What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-07 compared with 2020-11-06 · 210 added, 426 removed, 409 unchanged (61% of the section changed)

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Our business is organized into three primary segments:

1) Refining - We own and operate four refineries with total throughput capacity of over 200 Mbpd in Hawaii, Wyoming, and Washington.

2) Retail - Our retail outlets in Hawaii, Washington, and Idaho sell gasoline, diesel, and retail merchandise through Hele, “76”, “ Cenex® ,” and “Zip Trip®” branded sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations.

3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rockies that primarily transports and stores our crude oil and refined products for our refineries and transports refined products to our retail sites or third-party purchasers.

As of September 30, 2020 , we owned a 46.0% equity investment in Laramie Energy .

1) Refining - We own and operate four refineries, including one idled refinery, with total operating throughput capacity of over 150 Mbpd in Hawaii, Wyoming, and Washington.

2) Retail - Our retail outlets in Hawaii, Washington, and Idaho sell gasoline, diesel, and retail merchandise through Hele and “76” branded sites, “nomnom” branded company-operated convenience stores, 7-Eleven operated convenience stores, other sites operated by third parties, and unattended cardlock stations.

Through March 31, 2021, we completed the rebranding of all company-operated convenience stores in Washington and Idaho to “nomnom,” our proprietary brand.

3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rockies regions that primarily transports and stores crude oil and refined products for our refineries and transports refined products to our retail sites or third-party purchasers.

As of March 31, 2021, we owned a 46.0% equity investment in Laramie Energy.

Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco Counties, Colorado.

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Recent Events Affecting Comparability of Periods

On March 11, 2020, the World Health Organization (“WHO”) declared that the worldwide spread and severity of a new coronavirus, referred to as COVID-19, was severe enough to be characterized as a pandemic.

The spread of COVID-19, in conjunction with related government and other preventative measures taken to mitigate the spread of the virus, has caused severe disruptions in the worldwide economy, including the global demand for crude oil and refined products, the movement of people and goods in the United States, and the global supply chain for industrial and commercial production, all of which have in turn disrupted our businesses and operations.

We continue to actively respond to the impacts that these matters are having on our business.

We decreased throughput rates at our Hawaii and Wyoming refineries in response to reduced refined product demand, idled certain refining units at our Hawaii refineries, reduced the scope of our Washington turnaround scheduled in the first quarter of 2021, and delayed the timing of our planned turnaround in Hawaii until the third quarter of 2020.

In addition, we have adjusted production of certain refined products to meet the changing local demand profile.

We continue to maintain an ample supply of refined product to meet the refined product needs in the regions in which we operate.

On May 5, 2020 , we announced that 29 employees were furloughed in response to the previously announced decline in throughput rates at our refineries in Kapolei, Hawaii, and our President and Chief Executive Officer and the independent members of the Company’s Board of Directors reduced their cash salaries by 75% .

In response to sustained decreased demand for refined products in Hawaii, we significantly reduced discretionary spending company-wide and, in early October 2020 , we reduced headcount in our refining segment in Hawaii.

In addition, we are taking measures to address our liquidity, including deferring or delaying certain capital expenditures originally planned for 2020 and early 2021 related to turnaround activities at three of our refineries and, in early June 2020, accessing the capital markets to issue $105 million aggregate principal amount of senior secured notes due 2026 .

Interest rates associated with our inventory financing arrangements and borrowings under those inventory financing arrangements have also declined.

We believe the steps we have taken have strengthened our ability to conduct our operations through current conditions.

We are also utilizing some of the tax payment deferral opportunities and federal refund acceleration opportunities provided by the IRS, Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and various state-specific provisions.

In December 2020 and February 2021, the U.S.

Food & Drug Administration granted Emergency Use Authorization (“EUA”) for three vaccines to be distributed in the United States.

On April 2, 2021, the Centers for Disease Control and Prevention (“CDC”) announced that individuals who are fully vaccinated can travel domestically at low risk to themselves, though they should still wear masks and adhere to social distancing guidelines and travel is still not recommended.

In addition to measures we took in 2020 in response to the COVID-19 pandemic, as described in our Annual Report on Form 10-K for the year ended December 31, 2020, we have also undertaken additional liquidity-enhancing measures, including deferring or delaying certain capital expenditures related to turnaround activities at our Washington refinery.

We closed sale-leaseback transactions in the first quarter of 2021, in which we sold twenty-two (22) retail convenience store/fuel station properties located in Hawaii (the “Sale-Leaseback Properties”) for a net purchase price of $112.8 million.

We also entered into a lease on the properties for fifteen (15) years, unless earlier terminated, with up to four 5-year renewal options.

On March 19, 2021, we sold 5.75 million shares of common stock in an underwritten public offering at a public offering price of $16.00 per share resulting in net proceeds to us of approximately $87.4 million, after deducting underwriting discounts and commissions and offering expenses.

We believe the steps we have taken throughout 2020 and more recently in the first quarter of 2021 have strengthened our ability to conduct our operations through current conditions.

We are also utilizing some of the tax payment deferral opportunities and federal refund acceleration opportunities provided by the Internal Revenue Service (“IRS”), Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and various state-specific provisions.

We continue to maintain existing processes and procedures, including but not limited to processes and procedures around protection of our technology systems and proprietary data, even though a significant number of our employees are working from home.

time of uncertainty, the health and wellbeing of our employees and customers are our top priorities as we continue navigating the challenges presented by the COVID-19 pandemic.

The financial results contained in this Quarterly Report on Form 10-Q reflect the reduced activity experienced in the second and third quarters of 2020 in the regions in which we operate.

The COVID-19 pandemic is ongoing and the impacts of the virus on people and businesses continue to evolve as of the date of this report.

In Washington, for example, mandatory self-quarantine orders have been lifted and replaced by recommended self-quarantines for travelers arriving from areas of high COVID-19 activity.

Beginning October 15, 2020, U.S.

travelers to the state of Hawaii have an option to take a rapid COVID-19 test as an alternative to a 14-day quarantine.

If travelers test negative, they will not be required to quarantine.

Prohibitions on international travel to the U.S.

have been extended into the fourth quarter of 2020.

The health and wellbeing of our employees and customers continue to be our top priorities as we continue navigating the challenges presented by the COVID-19 pandemic.

The financial results contained in this Quarterly Report on Form 10-Q reflect the continuing pandemic-related demand suppression experienced in the first quarter of 2021 in the regions in which we operate.

Though vaccine availability is increasing, the COVID-19 pandemic is ongoing and the impacts of the virus on people and businesses continue to evolve as of the date of this report.

We continue to actively monitor the impact of the global situation on our people, operations, financial condition, liquidity, suppliers, customers, and industry.

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Results of Operations

Three months ended September 30, 2020 compared to the three months ended September 30, 2019

Our financial results for the third quarter of 2020 improved from a net loss of $83.9 million for the three months ended September 30, 2019 to a net loss of $14.3 million for the three months ended September 30, 2020 .

The increase was primarily driven by our 2019 other-than-temporary impairment of $81.5 million related to our equity investment in Laramie Energy, partially offset by unfavorable refining crack spreads, lower retail sales volumes related to COVID-19 demand destruction, and an approximately $6.2 million increase in expense from an expected liquidation of a LIFO inventory layer.

Other factors impacting our results period over period include cost reductions across our businesses in response to COVID-19, partially offset by an increase in RINs expenses and a $5.5 million unfavorable change in lower of cost or net realizable value adjustments.

Adjusted EBITDA and Adjusted Net Income (Loss) .

For the three months ended September 30, 2020 , Adjusted EBITDA was a loss of $16.1 million compared to earnings of $47.0 million for the three months ended September 30, 2019 .

The decrease was primarily related to unfavorable crack spreads and lower sales volumes across our operating segments related to COVID-19 demand destruction, partially offset by favorable crude oil differentials in Hawaii and cost reductions across our businesses in response to COVID-19.

For the three months ended September 30, 2020 , Adjusted Net Income (Loss) was a loss of $56.5 million compared to income of $4.0 million for the three months ended September 30, 2019 .

The decrease was primarily related to the factors described above for the decrease in Adjusted EBITDA, partially offset by a $2.2 million decrease in our Equity earnings from Laramie Energy, excluding our share of unrealized gains or losses on derivatives and excluding impairment changes associated with our investment in Laramie Energy.

Nine months ended September 30, 2020 compared to the nine months ended September 30, 2019

Net Income (Loss) .

Our net income decreased from $5.4 million for the nine months ended September 30, 2019 to a net loss of $277.2 million for the nine months ended September 30, 2020 .

The decrease was primarily driven by unfavorable crack spreads, goodwill impairments of $67.9 million , increased RINs expenses and derivative costs, and an unfavorable change in lower of cost or net realizable value adjustments, partially offset by cost reductions across our businesses in response to COVID-19 and higher retail fuel margins.

In addition, we incurred an other-than-temporary impairment of $45.3 million related to our equity investment in Laramie Energy in 2020, as compared to an other-than-temporary impairment of $81.5 million in 2019.

