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 decreased in the third quarter of 2024 compared to the third quarter of 2023. Brent crude oil pricing averaged $78.71 per barrel in the third quarter of 2024 compared to $85.92 per barrel in the third quarter of 2023. Average U.S. retail gasoline prices remained relatively stable from $3.69 per gallon in 2023 to $3.51 per gallon in 2024. Refined product crack spreads decreased in 2024 as compared to 2023. The U.S. Energy Information Administration (“EIA”) in its September 2024 short term energy outlook forecasts average Brent crude oil pricing of $84 per barrel in 2025 due to strong global inventory draws in the first half of 2024 driven by less Organization of the Petroleum Exporting Countries (“OPEC”) production. In addition, the International Energy Agency (“IEA”) reduced its forecast for global oil demand in 2024 and 2025 in its October report. This is primarily driven by reduced demand in China. 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), in 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 increased 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 Red Sea region continued to escalate in 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 3.4% year over year as of September 30, 2024. While inflation has increased 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 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 September 30, 2024 compared to the three months ended September 30, 2023 Net Income. Our financial results for the third quarter of 2024 declined from net income of $171.4 million for the three months ended September 30, 2023 to $7.5 million for the three months ended September 30, 2024. The decrease was primarily driven by a $175.8 million decrease in our refining segment operating income and a $2.6 million increase in interest expense and financing costs, net, partially offset by a $5.5 million increase in our logistics segment operating income, a $5.0 million increase in our retail segment operating income, and a $4.7 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 (Loss). For the three months ended September 30, 2024, Adjusted EBITDA was $51.4 million compared to $255.7 million for the three months ended September 30, 2023. The $204.3 million decrease was primarily due to a decrease of $208.4 million in refining segment Adjusted Gross Margin, partially offset by an increase of $4.4 million in our retail 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 September 30, 2024, Adjusted Net Loss was $5.5 million compared to Adjusted Net Income of $193.4 million for the three months ended September 30, 2023. The decline was primarily related to the factors described above for the decrease in Adjusted EBITDA, combined with an increase of $1.9 million in interest expense and financing costs, excluding unrealized interest rate derivative losses (gains), partially offset by a decrease of $3.8 million in income tax expense and a decrease of $3.4 million in D&A. 32 Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 Net Income. Our financial results declined from net income of $439.3 million for the nine months ended September 30, 2023 to $22.4 million for the nine months ended September 30, 2024. The decrease was driven by a $419.3 million decrease in refining segment operating income, a $21.2 million increase in general and administrative expenses, a $9.7 million increase in Interest expense and financing costs, net, and a $7.8 million increase in Equity earnings from Laramie Energy, LLC, partially offset by a $17.1 million decrease in acquisitions and integration expenses related to our Billings Acquisition, a $16.3 million decrease in Debt extinguishment and commitment costs, and a $10.6 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 nine months ended September 30, 2024, Adjusted EBITDA was $227.7 million compared to $574.2 million for the nine months ended September 30, 2023. The $346.5 million decrease was primarily due to a decrease of $241.9 million in our refining segment Adjusted Gross Margin, a $114.2 million increase in operating expenses, a $21.2 million increase in General and administrative expense (excluding depreciation),partially offset by increases of $13.1 million and $6.5 million in our logistics and retail segment Adjusted Gross Margins, respectively. Please read the discussion of Adjusted Gross Margin by Segment and the Discussion of Consolidated Results below for additional information. For the nine months ended September 30, 2024, Adjusted Net Income was $64.7 million compared to $435.9 million for the nine months ended September 30, 2023. The decline was primarily related to the same factors described above for the decrease in Adjusted EBITDA, combined with an increase of $9.4 million of interest expense and financing costs, excluding unrealized interest rate derivative losses (gains), an increase of $8.8 million of D&A, and a decrease of $9.2 million of cash distributions received from Laramie Energy, LLC, partially offset by a decrease in Income tax expense, net of impacts due to changes in the valuation allowance and other deferred tax items of $5.5 million. The following tables summarize our consolidated results of operations for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 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 September 30, 2024 2023 $ Change % Change Revenues $ 2,143,933 $ 2,579,308 $ (435,375) (17)% Cost of revenues (excluding depreciation) 1,905,200 2,174,385 (269,185) (12)% Operating expense (excluding depreciation) 147,049 145,183 1,866 1% Depreciation and amortization 31,879 35,311 (3,432) (10)% General and administrative expense (excluding depreciation) 22,399 23,694 (1,295) (5)% Equity earnings from refining and logistics investments (3,008) (3,934) 926 24% Acquisition and integration costs (23) 4,669 (4,692) (100)% Par West redevelopment and other costs 4,006 3,127 879 28% Loss on sale of assets, net — — — NM (1) Total operating expenses 2,107,502 2,382,435 Operating income 36,431 196,873 Other income (expense) Interest expense and financing costs, net (23,402) (20,815) (2,587) 12% Other income (expense), net 1,253 (43) 1,296 3,014% Equity earnings (losses) from Laramie Energy, LLC (336) — (336) NM (1) Total other expense, net (22,485) (20,858) Income before income taxes 13,946 176,015 Income tax expense (6,460) (4,600) (1,860) 40% Net income $ 7,486 $ 171,415 33 Nine Months Ended September 30, 2024 2023 $ Change % Change Revenues $ 6,142,236 $ 6,048,444 $ 93,792 2% Cost of revenues (excluding depreciation) 5,422,875 5,038,211 384,664 8% Operating expense (excluding depreciation) 444,389 330,146 114,243 35% Depreciation and amortization 96,679 87,887 8,792 10% General and administrative expense (excluding depreciation) 87,322 66,148 21,174 32% Equity earnings from refining and logistics investments (12,846) (4,359) (8,487) (195)% Acquisition and integration costs 68 17,213 (17,145) (100)% Par West redevelopment and other costs 9,048 8,490 558 7% Loss on sale of assets, net 114 — 114 NM (1) Total operating expenses 6,047,649 5,543,736 Operating income 94,587 504,708 Other income (expense) Interest expense and financing costs, net (61,720) (51,974) (9,746) 19% Debt extinguishment and commitment costs (1,418) (17,682) 16,264 (92)% Other income (expense), net (1,447) 301 (1,748) (581)% Equity earnings from Laramie Energy, LLC 2,867 10,706 (7,839) (73)% Total other expense, net (61,718) (58,649) Income before income taxes 32,869 446,059 Income tax expense (10,496) (6,741) (3,755) 56% Net income $ 22,373 $ 439,318 ________________________________________________________ (1) NM - Not meaningful The following tables summarize our operating income (loss) by segment for the three and nine months ended September 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 September 30, 2024 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 