PBF Energy Q1 2025 Earnings Report

PBF Energy EPS Results

• Actual EPS: -$3.09
• Consensus EPS: -$3.50
• Beat/Miss: Beat by +$0.41
• One Year Ago EPS: $0.85

PBF Energy Revenue Results

• Actual Revenue: $7.07 billion
• Expected Revenue: $6.27 billion
• Beat/Miss: Beat by +$792.41 million
• YoY Revenue Growth: -18.30%

PBF Energy Announcement Details

• Quarter: Q1 2025
• Date: 5/1/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 8:30AM ET

PBF Energy (NYSE:PBF), through its subsidiaries, engages in refining and supplying petroleum products. The company operates in two segments, Refining and Logistics. It produces gasoline, ultra-low-sulfur diesel, heating oil, diesel fuel, jet fuel, lubricants, petrochemicals, and asphalt, as well as unbranded transportation fuels, petrochemical feedstocks, blending components, and other petroleum products from crude oil. The company sells its products in Northeast, Midwest, Gulf Coast, and West Coast of the United States, as well as in other regions of the United States, Canada, Mexico, and internationally. It is also involved in the provision of various rail, truck, and marine terminaling services, as well as pipeline transportation and storage services. The company was founded in 2008 and is based in Parsippany, New Jersey.

PBF Energy Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good day, everyone, and welcome to the PBF Energy First Quarter twenty twenty five Earnings Conference Call and Webcast. At this time, all participants have been placed in a listen only mode and the floor will be opened for questions following management prepared remarks. Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir, you may begin.

[Colin Murray, Vice President, Investor Relations at PBF Energy]

Thank you, John. Good morning, and welcome to today's call. With me today are Matt Lucey, our President and CEO Mike Bukowski, our Senior Vice President and Head of Refining Karen Davis, our CFO and several other members of our management team. Copies of today's earnings release and our 10 Q filing, including supplemental information, are available on our website. Before getting started, I'd like to direct your attention to the Safe Harbor statement contained in today's press release.

[Colin Murray, Vice President, Investor Relations at PBF Energy]

Statements that express the company's or management's expectations or predictions of the future are forward looking statements intended to be covered by the safe harbor provisions under federal securities laws. Consistent with our prior periods, we will discuss our results excluding special items, which are described in today's press release. Also included in the press release is forward looking guidance information. For any questions on these items or other follow-up questions, please contact Investor Relations. For reconciliations of any non GAAP measures mentioned on today's call, please refer to the supplemental tables provided in the press release.

[Colin Murray, Vice President, Investor Relations at PBF Energy]

I'll now turn the call over to Matt Lucey.

[Matthew Lucey, President , CEO & Director at PBF Energy]

Thanks, Colin. Good morning, everyone, and thank you for joining the call. To say the first quarter was tumultuous would be an understatement. Between the uncertain economic environment and our Martinez Martinez event, there's been a lot to digest. I'm happy to report that Phase one of our restart plans for Martinez were recently completed.

[Matthew Lucey, President , CEO & Director at PBF Energy]

Consistent with our March update, we safely restarted a number of the unaffected units, including the crude unit, hydrocracker and delayed coker. The refinery will be running in this limited configuration in the 85 to 105,000 barrels per day range. Getting to this point was no small lift for the Martinez team, especially given they were simultaneously continuing their initial work to rebuild the fire damaged areas, conducting the planned FCC turnaround and repair and preparing at successfully executing the start up. In the current configuration, we'll be supplying limited quantities of finished gasoline and jet fuel to the California markets. We will also be producing intermediates, which we intend to further process into finished products at Torrance.

[Matthew Lucey, President , CEO & Director at PBF Energy]

Our business interruption waiting period ended on April 3, and we expect that we from that date forward, we will see the portion of our insurance program respond as well. As mentioned in our press release, our insurance have agreed to pay a first installment of $250,000,000 which we expect to receive this quarter. We are appreciative of the willingness of our insurance carriers to provide interim payments. This goes directly to the quality of our program and the relationships that have been established, in many cases, more than a decade ago. Despite the broader concerns in the market, the fundamentals are improving as we approach driving season.

[Matthew Lucey, President , CEO & Director at PBF Energy]

Demand is resilient and showing signs of strength. Gasoline stocks are below the five year average, and distillate stocks are at the bottom of the range, and cracks are constructive.

