PAR PACIFIC HOLDINGS, INC. 10-Q

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a growing energy company based in Houston, Texas, that provides both renewable and conventional fuels to the western United States. For more information, please read Note 1—Overview to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Recent Events Affecting Comparability of Periods Crude oil pricing was relatively stable in the first quarter of 2024 compared to the first quarter of 2023. Brent crude oil pricing averaged $81.76 per barrel in the first quarter of 2024 compared to $82.10 per barrel in the first quarter of 2023. Similarly, average U.S. retail gasoline prices remained relatively stable from $3.38 per gallon in the first quarter of 2023 to $3.24 in the first quarter of 2024. Refined product crack spreads in the first quarter of 2024 decreased as compared to the first quarter of 2023. The U.S. Energy Information Administration (“EIA”) in its April 2024 short term energy outlook forecasts average Brent crude oil pricing of $89 per barrel in 2024 due to strong global inventory draws in the first quarter of 2024 and ongoing geopolitical risks. In 2023, OPEC announced several voluntary production cuts. Russia announced on February 10, 2023, that it would cut its oil production by 500,000 barrels a day (5 percent of its output), as a response to imposed sanctions on the country’s oil trade. In June 2023, OPEC extended oil output cuts of 3.66 million barrels per day, or about 5% of daily global demand, until the end of 2024, including a Russian cut in oil exports of 300,000 barrels a day until the end of 2023. In November 2023 OPEC announced additional voluntary production cuts of 1.7 million barrels a day, thus totaling about 2.2 million barrels a day, from January through March 2024. On March 3, 2024, OPEC announced an extension of its November 2023 voluntary production cut through June 2024, driving down supply, as demand increases due to spring and summer travel seasons in the Northern Hemisphere. Additionally, geopolitical tensions in the Middle East escalated in the first quarter of 2024 putting upward pressure on prices. The overall effect of these conflicts and associated actions taken to limit the purchase of Russian petroleum products has been to raise the operating costs of many European and other refineries. Energy prices are, among other factors, indicators of inflation. The overall energy price index increased 2.1% year over year as of March 31, 2024. While inflation has worsened relative to the prior year, we do not believe that inflation has had a material effect on our business, financial condition or results of operations in the first quarter of 2024. Please read Item 1A. — Risk Factors on our Annual Report on Form 10-K for the year ended December 31, 2023 for further information. Results of Operations Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Net Income (Loss). Our financial results for the first quarter of 2024 declined from net income of $237.9 million for the three months ended March 31, 2023 to a net loss of $3.8 million for the three months ended March 31, 2024. The decrease was primarily driven by a $240.5 million decrease in refining segment operating income, including a $94.7 million decrease driven by a gain on RINs settlements in the first quarter of 2023, a $22.5 million increase in general and administrative expenses, a $6.1 million decrease in equity earnings from our investment in Laramie, and a $2.5 million decrease in retail segment operating income, partially offset by a $17.7 million loss on termination of financing agreements in 2023 with no similar activity in 2024, a $7.8 million improvement in our logistics segment operating income, a $5.1 million decrease in acquisition and integration expenses related to our Billings Acquisition, and a $2.8 million decrease in income tax expense. Please read the discussions of segment and consolidated results below for additional information. Adjusted EBITDA and Adjusted Net Income. For the three months ended March 31, 2024, Adjusted EBITDA was $94.7 million compared to $167.6 million for the three months ended March 31, 2023. The $72.9 million decrease was primarily related to a decrease of $71.4 million in our refining segment, a decrease of $9.5 million in our corporate and other segment, and a decrease of $2.5 million in our retail segment, partially offset by an increase of $10.5 million in our logistics segment. Please read the discussion of segment results below for additional information. For the three months ended March 31, 2024, Adjusted Net Income was $41.7 million compared to $137.5 million for the three months ended March 31, 2023. The decline was primarily related to the factors described above for the decrease in Adjusted EBITDA, an increase of $8.3 million in D&A and an increase of $2.5 million in interest expense and financing costs, excluding unrealized interest rate derivative losses (gains), partially offset by a $2.6 million income tax benefit in 2024 compared to $0.2 million income tax expense in 2023. 28 The following tables summarize our consolidated results of operations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 (in thousands). The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Three Months Ended March 31, 2024 2023 $ Change % Change Revenues $ 1,980,835 $ 1,685,209 $ 295,626 18% Cost of revenues (excluding depreciation) 1,747,478 1,289,020 458,458 36% Operating expense (excluding depreciation) 153,260 83,120 70,140 84% Depreciation and amortization 32,656 24,360 8,296 34% General and administrative expense (excluding depreciation) 41,755 19,286 22,469 117% Equity earnings from refining and logistics investments (6,094) — (6,094) NM (1) Acquisition and integration costs 243 5,271 (5,028) (95)% Par West redevelopment and other costs 1,971 2,750 (779) (28)% Loss on sale of assets, net 51 — 51 NM (1) Total operating expenses 1,971,320 1,423,807 Operating income 9,515 261,402 Other income (expense) Interest expense and financing costs, net (17,884) (16,250) (1,634) 10% Debt extinguishment and commitment costs — (17,720) 17,720 (100)% Other expense, net (2,576) (35) (2,541) 7,260% Equity earnings from Laramie Energy, LLC 4,563 10,706 (6,143) (57)% Total other expense, net (15,897) (23,299) Income (loss) before income taxes (6,382) 238,103 Income tax benefit (expense) 2,631 (213) 2,844 1,335% Net income (loss) $ (3,751) $ 237,890 ________________________________________________________ (1) NM - Not meaningful The following tables summarize our operating income (loss) by segment for the three months ended March 31, 2024 and 2023 (in thousands). The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Three months ended March 31, 2024 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 1,926,616 $ 71,842 $ 140,134 $ (157,757) $ 1,980,835 Cost