceeds position us to drive strong cash generation.

I'll now turn the call over to Richard to discuss our refining and logistics operations.

Thank you, Will. Second quarter combined throughput was 187,000 barrels per day. In Hawaii, throughput was a record 88,000 barrels per day and production costs were $4.18 per barrel. Hawaii delivered strong results due to reliable operations, which enabled the site to run near nameplate capacity throughout the quarter. This record is a result of focus and effort of our team to sustainably de-constrain Hawaiian operations over the last 18 months.

Washington throughput was 41,000 barrels per day and production costs were $3.73 per barrel, which highlights the site's low cost and efficient refining structure.

Shifting to Wyoming, throughput was 13,000 barrels per day and production costs were $14.50 per barrel impacted by lower throughput and an incremental $4 million due to the crude heater outage. The refinery returned to full production capacity in April, and we expect to return to our normal OpEx run rate in the third quarter.

Finally, in Montana, second quarter throughput was 44,000 barrels per day and production costs were $14.18 per barrel, reflecting lower throughput related to the successful completion of the FCC and alkylation unit turnaround. As Will said, we are pleased with the team's performance and their solid execution of the site's largest turnaround ever.

Looking ahead to the third quarter, we expect Hawaii throughput between 78,000 and 81,000 barrels per day with July runs impacted by weather-driven crude delivery delays. Despite this, Hawaii downstream conversion units remain fully utilized through the consumption of intermediate inventory.

Shifting to the Mainland, we expect Washington throughput to be between 39,000 and 41,000 barrels per day, following between '18 and '19 and Montana between 54 and 56 resulting in a system-wide throughput between 190,000 and 205,000 barrels per day.

I'll now turn the call over to Shawn to cover the financial results.

Thank you, Richard. Second quarter adjusted EBITDA and adjusted earnings were $138 million and $78 million or $1.54 per share. Our Refining segment reported adjusted EBITDA of $108 million in the second quarter compared to a loss of $14 million in the first quarter. Starting in Hawaii, the Singapore 312 averaged $13.56 per barrel and our crude differential was $4.99 and resulting in a Hawaii index of $8.57 per barrel. Hawaii margin capture was 119%, including a combined $4 million headwind from price lag and product crack hedging. Excluding these items, margin capture was 125%, reflecting favorable yield and reduced product imports, driven by record quarterly throughput rates.

Looking ahead to the third quarter, we expect our Hawaii crude differential to land between $5.75 and $6.25 per barrel. In Montana, our index averaged $20.29 per barrel, margin capture was 110%, highlighting our ability to maintain strong clean product sales through strategic inventory drawdowns despite lower throughput rates during the turnaround. Looking ahead, our Montana indicator averaged $15.13 per barrel in July, supported by strong distillate margins across the Northern Rockies, offset by tighter heavy crude differentials.

In Wyoming, our index averaged $21.41 per barrel, margin capture was 87%, impacted by the recent outage as we resumed full throughput rates in late April. Under FIFO accounting, we continue to expense high-cost purchased products into May, which reduced second quarter gross margin by approximately $8 million. Looking to the third quarter, we've returned to normal operations and expect OpEx to revert to prior run rate levels.

Lastly, our Washington Index averaged $15.37 per barrel an improvement of approximately $11 from the prior quarter, driven by tight distillate supplies in the P&W. Margin capture was 75%, below our guidance range of 85% to 95%, primarily due to higher sales mix of asphalt and intermediate products during the summer demand season. In July, our Washington indicator averaged $13.74 per barrel, remaining well supported by strong clean product margins.

Turning to the Logistics segment. Second quarter adjusted EBITDA came in at $30 million, consistent with our mid-cycle run rate guidance. In Wyoming, logistics volumes began to recover following the restart of the refinery in April, across the rest of our logistics system, we saw strong utilization on our pipelines and truck racks supported by seasonal strength in sales volumes.

In the Retail segment, we reported second quarter adjusted EBITDA of $23 million up from $19 million in the first quarter. The improvement was driven by higher fuel margins, same-store sales growth and lower operating costs.

Corporate expenses and adjusted EBITDA totaled $24 million for the second quarter. We remain on track to achieve our company-wide cost reduction initiatives, targeting $30 million to $40 million in annual savings relative to last year. Excluding the Wyoming repair costs, year-to-date consolidated operating expenses were $412 million, reflecting a $24 million reduction compared to the prior year period.