[Matthew Lucey, President , CEO & Director at PBF Energy]

That said, differentials for our preferred heavy and sour feedstocks are definitively a headwind.

[Matthew Lucey, President , CEO & Director at PBF Energy]

These narrow differentials reduce capture rates for complex refiners such as PBF. We are encouraged, however, with the reintroduction of incremental OPEC plus barrels with the prospect of more to come. As these tight differentials begin to loosen, PBF will be a direct beneficiary. Longer term, we continue to see incremental product demand growth exceeding net refining capacity additions. This is a constructive setup for the global refining environment.

[Matthew Lucey, President , CEO & Director at PBF Energy]

We are seeing more rationalizations than expected in 2025 and 'twenty six, with new additions declining as we look further out. PBF is focused on controlling the aspects of our business that we can control to best position ourselves going forward. In this current cycle, PBF's balance sheet provides us with the flexibility to weather challenging markets and look ahead to the next market cycle. To be successful and enhance value for our investors, we must operate safely, reliably and responsibly, and we must do it as efficiently as possible. As part of our ongoing review of our portfolio of assets to maximize value for investors, today, we announced the sale of our Knoxville and Philadelphia terminal assets for $175,000,000 This process began last year, and we expect the transaction will close in the second half of this year.

[Matthew Lucey, President , CEO & Director at PBF Energy]

I'll now turn the call over to Mike Mikowski for comments on operations and our cost savings program, which are tracking ahead of plan.

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

Thank you, Matt. Good morning, everyone. Before updating the progress we've made on our refining business improvement program, or RBI for short, I'll provide some additional commentary on first quarter operations. On the West Coast, during a mid March weather event, a loss of steam occurred at Torrance, which shut down the majority of

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

the

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

refinery. Initial expectations were for five to seven days of downtime. After the initial repairs were completed within seven days, we began a sequence restart of the refining units in late March. Unfortunately, issues occurred during restart attempts, which primarily resulted from the initial rapid shutdown. The restart was completed in mid April.

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

In addition to the work on the West Coast, we executed turnarounds at the Chalmette and Delaware City refineries. In Chalmette, the turnaround was completed on time and on budget. I'd like to I would also like to congratulate and thank the Chalmette refinery for successfully and safely managing operations through a record breaking snowstorm and freezing temperatures in January. At Delaware City, a turnaround of the hydrocracker was performed according to plan. The work was completed in the April.

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

Shifting topics to RBI. Earlier in 2025, we announced the initiative as part of our ongoing strategic process to extract incremental value across our business. Since then, we have generated over 500 cost saving ideas through more than 40 idea generation sessions. Our teams are building out these ideas with actionable, quantifiable and measurable plans. Initially, we are focused on five main areas, including projects and turnarounds, strategic procurement opportunities, the East Coast refining system, the Torrance Refinery and the refining organizational structure.

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

Our stated goal is to generate and deliver more than $200,000,000 of annualized run rate sustainable cost savings by year end 2025. This effort will ultimately touch all our locations, including some centralized functions. That said, in the four months since our initial announcement, we've had teams at Torrance and on the East Coast, and we are looking at various centralized groups such as capital turnaround to procurement. We are currently on track to exceed our stated goal of $200,000,000 of run rate savings by year end 2025. As a reminder, we will realize the full value of these savings in 2026 and a prorated portion in 2025 as we move through implementation.

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

In terms of next steps, we will continue implementing initiatives and tracking success while progressing the program through our remaining locations and functions to generate additional actionable ideas that will translate to real cost savings. Lastly, we've reviewed our 2025 capital program and have elected to eliminate a number of discretionary and small strategic projects from the 2025 plan without affecting our maintenance, environmental or safety related programs. Our revised total capital budget for 2025 is now in the $750,000,000 to $775,000,000 range. Capital expenditures to rebuild Martinez and bring it back to full operations are separate as these costs will be covered by insurance. We will continue to look at our capital going forward and make adjustments as needed depending on operations and market conditions.

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

We have a number of positive initiatives going on across our organizations, but our main priority will always be to focus on safe, reliable and responsible operations across the system. With that, I'll now turn the call over to Kara Davis for our financial overview.