Other factors impacting our results period over period include a $48.1 million reduction in our income tax benefit, lower debt extinguishment and commitment costs, and an approximately $6.2 million increase in expense from an expected liquidation of a LIFO inventory layer.

Adjusted EBITDA and Adjusted Net Income (Loss) .

For the nine months ended September 30, 2020 , Adjusted EBITDA was a loss of $52.7 million compared to earnings of $166.0 million for the nine months ended September 30, 2019 .

The change was primarily related to unfavorable crack spreads and lower refining sales volumes at our Hawaii and Wyoming refineries related to COVID-19 demand destruction, partially offset by lower operating expense and higher retail fuel margins.

For the nine months ended September 30, 2020 , Adjusted Net Income (Loss) was a loss of $174.5 million compared to income of $35.7 million for the nine months ended September 30, 2019 .

The decrease was primarily related to the same factors described above for the decrease in Adjusted EBITDA, partially offset by a $4.7 million decrease in interest expense and financing costs and a $3.7 million decrease in our Equity earnings from Laramie Energy, excluding our share of unrealized gains or losses on derivatives and excluding impairment changes associated with our investment in Laramie Energy.

The following tables summarize our consolidated results of operations for the three and nine months ended September 30, 2020 compared to the three and nine months ended September 30, 2019 (in thousands).

The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report.

Three Months Ended September 30,

Cost of revenues (excluding depreciation)

Operating expense (excluding depreciation)

Depreciation, depletion, and amortization

General and administrative expense (excluding depreciation)

Acquisition and integration costs

Total operating expenses

Operating income

Other income (expense)

Interest expense and financing costs, net

Other income, net

Change in value of common stock warrants

Equity losses from Laramie Energy, LLC

Total other income (expense), net

Loss before income taxes

Income tax benefit (expense)

Nine Months Ended September 30,

Three months ended March 31, 2021 compared to the three months ended March 31, 2020

Our financial results for the first quarter of 2021 improved from a net loss of $222.3 million for the three months ended March 31, 2020 to a net loss of $62.2 million for the three months ended March 31, 2021.

The increase was primarily driven by a gain of $64.9 million primarily related to the Sale-Leaseback Transaction we closed on February 23, 2021 and March 12, 2021, our 2020 goodwill impairment of $67.9 million related to our Refining and Retail segments, and our 2020 other-than-temporary impairment of $45.3 million related to our equity investment in Laramie Energy, and a $193.0 million favorable change in lower of cost or net realizable value adjustments, partially offset by a 28% decrease in refining sales volumes, unfavorable crack spreads primarily due to decreased demand as a result of the COVID-19 pandemic, and an increase in the RINs mark-to-market expense driven by higher RINs prices.

Adjusted EBITDA and Adjusted Net Loss.

For the three months ended March 31, 2021, Adjusted EBITDA was a loss of $43.3 million compared to earnings of $13.7 million for the three months ended March 31, 2020.

The decrease was primarily related to unfavorable crack spreads and lower sales volumes across our operating segments related to COVID-19 demand destruction, and RINs mark-to-market expense driven by higher RINs prices, partially offset by favorable feedstock costs in Hawaii.

For the three months ended March 31, 2021, Adjusted Net Loss was a loss of $84.4 million compared to a loss of $27.3 million for the three months ended March 31, 2020.

The decrease was primarily related to the factors described above for the decrease in Adjusted EBITDA.

The following tables summarize our consolidated results of operations for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 (in thousands).

The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Three Months Ended March 31,

2021 2020 $ Change % Change (1)

Revenues $ 888,680 $ 1,204,083 $ (315,403) (26) %

Cost of revenues (excluding depreciation) 888,863 1,210,211 (321,348) (27) %

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Impairment expense — 67,922 (67,922) (100) %

Loss (gain) on sale of assets, net (64,912) — (64,912) NM

General and administrative expense (excluding depreciation) 11,885 11,784 101 1 %

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Total operating expenses 933,342 1,385,256

Operating income (loss)

Operating loss (44,662) (181,173)

Other income (expense)

Interest expense and financing costs, net (18,151) (18,674) 523 3 %

Debt extinguishment and commitment costs

Debt extinguishment and commitment costs (1,507) — (1,507) NM

Gain on curtailment of pension obligation 2,032 — 2,032 NM

Other income, net 61 24 37 154 %

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Loss before income taxes (62,227) (240,584)

Income tax benefit

Net income (loss)

Income tax benefit (expense) — 18,247 (18,247) (100) %

Net loss $ (62,227) $ (222,337)

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(1) NM - Not meaningful

The following tables summarize our operating income (loss) by segment for the three and nine months ended September 30, 2020 and 2019 (in thousands).

The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report.

Three months ended September 30, 2020

Corporate, Eliminations and Other (1)

Cost of revenues (excluding depreciation)

Operating expense (excluding depreciation)

Depreciation, depletion, and amortization

General and administrative expense (excluding depreciation)

Acquisition and integration costs

Operating income (loss)

Three months ended September 30, 2019

Corporate, Eliminations and Other (1)

Cost of revenues (excluding depreciation)

Operating expense (excluding depreciation)

Depreciation, depletion, and amortization

General and administrative expense (excluding depreciation)

Acquisition and integration costs

Operating income (loss)

________________________________________________________

Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $69.9 million and $107.2 million for the three months ended September 30, 2020 and 2019 , respectively.

Nine months ended September 30, 2020

Corporate, Eliminations and Other (1)

The following tables summarize our operating income (loss) by segment for the three months ended March 31, 2021 and 2020 (in thousands).

The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Three months ended March 31, 2021 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 838,755 $ 41,309 $ 91,188 $ (82,572) $ 888,680

Cost of revenues (excluding depreciation) 883,477 22,082 65,872 (82,568) 888,863

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Impairment expense — — — — —

Loss (gain) on sale of assets, net (21,259) — (43,653) — (64,912)

General and administrative expense (excluding depreciation) — — — 11,885 11,885

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Operating income (loss) $ (90,865) $ 10,077 $ 49,355 $ (13,229) $ (44,662)

Nine months ended September 30, 2019

Corporate, Eliminations and Other (1)

Three months ended March 31, 2020 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 1,148,126 $ 59,150 $ 102,813 $ (106,006) $ 1,204,083

Cost of revenues (excluding depreciation) 1,213,353 31,436 71,430 (106,008) 1,210,211

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Depreciation, depletion, and amortization 12,994 4,667 2,799 823 21,283

Impairment expense 38,105 — 29,817 — 67,922

Loss (gain) on sale of assets, net — — — — —

General and administrative expense (excluding depreciation) — — — 11,784 11,784

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________________________________________________________

Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $237.7 million and $316.0 million for the nine months ended September 30, 2020 and 2019 , respectively.

Below is a summary of key operating statistics for the refining segment for the three and nine months ended September 30, 2020 and 2019 :

Three Months Ended September 30,

Nine Months Ended September 30,

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $82.6 million and $106.0 million for the three months ended March 31, 2021 and 2020, respectively.

Below is a summary of key operating statistics for the refining segment for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

Total Refining Segment

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Gasoline and gasoline blendstocks 24.7 % 24.7 %

Distillates 42.9 % 48.1 %

Fuel oils 27.6 % 22.3 %

Other products 1.5 % 0.6 %

Total yield 96.7 % 95.7 %

Refined product sales volume (Mbpd)

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Gasoline and gasoline blendstocks 24.5 % 23.4 %

Distillates 36.2 % 35.5 %

Asphalt 18.0 % 18.0 %

Other products 18.7 % 19.4 %

Total yield 97.4 % 96.3 %

Refined product sales volume (Mbpd) 39.2 43.7

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DD&A per bbl ($/throughput bbl) 1.77 1.42

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Wyoming Refinery

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Gasoline and gasoline blendstocks 49.0 % 51.0 %

Distillates 45.0 % 44.7 %

Fuel oils 1.4 % 1.6 %

Other products 1.2 % 0.6 %

Total yield 96.6 % 97.9 %

Refined product sales volume (Mbpd) 13.1 16.5

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DD&A per bbl ($/throughput bbl) 3.11 3.40

Market Indices ($ per barrel)

Market Indices (average $ per barrel)

3-1-2 Singapore Crack Spread (3) $ 3.80 $ 8.11

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Wyoming 3-2-1 Index (5) 20.97 15.86

Crude Prices ($ per barrel)

Crude Oil Prices ($ per barrel)

Brent $ 61.32 $ 50.82

WTI 58.14 45.98

ANS 61.65 52.27

Bakken Clearbrook 57.60 42.67

WCS Hardisty 46.16 27.96

Brent M1-M3 0.81 (0.54)

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Feedstocks throughput and sales volumes per day for the Washington refinery for the three and nine months ended September 30, 2019 are calculated based on the 92 and 263 -day periods for which we owned the Washington refinery in 2019, respectively.

As such, the amounts for the total refining segment represent the sum of the Hawaii and Wyoming refineries’ throughput or sales volumes averaged over the three and nine months ended September 30, 2019 plus the Washington refinery’s throughput or sales volumes averaged over the periods from July 1, 2019 to September 30, 2019 and January 11, 2019 to September 30, 2019 , respectively.

