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Financial report summary
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CanadaRisks
- Our operations are subject to operational hazards that could expose us to potentially significant losses.
- The volatility of crude oil prices and refined product prices and changes in the demand for such products may have a material adverse effect on our cash flow and results of operations.
- Instability in the global economic and political environment can lead to volatility in the cost and availability of crude oil and prices for refined products, which could adversely impact our results of operations.
- Geopolitical conflicts, including the conflict between Russia and Ukraine, could increase the cost of our crude oil feedstocks and affect the demand for our products.
- Many of our refined products could cause serious injury or death if mishandled or misused by us or our purchasers, or if defects occur during manufacturing.
- Our business is impacted by increased risks of spills, discharges, or other releases of petroleum or hazardous substances in our refining and logistics operations.
- Our operations, including the operation of underground storage tanks, are also subject to the risk of environmental litigation and investigations which could affect our results of operations.
- Our insurance coverage may be inadequate to protect us from the liabilities that could arise in our business.
- We are subject to interruptions of supply and increased costs as a result of our reliance on third-party transportation of crude oil and refined products to and from our refineries.
- The financial and operating results of our refineries, including the products they refine and sell, can be seasonal.
- We rely upon certain critical information systems for the operation of our business and the failure of any critical information system, including a cybersecurity breach, may result in harm to our business.
- Climate change may increase the frequency and severity of weather events that could result in severe personal injury, property damage, and environmental damage, which could curtail our operations and otherwise materially adversely affect our cash flows.
- Through our investment in Laramie Energy, we are subject to all of the risks of natural gas and oil exploration and production, but we lack the ability to control Laramie Energy’s operations and our ability to extract value is limited.
- Meeting the requirements of evolving environmental, health, and safety laws and regulations, including those related to climate change and marine protection, could adversely affect our performance.
- Renewable fuels mandates and other mandates may reduce demand for the petroleum fuels we produce, which could have a material adverse effect on our business results of operations and financial condition.
- Potential legislative and regulatory actions addressing climate change could increase our costs, reduce our revenue and cash flow from natural gas and oil sales, or otherwise alter the way we conduct our business.
- We will be required to undertake significant environmental remediation and other corrective actions in connection with certain prior acquisitions.
- We may incur significant costs and liabilities resulting from performance of pipeline integrity programs and related repairs.
- Compliance with and changes in tax laws could materially and adversely affect our financial condition, results of operations and cash flows.
- The locations of our refineries and related assets in certain limited geographic areas create an exposure to localized economic risks.
- We must make substantial capital expenditures at our refineries and related assets to maintain their reliability and efficiency. If we are unable to complete capital projects at their expected costs or in a timely manner, or if the market conditions assumed in our project economics deteriorate, our financial condition, results of operations, or cash flows could be adversely affected.
- The retail market is diverse and highly competitive. Aggressive competition and the development of alternative fuels could adversely impact our business.
- If we are unable to obtain crude oil supplies for our refineries without the benefit of our Supply and Offtake Agreement, LC Facility, and ABL Credit Facility, the capital required to finance our crude oil supply could negatively impact our liquidity.
- The Supply and Offtake Agreement and LC Facility expose us to counterparty credit and performance risk.
- Inadequate liquidity could materially and adversely affect our business operations in the future.
- Our ability to generate cash and repay our indebtedness or fund capital expenditures depends on many factors beyond our control and any failure to do so could harm our business, financial condition, and results of operations.
- Our substantial level of indebtedness could adversely affect our financial condition.
- Despite our current debt levels, we may still incur substantially more debt or take other actions which would intensify the risks associated with our substantial leverage.
- Our debt agreements impose significant operating and financial restrictions on us.
- We may incur losses and incur additional costs as a result of our forward-contract activities and derivative transactions.
- Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly and otherwise impact our ability to incur indebtedness for acquisitions and working capital needs.
- We cannot be certain that our net operating loss tax carryforwards will continue to be available to offset our tax liability.
- We may be unable to successfully identify, execute, or effectively integrate future acquisitions, which may negatively affect our results of operations.
- Acquisitions may prove to be worth less than we paid because of uncertainties in evaluating potential liabilities.
- A substantial portion of our refining workforce is unionized and we may face labor disruptions that would interfere with our operations.
- Changes in the availability of and the cost of labor could adversely affect our business.
- Adverse changes in global economic conditions and the demand for transportation fuels may impact our business and financial condition in ways that we currently cannot predict.
- Because we have no near term plans to pay cash dividends on our common stock, investors must look solely to stock appreciation for a return on their investment in us.
- If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock, or if our operating results do not meet their expectations, our stock price could decline.
- The price of our common stock historically has been volatile. This volatility may affect the price at which you could sell your common stock.
- An impairment of an equity investment, a long-lived asset, or goodwill could reduce our earnings or negatively impact the value of our common stock.
- The market for our common stock has been historically illiquid, which may affect your ability to sell your shares.
- Delaware law, our charter documents, and concentrated stock ownership may impede or discourage a takeover, which could reduce the market price of our common stock.
- We may issue preferred stock with terms that could adversely affect the voting power or value of our common stock and any future issuances of our common stock may reduce our stock price.
- Investor sentiment towards climate change, fossil fuels, sustainability, and other Environmental, Social, and Governance (“ESG”) matters could adversely affect our business and our stock price.
Management Discussion
- Net Income. Our financial results for the year ended December 31, 2023 improved from a net income of $364.2 million for the year ended December 31, 2022 to $728.6 million for the year ended December 31, 2023. The increase was driven by a $274.3 million increase in refining segment operating income, an increase of $116.0 million in income tax benefit, and a $15.7 million increase in logistics segment operating income, partially offset by a $29.0 million increase in general and administrative expenses, a $13.8 million increase in acquisitions and integration expenses related to our Billings Acquisition,
- and a $2.4 million increase in expenses related to Par West operations and redevelopment. Please read the discussions of segment and consolidated results below for additional information.
- Adjusted EBITDA and Adjusted Net Income. For the year ended December 31, 2023, Adjusted EBITDA was $696.2 million compared to $643.4 million for the year ended December 31, 2022. The improvement was primarily related to an increase of $54.7 million in our refining segment, an increase of $22.3 million in our logistics segment, and an increase of $8.0 million in our retail segment, partially offset by a decrease of $32.3 million in our corporate segment. Please read the discussion of segment results below for additional information.