[Karen Davis, Senior VP & CFO at PBF Energy]

Thanks, Mike. For the first quarter, we reported an adjusted net loss of $3.09 per share and adjusted EBITDA loss of $258,800,000 Our discussion of first quarter results excludes a $78,100,000 special item related to expenses resulting from the Martinez refinery incident and an $8,700,000 gain relating to PBF's fifty percent share of SBR's lower of cost or market adjustment for the quarter. As Matt said earlier, we received notice that our insurers have agreed to pay an unallocated first installment of insurance proceeds of $250,000,000 which we should receive in the second quarter. We expect that we will negotiate additional interim payments, most likely on a quarterly basis. However, the timing and amount of any agreed upon future payments will be dependent on the amount of covered expenditures that we actually incur plus calculated business interruption losses.

[Karen Davis, Senior VP & CFO at PBF Energy]

We are very early in the recovery and claim process and we expect that cash recoveries could lag to a certain extent our expenses incurred and covered losses. Our Q1 P and L reflects incremental OpEx at Martinez of $78,100,000 related to fire response, recovery and cleanup efforts, which are reflected as a Q1 special item. We anticipate recovering a portion of this amount through insurance, but the specific amount of the recovery will be determined as we progress further into the claims process. We also wrote down the net book value of the fire damaged assets by 56,000,000 and recorded a corresponding insurance receivable for the same amount plus an additional cost. Generally speaking, any insurance proceeds that we receive in future periods, including the $250,000,000 upfront payment expected this quarter, that is in excess of the $61,000,000 insurance receivable will be reflected as other operating income on our income statement.

[Karen Davis, Senior VP & CFO at PBF Energy]

It is our intent to present insurance proceeds that we report in other operating income as a special item going forward. Shifting back to our normal quarterly results discussion, also included in our results is a $17,000,000 loss related to PBF's equity investment in St. Bernard renewables. SBR produced an average of 10,000 barrels per day of renewable diesel in the first quarter. Second quarter RD production is expected to be 12,000 to 14,000 barrels per day as a result of plant catalyst change that began in March and ended in April.

[Karen Davis, Senior VP & CFO at PBF Energy]

Cash flow used in operations for the quarter was 661,400,000 which includes a working capital headwind of approximately $330,000,000 primarily related to the January 2025 tax receivable agreement payment of $131,000,000 and a temporary increase in hydrocarbon inventory levels related to the Martinez and Torrance downtime. We expect inventory levels to be reduced by approximately 2,000,000 barrels by the end of the second quarter as compared to March 31. Cash invested in consolidated CapEx for the first quarter was $218,300,000 which includes refining, corporate and logistics. This amount also includes approximately $28,000,000 of CapEx related to the Martinez incident. Additionally, our Board of Directors approved a regular quarterly dividend of $0.02 $75 per share.

[Karen Davis, Senior VP & CFO at PBF Energy]

We ended the quarter with approximately $469,000,000 in cash and approximately $1,770,000,000 of net debt. Maintaining our firm financial footing and a resilient balance sheet remain priorities. In the first quarter, we accessed the capital markets through our $800,000,000 upsized senior notes offering. This issuance bolsters our balance sheet and ensures that we have sufficient liquidity as we navigate the turbulent commodities markets and rebuild from the Martinez incident. At quarter end, our net debt to cap was 29%, and our current liquidity is approximately $2,400,000,000 based on a cash balance of $469,000,000 and $2,000,000,000 of available borrowing capacity under our ABL.

[Karen Davis, Senior VP & CFO at PBF Energy]

Our liquidity position is ample, and our plans to reduce inventory, receipt of the First Martinez insurance payment and receipt of the proceeds from the pending sale of the terminals should bolster this further. As we look ahead, we expect to use periods of strength to focus on delevering and preserving the balance sheet. Operator, we've completed our opening remarks, and we'd be pleased to take questions.

[Operator]

Thank you. In a moment, we'll open the call for questions. The company requests that all callers limit each turn to one question and one follow-up. You may rejoin the queue with additional questions.

[Operator]

Your

[Operator]

queue.

[Operator]

You. We now have our first question. It comes from the line of Roger Read from Wells Fargo. Your line is now open. Please go ahead.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Thank you. Good morning, everybody.