The 2020 amounts for the total refining segment represent the sum of the Hawaii, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the three and nine months ended September 30, 2020 .

(1) We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput.

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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.

After completing the acquisition of the Par West Hawaii refinery in December 2018, we began shifting our Hawaii production profile to supply the local utilities with low sulfur fuel oil and significantly reduced our high sulfur fuel oil yield.

(3) In 2020, following the implementation of IMO 2020, we established 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)) as a new benchmark for our Hawaii operations.

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The Pacific Northwest 5-2-2-1 Index is computed by taking two parts gasoline (sub-octane), two parts middle distillates (ULSD and jet fuel), and one part fuel oil as created from five barrels of Alaskan North Slope (“ANS”) crude oil.

The 2019 price for the three and nine months ended September 30, 2019 represents the price averaged over the periods from July 1, 2019 to September 30, 2019 and January 11, 2019 to September 30, 2019 , respectively.

(5) The profitability of our Wyoming refinery is heavily influenced by crack spreads in nearby markets.

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Pricing is based 50% on applicable product pricing in Rapid City, South Dakota, and 50% on applicable product pricing in Denver, Colorado.

Below is a summary of key operating statistics for the retail segment for the three and nine months ended September 30, 2020 and 2019 :

Three Months Ended September 30,

Nine Months Ended September 30,

Below is a summary of key operating statistics for the retail segment for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

Retail Segment

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Adjusted Gross Margin

Adjusted Gross Margin is defined as (i) operating income (loss) plus operating expense (excluding depreciation);

impairment expense;

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 and terminal obligations, and purchase price allocation adjustments);

depreciation, depletion, and amortization (“DD&A”);

Renewable Identification Numbers (“RINs”) loss (gain) in excess of net obligation (which represents the income statement effect of reflecting our RINs liability on a net basis);

and unrealized loss (gain) on derivatives or (ii) revenues less cost of revenues (excluding depreciation) plus inventory valuation adjustment, unrealized loss (gain) on derivatives, and RINs loss (gain) in excess of net obligation.

Adjusted Gross Margin is defined as (i) operating income (loss) plus operating expense (excluding depreciation), impairment expense, 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, and purchase price allocation adjustments), depreciation, depletion, and amortization (“DD&A”);

Renewable Identification Numbers (“RINs”) loss (gain) in excess of net obligation (which represents the income statement effect of reflecting our RINs liability on a net basis), (gain) loss on sale of assets, and unrealized loss (gain) on derivatives or (ii) revenues less cost of revenues (excluding depreciation) plus inventory valuation adjustment, unrealized loss (gain) on derivatives, and RINs loss (gain) in excess of net obligation.

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, and certain hydrocarbon fees and taxes.

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Beginning in the second quarter of 2020, Adjusted Gross Margin also includes the contango gains and backwardation losses associated with our Washington inventory and intermediation obligation.

Prior to the second quarter of 2020, contango gains and backwardation losses captured by our Washington intermediation agreement were excluded from Adjusted Gross Margin (as part of the inventory valuation adjustment).

Prior to 2020, contango gains and backwardation (losses) captured by our Washington intermediation agreement were excluded from Adjusted Gross Margin (as part of the inventory valuation adjustment).

This change to our non-GAAP information was made to reflect the favorable or unfavorable impact of the market structure on the profitability of our Washington refinery consistent with the presentation of such impacts on our other refineries.

Beginning in the third quarter of 2020, Adjusted Gross Margin excludes the LIFO layer liquidation impacts associated with our Washington inventory.

We have recast the non-GAAP information for the three and nine months ended September 30, 2019 to conform to the current period presentation.

Also beginning in the third quarter of 2020, Adjusted Gross Margin excludes the LIFO layer liquidation impacts associated with our Washington inventory.

We have recast the non-GAAP information for the three months ended March 31, 2020 to conform to the current period presentation.

Management believes Adjusted Gross Margin is an important measure of operating performance and uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks.

Management believes Adjusted Gross Margin 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 or 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, depletion, and amortization .

Management believes Adjusted Gross Margin 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, depletion, and amortization.

Adjusted Gross Margin should not be considered an alternative to operating income (loss), cash flows from operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP.

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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 September 30, 2020

Three months ended March 31, 2021 Refining Logistics Retail

Operating income (loss) $ (90,865) $ 10,077 $ 49,355

Operating expense (excluding depreciation)

53,338 3,896 16,954

Depreciation, depletion, and amortization 14,064 5,254 2,660

Loss (gain) on sale of assets, net (21,259) — (43,653)

Inventory valuation adjustment 14,175 — —

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Adjusted Gross Margin (1) $ (3,901) $ 19,227 $ 25,316

Three months ended September 30, 2019

Operating income

Operating expense (excluding depreciation)

Depreciation, depletion, and amortization

Inventory valuation adjustment

LIFO liquidation adjustment

RINs gain in excess of net obligation

Unrealized gain on derivatives

Adjusted Gross Margin (1)

Nine months ended September 30, 2020

Three months ended March 31, 2020 Refining Logistics Retail

Operating income (loss) $ (168,570) $ 18,776 $ (18,109)

Operating expense (excluding depreciation)

52,244 4,271 16,876

Depreciation, depletion, and amortization 12,994 4,667 2,799

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Inventory valuation adjustment 75,324 — —

LIFO liquidation adjustment

RINs loss in excess of net obligation 6,602 — —

Unrealized gain on derivatives

Adjusted Gross Margin

Nine months ended September 30, 2019

Operating income

Operating expense (excluding depreciation)

Depreciation, depletion, and amortization

Inventory valuation adjustment

LIFO liquidation adjustment

RINs gain in excess of net obligation

Unrealized loss on derivatives 22,876 — —

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____________________________________________________________________________

For the three months ended September 30, 2020 and the three and nine months ended September 30, 2019 , there was no impairment expense recorded in Operating income (loss).

(1) For the three months ended March 31, 2021, there was no impairment expense.

(2) For the three months ended March 31, 2020, there was no LIFO liquidation adjustment or loss (gain) on sale of assets.

Adjusted Net Income (Loss) and Adjusted EBITDA

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Beginning in the second quarter of 2020, Adjusted Net Income (Loss) also includes the contango gains and backwardation losses associated with our Washington inventory and intermediation obligation.

Prior to the second quarter of 2020, contango gains and backwardation losses captured by our Washington intermediation agreement were excluded from Adjusted Net Income (as part of the inventory valuation adjustment).

Prior to 2020, contango gains and backwardation (losses) captured by our Washington intermediation agreement were excluded from Adjusted Net Income (Loss) (as part of the inventory valuation adjustment).

Beginning in the third quarter of 2020, Adjusted Net Income (Loss) excludes the LIFO layer liquidation impacts associated with our Washington inventory.

We have recast the non-GAAP information for the three and nine months ended September 30, 2019 to conform to the current period presentation.

Adjusted EBITDA is Adjusted Net Income (Loss) excluding interest expense and financing costs, income taxes, DD&A, and equity losses (earnings) from Laramie Energy, excluding Par’s share of unrealized loss (gain) on derivatives, the impairment of Par’s investment, and our share of Laramie Energy ’s asset impairment losses in excess of our basis difference.

Also beginning in the third quarter of 2020, Adjusted Net Income (Loss) excludes the LIFO layer liquidation impacts associated with our Washington inventory.

We have recast the non-GAAP information for the three months ended March 31, 2020 to conform to the current period presentation.

Adjusted EBITDA is Adjusted Net Income (Loss) excluding interest expense and financing costs, income taxes, DD&A, and 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.

We believe Adjusted Net Income (Loss) and Adjusted EBITDA are useful supplemental financial measures that allow investors to assess:

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Adjusted Net Income (Loss) and Adjusted EBITDA presented by other companies may not be comparable to our presentation as other companies may define these terms differently.

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 September 30,

Nine Months Ended September 30,

The following table presents a reconciliation of Adjusted Net Loss and Adjusted EBITDA to the most directly comparable GAAP financial measure, Net Loss, on a historical basis for the periods indicated (in thousands):

Three Months Ended March 31,

Net Income (Loss) $ (62,227) $ (222,337)

1 unchanged sentence

LIFO liquidation adjustment 1,888 —

RINs loss (gain) in excess of net obligation

RINs loss in excess of net obligation 28,770 6,602

Unrealized loss (gain) on derivatives (4,012) 22,876

4 unchanged sentences

Severance costs 16 149

Gain on sale of assets, net (64,912) —

Impairment expense — 67,922

1 unchanged sentence

Par's share of Laramie Energy's unrealized loss (gain) on derivatives (2) — (1,110)

Adjusted Net Income (Loss) (3)

Adjusted Net Loss (3) (84,357) (27,258)

Depreciation, depletion, and amortization 22,880 21,283

1 unchanged sentence

Equity losses (earnings) from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives and impairment losses — 847

Income tax expense

Income tax expense (benefit) — 126

Adjusted EBITDA $ (43,326) $ 13,672

1 unchanged sentence

(1) Includes increases in (releases of) our valuation allowance associated with business combinations and changes in deferred tax assets and liabilities that are not offset by a change in the valuation allowance.