2,080,546 $ 77,741 $ 150,213 $ (164,567) $ 2,143,933 Cost of revenues (excluding depreciation) 1,917,962 44,228 107,598 (164,588) 1,905,200 Operating expense (excluding depreciation) 122,054 3,334 21,661 — 147,049 Depreciation and amortization 22,623 5,925 2,680 651 31,879 General and administrative expense (excluding depreciation) — — — 22,399 22,399 Equity earnings from refining and logistics investments (1,098) (1,910) — — (3,008) Acquisition and integration costs — — — (23) (23) Par West redevelopment and other costs — — — 4,006 4,006 Loss on sale of assets, net — — — — — Operating income (loss) $ 19,005 $ 26,164 $ 18,274 $ (27,012) $ 36,431 34 Three months ended September 30, 2023 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 2,524,155 $ 72,839 $ 158,512 $ (176,198) $ 2,579,308 Cost of revenues (excluding depreciation) 2,190,474 39,801 120,332 (176,222) 2,174,385 Operating expense (excluding depreciation) 116,949 6,135 22,099 — 145,183 Depreciation and amortization 24,278 7,708 2,766 559 35,311 General and administrative expense (excluding depreciation) — — — 23,694 23,694 Equity earnings from refining and logistics investments (2,393) (1,541) — — (3,934) Acquisition and integration costs — — — 4,669 4,669 Par West redevelopment and other costs — — — 3,127 3,127 Operating income (loss) $ 194,847 $ 20,736 $ 13,315 $ (32,025) $ 196,873 ________________________________________________________ (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 $164.6 million and $176.2 million for the three months ended September 30, 2024 and 2023, respectively. Nine months ended September 30, 2024 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 5,964,435 $ 222,058 $ 443,189 $ (487,446) $ 6,142,236 Cost of revenues (excluding depreciation) 5,457,167 131,303 321,894 (487,489) 5,422,875 Operating expense (excluding depreciation) 365,031 11,847 67,511 — 444,389 Depreciation and amortization 66,584 19,893 8,471 1,731 96,679 General and administrative expense (excluding depreciation) — — — 87,322 87,322 Equity earnings from refining and logistics investments (7,158) (5,688) — — (12,846) Acquisition and integration costs — — — 68 68 Par West redevelopment and other costs — — — 9,048 9,048 Loss (gain) on sale of assets, net — 124 (10) — 114 Operating income (loss) $ 82,811 $ 64,579 $ 45,323 $ (98,126) $ 94,587 Nine months ended September 30, 2023 Refining Logistics (1) Retail Corporate, Eliminations and Other (2) Total Revenues $ 5,848,108 $ 189,936 $ 442,480 $ (432,080) $ 6,048,444 Cost of revenues (excluding depreciation) 5,035,749 106,888 327,728 (432,154) 5,038,211 Operating expense (excluding depreciation) 252,802 13,178 64,166 — 330,146 Depreciation and amortization 59,827 17,801 8,577 1,682 87,887 General and administrative expense (excluding depreciation) — — — 66,148 66,148 Equity earnings from refining and logistics investments (2,393) (1,966) — — (4,359) Acquisition and integration costs — — — 17,213 17,213 Par West redevelopment and other costs — — — 8,490 8,490 Operating income (loss) $ 502,123 $ 54,035 $ 42,009 $ (93,459) $ 504,708 ________________________________________________________ (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 $487.4 million and $432.1 million for the nine months ended September 30, 2024 and 2023, respectively. 35 Below is a summary of key operating statistics for the refining segment for the three and nine months ended September 30, 2024 and 2023: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Total Refining Segment Feedstocks Throughput (Mbpd) (1) 198.4 198.2 186.3 164.6 Refined product sales volume (Mbpd) (1) 216.2 217.3 200.2 178.7 Hawaii Refinery Feedstocks Throughput (Mbpd) 80.7 82.3 80.4 80.9 Yield (% of total throughput) Gasoline and gasoline blendstocks 25.6 % 26.5 % 26.0 % 26.7 % Distillates 38.3 % 42.1 % 38.1 % 40.8 % Fuel oils 32.0 % 26.5 % 32.0 % 28.0 % Other products 0.7 % 2.1 % 0.3 % 1.5 % Total yield 96.6 % 97.2 % 96.4 % 97.0 % Refined product sales volume (Mbpd) 93.5 90.0 87.8 89.2 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 6.10 $ 13.47 $ 10.06 $ 14.74 Production costs per bbl ($/throughput bbl) (3) 4.58 4.50 4.66 4.46 D&A per bbl ($/throughput bbl) 0.25 0.65 0.47 0.68 Montana Refinery Feedstocks Throughput (Mbpd) (1) 57.2 55.4 49.2 57.1 Yield (% of total throughput) Gasoline and gasoline blendstocks 46.5 % 50.5 % 49.5 % 49.6 % Distillates 34.7 % 27.7 % 31.7 % 28.2 % Asphalt 11.0 % 14.7 % 9.3 % 14.4 % Other products 4.0 % 3.4 % 4.4 % 3.5 % Total yield 96.2 % 96.3 % 94.9 % 95.7 % Refined product sales volume (Mbpd) (1) 60.3 63.5 53.4 62.5 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 12.42 $ 26.49 $ 14.15 $ 27.74 Production costs per bbl ($/throughput bbl) (3) 11.61 10.83 13.16 10.10 D&A per bbl ($/throughput bbl) 1.82 1.63 1.69 1.69 36 Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Washington Refinery Feedstocks Throughput (Mbpd) 41.1 41.0 37.9 40.5 Yield (% of total throughput) Gasoline and gasoline blendstocks 23.6 % 22.8 % 24.0 % 23.4 % Distillates 35.3 % 34.6 % 34.5 % 34.6 % Asphalt 17.4 % 20.1 % 18.6 % 19.4 % Other products 19.7 % 18.8 % 19.3 % 18.8 % Total yield 96.0 % 96.3 % 96.4 % 96.2 % Refined product sales volume (Mbpd) 42.4 44.2 39.6 43.3 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 1.76 $ 12.30 $ 4.03 $ 9.91 Production costs per bbl ($/throughput bbl) (3) 3.50 3.77 4.28 4.00 D&A per bbl ($/throughput bbl) 1.81 1.79 2.00 1.81 Wyoming Refinery Feedstocks Throughput (Mbpd) 19.4 19.5 18.8 17.7 Yield (% of total throughput) Gasoline and gasoline blendstocks 43.7 % 46.7 % 45.7 % 46.0 % Distillates 49.0 % 47.1 % 48.1 % 47.3 % Fuel oils 3.4 % 2.5 % 2.5 % 2.5 % Other products 2.3 % 1.7 % 2.2 % 1.7 % Total yield 98.4 % 98.0 % 98.5 % 97.5 % Refined product sales volume (Mbpd) 20.0 19.6 19.4 18.3 Adjusted Gross Margin per bbl ($/throughput bbl) (2) $ 13.65 $ 37.01 $ 14.42 $ 28.88 Production costs per bbl ($/throughput bbl) (3) 7.00 6.46 7.30 7.34 D&A per bbl ($/throughput bbl) 2.43 2.41 2.51 2.69 Market Indices (average $ per barrel) 3-1-2 Singapore Crack Spread (4) $ 11.00 $ 23.39 $ 14.04 $ 19.45 RVO Adjusted Pacific Northwest 3-1-1-1 (5) 15.48 35.00 19.49 28.51 RVO Adjusted USGC 3-2-1 (6) 14.14 29.65 17.79 25.96 Crude Oil Prices (average $ per barrel) Brent $ 78.71 $ 85.92 $ 81.82 $ 81.93 WTI 75.27 82.22 77.61 77.28 ANS (7) 80.26 89.25 83.49 82.57 Bakken Clearbrook 74.41 83.58 76.22 79.38 WCS Hardisty 59.98 65.42 62.20 60.75 Brent M1-M3 1.31 1.27 1.22 0.74 37 ________________________________________________________ (1) Feedstocks throughput and sales volumes per day for the Montana refinery for the three and nine months ended September 30, 2023 are calculated based on the 92 and 122-day periods for which we owned the Montana refinery during the three and nine months ended September 30, 2023, respectively. 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 nine months ended September 30, 2023, plus the Montana refinery’s throughput or sales volumes averaged over the periods from July 1, 2023 to September 30, 2023 and June 1, 2023, to September 30, 2023, respectively. 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 nine months ended September 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 Index (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 Index (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. (7) ANS crude price influences the Hawaii Refinery’s financial performance. Beginning in September 2024, the ANS index has been updated from a Platts marker to an Argus marker to better reflect the prompt ANS market. Below is a summary of key operating statistics for the retail segment for the three and nine months ended September 30, 2024 and 2023: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Retail Segment Retail sales volumes (thousands of gallons) 31,232 31,137 91,186 87,710 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 38 our assets to generate cash to pay interest on our indebtedness, and our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure. Beginning with financial results reported for the second quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA also exclude our portion of interest, taxes, and depreciation expense from our refining and logistics investments acquired on June 1, 2023, as part of the Billings Acquisition. 