[Matthew Lucey, President , CEO & Director at PBF Energy]

Good morning, Roger.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Good morning, Matt.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Let's, I guess, let's let's hit Martinez. Right? You've been in there enough now to get a feel for what the damage was, what the repair process ought to be. I think the expectation at the time or at least the initial expectation on the last time we talked about this was beginning of q four or in q four, you could get, you know, back up and running. So I'm just curious as you look at the unit, the repair process, permitting California, all that stuff, how is it, how is it looking on that front?

[Matthew Lucey, President , CEO & Director at PBF Energy]

No change at this point. Long lead items have been ordered. And so, you know, once you get into the execution of of of some of the rebuild, you know, when when that equipment arrives, the schedule will will, you know, tighten, or stress will be put on the schedule. But at this point, we we're there's no change.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Okay. And then in terms of moving the product, like you said, the intermediates down from Martinez to Torrance, has that actually occurred yet? Like, you're you're comfortable with the way the the system will be integrated for the interim period?

[Matthew Lucey, President , CEO & Director at PBF Energy]

It's happening today. Torrance is fully up and running and fully operational.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Great. Thanks. And then, Karen, since you gave this guidance, I'm just sort of curious volume guidance on renewable diesel, but how should we think about this whole confusing status with RINs and other sort of you know, BTC to PTC change and and other parts of how that's operate.

[Matthew Lucey, President , CEO & Director at PBF Energy]

I I know you said, Karen and and she hit a hot button with me, Roger, that I can't. Okay. I don't care. I hear you caught on it. If you said the word rent, it's, like, set something off with.

[Matthew Lucey, President , CEO & Director at PBF Energy]

I mean, the current market is is unstable or unstable, to say the least. I mean, rent the d four rent prices surged 75% since beginning of the year. You know, why is that? I guess there's three primary reasons. And this is the d four rent.

[Matthew Lucey, President , CEO & Director at PBF Energy]

Right? So you've got the PTC questions. There's no clarity. Fine. There's now tariffs imposed on some of the feedstocks, so that increases cost and, you know, reduces supply.

[Matthew Lucey, President , CEO & Director at PBF Energy]

And then you have the elimination for credits for imported fuels. So you have you have much less RD supply. So the d four RIN has to go up. The problem is the d six is tied to the d four. They're they're linked.

[Matthew Lucey, President , CEO & Director at PBF Energy]

And so all indications suggest that we're gonna be on the potential of another RINsane event. And it's it's sort of interesting certainly with the current administration because you have this massive contradiction with the current administration where maybe the two strongest pillars of their whole platform is commitment to low energy prices and an intent to incentivize domestic manufacturing. But if this situation doesn't get rectified on the d six RINs, then, you know, the American consumer could face unintended consequences with higher gasoline prices, higher energy prices, and then we can get back to the D6 RIN threatening refining capacity, which we've been through before. And what's what's crazy about it is it can just so easily be rectified.

[Matthew Lucey, President , CEO & Director at PBF Energy]

You know, all you have to do, and you

[Matthew Lucey, President , CEO & Director at PBF Energy]

can do it in any number of ways, an infinite number of ways, is is right size the ethanol mandate. That reflects reality, you know, as opposed to setting it above the blend wall, which, you know, simply decouples the d six with d four, which is the original intent. The d four should be incenting new manufacturing of renewable diesel because you need those government support to to get the product in the marketplace. But the amount of ethanol in the fuel pool is unchanging, is not driven by RIN prices. So the d six being connected to the d four accomplishes two things.

[Matthew Lucey, President , CEO & Director at PBF Energy]

It raises the price of gasoline, and it potentially threatens refineries. So I will be doing everything in my power to get that message out. Indeed, going down to Washington and making sure that they understand the contradictions that exist. I'm not sure that that's exact that diatribe is what you're looking for, but I want to get it off my chest anyway.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Well, maybe if we could hone in just a little bit on SBR there, though, like, understand catalyst change outs and stuff like that. But if we were to look at SBR in isolation, I mean, how do you think it's performing in this you know, we're we're still waiting for, as you mentioned, you know, clarity on some of the the new rules. Just

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

how how

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

are you with with that?

