PAR PACIFIC HOLDINGS, INC. 10-Q

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a growing energy company based in Houston, Texas, that provides both renewable and conventional fuels to the western United States. For more information, please read Note 1—Overview to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Recent Events Affecting Comparability of Periods Crude oil pricing 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. Average U.S. 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. The U.S. 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% 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. 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 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. — Risk Factors on our Annual Report on Form 10-K for the year ended December 31, 2023 for further information. Results of Operations Three months ended June 30, 2024 compared to the three months ended June 30, 2023 Net Income. 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 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. 30 Six months ended June 30, 2024 compared to the six months ended June 30, 2023 Net Income. 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 June 30, 2024 2023 $ Change % Change Revenues $ 2,017,468 $ 1,783,927 $ 233,541 13% Cost of revenues (excluding depreciation) 1,770,197 1,574,806 195,391 12% Operating expense (excluding depreciation) 144,080 101,843 42,237 41% Depreciation and amortization 32,144 28,216 3,928 14% General and administrative expense (excluding depreciation) 23,168 23,168 — —% Equity earnings from refining and logistics investments (3,744) (425) (3,319) (781)% Acquisition and integration costs (152) 7,273 (7,425) (102)% Par West redevelopment and other costs 3,071 2,613 458 18% Loss on sale of assets, net 63 — 63 NM (1) Total operating expenses 1,968,827 1,737,494 Operating income 48,641 46,433 Other income (expense) Interest expense and financing costs, net (20,434) (14,909) (5,525) 37% Debt extinguishment and commitment costs (1,418) 38 (1,456) (3,832)% 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 31 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 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 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 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 Cost of revenues (excluding depreciation) 1,779,810 44,278 111,244 (165,135) 1,770,197 Operating expense (excluding depreciation) 116,509 4,701 22,870 — 144,080 Depreciation and amortization 21,691 7,193 2,675 585 32,144 General and administrative expense (excluding depreciation) — — — 23,168 23,168 Equity earnings from refining and logistics investments (1,943) (1,801) — — (3,744) Acquisition and integration costs — — — (152) (152) 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 32 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) Total 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 Six months ended June 30, 2023 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 3,323,953 $ 117,097 $ 283,968 $ (255,882) $ 3,469,136 Cost of revenues (excluding depreciation) 2,845,275 67,087 207,396 (255,932) 2,863,826 Operating expense (excluding depreciation) 135,853 7,043 42,067 — 184,963 Depreciation and amortization 35,549 10,093 5,811 1,123 52,576 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 Par West redevelopment and other costs — — — 5,363 5,363 Operating income (loss) $ 307,276 $ 33,299 $ 28,694 $ (61,434) $ 307,835 ________________________________________________________ (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 $322.9 million and $255.9 million for the six months ended June 30, 2024 and 2023, respectively. 33 Below is a summary of key operating statistics for the refining segment for the three and six months ended June 30, 2024 and 2023: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Total Refining Segment Feedstocks Throughput (Mbpd) (1) 179.8 162.3 180.0 147.7 Refined product sales volume (Mbpd) (1) 191.2 168.8 192.0 159.1 Hawaii Refinery Feedstocks Throughput (Mbpd) 81.0 84.1 80.2 80.2 Yield (% of total throughput) Gasoline and gasoline blendstocks 27.3 % 26.8 % 26.2 % 26.8 % Distillates 37.9 % 41.0 % 38.0 % 40.1 % Fuel oils 30.0 % 28.2 % 32.0 % 28.8 % Other products 1.4 % 0.8 % 0.1 % 1.2 % Total yield 96.6 % 96.8 % 96.3 % 96.9 % Refined product sales volume (Mbpd) 82.2 87.2 84.9 88.8 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 10.07 $ 12.08 $ 12.02 $ 15.41 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 Montana Refinery Feedstocks Throughput (Mbpd) (1) 37.7 62.6 45.1 62.6 Yield (% of total throughput) Gasoline and gasoline blendstocks 56.6 % 46.3 % 51.3 % 46.3 % Distillates 25.2 % 29.3 % 29.6 % 29.3 % Asphalt 6.9 % 13.3 % 8.7 % 13.3 % Other products 5.0 % 6.1 % 4.5 % 6.1 % Total yield 93.7 % 95.0 % 94.1 % 95.0 % 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 34 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Washington Refinery Feedstocks Throughput (Mbpd) 41.2 40.9 36.3 40.3 Yield (% of total throughput) Gasoline and gasoline blendstocks 24.7 % 24.0 % 24.2 % 23.8 % Distillates 34.4 % 34.8 % 34.0 % 34.6 % Asphalt 18.0 % 19.5 % 19.3 % 19.0 % Other products 20.0 % 18.3 % 19.1 % 18.7 % Total yield 97.1 % 96.6 % 96.6 % 96.1 % Refined product sales volume (Mbpd) 40.2 44.8 38.2 42.8 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 4.67 $ 6.37 $ 5.30 $ 8.66 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 