When you visit your local CITGO to fill-up with gas, grab a snack, a hot cup of coffee, some groceries, and your breakfast, lunch or dinner, you're walking into a locally owned and operated business.
HOUSTON, Nov. 13, 2020 /PRNewswire/ -- The Company's third quarter results were driven by the economic effects of the COVID-19 pandemic, which affected the refining industry as a whole, and were further affected by an eight-week shutdown at the Lake Charles, La. refinery due to Hurricanes Laura and Delta. As a result of these factors, CITGO Petroleum Corporation ("CITGO") reported a net loss of $248 million for the third quarter of 2020 along with EBITDA1 of $(212) million and adjusted EBITDA of $(183) million.
Operations at the Lake Charles refinery were safely shutdown in advance of Hurricane Laura, and the refinery experienced no safety issues or hydrocarbon releases arising from the direct impact of the storm. When Hurricane Delta struck six weeks later, shortly after the repaired refinery had restarted, the facility was secured, shutdown and again experienced no safety or hydrocarbon releases. Post-Hurricane Delta start-up was successfully completed in late October.
"The ongoing impact of COVID-19 and a category four hurricane made the third quarter particularly difficult," said President and CEO Carlos Jordá. "We were able to quickly adjust our operations throughout our system while Lake Charles was offline, and at the same time continued to adjust cash spending and aggressively manage expenses to cope with the negative conditions affecting the U.S. refining sector. We are very thankful our Lake Charles employees made it through the hurricanes safely, and thanks to their hard work the refinery is now back up and running."
In this extremely challenging margin environment, the Company remains focused on optimizing operations to improve gross margin, reducing costs where possible and deferring discretionary capital to manage liquidity.
Third quarter operational and performance highlights:
CITGO announced several notable personnel changes:
While the announcement in early November of a promising COVID-19 vaccine – and subsequent strong rallies in both the oil and equities markets – provide concrete reasons for optimism, significant near-term challenges remain for the refining industry. Here are the main developments during the third quarter:
While the effects of the COVID-19 pandemic remain the largest risk to energy demand, the refining industry continues to adapt by making significant cost reductions. At the same time, the U.S. economy staged an uneven recovery from the severe recession earlier this year. After falling at an annualized rate of more than 31% in the second quarter, the largest decline ever, U.S. GDP rose by a record 33% in the third quarter. The combination of massive fiscal stimulus provided by Congressional passage of the CARES Act, plus aggressive actions by the Federal Reserve including adoption of near-zero interest rates, has provided a record level of support to counter the economic downturn. Against this backdrop, and given the multiple measures CITGO has taken to exercise cost discipline and complete refinery turnarounds, the company believes it is well-positioned to benefit when refining industry market conditions improve.
Headquartered in Houston, Texas, CITGO Petroleum Corporation is a recognized leader in the refining industry with a well-known brand. CITGO operates three refineries located in Corpus Christi, Texas; Lake Charles, La.; and Lemont, Ill., and wholly and/or jointly owns 42 terminals, six pipelines and three lubricants blending and packaging plants. With approximately 3,300 employees and a combined crude capacity of approximately 769,000 barrels-per-day (bpd), CITGO is ranked as the sixth-largest, and one of the most complex independent refiners in the United States. CITGO transports and markets transportation fuels, lubricants, petrochemicals and other industrial products and supplies a network of more than 4,500 locally owned and operated branded retail outlets, all located east of the Rocky Mountains. CITGO Petroleum Corporation is owned by CITGO Holding, Inc.
Certain information included in this release may be deemed to be "forward-looking statements" under applicable securities and other laws that involve risks and uncertainties. These statements relate to, among other things, expectations regarding our industry, business strategy, goals and expectations concerning our market position and future operations or performance. We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "would" and similar terms and phrases to identify forward-looking statements, which speak only as of the date of this release.
Any forward-looking statements are not guarantees of future events and are subject to risks and uncertainties that could cause actual events, developments and business decisions to differ materially from those contemplated by these forward-looking statements. These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions (including current market conditions), expected future developments and other factors they believe to be appropriate. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate, and the forward-looking statements based on these assumptions could be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or could otherwise materially affect our financial condition, results of operations and cash flows. We caution readers that these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from the results that are projected, expressed or implied. These risks and uncertainties include, among others, risks related to the effects of the ongoing COVID-19 pandemic, general economic activity, developments in international and domestic petroleum markets, and refinery turnarounds and operations. Readers are cautioned not to place undue reliance on these forward-looking statements.
The forward-looking statements contained in this release are made only as of the date of this release. We disclaim any duty to update any forward-looking statements.
1 EBITDA and Adjusted EBITDA are non-GAAP financial measures. Please see the reconciliation at the end of this press release for more information.
2 Lower earners are exempt.
CITGO PETROLEUM CORPORATION
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA
(in millions of U.S. dollars)
Three Months Ended
Interest expense, including finance lease
Depreciation and amortization
Amortization of loan origination fees in interest expense
Hurricane Laura costs, net of insurance recoveries
LIFO inventory permanent dip impact
Charitable contributions (a)
Donations to charitable organizations. We adjust for this item in calculating Adjusted EBITDA because we believe excluding this item will enable investors and analysts to compare our performance to our competitors in a more consistent manner.
SOURCE CITGO Corporation