[Matthew Lucey, President , CEO & Director at PBF Energy]

Just I I think that in isolation, the the net net is actually the landscape has improved for SBR because, you know, on Blender's tax credit, which was $1 the PTC is that sort of nebulous guidance is now, will receive a little less than half of that. But the D4 RIN has risen more than that fall off in the blender tax credit. So the outlook for SBR specifically, coming out of the catalyst change, which by the way, we are expecting improvements from the catalyst itself as UOP has been making investments in improving the catalyst. So the the outlook for SBR unto itself is certainly improved going forward with the higher rent price, But then that that just creates d six problems that need to get addressed.

[Roger Read, Senior Energy Analyst at Wells Fargo Securities]

Great. Thank you. I'll turn it back.

[Operator]

Thank you. And the next question comes from Manav Gupta from UBS. Your line is now open. Please go ahead.

[Manav Gupta, Executive Director at UBS Group]

Good morning, guys. I wanted to get your view on the crude quality discounts. Looks like OPEC is raising volumes. We've also seen some rebound in refining cracks, but the reason refining estimates are not moving up or probably even slightly moving down is because these crude quality discounts are are very low. And so in your opinion, as OPEC brings back these barrels, what do you expect to happen for the heavy light spreads, on the Gulf Coast or or or or all coast right now?

[Matthew Lucey, President , CEO & Director at PBF Energy]

Tom O'Connor?

[Thomas O'Connor, Senior Vice President of Commodity Risk & Strategy at PBF Energy]

Yeah. Thanks, Manav. I mean, I think it certainly has taken us as sort of a positive note from the words we've seen from OPEC plus over the last couple weeks. You know, first one of the official reactions for the increases for May. And then, you know, we should be receiving more news next week, you know, as the JMCC moves through.

[Thomas O'Connor, Senior Vice President of Commodity Risk & Strategy at PBF Energy]

Clearly, there's a lot of, you know, commentary and and information that's in the market that is talking about an increased taper. But next week also, we should receive OSPs and all those other nice things that come along there. And, you know, broadly speaking, as you mentioned, yes, we've been in a very narrow range, but it's certainly our expectation with the changes that are, you know, coming to the market with OPEC policy that we should see differential start to widen out.

[Matthew Lucey, President , CEO & Director at PBF Energy]

From from my you know, from a hundred thousand foot view, I mean, Tom Tom covers it, sort of down to the to the barrel. But on a, you know, real high level view, I think the what's in the marketplace now and and admittedly some speculation, the moves of OPEC over the next couple months could overwhelm a lot of the headwinds that we've had, you know, whether it's on Venezuela or other tariffs and sanctions that have disrupted our our business and, you know, Mexican production coming off of it. But the taper move from OPEC plus is a big, big factor in your question. And I don't know if there's a a more levered beneficiary to move than PBL.

[Manav Gupta, Executive Director at UBS Group]

Perfect, sir. So I'm going to repeat this question which I had asked you, I think, three or four quarter calls again, ago, which was basically that it looks like the state of California is trying to push out refineries. And I think, Matt, your response was whether they are trying to do this or not, we are needed. If you push keep pushing us out, it will create a lot more volatility for product prices and consumers will suffer. I'm just trying to understand the way things have gone in the last three or four quarters.

[Manav Gupta, Executive Director at UBS Group]

It's becoming increasingly clear from your peers that this is a relentless push to get rid of refineries in the state of California. And I just wanted your comments on it. Are you also feeling the same way that or do you think, you know, something might change here and they might realize they're doing the wrong thing here?

[Matthew Lucey, President , CEO & Director at PBF Energy]

Well, I appreciate the question. And and I'd say, Manav, to call the situation California dynamic would be a huge understatement. And maybe just maybe it's it's a case of, you know, nothing focuses mine like a pending hanging or a looming energy crisis. But I actually think there's been recognition in the state, certainly in the last couple months, how critical our products are for the well-being of the people within the state. And indeed, not only how important they are, but indeed the recognition that they're gonna be in demand for many decades to come.

[Matthew Lucey, President , CEO & Director at PBF Energy]

And if you go and look at the state's numbers pro form a for the announced closures, by next year, we see the market short 250,000 barrels a day of gasoline or over 250,000 barrels a day of gasoline, which will force the market to attract higher cost imports. So we believed in, as I said three or four quarters ago, whenever it was, that our system of two refineries between Torrance and Martinez has been and is today, going forward, one of best systems out there in California. And but whatever I said three or four quarters ago, our system is even more critical to the state today. And certainly for the situation not to deteriorate any further, there must be recognition by the stakeholders. There has to be a level playing field for the participants in the in the market.

