Par Pacific Holdings Reports Strong Second Quarter 2022 Results
Par Pacific Holdings Reports Strong Second Quarter 2022 Results
- Net Income of
$149 .1 million, or$2.50 per diluted share - Adjusted Net Income of
$197.2 million , or$3.31 per diluted share - Adjusted EBITDA of
$242.1 million $70.1 million in debt reduction, or 12% of funded debt- System-wide throughput of 141 Mbpd, including record quarterly rates at the
Hawaii refinery
“We are pleased to report strong quarterly financial results due to rebounding demand, record market conditions and excellent operational reliability across our regions,” said
Refining
The Refining segment reported operating income of
Refining segment Adjusted EBITDA was
The 3-1-2 Singapore Crack Spread was
The
The
The
During the second quarter of 2022, the
The Wyoming refinery's Adjusted Gross Margin of
Retail
The Retail segment reported operating income of
Retail segment Adjusted EBITDA was
Logistics
The Logistics segment reported operating income of
Logistics segment Adjusted EBITDA was
Laramie Energy
Due to the discontinuation of the equity method of accounting as of
Liquidity
Net cash provided by operations totaled
At
Major Shareholder Transactions
As of
Conference Call Information
A conference call is scheduled for
About
Forward-Looking Statements
This news release (and oral statements regarding the subject matter of this news release, including those made on the conference call and webcast announced herein) includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements include, without limitation, statements about: expected market conditions; anticipated free cash flows; anticipated refinery throughput; anticipated cost savings; anticipated capital expenditures, including major maintenance costs, and their effect on our financial and operating results, including earnings per share and free cash flow; anticipated retail sales volumes and on-island sales; the anticipated financial and operational results of
Contact:
Ashimi Patel
Director, Investor Relations
(832) 916-3355
[email protected]
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
| Three Months Ended |
Six Months Ended |
||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Revenues | $ | 2,106,332 | $ | 1,217,525 | $ | 3,456,625 | $ | 2,106,205 | |||||||
| Operating expenses | |||||||||||||||
| Cost of revenues (excluding depreciation) | 1,808,925 | 1,197,298 | 3,159,174 | 2,086,161 | |||||||||||
| Operating expense (excluding depreciation) | 82,342 | 68,821 | 163,746 | 143,009 | |||||||||||
| Depreciation and amortization | 25,583 | 23,548 | 49,363 | 46,428 | |||||||||||
| Loss (gain) on sale of assets, net | 15 | 510 | 15 | (64,402 | ) | ||||||||||
| General and administrative expense (excluding depreciation) | 15,438 | 12,201 | 31,331 | 24,086 | |||||||||||
| Acquisition and integration costs | — | (352 | ) | 63 | 86 | ||||||||||
| Total operating expenses | 1,932,303 | 1,302,026 | 3,403,692 | 2,235,368 | |||||||||||
| Operating income (loss) | 174,029 | (84,501 | ) | 52,933 | (129,163 | ) | |||||||||
| Other income (expense) | |||||||||||||||
| Interest expense and financing costs, net | (18,154 | ) | (17,186 | ) | (34,548 | ) | (35,337 | ) | |||||||
| Debt extinguishment and commitment costs | (5,672 | ) | (6,628 | ) | (5,672 | ) | (8,135 | ) | |||||||
| Gain on curtailment of pension obligation | — | — | — | 2,032 | |||||||||||
| Other income (expense), net | 47 | (36 | ) | 49 | 25 | ||||||||||
| Total other expense, net | (23,779 | ) | (23,850 | ) | (40,171 | ) | (41,415 | ) | |||||||
| Income (loss) before income taxes | 150,250 | (108,351 | ) | 12,762 | (170,578 | ) | |||||||||
| Income tax benefit (expense) | (1,125 | ) | (607 | ) | (688 | ) | (607 | ) | |||||||
| Net income (loss) | $ | 149,125 | $ | (108,958 | ) | $ | 12,074 | $ | (171,185 | ) | |||||
| Weighted-average shares outstanding | |||||||||||||||
| Basic | 59,479 | 59,367 | 59,449 | 56,837 | |||||||||||
| Diluted | 59,642 | 59,367 | 59,644 | 56,837 | |||||||||||
| Income (loss) per share | |||||||||||||||
| Basic | $ | 2.51 | $ | (1.84 | ) | $ | 0.20 | $ | (3.01 | ) | |||||
| Diluted | $ | 2.50 | $ | (1.84 | ) | $ | 0.20 | $ | (3.01 | ) | |||||
Balance Sheet Data
(Unaudited)
(in thousands)
| Balance Sheet Data | |||||||
| Cash and cash equivalents | $ | 186,178 | $ | 112,221 | |||
| Working capital (1) | (433,884 | ) | (327,002 | ) | |||
| Debt, including current portion | 519,871 | 564,558 | |||||
| Total stockholders’ equity | 278,729 | 265,700 | |||||
________________________________________
(1) Working capital is calculated as (i) total current assets excluding cash and cash equivalents less (ii) total current liabilities excluding current portion of long-term debt. Total current assets include inventories stated at the lower of cost or net realizable value.