These tax expenses (benefits) are included in Income tax benefit (expense) on our condensed consolidated statements of operations.

These tax expenses (benefits) are included in Income tax benefit on our condensed consolidated statements of operations.

(2) Included in Equity losses from Laramie Energy, LLC on our condensed consolidated statements of operations.

For the three and nine months ended September 30, 2020 and 2019 , there was no (gain) loss on sale of assets or change in value of contingent consideration.

(3) For the three months ended March 31, 2021 and 2020, there was no change in value of contingent consideration.

Factors Impacting Segment Results

Three months ended September 30, 2020 compared to the three months ended September 30, 2019

Operating loss for our refining segment was $5.1 million for the three months ended September 30, 2020 , a decrease of $8.4 million compared to operating income of $3.3 million for the three months ended September 30, 2019 .

The decrease in profitability was primarily driven by unfavorable crack spreads at our Hawaii, Wyoming, and Washington refineries, partially offset by favorable crude oil differentials in Hawaii and operating expense reductions across our refineries in response to COVID-19.

Other factors impacting our results period over period include an increase in RINs expenses, a $5.5 million unfavorable change in lower of cost or net realizable value adjustments, and a $6.2 million unfavorable impact from the liquidation of a LIFO inventory layer in Washington.

Operating income for our logistics segment was $6.4 million for the three months ended September 30, 2020 , a decrease of $7.2 million compared to operating income of $13.6 million for the three months ended September 30, 2019 .

The decrease is due to a net 42% and 23% lower throughput across our Hawaii and Wyoming logistics assets, respectively, primarily due to decreased demand as a result of the COVID-19 pandemic and higher operating expense and DD&A.

Operating income for our retail segment was $12.1 million for the three months ended September 30, 2020 , a decrease of $2.3 million compared to operating income of $14.4 million for the three months ended September 30, 2019 .

The decrease was primarily due to a 21% decline in sales volumes, partially offset by an 8% increase in fuel margins.

Nine months ended September 30, 2020 compared to the nine months ended September 30, 2019

Operating loss for our refining segment was $210.4 million for the nine months ended September 30, 2020 , a decrease of $261.2 million compared to operating income of $50.8 million for the nine months ended September 30, 2019 .

The decrease in profitability was primarily driven by lower refining sales volumes at our Hawaii and Wyoming refineries related to COVID-19 demand destruction, unfavorable crude oil differentials in Hawaii and Wyoming, and increased derivative costs and RINs expenses, goodwill impairment charges of $38.1 million , and unfavorable lower of cost or net realizable value adjustments of $22.3 million , partially offset by improved crude oil differentials in Washington and operating expense reductions across our refineries in response to COVID-19.

Operating income for our logistics segment was $31.5 million for the nine months ended September 30, 2020 , a decrease of $10.9 million compared to operating income of $42.4 million for the nine months ended September 30, 2019 .

The decrease is primarily due to a net 28% and 15% lower throughput across our Hawaii and Wyoming logistics assets, respectively, related to COVID-19 demand destruction and higher DD&A, partially offset by increased throughput in Washington.

Operating income for our retail segment was $10.1 million for the nine months ended September 30, 2020 , a decrease of $26.4 million compared to operating income of $36.5 million for the nine months ended September 30, 2019 .

The decrease in profitability is primarily due to goodwill impairment charges of $29.8 million and a decline in sales volumes of 18% , partially offset by an increase in fuel margins of 27% .

Three months ended March 31, 2021 compared to the three months ended March 31, 2020

Operating loss for our refining segment was $90.9 million for the three months ended March 31, 2021, an increase of $77.7 million compared to operating loss of $168.6 million for the three months ended March 31, 2020.

The increase in profitability was primarily driven by a $193.0 million favorable change in lower of cost or net realizable value adjustments and favorable feedstock costs at our Hawaii refinery, partially offset by a 28% decrease in sales volume, a $72.0 million increase in RINs mark-to-market expense related to our gross RINs obligation, and unfavorable crack spreads primarily

due to decreased demand as a result of the COVID-19 pandemic.

Other factors impacting our results period over period include a $7.3 million favorable FIFO impact in 2021 compared to a $15.0 million unfavorable FIFO impact in the same period in 2020 at our Wyoming refinery, our 2020 goodwill impairment of $38.1 million, and a 2021 gain of $21.3 million primarily related to the sale-leaseback transactions we closed on February 23, 2021 and March 12, 2021.

Operating income for our logistics segment was $10.1 million for the three months ended March 31, 2021, a decrease of $8.7 million compared to operating income of $18.8 million for the three months ended March 31, 2020.

The decrease is due to a net 28% and 12% lower throughput across our Hawaii and Washington logistics assets, respectively, primarily due to decreased demand as a result of the COVID-19 pandemic and Washington refinery turnaround activities.

Operating income for our retail segment was $49.4 million for the three months ended March 31, 2021, an increase of $67.5 million compared to operating loss of $18.1 million for the three months ended March 31, 2020.

The increase was primarily due to our 2020 goodwill impairment of $29.8 million with no corresponding impairment in 2021 and a gain of $43.7 million primarily related to the sale-leaseback transactions we closed on February 23, 2021 and March 12, 2021.

Adjusted Gross Margin

Three months ended September 30, 2020 compared to the three months ended September 30, 2019

For the three months ended September 30, 2020 , our refining Adjusted Gross Margin was $16.3 million , a decrease of $69.8 million compared to $86.1 million for the three months ended September 30, 2019 .

The decrease was primarily driven by a 32% decline in refining sales volumes and unfavorable crack spreads.

Adjusted gross margin for the Hawaii refineries decreased from $0.98 per barrel during the three months ended September 30, 2019 to $(0.47) per barrel during the three months ended September 30, 2020 primarily due to unfavorable crack spreads and an increase in RINs expenses.

Adjusted gross margin for the Wyoming refinery decreased $17.12 per barrel primarily due to a decrease in sales volume and unfavorable crack spreads and crude oil differentials.

Adjusted gross margin for the Washington refinery decreased $8.40 per barrel primarily due to declining crack spreads and an increase in RINs expenses.

For the three months ended September 30, 2020 , our logistics Adjusted Gross Margin was $15.3 million , a decrease of $5.6 million compared to $20.9 million for the three months ended September 30, 2019 .

The decrease is due to a net 42% and 23% lower throughput across our Hawaii and Wyoming logistics assets, respectively, primarily due to decreased demand as a result of the COVID-19 pandemic.

For the three months ended September 30, 2020 , our retail Adjusted Gross Margin was $31.0 million , a decrease of $3.6 million when compared to $34.6 million for the three months ended September 30, 2019 .

The decrease was primarily due to a 21% decline in sales volumes, partially offset by an 8% increase in fuel margins.

Nine months ended September 30, 2020 compared to the nine months ended September 30, 2019

For the nine months ended September 30, 2020 , our refining Adjusted Gross Margin was $33.5 million , a decrease of $239.3 million compared to $272.8 million for the nine months ended September 30, 2019 .

The decrease was primarily due to a 19% decline in sales volumes and declines in crack spreads.

Adjusted gross margin for the Hawaii refineries decreased from $2.82 per barrel in 2019 to $(2.17) per barrel in 2020 primarily due to 27% lower sales volumes, unfavorable crude oil differentials, and an increase in RINs expenses.

Adjusted gross margin for the Wyoming refinery decreased $14.71 per barrel primarily due to a 19% decline in sales volumes, a decrease in crack spreads, and unfavorable crude oil differentials.

Adjusted gross margin for the Washington refinery decreased $4.71 per barrel primarily due to unfavorable crack spreads and higher derivative costs and RINs expenses, partially offset by improved crude oil differentials.

For the nine months ended September 30, 2020 , our logistics Adjusted Gross Margin was $57.5 million , a decrease of $5.5 million compared to $63.0 million for the nine months ended September 30, 2019 .

The decrease was primarily driven by 28% and 15% decreases in throughput in Hawaii and Wyoming, respectively, related to COVID-19 demand destruction.

For the nine months ended September 30, 2020 , our retail Adjusted Gross Margin of $96.6 million was relatively consistent with $94.1 million for the nine months ended September 30, 2019 .

Three months ended March 31, 2021 compared to the three months ended March 31, 2020

For the three months ended March 31, 2021, our refining Adjusted Gross Margin was a loss of $3.9 million, a decrease of $43.5 million compared to income of $39.6 million for the three months ended March 31, 2020.

The decrease was primarily driven by a 28% decline in refining sales volumes, unfavorable crack spreads in Hawaii and Washington, and a $46.9 million RINs mark-to-market expense related to the 2019 and 2020 net obligations due to increasing RINs prices, partially offset by favorable feedstock costs.