[Matthew Lucey, President , CEO & Director at PBF Energy]

So I will tell you, I have been more than pleased and encouraged by the recent conversations we've had. Words like we need to work collaboratively, which is somewhat unthinkable not not too long ago. But the refineries, look, at the end of the day, they need to execute a business plan that makes sense. And otherwise, this trend of closures will continue. We believe, I think I said this probably some time ago, the value and best use for our assets are in refining.

[Matthew Lucey, President , CEO & Director at PBF Energy]

But that absolutely requires a business environment that allows us to succeed. And I've gotten some indications that that is well understood within the state. So there's because the other reality is the alternative values in California are compelling. It's not it's not like many other situations. The underlying value of these assets is fairly extraordinary.

[Matthew Lucey, President , CEO & Director at PBF Energy]

So that creates a high bar of what must be made in refining. So I've been encouraged by the state. I've had we are we have a team embedded there. People focused on it for a % of what they do, and and indeed, I've had a number of conversations with them. And so, you know, at the moment, I believe our refineries are well positioned to not only deliver the low cost products that the state is desperately gonna need going forward, but just to provide strong returns and results for our shareholders.

[Manav Gupta, Executive Director at UBS Group]

Thank you so much.

[Operator]

You. And the next question comes from the line of Doug Leggate from Wolfe Research. Your line is now open. Please go ahead. Doug, your line is now open.

[Operator]

You may go ahead and ask your question.

[John Abbott, E&P Research Vice President at Wolfe Research, LLC]

Hey, good morning. This is John Abbott on for Doug Leggett. Our first question is on your net debt our first question is on your net debt trajectory. Could you walk us through on how that plays out and whether or not you may think you may need additional financing?

[Karen Davis, Senior VP & CFO at PBF Energy]

Sure. Thanks thanks, John. Thanks for the, thanks for the question. You know, as as we've said in the past, our capital allocation policy is to prioritize the the balance sheet in supporting operations, CapEx, and maintaining our dividend. And our approach to the balance sheet has been to use up cycles like we saw in 2022 and '23 to reduce debt and to to build a balance sheet, preserve our balance sheet so that we can be resilient through down cycles like we've experienced in the past three quarters few quarters.

[Karen Davis, Senior VP & CFO at PBF Energy]

So, going forward, as the market continues to improve as as we believe the macro suggests it will and as cash generation correspondingly approves and when we receive proceeds from the terminal sale, we expect that our focus will again pivot to delivering and prioritizing the balance sheet. As you know, we did access the capital market, raised $800,000,000 in an unsecured offering that bolstered our liquidity and to a level where we are comfortable. And at this point in time, we don't anticipate accessing capital markets.

[John Abbott, E&P Research Vice President at Wolfe Research, LLC]

Appreciate it. And then for our

[John Abbott, E&P Research Vice President at Wolfe Research, LLC]

follow-up question, it's on the capital reduction. How much

[John Abbott, E&P Research Vice President at Wolfe Research, LLC]

of that could be permanent? Or is it all transitory?

[Matthew Lucey, President , CEO & Director at PBF Energy]

Well, when you say it's permanent in regards to lowering our capital program going forward, our capital program and our turnaround spend is part of our RBI program. And so we are expecting to see, again, within the confines of the scale that we provided in regards to RBI, we expect to receive real benefits on reducing capital, bending the cost curve permanently in regards to the specific cuts that were made here. They discretionary projects, if you want to comment, Mike.

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

Yes. I mean, we went through a portfolio optimization process and we didn't defer some spending, some of them were cuts. As Matt mentioned, as part of the RBI program, we have developed longer term initiatives to lower the capital spend going forward. I think it's probably premature at this point to say to what extent that's going to be relative to these cuts, but there are an expectation that going forward we will have sustainable reductions in how we spend capital and spending them more to spend it more efficiently.

[John Abbott, E&P Research Vice President at Wolfe Research, LLC]

Appreciate it. Thank you for taking our questions.

[Operator]

Thank you. The next question comes from Paul Cheng from Scotiabank. Your line is now open. Please go ahead.