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 September 30, 2024 Refining Logistics Retail Operating income $ 19,005 $ 26,164 $ 18,274 Operating expense (excluding depreciation) 122,054 3,334 21,661 Depreciation and amortization 22,623 5,925 2,680 Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 658 861 — Inventory valuation adjustment 14,057 — — Environmental obligation mark-to-market adjustments (4,432) — — Unrealized gain on derivatives (31,772) — — Loss on sale of assets, net — — — Adjusted Gross Margin (1) $ 142,193 $ 36,284 $ 42,615 39 Three months ended September 30, 2023 Refining Logistics Retail Operating income $ 194,847 $ 20,736 $ 13,315 Operating expense (excluding depreciation) 116,949 6,135 22,099 Depreciation and amortization 24,278 7,708 2,766 Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 821 698 — Inventory valuation adjustment 72,823 — — Environmental obligation mark-to-market adjustments (50,153) — — Unrealized gain on derivatives (8,995) — — Adjusted Gross Margin (1) $ 350,570 $ 35,277 $ 38,180 Nine months ended September 30, 2024 Refining Logistics Retail Operating income $ 82,811 $ 64,579 $ 45,323 Operating expense (excluding depreciation) 365,031 11,847 67,511 Depreciation and amortization 66,584 19,893 8,471 Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 2,037 2,550 — Inventory valuation adjustment (6,419) — — Environmental obligation mark-to-market adjustments (18,199) — — Unrealized loss on derivatives 34,061 — — Loss (gain) on sale of assets, net — 124 (10) Adjusted Gross Margin (1) $ 525,906 $ 98,993 $ 121,295 Nine months ended September 30, 2023 Refining Logistics Retail Operating income $ 502,123 $ 54,035 $ 42,009 Operating expense (excluding depreciation) 252,802 13,178 64,166 Depreciation and amortization 59,827 17,801 8,577 Par’s portion of interest, taxes, and depreciation expense from refining and logistics investments 821 905 — Inventory valuation adjustment 126,799 — — Environmental obligation mark-to-market adjustments (174,111) — — Unrealized gain on derivatives (487) — — Adjusted Gross Margin (1) $ 767,774 $ 85,919 $ 114,752 ____________________________________________________________________________ (1) For the three and nine months ended September 30, 2024 and 2023, there was no impairment expense in Operating income. For the three months ended September 30, 2024 and the three and nine months ended September 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; 40 • 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 (earnings) 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net Income $ 7,486 $ 171,415 $ 22,373 $ 439,318 Inventory valuation adjustment 14,057 72,823 (6,419) 126,799 Environmental obligation mark-to-market adjustments (4,432) (50,153) (18,199) (174,111) Unrealized loss (gain) on derivatives (31,196) (9,116) 33,756 (1,151) Par West redevelopment and other costs 4,006 3,127 9,048 8,490 Acquisition and integration costs (23) 4,669 68 17,213 Debt extinguishment and commitment costs — — 1,418 17,682 Changes in valuation allowance and other deferred tax items (1) 5,707 — 9,238 — Severance costs and other non-operating expense (2) (1,490) 615 14,648 1,685 Loss on sale of assets, net — — 114 — Equity (earnings) losses from Laramie Energy, LLC, excluding cash distributions 336 — (1,382) — Adjusted Net Income (Loss) (3) (5,549) 193,380 64,663 435,925 Depreciation and amortization 31,879 35,311 96,679 87,887 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 22,826 20,936 62,025 52,638 Laramie Energy, LLC cash distributions to Par — — (1,485) (10,706) Par's portion of interest, taxes, and depreciation expense from refining and logistics investments 1,519 1,519 4,587 1,726 Income tax expense 753 4,600 1,258 6,741 Adjusted EBITDA (3) $ 51,428 $ 255,746 $ 227,727 $ 574,211 ________________________________________ (1) For the three and nine months ended September 30, 2024, we recognized a non-cash deferred tax expense of $5.7 million and $9.2 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 nine months ended September 30, 2023, we did not have any adjustments to our valuation allowance and other deferred tax items. (2) For t he nine months ended September 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 nine months ended September 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. 41 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 September 30, 2024 compared to the three months ended September 30, 2023 Refining. Operating income for our refining segment was $19.0 million for the three months ended September 30, 2024, a decrease of $175.8 million compared to operating income of $194.8 million for the three months ended September 30, 2023. The decrease was primarily driven by lower crack spreads across all of our refineries combined with unfavorable FIFO impacts, partially offset by a favorable change of $126.6 million in the step-out obligations associated with our inventory intermediation agreements. Please read the Adjusted Gross Margin discussion below for additional information. Logistics. Operating income for our logistics segment was $26.2 million for the three months ended September 30, 2024, an increase of $5.5 million compared to $20.7 million for the three months ended September 30, 2023. The increase was primarily due to a decrease of $2.8 million in operating expenses and a $1.8 million decrease in depreciation and amortization. The operating expense decrease primarily reflects lower outside services costs and repair and maintenance expenses, partially offset by lower rental expenses and employee costs. Retail. Operating income for our retail segment was $18.3 million for the three months ended September 30, 2024, an increase of $5.0 million compared to $13.3 million for the three months ended September 30, 2023. The increase was primarily due to a $3.4 million increase in fuel margins, increased merchandise margins of $0.7 million, and a $0.4 million decrease in operating expenses primarily driven by lower outside services costs. Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 Refining. Operating income for our refining segment was $82.8 million for the nine months ended September 30, 2024, a decrease of $419.3 million compared to $502.1 million for the nine months ended September 30, 2023. The decrease in operating income was primarily driven by: • a decrease of $394.4 million reflecting lower crack spreads at the refineries in our legacy portfolio, • an increase of $133.0 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, and • a decrease of $37.3 million driven by a 2.7% decline in refined product sales volumes primarily from our Washington and Hawaii refineries, partially offset by: • an increase of $68.1 million related to a favorable change in our step-out obligations associated with our inventory intermediation agreements in Hawaii and Washington, • an increase of $61.3 million related to favorable changes in crude oil differentials at the refineries in our legacy portfolio, and • a net decrease of $32.2 million in our derivative costs associated with all our refineries. Logistics. Operating income for our logistics segment was $64.6 million for the nine months ended September 30, 2024, an increase of $10.6 million compared to $54.0 million for the nine months ended September 30, 2023. The increase was primarily due to a $11.7 million increase in contribution from the Billings Acquisition logistics assets acquired in June 2023. Retail. Operating income for our