Q1 2021 Par Pacific Holdings Inc Earnings Call
[music].
Good day and welcome to the par Pacific first quarter 2021 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on <unk>.
The town center to withdraw your.
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Please note. This event is being recorded I would now like to turn the conference over to Ashish <unk> Patel. Please go ahead.
Thank you Matt welcome to the par Pacific's first quarter earnings Conference call. Joining me today are William Pate, President and Chief Executive Officer, well months Liang, Chief Financial Officer, and Joseph Israel, President and Chief Executive Officer of Park Trillium.
Before we begin note that our comments today may include forward looking statements any forward looking statements are subject to change and are not guarantees of future performance or events are subject to risks and uncertainties and actual results may differ materially from these forward looking statements accordingly investors should not place undue reliance on forward looking statements and we disclaim any obligation to update or revise them.
I refer you to our investor presentation on our website in two of our filings with the SEC for non-GAAP reconciliations and additional information.
I'll now turn the call over to our President and Chief Executive Officer, Okay.
Thank you assuming.
Good morning to our conference call participants our first quarter results reflect the continuing demand suppression brought out by the global pandemic. However, we noted several positive developments in the United States during the first quarter and.
An increase in vaccination rates, improving mobility trends growing employment and increasing business openings.
These factors indicate that our industry is that of key inflection point.
First quarter adjusted EBITDA was the loss of $43 million and adjusted net loss was $1 55 per share.
These results included a $47 million noncash prior period Mark to market expense.
In March we were pleased to see substantial improvement in our refineries profitability.
This was a welcome change in market conditions continued to improve early in the second quarter.
Air travel to Hawaii increased significantly with the advent of spring break.
This growth boosted our logistics segment utilization and profitability as the neighbor island demand approach normal.
Passenger arrivals to the state are now approximately 65% of pre pandemic levels, primarily driven by increases in domestic travel from the U S mainland.
International arrivals continue to lag domestic trends due to lower vaccination rates in key nations like Japan.
Right the slow international tourists recovery in Hawaii, we can operate our refinery in the range of 85000 barrels per day and easily place all of our refined product in local markets.
On the mainland product cracks have improved seasonally as inventories have returned to normal levels in refined products demand recovers.
<unk> of our improved over prior year, even when adjusted for the record rens prices the.
Texas freeze knockout of number of refining units and as a result.
Inventories are now at normal and even low levels in some pads.
<unk> has particularly benefited from the improving environment.
We expect our retail segment to rebound from the weaker Q1 performance as crude oil prices stabilize and traffic volumes increase.
Our northwest retail unit began rebranding to our proprietary non Nam convenience store brand. This winter and we expect this initiative will boost segment profit in coming quarters.
In Washington State several pieces of legislation of impasse to help reduce greenhouse gas emissions.
If these bills are signed by Governor Inslee, they will enact cap and trade limitations on greenhouse gas emissions and low carbon fuel standard regulations similar to the California framework.
We expect these regulations will have a significant impact on the industry, although establishing the regulatory framework will take time.
We're confident that our operations are well positioned for these new regulations, given our low scope one greenhouse gas emissions are newly completed renewables logistics system and our unique product yield.
During the first quarter, we closed two significant transactions to continue to increase our liquidity, we completed a $116 million sale leaseback of certain real estate properties and an $87 million of equity issuance.
Our liquidity of net debt position are in the best shape since the closing of our Tacoma refinery acquisition in January 2019.
Our current liquidity of $287 million, the substantially greater than liquidity levels at the end of 2019, when we faced three major turnarounds and Unbeknownst to us of historic refining downturn.
Our net debt position is also down to $462 million more than $45 million below our net debt level at year end 2019.
Overall, we anticipate improving profitability as the economy recovers.
Cracks in Singapore are in steep contango anticipating increasing demand going.
Going forward, we expect much of the global demand growth to be distillate refined product demand softness is now largely concentrated in jet fuel.
The largest domestic jet fuel markets like the United States and China are rapidly recovering to pre pandemic levels.
The remaining demand recovery will largely revolve around international travel as countries open their borders to other markets.
There is a limited global recovery underway there are occasional setbacks like the current surge in India.
Volatility is high as the market attempts to identify recovery trends.
Nonetheless after the market has fully recovered we expect the balanced market with high utilization as a result of the refinery closures during the pandemic.
