What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-08 · 473 added, 178 removed, 496 unchanged (57% of the section changed)

3 unchanged sentences

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.

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.

Crude oil pricing increased in the first half of 2024 compared to the first half of 2023.

Brent crude oil pricing averaged $85.03 per barrel in the first half of 2024 compared to $77.73 per barrel in the first half of 2023.

retail gasoline prices remained relatively stable from $3.59 per gallon in the first half of 2023 to $3.52 per gallon in the first half of 2024.

Refined product crack spreads in the first half of 2024 decreased as compared to the first half of 2023.

Energy Information Administration (“EIA”) in its June 2024 short term energy outlook forecasts average Brent crude oil pricing of $85 per barrel in the second half of 2024 due to strong global inventory draws in the first half of 2024 driven by less Organization of the Petroleum Exporting Countries (“OPEC”) production.

In 2023, OPEC announced several voluntary production cuts.

Russia announced on February 10, 2023, that it would cut its oil production by 500,000 barrels a day (5 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.

Russia announced on February 10, 2023, that it would cut its oil production by 500,000 barrels a day (5% of its output), as a response to imposed sanctions on the country’s oil trade.

In June 2023, OPEC extended oil output cuts of 3.66 million barrels a day, or about 5% of daily global demand, until the end of 2024, including a Russian cut in oil exports of 300,000 barrels a day until the end of 2023.

In November 2023 OPEC announced additional voluntary production cuts of 1.7 million barrels a day, thus totaling about 2.2 million barrels a day, from January through March 2024.

On March 3, 2024, OPEC announced an extension of its November 2023 voluntary production cut through June 2024, driving down supply, as demand increases due to spring and summer travel seasons in the Northern Hemisphere.

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.

On June 2, 2024, OPEC agreed to extend the latest cut of 2.2 million barrels a day until the end of September and gradually phase it out from October on a monthly basis.

Additionally, geopolitical tensions in the Middle East and the Red Sea region continued to escalate in the first half of 2024 putting upward pressure on prices.

The overall effect of these conflicts and associated actions taken to limit the purchase of Russian petroleum products impacted freight movements and raised the operating costs of many European and other refineries.

Energy prices are, among other factors, indicators of inflation.

The overall energy price index increased 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.

The overall energy price index increased 4.3% year over year as of June 30, 2024.

While inflation has worsened relative to the prior year, we do not believe that inflation has had a material effect on our business, financial condition, or results of operations in the first half of 2024.

Please read Item 1A.

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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.

Three months ended June 30, 2024 compared to the three months ended June 30, 2023

Our financial results for the second quarter of 2024 declined from net income of $30.0 million for the three months ended June 30, 2023 to $18.6 million for the three months ended June 30, 2024.

The decrease was primarily driven by a $5.5 million increase in interest expense and financing costs, net, a $4.7 million increase in income tax expense, a $2.9 million decrease in our refining segment operating income, a $2.7 million decrease in our logistics segment operating income, a $1.5 million increase in debt extinguishment and commitment costs, and a $1.4 million decrease in equity earnings from Laramie Energy, LLC, partially offset by a $7.4 million decrease in acquisition and integration expenses related to our Billings Acquisition.

Please read the discussions of segment and consolidated results below for additional information.

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.

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).

For the three months ended June 30, 2024, Adjusted EBITDA was $81.6 million compared to $150.8 million for the three months ended June 30, 2023.

The $69.2 million decrease was primarily related to a $42.3 million increase in operating expenses and a decrease of $29.0 million in refining segment Adjusted Gross Margin.

Please read the discussion of Adjusted Gross Margin by Segment and the Discussion of Consolidated Results below for additional information.

For the three months ended June 30, 2024, Adjusted Net Income was $28.5 million compared to $105.0 million for the three months ended June 30, 2023.

The decline was primarily related to the factors described above for the decrease in Adjusted EBITDA, an increase of $5.0 million in interest expense and financing costs, excluding unrealized interest rate derivative losses (gains), and an increase of $3.9 million of D&A, partially offset by a cash distribution of $1.5 million received from Laramie Energy, LLC in the second quarter of 2024.

Six months ended June 30, 2024 compared to the six months ended June 30, 2023

Our financial results declined from net income of $267.9 million for the six months ended June 30, 2023 to $14.9 million for the six months ended June 30, 2024.

The decrease was driven by a $243.5 million decrease in refining segment operating income, a $22.5 million increase in general and administrative expenses, and a $1.6 million decrease in retail segment operating income, partially offset by a $12.5 million decrease in acquisitions and integration expenses related to our Billings Acquisition and a $5.1 million increase in logistics segment operating income.

Please read the discussions of segment and consolidated results below for additional information.

Adjusted EBITDA and Adjusted Net Income.

For the six months ended June 30, 2024, Adjusted EBITDA was $176.3 million compared to $318.5 million for the six months ended June 30, 2023.

The $142.2 million decrease was primarily related to a $112.3 million increase in operating expenses and a decrease of $33.5 million in our refining segment Adjusted Gross Margin.

Please read the discussion of Adjusted Gross Margin by Segment and the Discussion of Consolidated Results below for additional information.

For the six months ended June 30, 2024, Adjusted Net Income was $70.2 million compared to $242.5 million for the six months ended June 30, 2023.

The decline was primarily related to the same factors described above for the decrease in Adjusted EBITDA, an increase of $12.2 million of D&A, a decrease of $9.2 million of cash distributions received from Laramie Energy, LLC, and an increase of $7.5 million of interest expense and financing costs, excluding unrealized interest rate derivative losses (gains) .

The following tables summarize our consolidated results of operations for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 (in thousands).

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

Three Months Ended March 31,

Three Months Ended June 30,

2024 2023 $ Change % Change

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Equity earnings from refining and logistics investments (3,744) (425) (3,319) (781)%

(6,094) — (6,094) NM (1)

Acquisition and integration costs (152) 7,273 (7,425) (102)%

6 unchanged sentences

Debt extinguishment and commitment costs (1,418) 38 (1,456) (3,832)%

Other expense, net (2,576) (35) (2,541) 7,260%

Other income (expense), net (124) 379 (503) (133)%

Equity earnings (losses) from Laramie Energy, LLC (1,360) — (1,360) NM (1)

Total other expense, net (23,336) (14,492)

Income before income taxes 25,305 31,941

Income tax expense (6,667) (1,928) (4,739) 246%

Net income $ 18,638 $ 30,013

Six Months Ended June 30,

2024 2023 $ Change % Change

Revenues $ 3,998,303 $ 3,469,136 $ 529,167 15%

Cost of revenues (excluding depreciation) 3,517,675 2,863,826 653,849 23%

Operating expense (excluding depreciation) 297,340 184,963 112,377 61%

Depreciation and amortization 64,800 52,576 12,224 23%

General and administrative expense (excluding depreciation) 64,923 42,454 22,469 53%

Equity earnings from refining and logistics investments (9,838) (425) (9,413) (2,215)%

Acquisition and integration costs 91 12,544 (12,453) (99)%

Par West redevelopment and other costs 5,042 5,363 (321) (6)%

Loss on sale of assets, net 114 — 114 NM (1)

Total operating expenses 3,940,147 3,161,301

Operating income 58,156 307,835

Other income (expense)

Interest expense and financing costs, net (38,318) (31,159) (7,159) 23%

Debt extinguishment and commitment costs (1,418) (17,682) 16,264 (92)%

Other income (expense), net (2,700) 344 (3,044) (885)%

Equity earnings from Laramie Energy, LLC 3,203 10,706 (7,503) (70)%

Total other expense, net (39,233) (37,791)

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

Income before income taxes 18,923 270,044

Income tax expense (4,036) (2,141) (1,895) 89%

Net income $ 14,887 $ 267,903

________________________________________________________

(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 tables summarize our operating income (loss) by segment for the three and six months ended June 30, 2024 and 2023 (in thousands).