of revenues (excluding depreciation) 1,759,395 42,797 103,052 (157,766) 1,747,478 Operating expense (excluding depreciation) 126,468 3,812 22,980 — 153,260 Depreciation and amortization 22,270 6,775 3,116 495 32,656 General and administrative expense (excluding depreciation) — — — 41,755 41,755 Equity earnings from refining and logistics investments (4,117) (1,977) — — (6,094) Acquisition and integration costs — — — 243 243 Par West redevelopment and other costs — — — 1,971 1,971 Loss (gain) on sale of assets, net — 61 (10) — 51 Operating income (loss) $ 22,600 $ 20,374 $ 10,996 $ (44,455) $ 9,515 29 Three months ended March 31, 2023 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 1,615,412 $ 52,388 $ 135,572 $ (118,163) $ 1,685,209 Cost of revenues (excluding depreciation) 1,277,670 31,299 98,228 (118,177) 1,289,020 Operating expense (excluding depreciation) 58,882 3,447 20,791 — 83,120 Depreciation and amortization 15,723 5,034 3,079 524 24,360 General and administrative expense (excluding depreciation) — — — 19,286 19,286 Acquisition and integration costs — — — 5,271 5,271 Par West redevelopment and other costs — — — 2,750 2,750 Operating income (loss) $ 263,137 $ 12,608 $ 13,474 $ (27,817) $ 261,402 ________________________________________________________ (1) Our logistics operations consist primarily of intercompany transactions which eliminate on a consolidated basis. (2) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $157.8 million and $118.2 million for the three months ended March 31, 2024 and 2023, respectively. 30 Below is a summary of key operating statistics for the refining segment for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, 2024 2023 Total Refining Segment Feedstocks Throughput (Mbpd) 180.9 132.8 Refined product sales volume (Mbpd) 192.9 149.1 Hawaii Refinery Feedstocks Throughput (Mbpd) 79.4 76.3 Yield (% of total throughput) Gasoline and gasoline blendstocks 25.0 % 26.8 % Distillates 38.2 % 39.1 % Fuel oils 34.0 % 29.3 % Other products (1.2) % 1.7 % Total yield 96.0 % 96.9 % Refined product sales volume (Mbpd) 87.6 90.4 Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ 14.00 $ 19.11 Production costs per bbl ($/throughput bbl) (2) 4.89 4.54 D&A per bbl ($/throughput bbl) 0.60 0.73 Montana Refinery Feedstocks Throughput (Mbpd) 53.1 — Yield (% of total throughput) Gasoline and gasoline blendstocks 47.7 % — % Distillates 32.7 % — % Asphalt 9.9 % — % Other products 4.1 % — % Total yield 94.4 % — % Refined product sales volume (Mbpd) 51.5 — Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ 13.82 $ — Production costs per bbl ($/throughput bbl) (2) 12.44 — D&A per bbl ($/throughput bbl) 1.40 — 31 Three Months Ended March 31, 2024 2023 Washington Refinery Feedstocks Throughput (Mbpd) 31.4 39.6 Yield (% of total throughput) Gasoline and gasoline blendstocks 23.6 % 23.6 % Distillates 33.5 % 34.5 % Asphalt 21.0 % 18.5 % Other products 17.9 % 19.2 % Total yield 96.0 % 95.8 % Refined product sales volume (Mbpd) 36.3 40.7 Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ 6.13 $ 11.07 Production costs per bbl ($/throughput bbl) (2) 6.07 4.25 D&A per bbl ($/throughput bbl) 2.44 1.81 Wyoming Refinery Feedstocks Throughput (Mbpd) 17.0 16.9 Yield (% of total throughput) Gasoline and gasoline blendstocks 49.8 % 47.5 % Distillates 45.9 % 46.0 % Fuel oils 1.9 % 2.4 % Other products 1.0 % 0.8 % Total yield 98.6 % 96.7 % Refined product sales volume (Mbpd) 17.5 18.0 Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ 14.84 $ 27.54 Production costs per bbl ($/throughput bbl) (2) 7.86 7.41 D&A per bbl ($/throughput bbl) 2.77 2.78 Market Indices (average $ per barrel) 3-1-2 Singapore Crack Spread (3) $ 18.67 $ 21.22 RVO Adjusted Pacific Northwest 3-1-1-1 (4) 20.48 25.30 RVO Adjusted USGC 3-2-1 (5) 21.34 26.55 Crude Oil Prices (average $ per barrel) Brent $ 81.76 $ 82.10 WTI 76.91 75.99 ANS 81.33 79.01 Bakken Clearbrook 74.31 79.14 WCS Hardisty 59.45 56.67 Brent M1-M3 1.06 0.52 32 ________________________________________________________ (1) We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput. Adjusted Gross Margin for our Washington refinery is determined under the last-in, first-out (“LIFO”) inventory costing method. Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method. (2) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry. There are a variety of ways to calculate production costs per barrel; different companies within the industry calculate it in different ways. We calculate production costs per barrel by dividing all direct production costs, which include the costs to run the refineries including personnel costs, repair and maintenance costs, insurance, utilities, and other miscellaneous costs, by total refining throughput. Our production costs are included in Operating expense (excluding depreciation) on our consolidated statement of operations, which also includes costs related to our bulk marketing operations and severance costs. (3) We believe the 3-1-2 Singapore Crack Spread (or three barrels of Brent crude oil converted into one barrel of gasoline and two barrels of distillates (diesel and jet fuel)) is the most representative market indicator for our operations in Hawaii. (4) We believe the RVO Adjusted Pacific Northwest 3-1-1-1 (or three barrels of WTI crude oil converted into one barrel of Pacific Northwest gasoline, one barrel of Pacific Northwest ULSD and one barrel of USGC VGO, less 100% of the RVO cost for gasoline and ULSD) is the most representative market indicator for our operations in Washington with improved historical correlations to our reported adjusted gross margin compared to prior reported indices. (5) We believe the RVO Adjusted USGC 3-2-1 (or three barrels of WTI crude oil converted into two barrels of USGC gasoline and one barrel of USGC ULSD, less 100% of the RVO cost) is the most representative market indicator for our operations in Montana and Wyoming with improved historical correlations to our reported adjusted gross margin compared to prior reported indices. Below is a summary of key operating statistics for the retail segment for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, 2024 2023 Retail Segment Retail sales volumes (thousands of gallons) 29,431 27,123 Non-GAAP Performance Measures Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures. These measures should not be considered in isolation or as substitutes or alternatives to their most directly comparable GAAP financial measures or any other measure of financial performance or liquidity presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies since each company may define these terms differently. We believe Adjusted Gross Margin (as defined below) provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost and net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation and amortization. Management uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks. We believe Adjusted Net Income (Loss) and Adjusted EBITDA (as defined below) are useful supplemental financial measures that allow investors to assess the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis, the ability of our assets to generate cash to pay interest on our indebtedness, and our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure. Beginning with financial results reported for the second quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA also exclude our portion of interest, taxes, and depreciation expense from our refining and logistics investments acquired on June 1, 2023, as part of the Billings Acquisition. 