retail segment was $45.3 million for the nine months ended September 30, 2024, an increase of $3.3 million compared to $42.0 million for the nine months ended September 30, 2023. The increase in operating income was primarily due to a $3.6 million increase in fuel volumes and increased merchandise revenues of $2.8 million, partially offset by higher operating expenses of $3.3 million driven by an increase in employee costs. Adjusted Gross Margin Three months ended September 30, 2024 compared to the three months ended September 30, 2023 Refining. For the three months ended September 30, 2024, our refining Adjusted Gross Margin was $142.2 million, a decrease of $208.4 million compared to $350.6 million for the three months ended September 30, 2023. The decrease was 42 primarily driven by a $164.4 million decrease due to lower crack spreads across our legacy refining portfolio and other factors described below. • Adjusted Gross Margin for the Hawaii refinery decreased by $7.37 per barrel from $13.47 per barrel during the three months ended September 30, 2023 to $6.10 per barrel during the three months ended September 30, 2024. The decrease in Adjusted Gross Margin was primarily due to declining crack spreads and a 3.9% decrease in refined product sales, partially offset by lower feedstock costs. The Singapore 3-1-2 index declined from $23.39 in the third quarter of 2023 to $11.00 in the third quarter of 2024. • Adjusted Gross Margin for the Montana refinery decreased by $14.07 per barrel from $26.49 per barrel during the three months ended September 30, 2023 to $12.42 per barrel during the three months ended September 30, 2024. The decrease in Adjusted Gross Margin was primarily due to declining crack spreads.The RVO Adjusted USGC 3-2-1 index decreased from $29.65 in the third quarter of 2023 to $14.14 in the third quarter of 2024. • Adjusted Gross Margin for the Washington refinery decreased by $10.54 per barrel from $12.30 per barrel during the three months ended September 30, 2023 to $1.76 per barrel during the three months ended September 30, 2024. The decrease was primarily due to declining crack spreads, and a 4% 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 $35.00 in the third quarter of 2023 to $15.48 in the third quarter of 2024. • Adjusted Gross Margin for the Wyoming refinery decreased by $23.36 per barrel from $37.01 per barrel during the three months ended September 30, 2023 to $13.65 per barrel during the three months ended September 30, 2024, primarily due to lower regional crack spreads. The RVO Adjusted USGC 3-2-1 index decreased from $29.65 in the third quarter of 2023 to $14.14 in the third quarter of 2024. Logistics. For the three months ended September 30, 2024, our logistics Adjusted Gross Margin was $36.3 million, an increase of $1.0 million compared to $35.3 million for the three months ended September 30, 2023. The increase is primarily due to higher throughput across our logistics system in the three months ended September 30, 2024 compared to the comparable period in 2023. Retail. For the three months ended September 30, 2024, our retail Adjusted Gross Margin was $42.6 million, an increase of $4.4 million compared to $38.2 million for the three months ended September 30, 2023. The increase was primarily due to a $3.4 million increase in fuel margins and increased merchandise margins of $0.7 million in the three months ended September 30, 2024 compared to the comparable period in 2023. Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 Refining. For the nine months ended September 30, 2024, our refining Adjusted Gross Margin was $525.9 million, a decrease of $241.9 million compared to $767.8 million for the nine months ended September 30, 2023. The decrease was primarily driven by a decrease of $394.4 million reflecting lower crack spreads at the refineries in our legacy portfolio, partially offset by an increase of $61.3 million related to favorable changes in crude oil differentials at the refineries in our legacy portfolio, favorable realized derivative gains and losses of $66.8 million, and other factors as described below. • Adjusted Gross Margin for the Hawaii refinery declined by $4.68 per barrel from $14.74 per barrel during the nine months ended September 30, 2023 to $10.06 per barrel during the nine months ended September 30, 2024. The decrease was primarily due to lower crack spreads partially offset by favorable derivative costs. The Singapore 3-2-1 index declined from $19.45 in the nine months ended September 30, 2023 to $14.04 in the nine months ended September 30, 2024. • Adjusted Gross Margin for the Washington refinery decreased by $5.88 per barrel from $9.91 per barrel during the nine months ended September 30, 2023 to $4.03 per barrel during the nine months ended September 30, 2024. The decrease was primarily due to declining crack spreads and an 9% decrease in refined product sales, partially offset by favorable changes in crude oil differentials. The RVO Adjusted Pacific Northwest 3-1-1-1 index declined from $28.51 in the nine months ended September 30, 2023 to $19.49 in the nine months ended September 30, 2024. • Adjusted Gross Margin for the Wyoming refinery decreased by $14.46 from $28.88 per barrel during the nine months ended September 30, 2023 to $14.42 per barrel during the nine months ended September 30, 2024, primarily due to lower regional crack spreads. The RVO Adjusted USGC 3-2-1 index declined from $25.96 in the nine months ended September 30, 2023 to $17.79 in the nine months ended September 30, 2024. Logistics. For the nine months ended September 30, 2024, our logistics Adjusted Gross Margin was $99.0 million, an increase of $13.1 million compared to $85.9 million for the nine months ended September 30, 2023. The increase was primarily due to a $15.6 million increased contribution from the Billings Acquisition logistics assets acquired in June 2023. 43 Retail. For the nine months ended September 30, 2024, our retail Adjusted Gross Margin was $121.3 million, an increase of $6.5 million compared to $114.8 million for the nine months ended September 30, 2023. The increase was primarily due to a $3.6 million increase in fuel volumes and increased merchandise margins of $2.8 million. Discussion of Consolidated Results Three months ended September 30, 2024 compared to the three months ended September 30, 2023 Revenues. For the three months ended September 30, 2024, revenues were $2.1 billion, a $0.5 billion decrease compared to $2.6 billion for the three months ended September 30, 2023. The decrease was primarily due to a $0.3 billion decrease to refining revenue reflecting lower average product crack spreads discussed below, $0.1 billion due to lower crude oil prices also discussed below. These lower average crack spreads are reflective of larger market trends. The IEA’s September 2024 report noted a slowdown in global and U.S. oil demand growth post-pandemic and its October 2024 report noted declining refining margins, primarily driven by reduced demand in China. The RVO Adjusted Pacific Northwest 3-1-1-1 index, 3-1-2 Singapore Crack Spread, and RVO Adjusted USGC 3-2-1 index declined 56%, 53%, and 52%, respectively, compared to the third quarter of 2023. Average WTI crude oil prices decreased 8% and average Brent crude oil prices decreased 8% as compared to the prior period. Please read our key operating statistics for further information. Revenues at our retail segment decreased $8.3 million primarily due to an 8% decline in fuel sales prices. Cost of Revenues (Excluding Depreciation). For the three months ended September 30, 2024, cost of revenues (excluding depreciation) was $1.9 billion, a decrease of $0.3 billion when compared to $2.2 billion for the three months ended September 30, 2023. The decrease was primarily driven by lower crude oil prices, as discussed above, a favorable change of $0.1 billion related to the