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

Three months ended March 31, 2024 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total

Three months ended June 30, 2024 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total

Revenues $ 1,957,273 $ 72,475 $ 152,842 $ (165,122) $ 2,017,468

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Par West redevelopment and other costs — — — 3,071 3,071

Loss on sale of assets, net — 63 — — 63

Operating income (loss) $ 41,206 $ 18,041 $ 16,053 $ (26,659) $ 48,641

Three months ended June 30, 2023 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total

Revenues $ 1,708,541 $ 64,709 $ 148,396 $ (137,719) $ 1,783,927

Cost of revenues (excluding depreciation) 1,567,605 35,788 109,168 (137,755) 1,574,806

Operating expense (excluding depreciation) 76,971 3,596 21,276 — 101,843

Depreciation and amortization 19,826 5,059 2,732 599 28,216

General and administrative expense (excluding depreciation) — — — 23,168 23,168

Equity earnings from refining and logistics investments — (425) — — (425)

Acquisition and integration costs — — — 7,273 7,273

Par West redevelopment and other costs — — — 2,613 2,613

Operating income (loss) $ 44,139 $ 20,691 $ 15,220 $ (33,617) $ 46,433

________________________________________________________

(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 $165.1 million and $137.7 million for the three months ended June 30, 2024 and 2023, respectively.

Six months ended June 30, 2024 Refining Logistics (1) Retail Corporate, Eliminations and Other (2)

Revenues $ 3,883,889 $ 144,317 $ 292,976 $ (322,879) $ 3,998,303

Cost of revenues (excluding depreciation) 3,539,205 87,075 214,296 (322,901) 3,517,675

Operating expense (excluding depreciation) 242,977 8,513 45,850 — 297,340

Depreciation and amortization 43,961 13,968 5,791 1,080 64,800

Loss (gain) on sale of assets, net — 124 (10) — 114

General and administrative expense (excluding depreciation) — — — 64,923 64,923

Equity earnings from refining and logistics investments (6,060) (3,778) — — (9,838)

Acquisition and integration costs — — — 91 91

Par West redevelopment and other costs — — — 5,042 5,042

Operating income (loss) $ 63,806 $ 38,415 $ 27,049 $ (71,114) $ 58,156

Three months ended March 31, 2023 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total

Six months ended June 30, 2023 Refining Logistics (1) Retail Corporate, Eliminations and Other (2)

Revenues $ 3,323,953 $ 117,097 $ 283,968 $ (255,882) $ 3,469,136

3 unchanged sentences

General and administrative expense (excluding depreciation) — — — 42,454 42,454

Equity earnings from refining and logistics investments — (425) — — (425)

Acquisition and integration costs — — — 12,544 12,544

3 unchanged sentences

(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.

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,

(2) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $322.9 million and $255.9 million for the six months ended June 30, 2024 and 2023, respectively.

Below is a summary of key operating statistics for the refining segment for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Total Refining Segment

Feedstocks Throughput (Mbpd) (1)

179.8 162.3 180.0 147.7

Refined product sales volume (Mbpd) (1)

191.2 168.8 192.0 159.1

Hawaii Refinery

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Production costs per bbl ($/throughput bbl) (3)

4.50 4.33 4.67 4.43

D&A per bbl ($/throughput bbl) 0.57 0.67 0.58 0.70

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Feedstocks Throughput (Mbpd) (1)

37.7 62.6 45.1 62.6

Yield (% of total throughput)

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Refined product sales volume (Mbpd) (1)

48.2 59.3 49.9 59.3

Adjusted Gross Margin per bbl ($/throughput bbl) (2)

$ 16.89 $ 30.98 $ 15.20 $ 30.98

Production costs per bbl ($/throughput bbl) (3)

16.18 8.07 14.09 8.07

D&A per bbl ($/throughput bbl) 1.84 1.85 1.59 1.85

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Washington Refinery

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Production costs per bbl ($/throughput bbl) (3)

3.66 3.98 4.70 4.11

D&A per bbl ($/throughput bbl) 1.83 1.82 2.09 1.81

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Production costs per bbl ($/throughput bbl) (3)

7.08 8.30 7.46 7.85

D&A per bbl ($/throughput bbl) 2.36 2.93 2.56 2.85

3 unchanged sentences

RVO Adjusted Pacific Northwest 3-1-1-1 (5)

22.54 25.13 21.51 25.21

RVO Adjusted USGC 3-2-1 (6)

17.93 21.65 19.63 24.09

Crude Oil Prices (average $ per barrel)

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WTI 80.66 73.56 78.78 74.77

86.42 78.26 83.87 78.63

Bakken Clearbrook

79.95 75.37 77.13 77.25

67.21 60.07 63.33 58.38

Brent M1-M3 1.30 0.44 1.18 0.48

________________________________________________________

(1) Feedstocks throughput and sales volumes per day for the Montana refinery for the three and six months ended June 30, 2023 are calculated based on the 30-day period for which we owned the Montana refinery during the three and six months ended June 30, 2023.

As such, the amounts for the total refining segment represent the sum of the Hawaii, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the three and six months ended June 30, 2023, plus the Montana refinery’s throughput or sales volumes averaged over the period from June 1, 2023, to June 30, 2023.

The 2024 amounts for the total refining segment represent the sum of the Hawaii, Montana, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the three and six months ended June 30, 2024.

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

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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.

Our production costs are included in Operating expense (excluding depreciation) on our condensed consolidated statements of operations, which also includes costs related to our bulk marketing operations and severance costs.

(4) 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,

(5) We believe the RVO Adjusted Pacific Northwest 3-1-1-1 (or three barrels of WTI crude oil converted into one barrel of Pacific Northwest gasoline, one barrel of Pacific Northwest ULSD and one barrel of USGC VGO, less 100% of the RVO cost for gasoline and ULSD) is the most representative market indicator for our operations in Washington.

(6) We believe the RVO Adjusted USGC 3-2-1 (or three barrels of WTI crude oil converted into two barrels of USGC gasoline and one barrel of USGC ULSD, less 100% of the RVO cost) is the most representative market indicator for our operations in Montana and Wyoming.

Below is a summary of key operating statistics for the retail segment for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Retail Segment

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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 March 31, 2024 Refining Logistics Retail

Three months ended June 30, 2024 Refining Logistics Retail

Operating income $ 41,206 $ 18,041 $ 16,053

6 unchanged sentences

Unrealized loss on derivatives 21,141 — —

Loss on sale of assets, net — 63 —

Adjusted Gross Margin (1) $ 176,603 $ 30,759 $ 41,598

Three months ended June 30, 2023 Refining Logistics Retail

Operating income $ 44,139 $ 20,691 $ 15,220

Operating expense (excluding depreciation)

76,971 3,596 21,276

Depreciation and amortization 19,826 5,059 2,732

Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments — 207 —

Inventory valuation adjustment 33,118 — —

Environmental obligation mark-to-market adjustments 9,343 — —

Unrealized loss on derivatives 22,178 — —

Adjusted Gross Margin (1) $ 205,575 $ 29,553 $ 39,228

Six months ended June 30, 2024 Refining Logistics Retail

Operating income $ 63,806 $ 38,415 $ 27,049

Operating expense (excluding depreciation)

242,977 8,513 45,850

Depreciation and amortization 43,961 13,968 5,791

Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 1,379 1,689 —

Loss (gain) on sale of assets, net — 124 (10)

Inventory valuation adjustment (20,476) — —

Environmental obligation mark-to-market adjustments (13,767) — —

Unrealized loss on derivatives 65,833 — —

Adjusted Gross Margin (1) $ 383,713 $ 62,709 $ 78,680

Three months ended March 31, 2023 Refining Logistics Retail

Six months ended June 30, 2023 Refining Logistics Retail

Operating income $ 307,276 $ 33,299 $ 28,694

2 unchanged sentences

Depreciation and amortization 35,549 10,093 5,811

Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments — 207 —

Inventory valuation adjustment 53,976 — —

Environmental obligation mark-to-market adjustments (123,958) — —

Unrealized gain on derivatives (13,670) — —

Unrealized loss on derivatives 8,508 — —

Adjusted Gross Margin (1) $ 417,204 $ 50,642 $ 76,572

____________________________________________________________________________

(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).

(1) For the three and six months ended June 30, 2024 and 2023, there was no impairment expense or LIFO liquidation adjustment recorded in Operating income.

For the three and six months ended June 30, 2023, there was no (gain) loss on sale of assets recorded in Operating income.

Adjusted Net Income (Loss) and Adjusted EBITDA

18 unchanged sentences

• income tax expense (benefit) excluding the increase in (release of) tax valuation allowance.

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,

Net Income (Loss) $ (3,751) $ 237,890

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

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net Income $ 18,638 $ 30,013 $ 14,887 $ 267,903

Inventory valuation adjustment (21,101) 33,118 (20,476) 53,976

Environmental obligation mark-to-market adjustments (3,504) 9,343 (13,767) (123,958)

Unrealized loss (gain) on derivatives 43,848 (13,670)

Unrealized loss on derivatives 21,104 21,635 64,952 7,965

Par West redevelopment and other costs 3,071 2,613 5,042 5,363

2 unchanged sentences

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

6,162 — 3,531 —

Severance costs and other non-operating expense (2)

— 1,070 16,138 1,070

Loss on sale of assets, net 63 — 114 —

Equity earnings from Laramie Energy, LLC, excluding cash distributions

2,845 — (1,718) —

Adjusted Net Income (3) 28,544 105,027 70,212 242,545

3 unchanged sentences

Laramie Energy, LLC cash distributions to Par

(1,485) — (1,485) (10,706)

Par's portion of interest, taxes, and depreciation expense from refining and logistics investments 1,422 207 3,068 207

3 unchanged sentences

________________________________________

(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.

(1) For the three and six months ended June 30, 2024, we recognized a non-cash deferred tax expense of $6.2 million and $3.5 million, respectively, related to deferred state and federal tax liabilities.

This tax benefit is included in Income tax expense (benefit) on our consolidated statements of operations.

For the three 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.

For the three and six months ended June 30, 2023, we did not have any adjustments to our valuation allowance and other deferred tax items.

(2) For t he six months ended June 30, 2024, we incurred $13.1 million of stock-based compensation expenses associated with accelerated vesting of equity awards and modification of vested equity awards related to our CEO transition and $2.3 million f or an estimated legal settlement unrelated to current operating activities.

(3) For the three and six months ended June 30, 2024 and 2023, there was no change in value of contingent consideration, change in value of common stock warrants, impairment expense, impairments associated with our investment in Laramie Energy, or our share of Laramie Energy’s asset impairment losses in excess of our basis difference.

Please read the Non-

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

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,

• 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,

Three months ended June 30, 2024 compared to the three months ended June 30, 2023

Operating income for our refining segment was $41.2 million for the three months ended June 30, 2024, a decrease of $2.9 million compared to operating income of $44.1 million for the three months ended June 30, 2023.

The decrease was primarily driven by lower crack spreads across all the refineries in our legacy portfolio and higher feedstock costs, partially offset by an $11.2 million increase related to a full quarter contribution from the Billings Acquisition and an $8.1 million decrease in environmental costs incurred by our legacy refinery portfolio.

Please read the Adjusted Gross Margin discussion below for additional information.

Operating income for our logistics segment was $18.0 million for the three months ended June 30, 2024, a decrease of $2.7 million compared to $20.7 million for the three months ended June 30, 2023.

The decrease was primarily due to a decrease of $3.7 million in third-party contracts and vessel revenue, partially offset by a decrease in vessel and fuel costs of $1.3 million.

Operating income for our retail segment was $16.1 million for the three months ended June 30, 2024, an increase of $0.9 million compared to $15.2 million for the three months ended June 30, 2023.

The increase was primarily due to a $1.2 million increase in fuel margins, and increased merchandise sales of $0.8 million, partially offset by a $1.6 million increase in operating expenses driven by higher employee costs.

Six months ended June 30, 2024 compared to the six months ended June 30, 2023

Operating income for our refining segment was $63.8 million for the six months ended June 30, 2024, a decrease of $243.5 million compared to $307.3 million for the six months ended June 30, 2023.

The decrease in operating income was primarily driven by:

• a decrease of $221.0 million related to lower crack spreads at our refineries in our legacy portfolio and

• an increase of $124.3 million in consolidated environmental costs across all our refineries in our legacy portfolio, primarily associated with RIN settlement gains recorded in 2023 with no similar gains in 2024.

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.

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.

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.

• an increase of $98.8 million related to favorable changes in crude oil differentials at our refineries in our legacy portfolio.

Operating income for our logistics segment was $38.4 million for the six months ended June 30, 2024, an increase of $5.1 million compared to $33.3 million for the six months ended June 30, 2023.

The increase was primarily due to a $7.3 million increase in contribution from the Billings Acquisition logistics assets acquired in June 2023 partially offset by a $2.5 million decrease in third-party contracts for our logistics services.

Our legacy logistics portfolio consists of our logistics assets, excluding logistics assets from the Billings Acquisition.

Operating income for our retail segment was $27.0 million for the six months ended June 30, 2024, a decrease of $1.6 million compared to $28.7 million for the six months ended June 30, 2023.

The decrease in operating income was primarily due to higher operating expenses of $3.8 million driven by an increase in employee costs, partially offset by increased merchandise sales of $1.8 million, and a $0.5 million increase related to 6% higher fuel sales volumes in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Adjusted Gross Margin

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

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.

Three months ended June 30, 2024 compared to the three months ended June 30, 2023

For the three months ended June 30, 2024, our refining Adjusted Gross Margin was $176.6 million, a decrease of $29.0 million compared to $205.6 million for the three months ended June 30, 2023.

The decrease was primarily driven by a decrease of $29.8 million related to decreased crack spreads across our legacy refining portfolio and a $9.7 million

decline in refined product sales volumes primarily from our Hawaii and Washington refineries, partially offset by lower feedstock costs, and $4.7 million lower environmental expenses.

Other factors impacting refining results are described below.

• 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.

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.

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.

• Adjusted Gross Margin for the Hawaii refinery decreased by $2.01 per barrel from $12.08 per barrel during the three months ended June 30, 2023 to $10.07 per barrel during the three months ended June 30, 2024.

The decrease in Adjusted Gross Margin was primarily due to declining crack spreads and a 5.7% decrease in refined product sales, partially offset by lower feedstock costs.

The Singapore 3-1-2 index declined from $13.72 in the second quarter of 2023 to $12.49 in the second quarter of 2024.

• Adjusted Gross Margin for the Washington refinery decreased by $1.70 per barrel from $6.37 per barrel during the three months ended June 30, 2023 to $4.67 per barrel during the three months ended June 30, 2024.

The decrease was primarily due to declining crack spreads, and a 10% decrease in refined product sales, partially offset by lower feedstock costs and favorable environmental costs.

The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $25.13 in the second quarter of 2023 to $22.54 in the second quarter of 2024.

• Adjusted Gross Margin for the Wyoming refinery decreased by $5.82 per barrel from $20.56 per barrel during the three months ended June 30, 2023 to $14.74 per barrel during the three months ended June 30, 2024, primarily due to lower regional crack spreads, partially offset by a 19% increase in refined product sales, and lower feedstock costs.

The RVO Adjusted USGC 3-2-1 index decreased from $21.65 in the second quarter of 2023 to $17.93 in the second quarter of 2024.

For the three months ended June 30, 2024, our logistics Adjusted Gross Margin was $30.8 million, an increase of $1.2 million compared to $29.6 million for the three months ended June 30, 2023.

The increase is primarily due to a $4.0 million increase in contribution from the Billings Acquisition logistics assets acquired in June 2023, partially offset by a decrease of $1.8 million driven by a 3% reduction in Hawaii throughput.

For the three months ended June 30, 2024, our retail Adjusted Gross Margin was $41.6 million, an increase of $2.4 million compared to $39.2 million for the three months ended June 30, 2023.

The increase was primarily due to 9% higher merchandise sales margins and 4% higher fuel sales volumes in the three months ended June 30, 2024 compared to the comparable period in 2023.

Six months ended June 30, 2024 compared to the six months ended June 30, 2023

For the six months ended June 30, 2024, our refining Adjusted Gross Margin was $383.7 million, a decrease of $33.5 million compared to $417.2 million for the six months ended June 30, 2023.

The decrease was primarily driven by a $157.3 million decline due to lower crack spreads, and a $27.0 million decrease related to a 5% decline in refined product sales volumes primarily from our Hawaii and Washington refineries, partially offset by increased Adjusted Gross Margin contributed by the Montana refinery of $66.6 million, $44.0 million lower purchased product expenses, $22.1 million benefit due to favorable derivative activities, and $12.7 million lower environmental expenses.

Other factors impacting refining results are described below.

• Adjusted Gross Margin for the Hawaii refinery declined by $3.39 per barrel from $15.41 per barrel during the six months ended June 30, 2023 to $12.02 per barrel during the six months ended June 30, 2024, inclusive of 10 days of reduced production for required maintenance in March 2024.

The decrease was primarily due to lower crack spreads, and a 4.4% decrease in sales volumes, partially offset by $44.0 million decrease of purchased product costs.

The Singapore 3-2-1 index declined from $17.45 in the six months ended June 30, 2023 to $15.58 in the six months ended June 30, 2024.

• Adjusted Gross Margin for the Wyoming refinery decreased by $9.22 from $24.05 per barrel during the six months ended June 30, 2023 to $14.83 per barrel during the six months ended June 30, 2024, primarily due to lower regional crack spreads and higher environmental expenses, partially offset by a 7% increase in refined product sales volumes, a favorable FIFO impact of $9.0 million, and an $8.0 million decline in feedstock costs.

The RVO Adjusted USGC 3-2-1 index declined from $24.09 in the six months ended June 30, 2023 to $19.63 in the six months ended June 30, 2024.

• Adjusted Gross Margin for the Washington refinery decreased by $3.36 per barrel from $8.66 per barrel during the six months ended June 30, 2023 to $5.30 per barrel during the six months ended June 30, 2024, inclusive of a 15-day planned maintenance event in March 2024.

The decrease was primarily due to declining crack spreads and an 11% decrease in refined product sales, partially offset by lower feedstock costs.

The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $25.21 in the six months ended June 30, 2023 to $21.51 in the six months ended June 30, 2024.

For the six months ended June 30, 2024, our logistics Adjusted Gross Margin was $62.7 million, an increase of $12.1 million compared to $50.6 million for the six months ended June 30, 2023.

The increase was primarily due to a $14.2 million increased contribution from the Billings Acquisition logistics assets acquired in June 2023 partially offset by an increase in cost of sales driven by $1.3 million of higher fees and variable expenses.

For the six months ended June 30, 2024, our retail Adjusted Gross Margin was $78.7 million, an increase of $2.1 million compared to $76.6 million for the six months ended June 30, 2023.

The increase was primarily due to a 2% increase in merchandise sales.

Other factors impacting results include a 6% increase in fuel sales volumes and a 34% decrease in fuel margins.

Discussion of Consolidated Results

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

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.

Three months ended June 30, 2024 compared to the three months ended June 30, 2023

For the three months ended June 30, 2024, revenues were $2.0 billion, a $0.2 billion increase compared to $1.8 billion for the three months ended June 30, 2023.

The increase was primarily due to a $0.3 billion increased contribution from the Billings Acquisition, which closed June 1, 2023, and $0.1 billion due to higher crude oil prices discussed below, partially offset by a 4% decrease in refining sales volumes primarily driven by our Hawaii and Washington refinery operations during the quarter and a decrease in average product crack spreads also discussed below.

Average WTI crude oil prices increased 10% and average Brent crude oil prices increased 9% as compared to the prior period.

The RVO Adjusted USGC 3-2-1, RVO Adjusted Pacific Northwest 3-1-1-1, and 3-1-2 Singapore Crack Spread declined 17%, 10%, and 9%, respectively, compared to the second quarter of 2023.

Please read our key operating statistics for further information.

Revenues at our retail segment increased $4.5 million primarily due to a 9% increase in volumes.

Revenues at our retail segment increased $4.4 million primarily due to a 4% increase in fuel sales 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.

For the three months ended June 30, 2024, cost of revenues (excluding depreciation) was $1.8 billion, an increase of $0.2 billion when compared to $1.6 billion for the three months ended June 30, 2023.

The increase was primarily driven by a $0.3 billion increased contribution from the Billings Acquisition due to a full quarter under our ownership and higher crude oil prices, partially offset by decreases due to lower refining sales volumes, as discussed above, and lower environmental expenses.

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.

For the three months ended June 30, 2024, operating expense (excluding depreciation) was $144.1 million, a $42.3 million increase when compared to $101.8 million for the three months ended June 30, 2023.

The increase was driven by a $41.1 million increased contribution from the Billings Acquisition.

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.

For the three months ended June 30, 2024, D&A was $32.1 million, an increase of $3.9 million compared to $28.2 million for the three months ended June 30, 2023.

The increase was primarily driven by the $5.0 million of D&A attributable to the Billings Acquisition, partially offset by a $0.9 million decrease in D&A from our Hawaii Refinery primarily driven by assets that became fully depreciated in the second half of 2023, partially offset by cogeneration equipment in Hawaii and other assets placed into service during the period.

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.

For the three months ended June 30, 2024, general and administrative expense (excluding depreciation) was $23.2 million, consistent with $23.2 million for the three months ended June 30, 2023.

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.

During the three months ended June 30, 2024, Equity earnings from refining and logistics investments, related to YELP and YPLC, were $3.7 million, an increase of $3.3 million compared to $0.4 million for the three months ended June 30, 2023.

For the three months ended June 30, 2024, our proportionate share of YELP’s net income and YPLC’s net income was $2.3 million and $1.8 million, respectively.

During the three months ended June 30, 2023, Equity (earnings) from refining and logistics investments were $0.4 million related to YPLC.

There were no equity earnings from YELP for the three months ended June 30, 2023.

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.

During the three months ended June 30, 2024, we incurred an immaterial amount of acquisition and integration costs.

For the three months ended June 30, 2023, we incurred $7.3 million of acquisition and integration costs related to the Billings Acquisition, which closed on June 1, 2023.

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.

For the three months ended June 30, 2024, Par West redevelopment and other costs were $3.1 million, an increase of $0.5 million compared to $2.6 million for the three months ended June 30, 2023, primarily due to an increase 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.

For the three months ended June 30, 2024, our interest expense and financing costs were $20.4 million, an increase of $5.5 million compared to $14.9 million for the three months ended June 30, 2023.

The increase was primarily due to a $5.6 million increase in debt costs, mainly driven by higher interest expenses due to higher ABL Credit Facility balances in 2024 to fund certain inventory purchases at our Hawaii refinery and Washington refinery and a $4.0 million decrease in interest income from our investment accounts.

The increase was partially offset by a $4.2 million decrease in inventory financing costs due to the termination of the Washington Refinery Intermediation Agreement in the fourth quarter of 2023, and termination of our Supply and Offtake Agreement in the second quarter of 2024.

Please read Note 9—Inventory Financing Agreements and Note 11—Debt 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.

During the three months ended June 30, 2024, we incurred $1.4 million of debt extinguishment and commitment costs related to the repricing of our Term Loan Credit Agreement, the termination of our LC Facility and the expiration of our Supply and Offtake Agreement in the second quarter of 2024.

For the three months ended June 30, 2023, we incurred an immaterial amount of debt extinguishment and commitment costs.

Please read Note 9—Inventory Financing Agreements, and Note 11—Debt for further information.

Equity earnings (losses) from Laramie Energy, LLC.

For the three months ended June 30, 2024, Equity losses from Laramie Energy, LLC were $1.4 million.

For the three months ended June 30, 2024, our proportionate share of Laramie Energy’s net loss was $3.0 million, partially offset by $1.6 million of basis difference accretion.

There were no equity earnings from our investment in Laramie Energy, LLC, for the three months ended June 30, 2023.

Please read Note 4 — Investment in Laramie Energy for further discussion.

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.

For the three months ended June 30, 2024, income tax expense was $6.7 million, an increase of $4.7 million compared to $1.9 million for three months ended June 30, 2023, primarily related to higher apportionment factors in the states in which we pay taxes.

For three months ended June 30, 2023, we recorded an income tax expense of $1.9 million primarily related to recording a valuation allowance on our deferred taxes.

Please read Note 18—Income Taxes for further discussion.

Six months ended June 30, 2024 compared to the six months ended June 30, 2023

For the six months ended June 30, 2024, revenues were $4.0 billion, a $0.5 billion increase compared to $3.5 billion for the six months ended June 30, 2023.

The increase was primarily due to an increase of $0.8 billion in the contribution from the Billings Acquisition, which closed on June 1, 2023.

When comparing our legacy refining operations, there were decreases of $0.2 billion in third-party revenues at our refining segment, $0.2 billion related to lower average crack spreads and $0.1 billion related to a 5% decrease in sales volumes primarily from our Hawaii and Washington refineries, partially offset by a $0.1 billion increase due to higher crude oil prices.

The RVO Adjusted USGC 3-2-1, RVO Adjusted Pacific Northwest 3-1-1-1, and 3-1-2 Singapore Crack Spread declined 19%, 15%, and 11%, respectively, compared to 2023.

Average WTI crude oil prices increased 5% and average Brent crude oil prices increased 4% as compared to the prior period.

Revenues at our retail segment increased $9.0 million primarily due to a 6% increase in fuel sales volumes and a $1.2 million increase in merchandise revenue, partially offset by a 3% decrease in fuel prices.

Cost of Revenues (Excluding Depreciation).

For the six months ended June 30, 2024, cost of revenues (excluding depreciation) was $3.5 billion, a $0.7 billion increase compared to $2.9 billion for the six months ended June 30, 2023, primarily driven by a $0.7 billion contribution from the Billings Acquisition.

Operating Expense (Excluding Depreciation).

For the six months ended June 30, 2024, operating expense (excluding depreciation) was $297.3 million, an increase of $112.3 million compared to $185.0 million for the six months ended June 30, 2023.

The increase was primarily driven by a $101.8 million increase in the contribution from the Billings Acquisition, coupled with $6.4 million of higher employee costs and a $4.8 million increase in outside services costs, partially offset by $1.9 million of lower utility and maintenance expenses.

Depreciation and Amortization .

For the six months ended June 30, 2024, D&A was $64.8 million, an increase of $12.2 million compared to $52.6 million for the six months ended June 30, 2023.

The increase was primarily driven by $13.4 million of D&A attributable to the Billings Acquisition, partially offset by a $1.0 million decrease related to catalyst in Hawaii that was fully depreciated in 2023.

General and Administrative Expense (Excluding Depreciation).

For the six months ended June 30, 2024, general and administrative expense (excluding depreciation) was $64.9 million, an increase of $22.4 million compared to $42.5 million for the six months ended June 30, 2023.

The increase was primarily due to a $18.7 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 $5.8 million in payroll expenses due to an increase in employee headcount, a $3.1 million increase in IT expenses, and $2.5 million of expenses related to development of our renewable projects.

Equity earnings from refining and logistics investments.

For the six months ended June 30, 2024, equity earnings from refining and logistics investments were $9.8 million, an increase of $9.4 million compared to $0.4 million for the six months ended June 30, 2023.

For the six months ended June 30, 2024, our proportionate share of YELP’s net income and YPLC’s net income was $6.8 million and $3.7 million, respectively.

Our proportionate share of YPLC’s net income was $0.4 million for the six months ended June 30, 2023.

There were no equity earnings from YELP for the six months ended June 30, 2023.

Please read Note 3—Refining and Logistics Equity Investments for additional information.

Acquisition and Integration Expense.

During the six months ended June 30, 2024, we incurred an immaterial amount of acquisition and integration costs.

For the six months ended June 30, 2023, we incurred $12.5 million of acquisition and integration costs related to the Billings Acquisition, which closed on June 1, 2023.

Please read Note 5—Acquisitions for further information.

Par West redevelopment and other costs.

For the six months ended June 30, 2024, Par West redevelopment and other costs were $5.0 million, a decrease of $0.4 million compared to $5.4 million for the six months ended June 30, 2023, associated with the operation and decommissioning of our Par West facility.

The decrease was primarily due to a decrease in redevelopment activities.

Interest Expense and Financing Costs, Net .

For the six months ended June 30, 2024, our interest expense and financing costs were $38.3 million, an increase of $7.1 million compared to $31.2 million for the six months ended June 30, 2023.

The increase was primarily due to an $8.7 million increase in debt costs, mainly driven by higher interest expenses due to higher ABL Credit Facility balances in 2024 to fund certain inventory purchases at our Hawaii refinery and Washington refinery, and a $5.1 million decrease in interest income from our investment accounts opened in the first quarter of 2023, offset by a $6.7 million decrease in inventory financing costs, due to the termination of the Washington Refinery Intermediation Agreement in the fourth quarter of 2023, and termination of our Supply and Offtake Agreement in the second quarter of 2024.

Please read Note 9—Inventory Financing Agreements, and Note 11—Debt for further information.

Debt Extinguishment and Commitment Costs.

During the six months ended June 30, 2024, we incurred $1.4 million of debt extinguishment and commitment costs primarily related to the repricing of our Term Loan Credit Agreement, the termination of our LC Facility and the expiration of our Supply and Offtake Agreement in the second quarter of 2024.

For the six months ended June 30, 2023, we incurred debt extinguishment and commitment costs of $17.7 million in connection with the refinancing of our long-term debt in the first quarter of 2023.

Please read Note 9—Inventory Financing Agreements, and Note 11—Debt for further information.

Other income (expense), net .

For the six months ended June 30, 2024, other expense was $2.7 million, a decrease of $3.0 million compared to $0.3 million of other income for the six months ended June 30, 2023.

The decrease was primarily due to $2.3 million of 2024 legal expenses unrelated to operating activities with no similar 2023 expenses.

Equity Earnings from Laramie Energy, LLC.

For the six months ended June 30, 2024, Equity earnings from Laramie Energy, LLC were $3.2 million, a decrease of $7.5 million compared to $10.7 million for the six months ended June 30, 2023.

For the six months ended June 30, 2024, the accretion of basis difference was $3.2 million, partially offset by our proportionate share of Laramie Energy’s net loss which was immaterial.

On April 29, 2024, Laramie Energy made a one-time cash distribution to its owners, including us, based on ownership percentage.

Our share of this distribution was $1.5 million.

On March 1, 2023, following a refinancing of certain debt, Laramie Energy was permitted to make a one-time cash distribution to its owners based on ownership percentage.

Our share of this distribution was $10.7 million.

There were no equity earnings from our investment in Laramie Energy, LLC for the six months ended June 30, 2023.

Please read Note 4 — Investment in Laramie Energy for further discussion.

Income Taxes.

For the six months ended June 30, 2024, income tax expense was $4.0 million, an increase of $1.9 million compared to $2.1 million for the six months ended June 30, 2023, primarily related to higher apportionment factors in the states in which we pay taxes.

For the six months ended June 30, 2023, we recorded an income tax expense of $2.1 million primarily related to recording a valuation allowance on our deferred taxes.

Please read Note 18—Income Taxes for further discussion.

Consolidating Condensed Financial Information

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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 March 31, 2024

As of June 30, 2024

Parent Guarantor Par Borrower and Subsidiaries

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Total liabilities and stockholders’ equity $ 1,478,746 $ 3,610,241 $ (1,225,037) $ 3,863,950

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Parent Guarantor Par Borrower and Subsidiaries

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Equity earnings from refining and logistics investments — — (3,744) (3,744)

— — (6,094) (6,094)

Acquisition and integration costs (2) — (152) — (152)

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Interest expense and financing costs, net (30) (20,494) 90 (20,434)

Debt extinguishment and commitment costs — (1,418) — (1,418)

Other income (expense), net (9) (114) (1) (124)

Equity earnings (losses) from subsidiaries 23,635 — (23,635) —

Equity earnings from Laramie Energy, LLC — — 4,563 4,563

Equity earnings (losses) from Laramie Energy, LLC — — (1,360) (1,360)

Total other income (expense), net 23,596 (22,026) (24,906) (23,336)

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Adjusted EBITDA $ (4,051) $ 80,480 $ 5,172 $ 81,601

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Parent Guarantor Par Borrower and Subsidiaries

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General and administrative expense (excluding depreciation) 8,459 14,710 (1) 23,168

Equity earnings from refining and logistics investments — — (425) (425)

Acquisition and integration costs (2) (5,271) 12,544 — 7,273

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Equity earnings (losses) from subsidiaries 34,389 — (34,389) —

Equity earnings from Laramie Energy, LLC — — 10,706 10,706

Equity earnings (losses) from Laramie Energy, LLC — — — —

Total other income (expense), net 34,412 (14,607) (34,297) (14,492)

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Adjusted EBITDA $ (7,942) $ 158,086 $ 686 $ 150,830

Six Months Ended June 30, 2024

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

and Subsidiaries

Revenues $ — $ 3,998,291 $ 12 $ 3,998,303

Operating expenses

Cost of revenues (excluding depreciation) — 3,517,675 — 3,517,675

Operating expense (excluding depreciation) — 297,340 — 297,340

Depreciation and amortization 727 63,978 95 64,800

General and administrative expense (excluding depreciation) 22,365 42,570 (12) 64,923

Equity earnings from refining and logistics investments — — (9,838) (9,838)

Acquisition and integration costs (2) — 91 — 91

Par West redevelopment and other costs — 5,042 — 5,042

Loss on sale of assets, net — 114 — 114

Total operating expenses 23,092 3,926,810 (9,755) 3,940,147

Operating income (loss) (23,092) 71,481 9,767 58,156

Other income (expense)

Interest expense and financing costs, net — (38,498) 180 (38,318)

Debt extinguishment and commitment costs — (1,418) — (1,418)

Other income (expense), net (17) (2,681) (2) (2,700)

Equity earnings (losses) from subsidiaries 37,995 — (37,995) —

Equity earnings (losses) from Laramie Energy, LLC — — 3,203 3,203

Total other income (expense), net 37,978 (42,597) (34,614) (39,233)

Income (loss) before income taxes 14,886 28,884 (24,847) 18,923

Income tax benefit (expense) (1) — (6,771) 2,735 (4,036)

Net income (loss) $ 14,886 $ 22,113 $ (22,112) $ 14,887

Adjusted EBITDA $ (13,538) $ 176,909 $ 12,928 $ 176,299

Six Months Ended June 30, 2023

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

and Subsidiaries

Revenues $ — $ 3,469,072 $ 64 $ 3,469,136

Operating expenses

Cost of revenues (excluding depreciation) — 2,863,826 — 2,863,826

Operating expense (excluding depreciation) — 184,963 — 184,963

Depreciation and amortization 816 51,666 94 52,576

General and administrative expense (excluding depreciation) 14,309 28,146 (1) 42,454

Equity earnings from refining and logistics investments — — (425) (425)

Acquisition and integration costs (2) — 12,544 — 12,544

Par West redevelopment and other costs — 5,363 — 5,363

Total operating expenses 15,125 3,146,508 (332) 3,161,301

Operating income (15,125) 322,564 396 307,835

Other income (expense)

Interest expense and financing costs, net (26) (31,315) 182 (31,159)

Debt extinguishment and commitment costs — (17,682) — (17,682)

Other income (expense), net 34 310 — 344

Equity earnings (losses) from subsidiaries 283,933 — (283,933) —

Equity earnings (losses) from Laramie Energy, LLC — — 10,706 10,706

Total other income (expense), net 283,941 (48,687) (273,045) (37,791)

Income (loss) before income taxes 268,816 273,877 (272,649) 270,044

Income tax benefit (expense) (1) (913) (67,360) 66,132 (2,141)

Net income (loss) $ 267,903 $ 206,517 $ (206,517) $ 267,903

Adjusted EBITDA $ (13,799) $ 331,567 $ 697 $ 318,465

________________________________________

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

(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.

(2) The acquisition and integration expense related to the Billings Acquisition was pushed down from the Parent Guarantor to the Issuer and Subsidiaries upon consummation of the transaction.

Non-GAAP Financial Measures

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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 March 31, 2024

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

Three Months Ended June 30, 2024

Parent Guarantor Par Borrower and Subsidiaries

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Par West redevelopment and other costs — 3,071 — 3,071

Debt extinguishment and commitment costs — 1,418 — 1,418

Severance costs and other non-operating expense (2)

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Loss (gain) on sale of assets, net

Equity earnings from Laramie Energy, LLC, excluding cash distributions — — (4,563) (4,563)

Equity losses from Laramie Energy, LLC, excluding cash distributions — — 2,845 2,845

Depreciation and amortization 378 31,718 48 32,144

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30 20,531 (90) 20,471

Laramie Energy, LLC cash distributions to Par

— — (1,485) (1,485)

Equity losses (income) from subsidiaries (23,635) — 23,635 —

Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 1,422 1,422

Income tax expense (benefit) — (189) (2,442) (2,631)

Income tax expense

— 6,960 (293) 6,667

Adjusted EBITDA (1) $ (4,051) $ 80,480 $ 5,172 $ 81,601

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Parent Guarantor Par Borrower and Subsidiaries

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Environmental obligation mark-to-market adjustments — 9,343 — 9,343

Unrealized loss (gain) on derivatives — (13,670) — (13,670)

Unrealized loss on derivatives — 21,635 — 21,635

Acquisition and integration costs (5,271) 12,544 — 7,273

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Debt extinguishment and commitment costs — (38) — (38)

Severance costs and other non-operating expense (2)

476 594 — 1,070

Depreciation and amortization 443 27,727 46 28,216

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18 15,525 (91) 15,452

Laramie Energy, LLC cash distributions to Par — — (10,706) (10,706)

Equity losses (income) from subsidiaries (34,389) — 34,389 —

Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 207 207

Income tax expense (benefit) 768 8,820 (7,660) 1,928

Adjusted EBITDA (1) $ (7,942) $ 158,086 $ 686 $ 150,830

Six Months Ended June 30, 2024

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

and Subsidiaries

Net income (loss) $ 14,886 $ 22,113 $ (22,112) $ 14,887

Inventory valuation adjustment — (20,476) — (20,476)

Environmental obligation mark-to-market adjustments — (13,767) — (13,767)

Unrealized loss on derivatives — 64,952 — 64,952

Acquisition and integration costs — 91 — 91

Par West redevelopment and other costs — 5,042 — 5,042

Debt extinguishment and commitment costs — 1,418 — 1,418

Severance costs and other non-operating expense (2)

8,844 7,294 — 16,138

Loss on sale of assets, net — 114 — 114

Equity earnings from Laramie Energy, LLC, excluding cash distributions — — (1,718) (1,718)

Depreciation and amortization 727 63,978 95 64,800

Interest expense and financing costs, net, excluding unrealized

interest rate derivative loss (gain)

— 39,379 (180) 39,199

Equity earnings from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives — — (1,485) (1,485)

Equity losses (income) from subsidiaries (37,995) — 37,995 —

Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 3,068 3,068

Income tax expense — 6,771 (2,735) 4,036

Adjusted EBITDA (1) $ (13,538) $ 176,909 $ 12,928 $ 176,299

Six Months Ended June 30, 2023

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

and Subsidiaries

Net income (loss) $ 267,903 $ 206,517 $ (206,517) $ 267,903

Inventory valuation adjustment — 53,976 — 53,976

Environmental obligation mark-to-market adjustments — (123,958) — (123,958)

Unrealized loss on derivatives — 7,965 — 7,965

Acquisition and integration costs — 12,544 — 12,544

Par West redevelopment and other costs — 5,363 — 5,363

Debt extinguishment and commitment costs — 17,682 — 17,682

Severance costs and other non-operating expense (2)

476 594 — 1,070

Depreciation and amortization 816 51,666 94 52,576

Interest expense and financing costs, net, excluding unrealized

interest rate derivative loss (gain)

26 31,858 (182) 31,702

Equity earnings from Laramie Energy, LLC, excluding Par’s share of unrealized loss (gain) on derivatives — — (10,706) (10,706)

Equity losses (income) from subsidiaries (283,933) — 283,933 —

Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 207 207

Income tax expense (benefit) 913 67,360 (66,132) 2,141

Adjusted EBITDA (1) $ (13,799) $ 331,567 $ 697 $ 318,465

________________________________________

(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.

(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.

(2) For the six months ended June 30, 2024, we incurred $13.1 million of stock-based compensation expenses associated with accelerated vesting of equity awards and modification of vested equity awards related to our CEO transition and $2.3 million for an estimated legal settlement unrelated to current operating activities.

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 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.

Our liquidity position as of June 30, 2024 was $520.4 million, consisting of $179.7 million of cash and cash equivalents and $340.8 million of availability under the ABL Credit Facility.

As of June 30, 2024, we had access to the ABL Credit Facility and cash on hand of $179.7 million.

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.

During the second quarter of 2024 our Supply and Offtake Agreement with J.Aron expired and we entered into an Inventory Intermediation Agreement with Citi.

We also early terminated our LC Facility.

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 planned for the refinancing of our Supply and Offtake Agreement.

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.

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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).

The following table summarizes cash activities for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

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).

The following table summarizes cash activities for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended June 30,

Net cash provided by operating activities $ 20,755 $ 312,240

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Net cash provided by (used in) financing activities (62,213) 13,812

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.

Cash flows for the six months ended June 30, 2024

Net cash provided by operating activities for the six months ended June 30, 2024 was driven primarily b y net income of $14.9 million , non-cash charges to operations and non-operating items of approximately $153.2 million, and net cash used for changes in operating assets and liabilities of approximately $147.3 million.

Non-cash charges to operations and non-operating items consisted primarily of the following adjustments:

• unrealized loss on derivatives contracts of $64.9 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.

• depreciation and amortization expenses of $64.8 million, and

• stock based compensation expenses of $19.5 million.

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,

• a $114.0 million increase in accounts receivable primarily related to the timing of collections and sales volumes,

• a $101.3 million increase in inventories primarily related to an increase in refined product, and

• an increase in deferred turnaround expenditures of $42.2 million driven by planned turnaround for our Montana refinery,

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:

• a $54.8 million decreases in prepaid and other expenses primarily related to advances to suppliers for crude purchases utilized in the first half of 2024, and a decrease in collateral for derivative instruments, and

• a net $52.0 million increase in our accounts payable, other accrued liabilities, and operating lease right-of-use assets and liabilities primarily driven by a $157.7 million increase in accounts payable partially offset by a $101.9 million decrease in environmental credit obligation liabilities.

Net cash used in investing activities for the six months ended June 30, 2024 consisted primarily of:

• $59.5 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.

• a $1.5 million cash distribution received from Laramie Energy in the second quarter of 2024.

Net cash used in financing activities was approximately $62.2 million for the six months ended June 30, 2024 and consisted primarily of the following activities:

• payments of $547.6 million for changes in our deferred payment arrangement and the termination of our inventory financing agreement related to the expiration of our Supply and Offtake Agreement in the second quarter of 2024,

• net borrowings of debt of $392.8 million primarily driven by activity in our ABL Credit Facility,

• repurchases of common stock of $103.5 million during the first half of 2024, and

• deferred loan costs payments of $8.2 million related to the closing of the Inventory Intermediation Agreement, and the upsizing of the ABL Credit Facility,

partially offset by:

• proceeds of $203.1 million received related to the step-in of the Inventory Intermediation Agreement in the second quarter of 2024.

Cash flows for the six months ended June 30, 2023

Net cash provided by operating activities for the six months ended June 30, 2023, was driven primarily by net income of $267.9 million, non-cash charges to operations and non-operating items of approximately $76.1 million, and net cash used for changes in operating assets and liabilities of approximately $31.8 million.

Non-cash charges to operations consisted primarily of the following adjustments:

• depreciation and amortization expenses of $24.4 million, and

• depreciation and amortization expenses of $52.6 million,

• debt commitment and extinguishment costs of $17.7 million,

• unrealized loss on derivatives contracts of $7.6 million, and

• stock based compensation costs of $6.1 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.

• a gain of $10.7 million from our equity investment in Laramie Energy.

Net cash used for changes in operating assets and liabilities resulted primarily from:

• 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,

• an increase in our accounts receivable due to the Billings Acquisition,

• a decrease in gross environmental credit obligations primarily related to retirements of a portion of our prior year obligations, partially offset by increase period obligations, and

• a decrease in our inventory financing agreement obligations,

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,

• an increase in our accounts payable, and

• an increase in inventory driven by Washington CCA assets, partially offset by lower crude oil and refined product prices and lower inventory volumes at our Hawaii refinery.

Net cash used in investing activities for the six months ended June 30, 2023 consisted primarily of:

• $608.2 million for the Billings Acquisition, and

• $30.7 million in additions to property, plant, and equipment driven by maintenance projects at our refineries and various profit improvement projects, including construction of a flagship retail store in Washington, improved crude processing equipment at our Hawaii refinery, a co-processing unit at our Tacoma refinery, and various IT infrastructure improvements,

partially offset by:

• a $10.7 million cash distribution received from Laramie Energy, LLC in the first quarter of 2023.

Net cash provided by financing activities was approximately $13.8 million for the six months ended June 30, 2023 and consisted primarily of the following activities:

• net borrowings of debt of $61.3 million primarily driven by the refinancing and consolidation of our debt,

partially offset by:

• net repayment under the J.

Aron Discretionary Draw Facility and MLC receivable advances of $31.4 million, and

• aggregate payments of $17.9 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:

There have b een no material 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.

Aron, to among other things, increase our total revolver commitment to $1.4 billion.

On May 31, 2024, we entered into the Inventory Intermediation Agreement with Citi.

Pursuant to the Inventory Intermediation Agreement, Citi will purchase and deliver crude oil to PHR for use at its refinery located in Kapolei, Hawaii.

The Inventory Intermediation Agreement replaces the Supply and Offtake Agreement between PHR and J.

Aron that was terminated on May 31, 2024.

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.

There have been no m aterial changes to critical accounting estimates disclosed in our Annual Report on Form 10-K for the six months ended June 30, 2024.

Forward-Looking Statements

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our expectations regarding the synergies or other benefits of our acquisitions;

our expectations regarding certain

tax liabilities and debt obligations;

our expectations regarding certain 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;

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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