33 Beginning with financial results reported for the fourth quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA excludes all hedge losses (gains) associated with our Washington ending inventory and LIFO layer increment impacts associated with our Washington inventory. In addition, we have modified our environmental obligation mark-to-market adjustment to include only the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington Climate Commitment Act (“Washington CCA”) and Clean Fuel Standard. This modification was made as part of our change in how we estimate our environmental obligation liabilities. Beginning with financial results reported for the fourth quarter of 2023, Adjusted Net Income (loss) excludes unrealized interest rate derivative losses (gains) and all Laramie Energy related impacts with the exception of cash distributions. We have recast Adjusted Net Income (Loss) for prior periods when reported to conform to the modified presentation. Beginning with financial results reported for the first quarter of 2024, Adjusted Net Income (loss) also excludes other non-operating income and expenses. This modification improves comparability between periods by excluding income and expenses resulting from non-operating activities. Adjusted Gross Margin Adjusted Gross Margin is defined as operating income (loss) excluding: • operating expense (excluding depreciation); • depreciation and amortization (“D&A”); • Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments; • impairment expense; • loss (gain) on sale of assets, net; • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory); • Environmental obligation mark-to-market adjustment (which represents the mark-to-market losses (gains) associated with our net RINs liability and our net obligation associated with the Washington Climate Commitment Act and Clean Fuel Standard); and • unrealized loss (gain) on derivatives. 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 March 31, 2024 Refining Logistics Retail Operating income $ 22,600 $ 20,374 $ 10,996 Operating expense (excluding depreciation) 126,468 3,812 22,980 Depreciation and amortization 22,270 6,775 3,116 Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 718 928 — Inventory valuation adjustment 625 — — Environmental obligation mark-to-market adjustments (10,263) — — Unrealized loss on derivatives 44,692 — — Loss (gain) on sale of assets, net — 61 (10) Adjusted Gross Margin (1) $ 207,110 $ 31,950 $ 37,082 34 Three months ended March 31, 2023 Refining Logistics Retail Operating income $ 263,137 $ 12,608 $ 13,474 Operating expense (excluding depreciation) 58,882 3,447 20,791 Depreciation and amortization 15,723 5,034 3,079 Inventory valuation adjustment 20,858 — — Environmental obligation mark-to-market adjustments (133,301) — — Unrealized gain on derivatives (13,670) — — Adjusted Gross Margin (1) $ 211,629 $ 21,089 $ 37,344 ____________________________________________________________________________ (1) For the three months ended March 31, 2024 and 2023, there was no impairment expense and LIFO liquidation adjustment recorded in Operating income (loss). For the three months ended March 31, 2023, there was no (gain) loss on sale of assets recorded in Operating income (loss). Adjusted Net Income (Loss) and Adjusted EBITDA Adjusted Net Income (Loss) is defined as Net income (loss) excluding: • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory); • Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our RINs and Washington CCA and Clean Fuel Standard); • unrealized (gain) loss on derivatives; • acquisition and integration costs; • redevelopment and other costs related to Par West; • debt extinguishment and commitment costs; • increase in (release of) tax valuation allowance and other deferred tax items; • changes in the value of contingent consideration and common stock warrants; • severance costs and other non-operating expense (income); • (gain) loss on sale of assets; • impairment expense; • impairment expense associated with our investment in Laramie Energy; and • Par’s share of equity losses from Laramie Energy, LLC, excluding cash distributions. Adjusted EBITDA is defined as Adjusted Net Income (Loss) excluding: • D&A; • interest expense and financing costs, net, excluding interest rate derivative loss (gain); • cash distributions from Laramie Energy, LLC to Par; • Par's portion of interest, taxes, and depreciation expense from refining and logistics investments; and • income tax expense (benefit) excluding the increase in (release of) tax valuation allowance. 35 The following table presents a reconciliation of Adjusted Net Income 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 March 31, 2024 2023 Net Income (Loss) $ (3,751) $ 237,890 Inventory valuation adjustment 625 20,858 Environmental obligation mark-to-market adjustments (10,263) (133,301) Unrealized loss (gain) on derivatives 43,848 (13,670) Par West redevelopment and other costs 1,971 2,750 Acquisition and integration costs 243 5,271 Debt extinguishment and commitment costs — 17,720 Changes in valuation allowance and other deferred tax items (1) (2,631) — Severance costs and other non-operating expense (2) 16,138 — Loss on sale of assets, net 51 — Equity earnings from Laramie Energy, LLC, excluding cash distributions (4,563) — Adjusted Net Income (3) 41,668 137,518 Depreciation and amortization 32,656 24,360 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 18,728 16,250 Laramie Energy, LLC cash distributions to Par — (10,706) Par's portion of interest, taxes, and depreciation expense from refining and logistics investments 1,646 — Income tax expense — 213 Adjusted EBITDA (3) $ 94,698 $ 167,635 ________________________________________ (1) For the three months ended March 31, 2024, we recognized a non-cash deferred tax benefit of $2.6 million related to deferred state and federal tax liabilities. This tax benefit is included in Income tax expense (benefit) on our consolidated statements of operations. For the three months ended March 31, 2023, we did not have any adjustments to our valuation allowance and other deferred tax items. (2) For t he three months ended March 