termination of the Washington Refinery Intermediation Agreement and Supply and Offtake Agreement, and favorable derivative activity of $0.1 billion, partially offset by $0.1 billion of unfavorable FIFO impacts. Please read Note 9—Inventory Financing Agreements for more information on the Washington Refinery Intermediation Agreement and Supply and Offtake Agreement terminations. Operating Expense (Excluding Depreciation). For the three months ended September 30, 2024, operating expense (excluding depreciation) was $147.0 million, a $1.8 million increase when compared to $145.2 million for the three months ended September 30, 2023. The increase was driven by a $4.1 million increase related to our Montana operations, primarily repairs and maintenance and outside service costs. This increase was partially offset by a net decrease of $2.3 million across our legacy operations. Depreciation and Amortization . For the three months ended September 30, 2024, D&A was $31.9 million, a decrease of $3.4 million compared to $35.3 million for the three months ended September 30, 2023. The decrease was primarily driven by a $2.4 million decrease in D&A from our Hawaii Refinery primarily driven by assets that became fully depreciated in the second quarter of 2024. General and Administrative Expense (Excluding Depreciation). For the three months ended September 30, 2024, general and administrative expense (excluding depreciation) was $22.4 million, a $1.3 million decrease when compared to $23.7 million for the three months ended September 30, 2023, driven by lower employee costs. Equity earnings from refining and logistics investments. During the three months ended September 30, 2024, Equity earnings from refining and logistics investments, related to YELP and YPLC, were $3.0 million, a decrease of $0.9 million compared to $3.9 million for the three months ended September 30, 2023. For the three months ended September 30, 2024, our proportionate share of YELP’s net income and YPLC’s net income was $1.4 million and $1.9 million, respectively. For the three months ended September 30, 2023, our proportionate share of YELP’s net income and YPLC’s net income was $2.7 million and $1.5 million, respectively. Please read Note 3—Refining and Logistics Equity Investments for further information. Acquisition and Integration Expense. During the three months ended September 30, 2024, we incurred an immaterial amount of acquisition and integration costs. For the three months ended September 30, 2023, we incurred $4.7 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 September 30, 2024, Par West redevelopment and other costs were $4.0 million, an increase of $0.9 million compared to $3.1 million for the three months ended September 30, 2023, primarily due to an increase in redevelopment activities. Interest Expense and Financing Costs, Net . For the three months ended September 30, 2024, our interest expense and financing costs were $23.4 million, an increase of $2.6 million compared to $20.8 million for the three months ended 44 September 30, 2023. The increase was primarily due to a $6.3 million increase in debt costs, mainly higher interest expense due to higher ABL Credit Facility balances in 2024 used to fund certain inventory purchases at our Hawaii and Washington refineries and a $0.9 million decrease in interest income from our investment accounts. The increase was partially offset by a $4.9 million of inventory financing costs incurred during the three months ended September 30, 2023, related to inventory financing agreements that were terminated in the fourth quarter of 2023 and the second quarter of 2024. Please read Note 9—Inventory Financing Agreements and Note 11—Debt for further information. Other income (expense), net. For the three months ended September 30, 2024, other income was $1.3 million primarily due to a $1.5 million reduction of2024 expenses for a legal settlement unrelated to operating activities with no similar 2023 expenses. For three months ended September 30, 2023, we incurred an immaterial amount of other expense. Equity earnings (losses) from Laramie Energy, LLC. For the three months ended September 30, 2024, Equity losses from Laramie Energy, LLC were $0.3 million. For the three months ended September 30, 2024, our proportionate share of Laramie Energy’s net loss was $2.0 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 September 30, 2023. Please read Note 4 — Investment in Laramie Energy for further discussion. Income Taxes. For the three months ended September 30, 2024, income tax expense was $6.5 million, an increase of $1.9 million compared to $4.6 million for three months ended September 30, 2023, primarily related to no longer recording a valuation allowance on our deferred taxes coupled with permanent tax differences associated with non-deductible executive compensation. For three months ended September 30, 2023, we recorded an income tax expense of $4.6 million primarily related to recording a valuation allowance on our deferred taxes. Please read Note 18—Income Taxes for further discussion. Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 Revenues. For the nine months ended September 30, 2024, revenues were $6.1 billion, a $0.1 billion increase compared to $6.0 billion for the nine months ended September 30, 2023. The increase was primarily due to an increase of $0.6 billion in the contribution from the Billings Acquisition, which closed on June 1, 2023. There was a decrease of $0.5 billion in third-party revenues when comparing our legacy refining operations, of which $0.4 billion was related to lower average crack spreads and $0.1 billion was related to a 3% decrease in sales volumes primarily at our Washington refinery. The RVO Adjusted Pacific Northwest 3-1-1-1 index, RVO Adjusted USGC 3-2-1 index, and 3-1-2 Singapore Crack Spread declined 32%, 31%, and 28%, respectively, compared to 2023. Please read our key operating statistics and our three months ended Cost of Revenues discussion above for further information regarding crack spread declines. Revenues at our retail segment increased $0.7 million primarily due to a 4% increase in fuel sales volumes and a 6% increase in merchandise revenue, partially offset by a 5% decrease in fuel prices. Cost of Revenues (Excluding Depreciation). For the nine months ended September 30, 2024, cost of revenues (excluding depreciation) was $5.4 billion, a $0.4 billion increase compared to $5.0 billion for the nine months ended September 30, 2023, primarily driven by a $0.6 billion contribution from the Billings Acquisition, partially offset by decreases in refining sales volumes and a decrease in intermediation costs related to two intermediation facilities terminated in 2023 and mid-year 2024, both discussed above. Operating Expense (Excluding Depreciation). For the nine months ended September 30, 2024, operating expense (excluding depreciation) was $444.4 million, an increase of $114.2 million compared to $330.1 million for the nine months ended September 30, 2023. The increase was primarily driven by a $105.9 million increase in the contribution from the Billings Acquisition. Depreciation and Amortization . For the nine months ended September 30, 2024, D&A was $96.7 million, an increase of $8.8 million compared to $87.9 million for the nine months ended September 30, 2023. The increase was primarily driven by $12.9 million of D&A attributable to the Billings Acquisition, partially offset by a $5.8 million decrease in D&A from our Hawaii Refinery reflecting fully depreciated assets in the second half of 2023 and the second quarter of 2024. General and Administrative Expense (Excluding Depreciation). For the nine months ended September 30, 2024, general and administrative expense (excluding depreciation) was $87.3 million, an increase of $21.2 million compared to $66.1 million for the nine months ended September 30, 2023. The increase was primarily due to $13.1 million of stock based compensation expenses related to CEO transition costs in the first quarter of 2024 and a $4.0 million increase in payroll expenses, including an increase in employee headcount, a $3.5 million increase in IT expenses, and $2.8 million of expenses related to development of our renewable projects. 