At this time I'll turn it over to Joseph to discuss our operations in more detail. Thank you Bill.
In the first quarter, Oh system demonstrated safe and reliable operations, along the smooth execution of our plan.
In Washington.
In addition on the major maintenance is planned for the rest of the year for all of our entire system.
Man recovery.
<unk> margin improvement.
The markets.
In terms of decelerated with the.
Seasonal trends.
Mostly for our Wyoming, and Washington refineries.
Gross structure and contractual repositioning mainly in Hawaii.
To support the Lone Mountain sculpture.
Our Wyoming 321 index in the first of all.
It was $20 97 per barrel on.
Refinery throughput averaged approximately 15000 barrels per day.
Your line is the adjusted gross margin in the quarter was two loans and 35 cents per barrel, including approximately $8.50 per barrel.
Prior period amongst the amongst the expense.
Production costs were slightly elevated.
All of them and since per barrel due to timing.
But the as mentioned in the past we are expecting to average <unk> two.
Two six new loans and 50 cents per barrel for NAV.
Annual basis.
So far in the second quarter of.
The Wyoming 321 index has averaged over $28 per barrel and.
And we are well position the supply the strong demand as we transition, but the gasoline season in the Rocky Mountains.
The second quarter throughput target is in the 17000 18000 barrels per day range.
In Washington, we are.
Executed our plan 20 days oil to oil zone.
Time and on budget.
Oh first quarter the Pacific Northwest 5221 Index was 11 46 cents per barrel on the E&S basis.
And the refinery throughput.
Including in the tone of the on impact.
Average approximately 32000 barrels per day.
Although we announced the adjusted gross margin was a negative $1.33 per barrel.
Including an estimated negative $1 30 per barrel.
The impact.
And then the approximately 3 billion loans and 38 cents per barrel.
Period.
The mark to market the previous Bryan Peery amongst the market.
Expense.
Production costs were for the loans and 36.
Per barrel in the quarter.
So far in the second quarter on the 5221 index has averaged close to $15 per barrel.
The planned throughput is approximately 39000 barrels per day.
NOI of.
Singapore 312 index in the first quarter two of $3 80 per barrel of rent basis.
The realized crude differential.
Bridged $1 <unk> per barrel premium to Brent.
Throughput average approximately 81000 barrels per day and other arena.
The adjusted gross margin was the.
The negative 46 cents per barrel, including an approximately $3.57 per barrel price.
The period Mark to market the expense.
Production cost of $3 of 97 cents per barrel.
Clothing, approximately 40 per barrel of non recurring maintenance and transition cost from August.
The fresh wave of COVID-19.
In Asia, the men recoveries slowdown and Singapore free one to index.
Average approximately $3.65 per barrel, so far in the second quarter.
However.
Tourism and activity surging of Hawaii, mainly from the U S mainland.
Triggering higher demand for both of them.
All of the estimated crude differential is on Buena and 92 cents per barrel premium per Brent.
The second quarter throughput target is in the 82 to 85000 barrels per day range.
And finally team is focused on debottlenecking opportunities.
The crude flexibility as we increase the utilization and get closer to over 94000 barrels per day nameplate capacity.
In summary.
We are excited to put down on the activities behind and maximize on the wassa to utilization.
As we transition back.
Positive profitability territory.
And with that ill turn the corner of who will review our consolidated results.
Thank you Joseph.
First quarter adjusted EBITDA and adjusted earnings were a loss of $43 million and $84 million or $1 55 per fully diluted share.
Focusing on accounting items first.
Finding results include a $47 million of prior period, Mark the market expense related to the 2019 and 2020 renewable fuel standard of compliance years.
In addition, Wyoming refining results benefited from of $7 million first in first out benefit in a rising price environment.
Impacting our GAAP results was the $64 million gain related to the sale of certain Hawaii retail real estate as well as approximately $1 5 million in debt extinguishment costs related to redeeming property level financing.
Shifting to segment results.
Retail segment, adjusted EBITDA contribution was $8 million compared.
Compared to $16 million in the fourth quarter of 2020.
The reduction was largely driven by margin compression in a rising price environment, while volumes remained below pre pandemic levels.
Of March showed a material improvement over the early part of the quarter with margin stabilizing and volume is beginning to grow compared to recent months.