31, 2024, we incurred $13.1 million of stock-based compensation expenses associated with accelerated vesting of equity awards and modification of vested equity awards related to our CEO transition and $2.3 million for an estimated legal settlement unrelated to current operating activities. (3) For the three months ended March 31, 2024 and 2023, there was no change in value of contingent consideration, change in value of common stock warrants, impairment expense, impairments associated with our investment in Laramie Energy, or our share of Laramie Energy’s asset impairment losses in excess of our basis difference. Please read the Non-GAAP Performance Measures discussion above for information regarding changes to the components of Adjusted Net Income (Loss) and Adjusted EBITDA made during the reporting periods. Factors Impacting Segment Results Operating Income Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Refining. Operating income for our refining segment was $22.6 million for the three months ended March 31, 2024, a decrease of $240.5 million compared to operating income of $263.1 million for the three months ended March 31, 2023. The decrease was primarily driven by: • $131.8 million related to decreased crack spreads at our refineries in our legacy portfolio, • an increase in consolidated environmental costs across all our refineries of $125.9 million, primarily associated with a gain of $102.1 million related to settlements in 2023 with no similar gain in 2024, • $41.0 million related to higher inventory financing costs driven by changes in commodity prices, 36 • a decrease of $17.7 million driven by a 5.2% decrease in refined product sales across our legacy refineries, and • an increase in operating expenses of $9.5 million, excluding the impact of the Billings Acquisition, partially offset by: • a decrease in purchased product costs of $42.0 million at our Hawaii refinery, • a $16.0 million favorable change in inventory valuation adjustments, • a $10.9 million contribution from the Billings Acquisition, • $7.0 million related to a favorable change in crude oil differentials at our refineries in our legacy portfolio, and • a $5.0 million favorable FIFO change at our Wyoming refinery. Logistics. Operating income for our logistics segment was $20.4 million for the three months ended March 31, 2024, an increase of $7.8 million compared to $12.6 million for the three months ended March 31, 2023. The increase was primarily due to a $7.7 million contribution from the Billings Acquisition logistics assets acquired in June 2023. Retail. Operating income for our retail segment was $11.0 million for the three months ended March 31, 2024, a decrease of $2.5 million compared to $13.5 million for the three months ended March 31, 2023. The decrease was primarily due to a $2.2 million increase in operating expenses driven by higher employee costs. Gross margin remained relatively consistent in the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Adjusted Gross Margin Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Refining. For the three months ended March 31, 2024, our refining Adjusted Gross Margin was $207.1 million, a decrease of $4.5 million compared to $211.6 million for the three months ended March 31, 2023. The decrease was primarily driven by a decrease of $131.8 million related to decreased crack spreads across our legacy refining portfolio, a decrease of $17.7 million related to lower refined product sales volumes across our legacy portfolio, a decrease of $17.3 million primarily related to higher feedstock costs across our legacy refining portfolio, and a decrease of $15.6 million related to higher inventory financing costs, partially offset by $66.8 million contributed by the Montana refinery acquired in June 2023, an improvement of $52.4 million related to lower purchased product costs across our legacy refining portfolio, favorable derivative changes of $25.8 million, and favorable FIFO adjustments of $21.0 million driven by a decrease in feedstock costs. Other factors impacting refining results are described below. • Adjusted Gross Margin for the Hawaii refinery decreased by $5.11 per barrel from $19.11 per barrel during the three months ended March 31, 2023 to $14.00 per barrel during the three months ended March 31, 2024, including 10 days of reduced production for required maintenance in March 2024. The decrease in Adjusted Gross Margin was primarily due to declining crack spreads, partially offset by lower purchased product and feedstock costs. The Singapore 3-1-2 index declined from $21.22 in the first quarter of 2023 to $18.67 in the first quarter of 2024. • Adjusted Gross Margin for the Washington refinery decreased by $4.94 per barrel from $11.07 per barrel during the three months ended March 31, 2023 to $6.13 per barrel during the three months ended March 31, 2024, inclusive of a 15-day planned maintenance in March 2024. The decrease was primarily due to declining crack spreads, higher inventory financing expenses, and an 11% decrease in refined product sales, partially offset by a favorable change in derivative activities, favorable environmental costs, and lower purchased product costs. The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $25.30 in the first quarter of 2023 to $20.48 in the first quarter of 2024. • Adjusted Gross Margin for the Wyoming refinery decreased by $12.70 per barrel from $27.54 per barrel during the three months ended March 31, 2023 to $14.84 per barrel during the three months ended March 31, 2024, primarily due to lower regional crack spreads, partially offset by lower feedstock costs and a favorable FIFO change of $5.0 million. The RVO Adjusted USGC 3-2-1 index decreased from $26.55 in the first quarter of 2023 to $21.34 in the first quarter of 2024. Logistics. For the three months ended March 31, 2024, our logistics Adjusted Gross Margin was $32.0 million, an increase of $10.9 million compared to $21.1 million for the three months ended March 31, 2023. The increase is primarily due to $10.9 million contributed by the Billings Acquisition logistics assets acquired in June 2023. Retail. For the three months ended March 31, 2024, our retail Adjusted Gross Margin was $37.1 million, a decrease of $0.2 million compared to $37.3 million for the three months ended March 31, 2023. The decrease was primarily due to a 12% decrease in fuel margins, partially offset by 9% higher fuel sales volumes and 11% higher merchandise sales margins in the three months ended March 31, 2024 compared to the comparable period in 2023. 