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, Aug. 16, 2021 /PRNewswire/ -- CITGO Petroleum Corporation ("CITGO") today reported its second quarter 2021 performance results, including net income of $3 million, EBITDA1 of $214 million and adjusted EBITDA2 of $208 million, marking the company's first profitable quarter since the third quarter of 2019.
"Given the multiple challenges we have faced during 2020 and the first half of 2021, this return to profitability is particularly satisfying – especially given the slow margin recovery we are experiencing due to the lingering effects of the pandemic," said CITGO President and CEO Carlos Jordá. "All of us at CITGO have continued to come together, carefully manage expenses and make some painful choices while remaining focused on safety and operational excellence."
Also during the quarter, CITGO operations and much of the refining industry were affected by the nearly week-long Colonial Pipeline shutdown, which forced CITGO teams in Houston and Lake Charles to adjust operations in real time.
"The Colonial outage was of course unexpected, but the CITGO team responded with agility and professionalism," said CEO Jorda. "We were gratified to receive positive feedback from our customers on our effective response to the shutdown."
Despite reduced refining margins and the Colonial interruption, operations were strong at both the Lake Charles and Lemont refineries during the second quarter, with utilization rates of 87% and 97%, respectively. Reliability at the Corpus Christi refinery was negatively impacted by both operational and third-party outages affecting a number of units, which resulted in a utilization rate of 78% for the quarter. On the marketing side of the business, both the branded and unbranded product volumes and margins showed significant improvement in the second quarter.
"I am immensely proud of the hard work and sacrifice that helped make our return to profitability a reality," said CEO Jordá, "With better margins, improved commercial and operational performance, and continued financial discipline, we believe that CITGO is well-positioned to benefit from a strengthening economy and demand for our products as we move into the second half of 2021."
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 EBITDA and Adjusted EBITDA are non-GAAP financial measures. Please see the reconciliation at the end of this press release for more information.
Second Quarter Highlights:
Exports – Second quarter refined products exports averaged 132,000 barrels-per-day (bpd), up more than 30% from the first quarter. Export sales should see continued strength during the second half of the year as demand continues to recover.
Refinery Throughput – Total refinery throughput in the second quarter was 732,000 bpd, including 63,000 bpd of intermediate feedstocks. The overall crude utilization of 87% improved over the first quarter, despite the third-party outages affecting operations at the Corpus Christi refinery.
Notable Personnel Changes – On June 23, 2021, Ernesto José Hernández Bolívar and Luis Giusti Lugo were named to the CITGO Petroleum Corporation Board of Directors. Effective June 1, 2021, Balvy Bhogal-Mitro was promoted to Vice President Strategic and Corporate Planning, reporting directly to CITGO President and CEO Carlos Jordá. Most recently, on August 10, 2021, Mark Holstein was named CITGO General Counsel after serving as Interim General Counsel since December 2020.
Capital Spending/Other – The 2021 projection for capital, turnaround and catalyst spending was reduced to approximately $460 million from the previously announced $568 million after shifting the timing of the Corpus Christi turnaround from the fourth quarter of this year to the first quarter of 2022. With this revision, capital, turnaround and catalyst spending remains heavily weighted to the second half of this year. Based on improved results, effective July 1, 2021, the Company reinstated full employee salaries, which had been reduced by 10% in January 2021, and restored the employer contribution to the Company's 401(k) plan.
The second quarter of 2021 was one of improvement, both for the global economy and for the refiners who contribute products to keep that economy running. U.S. real GDP increased at an annualized rate of 6.5% in the second quarter. Increased vaccinations also allowed for much improvement in mobility. Both resulted in increased demand for refined products. Changes in key drivers for the U.S. refining industry during the second quarter 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 39 active refined product storage and transfer terminals, and has access to over 120 third-party and related party terminals through exchange, terminal 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.
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 recovery - Athos
Hurricane Laura expenses, net of insurance recoveries
Charitable contributions (a)
Winter Storm Uri expenses, net of insurance recoveries
Loss on early debt extinguishment
Utilization of rated crude refining capacity
The primary items affecting adjusted EBITDA during Q2 2021, Q1 2021 and Q2 2020 were:
Lower of cost or market adjustment ("LCM") (Q2 2020): We fully reversed the previously recorded LCM inventory valuation adjustment of $332 million as the prices have recovered during the second quarter of 2020.
Insurance recovery - Athos (Q2 2020): We recovered, from the reinsurer, approximately $11 million for previously incurred costs related to the Athos matter.
Hurricane Laura expenses (Q2 2021 & Q1 2021): We incurred approximately $78 million in repair costs, of which approximately $41 million were recovered through insurance. We expect to incur additional costs, net of any insurance recoveries, into 2021.
Winter Storm Uri expenses (Q2 2021 & Q1 2021): We incurred approximately $23 million in repair costs, of which approximately $13 million were recovered through insurance.
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