Operating Statistics
The following table summarizes key operational data:
| Three Months Ended |
Six Months Ended |
||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Total Refining Segment | |||||||||||||||
| Feedstocks throughput (Mbpd) | 141.3 | 140.7 | 129.8 | 134.1 | |||||||||||
| Refined product sales volume (Mbpd) | 143.4 | 146.6 | 133.0 | 138.5 | |||||||||||
| Feedstocks throughput (Mbpd) | 84.1 | 84.0 | 83.4 | 82.6 | |||||||||||
| Yield (% of total throughput) | |||||||||||||||
| Gasoline and gasoline blendstocks | 22.9 | % | 24.7 | % | 24.0 | % | 24.7 | % | |||||||
| Distillates | 38.0 | % | 46.8 | % | 39.6 | % | 44.9 | % | |||||||
| Fuel oils | 33.6 | % | 25.6 | % | 31.5 | % | 26.5 | % | |||||||
| Other products | 2.4 | % | (0.4 | )% | 1.4 | % | 0.5 | % | |||||||
| Total yield | 96.9 | % | 96.7 | % | 96.5 | % | 96.6 | % | |||||||
| Refined product sales volume (Mbpd) | |||||||||||||||
| On-island sales volume | 80.2 | 87.3 | 79.2 | 82.6 | |||||||||||
| Export sales volume | — | — | — | — | |||||||||||
| Total refined product sales volume | 80.2 | 87.3 | 79.2 | 82.6 | |||||||||||
| Adjusted Gross Margin per bbl ($/throughput bbl) (1) | $ | 18.71 | $ | 2.73 | $ | 11.22 | $ | 3.51 | |||||||
| Production costs per bbl ($/throughput bbl) (2) | 4.50 | 3.40 | 4.45 | 3.69 | |||||||||||
| D&A per bbl ($/throughput bbl) | 0.66 | 0.65 | 0.66 | 0.66 | |||||||||||
| Feedstocks throughput (Mbpd) | 40.5 | 38.7 | 30.4 | 35.2 | |||||||||||
| Yield (% of total throughput) | |||||||||||||||
| Gasoline and gasoline blendstocks | 24.2 | % | 23.6 | % | 24.4 | % | 24.0 | % | |||||||
| Distillate | 34.4 | % | 34.1 | % | 34.1 | % | 35.0 | % | |||||||
| Asphalt | 20.8 | % | 21.5 | % | 19.7 | % | 19.9 | % | |||||||
| Other products | 17.4 | % | 17.8 | % | 18.6 | % | 18.2 | % | |||||||
| Total yield | 96.8 | % | 97 | % | 96.8 | % | 97.1 | % | |||||||
| Refined product sales volume (Mbpd) | 44.6 | 40.9 | 37.1 | 40.1 | |||||||||||
| Adjusted Gross Margin per bbl ($/throughput bbl) (1) | $ | 20.50 | $ | 1.97 | $ | 14.17 | $ | 2.14 | |||||||
| Production costs per bbl ($/throughput bbl) (2) | 3.40 | 3.28 | 4.71 | 3.76 | |||||||||||
| D&A per bbl ($/throughput bbl) | 2.03 | 1.49 | 2.45 | 1.62 | |||||||||||
| Three Months Ended |
Six Months Ended |
||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Feedstocks throughput (Mbpd) | 16.7 | 18.0 | 16.0 | 16.3 | |||||||||||
| Yield (% of total throughput) | |||||||||||||||
| Gasoline and gasoline blendstocks | 48.1 | % | 45.6 | % | 49.1 | % | 47.1 | % | |||||||
| Distillate | 43.6 | % | 46.6 | % | 43.4 | % | 45.9 | % | |||||||
| Fuel oils | 2.2 | % | 2.4 | % | 2.3 | % | 2.0 | % | |||||||
| Other products | 3.4 | % | 2.5 | % | 2.5 | % | 1.9 | % | |||||||
| Total yield | 97.3 | % | 97.1 | % | 97.3 | % | 96.9 | % | |||||||
| Refined product sales volume (Mbpd) | 18.6 | 18.4 | 16.7 | 15.8 | |||||||||||
| Adjusted Gross Margin per bbl ($/throughput bbl) (1) | $ | 43.34 | $ | 15.10 | $ | 34.97 | $ | 13.38 | |||||||
| Production costs per bbl ($/throughput bbl) (2) | 6.97 | 5.71 | 7.46 | 6.78 | |||||||||||
| D&A per bbl ($/throughput bbl) | 2.92 | 2.63 | 3.07 | 2.85 | |||||||||||
| Market Indices ($ per barrel) | |||||||||||||||
| 3-1-2 Singapore Crack Spread (3) | $ | 36.80 | $ | 4.38 | $ | 26.56 | $ | 4.09 | |||||||
| 46.16 | 16.05 | 34.09 | 13.77 | ||||||||||||
| 54.55 | 30.04 | 40.62 | 25.53 | ||||||||||||
| Crude Oil Prices ($ per barrel) | |||||||||||||||
| Brent | $ | 111.98 | $ | 69.08 | $ | 104.98 | $ | 65.22 | |||||||
| WTI | 108.52 | 66.17 | 101.80 | 62.18 | |||||||||||
| ANS | 115.84 | 69.44 | 107.74 | 65.57 | |||||||||||
|
|
112.44 | 65.99 | 105.45 | 61.82 | |||||||||||
| WCS Hardisty | 93.35 | 53.33 | 87.97 | 49.77 | |||||||||||