37 Discussion of Consolidated Results Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Revenues. For the three months ended March 31, 2024, revenues were $2.0 billion, a $0.3 billion increase compared to $1.7 billion for the three months ended March 31, 2023. The increase was primarily due to a $0.5 billion contribution from the Billings Acquisition, partially offset by a 5% decrease in refining sales volumes across our legacy refinery portfolio during the quarter and a decrease in average product crack spreads discussed below. The 3-1-2 Singapore Crack Spread, RVO Adjusted Pacific Northwest 3-1-1-1, and RVO Adjusted USGC 3-2-1 declined 12%, 19%, and 20%, respectively, compared to the first quarter of 2023. Please read our key operating statistics for further information. Revenues at our retail segment increased $4.5 million primarily due to a 9% increase in volumes. Cost of Revenues (Excluding Depreciation). For the three months ended March 31, 2024, cost of revenues (excluding depreciation) was $1.7 billion, an increase of $0.4 billion when compared to $1.3 billion for the three months ended March 31, 2023. The increase was primarily driven by a $0.4 billion contribution from the Billings Acquisition. Operating Expense (Excluding Depreciation). For the three months ended March 31, 2024, operating expense (excluding depreciation) was $153.3 million, a $70.2 million increase when compared to $83.1 million for the three months ended March 31, 2023. The increase was driven by a $60.7 million contribution from the Billings Acquisition, a $4.3 million increase in consulting services, and a $2.5 million increase in repairs and maintenance expenses. Depreciation and Amortization . For the three months ended March 31, 2024, D&A was $32.7 million, an increase of $8.3 million compared to $24.4 million for the three months ended March 31, 2023. The increase was primarily driven by the $8.5 million of D&A attributable to the Billings Acquisition. General and Administrative Expense (Excluding Depreciation). For the three months ended March 31, 2024, general and administrative expense (excluding depreciation) was $41.8 million, an increase of $22.5 million compared to $19.3 million for the three months ended March 31, 2023. The increase was primarily due to a $15.9 million increase in employee costs driven by $13.1 million of stock based compensation expenses related to CEO transition costs in the first quarter of 2024 and an increase of $2.6 million in payroll expenses due primarily to an increase in employee headcount, a $4.2 million increase in renewable development expense, and $1.6 million related to the Billings Acquisition. Equity earnings from refining and logistics investments. During the three months ended March 31, 2024, Equity earnings from refining and logistics investments were $6.1 million related to YELP and YPLC. For the three months ended March 31, 2024, our proportionate share of YELP’s net income and YPLC’s net income was $4.5 million and $1.9 million, respectively. Please read Note 3—Refining and Logistics Equity Investments for further information. Acquisition and Integration Expense. During the three months ended March 31, 2024, we incurred an immaterial amount of acquisition and integration costs. For the three months ended March 31, 2023, we incurred $5.3 million of acquisition and integration costs related to the Billings Acquisition. Please read Note 5—Acquisitions for further information. Par West redevelopment and other costs. For the three months ended March 31, 2024, Par West redevelopment and other costs were $2.0 million, a decrease of $0.8 million compared to $2.8 million for the three months ended March 31, 2023, primarily due to a decrease in redevelopment activities. Interest Expense and Financing Costs, Net . For the three months ended March 31, 2024, our interest expense and financing costs were $17.9 million, an increase of $1.6 million compared to $16.3 million for the three months ended March 31, 2023. The increase was primarily due to a $2.9 million increase in interest expense due to higher outstanding debt balances, partly offset by an increase of $1.2 million in interest income from our investment accounts opened in the first quarter of 2023. Please read Note 11—Debt to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further information. Debt Extinguishment and Commitment Costs. During the three months ended March 31, 2024, we incurred no debt extinguishment and commitment costs. For the three months ended March 31, 2023 we incurred $17.7 million of debt extinguishment and commitment costs in connection with the refinancing of our long-term debt in the first quarter of 2023. Please read Note 11—Debt to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further information. 38 Income Taxes. For the three months ended March 31, 2024, we recorded income tax benefit of $2.6 million primarily related our first quarter of 2024 pre-tax net loss. For the three months ended March 31, 2023, we recorded income tax expense of $0.2 million primarily related to increased taxable income. Consolidating Condensed Financial Information On February 28, 2023, Par Petroleum, LLC (“Par Borrower”) entered into the Term Loan Credit Agreement (the “Term Loan Credit Agreement”) due 2030 with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. The Term Loan Credit Agreement was co-issued by Par Petroleum Finance Corp. (together with the Par Borrower, the “Term Loan Borrowers”), which has no independent assets or operations. The Term Loan Credit Agreement is guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc. (the “Parent”) and is guaranteed on a senior secured basis by all of the subsidiaries of Par Borrower. The Term Loan Credit Agreement proceeds were used to refinance our existing Term Loan B Facility and repurchase our outstanding 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, all three of which had similar guarantees that were replaced by those on the Term Loan Credit Agreement. The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Borrower and its consolidated subsidiaries’ accounts (which are all guarantors of the Term Loan Credit Agreement), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the Term Loan Credit Agreement 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). 