Moving to cash flows. Cash from operations during the second quarter totaled $83 million, excluding working capital inflows of $123 million and deferred turnaround expenditures of $72 million. We expect a partial reversal of the working capital inflow in the third quarter, primarily driven by the timing of derivative cash settlements, and return to typical accounts payable levels. Cash used in investing activities totaled $46 million, driven by capital expenditures. As Will noted, we expect CapEx to decline meaningfully during the second half of the year. Through June 30, accrued CapEx and turnaround costs totaled $173 million with our full year outlook turning toward the upper end of our guidance of $240 million.

Turning to capital allocation. We repurchased $28 million or 1.6 million shares of common stock during the second quarter. Year-to-date, we bought back 5.2 million shares at an average price of $15, reducing our basic shares outstanding by 8%.

Moving to the balance sheet. Gross term debt as of June 30 was $641 million or 3x our trailing 12-month retail and logistics EBITDA at the low end of our 3 to 4x leverage target. With a record LTM EBITDA of $211 million, our growing retail and logistics cash flow comfortably supports our leverage profile. Total liquidity increased 23% during the second quarter to $647 million, supported by strong operating cash flows and expanding capacity under our ABL facility.

Our solid financial position, combined with an improved market backdrop positions us well to advance our strategic priorities moving forward.

This concludes our prepared remarks. Operator, we'll turn it back to you for Q&A.

[Operator Instructions] And our first question comes from Matthew Blair from TPH.

Could you talk a little bit about the drivers behind the strong capture rates in Hawaii in the second quarter? I believe your overall capture was 119% of your indicator. And I think you mentioned that areas like price lag and the hedging were actually headwinds in the quarter. So what was on the other side of the provided tailwinds and enabled such a strong capture figure?

Yes, Matt, this is Shawn. You're correct. Our reported capture was 119%. And excluding the nonrecurring events of the price lag and crack hedging, was 125% and I think over the last 2 or 3 years, our average capture in Hawaii has been 120%. So I think we've shown that we can outperform our steady guidance of 110% capture. And that's primarily driven by elevated clean product freight rates, which is included in our sales contracts. And then as you see throughput rates move higher, closer to nameplate capacity, our yield expense improves materially on a barrel-per-barrel basis.

So I think as long as we sustain throughput rates, in the mid-80s and continue to see elevated clean product freight, I fully expect capture rates to continue to outperform our guidance.

Yes, Matt, this is Will. I think that what I point out here is just at 88,000 barrels per day throughput rate. Again, this reflects, I would say, over 18 months of work by the Hawaii team and we're really deconstraining and just improving overall heater efficiency inside the plant. And so again, I think the yield profile on those last barrels produced is very attractive.

Sounds good. And then the SAF JV looks like a total home run for Par. Could you talk a little bit about how that deal came about, the benefits to Par from that deal? And then what -- is there an update on the start-up timing and when you would expect the EBITDA contribution to begin to flow through the Par financials?

Sure, Matt. Yes. I think the discussions have been ongoing for an extended period of time. And I think the key thing that's driven really the partnership here is the -- I'll just say, relative attractive elements of our project. And so I think we've been mentioning this, but I'll reiterate, but I think at the end of the day, we see our SAF project is very attractive relative to the industry and it's driven really by, I think, our operating expense, given that it's inside the fence line of the plant on a per gallon basis, we'd expect it to be very attractive and highly competitive.

Second really is logistics. I think we expect over time to sell the vast majority of our products locally in Hawaii, and I think that allows us to leverage our existing proprietary distribution system. And then I think the capital efficiency of the project is the other piece that we've been touting. And so I think when you look at all those facets, it's kind of the key ingredients for bringing in a partner of the quality of Mitsubishi and ENEOS.

And then I think ultimately, it was definitely not a 2 plus 2 equals 4, but I think it's a great opportunity for us to expand our distribution capabilities on the West Coast, Mitsubishi and others have access into the California market, which complements our positioning in Washington and just expands the flexibility that we're going to have in the overall renewable fuels business. So I think long story short, I see this being an attractive long-term partnership that unlocks the value of the renewables business and then also brings to bear a larger global scale that Mitsubishi and ENEOS have.

So again, very pleased with this, and I think it helps shine a light on the attractive elements of the project that we've been working on. And in terms of start-up, I think we're targeting second half of this year. We're intending to bring online the pretreatment unit first, as I've referenced, go through the commissioning process there. And I wouldn't expect to start to see financial contributions from the JV until really the first quarter of '26. And just keep in mind, we'll be in commissioning and really getting through the, I'll call it, credit pathway establishment. And so I think it's going to take us a quarter or two before we get to kind of the right CI scores and ultimately to the run rate contributions for that business.

The next question comes from Ryan Todd from Piper Sandler.

I wanted to talk about -- a little bit about the Rockies. Obviously, really strong performance in Montana and Wyoming in the quarter. Some of that due to excess inventory sales. Can you talk about maybe how much is due to the excess inventory sales and what you're seeing on broader dynamics in the region as you look forward from here?