Wyoming Refinery Feedstocks Throughput (Mbpd) 19.9 16.7 18.4 16.8 Yield (% of total throughput) Gasoline and gasoline blendstocks 44.3 % 43.7 % 46.8 % 45.6 % Distillates 48.9 % 48.7 % 47.6 % 47.3 % Fuel oils 2.2 % 2.6 % 2.1 % 2.5 % Other products 3.1 % 2.5 % 2.1 % 1.7 % Total yield 98.5 % 97.5 % 98.6 % 97.1 % Refined product sales volume (Mbpd) 20.6 17.3 19.0 17.7 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 14.74 $ 20.56 $ 14.83 $ 24.05 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 Market Indices (average $ per barrel) 3-1-2 Singapore Crack Spread (4) $ 12.49 $ 13.72 $ 15.58 $ 17.45 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) Brent $ 85.03 $ 77.73 $ 83.39 $ 79.90 WTI 80.66 73.56 78.78 74.77 ANS 86.42 78.26 83.87 78.63 Bakken Clearbrook 79.95 75.37 77.13 77.25 WCS Hardisty 67.21 60.07 63.33 58.38 Brent M1-M3 1.30 0.44 1.18 0.48 35 ________________________________________________________ (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. Adjusted Gross Margin for our Washington refinery is determined under the last-in, first-out (“LIFO”) inventory costing method. Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method. (3) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry. There are a variety of ways to calculate production costs per barrel; different companies within the industry calculate it in different ways. We calculate production costs per barrel by dividing all direct production costs, which include the costs to run the refineries including personnel costs, repair and maintenance costs, insurance, utilities, and other miscellaneous costs, by total refining throughput. Our production costs are included in Operating expense (excluding depreciation) on our condensed consolidated 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. (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 Retail sales volumes (thousands of gallons) 30,523 29,373 59,953 56,572 Non-GAAP Performance Measures Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures. These measures should not be considered in isolation or as substitutes or alternatives to their most directly comparable GAAP financial measures or any other measure of financial performance or liquidity presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies since each company may define these terms differently. We believe Adjusted Gross Margin (as defined below) provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost and net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation and amortization. Management uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks. We believe Adjusted Net Income (Loss) and Adjusted EBITDA (as defined below) are useful supplemental financial measures that allow investors to assess the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis, the ability of our assets to generate cash to pay interest on our indebtedness, and our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure. 36 Beginning with financial results reported for the second quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA also exclude our portion of interest, taxes, and depreciation expense from our refining and logistics investments acquired on June 1, 2023, as part of the Billings Acquisition. Beginning with financial results reported for the fourth quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA excludes all hedge losses (gains) associated with our Washington ending inventory and LIFO layer increment impacts associated with our Washington inventory. In addition, we have modified our environmental obligation mark-to-market adjustment to include only the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington Climate Commitment Act (“Washington CCA”) and Clean Fuel Standard. This modification was made as part of our change in how we estimate our environmental obligation liabilities. Beginning with financial results reported for the fourth quarter of 2023, Adjusted Net Income (loss) excludes unrealized interest rate derivative losses (gains) and all Laramie Energy related impacts with the exception of cash distributions. We have recast Adjusted Net Income (Loss) for prior periods when reported to conform to the modified presentation. Beginning with financial results reported for the first quarter of 2024, Adjusted Net Income (loss) also excludes other non-operating income and expenses. This modification improves comparability between periods by excluding income and expenses resulting from non-operating activities. Adjusted Gross Margin Adjusted Gross Margin is defined as operating income (loss) excluding: • operating expense (excluding depreciation); • depreciation and amortization (“D&A”); • Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments; • impairment expense; • loss (gain) on sale of assets, net; • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory); • Environmental obligation mark-to-market adjustment (which represents the mark-to-market losses (gains) associated with our net RINs liability and our net obligation associated with the Washington Climate Commitment Act and Clean Fuel Standard); and • unrealized loss (gain) on derivatives. The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands): Three months ended June 30, 2024 Refining Logistics Retail Operating income $ 41,206 $ 18,041 $ 16,053 Operating expense (excluding depreciation) 116,509 4,701 22,870 Depreciation and amortization 21,691 7,193 2,675 Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 