39 As of March 31, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 12,064 $ 216,234 $ — $ 228,298 Restricted cash 341 — — 341 Trade accounts receivable — 448,479 — 448,479 Inventories — 1,133,069 — 1,133,069 Prepaid and other current assets 4,718 43,602 — 48,320 Due from related parties 371,464 — (371,464) — Total current assets 388,587 1,841,384 (371,464) 1,858,507 Property, plant, and equipment Property, plant, and equipment 22,327 1,582,028 3,956 1,608,311 Less accumulated depreciation and amortization (16,836) (483,581) (3,358) (503,775) Property, plant, and equipment, net 5,491 1,098,447 598 1,104,536 Long-term assets Operating lease right-of-use (“ROU”) assets 6,895 334,510 — 341,405 Refining and logistics equity investments — — 88,315 88,315 Investment in Laramie Energy, LLC — — 18,842 18,842 Investment in subsidiaries 1,084,824 — (1,084,824) — Intangible assets, net — 10,254 — 10,254 Goodwill — 126,678 2,597 129,275 Other long-term assets 726 96,579 123,237 220,542 Total assets $ 1,486,523 $ 3,507,852 $ (1,222,699) $ 3,771,676 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 4,226 $ — $ 4,226 Obligations under inventory financing agreements — 662,688 — 662,688 Accounts payable 5,779 430,409 — 436,188 Accrued taxes 12 36,780 — 36,792 Operating lease liabilities 14 68,827 — 68,841 Other accrued liabilities 3,278 233,547 2,202 239,027 Due to related parties 156,941 198,303 (355,244) — Total current liabilities 166,024 1,634,780 (353,042) 1,447,762 Long-term liabilities Long-term debt, net of current maturities — 635,283 — 635,283 Finance lease liabilities 558 17,034 (4,217) 13,375 Operating lease liabilities 8,602 274,497 — 283,099 Other liabilities — 137,956 (57,138) 80,818 Total liabilities 175,184 2,699,550 (414,397) 2,460,337 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 590 — — 590 Additional paid-in capital 872,954 242,505 (242,505) 872,954 Accumulated earnings (deficit) 429,675 559,784 (559,784) 429,675 Accumulated other comprehensive income (loss) 8,120 6,013 (6,013) 8,120 Total stockholders’ equity 1,311,339 808,302 (808,302) 1,311,339 Total liabilities and stockholders’ equity $ 1,486,523 $ 3,507,852 $ (1,222,699) $ 3,771,676 40 As of December 31, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 10,369 $ 268,711 $ 27 $ 279,107 Restricted cash 339 — — 339 Trade accounts receivable — 367,249 — 367,249 Inventories — 1,160,395 — 1,160,395 Prepaid and other current assets 4,767 177,638 — 182,405 Due from related parties 380,159 — (380,159) — Total current assets 395,634 1,973,993 (380,132) 1,989,495 Property, plant, and equipment Property, plant, and equipment 21,350 1,552,496 3,955 1,577,801 Less accumulated depreciation and amortization (16,487) (458,616) (3,310) (478,413) Property, plant, and equipment, net 4,863 1,093,880 645 1,099,388 Long-term assets Operating lease right-of-use (“ROU”) assets 7,005 339,449 — 346,454 Refining and logistics equity investments — — 87,486 87,486 Investment in Laramie Energy, LLC — — 14,279 14,279 Investment in subsidiaries 1,070,518 — (1,070,518) — Intangible assets, net — 10,918 — 10,918 Goodwill — 126,678 2,597 129,275 Other long-term assets 726 65,323 120,606 186,655 Total assets $ 1,478,746 $ 3,610,241 $ (1,225,037) $ 3,863,950 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 4,255 $ — $ 4,255 Obligations under inventory financing agreements — 594,362 — 594,362 Accounts payable 4,991 386,334 — 391,325 Accrued taxes — 40,064 — 40,064 Operating lease liabilities — 72,833 — 72,833 Other accrued liabilities 947 415,468 5,347 421,762 Due to related parties 128,922 232,803 (361,725) — Total current liabilities 134,860 1,746,119 (356,378) 1,524,601 Long-term liabilities Long-term debt, net of current maturities — 646,603 — 646,603 Finance lease liabilities — 16,693 (4,255) 12,438 Operating lease liabilities 8,462 274,055 — 282,517 Other liabilities — 119,618 (57,251) 62,367 Total liabilities 143,322 2,803,088 (417,884) 2,528,526 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 597 — — 597 Additional paid-in capital 860,797 242,505 (242,505) 860,797 Accumulated earnings (deficit) 465,856 558,581 (558,581) 465,856 Accumulated other comprehensive income (loss) 8,174 6,067 (6,067) 8,174 Total stockholders’ equity 1,335,424 807,153 (807,153) 1,335,424 Total liabilities and stockholders’ equity $ 1,478,746 $ 3,610,241 $ (1,225,037) $ 3,863,950 41 Three Months Ended March 31, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 1,980,831 $ 4 $ 1,980,835 Operating expenses Cost of revenues (excluding depreciation) — 1,747,478 — 1,747,478 Operating expense (excluding depreciation) — 153,260 — 153,260 Depreciation and amortization 349 32,260 47 32,656 General and administrative expense (excluding depreciation) 17,785 23,983 (13) 41,755 Equity earnings from refining and logistics investments — — (6,094) (6,094) Acquisition and integration costs — 243 — 243 Par West redevelopment and other costs — 1,971 — 1,971 Loss on sale of assets, net — 51 — 51 Total operating expenses 18,134 1,959,246 (6,060) 1,971,320 Operating income (loss) (18,134) 21,585 6,064 9,515 Other income (expense) Interest expense and financing costs, net 30 (18,004) 90 (17,884) Other income (expense), net (8) (2,567) (1) (2,576) Equity earnings (losses) from subsidiaries 14,360 — (14,360) — Equity earnings from Laramie Energy, LLC — — 4,563 4,563 Total other income (expense), net 14,382 (20,571) (9,708) (15,897) Income (loss) before income taxes (3,752) 1,014 (3,644) (6,382) Income tax benefit (expense) (1) — 189 2,442 2,631 Net income (loss) $ (3,752) $ 1,203 $ (1,202) $ (3,751) Adjusted EBITDA $ (9,487) $ 96,429 $ 7,756 $ 94,698 42 Three Months Ended March 31, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 1,685,197 $ 12 $ 1,685,209 Operating expenses Cost of revenues (excluding depreciation) — 1,289,020 — 1,289,020 Operating expense (excluding depreciation) — 83,120 — 83,120 Depreciation and amortization 373 23,939 48 24,360 General and administrative expense (excluding depreciation) 5,850 13,436 — 19,286 Acquisition and integration costs 5,271 — — 5,271 Par West redevelopment and other costs — 2,750 — 2,750 Total operating expenses 11,494 1,412,265 48 1,423,807 Operating income (11,494) 272,932 (36) 261,402 Other income (expense) Interest expense and financing costs, net (8) (16,333) 91 (16,250) Debt extinguishment and commitment costs — (17,720) — (17,720) Other income (expense), net (7) (27) (1) (35) Equity earnings (losses) from subsidiaries 249,544 — (249,544) — Equity earnings from Laramie Energy, LLC — — 10,706 10,706 Total other income (expense), net 249,529 (34,080) (238,748) (23,299) Income (loss) before income taxes 238,035 238,852 (238,784) 238,103 Income tax benefit (expense) (1) (145) (58,540) 58,472 (213) Net income (loss) $ 237,890 $ 180,312 $ (180,312) $ 237,890 Adjusted EBITDA $ (5,857) $ 173,481 $ 11 $ 167,635 _______________________________________ (1) The income tax benefit (expense) of the Parent Guarantor and Par Borrower 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. 43 Non-GAAP Financial Measures Adjusted EBITDA for the supplemental consolidating condensed financial information, which is segregated at the “Parent Guarantor,” “Par Borrower and Subsidiaries,” and “Non-Guarantor Subsidiaries and Eliminations” levels, is calculated in the same manner as for the Par Pacific Holdings, Inc. Adjusted EBITDA calculations. 