Yes, Ryan, I'll take the excess inventory sort of impacts on capture and I'll turn it to Will to talk about sort of the PADD 4 market in general. But I think the market environment that we're operating in the second quarter supported our captured guidance range of 90% to 100%. I think what drove capture closer to the 10% was our ability to draw down diesel and gasoline inventories. And so then it's just a function of sales are versus throughput. I think looking ahead, I'd just reiterate our guidance of $90 million to $100 million into Q3.

And then, Ryan, on the broader market, I think the kind of PADD 5 and PADD 4 distillate markets are particularly tight, I think big picture. I think you saw the export market open up in the PADD 5 market. You saw global distillate inventory start to draw down well below historical averages and that opened up, I think, attractive netbacks for exporting diesel. On top of that, I think you've seen production of biodiesel and renewable diesel come off materially. And I should also say, imports of diesel and renewable diesel come off materially as you saw the blenders tax credit expire and so you've had both export of conventional diesel and then reduction in renewable barrels available as we kind of work into the second quarter.

So I think the market and supply position there is tight. And I think that's really reflective of a globally tight distillate market. So those are the key drivers, and I'd broadly say a pretty typical driving season in terms of demand and fundamentals on the gasoline side is what we've seen so far.

Great. And then maybe 1 on kind of use of cash and shareholder returns. You've been pretty active in the first half of the year in terms of share buyback. You've got $100 million coming in the door from kind of proceeds from JV, CapEx budget that's rolling off pretty materially as you highlighted here in the second half of the year. But you've also talked in the past about being opportunistic and shareholder returns. So how do you think about those dynamics as you look at the second half of the year?

Sure. Yes. I mean what I would say is really our historical framework still holds today. And what I'd say is when we're in an excess capital position like we are today and like we expect to improve and we get the chance to repurchase our shares below intrinsic value, and we see that opportunity. And I think that opportunity is going to come and go based on the many variables that impact our business and markets as a whole. And really, I think a nimble approach is critical. We live in a volatile world, and things are changing quickly, and what I would say is, as a management team, what we're focused on is really actively weighing our growth prospects.

That's both the internal growth capital projects that we're generating as well as any M&A opportunities against those opportunities to repurchase stock and other capital allocation alternatives. And I think I'll just say it a little differently. I think we really just want the most options on the table that we can execute at any point in time so that we can adapt quickly to how quickly the world is changing.

[Operator Instructions] And our next question comes from Neil Mehta from Goldman Sachs.

Just want your perspective on small refinery exemptions. Where do you think we are in terms of the time line? And then any advice in helping us to size what this could mean for Par's cash flow?

Sure. So I think broadly on small refinery exemptions, our expectation is that the EPA will, I would say, follow the law and from our perspective, that means that goes through a rigorous kind of refinery by refinery DOE scoring process to assess each plant. And so -- and to give you some context, in the past, I would say all three of our mainland refineries have qualified and received small refinery exemptions in the past. And so I think that's really our expectation of the process.

In terms of the timing, I won't even hazard a guess, Neil. I think this is highly politicized effort on all sides. And unfortunately, there would just be speculation to try and say that we know what the time line is because it's been difficult for them to maintain a schedule. In terms of sizing of the opportunity, maybe I'll turn it to Shawn just to talk about the overall RIN positioning for us as a whole and what it means. Before I do that, I just want to clarify any exemptions and return of RINs would be upside to us, right? We have really a balanced rent asset and liability position today.

Neil, this is Shawn. To Will's point there, we've covered our obligations going back to 2019 through 2024. So any retroactive receipt of a small refinery exemption would be sort of direct cash proceeds in terms of getting RINs back and selling those at market prices. I think when you think about our exposure on a go-forward basis, the mainland refineries have about $140 million RIN unit gross exposure. And so I think that's the best way to size up given that those three refineries received SREs in the past.

That makes sense. And then in time just talking about the Singapore market. Hawaii is, I would characterize it, at or maybe even above mid-cycle. So that happened really quick. It's great to see but just the sustainability of it and there's some moving pieces here, right? Asia demand, Chinese oil demand is not that good. India, there's some debate around tariff impacts out there, and then we have this potential for the Chinese to ramp up product exports. So how do you think about some of those moving pieces and risks as you assess the path forward for Singapore margins?