45 Equity earnings from refining and logistics investments. For the nine months ended September 30, 2024, equity earnings from refining and logistics investments were $12.8 million, an increase of $8.4 million compared to $4.4 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, our proportionate share of YELP’s net income and YPLC’s net income was $8.2 million and $5.6 million, respectively. For the nine months ended September 30, 2023, our proportionate share of YELP’s net income and YPLC’s net income was $2.7 million and $1.9 million, respectively. Please read Note 3—Refining and Logistics Equity Investments for additional information. Acquisition and Integration Expense. During the nine months ended September 30, 2024, we incurred an immaterial amount of acquisition and integration costs. For the nine months ended September 30, 2023, we incurred $17.2 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 nine months ended September 30, 2024, Par West redevelopment and other costs were $9.0 million, an increase of $0.5 million compared to $8.5 million for the nine months ended September 30, 2023, associated with the operation and decommissioning of our Par West facility. The increase was primarily due to an increase in redevelopment activities. Interest Expense and Financing Costs, Net . For the nine months ended September 30, 2024, our interest expense and financing costs were $61.7 million, an increase of $9.7 million compared to $52.0 million for the nine months ended September 30, 2023. The increase was primarily due to an $14.5 million increase in debt costs related to higher ABL Credit Facility balances in 2024 used to fund certain inventory purchases at our Hawaii and Washington refineries, and a $6.0 million decrease in interest income from our investment accounts opened in the first quarter of 2023, partially offset by an $11.6 million decrease in inventory financing costs incurred during the nine months ended September 30, 2023 related to inventory financing agreements that were terminated in the fourth quarter of 2023 and 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 nine months ended September 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 nine months ended September 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 nine months ended September 30, 2024, other expense was $1.4 million, a decrease of $1.7 million compared to $0.3 million of other income for the nine months ended September 30, 2023. The decrease was primarily due to $1.5 million of 2024 legal expenses unrelated to operating activities with no similar 2023 expenses. Equity Earnings from Laramie Energy, LLC. For the nine months ended September 30, 2024, Equity earnings from Laramie Energy, LLC were $2.9 million, a decrease of $7.8 million compared to $10.7 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, the accretion of basis difference was $4.8 million, partially offset by our proportionate share of Laramie Energy’s net loss of $2.0 million. 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 nine months ended September 30, 2023. Please read Note 4 — Investment in Laramie Energy for further discussion. Income Taxes. For the nine months ended September 30, 2024, income tax expense was $10.5 million, an increase of $3.8 million compared to $6.7 million for the nine months ended September 30, 2023, primarily related to no longer recording a valuation allowance on our deferred taxes coupled with permanent tax differences associated with non-deductible executive compensation. For the nine months ended September 30, 2023, we recorded an income tax expense of $6.7 million primarily related to recording a valuation allowance on our deferred taxes. Please read Note 18—Income Taxes for further discussion. 46 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). 47 As of September 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 $ 2,302 $ 180,675 $ — $ 182,977 Restricted cash 345 — — 345 Trade accounts receivable — 429,740 — 429,740 Inventories — 1,071,923 — 1,071,923 Prepaid and other current assets 8,582 73,616 — 82,198 Due from related parties 373,725 — (373,725) — Total current assets 384,954 1,755,954 (373,725) 1,767,183 Property, plant, and equipment Property, plant, and equipment 24,760 1,657,287 3,956 1,686,003 Less accumulated depreciation and amortization (17,651) (530,943) (3,452) (552,046) Property, plant, and equipment, net 7,109 1,126,344 504 1,133,957 Long-term assets Operating lease right-of-use (“ROU”) assets 7,478 427,570 — 435,048 Refining and logistics equity investments — — 90,171 90,171 Investment in Laramie Energy, LLC — — 15,661 15,661 Investment in subsidiaries 1,057,014 — (1,057,014) — Intangible assets, net — 9,764 — 9,764 Goodwill — 126,678 2,597 129,275 Other long-term assets 726 160,123 111,369 272,218 Total assets $ 1,457,281 $ 3,606,433 $ (1,210,437) $ 3,853,277 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt $ — $ 4,133 $ — $ 4,133 Obligations under inventory financing agreements — 165,168 — 165,168 Accounts payable 3,706 461,058 2 464,766 Accrued taxes (13) 51,195 — 51,182 Operating lease liabilities (37) 75,438 — 75,401 Other accrued liabilities 2,100 282,566 333 284,999 Due to related parties 187,464 179,262 (366,726) — Total current liabilities 193,220 1,218,820 (366,391) 1,045,649 Long-term liabilities Long-term debt, net of current maturities — 1,039,573 — 1,039,573 Finance lease liabilities 496 15,534 (4,131) 11,899 Operating lease liabilities 9,539 361,440 — 370,979 Other liabilities — 194,236 (63,085) 131,151 Total liabilities 203,255 2,829,603 (433,607) 2,599,251 Commitments and contingencies Stockholders’ equity Common stock 559 — — 559 Additional paid-in capital 878,789 177,505 (177,505) 878,789 Accumulated earnings (deficit) 366,667 593,421 (593,421) 366,667 Accumulated other comprehensive income (loss) 8,011 5,904 (5,904) 8,011 Total stockholders’ equity 1,254,026 776,830 (776,830) 1,254,026 Total liabilities and stockholders’ equity $ 1,457,281 $ 3,606,433 $ (1,210,437) $ 3,853,277 48 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 49 Three Months Ended September 30, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 2,143,933 $ — $ 2,143,933 Operating expenses Cost of revenues (excluding depreciation) — 1,905,200 — 1,905,200 Operating expense (excluding depreciation) — 147,062 (13) 147,049 Depreciation and amortization 437 31,397 45 31,879 General and administrative expense (excluding depreciation) 5,713 16,674 12 22,399 Equity earnings from refining and logistics investments — — (3,008) (3,008) Acquisition and integration costs (2) — (23) — (23) Par West redevelopment and other costs — 4,006 — 4,006 Loss on sale of assets, net — — — — Total operating expenses 6,150 2,104,316 (2,964) 2,107,502 Operating income (loss) (6,150) 39,617 2,964 36,431 Other income (expense) Interest expense and financing costs, net (19) (23,468) 85 (23,402) Debt extinguishment and commitment costs — — — — Other income (expense), net (7) 1,260 — 1,253 Equity earnings (losses) from subsidiaries 13,663 — (13,663) — Equity earnings (losses) from Laramie Energy, LLC — — (336) (336) Total other income (expense), net 13,637 (22,208) (13,914) (22,485) Income (loss) before income taxes 7,487 17,409 (10,950) 13,946 Income tax benefit (expense) (1) — (4,682) (1,778) (6,460) Net income (loss) $ 7,487 $ 12,727 $ (12,728) $ 7,486 Adjusted EBITDA $ (7,210) $ 54,110 $ 4,528 $ 51,428 50 Three Months Ended September 30, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 2,579,306 $ 2 $ 2,579,308 Operating expenses Cost of revenues (excluding depreciation) — 2,174,385 — 2,174,385 Operating expense (excluding depreciation) — 145,183 — 145,183 Depreciation and amortization 404 34,861 46 35,311 General and administrative expense (excluding depreciation) 7,158 16,536 — 23,694 Equity earnings from refining and logistics investments — — (3,934) (3,934) Acquisition and integration costs (2) — 4,669 — 4,669 Par West redevelopment and other costs — 3,127 — 3,127 Total operating expenses 7,562 2,378,761 (3,888) 2,382,435 Operating income (7,562) 200,545 3,890 196,873 Other income (expense) Interest expense and financing costs, net (11) (20,895) 91 (20,815) Other income (expense), net 19 (62) — (43) Equity earnings (losses) from subsidiaries 181,120 — (181,120) — Total other income (expense), net 181,128 (20,957) (181,029) (20,858) Income (loss) before income taxes 173,566 179,588 (177,139) 176,015 Income tax benefit (expense) (1) (2,151) (43,708) 41,259 (4,600) Net income (loss) $ 171,415 $ 135,880 $ (135,880) $ 171,415 Adjusted EBITDA $ (7,123) $ 257,413 $ 5,456 $ 255,746 51 Nine Months Ended September 30, 2024 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 6,142,224 $ 12 $ 6,142,236 Operating expenses Cost of revenues (excluding depreciation) — 5,422,875 — 5,422,875 Operating expense (excluding depreciation) — 444,402 (13) 444,389 Depreciation and amortization 1,164 95,375 140 96,679 Impairment expense — — — — General and administrative expense (excluding depreciation) 28,078 59,244 — 87,322 Equity earnings from refining and logistics investments — — (12,846) (12,846) Acquisition and integration costs (2) — 68 — 68 Par West redevelopment and other costs — 9,048 — 9,048 Loss on sale of assets, net — 114 — 114 Total operating expenses 29,242 6,031,126 (12,719) 6,047,649 Operating income (loss) (29,242) 111,098 12,731 94,587 Other income (expense) Interest expense and financing costs, net (19) (61,966) 265 (61,720) Interest income from subsidiaries — — — — Debt extinguishment and commitment costs — (1,418) — (1,418) Gain on curtailment of pension obligation — — — — Other income (expense), net (24) (1,421) (2) (1,447) Change in value of common stock warrants — — — — Change in value of contingent consideration — — — — Equity earnings (losses) from subsidiaries 51,658 — (51,658) — Equity earnings (losses) from Laramie Energy, LLC — — 2,867 2,867 Total other income (expense), net 51,615 (64,805) (48,528) (61,718) Income (loss) before income taxes 22,373 46,293 (35,797) 32,869 Income tax benefit (expense) (1) — (11,453) 957 (10,496) Net income (loss) $ 22,373 $ 34,840 $ (34,840) $ 22,373 Adjusted EBITDA $ (20,748) $ 231,019 $ 17,456 $ 227,727 52 Nine Months Ended September 30, 2023 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Revenues $ — $ 6,048,378 $ 66 $ 6,048,444 Operating expenses Cost of revenues (excluding depreciation) — 5,038,211 — 5,038,211 Operating expense (excluding depreciation) — 330,146 — 330,146 Depreciation and amortization 1,220 86,527 140 87,887 General and administrative expense (excluding depreciation) 21,467 44,682 (1) 66,148 Equity earnings from refining and logistics investments — — (4,359) (4,359) Acquisition and integration costs (2) — 17,213 — 17,213 Par West redevelopment and other costs — 8,490 — 8,490 Total operating expenses 22,687 5,525,269 (4,220) 5,543,736 Operating income (22,687) 523,109 4,286 504,708 Other income (expense) Interest expense and financing costs, net (37) (52,210) 273 (51,974) Debt extinguishment and commitment costs — (17,682) — (17,682) Other income (expense), net 53 248 — 301 Equity earnings (losses) from subsidiaries 465,053 — (465,053) — Equity earnings (losses) from Laramie Energy, LLC — — 10,706 10,706 Total other income (expense), net 465,069 (69,644) (454,074) (58,649) Income (loss) before income taxes 442,382 453,465 (449,788) 446,059 Income tax benefit (expense) (1) (3,064) (111,068) 107,391 (6,741) Net income (loss) $ 439,318 $ 342,397 $ (342,397) $ 439,318 Adjusted EBITDA $ (20,922) $ 588,980 $ 6,153 $ 574,211 ________________________________________ (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. 53 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 September 30, 2024 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 7,487 $ 12,727 $ (12,728) $ 7,486 Inventory valuation adjustment — 14,057 — 14,057 Environmental obligation mark-to-market adjustments — (4,432) — (4,432) Unrealized loss (gain) on derivatives — (31,196) — (31,196) Acquisition and integration costs — (23) — (23) Par West redevelopment and other costs — 4,006 — 4,006 Severance costs and other non-operating expense (2) (1,490) — — (1,490) Equity losses from Laramie Energy, LLC, excluding cash distributions — — 336 336 Depreciation and amortization 437 31,397 45 31,879 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 19 22,892 (85) 22,826 Equity losses (income) from subsidiaries (13,663) — 13,663 — Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 1,519 1,519 Income tax expense — 4,682 1,778 6,460 Adjusted EBITDA (1) $ (7,210) $ 54,110 $ 4,528 $ 51,428 Three Months Ended September 30, 2023 Parent Guarantor Par Borrower and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 171,415 $ 135,880 $ (135,880) $ 171,415 Inventory valuation adjustment — 72,823 — 72,823 Environmental obligation mark-to-market adjustments — (50,153) — (50,153) Unrealized loss (gain) on derivatives — (9,116) — (9,116) Acquisition and integration costs — 4,669 — 4,669 Par West redevelopment and other costs — 3,127 — 3,127 Debt extinguishment and commitment costs — — — — Severance costs and other non-operating expense (2) 16 598 1 615 Depreciation and amortization 404 34,861 46 35,311 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 11 21,016 (91) 20,936 Equity losses (income) from subsidiaries (181,120) — 181,120 — Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 1,519 1,519 Income tax expense (benefit) 2,151 43,708 (41,259) 4,600 Adjusted EBITDA (1) $ (7,123) $ 257,413 $ 5,456 $ 255,746 54 Nine Months Ended September 30, 2024 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 22,373 $ 34,840 $ (34,840) $ 22,373 Inventory valuation adjustment — (6,419) — (6,419) Environmental obligation mark-to-market adjustments — (18,199) — (18,199) Unrealized loss on derivatives — 33,756 — 33,756 Acquisition and integration costs — 68 — 68 Par West redevelopment and other costs — 9,048 — 9,048 Debt extinguishment and commitment costs — 1,418 — 1,418 Severance costs and other non-operating expense (2) 7,354 7,294 — 14,648 Loss on sale of assets, net — 114 — 114 Equity earnings from Laramie Energy, LLC, excluding cash distributions — — (1,382) (1,382) Depreciation and amortization 1,164 95,375 140 96,679 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 19 62,271 (265) 62,025 Equity earnings from Laramie Energy, LLC, excluding Par’s share of unrealized gain on derivatives — — (1,485) (1,485) Equity losses (income) from subsidiaries (51,658) — 51,658 — Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 4,587 4,587 Income tax expense — 11,453 (957) 10,496 Adjusted EBITDA (1) $ (20,748) $ 231,019 $ 17,456 $ 227,727 Nine Months Ended September 30, 2023 Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc. and Subsidiaries Net income (loss) $ 439,318 $ 342,397 $ (342,397) $ 439,318 Inventory valuation adjustment — 126,799 — 126,799 Environmental obligation mark-to-market adjustments — (174,111) — (174,111) Unrealized loss (gain) on derivatives — (1,151) — (1,151) Acquisition and integration costs — 17,213 — 17,213 Par West redevelopment and other costs — 8,490 — 8,490 Debt extinguishment and commitment costs — 17,682 — 17,682 Severance costs and other non-operating expense (2) 492 1,192 1 1,685 Depreciation and amortization 1,220 86,527 140 87,887 Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain) 37 52,874 (273) 52,638 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 (465,053) — 465,053 — Par's portion of interest, taxes, and depreciation expense from refining and logistics investments — — 1,726 1,726 Income tax expense (benefit) 3,064 111,068 (107,391) 6,741 Adjusted EBITDA (1) $ (20,922) $ 588,980 $ 6,153 $ 574,211 ________________________________________ (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 nine months ended September 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. 55 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 September 30, 2024 was $632.5 million, consisting of $183.0 million of cash and cash equivalents and $449.5 million of availability under the ABL Credit Facility. As of September 30, 2024, we had access to the ABL Credit Facility and cash on hand of $183.0 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 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 nine months ended September 30, 2024 and 2023 (in thousands): Nine Months Ended September 30, 2024 2023 Net cash provided by operating activities $ 99,242 $ 581,445 Net cash used in investing activities (86,319) (631,752) Net cash used in financing activities (109,047) (79,039) Cash flows for the nine months ended September 30, 2024 Net cash provided by operating activities for the nine months ended September 30, 2024 was driven primarily b y net income of $22.4 million , non-cash charges to operations and non-operating items of approximately $172.6 million, and net cash used for changes in operating assets and liabilities of approximately $95.7 million. Non-cash charges to operations and non-operating items consisted primarily of the following adjustments: • unrealized loss on derivatives contracts of $33.8 million, • depreciation and amortization expenses of $96.7 million, and • stock based compensation expenses of $22.5 million. 56 Net cash used for changes in operating assets and liabilities resulted primarily from: • an $82.5 million decrease in Obligations under inventory financing agreements primarily related to the termination of the J. Aron Supply and Offtake agreement and a decrease in crude oil prices, • an increase in deferred turnaround expenditures of $57.8 million driven by expenditures related to the turnaround at the Montana refinery, and • a $57.2 million increase in accounts receivable primarily related to the timing of collections and sales volumes, partially offset by: • a $72.7 million decrease in inventories primarily related to a $51.8 million decrease in crude oil and feedstock ending inventory, and • a $24.8 million decreases in prepaid and other expenses. Net cash used in investing activities for the nine months ended September 30, 2024 consisted primarily of: • $87.9 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 $109.0 million for the nine months ended September 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, • repurchases of common stock of $126.7 million, and partially offset by: • net borrowings of debt of $370.0 million primarily driven by activity in our ABL Credit Facility, and • 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 nine months ended September 30, 2023 Net cash provided by operating activities for the nine months ended September 30, 2023, was driven primarily by net income of $439.3 million, non-cash charges to operations and non-operating items of approximately $106.4 million, and net cash provided by changes in operating assets and liabilities of approximately $35.7 million. Non-cash charges to operations consisted primarily of the following adjustments: • depreciation and amortization expenses of $87.9 million, • debt commitment and extinguishment costs of $17.7 million, • stock based compensation costs of $9.0 million, partially offset by: • a gain of $10.7 million from our equity investment in Laramie Energy. Net cash provided by changes in operating assets and liabilities resulted primarily from: • an increase in our accounts payable primarily driven by the contribution of our Billings business, and • a decrease in inventory driven by lower crude oil and refined product prices, lower inventory volumes, and a decrease in RINs assets at our Hawaii and Wyoming refineries, 57 • an increase in our accounts payable primarily driven by the contribution of our Billings business, and partially offset by: • an increase in our accounts receivable primarily driven by the contribution of our Billings Acquisition and higher accounts receivable balances across our legacy refining portfolio, and • a decrease in gross environmental credit obligations primarily related to retirements of a portion of our prior year obligations, partially offset by increased current period obligation. Net cash used in investing activities for the nine months ended September 30, 2023 consisted primarily of: • $595.4 million for the Billings Acquisition, and • $53.7 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 in the first quarter of 2023. Net cash used in financing activities was approximately $79.0 million for the nine months ended September 30, 2023 and consisted primarily of the following activities: • net repayments under the J. Aron Discretionary Draw Facility and MLC receivable advances of $52.4 million, and • repurchases of common stock of $32.2 million, partially offset by: • net borrowings of debt of $12.7 million primarily driven by the refinancing and consolidation of our debt. Cash Requirements. There have been 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 material changes to critical accounting estimates disclosed in our Annual Report on Form 10-K for the nine months ended September 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 58 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 the impact of future events on our existing business, the anticipated synergies and other benefits of the recently acquired ExxonMobil Billings refinery and associated marketing and logistics assets (the “Acquisition”), including renewable growth opportunities; the anticipated financial and operating results of the Acquisition, and the effect on the Company’s cash flows and profitability (including Adjusted EBITDA and Adjusted Net Income); our ability to raise additional debt or equity capital; our ability to make strategic investments in business opportunities; and the estimates, assumptions, and projections regarding future financial condition, results of operations, liquidity, and cash flows. These and other forward-looking statements could cause the actual results, performance, or achievements of Par and its subsidiaries to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “will,” “would,” “could,” “should,” “seeks,” or “scheduled to,” or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act, and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. The forward-looking statements contained in this Quarterly Report on Form 10-Q are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control, including those set out in our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q under “Risk Factors.” In addition, management’s assumptions about future events may prove to be inaccurate. All readers are cautioned that the forward-looking statements contained in this Quarterly Report on Form 10-Q are not guarantees of future performance; and we cannot assure any reader that such statements will be realized or that the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors described above and under Critical Accounting Estimates and Risk Factors included in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q. All forward-looking statements speak only as of the date they are made. There can be no guarantee that the operational and financial measures the Company has taken, and may take in the future, will be fully effective. We do not intend to update or revise any forward-looking statements as a result of new information, future events, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.