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 March 31, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ (3,752) $ 1,203 $ (1,202) $ (3,751) Inventory valuation adjustment — 625 — 625 Environmental obligation mark-to-market adjustments — (10,263) — (10,263) Unrealized loss on derivatives — 43,848 — 43,848 Acquisition and integration costs — 243 — 243 Par West redevelopment and other costs — 1,971 — 1,971 Severance costs and other non-operating expense (2) 8,306 7,832 — 16,138 Loss (gain) on sale of assets, net — 51 — 51 Equity earnings from Laramie Energy, LLC, excluding cash distributions — — (4,563) (4,563) Depreciation and amortization 349 32,260 47 32,656 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) (30) 18,848 (90) 18,728 Equity losses (income) from subsidiaries (14,360) — 14,360 — Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 1,646 1,646 Income tax expense (benefit) — (189) (2,442) (2,631) Adjusted EBITDA (1) $ (9,487) $ 96,429 $ 7,756 $ 94,698 Three Months Ended March 31, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 237,890 $ 180,312 $ (180,312) $ 237,890 Inventory valuation adjustment — 20,858 — 20,858 Environmental obligation mark-to-market adjustments — (133,301) — (133,301) Unrealized loss (gain) on derivatives — (13,670) — (13,670) Acquisition and integration costs 5,271 — — 5,271 Par West redevelopment and other costs — 2,750 — 2,750 Debt extinguishment and commitment costs — 17,720 — 17,720 Depreciation and amortization 373 23,939 48 24,360 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 8 16,333 (91) 16,250 Laramie Energy, LLC cash distributions to Par — — (10,706) (10,706) Equity losses (income) from subsidiaries (249,544) — 249,544 — Income tax expense (benefit) 145 58,540 (58,472) 213 Adjusted EBITDA (1) $ (5,857) $ 173,481 $ 11 $ 167,635 _______________________________________ (1) Please read the Non-GAAP Performance Measures and Adjusted Net Income (Loss) and Adjusted EBITDA discussions above for information regarding the components of Adjusted Net Income (Loss) and Adjusted EBITDA. 44 (2) For the three months ended March 31, 2024, we incurred $13.1 million of stock-based compensation expenses associated with accelerated vesting of equity awards and modification of vested equity awards related to our CEO transition an d $2.3 million for an estimated legal settlement unrelated to current operating activities. Liquidity and Capital Resources Our liquidity and capital requirements are primarily a function of our debt maturities and debt service requirements and contractual obligations, capital expenditures, turnaround outlays, and working capital needs. Examples of working capital needs include purchases and sales of commodities and associated margin and collateral requirements, facility maintenance costs, and other costs such as payroll. 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 March 31, 2024 was $575.0 million, consisting of $228.3 million of cash and cash equivalents, $344.8 million of availability under the ABL Credit Facility, and $1.9 million of availability under the J.Aron Discretionary Draw Facility. In addition, we had the ability to issue letters of credit up to $120.0 million under our LC Facility. As of March 31, 2024, we had access to the ABL Credit Facility, the LC Facility, the J. Aron Discretionary Draw Facility, and cash on hand of $228.3 million. In addition, we have the Supply and Offtake Agreement with J. Aron, which is used to finance the majority of the inventory at our Hawaii refinery. 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. Our Supply and Offtake Agreement with J.Aron expires on May 31, 2024, and our LC Facility will mature on July 25, 2024. In the first quarter of 2024 we amended our asset-based loan to permit expanding its capacity from $900 million to $1.4 billion as we plan the refinancing of our existing Hawaii intermediation facility. 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. We may seek to raise additional debt or equity capital to fund acquisitions and any other significant changes to our business or to refinance existing debt. We cannot offer any assurances that such capital will be available in sufficient amounts or at an acceptable cost. We may from time to time seek to retire or repurchase our common stock through cash purchases, in open market purchases, privately negotiated transactions, or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. The Term Loan Credit Agreement may also require annual prepayments of principal with a variable percentage of our excess cash flow, 50% or 25% depending on our consolidated year end secured leverage ratio (as defined in the Term Loan Credit Agreement). Cash Flows The following table summarizes cash activities for the three months ended March 31, 2024 and 2023 (in thousands): Three Months Ended March 31, 2024 2023 Net cash provided by operating activities $ 25,431 $ 139,095 Net cash used in investing activities (22,632) (2,457) Net cash provided by (used in) financing activities (53,606) 33,754 Cash flows for the three months ended March 31, 2024 Net cash provided by operating activities for the three months ended March 31, 2024 was driven primarily b y a net loss of $3.8 million, non-cash charges to operations and non-operating items of approximately $86.4 million, and net cash used for changes in operating assets and liabilities of approximately $57.2 million. Non-cash charges to operations and non-operating items consisted primarily of the following adjustments: 45 • unrealized loss on derivatives contracts of $43.8 million, • depreciation and amortization expenses of $32.7 million, • stock based compensation costs of $16.4 million, and • non-cash interest and financing costs of $1.4 million, partially offset by: • a $2.6 million change in deferred tax assets driven by our net loss during the period and • equity earnings of $6.1 million from our YELP and YPLC investments partially offset by $5.3 million of dividends received from YELP. Net cash used for changes in operating assets and liabilities resulted primarily from: • an $81.6 million increase in crude and refined products inventory driven by higher ending volumes, and • an $81.2 million increase in accounts receivable primarily driven by timing of collections and sales volumes, partially offset by: • decreases in prepaid and other expenses primarily driven by prepayments for crude and • net increases in our Supply and Offtake Agreement obligations and accounts payable. Net cash used in investing activities for the three months ended March 31, 2024 consisted primarily of: • $22.6 million in additions to property, plant, and equipment driven by maintenance projects at our refineries and various profit improvement projects. Net cash used in financing activities was approximately $53.6 million for the three months ended March 31, 2024 and consisted primarily of the following activities: • repurchases of common stock of $34.1 million, • net repayments of debt of $18.6 million primarily driven by ABL Credit Facility activity, and • payments of $3.4 million of deferred loan costs, partially offset by: • net