Adjusted Gross Margin for the Hawaii refineries decreased from $0.24 per barrel during the three months ended March 31, 2020 to a loss of $0.46 per barrel during the three months ended March 31, 2021 primarily due to a 35% decrease in sales volume, a $26.1 million RINs mark-to-market expense, and unfavorable crack spreads, partially offset by favorable feedstock costs.

Adjusted Gross margin for the Wyoming refinery decreased $3.16 per barrel primarily due to a 21% decrease in sales volume and an $11.2 million RINs mark-to-market expense.

Adjusted Gross Margin for the Washington refinery decreased $11.27 per barrel primarily due to declining crack spreads, a $9.6 million RINs mark-to-market expense, and a 10% decrease in sales volumes.

For the three months ended March 31, 2021, our logistics Adjusted Gross Margin was $19.2 million, a decrease of $8.5 million compared to $27.7 million for the three months ended March 31, 2020.

For the three months ended March 31, 2021, our retail Adjusted Gross Margin was $25.3 million, a decrease of $6.1 million when compared to $31.4 million for the three months ended March 31, 2020.

The decrease was primarily due to a 15% decrease in fuel margins related to rising crude prices and a 13% decline in sales volumes.

Discussion of Consolidated Results

Three months ended September 30, 2020 compared to the three months ended September 30, 2019

For the three months ended September 30, 2020 , revenues were $0.7 billion , a $0.7 billion decrease compared to $1.4 billion for the three months ended September 30, 2019 .

The decrease was primarily due to a decrease of $0.7 billion in third-party refining segment revenue as a result of decreases in Brent and WTI crude oil prices and a 32.2% decrease in refining sales volumes related to COVID-19 demand destruction.

Brent crude oil prices averaged $43.34 per barrel during the third quarter of 2020 compared to $62.03 per barrel during the third quarter of 2019 , with similar decreases experienced for WTI crude oil prices.

Revenues at our retail segment decreased $30.5 million primarily due to a 21% decline in sales volumes and a 22% decline in fuel prices.

Cost of Revenues (Excluding Depreciation).

For the three months ended September 30, 2020 , cost of revenues (excluding depreciation) was $0.6 billion , a $0.7 billion decrease compared to $1.3 billion for the three months ended September 30, 2019 .

The decrease was primarily driven by decreases in Brent and WTI crude oil prices and lower refining volumes related to COVID-19 demand destruction as discussed above.

Cost of revenues at our retail segment decreased $26.9 million primarily due to lower fuel costs and a 21% decline in sales volumes.

Operating Expense (Excluding Depreciation).

For the three months ended September 30, 2020 , operating expense (excluding depreciation) was $69.5 million , a $13.7 million decrease when compared to $83.2 million for the three months ended September 30, 2019 .

The decrease was primarily due to cost reductions across our businesses and the idling of certain refining units at our Hawaii refineries in response to COVID-19 demand destruction.

Depreciation, Depletion, and Amortization .

For the three months ended September 30, 2020 , DD&A was $22.8 million , which was relatively consistent with $22.2 million for the three months ended September 30, 2019 .

General and Administrative Expense (Excluding Depreciation).

For the three months ended September 30, 2020 , general and administrative expense (excluding depreciation) was approximately $9.8 million , a $1.6 million decrease when compared to $11.4 million for the three months ended September 30, 2019 .

The decrease was primarily driven by a reduction in the use of outside services and COVID-19-related reductions in travel and employee costs.

Acquisition and Integration Costs.

Acquisition and integration costs for the three months ended September 30, 2020 and 2019 were immaterial.

Interest Expense and Financing Costs, Net .

For the three months ended September 30, 2020 , our interest expense and financing costs were $17.5 million , a $0.8 million decrease when compared to $18.3 million for the three months ended September 30, 2019 .

The decrease was primarily driven by a $0.7 million decrease in interest expense and financing costs due to the exchange of a portion of our outstanding 5.00% Convertible Senior Notes during 2019, a decrease of $1.6 million due to reduced borrowings under our inventory financing agreements, and a decrease of $2.3 million due to the reduced principal and lower variable interest rates on our Term Loan B Facility and Retail Property Term Loan , net of the impact from our interest rate swap.

These decreases were partially offset by interest expense of $3.6 million related to the 12.875% Senior Secured Notes issued in June 2020.

Please read Note 9—Inventory Financing Agreements and Note 10—Debt to our condensed consolidated financial statements for further discussion on our inventory financing and indebtedness, respectively.

Change in Value of Common Stock Warrants .

For the three months ended September 30, 2019 , the change in value of common stock warrants resulted in a loss of approximately $0.8 million .

During the three months ended September 30, 2020 , there was no change in value of common stock warrants.

During January and March 2020 , one of our stockholders and its affiliates exercised the remaining 354,350 common stock warrants in exchange for 350,542 shares of common stock.

We estimated the fair value of our outstanding common stock warrants using the difference between the strike price of the warrant and the market price of our common stock.

During the three months ended September 30, 2019 , our stock price increased from $20.52 per share as of June 30, 2019 to $22.86 per share as of September 30, 2019 .

Equity Losses from Laramie Energy, LLC .

For the three months ended September 30, 2020 , there were no equity earnings (losses) from Laramie Energy, compared to equity losses of $85.6 million for the three months ended September 30, 2019 .

During the three months ended September 30, 2019, we recorded an impairment charge of $81.5 million due to the significant decline in natural gas prices over the second quarter of 2019 and continued deterioration in the third quarter of 2019.

As of June 30, 2020, we have discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero.

Please read Note 3—Investment in Laramie Energy, LLC for further information.

Income Taxes.

For the three months ended September 30, 2020 , we recorded an income tax expense of $0.1 million primarily related to current state income taxes.

For the three months ended September 30, 2019 , we recorded an income tax benefit of $2.4 million primarily driven by a $2.8 million benefit associated with a partial release of our valuation allowance in connection with indefinite-lived deferred tax assets from interest expense carryforwards with no expiration.

Nine months ended September 30, 2020 compared to the nine months ended September 30, 2019

For the nine months ended September 30, 2020 , revenues were $2.4 billion , a $1.6 billion decrease compared to $4.0 billion for the nine months ended September 30, 2019 .

The decrease was primarily due to a decrease of $1.5 billion in third-party revenues at our refining segment primarily as a result of decreases in Brent and WTI crude oil prices and lower sales volumes related to COVID-19 demand destruction.

Refined product sales volumes decreased 19% from 175.1 Mbpd in the nine months ended September 30, 2019 to 141.2 Mbpd in the nine months ended September 30, 2020 .

Average Brent crude oil prices decreased from $64.77 per barrel in the nine months ended September 30, 2019 to $42.52 per barrel in the nine months ended September 30, 2020 , with similar decreases experienced for WTI crude oil prices.

Revenues at our retail segment decreased $68.6 million primarily due to an 18% decline in sales volumes and a 16% decrease in fuel prices.

Three months ended March 31, 2021 compared to the three months ended March 31, 2020

For the three months ended March 31, 2021, revenues were $0.9 billion, a $0.3 billion decrease compared to $1.2 billion for the three months ended March 31, 2020.

The decrease was primarily due to a decrease of $0.3 billion in third-party refining segment revenue as a result of a 28% decrease in refining sales volumes and a decrease in average product cracks, partially offset by an increase in refined product prices related to higher crude oil prices.

Brent crude oil prices improved to $61.32 per barrel during the first quarter of 2021 compared to $50.82 per barrel during the first quarter of 2020, and WTI crude oil prices improved to $58.14 per barrel during the first quarter of 2021 compared to $45.98 per barrel during the first quarter of 2020.

Cost of Revenues (Excluding Depreciation).

For the nine months ended September 30, 2020 , cost of revenues (excluding depreciation) was $2.2 billion , a $1.4 billion decrease compared to $3.6 billion for the nine months ended September 30, 2019 .

The decrease was primarily due to decreases in Brent and WTI crude oil prices as discussed above and lower refining sales volumes related to COVID-19 demand destruction, partially offset by unfavorable crude oil differentials, higher RINs expenses, increased derivative costs, and an unfavorable lower of cost or net realizable value adjustment of $22.3 million .

Cost of revenues at our retail segment decreased $71.3 million primarily due to lower fuel costs and an 18% decline in sales volumes.

For the three months ended March 31, 2021, cost of revenues (excluding depreciation) was $0.9 billion, a $0.3 billion decrease compared to $1.2 billion for the three months ended March 31, 2020.

The decrease was primarily driven by lower refining volumes as discussed above, a $193.0 million favorable change in in lower of cost or net realizable value adjustments, and a decrease in purchased products volumes, partially offset by increases to cost of revenues caused by higher Brent and WTI crude oil prices, and a $72.0 million increase in the RINs mark-to-market expense related to our gross RINs obligation.

Other factors impacting our results period over period are lower purchased product, feedstock, and logistics costs and unfavorable derivative activity.

Operating Expense (Excluding Depreciation).

For the nine months ended September 30, 2020 , operating expense (excluding depreciation) was $209.9 million , a decrease of $21.8 million compared to $231.7 million for the nine months ended September 30, 2019 .