| Brent M1-M3 | 4.23 | 0.96 | 4.18 | 0.89 | |||||||||||
| Retail Segment | |||||||||||||||
| Retail sales volumes (thousands of gallons) | 25,862 | 28,871 | 50,770 | 53,672 | |||||||||||
________________________________________
(1) We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput. Adjusted Gross Margin for our
(2) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry. There are a variety of ways to calculate production costs per barrel; different companies within the industry calculate it in different ways. We calculate production costs per barrel by dividing all direct production costs, which include the costs to run the refineries including personnel costs, repair and maintenance costs, insurance, utilities, and other miscellaneous costs, by total refining throughput. Our production costs are included in Operating expense (excluding depreciation) on our condensed consolidated statement of operations, which also includes costs related to our bulk marketing operations.
(3) We believe the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) is the most representative market indicator for our operations in
(4) We believe the
(5) The profitability of our
Non-GAAP Performance Measures
Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures. These measures should not be considered in isolation or as substitutes or alternatives to their most directly comparable GAAP financial measures or any other measure of financial performance or liquidity presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies since each company may define these terms differently.
We believe Adjusted Gross Margin (as defined below) provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost and net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation and amortization. Management uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks. We believe Adjusted Net Income (Loss) and Adjusted EBITDA (as defined below) are useful supplemental financial measures that allow investors to assess the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis, the ability of our assets to generate cash to pay interest on our indebtedness, and our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure. We believe Adjusted EBITDA by segment (as defined below) is a useful supplemental financial measure to evaluate the economic performance of our segments without regard to financing methods, capital structure, or historical cost basis.
Beginning with financial results reported for periods in fiscal year 2022, the inventory valuation adjustment was modified to include the first-in, first-out (“FIFO”) inventory gains (losses) associated with our titled manufactured inventory in
Adjusted Gross Margin
Adjusted Gross Margin is defined as operating income (loss) excluding:
- operating expense (excluding depreciation);
- depreciation and amortization (“D&A”);
- impairment expense;
- loss (gain) on sale of assets, net;
- inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, contango (gains) and backwardation losses associated with our
Washington inventory and intermediation obligation, and purchase price allocation adjustments; beginning in 2022, this also includes the FIFO inventory (gains) losses associated with our titled manufactured inventory inHawaii ); - LIFO layer liquidation impacts associated with our
Washington inventory; - Renewable Identification Numbers (“RINs”) mark-to-market adjustments (which represents the income statement effect of reflecting our RINs liability on a net basis; beginning with financial results reported for the second quarter of 2022, this also includes the mark-to-market losses (gains) associated with our net RINs liability); and
- unrealized loss (gain) on derivatives.
Adjusted Gross Margin can also be defined as revenues less cost of revenues (excluding depreciation) excluding:
- inventory valuation adjustment;
- unrealized loss (gain) on derivatives;
- LIFO layer liquidation impacts associated with our
Washington inventory; and - RINs mark-to-market adjustments (which represents the income statement effect of reflecting our RINs liability on a net basis; beginning with financial results reported for the second quarter of 2022, this also includes the mark-to-market losses (gains) associated with our net RINs liability).
We define cost of revenues (excluding depreciation) as:
- the hydrocarbon-related costs of inventory sold;
- transportation costs of delivering product to customers;
- crude oil consumed in the refining process;
- costs to satisfy our RINs and environmental credit obligations;
- certain hydrocarbon fees and taxes; and
- the unrealized gain (loss) on derivatives and the inventory valuation adjustment that we exclude from Adjusted Gross Margin.
The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands):
| Three months ended |
Refining | Logistics | Retail | ||||||||
| Operating income (loss) | $ | 168,798 | $ | 15,898 | $ | 5,525 | |||||
| Operating expense (excluding depreciation) | 59,101 | 3,797 | 19,444 | ||||||||
| Depreciation and amortization | 16,979 | 5,211 | 2,600 | ||||||||
| Loss (gain) on sale of assets, net | — | (12 | ) | — | |||||||
| Inventory valuation adjustment | (7,557 | ) | — | — | |||||||
| RINs mark-to-market adjustments | 78,548 | — | — | ||||||||
| Unrealized gain on derivatives | (28,607 | ) | — | — | |||||||
| Adjusted Gross Margin (1) | $ | 287,262 | $ | 24,894 | $ | 27,569 | |||||
| Three months ended |
Refining | Logistics | Retail | ||||||||
| Operating income (loss) | $ | (99,119 | ) | $ | 14,542 | $ | 12,651 | ||||
| Operating expense (excluding depreciation) | 47,944 | 3,494 | 17,383 | ||||||||
| Depreciation and amortization | 14,561 | 5,377 | 2,874 | ||||||||
| Loss (gain) on sale of assets, net | 1,664 | (21 | ) | (1,133 | ) | ||||||
| Inventory valuation adjustment | 29,657 | — | — | ||||||||
| LIFO liquidation adjustment | 2,263 | — | — | ||||||||
| RINs mark-to-market adjustments | 54,158 | — | — | ||||||||
| Unrealized loss on derivatives | 1,404 | — | — | ||||||||
| Adjusted Gross Margin (2) | $ | 52,532 | $ | 23,392 | $ | 31,775 | |||||
| Six Months Ended June 30, 2022 | Refining | Logistics | Retail | ||||||||
| Operating income | $ | 50,473 | $ | 25,750 | $ | 9,570 | |||||
| Operating expense (excluding depreciation) | 117,401 | 7,570 | 38,775 | ||||||||
| Depreciation and amortization | 32,312 | 10,298 | 5,291 | ||||||||
| Loss (gain) on sale of assets, net | — | (12 | ) | — | |||||||
| Inventory valuation adjustment | 73,096 | — | — | ||||||||
| RINs mark-to-market adjustments | 89,850 | — | — | ||||||||
| Unrealized gain on derivatives | (13,155 | ) | — | — | |||||||
| Adjusted Gross Margin (1) | $ | 349,977 | $ | 43,606 | $ | 53,636 | |||||
| Six Months Ended June 30, 2021 | Refining | Logistics | Retail | ||||||||
| Operating income (loss) | $ | (189,984 | ) | $ | 24,619 | $ | 62,006 | ||||
| Operating expense (excluding depreciation) | 101,282 | 7,390 | 34,337 | ||||||||
| Depreciation and amortization | 28,625 | 10,631 | 5,534 | ||||||||
| Loss (gain) on sale of assets, net | (19,595 | ) | (21 | ) | (44,786 | ) | |||||
| Inventory valuation adjustment | 52,743 | — | — | ||||||||
| LIFO liquidation adjustment | 4,151 | — | — | ||||||||
| RINs mark-to-market adjustments | 131,060 | — | — | ||||||||
| Unrealized gain on derivatives | (2,608 | ) | — | — | |||||||
| Adjusted Gross Margin (1) (2) | $ | 105,674 | $ | 42,619 | $ | 57,091 | |||||
________________________________________
(1) There was no LIFO liquidation adjustment or impairment expense for the three and six months ended
(2) There was no impairment expense for the three and six months ended
Adjusted Net Income (Loss) and Adjusted EBITDA
Adjusted Net Income (Loss) is defined as Net income (loss) excluding:
- inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, contango (gains) and backwardation losses associated with our
Washington inventory and intermediation obligation, and purchase price allocation adjustments; beginning in 2022, this also includes the FIFO inventory (gains) losses associated with our titled manufactured inventory inHawaii ); - the LIFO layer liquidation impacts associated with our
Washington inventory; - RINs mark-to-market adjustments (which represents the income statement effect of reflecting our RINs liability on a net basis; beginning with financial results reported for the second quarter of 2022, this also includes the mark-to-market losses (gains) associated with our net RINs liability);
- unrealized (gain) loss on derivatives;
- acquisition and integration costs;
- debt extinguishment and commitment costs;
- increase in (release of) tax valuation allowance and other deferred tax items;
- changes in the value of contingent consideration and common stock warrants;
- severance costs;
- (gain) loss on sale of assets;
- impairment expense;
- impairment expense associated with our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference; and
- Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives.