repayment under the J. Aron Discretionary Draw Facility of $2.4 million. Cash flows for the three months ended March 31, 2023 Net cash provided by operating activities for the three months ended March 31, 2023, was driven primarily by net income of $237.9 million, non-cash charges to operations of approximately $21.0 million, and net cash used for changes in operating assets and liabilities of approximately $119.8 million. Non-cash charges to operations consisted primarily of the following adjustments: • depreciation and amortization expenses of $24.4 million, and • debt commitment and extinguishment costs of $17.7 million, partially offset by: • unrealized gain on derivatives contracts of $13.7 million, and • a gain of $10.7 million from our equity investment in Laramie Energy, LLC. Net cash used for changes in operating assets and liabilities resulted primarily from: 46 • a decrease in gross environmental credit obligations primarily related to retirements of a portion of our 2020 and all our 2021 RVO liabilities across all our refineries, partially offset by increased obligations related to the Washington CCA and increased gross RVO primarily related to current period production volumes, and • net decreases in our inventories and accounts receivable resulting from retirements of RINs across all our refineries, lower crude oil and refined product prices and lower inventory volumes at our Hawaii refinery, partially offset by: • net increases in our inventory financing agreement obligations and accounts payable, and • decreases in prepaid and other expenses primarily driven by decreases in our derivative collateral. Net cash used in investing activities for the three months ended March 31, 2023 consisted primarily of $13.2 million in additions to property, plant, and equipment driven by maintenance projects at our refineries and various profit improvement projects, including improved crude processing equipment at our Hawaii refinery. This was partially offset by a $10.7 million cash distribution received from Laramie Energy, LLC. Net cash provided by financing activities was approximately $33.8 million for the three months ended March 31, 2023 and consisted primarily of the following activities: • net repayments of debt of $20.5 million primarily driven by the refinancing and consolidation of our debt, and • net repayments under the J. Aron Discretionary Draw Facility and MLC receivable advances of $22.4 million, partially offset by: • aggregate payments of $13 million of deferred loan costs and debt extinguishment costs related to our debt refinancing. Cash Requirements. There have b een no m aterial changes to the cash requirements disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, outside the ordinary course of business except as follows: Debt Refinancing. On March 22, 2024, we entered into the Third Amendment to the ABL Credit Facility, conditional upon the termination of the Company’s existing intermediation agreement with J. Aron, to among other things, increase our total revolver commitment to $1.4 billion, Please read Note 9—Inventory Financing Agreements and Note 11—Debt to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information. Critical Accounting Estimates There have been no m aterial changes to critical accounting estimates disclosed in our Annual Report on Form 10-K for the three months ended March 31, 2024. Forward-Looking Statements Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (“PSLRA”), or in releases made by the SEC, all of which may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties, and other important factors including, without limitation, the Russia-Ukraine war, Israel-Palestine conflict, Houthi attacks in the Red Sea, Iranian activities in the Strait of Hormuz and certain developments in the global crude oil markets, on our business, our customers, and the markets where we operate; our beliefs regarding available capital resources; our beliefs regarding the likely results or impact of certain disputes or contingencies and any potential fines or penalties; our beliefs regarding the fair value of certain assets, and our expectations with respect to laws and regulations, including environmental regulations and related compliance costs and any fines or penalties related thereto; our expectations regarding the sufficiency of our cash flows and liquidity; our expectations regarding anticipated capital expenditures, including the timing and cost of compliance with consent decrees and other enforcement actions; our expectations regarding the impact of the adoption of certain accounting standards; our estimates regarding the fair value of certain indebtedness; estimated costs to settle claims from the Delta bankruptcy; the estimated value of, and our ability to settle, legal claims remaining to be settled against third parties; our expectations regarding the synergies or other benefits of our acquisitions; our expectations regarding certain 47 tax liabilities and debt obligations; management’s assumptions about future events into our existing business, the anticipated synergies and other benefits of the recently acquired ExxonMobil Billings refinery and associated marketing and logistics assets (the “Acquisition”), including renewable growth opportunities; the anticipated financial and operating results of the Acquisition, and the effect on the Company’s cash flows and profitability (including Adjusted EBITDA and Adjusted Net Income); our ability to raise additional debt or equity capital; our ability to make strategic investments in business opportunities; and the estimates, assumptions, and projections regarding future financial condition, results of operations, liquidity, and cash flows. 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. 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. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act, and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. The forward-looking statements contained in this Quarterly Report on Form 10-Q are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control, including those set out in our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q under “Risk Factors.” In addition, management’s assumptions about future events may prove to be inaccurate. All readers are cautioned that the forward-looking statements contained in this Quarterly Report on Form 10-Q are not guarantees of future performance; 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 Estimates 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. There can be no guarantee that the operational and financial measures the Company has taken, and may take in the future, will be fully effective. We do not intend to update or revise any forward-looking statements as a result of new information, future events, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.