The decrease was primarily due to lower utilities and repairs and maintenance expenses and COVID-19-related reductions in travel, employee costs, and the use of outside services.

For the three months ended March 31, 2021, operating expense (excluding depreciation) was $74.2 million, which was relatively consistent with $73.4 million for the three months ended March 31, 2020.

Depreciation, Depletion, and Amortization .

For the nine months ended September 30, 2020 , DD&A was $66.2 million , which was relatively consistent with $65.1 million for the nine months ended September 30, 2019 .

For the three months ended March 31, 2021, DD&A was $22.9 million, which was relatively consistent with $21.3 million for the three months ended March 31, 2020.

Impairment Expense.

During the nine months ended September 30, 2020 , we recorded goodwill impairment charges of $67.9 million related to our Refining and Retail segments.

Please read Note 8—Goodwill to our condensed consolidated financial statements for further discussion on the goodwill impairment.

There was no impairment expense for the nine months ended September 30, 2019 .

During the three months ended March 31, 2020, we recorded goodwill impairment charges of $67.9 million related to our Refining and Retail segments as a result of the global economic impact of the COVID-19 pandemic and a steep decline in current and forecasted prices and demand for crude oil and refined products.

No such charge was recorded in 2021.

Gain on Sale of Assets.

During the three months ended March 31, 2021, we recorded a gain of $64.9 million primarily related to the Sale-Leaseback Transaction we closed on February 23, 2021 and March 12, 2021.

No such gain or loss was recorded during the three months ended March 31, 2020.

General and Administrative Expense (Excluding Depreciation).

For the nine months ended September 30, 2020 , general and administrative expense (excluding depreciation) was $31.8 million , a decrease of $2.6 million compared to $34.4 million for the nine months ended September 30, 2019 .

The decrease was primarily due to COVID-19-related reductions in travel and employee costs and a reduction in the use of outside services.

Acquisition and Integration Costs.

For the nine months ended September 30, 2020 , we incurred $0.6 million of integration costs primarily related to the Washington Acquisition .

For the nine months ended September 30, 2019 , we incurred $4.3 million of acquisition and integration costs related to the Washington Acquisition and the Par West Hawaii refinery acquisition.

For the three months ended March 31, 2021, general and administrative expense (excluding depreciation) was $11.9 million, which was relatively consistent with $11.8 million for the three months ended March 31, 2020.

Interest Expense and Financing Costs, Net .

For the nine months ended September 30, 2020 , our interest expense and financing costs were $52.6 million , a decrease of $4.7 million when compared to $57.3 million for the nine months ended September 30, 2019 .

The decrease was primarily due to a $3.5 million decrease in interest expense and financing costs due to the exchange of a portion of our outstanding 5.00% Convertible Senior Notes during 2019, a decrease of $3.2 million due to reduced borrowings under our inventory financing agreements, and a decrease of $3.1 million due to the reduced principal and lower variable interest rates on our Term Loan B Facility and Retail Property Term Loan , net of the impact from our interest rate swap.

These decreases were partially offset by interest expense of $4.6 million related to the 12.875% Senior Secured Notes issued in June 2020.

For the three months ended March 31, 2021, our interest expense and financing costs were $18.2 million, relatively consistent with $18.7 million for the three months ended March 31, 2020.

Change in Value of Common Stock Warrants .

For the nine months ended September 30, 2020 , the change in value of common stock warrants resulted in a gain of $4.3 million , a change of $7.4 million when compared to a loss of $3.1 million for the nine months ended September 30, 2019 .

For the three months ended March 31, 2020, the change in value of common stock warrants resulted in income of $4.3 million.

During January and March 2020, one of our stockholders and its affiliates exercised the remaining 354,350 common stock warrants in exchange for 350,542 shares of common stock.

We estimated the fair value of our outstanding common stock warrants and the income recognized upon exercise using the difference between the strike price of the warrant and the market price of our common stock.

For the three months ended March 31, 2020, our stock price decreased

from $23.24 per share as of December 31, 2019 to $7.10 per share as of March 31, 2020.

During the nine months ended September 30, 2019 , our stock price increased from $14.18 per share on December 31, 2018 to $22.86 per share on September 30, 2019 .

Debt Extinguishment and Commitment Costs.

For the nine months ended September 30, 2019 , our debt extinguishment and commitment costs were $9.2 million and primarily represented the commitment and other fees associated with the financing of the Washington Acquisition and the extinguishment costs associated with the repurchase and cancellation of a portion of our outstanding 5.00% Convertible Senior Notes .

Please read Note 10—Debt to our condensed consolidated financial statements for further discussion.

No such costs were incurred for the nine months ended September 30, 2020 .

Equity Losses from Laramie Energy, LLC .

For the nine months ended September 30, 2020 , equity losses from Laramie Energy were $46.9 million , a difference of $37.9 million compared to equity losses of $84.8 million for the nine months ended September 30, 2019 .

During the three months ended March 31, 2020 and the three months ended September 30, 2019, we recorded other-than-temporary impairment charges of $45.3 million and $81.5 million related to our investment in Laramie Energy, respectively.

As of June 30, 2020, we have discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero.

We estimated the fair value of our outstanding common stock warrants using the difference between the strike price of the warrant and the market price of our common stock.

During the three months ended March 31, 2020, our stock price decreased from $23.24 per share as of December 31, 2019 to $7.10 per share as of March 31, 2020.

During the three months ended March 31, 2021, there were no common stock warrants outstanding.

Equity Earnings from Laramie Energy, LLC .

For the three months ended March 31, 2021, there were no equity earnings (losses) from Laramie Energy, compared to equity losses of $45.0 million for the three months ended March 31, 2020.

As of June 30, 2020, we discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero.

Please read Note 3—Investment in Laramie Energy, LLC for further information.

Income Taxes.

For the nine months ended September 30, 2020 , we recorded an income tax benefit of $20.9 million primarily driven by an increase in our net operating loss carryforwards and the change in our indefinitely-lived goodwill due to the impairments.

For the nine months ended September 30, 2019 , we recorded an income tax benefit of $69.0 million primarily driven by a $67.0 million benefit associated with a partial release of our valuation allowance in connection with the Washington Acquisition .

For the three months ended March 31, 2021, we did not record any income taxes.

For the three months ended March 31, 2020, we recorded an income tax benefit of $18.2 million primarily driven by a $18.4 million benefit associated with a partial release of our valuation allowance in connection with indefinite-lived deferred tax assets from interest expense carryforwards with no expiration.

Consolidating Condensed Financial Information

5 unchanged sentences

The 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes are guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc.

(the “Parent”) and are guaranteed on a senior secured basis by all of the subsidiaries of Par Petroleum, LLC (other than Par Petroleum Finance Corp.).

(the “Parent”) and are guaranteed on a senior secured basis by all of the subsidiaries of Par Petroleum, LLC.

The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Petroleum, LLC and its consolidated subsidiaries’ accounts (which are all guarantors of the 7.75% Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the 7.75% Senior Secured Notes, Term Loan B, or 12.875% Senior Secured Notes and consolidating adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated.

For purposes of the following condensed consolidating information, the Parent’s investment in its subsidiaries is accounted for under the equity method of accounting (dollar amounts in thousands).

As of September 30, 2020

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

As of March 31, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

3 unchanged sentences

Trade accounts receivable — 155,883 3 155,886

Inventories — 579,206 — 579,206

Prepaid and other current assets 13,123 11,296 494 24,913

9 unchanged sentences

Intangible assets, net — 18,227 — 18,227

Goodwill — 125,399 2,598 127,997

Other long-term assets 723 62,036 — 62,759

Total assets $ 374,754 $ 2,469,088 $ (341,372) $ 2,502,470

LIABILITIES AND STOCKHOLDERS’ EQUITY

18 unchanged sentences

Preferred stock — — — —

Common stock 601 — — 601

Additional paid-in capital 814,467 449,694 (449,694) 814,467

Accumulated earnings (deficit) (539,255) (180,879) 180,879 (539,255)

Accumulated other comprehensive income

Accumulated other comprehensive income (loss) 254 1,084 (1,084) 254

Total stockholders’ equity 276,067 269,899 (269,899) 276,067

1 unchanged sentence

As of December 31, 2020

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

3 unchanged sentences

Trade accounts receivable — 111,654 3 111,657

Inventories — 429,855 — 429,855

Prepaid and other current assets 16,983 7,171 494 24,648

10 unchanged sentences

Intangible assets, net — 18,892 — 18,892

Goodwill — 125,399 2,598 127,997

Other long-term assets 723 59,849 — 60,572

Total assets $ 346,344 $ 2,080,147 $ (292,630) $ 2,133,861

LIABILITIES AND STOCKHOLDERS’ EQUITY

19 unchanged sentences

Preferred stock — — — —

Common stock 540 — — 540

Additional paid-in capital 726,504 307,967 (307,967) 726,504

Accumulated earnings (deficit) (477,028) (94,086) 94,086 (477,028)

Accumulated other comprehensive income

Accumulated other comprehensive income (loss) (3,742) (2,912) 2,912 (3,742)

Total stockholders’ equity 246,274 210,969 (210,969) 246,274

Total liabilities and stockholders’ equity $ 346,344 $ 2,080,147 $ (292,630) $ 2,133,861

Three Months Ended September 30, 2020

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

and Subsidiaries

Operating expenses

Cost of revenues (excluding depreciation)

Operating expense (excluding depreciation)

Depreciation, depletion, and amortization

General and administrative expense (excluding depreciation)

Acquisition and integration costs

Total operating expenses

Operating income (loss)

Other income (expense)

Interest expense and financing costs, net

Other income, net

Equity earnings (losses) from subsidiaries

Total other income (expense), net

Income (loss) before income taxes

Income tax benefit (expense) (1)

Net income (loss)

Adjusted EBITDA

Three Months Ended September 30, 2019

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

and Subsidiaries

Operating expenses

Cost of revenues (excluding depreciation)

Operating expense (excluding depreciation)

Depreciation, depletion, and amortization

General and administrative expense (excluding depreciation)

Acquisition and integration costs

Total operating expenses

Operating income (loss)

Other income (expense)

Interest expense and financing costs, net

Other income, net

Change in value of common stock warrants

Equity earnings (losses) from subsidiaries

Equity losses from Laramie Energy, LLC

Total other income (expense), net

Income (loss) before income taxes

Income tax benefit (expense) (1)

Net income (loss)

Adjusted EBITDA

Nine Months Ended September 30, 2020

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Three Months Ended March 31, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

Revenues $ — $ 888,680 $ — $ 888,680

Operating expenses

3 unchanged sentences

Impairment expense — — — —

Gain on sale of assets, net — (11,208) (53,704) (64,912)

General and administrative expense (excluding depreciation) 3,105 8,780 — 11,885

4 unchanged sentences

Interest expense and financing costs, net (1,290) (16,897) 36 (18,151)

Debt extinguishment and commitment costs — (91) (1,416) (1,507)

Gain on curtailment of pension obligation — 2,032 — 2,032

Other income, net (7) 69 (1) 61

Change in value of common stock warrants

Equity earnings (losses) from subsidiaries (56,721) — 56,721 —

Equity losses from Laramie Energy, LLC

Total other income (expense), net (58,018) (14,887) 55,340 (17,565)

3 unchanged sentences

Adjusted EBITDA $ (3,112) $ (40,930) $ 716 $ (43,326)

Nine Months Ended September 30, 2019

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

________________________________________________________

(1) The income tax benefit (expense) of the Parent Guarantor and Issuer and Subsidiaries is determined using the separate return method.

The Non-Guarantor Subsidiaries and Eliminations column includes tax benefits recognized at the Par consolidated level that are primarily associated with changes to the consolidated valuation allowance and other deferred tax balances.

Three Months Ended March 31, 2020

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

Revenues $ — $ 1,204,081 $ 2 $ 1,204,083

Operating expenses

2 unchanged sentences

Depreciation, depletion, and amortization 736 20,417 130 21,283

Loss (gain) on sale of assets, net

Impairment expense — 67,922 — 67,922

Gain on sale of assets, net — — — —

General and administrative expense (excluding depreciation) 3,001 8,783 — 11,784

1 unchanged sentence

Total operating expenses 3,737 1,382,572 (1,053) 1,385,256

Operating income (loss)

Operating loss (3,737) (178,491) 1,055 (181,173)

Other income (expense)

Interest expense and financing costs, net (1,228) (15,030) (2,416) (18,674)

Debt extinguishment and commitment costs

Other income, net 10 14 — 24

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See “Results of Operations — Non-GAAP Performance Measures — Adjusted Net Income (Loss) and Adjusted EBITDA” above.

The following tables present a reconciliation of 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 September 30, 2020

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

and Subsidiaries

Net income (loss)

Inventory valuation adjustment

LIFO liquidation adjustment

RINs loss (gain) in excess of net obligation

Unrealized loss (gain) on derivatives

Acquisition and integration costs

Depreciation, depletion, and amortization

Interest expense and financing costs, net

Equity losses (income) from subsidiaries

Income tax expense (benefit)

Adjusted EBITDA (3)

Three Months Ended September 30, 2019

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

and Subsidiaries

Net income (loss)

Inventory valuation adjustment

RINs loss (gain) in excess of net obligation

Unrealized loss (gain) on derivatives

Acquisition and integration costs

Changes in valuation allowance and other deferred tax items (1)

Change in value of common stock warrants

Impairment of Investment in Laramie Energy, LLC (2)

Par’s share of Laramie Energy’s unrealized loss on derivatives (2)

Depreciation, depletion, and amortization

Interest expense and financing costs, net

Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized loss on derivatives and impairment losses

Equity losses (income) from subsidiaries

Income tax expense (benefit)

Adjusted EBITDA (3)

Nine Months Ended September 30, 2020

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

The following tables present a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, Net Loss, on a historical basis for the periods indicated (in thousands):

Three Months Ended March 31, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

5 unchanged sentences

Acquisition and integration costs 438 — — 438

Changes in valuation allowance and other deferred tax items (1)

Change in value of common stock warrants

Debt extinguishment and commitment costs — 91 1,416 1,507

Severance costs — 16 — 16

Impairment expense

Impairment of Investment in Laramie Energy, LLC (2)

Par’s share of Laramie Energy’s unrealized gain on derivatives (2)

Gain on sale of assets, net — (11,208) (53,704) (64,912)

Depreciation, depletion, and amortization 666 22,119 95 22,880

Interest expense and financing costs, net 1,290 16,897 (36) 18,151

Equity losses from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives and impairment losses

Equity losses (income) from subsidiaries 56,721 — (56,721) —

1 unchanged sentence

Adjusted EBITDA (3) $ (3,112) $ (40,930) $ 716 $ (43,326)

Nine Months Ended September 30, 2019

Parent Guarantor

Issuer and Subsidiaries

Non-Guarantor Subsidiaries and Eliminations

Par Pacific Holdings, Inc.

Three Months Ended March 31, 2020

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

4 unchanged sentences

Acquisition and integration costs — 665 — 665

Debt extinguishment and commitment costs

Changes in valuation allowance and other deferred tax items (1) — — (18,373) (18,373)

Change in value of common stock warrants (4,270) — — (4,270)

Loss (gain) on sale of assets, net

Severance costs 61 88 — 149

Impairment of Investment in Laramie Energy, LLC (2) — — 45,294 45,294

Par’s share of Laramie Energy’s unrealized gain on derivatives (2) — — (1,110) (1,110)

Impairment expense — 67,922 — 67,922

Depreciation, depletion, and amortization 736 20,417 130 21,283

5 unchanged sentences

________________________________________________________

Included in Income tax benefit (expense) on our condensed consolidated statements of operations.

Included in Equity earnings (losses) from Laramie Energy, LLC on our condensed consolidated statements of operations.

For the three and nine months ended September 30, 2019 , there were no severance costs or LIFO liquidation adjustments.

For the three months ended September 30, 2020, there was no impairment expense, earnings (losses) attributed to Laramie, change in valuation allowance and other deferred tax items, or common stock warrants outstanding.

These tax expenses (benefits) are included in Income tax expense (benefit) on our condensed consolidated statements of operations.

(2) Includes impairment losses on our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference.

These impairment losses and our share of Laramie Energy’s unrealized loss (gain) on derivatives are included in Equity earnings (losses) from Laramie Energy, LLC on our condensed consolidated statements of operations.

(3) For the three months ended March 31, 2021, there was no change in valuation allowance and other deferred tax items, change in value of common stock warrants, impairment of investment in Laramie Energy, unrealized gain on derivatives included in equity earnings from Laramie Energy, impairment expense, or equity losses from Laramie Energy.

For the three months ended March 31, 2020, there was no LIFO liquidation adjustment or loss (gain) on sale of assets.

Liquidity and Capital Resources

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Our primary sources of liquidity are cash flows from operations, cash on hand, amounts available under our credit agreements, and access to capital markets.

Our liquidity position as of September 30, 2020 was $190.6 million and consisted of $188.2 million at Par Petroleum, LLC and subsidiaries, $2.3 million at Par Pacific Holdings, and an immaterial amount at all our other subsidiaries.

As of September 30, 2020 , we had access to the J.

Our liquidity position as of March 31, 2021 was $286.9 million and consisted of $282.1 million at Par Petroleum, LLC and subsidiaries, $3.5 million at Par Pacific Holdings, and $1.3 million at all our other subsidiaries.

As of March 31, 2021, we had access to the J.

Aron Deferred Payment Arrangement, the ABL Credit Facility, the MLC receivable advances, and cash on hand of $214.7 million.

2 unchanged sentences

Generally, the primary uses of our capital resources have been in the operations of our refining and retail segments, payments related to acquisitions, and to repay or refinance indebtedness.

In the first quarter of 2021, we closed on the sale and leaseback of twenty-two (22) of our retail properties in Hawaii for an aggregate cash purchase price of approximately $112.8 million net of transaction fees (the “Sale-Leaseback Transaction”).

We used approximately $53.1 million of the net cash proceeds to repay the certain financing arrangements which were related to certain of the retail properties and the remainder for general corporate purposes.

On March 19, 2021, we sold 5.75 million shares of common stock in an underwritten public offering at a public offering price of $16.00 per share, resulting in net proceeds of approximately $87.4 million, after deducting underwriting discounts and commissions and offering expenses.

We intend to use the net proceeds from the Equity Offering for general corporate purposes, including repaying indebtedness, capital expenditures, and funding working capital.

We believe our cash flows from operations and available capital resources will be sufficient to meet our current capital and turnaround expenditures, working capital, and debt service requirements for the next 12 months.

4 unchanged sentences

The amounts involved may be material.

The following table summarizes cash activities for the nine months ended September 30, 2020 and 2019 (in thousands):

Nine Months Ended September 30,

Net cash provided by operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash provided by operating activities was approximately $26.0 million for the nine months ended September 30, 2020 , which resulted from a net loss of approximately $277.2 million , offset by net cash provided by changes in operating assets and liabilities of approximately $117.5 million and non-cash charges to operations of approximately $185.6 million .

The change in our operating assets and liabilities for the nine months ended September 30, 2020 was primarily due to a decrease in our trade receivables of $112.2 million and a decrease in inventories of $98.8 million , partially offset by a net decrease in our Supply and Offtake Agreements and Washington Refinery Intermediation Agreement obligations of $124.4 million .

Net cash provided by changes in operating assets and liabilities also includes an increase of $40.6 million in deferred turnaround costs associated with the Hawaii and Wyoming planned turnarounds.

These decreases in accounts receivable, inventory, and Supply and Offtake Agreements were primarily driven by the decline in crude oil prices in 2020 and overall decline in sales and inventory volumes resulting from COVID-19 demand destruction.

Net cash provided by operating activities was approximately $98.6 million for the nine months ended September 30, 2019 , which resulted from net income of approximately $5.4 million and non-cash charges to operations of approximately $113.2 million primarily related to a $81.5 million non-cash impairment of our Investment in Laramie Energy, offset by net cash used for changes in operating assets and liabilities of approximately $19.9 million .

For the nine months ended September 30, 2020 , net cash used in investing activities was approximately $42.4 million and primarily related to additions to property, plant, and equipment totaling approximately $42.5 million .

Net cash used in investing activities was approximately $334.3 million for the nine months ended September 30, 2019 and primarily related to $274.3 million net cash consideration paid for the Washington Acquisition and additions to property and equipment totaling approximately $64.1 million .

Net cash provided by financing activities for the nine months ended September 30, 2020 was approximately $17.4 million , which consisted primarily of net debt and insurance premium borrowings of approximately $85.5 million , offset by net repayments associated with the J.

Aron deferred payment and MLC receivable advances of approximately $60.8 million and payments of $6.3 million in deferred loan costs primarily related to the issuance of the 12.875% Senior Secured Notes .

Net cash provided by financing activities for the nine months ended September 30, 2019 was approximately $273.0 million , which consisted primarily of net debt borrowings of approximately $263.4 million and net borrowings associated with the J.

Aron deferred payment and MLC receivable advances of approximately $27.8 million , offset by the payments of $13.5 million in deferred loan costs and $7.1 million in commitment and extinguishment costs related to the funding for the Washington Acquisition and the financing costs related to the repurchase and cancellation of a portion of our 5.00% Convertible Senior Notes.

The following table summarizes cash activities for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,

Net cash provided by (used in) operating activities $ (30,737) $ 14,499

Net cash provided by (used in) investing activities 94,678 (14,943)

Net cash provided by (used in) financing activities 82,483 (63,491)

Net cash used in operating activities was approximately $30.7 million for the three months ended March 31, 2021, which resulted from a net loss of approximately $62.2 million, offset by net cash provided by changes in operating assets and liabilities of approximately $85.8 million and non-cash earnings from operations of approximately $54.3 million.

The change in our operating assets and liabilities for the three months ended March 31, 2021 was primarily due to a net increase in our Supply and Offtake Agreements and Washington Refinery Intermediation Agreement obligations of $124.4 million and an increase in our gross environmental credit obligations of $109.5 million, partially offset by increases in inventories of $139.1 million and accounts receivable of $45.0 million.

Net cash provided by changes in operating assets and liabilities also includes an increase of $5.6 million in deferred turnaround costs.

Net cash provided by operating activities was approximately $14.5 million for the three months ended March 31, 2020, which resulted from a net loss of approximately $222.3 million and net cash used for changes in operating assets and liabilities of approximately $88.7 million, offset by non-cash charges to operations of approximately $325.6 million.

For the three months ended March 31, 2021, net cash provided by investing activities was approximately $94.7 million and primarily related to proceeds received from the Sale-Leaseback Transaction.

Net cash used in investing activities was approximately $14.9 million for the three months ended March 31, 2020 and primarily related to additions to property and equipment totaling approximately $14.9 million.

Net cash provided by financing activities for the three months ended March 31, 2021 was approximately $82.5 million, which consisted primarily of proceeds of $87.4 million from our March 2021 Equity Offering and net borrowings associated with the J.

Aron deferred payment and MLC receivable advances of approximately $44.5 million, partially offset by net debt and insurance premium repayments of approximately $47.3 million.

Net cash used in financing activities for the three months ended March 31, 2020 was approximately $63.5 million, which consisted primarily of net debt and insurance premium repayments of approximately $9.8 million and net repayments associated with the J.

Aron deferred payment and MLC receivable advances of approximately $52.1 million.

Capital Expenditures and Turnaround Costs

Our deferred turnaround costs and capital expenditures, excluding acquisitions, for the nine months ended September 30, 2020 totaled approximately $83.0 million and were primarily related to equipment purchases and engineering work for the 2020 turnarounds at our Par East Hawaii and Wyoming refineries, the second phase of a Washington renewables project, tank compliance construction and repairs within our Wyoming logistics network, and scheduled maintenance.

Our capital expenditure and deferred turnaround cost budget for 2020 ranges from $95 million to $115 million and primarily relates to the second phase of a Washington renewables project, equipment purchases and engineering work related to the execution of the 2020 turnarounds at our Par East Hawaii and Wyoming refineries, tank compliance construction and repairs within our Wyoming logistics network, and scheduled maintenance and other capital projects.

Our deferred turnaround costs and capital expenditures, excluding acquisitions, for the three months ended March 31, 2021 totaled approximately $13.8 million and were primarily related to the 2021 turnaround and related scheduled maintenance work at our Washington refinery and underground tank replacements, rebranding, and point of sale and other equipment upgrades at our Retail segment.

Our capital expenditure and deferred turnaround cost budget for 2021 ranges from $35 to $45 million and primarily relates to a partial turnaround at our Washington refinery and scheduled sustaining maintenance, regulatory, and safety compliance projects across all businesses.

We also continue to seek strategic investments in business opportunities, but the amount and timing of those investments are not predictable.

2 unchanged sentences

On June 1, 2015, we entered into the Supply and Offtake Agreements with J.

Aron to support the operations of our Par East Hawaii refinery.

Aron to support our Hawaii refining operations.

On May 8, 2017, we and J.

4 unchanged sentences

Aron amended the Supply and Offtake Agreements to account for additional processing capacity expected to be provided by the Par West Hawaii refinery.

We are evaluating options to extend or replace the Supply and Offtake Agreements.

On May 4, 2021, we extended the term of the Supply and Offtake Agreements to June 30, 2021.

We expect to finalize a new multi-year agreement during the second quarter.

Please read Note 7—Inventory Financing Agreements for more information.

1 unchanged sentence

In connection with the consummation of the Washington Acquisition on January 11, 2019, we assumed the Washington Refinery Intermediation Agreement with MLC to support the operations of our Washington refinery.

On November 1, 2019 , we and MLC amended the Washington Refinery Intermediation Agreement and extended the term through June 30, 2021 , with an option for us to early terminate as early as March 31, 2021 .

We are evaluating options to extend or replace the Washington Refinery Intermediation Agreement.

On November 1, 2019, we and MLC amended the Washington Refinery Intermediation Agreement and extended the term through June 30, 2021, We further amended the Washington Refinery Intermediation Agreement on February 11, 2021 and extended the term through March 31, 2022.

Please read Note 7—Inventory Financing Agreements for more information.

21 unchanged sentences

These and other forward-looking statements could cause the actual results, performance, or achievements of Par and its subsidiaries to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements.

Statements that are not historical fact are forward-looking statements.

Statements that are not historical fact are forward-

looking statements.

Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “will,” “would,” “could,” “should,” “seeks,” or “scheduled to,” or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions.

6 unchanged sentences

and we cannot assure any reader that such statements will be realized or that the forward-looking events and circumstances will occur.

Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors described above and under Critical Accounting Policies and Risk Factors included in our most recent Annual Report on Form 10-K and in

this Quarterly Report on Form 10-Q.

All forward-looking statements speak only as of the date they are made.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis