CITGO Enters 2022 With Strong Momentum

Profitable 4Q Marks Best Results Since 3Q 2019

HOUSTON, March 31, 2022 /PRNewswire/ -- CITGO Petroleum Corporation today reported its 2021 fourth quarter and year-end financial results. For the fourth quarter of 2021, CITGO generated net income of $21 million, EBITDA¹ of $236 million and adjusted EBITDA of $139 million, representing the strongest quarterly net income and EBITDA performance since the third quarter of 2019, prior to the start of the COVID-19 pandemic.

The Company's overall financial and operational performance for the year were negatively affected by Winter Storm Uri, which forced a complete emergency shutdown of the Corpus Christi refinery for approximately two weeks, contributing to a significant first quarter loss of $(180) million. Given these headwinds, CITGO reported a net loss of approximately $(160) million and adjusted EBITDA of $557 million for the 2021 full year, both significantly improved over full year 2020 results. The improved results compared to 2020 were achieved despite the financial impacts of the storm and were primarily due to higher throughput volumes, higher margins and improved economics related to the pandemic.

"Winter Storm Uri was a significant obstacle for our Corpus Christi refinery and contributed to a challenging start to 2021," said CITGO President and CEO Carlos Jordá, "yet we still achieved excellent reliability at our Lake Charles and Lemont refineries and were able to capture available margins as demand improved. We also set many production-related records and, at the same time, achieved our best-ever TRIR (total recordable incident rate) performance and second-best process safety performance since 2012. This is a real testament to the professionalism and commitment of our employees as they continued dealing with the ongoing effects of the pandemic and other operational challenges, such as the Colonial Pipeline interruption."

4Q and Full Year Highlights:

• Financial
• Increased maximum borrowing capacity under the CITGO accounts receivable securitization facility from $250 million to $500 million, with full availability at end of year.
• Refinanced $650 million of senior secured notes due 2022 with the proceeds of a private offering of $650 million of 6.375% senior secured notes due 2026.
• Received approximately $556 million, including interest, from the Internal Revenue Service during the third quarter, reflecting its share of U.S. income tax refund payments under the Coronavirus Aid, Relief and Economic Security (CARES) Act.
• Refinery Throughput
• Total refinery throughput for 4Q was the highest of the year at 796,000 bpd (barrels-per-day), with crude utilization increasing from 85% in 3Q to 94% in 4Q.
• For full year 2021, total refinery throughput was 730,000 bpd, up 14% compared with the prior year. This resulted in a 15% increase in crude utilization, from 72% in 2020 to 87% in 2021.
• Turnarounds and capital investments – Successfully executed the Lake Charles and Lemont planned turnarounds within budget and planned timeline, spending approximately $184 million in 2021 on turnaround and catalyst costs. Invested $200 million in capital projects: $100 million in Regulatory and HSE projects, $98 million in maintenance projects and $2 million in strategic projects.
• Exports – 4Q exports increased to 167,000 bpd from 136,000 bpd in the prior quarter as Latin America continued to reopen. For full year 2021, exports averaged 134,000 bpd.
• Operational excellence – Both the Lake Charles and Lemont refineries achieved records in safety and environmental performance, production, and plant reliability. The Corpus Christi refinery was negatively affected by Winter Storm Uri in February 2021, yet achieved a light crude processing record and was also recognized for the second year in a row with the EPA's Energy Star Certification. Additionally, the terminals group was recognized by ILTA (International Liquids Terminal Association) for occupational safety performance.

Governance and Leadership:

CITGO continued its focus on corporate governance and ethics throughout the year, led by the Company's first dedicated Ethics & Compliance Officer.  Notable ethics and compliance related enhancements include launching the CITGO Code of Business Conduct and Ethics on the citgo.com website and deploying a new online Code of Business Conduct and Ethics training module.

The Company also continued to strengthen its management team. Shane Moser was named Vice President of Health, Safety & Environment; Mark Holstein was named General Counsel; Balvy Bhogal-Mitro was named Vice President Strategic and Corporate Planning; and Steve Scarpino was named Chief Ethics & Compliance Officer. Gina Coon, Corporate Treasurer, retired after 30 years of service.

"As the first quarter comes to a close, our industry is dealing with the effects of the recent events in Ukraine, which clearly illustrate the need for reliable, secure supply. We believe CITGO is well-positioned to continue being a reliable supplier of fuel products to the North American and Latin American markets," concluded Jordá.

About CITGO

Headquartered in Houston, Texas, CITGO Petroleum Corporation is a recognized leader in the refining industry and operates under the well-known CITGO brand. CITGO operates three refineries located in Lake Charles, La.; Lemont, Ill.; and Corpus Christi, Texas, and wholly and/or jointly owns 38 active 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 ranks as the fifth-largest and is 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 approximately 4,400 locally owned and operated branded retail outlets, all located east of the Rocky Mountains. CITGO Petroleum Corporation is owned by CITGO Holding, Inc.

ADDITIONAL INFORMATION

General:

CITGO publishes financial and other information on its website, including reports of quarterly and annual results of operations and financial condition. While CITGO's historical financial information is presented in accordance with U.S. generally accepted accounting principles ("GAAP"), except for certain non-GAAP financial measures (see below), CITGO is not an SEC reporting company and does not report all information required of SEC reporting companies.

Forward-Looking Statements:

This press release contains "forward-looking statements" regarding financial and operating items relating to the CITGO business. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these forward-looking statements. This press release may also contain estimates and projections regarding market and industry data that were obtained from internal company estimates as well as third-party sources believed to be generally reliable. However, market data is subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data and other limitations and uncertainties inherent in any statistical survey, interpretation or presentation of market data and management's estimates and projections. The forward-looking statements contained in this press release are made only as of the date of this press release. CITGO disclaims any duty to update any forward-looking statements.

Non-GAAP Financial Measures:

This press release also contains operational metrics and non-GAAP information, including EBITDA and Adjusted EBITDA, that have not been audited and are based on management's estimates, which may be difficult to verify. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP and may differ from non-GAAP measures used by other companies in our industry. We consider these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the Company, exclusive of unusual events, as well as factors that do not directly affect what we consider to be our core operating performance. These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP. Please see the reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable GAAP measure set forth on page 6 of this press release.

Refinery EBITDA Estimates:

The estimates of Refinery EBITDA presented in this press release are calculated as refinery hydrocarbon gross margin minus refinery operating expenses and non-operating and income/(expense) items, plus depreciation and amortization. Our estimates of Refinery EBITDA are intended as estimates of our refineries' earnings before taxes and interest and depreciation and amortization. Shown in the table on page 6 of this press release is a reconciliation of our estimates of Refinery of EBITDA (on an individual and total refinery basis) to EBITDA for our consolidated operations for the respective periods presented therein. In addition, we summarize below the methodologies and assumptions we utilize in connection with our estimates of the various components of Refinery EBITDA.

With respect to these components of Refinery EBITDA, we define refinery hydrocarbon gross margin as the estimated value of a refinery's production less the cost of hydrocarbons and intermediate feedstocks used by that refinery. The estimated values of production are not calculated in the same way as revenues for U.S. GAAP purposes, and these values would not be eligible for revenue recognition under U.S. GAAP. Under U.S. GAAP, we recognize revenues at the time products are sold, whereas the estimated values are based on production dates, which may not be the same as the market values at the time of sale. In addition, our U.S. GAAP revenues are based on the actual sales prices of products, while the estimated values are based on the selected market indexes. As a result, the actual revenue realized for the sale of products may vary based on the timing, location or actual realized sales price. The cost of hydrocarbons and intermediate feedstocks used to calculate refinery hydrocarbon gross margin are the acquisition costs of these inputs used by a refinery. Costs relating to these items are included as part of cost of sales and operating expenses on our consolidated statements of income and comprehensive income under U.S. GAAP. However, for purposes of calculating refinery hydrocarbon gross margin these costs are not calculated in the same way that we calculate amounts included in cost of sales under U.S. GAAP, and the amounts reflected in refinery hydrocarbon gross margin may materially understate or overstate the corresponding U.S. GAAP amounts.

In addition, refinery operating expenses reflect estimates of the direct costs and expenses associated with operating the refineries, such as labor and related burden, energy, maintenance and materials and depreciation and amortization. Costs and expenses relating to these items are included as part of other expenses or cost of sales and operating expenses on our consolidated statements of income and comprehensive income under U.S. GAAP, along with other expenses. The amounts allocated to our refineries for certain of these costs and expenses for purposes of our estimates of Refinery EBITDA do not necessarily reflect the full amounts of such costs, or may materially overstate or understate such costs.

Further, other miscellaneous costs and indirect expenses associated with operating the refineries include certain overhead expenses for crude supply and trading, industrial products and petrochemicals, as well as certain refinery-related equity in the investments of affiliates and insurance proceeds. These items reflect amounts included as part of cost of sales and operating expenses and other income, other expenses, insurance recoveries and equity in earnings of affiliates on our consolidated statements of income and comprehensive income along with other expenses. The amounts allocated to our refineries for certain of these costs and expenses for purposes of our estimates of Refinery EBITDA do not necessarily reflect the full amounts of such costs, or may materially overstate or understate such costs.

Some of the items affecting adjusted EBITDA during the periods shown above were:

• LIFO permanent dip (2021 and 2020): We recorded approximately $100 million benefit and a $57 million loss in 2021 and 2020, respectively, as a result of selling prior year inventory layers at prices above and below cost, respectively.
• Hurricane Laura expenses (2021 and 2020): We incurred approximately $30 million in repair costs, of which approximately $18 million were recovered through insurance in 2021. We incurred approximately $58 million in repair costs, of which approximately $29 million were recovered through insurance in 2020.
• Winter Storm Uri expenses (2021): We incurred approximately $24 million in repair costs, of which approximately $14 million were recovered through insurance.
• Insurance litigation recovery - Athos (2020): We recovered approximately $183 million in 2020 in insurance proceeds from the previously incurred costs related to a shipping incident in 2004.
• Litigation recovery - credit card interchange fees (2020): Proceeds received from legal settlements.

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SOURCE CITGO Corporation