661 761 — Inventory valuation adjustment (21,101) — — Environmental obligation mark-to-market adjustments (3,504) — — Unrealized loss on derivatives 21,141 — — Loss on sale of assets, net — 63 — Adjusted Gross Margin (1) $ 176,603 $ 30,759 $ 41,598 37 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 Six months ended June 30, 2023 Refining Logistics Retail Operating income $ 307,276 $ 33,299 $ 28,694 Operating expense (excluding depreciation) 135,853 7,043 42,067 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 loss on derivatives 8,508 — — Adjusted Gross Margin (1) $ 417,204 $ 50,642 $ 76,572 ____________________________________________________________________________ (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 Adjusted Net Income (Loss) is defined as Net income (loss) excluding: • inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase or terminal obligations, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory); • Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our RINs and Washington CCA and Clean Fuel Standard); • unrealized (gain) loss on derivatives; • acquisition and integration costs; • redevelopment and other costs related to Par West; 38 • debt extinguishment and commitment costs; • increase in (release of) tax valuation allowance and other deferred tax items; • changes in the value of contingent consideration and common stock warrants; • severance costs and other non-operating expense (income); • (gain) loss on sale of assets; • impairment expense; • impairment expense associated with our investment in Laramie Energy; and • Par’s share of equity losses from Laramie Energy, LLC, excluding cash distributions. Adjusted EBITDA is defined as Adjusted Net Income (Loss) excluding: • D&A; • interest expense and financing costs, net, excluding interest rate derivative loss (gain); • cash distributions from Laramie Energy, LLC to Par; • Par's portion of interest, taxes, and depreciation expense from refining and logistics investments; and • income tax expense (benefit) excluding the increase in (release of) tax valuation allowance. 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 on derivatives 21,104 21,635 64,952 7,965 Par West redevelopment and other costs 3,071 2,613 5,042 5,363 Acquisition and integration costs (152) 7,273 91 12,544 Debt extinguishment and commitment costs 1,418 (38) 1,418 17,682 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 Depreciation and amortization 32,144 28,216 64,800 52,576 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 20,471 15,452 39,199 31,702 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 Income tax expense 505 1,928 505 2,141 Adjusted EBITDA (3) $ 81,601 $ 150,830 $ 176,299 $ 318,465 ________________________________________ (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 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- 39 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 June 30, 2024 compared to the three months ended June 30, 2023 Refining. 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. Logistics. 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. Retail. 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 Refining. 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: • an increase of $98.8 million related to favorable changes in crude oil differentials at our refineries in our legacy portfolio. Logistics. 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. Retail. 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 June 30, 2024 compared to the three months ended June 30, 2023 Refining. 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 40 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 $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. Logistics. 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. Retail. 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 Refining. 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. 41 Logistics. 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. Retail. 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 June 30, 2024 compared to the three months ended June 30, 2023 Revenues. 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 $4.4 million primarily due to a 4% increase in fuel sales volumes. Cost of Revenues (Excluding Depreciation). 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 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 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 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 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 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 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. 42 Interest Expense and Financing Costs, Net . 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 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 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 Revenues. 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 43 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. 