Adjusted EBITDA is defined as Adjusted Net Income (Loss) excluding:
- D&A;
- interest expense and financing costs;
- equity losses (earnings) from Laramie Energy excluding Par’s share of unrealized loss (gain) on derivatives, impairment of Par’s investment, and our share of Laramie Energy’s asset impairment losses in excess of our basis difference; and
- income tax expense (benefit).
The following table presents a reconciliation of Adjusted Net Income (Loss) and Adjusted EBITDA to the most directly comparable GAAP financial measure, net income (loss), on a historical basis for the periods indicated (in thousands):
| Three Months Ended |
Six Months Ended |
||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net income (loss) | $ | 149,125 | $ | (108,958 | ) | $ | 12,074 | $ | (171,185 | ) | |||||
| Inventory valuation adjustment | (7,557 | ) | 29,657 | 73,096 | 52,743 | ||||||||||
| LIFO liquidation adjustment | — | 2,263 | — | 4,151 | |||||||||||
| RINs mark-to-market adjustments | 78,548 | 54,158 | 89,850 | 131,060 | |||||||||||
| Unrealized loss (gain) on derivatives | (28,607 | ) | 1,404 | (13,155 | ) | (2,608 | ) | ||||||||
| Acquisition and integration costs | — | (352 | ) | 63 | 86 | ||||||||||
| Debt extinguishment and commitment costs | 5,672 | 6,628 | 5,672 | 8,135 | |||||||||||
| Severance costs | 35 | — | 2,263 | 16 | |||||||||||
| Loss (gain) on sale of assets, net | 15 | 510 | 15 | (64,402 | ) | ||||||||||
| Adjusted Net Income (Loss) | 197,231 | (14,690 | ) | 169,878 | (42,004 | ) | |||||||||
| Depreciation and amortization | 25,583 | 23,548 | 49,363 | 46,428 | |||||||||||
| Interest expense and financing costs, net | 18,154 | 17,186 | 34,548 | 35,337 | |||||||||||
| Income tax expense | 1,125 | 607 | 688 | 607 | |||||||||||
| Adjusted EBITDA (1) | $ | 242,093 | $ | 26,651 | $ | 254,477 | $ | 40,368 | |||||||
___________________________________
(1) For the three and six months ended
The following table sets forth the computation of basic and diluted Adjusted Net Income (Loss) per share (in thousands, except per share amounts):
| Three Months Ended |
Six Months Ended |
||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Adjusted Net Income (Loss) | $ | 197,231 | $ | (14,690 | ) | $ | 169,878 | $ | (42,004 | ) | |||||
| Undistributed Adjusted Net Income allocated to participating securities | — | — | — | — | |||||||||||
| Adjusted Net Income (Loss) attributable to common stockholders | 197,231 | (14,690 | ) | 169,878 | (42,004 | ) | |||||||||
| Plus: effect of convertible securities | — | — | — | — | |||||||||||
| Numerator for diluted income (loss) per common share | $ | 197,231 | $ | (14,690 | ) | $ | 169,878 | $ | (42,004 | ) | |||||
| Basic weighted-average common stock shares outstanding | 59,479 | 59,367 | 59,449 | 56,837 | |||||||||||
| Add dilutive effects of common stock equivalents (1) | 163 | — | 195 | — | |||||||||||
| Diluted weighted-average common stock shares outstanding | 59,642 | 59,367 | 59,644 | 56,837 | |||||||||||
| Basic Adjusted Net Income (Loss) per common share | $ | 3.32 | $ | (0.25 | ) | $ | 2.86 | $ | (0.74 | ) | |||||
| Diluted Adjusted Net Income (Loss) per common share | $ | 3.31 | $ | (0.25 | ) | $ | 2.85 | $ | (0.74 | ) | |||||
________________________________________
(1) Entities with a net loss from continuing operations are prohibited from including potential common shares in the computation of diluted per share amounts. We have utilized the basic shares outstanding to calculate both basic and diluted Adjusted Net Loss per common share for the three and six months ended