Yes. I think we watch the Singapore market closely and I think really have for the last 12 years. And I think the theme that we continue to see is that the overall Chinese refining fleet remains focused on meeting internal demand is sort of one theme that we see. And the second is really just deeper and deeper integration between the refining fleet and their petrochemical complex. And so I think really internalizing demand and then also shifting product yields to the lighter end products so that they can internalize their petchem complex. And so I think those are the kind of the key policy pieces that we watch in terms of the, I'll call it, export relief valve, it seems like that's been relatively well contained. And I wouldn't say we see anything right now that suggests that there's a material change coming in the future on Chinese exports given their stated policy objectives.

So I think that's sort of the incremental supply point that we see. And I think big picture of demand in the Asia Pacific market remains steady and a fair amount of, I'll just say, arbitrage barrels are still needed to clear from the Middle East and in India and even potentially from North Asia all the way into Europe to kind of keep the Atlantic Basin balance for distillate. So that's kind of the key thing we're watching, and I think we don't see a major shift there.

The next question comes from Michael Latimer from TD Cowen.

It's Mike here on for Jason Gilerman, First, could you just talk about how your niche markets in the Rockies and Pacific Northwest are shaping up quarter-to-date? Markets like Portland, for example, have been pretty elevated for quite some time now, so I'm just trying to get a handle on the durability of those margins.

Sure. . Yes. I think I referenced this that our July combined index is about $13. So Barwick kind of aggregates all of our markets, and that's pretty flat to where we were in June. And so I think the overall story there is probably very similar to what we saw in the back half of the second quarter in terms of the distillate market being strong. And I commented on this previously, which is, I think, principally driven by open export market and reduced supply of biodiesel or renewable diesel, but were not domestically produced as well as imported, given the changes in the recent PTC, the production tax credit.

So I think those are the factors that are influencing the distillate side of the barrel. I think we see strong demand, I think, in particular, debt demand strong globally. And so all those pieces are kind of pulling on the distillate barrel and the gas kind of side of the equation, I would call it, broadly probably a mid-cycle market condition. And then I think the biggest thing to watch in the future is really the changes in California refining fleet. And to the extent that we do see the two competitor refiners there in Los Angeles and San Francisco, ceased operations in the fourth quarter and the first quarter of next year, I think it really further shifts the kind of import export parity balance over time, which I think practically speaking, just put you more into a position where you're equally relying on renewables and biodiesel to balance the market.

All right. Great. And then my last one is just how you're thinking about your excess cash position. I think in the past, you've mentioned that the business is comfortable around $300 million of liquidity. So is still -- is that still the right range to think about? And then as to as your stock has run up a bit, just how your appetite for M&A would be with that excess cash?

Yes. I think we've stated that our minimum liquidity target is $250 million to $300 million. So we're certainly in an excess capital position today. And as Will sort of mentioned in the earlier Q&A, I think we're going to continue to think about capital allocation in the same light and measure our opportunistic buybacks with pursuing our strategic growth priorities.

And on the M&A front, I would just say it's a -- I'd say, still a challenging market from a bid [indiscernible] perspective. And I'd say we're today principally focused on trying to find and develop internal opportunities or sort of smaller scale bolt-on solutions that help advance really principally on the cost reduction side, but certainly on other elements of market access that could improve our business, particularly on the Mainland.

The next question comes from Manav Gupta from UBS.

I apologize guys. I was having some technical difficulties, so couldn't join in time, so if this question has been asked, I apologize. But I just wanted your views on global quality discounts out there. How do you see heavier sour and other kinds of barrels in the global markets trade versus the light sweet barrels, if you could talk a little bit about that?

Sure. I would say -- big picture, I would say the -- I'll say the future incremental supply looks like it should, I would say, add pressure and expand the heavy light dip as we head into the winter. I would tell you that not seeing signs of that in the prompt market, and that probably goes all the way out into the September, October time frame. So continue to see A&S and grades like that trade at some pretty elevated premiums to Brent. And so I would say, while incremental supply should help kind of bring quality differentials or expand quality differentials again, have not seen that emerge at this point.

You are seeing some tightening on the WCS side, any comments you would like to make on that? I think WCS has now dropped to like 13% to WTI, but if you could -- because you do use a lot of WCS in the system. So if you could talk about a little bit about the WCS market also?

Yes. I mean I think certainly been tighter than we would expect in the, I'll say, almost in the high single digits at points in time here. And I think a little bit of incremental supply coming back on from Latin America and probably some reduced runs here as you get the turnaround season in the fourth quarter. I think, are setting the stage there for a bit wider differentials there. So those would be kind of the incremental changes that we've seen, nothing earth shattering there probably to what you've heard in the market from other parties.

There are no more questions in the queue. This concludes our question-and-answer session. I'd like to turn the conference back over to Will Monteleone for any closing remarks.

Thank you. We're encouraged by the improving market backdrop and remain focused on executing on our key objectives as the key to driving our shareholder value. Thank you for joining us today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.