Same store sales fuel volumes were down roughly 13%.
While merchandise sales were up approximately 3% compared to the first quarter of 2020.
The logistics segment adjusted EBITDA contribution was $16 million up $7 million from the fourth quarter of 2020.
The improvement was driven by a full quarter of Hawaii neighbor Island demand growth as well as increased Wyoming sales post turnaround.
Washington throughput was marginally impacted by the turnaround activities during the quarter.
Hawaii neighbor island activity levels increased throughout the quarter, culminating in March.
Looking forward a full quarter of March level demand would bode well for the second quarter of Hawaii contributions.
The refining segment recorded segment adjusted EBITDA loss of $55 million the.
Prior period noncash Mark to market expense of $47 million was split $26 million in Hawaii $10 million in Washington, and $11 million in Wyoming.
Excluding the prior period Mark to market expense, the refining segment adjusted EBITDA would be of loss of $9 million.
Notwithstanding of rapidly increasing price environment that squeezed, Hawaii refining gross margins on fuel oil we continue to see improvements in our adjusted gross margins relative to our benchmark indices.
Washington results were negatively impacted by compressed margins on asphalt and of rising flat price environment as well as lower sales due to turnaround activities.
Wyoming saw improvement throughout the quarter with volumes and margins expanding steadily.
Laramie generated adjusted EBITDAX of $54 million and net income of $40 million for.
For the first quarter of 2021 of.
The largest driver of this improved financial performance was gas price realizations of $6 83.
Related to favorable market positioning during winter storm Yuri.
First quarter cash consumed from operations was $31 million.
Excluding the impact of Rins and deferred turnaround expenditures net working capital was a use of approximately $8 million.
Capital expenditures were $8 million and accrued deferred turnaround expenditures were $6 million totaling approximately $14 million.
Crude cash interest equaled $16 million.
Our quarter end liquidity totaled $287 million made up of $215 million of cash and $72 million in availability.
This reflects the completion of the $116 million sale leaseback repayment of the $53 million in property of obligations and the issuance of $87 million in common stock.
In addition, we have recently extended the J Aron agreement by one month and expect to enter into a multiyear extension shortly.
With our liquidity on hand, we are well positioned the cash settle the upcoming convertible note if required as well as consider other alternatives to reduce our funding costs.
First quarter total operating expense plus logistics segment cost of goods sold increased approximately $4 million compared to the Q2 through Q4 2020 average the increase was largely driven by increased R&M expense utility costs due to higher flat prices insurance and approximately one.
Of the lease expense associated with the sale leaseback transactions partially.
The offset by reduced logistics commitments and other cost savings initiatives.
This concludes our prepared remarks, operator, I'll turn it back to you for Q&A.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys. If at anytime you question. That's been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question will come from Phil Gresh with the Jpmorgan. Please go ahead.
Yes, hi, good morning.
Yes, My first question would be just how you.
You commented a bit in the prepared remarks about how you see.
Things trending here in the second quarter.
Some of your peers have been willing to talk about.
April EBITDA performance.
I wasn't sure if you'd be willing to lean out their share any information there and in particular.
How things are going in the Hawaii. It looked like if you back out the mark to market.
The FX is a pretty strong capture rate in the first quarter, so any color there.
Sure. Thanks, Phil This is bill.
We are seeing.
A pretty significant change in profitability.
Especially if you compare January and February to March and on but I think.
We started to see really increased runs and all of our refineries in March and by the end of March really pushing the refineries in operational reliability, then becomes the key factor too to achieving nameplate.
And so it's more a matter of market trends and you can see that.
In all of our markets with our market indices cracks had been improving.
And we believe we can improve our capture overtime in Hawaii, its largely related to some of the contractual improvements, but there are other factors as well and obviously by increasing throughput at every refiner. We also think we can get our operating costs down to a more manageable level. So.
We're at a point in the cycle, where the profitability for our refining business will improve materially and you started to see the improvement from logistics in Q1.
Point out that improvement was really on the backs of increased throughput in sales in March and so we expect to see additional improvements in logistics going forward. So.
Overall things look pretty good retail obviously, we did.
We had a rough quarter, but keep in mind that was on the back of the almost a record quarter in Q4.
We also youre starting to see some of the impact of the sale leaseback, because we closed that.
At the end of February so that that will be of factor going forward and then we started transitioning our northwest retail stores to our own brand and that has some.
Disruption.
But I do think going forward as we transition of that brand and that actually allows us to change our supply relationships and improve our profitability I think we're really well positioned in all of our units.
We as we move forward as long as the market cooperates and we're starting to see that cooperation.
Okay great.
My second question.
It would be a bit of the macro one I appreciate all of the.
The color you provided in the slides around sensitivity of et cetera, if I look at the Singapore crack spread.
Relative to the two U S crush spreads of they've all gotten the two U S crack spreads have gotten back to.
The five year average levels.
We're closer to it whereas Singapore has lagged.
Touched on some of the.
Factors, there, but do you think the Singapore crash can get back to normalized levels, just with the demand recovery or do you see of supply factors and the.
The Asia.
Needing to come to bear to help balance of the market.
Well certainly there has been a significant increase in supply over the last year and a half but keep in mind. There's also been a lot of rationalization and even in the last 24 hours shell.
Accelerated the reduction in <unk>, Singapore refinery.
500000 barrel the day refinery they were supposed to ratchet it back to 300000 barrels at the end of 2023 and they announced in the last 48 hours that they're going to do that at the end of July. So we are seeing supply change in the market I would also point out that when you look at the Singapore cracks keep in mind. It does not include the impact of rents and so a lot of the <unk>.
Impact, we're seeing in the local and the mainland U S market.
Is driven by higher rins prices and higher agricultural prices, which drive ethanol and biofuels.
In you don't have that impact in the Singapore market.
And then the Singapore market I think there is just more of an international factor there given international travel in the relationship of nations and how locked down the countries are there. So I think that market will return to.
Some kind of historical means.
But we're going to we're in for a lot more volatility everywhere, whether it's the U S or Asia, just given all of the changes that are affecting the industry.
And let me add the common theme in all of our markets.
Gasoline crack spreads of scores are strong as consumers zone, one back on the road.
Really the wildcard is jet fuel recovery.
As we lost channel three to 4 million barrels per day of demand in 2020 and.
Having day, how does the time till it comes into the air, especially with international flights and the challenge with jet fuel and this is a global challenge.
In total the diesel crack spreads now and even with the very healthy demand profile you per day.
Right.
For the diesel crack spreads too.
As the Homegoods the refineries.
To continue the input.
Jet fuel into diesel.
And the Justice point I think what we typically track is a pretty good barometer of.
Really that.
<unk> is really just the the jet regretted basically the spread between jet fuel and Singapore diesel and again, we've seen that narrowing over the last two weeks and again I think that's a positive indicator for the relative value of those two products and ultimately I think that's a pretty good barometer to watch.
With respect to.
Ultimately when jet starts getting produced on purpose is what I'd say.
That all makes sense, thanks a lot.
Our next question will come from Neil Mehta with Goldman Sachs. Please go ahead.
Hi, This is carly on for Neil Thanks for taking the questions. This morning, I wanted to start off on retail of the quarter was a little lighter than normal there and you touched on it a bit in the prepared remarks, but can you just walk through the moving pieces that impacted results in <unk> and then talk a little about how those dynamics have evolved into two camps here across both of your Mark.
Right.
Sure part of it as well I think first on the volume side you can see in the.
In the first quarter, our volume doing lagged where we were in the fourth quarter part of that is fewer days in the first quarter, but I think you also had just a little bit of a lull that occurred.
In our markets and so as I referenced I think we'd be march as being materially different than probably January and February from a volumetric standpoint.
And then you heard Bill referenced this we are also in the processing of the northwest of.
Transitioning our brand.
Really during the early part of the quarter and there's some disruption that occurs with that.
And then the probably additional impactful pieces the rapid increase in crude prices compressed margin. So we typically see.
The street prices are sticky.
In supply cost move faster so in a rapidly rising price environment like we are in in Q1, we tend to see margin compression those of the big.
Factors that impacted the compression on the retail side and as bill referenced the.
The.
The stabilization of the crude flat prices as.
As well as the ongoing recovery in our markets is positive for a rebound on the retail segment.
Carly This is bill I would just add one other thing, which is especially with respect of gasoline and Hawaii, It's really a it's a product where it's consumed largely by the local.
<unk>. So the employment trends are probably the bigger driver of gasoline consumption, particularly for our network because we tend to be Oahu focused and so even as we see passenger arrivals ramping up in the neighbor islands, that's not going to have the kind of impact on gasoline volumes that we'll see on jet and what we really watch when we think about gasoline.
Returning to normal, but really watching of return to employment.
So that's what puts people back on the road in Oahu, and Thats, probably going to lag and really depend on the international revivals in a return to of the tourist population and the shopping population if you will.
Honolulu.
That's helpful. Thank you and then the follow up is is around brands and I. Appreciate you breaking out the mark to market impact there we have the Supreme Court oral arguments in the last couple of weeks I would love to get your read on the key takeaways from that process, thus far and ultimately how do you see pars exposure of kit rent obligation.
So really the 2019 to 2021 compliant tiers.
Yes. This is bill I'll start and I'll, let will kind of cover of any of the granularity, but first of all.
But I think the small refineries council did a great job of explaining why the law permits small refiners the demonstrate hardship to seek an exemption at any time and so.
As you know this has been the EPA has established policy since the inception of the RFS back in 2007.
And it's been that way under three different administrations to Republican and one Democratic administration and only in the last few months in the wake of the 10th circuit opinion as the EPA changed that stance.
We certainly expect the Supreme Court to reverse the 10th circuit and I think when that happens the EPA will grant us our waivers for 2019 and 2020 will cover how we account for that.
But.
I think.
That's why we have referenced the mark to market in a different way and I think the factors that are driving pricing are somewhat related to this issue.
Unfortunately rens.
And this is this is probably unfortunate for a lot of administrative regulations, it's become more of a political instrument than of consistent policy and the only thing worse than government regulation is government regulation, that's become a political football.
Pardon me with respect to the accounting for the Rins as we referenced the $47 million Mark to market. Our net liability at the end of the first quarter was roughly $126 million based on the $1 38 average rent price.
And so I think one thing you should just keep in mind as well as we look forward to the managing messes Ulta.
Ultimately the renewable fuel standard of lives you did the first settlement for up to two consecutive compliance yours.
So what this would do is this would allow us to the first settlement of our 21 compliant share until the 2023 time frame.
Based on our operations and commercial activities, we estimate our year end 2021 rents would be valued at approximately $100 million holding prices constant as of $3 31.
And so I think what this asset available to support our prior period settlement obligations, we think our net cash requirement to the extent of the court ruled against us.
Would be substantially less than $125 million.
And again as Bill said as the oral arguments recently occurred I think we expect the Supreme Court reversed the lower court's decision in the for the EPA to grant us the waivers for the 19 and 20 years.
I appreciate the color. Thanks.
Our next question will come from Matthew Blair with Tudor Pickering Holt. Please go ahead.
Hey, good morning, everyone. Joseph I was a little surprised at the crude this guidance employee of it looks like it's getting.
More expensive for you by about 90 cents per barrel in Q2 compared to Q1.
<unk>.
Are there any particular crudes that are moving against the here and could you also talk about how.
Tanker costs are trending for you.
Good morning.
Matt it's not a question of quantity.
Hi, Praful.
Running this quarter versus the prior quarter, just remember of the two three months lag that we have in our <unk>.
Pricing in the.
And the good it will be running in the second quarter is the one.
The way the.
The positive of the league.
Covered around the world and it is built in the price you can so you can see it in the flat price as the windows of the differential.
The Matt This is will the Joseph referenced.
The crude that we consumed during the first quarter was largely procured or committed to during the late third or fourth quarter of 2020, so reflecting probably more of the of.
Challenging market environment and so.
Again, I think we're seeing the shape of the curve also shift from contango to backwardation.
And then so those of the major factors that drive the modest increase on the crude diff side and on the freight side I think it's been relatively stable.
So again, I don't think anything that you'd call out there.
<unk>.
Sounds good thanks, and then.
You can put up excellent.
The number of $54 million compared to about $12 million last year.
I guess to your accounting that doesn't affect our EPS, but I guess could you just talk about the economic benefits of par in the.
The flaring me what is the one where you're going to do with that the that extra cash generated the does that go to debt reduction or I guess increased growth.
Yes, just overall update on the army of it'd be great.
Matthew you are correct that doesn't impact our financial results. Ultimately I believe Laramie is management's plans is to take that incremental cash that was generated and use it to pay down debt.
And again I think Laramie is in a position where ultimately it's capital structures improving but this is still a very challenging backdrop for a natural gas producer.
Notwithstanding the impressive quarter that they had and so again I think we're continuing to work with Laramie management and the other stakeholders there to ensure that we maximize.
The potential value of of our equity stake there overtime.
Great. Thank you very much.
Our next question will come from Manav Gupta with credit Suisse. Please go ahead.
Hi, I just had a couple of quick accounting questions I think your mark to market number on the range you out of indicating is $47 million. When we looked at two of your adjusted EBITDA calculations and.
The number of over if there is the RIN loss in excess of net obligation at about $29 million can you just help me reconcile those two numbers 47 versus 2009.
Sure Manav. This is will so keep in mind its really two separate issues.
To understand the.
The non-GAAP adjustment.
The first need to understand our GAAP accounting and so again, our GAAP accounting today as our liability for Rins are carried at market. So in a rising price environment, our liabilities increasing.
Our assets are carried at cost so the asset values not increasing.
And what that non-GAAP adjustment reflects is really in a rising price environment of increasing the value of our rent assets to a market price.
So again, it's not related to the $47 million of.
The $47 million reflects the fact that we haven't opened RIN position for the 2019, and 2020 years and the price increased and so.
That's what the $47 million represents is really the balance sheet item related to our prior period open position.
Okay. Thank you.
And yes, what is the open position in terms of number of gallons not the dollar amount of what's the actual gallon.
The open position at this point of time.
We're not going to share the volumes, but just the dollars is approximately $125 million.
And you said Thats. The 131, okay. Thank you for taking my question. Thank you.
Again, if you have a question. Please press star then one to be joined into the queue. Our next question will come from Jason <unk> with Cowen. Please go ahead.
Yeah, Hey.
Thanks for taking my question.
First of all of that I ask on the equity raise.
You did can you just talk about the logic behind it I mean, it seems like liquidity seems to be in a pretty good position right. Now. So why do you decided to go ahead of an issue more shares in.
Can you just elaborate on where youre going to potentially use those proceeds and all of the follow up thanks.
Sure Jason Thanks for the question, Yes, I think the principal.
Process behind the equity raise was.
Really trying to give us the tools that we need to.
Avail ourselves of lowering our cost of senior debt funding again, if you looked at our weighted average cost of debt capital today, it's around eight 5%.
Just substantially higher than I think most of our peers.
And so again I think what the capital raise avails us of is is ultimately the pathway towards reducing our cost of.
Of debt capital, So I think thats, the principal thought process behind improving our liquidity and also the <unk>.
<unk> for the or evaluating it also gives us additional.
Flexibility in the way in which we can address the convertible note debt matures.
In June.
Are you able to pay down debt without much friction cost.
Yes, we do have pre payable debt and we do have debt debt.
Can be called.
Kind of per the indentures of credit agreements.
Alright.
Just let us know, which one of those are.
We're not going to get into the specifics of which instruments, we would use to pay down, but I think debt reduction and lowering our funding cost is I think one of our principal financial objectives. This year.
Got it and then my second question just on the Oi margin. It does seem like the margin strength and excluding.
The Mark to market impacts are you seeing any benefit from these new commercial contracts that you mentioned would be kicking in in the first quarter and can you give us any indication of what those magnitude the.
Magnitude of that benefit was in of.
That's sticky.
Sticky and it's going to continue into the future.
Sure.
Jason This is well I think the best way to measure that is to look at our Singapore 312 index that we publish.
The track the crude differential that we provide and look at what we will say is the available.
The margin in the market compare that against our adjusted gross margin per barrel and I think what Youll see is in Q1.
Trend that really started in Q4.
But that ultimately our capture our adjusted gross margin relative to those indices is improving and that reflects the contractual improvements that we've been discussing.
Over the last several quarters.
Great. Thanks.
Thanks.
This concludes our question and answer session I would like to turn the conference back over to William Pate for any closing remarks.
Thank you operator.
We ended the first quarter with our refineries running at their highest level since the beginning of 2020 and product tracks are moving upward as the world returns to normal.
We look forward to increasing profitability on the back of these trends as we enter the summer driving season and have a good day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.