Adjusted EBITDA by Segment
Adjusted EBITDA by segment is defined as Operating income (loss) excluding:
- D&A;
- inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, contango (gains) and backwardation losses associated with our
Washington inventory and intermediation obligation, and purchase price allocation adjustments; beginning in 2022, this also includes the FIFO inventory (gains) losses associated with our titled manufactured inventory inHawaii ); - the LIFO layer liquidation impacts associated with our
Washington inventory; - RINs mark-to-market adjustments (which represents the income statement effect of reflecting our RINs liability on a net basis; beginning with financial results reported for the second quarter of 2022, this also includes the mark-to-market losses (gains) associated with our net RINs liability);
- unrealized (gain) loss on derivatives;
- acquisition and integration costs;
- severance costs;
- (gain) loss on sale of assets; and
- impairment expense.
Adjusted EBITDA by segment also includes Gain on curtailment of pension obligation and Other income (loss), net, which are presented below operating income (loss) on our condensed consolidated statements of operations.
The following table presents a reconciliation of Adjusted EBITDA by segment to the most directly comparable GAAP financial measure, operating income (loss) by segment, on a historical basis, for selected segments, for the periods indicated (in thousands):
| Three Months Ended |
|||||||||||||||
| Refining | Logistics | Retail | Corporate and Other | ||||||||||||
| Operating income (loss) by segment | $ | 168,798 | $ | 15,898 | $ | 5,525 | $ | (16,192 | ) | ||||||
| Depreciation and amortization | 16,979 | 5,211 | 2,600 | 793 | |||||||||||
| Inventory valuation adjustment | (7,557 | ) | — | — | — | ||||||||||
| RINs mark-to-market adjustments | 78,548 | — | — | — | |||||||||||
| Unrealized loss (gain) on derivatives | (28,607 | ) | — | — | — | ||||||||||
| Acquisition and integration costs | — | — | — | — | |||||||||||
| Severance costs | 3 | 4 | 22 | 6 | |||||||||||
| Loss (gain) on sale of assets, net | — | (12 | ) | — | 27 | ||||||||||
| Other income (loss), net | — | — | — | 47 | |||||||||||
| Adjusted EBITDA (1) | $ | 228,164 | $ | 21,101 | $ | 8,147 | $ | (15,319 | ) | ||||||
| Three Months Ended |
|||||||||||||||
| Refining | Logistics | Retail | Corporate and Other | ||||||||||||
| Operating income (loss) by segment | $ | (99,119 | ) | $ | 14,542 | $ | 12,651 | $ | (12,575 | ) | |||||
| Depreciation and amortization | 14,561 | 5,377 | 2,874 | 736 | |||||||||||
| Inventory valuation adjustment | 29,657 | — | — | — | |||||||||||
| LIFO liquidation adjustment | 2,263 | — | — | — | |||||||||||
| RINs mark-to-market adjustments | 54,158 | — | — | — | |||||||||||
| Unrealized loss (gain) on derivatives | 1,404 | — | — | — | |||||||||||
| Acquisition and integration costs | — | — | — | (352 | ) | ||||||||||
| Loss (gain) on sale of assets, net | 1,664 | (21 | ) | (1,133 | ) | — | |||||||||
| Other income (loss), net | — | — | — | (36 | ) | ||||||||||
| Adjusted EBITDA (1) | $ | 4,588 | $ | 19,898 | $ | 14,392 | $ | (12,227 | ) | ||||||
| Six Months Ended |
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| Refining | Logistics | Retail | Corporate and Other | ||||||||||||
| Operating income (loss) by segment | $ | 50,473 | $ | 25,750 | $ | 9,570 | $ | (32,860 | ) | ||||||
| Depreciation and amortization | 32,312 | 10,298 | 5,291 | 1,462 | |||||||||||
| Inventory valuation adjustment | 73,096 | — | — | — | |||||||||||
| RINs mark-to-market adjustments | 89,850 | — | — | — | |||||||||||
| Unrealized loss (gain) on derivatives | (13,155 | ) | — | — | — | ||||||||||
| Acquisition and integration costs | — | — | — | 63 | |||||||||||
| Severance costs | 40 | 4 | 22 | 2,197 | |||||||||||
| Loss on sale of assets, net | — | (12 | ) | — | 27 | ||||||||||
| Other income (loss), net | — | — | — | 49 | |||||||||||
| Adjusted EBITDA (1) | $ | 232,616 | $ | 36,040 | $ | 14,883 | $ | (29,062 | ) | ||||||
| Six Months Ended |
|||||||||||||||
| Refining | Logistics | Retail | Corporate and Other | ||||||||||||
| Operating income (loss) by segment | $ | (189,984 | ) | $ | 24,619 | $ | 62,006 | $ | (25,804 | ) | |||||
| Depreciation and amortization | 28,625 | 10,631 | 5,534 | 1,638 | |||||||||||
| Inventory valuation adjustment | 52,743 | — | — | — | |||||||||||
| LIFO liquidation adjustment | 4,151 | — | — | — | |||||||||||
| RINs mark-to-market adjustments | 131,060 | — | — | — | |||||||||||
| Unrealized loss (gain) on derivatives | (2,608 | ) | — | — | — | ||||||||||
| Acquisition and integration costs | — | — | — | 86 | |||||||||||
| Severance costs | — | 16 | — | — | |||||||||||
| Loss (gain) on sale of assets, net | (19,595 | ) | (21 | ) | (44,786 | ) | — | ||||||||
| Gain on curtailment of pension obligation | 1,802 | 228 | 2 | — | |||||||||||
| Other income (loss), net | — | — | — | 25 | |||||||||||
| Adjusted EBITDA (1) | $ | 6,194 | $ | 35,473 | $ | 22,756 | $ | (24,055 | ) | ||||||
________________________________________
(1) For the three and six months ended
Laramie Energy Adjusted EBITDAX
Adjusted EBITDAX is defined as net income (loss) excluding commodity derivative loss (gain), loss (gain) on settled derivative instruments, interest expense, gain on extinguishment of debt, non-cash preferred dividend, depreciation, depletion, amortization, and accretion, exploration and geological and geographical expense, bonus accrual, equity-based compensation expense, loss (gain) on disposal of assets, and expired acreage (non-cash). We believe Adjusted EBITDAX is a useful supplemental financial measure to evaluate the economic and operational performance of exploration and production companies such as Laramie Energy.
The following table presents a reconciliation of Laramie Energy’s Adjusted EBITDAX to the most directly comparable GAAP financial measure, net income (loss) for the periods indicated (in thousands):
| Three Months Ended |
Six Months Ended |
||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net income (loss) | $ | 383 | $ | 133 | $ | (32,517 | ) | $ | 40,584 | ||||||
| Commodity derivative loss (gain) | 22,357 | 761 | 73,200 | 1,350 | |||||||||||
| Gain (loss) on settled derivative instruments | (11,625 | ) | (30 | ) | (19,812 | ) | (1,167 | ) | |||||||
| Interest expense and loan fees | 3,715 | 3,013 | 7,871 | 7,203 | |||||||||||
| Non-cash preferred dividend | 2,640 | 1,913 | 4,726 | 3,742 | |||||||||||
| Depreciation, depletion, amortization, and accretion | 5,990 | 8,777 | 12,135 | 16,497 | |||||||||||
| Exploration and geological and geographical expense | — | 308 | — | 342 | |||||||||||
| Bonus accrual | — | 27 | — | 602 | |||||||||||
| Loss (gain) on disposal of assets | 724 | 4 | 724 | (39 | ) | ||||||||||
| Expired acreage (non-cash) | 44 | 246 | 47 | 338 | |||||||||||
| Total Adjusted EBITDAX | $ | 24,228 | $ | 15,152 | $ | 46,374 | $ | 69,452 | |||||||
Source: