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, May 21, 2021 /PRNewswire/ -- CITGO Petroleum Corporation ("CITGO") today reported its first quarter 2021 performance results, including a net loss of $180 million, an EBITDA loss of $(21) million and Adjusted EBITDA1 of $10 million. The quarter marked the first positive quarterly Adjusted EBITDA for CITGO since the full onset of the coronavirus pandemic.
The company's overall quarterly performance was affected primarily by its February results, which were negatively impacted by the effects of Winter Storm Uri and accounted for approximately two-thirds of the total net loss for the quarter. The storm disrupted approximately six million barrels of industry refining capacity, which included a forced, complete shutdown of the Corpus Christi refinery for approximately two weeks. As a result, CITGO incurred approximately $21 million in repair costs during the quarter. We estimate our excess energy and other utility costs to be approximately $60 million as a result of the storm.
"We carefully managed our expenses and liquidity to address the unique challenges of 2020, but Uri brought a whole new set of operational challenges that hit our people and our refineries hard," said CITGO President and CEO Carlos Jordá. "Our response to February's record-breaking cold snap once again demonstrated our resilience as a company, providing yet another example of how CITGO comes together as a team."
Overall improvements in performance for the quarter were driven by improved margins and increased refinery utilization, which rose to 83% during the first quarter from 75% during the fourth quarter of the prior year. With the negative effects of the winter storm having receded, CITGO saw significant improvements in utilization and margins during March.
"With the winter storm impacts behind us, we are encouraged by strengthening demand, improving margins and higher utilizations as we look beyond the first quarter," said Jordá.
First quarter highlights:
Strategic and Operational
Notable Personnel Changes -- On February 12, 2021, Jose R. Pocaterra was elected Chairman of the CITGO Petroleum Corporation Board of Directors. Luisa Palacios resigned from the CITGO Petroleum Board of Directors effective March 31, 2021 to pursue a full-time position at an academic institution. Steven Scarpino joined CITGO on April 22, 2021 as the first full time Chief Compliance & Ethics Officer in the history of CITGO, reporting directly to CITGO President and CEO Carlos Jordá and with direct reporting access to the Audit Committee of the Board of Directors.
Changes in key drivers during the year include the following:
Headquartered in Houston, Texas, CITGO Petroleum Corporation owns and operates three large-scale, highly complex refineries, with a combined crude capacity of approximately 769,000 barrels-per-day, located in Lake Charles, La.; Lemont, Ill.; and Corpus Christi, Texas, has ownership/equity interest in 40 active refined product storage and transfer terminals, and has access to over 120 third-party and related party terminals through exchange, terminaling and similar arrangements. 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.
EBITDA and Adjusted EBITDA are non-GAAP financial measures. Please see the reconciliation to the most directly comparable GAAP financial measure at the end of this press release for more information.
Reconciliation of net income (loss) to Adjusted EBITDA
(unaudited, in millions of U.S. dollars)
Three Months Ended
Net income (loss)
Interest expense, including finance lease
Income tax expense (benefit)
Depreciation and amortization
Lower of cost or market adjustment
Insurance litigation recovery - Athos
LIFO inventory permanent dip impact
Hurricane Laura expenses, net of insurance recoveries
Charitable contributions (a)
Tax effect - CARES Act
Litigation recovery - credit card interchange fees
Winter Storm Uri
Loss on early debt extinguishment
Utilization of rated crude refining capacity
The primary items affecting Adjusted EBITDA during Q1 2021, Q4 2020 and Q1 2020 were:
Lower of cost or market adjustment ("LCM") (Q1 2020): We recorded an LCM Inventory valuation adjustment of $332 million as a result of the low price environment in the first quarter of 2020.
Insurance litigation recovery - Athos (Q1 2020): We recovered approximately $172 million in the first quarter of 2020 in insurance proceeds from the previously incurred costs related to a shipping incident in 2004.
Taxes (Q1 2020): We benefited from Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provisions in the amount of $48 million.
Litigation recovery-credit card interchange fees (Q1 2020): Proceeds received from legal settlements.
LIFO permanent dip (Q4 2020): We recorded approximately $49 million loss in Q4 2020 as a result of prior years' LIFO Layers.
Hurricane Laura expenses (Q1 2021 & Q4 2020): We incurred approximately $69 million in repair costs, of which approximately $35 million were recovered through insurance. We expect to incur additional costs, net of any insurance recoveries, into 2021.
Winter Storm Uri (Q1 2021): We incurred approximately $21 million in maintenance/repair costs.
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 better assess our operating performance.
SOURCE CITGO Corporation