44 Consolidating Condensed Financial Information On February 28, 2023, Par Petroleum, LLC (“Par Borrower”) entered into the Term Loan Credit Agreement (the “Term Loan Credit Agreement”) due 2030 with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. The Term Loan Credit Agreement was co-issued by Par Petroleum Finance Corp. (together with the Par Borrower, the “Term Loan Borrowers”), which has no independent assets or operations. The Term Loan Credit Agreement is guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc. (the “Parent”) and is guaranteed on a senior secured basis by all of the subsidiaries of Par Borrower. The Term Loan Credit Agreement proceeds were used to refinance our existing Term Loan B Facility and repurchase our outstanding 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, all three of which had similar guarantees that were replaced by those on the Term Loan Credit Agreement. The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Borrower and its consolidated subsidiaries’ accounts (which are all guarantors of the Term Loan Credit Agreement), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the Term Loan Credit Agreement and consolidating adjustments and eliminations, and (iv) the Parent’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent’s investment in its subsidiaries is accounted for under the equity method of accounting (dollar amounts in thousands). 45 As of June 30, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 6,807 $ 172,851 $ — $ 179,658 Restricted cash 343 — — 343 Trade accounts receivable — 486,300 — 486,300 Inventories — 1,258,337 — 1,258,337 Prepaid and other current assets 4,020 42,363 5,334 51,717 Due from related parties 382,382 — (382,382) — Total current assets 393,552 1,959,851 (377,048) 1,976,355 Property, plant, and equipment Property, plant, and equipment 24,018 1,614,082 3,956 1,642,056 Less accumulated depreciation and amortization (17,214) (506,359) (3,405) (526,978) Property, plant, and equipment, net 6,804 1,107,723 551 1,115,078 Long-term assets Operating lease right-of-use (“ROU”) assets 6,788 342,404 — 349,192 Refining and logistics equity investments — — 88,218 88,218 Investment in Laramie Energy, LLC — — 15,997 15,997 Investment in subsidiaries 1,043,405 — (1,043,405) — Intangible assets, net — 10,009 — 10,009 Goodwill — 126,678 2,597 129,275 Other long-term assets 726 135,022 117,075 252,823 Total assets $ 1,451,275 $ 3,681,687 $ (1,196,015) $ 3,936,947 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 4,165 $ — $ 4,165 Obligations under inventory financing agreements — 251,058 — 251,058 Accounts payable 4,426 544,613 1 549,040 Accrued taxes (25) 52,264 — 52,239 Operating lease liabilities 50 69,612 — 69,662 Other accrued liabilities (661) 282,072 3,478 284,889 Due to related parties 175,064 201,881 (376,945) — Total current liabilities 178,854 1,405,665 (373,466) 1,211,053 Long-term liabilities Long-term debt, net of current maturities — 1,054,590 — 1,054,590 Finance lease liabilities 527 16,058 (4,174) 12,411 Operating lease liabilities 8,745 280,691 — 289,436 Other liabilities (2,631) 160,526 (54,218) 103,677 Total liabilities 185,495 2,917,530 (431,858) 2,671,167 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 568 — — 568 Additional paid-in capital 875,868 177,505 (177,505) 875,868 Accumulated earnings (deficit) 381,279 580,694 (580,694) 381,279 Accumulated other comprehensive income (loss) 8,065 5,958 (5,958) 8,065 Total stockholders’ equity 1,265,780 764,157 (764,157) 1,265,780 Total liabilities and stockholders’ equity $ 1,451,275 $ 3,681,687 $ (1,196,015) $ 3,936,947 46 As of December 31, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries ASSETS Current assets Cash and cash equivalents $ 10,369 $ 268,711 $ 27 $ 279,107 Restricted cash 339 — — 339 Trade accounts receivable — 367,249 — 367,249 Inventories — 1,160,395 — 1,160,395 Prepaid and other current assets 4,767 177,638 — 182,405 Due from related parties 380,159 — (380,159) — Total current assets 395,634 1,973,993 (380,132) 1,989,495 Property, plant, and equipment Property, plant, and equipment 21,350 1,552,496 3,955 1,577,801 Less accumulated depreciation and amortization (16,487) (458,616) (3,310) (478,413) Property, plant, and equipment, net 4,863 1,093,880 645 1,099,388 Long-term assets Operating lease right-of-use (“ROU”) assets 7,005 339,449 — 346,454 Refining and logistics equity investments — — 87,486 87,486 Investment in Laramie Energy, LLC — — 14,279 14,279 Investment in subsidiaries 1,070,518 — (1,070,518) — Intangible assets, net — 10,918 — 10,918 Goodwill — 126,678 2,597 129,275 Other long-term assets 726 65,323 120,606 186,655 Total assets $ 1,478,746 $ 3,610,241 $ (1,225,037) $ 3,863,950 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 4,255 $ — $ 4,255 Obligations under inventory financing agreements — 594,362 — 594,362 Accounts payable 4,991 386,334 — 391,325 Accrued taxes — 40,064 — 40,064 Operating lease liabilities — 72,833 — 72,833 Other accrued liabilities 947 415,468 5,347 421,762 Due to related parties 128,922 232,803 (361,725) — Total current liabilities 134,860 1,746,119 (356,378) 1,524,601 Long-term liabilities Long-term debt, net of current maturities — 646,603 — 646,603 Finance lease liabilities — 16,693 (4,255) 12,438 Operating lease liabilities 8,462 274,055 — 282,517 Other liabilities — 119,618 (57,251) 62,367 Total liabilities 143,322 2,803,088 (417,884) 2,528,526 Commitments and contingencies Stockholders’ equity Preferred stock — — — — Common stock 597 — — 597 Additional paid-in capital 860,797 242,505 (242,505) 860,797 Accumulated earnings (deficit) 465,856 558,581 (558,581) 465,856 Accumulated other comprehensive income (loss) 8,174 6,067 (6,067) 8,174 Total stockholders’ equity 1,335,424 807,153 (807,153) 1,335,424 Total liabilities and stockholders’ equity $ 1,478,746 $ 3,610,241 $ (1,225,037) $ 3,863,950 47 Three Months Ended June 30, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 2,017,460 $ 8 $ 2,017,468 Operating expenses Cost of revenues (excluding depreciation) — 1,770,197 — 1,770,197 Operating expense (excluding depreciation) — 144,080 — 144,080 Depreciation and amortization 378 31,718 48 32,144 General and administrative expense (excluding depreciation) 4,580 18,587 1 23,168 Equity earnings from refining and logistics investments — — (3,744) (3,744) Acquisition and integration costs (2) — (152) — (152) Par West redevelopment and other costs — 3,071 — 3,071 Loss on sale of assets, net — 63 — 63 Total operating expenses 4,958 1,967,564 (3,695) 1,968,827 Operating income (loss) (4,958) 49,896 3,703 48,641 Other income (expense) 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 (losses) from Laramie Energy, LLC — — (1,360) (1,360) Total other income (expense), net 23,596 (22,026) (24,906) (23,336) Income (loss) before income taxes 18,638 27,870 (21,203) 25,305 Income tax benefit (expense) (1) — (6,960) 293 (6,667) Net income (loss) $ 18,638 $ 20,910 $ (20,910) $ 18,638 Adjusted EBITDA $ (4,051) $ 80,480 $ 5,172 $ 81,601 48 Three Months Ended June 30, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 1,783,875 $ 52 $ 1,783,927 Operating expenses Cost of revenues (excluding depreciation) — 1,574,806 — 1,574,806 Operating expense (excluding depreciation) — 101,843 — 101,843 Depreciation and amortization 443 27,727 46 28,216 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 Par West redevelopment and other costs — 2,613 — 2,613 Total operating expenses 3,631 1,734,243 (380) 1,737,494 Operating income (3,631) 49,632 432 46,433 Other income (expense) Interest expense and financing costs, net (18) (14,982) 91 (14,909) Debt extinguishment and commitment costs — 38 — 38 Other income (expense), net 41 337 1 379 Equity earnings (losses) from subsidiaries 34,389 — (34,389) — Equity earnings (losses) from Laramie Energy, LLC — — — — Total other income (expense), net 34,412 (14,607) (34,297) (14,492) Income (loss) before income taxes 30,781 35,025 (33,865) 31,941 Income tax benefit (expense) (1) (768) (8,820) 7,660 (1,928) Net income (loss) $ 30,013 $ 26,205 $ (26,205) $ 30,013 Adjusted EBITDA $ (7,942) $ 158,086 $ 686 $ 150,830 49 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 50 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 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. 51 Non-GAAP Financial Measures Adjusted EBITDA for the supplemental consolidating condensed financial information, which is segregated at the “Parent Guarantor,” “Par Borrower and Subsidiaries,” and “Non-Guarantor Subsidiaries and Eliminations” levels, is calculated in the same manner as for the Par Pacific Holdings, Inc. Adjusted EBITDA calculations. See “Results of Operations — Non-GAAP Performance Measures — Adjusted Net Income (Loss) and Adjusted EBITDA” above. The following tables present a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, Net income, on a historical basis for the periods indicated (in thousands): Three Months Ended June 30, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 18,638 $ 20,910 $ (20,910) $ 18,638 Inventory valuation adjustment — (21,101) — (21,101) Environmental obligation mark-to-market adjustments — (3,504) — (3,504) Unrealized loss on derivatives — 21,104 — 21,104 Acquisition and integration costs — (152) — (152) 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) 538 (538) — — Loss (gain) on sale of assets, net — 63 — 63 Equity losses from Laramie Energy, LLC, excluding cash distributions — — 2,845 2,845 Depreciation and amortization 378 31,718 48 32,144 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 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 — 6,960 (293) 6,667 Adjusted EBITDA (1) $ (4,051) $ 80,480 $ 5,172 $ 81,601 52 Three Months Ended June 30, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 30,013 $ 26,205 $ (26,205) $ 30,013 Inventory valuation adjustment — 33,118 — 33,118 Environmental obligation mark-to-market adjustments — 9,343 — 9,343 Unrealized loss on derivatives — 21,635 — 21,635 Acquisition and integration costs (5,271) 12,544 — 7,273 Par West redevelopment and other costs — 2,613 — 2,613 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 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 18 15,525 (91) 15,452 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 53 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 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 Our liquidity and capital requirements are primarily a function of our debt maturities and debt service requirements and contractual obligations, capital expenditures, turnaround outlays, and working capital needs. Examples of working capital needs include purchases and sales of commodities and associated margin and collateral requirements, facility maintenance costs, and other costs such as payroll. Our primary sources of liquidity are cash flows from operations, cash on hand, amounts available under our credit agreements, and access to capital markets. Our liquidity position as of 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. 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. We may seek to raise additional debt or equity capital to fund acquisitions and any other significant changes to our business or to refinance existing debt. We cannot offer any assurances that such capital will be available in sufficient amounts or at an acceptable cost. We may from time to time seek to retire or repurchase our common stock through cash purchases, in open market purchases, privately negotiated transactions, or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. The 54 Term Loan Credit Agreement may also require annual prepayments of principal with a variable percentage of our excess cash flow, 50% or 25% depending on our consolidated year end secured leverage ratio (as defined in the Term Loan Credit Agreement). Cash Flows The following table summarizes cash activities for the six months ended June 30, 2024 and 2023 (in thousands): Six Months Ended June 30, 2024 2023 Net cash provided by operating activities $ 20,755 $ 312,240 Net cash used in investing activities (57,987) (626,021) Net cash provided by (used in) financing activities (62,213) 13,812 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 $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: • 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: • 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 partially offset by: • 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, 55 • 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 $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: • 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: • 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: • 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. 56 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 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. 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 six months ended June 30, 2024. Forward-Looking Statements Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (“PSLRA”), or in releases made by the SEC, all of which may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties, and other important factors including, without limitation, the Russia-Ukraine war, Israel-Palestine conflict, Houthi attacks in the Red Sea, Iranian activities in the Strait of Hormuz and certain developments in the global crude oil markets, on our business, our customers, and the markets where we operate; our beliefs regarding available capital resources; our beliefs regarding the likely results or impact of certain disputes or contingencies and any potential fines or penalties; our beliefs regarding the fair value of certain assets, and our expectations with respect to laws and regulations, including environmental regulations and related compliance costs and any fines or penalties related thereto; our expectations regarding the sufficiency of our cash flows and liquidity; our expectations regarding anticipated capital expenditures, including the timing and cost of compliance with consent decrees and other enforcement actions; our expectations regarding the impact of the adoption of certain accounting standards; our estimates regarding the fair value of certain indebtedness; estimated costs to settle claims from the Delta bankruptcy; the estimated value of, and our ability to settle, legal claims remaining to be settled against third parties; our expectations regarding the synergies or other benefits of our acquisitions; our expectations regarding certain tax liabilities and debt obligations; management’s assumptions about future events into our existing business, the anticipated synergies and other benefits of the recently acquired ExxonMobil Billings refinery and associated marketing and logistics assets (the “Acquisition”), including renewable growth opportunities; the anticipated financial and operating results of the Acquisition, and the effect on the Company’s cash flows and profitability (including Adjusted EBITDA and Adjusted Net Income); our ability to raise additional debt or equity capital; our ability to make strategic investments in business opportunities; and the estimates, assumptions, and projections regarding future financial condition, results of operations, liquidity, and cash flows. These and other forward-looking statements could cause the actual results, performance, or achievements of Par and its subsidiaries to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “will,” “would,” “could,” “should,” “seeks,” or “scheduled to,” or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act, and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. 57 The forward-looking statements contained in this Quarterly Report on Form 10-Q are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control, including those set out in our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q under “Risk Factors.” In addition, management’s assumptions about future events may prove to be inaccurate. All readers are cautioned that the forward-looking statements contained in this Quarterly Report on Form 10-Q are not guarantees of future performance; and we cannot assure any reader that such statements will be realized or that the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors described above and under Critical Accounting Estimates and Risk Factors included in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q. All forward-looking statements speak only as of the date they are made. There can be no guarantee that the operational and financial measures the Company has taken, and may take in the future, will be fully effective. We do not intend to update or revise any forward-looking statements as a result of new information, future events, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.