[Paul Cheng, Analyst at Scotiabank]

Thank you. Good morning. Matt and Karen, with the uncertainty in the economy because of the tariff war and everything, in the event, if economy take a more thorough note and correspondingly demand and margin will not improve the kind of way that we all think it may. At what point that the dividend will become a question on the table for the company? And I mean, what is the criteria or that you think that this is a sacred then you will do everything else that and not touching the dividend?

[Paul Cheng, Analyst at Scotiabank]

That's the first question. Second question is that in the second quarter, how should we look at the operating are we finding operating costs, particularly in California? And also that once we finish the business improvement plan by the end of the year, you get to that $200,000,000 1 way. What's the refining OpEx that one way we should reasonably can expand? Thank you.

[Matthew Lucey, President , CEO & Director at PBF Energy]

On the first one, tough to tough to answer in a hypothetical situation. Obviously, we're watching the economy very, very closely, and we always, you know, hope for the best and prepare for the worst. You know, over the last fifteen years, we've seen downturns in the economy that have come in different forms and fashion that were sort of unfathomable. So to sort of hypothetically talk about a recessionary period is hard to do in a vacuum. That being said, we set our dividend sort of as a through cycle dividend.

[Matthew Lucey, President , CEO & Director at PBF Energy]

If there is a major turndown in the marketplace, we're going to manage our business as conservatively and as appropriately as we possibly can in regards to how we run our refineries, how we invest the capital and how we manage the balance sheet. So but we're comfortable with where we are. And like I said, the original design of the dividend was certainly through cycles. Mike, do you want to?

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

Yes. Relative to the RPI program, so our baseline is 2023 OpEx is what we use to set up how we're deviate or how we're using the differentiations on OpEx savings. And I would look at the $200,000,000 and consider about one fourth of it's going to come from capital and turnarounds as well. So that's to give you some information on how you want to look at OpEx going forward. That being said, the program doesn't stop in 2025.

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

We will continue driving additional reductions in OpEx going forward. I mean, our expectations are as high as $350,000,000 of run rate savings by the end of twenty twenty

[Matthew Lucey, President , CEO & Director at PBF Energy]

Yes, because importantly, Mike's comments and everyone should understand them. The team has essentially circled over $200,000,000 of run rate savings to date. They haven't been achieved yet. They're going to be achieved over the course of this year, but they've categorized them and they've been circled in terms of we're going to execute on those. And we haven't been to all our plans yet.

[Matthew Lucey, President , CEO & Director at PBF Energy]

So the number of savings will go up as we complete the program.

[Paul Cheng, Analyst at Scotiabank]

I Mike, do guys have a number you can share in terms of California OpEx in the second quarter?

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

We're not ready to share that number yet.

[Matthew Lucey, President , CEO & Director at PBF Energy]

That's it'd be very, very difficult to dissect, Paul, because, again, you're it's it's one region. We don't report on the individual assets. And with the turnaround and the insurance, it becomes somewhat difficult to forensically dissect for you.

[Paul Cheng, Analyst at Scotiabank]

Okay. We do. Thank you.

[Operator]

Thank you. The next question comes from Matthew Blair from TPH. Your line is now open. Please go ahead.

[Matthew Blair, Managing Director at TPH&Co]

Thank you, and good morning. On the RBI program, you mentioned you're on track to exceed the 200,000,000, goal here, which seems quite encouraging. Do you have any examples you could share of areas where you're you're seeing more opportunity than you originally expected?

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

So actually, quite frankly, when we did the due diligence initially, from a from the category basis, we're actually right where we wanted to be from from each nothing's really standing out as as jumping out as a big surprise. We thought energy would be a big opportunity, and it is. We thought that our our turnaround performance would be an opportunity, and we're seeing significant opportunity there as well. And then, lastly, we have not, in the past, really leveraged our our spend across the organization. And so the strategic procurement opportunities are a big focus for us as well.

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

But it's roughly kind of evenly divided among those areas so far.

[Matthew Blair, Managing Director at TPH&Co]

Sounds good. And then could I just clarify two points from your Q1 reporting? I guess, first, do you have an EBITDA estimate associated with the logistics asset sale? And then second, could you also provide the your share of the RD EBITDA in the first quarter? Thank you.

[Matthew Lucey, President , CEO & Director at PBF Energy]

I'll take the first

[Matthew Lucey, President , CEO & Director at PBF Energy]

part and you turn to the second part.

[Matthew Lucey, President , CEO & Director at PBF Energy]

So in regards to the asset sales, these are two terminals that PBF Logistics, when we had MLP acquired going back eight or nine years ago when we first bought the claims assets. Philadelphia terminal that we agreed to sell yesterday was one of three terminals in that package of assets. And then subsequently PBF Logistics, the MLP acquired the Knoxville terminal. From a strategic standpoint, they made real sense for a public publicly traded MLP. And there were some ancillary benefits to our connection to our refining business, but we were able to accomplish the benefits through contracts and main maintaining access to the terminals.

[Matthew Lucey, President , CEO & Director at PBF Energy]

So from a, you know, from a strategic standpoint, the the terminals were definitely nine four, and they're going to a third party that that, you know, has a different cost of capital and can value them in a more attractive way. And indeed, we're selling these two terminals for more than 10 times our EBITDA.

[Karen Davis, Senior VP & CFO at PBF Energy]

And then with with respect to SBR, SBR's standalone EBITDA was 7, $17,000,000 loss. So our our half of that would be half half of that. And then also circling back to a a question that Roger Read asked, we did like so many of our peers, we did record 45 z revenue based on the provisional guidance that's out there. But as Matt mentioned, whereas we were receiving about a a dollar on BTC, it's it's less than half than that under the BTC program.

[Matthew Blair, Managing Director at TPH&Co]

Great. Thanks for all the information.

[Operator]

Thank you. And the next question comes from the line of Neil Mehta from Goldman Sachs. Your line is now open. Please go ahead.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Yes. Thanks, Matt, Karen and team. I guess the first question is just on working capital. It looked like it was a headwind this quarter. Typically in a lower commodity price environment, could see that headwind continue.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Just your perspective on the Q2 setup for working capital and then is that a reversal, the 300 from this quarter oil price constant, would that reverse over the course of the year?

[Karen Davis, Senior VP & CFO at PBF Energy]

I mentioned in the that the headwind from inventory was around $200,000,000 As we reduce those two and our plans are to reduce 2,000,000 barrels. But as you rightly point out, that's in a lower price environment, so we might not get the the the full benefit of that reduction. It it could, in fact, even be a headwind. But at this point, based on our projections, it looks like there will be some a modest benefit.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

And then Karen, maybe the follow-up is just on the credit side. We have gotten a significant amount of incoming about liquidity. Think through the asset sales and some of the adjustments that you guys have talked about, we've seen these are steps to help allay some of the concerns that the credit market might have. But maybe you could address that directly because the bonds have sold off here and why you have so much confidence in the liquidity picture.

[Karen Davis, Senior VP & CFO at PBF Energy]

Well, as as we mentioned, work working capital should be fairly stable going forward. We don't really see any, you know, an unusual items in impacting that area. It's really gonna just be hydrocarbon prices.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Oh, Karen, I meant just broadly speaking about the credit credit picture.

[Karen Davis, Senior VP & CFO at PBF Energy]

Well, you know, as I said in my prepared remarks, you know, we believe that our current liquidity levels are sufficient, and that includes having the ability to pay our dividends. And we're really, focused on everything that we can control. You know, we're normalizing our inventory levels. We've reduced our CapEx program by a hundred million dollars. We we expect to begin seeing the benefits of the RBI initiatives.

[Karen Davis, Senior VP & CFO at PBF Energy]

Those should start feathering in over actually, even starting in the the second quarter. We've talked about the $250,000,000 upfront insurance payment. And importantly, we have a a dedicated team working on the Martinez insurance claim includes engineers, forensic accountants, insurance experts so that we can very timely present the information to our carriers so that they can make timely decisions on on future payments.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Okay. That's great. Thanks so much, Steve.

[Operator]

Thank you. The next question comes from Ryan Todd from Piper Sandler. Please go ahead.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Great. Thanks. Maybe following up on your last comments there, Karen, on insurance proceeds. Congrats on the $250,000,000 first installation payment that you said to receive. I guess it's safe to is it safe to assume this is largely associated with the capital cost for repair?

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

And maybe any I know it's really hard to because it's very uncertain, but any color on how you think about potential size or or cadence of additional proceeds as we look out over the remainder of the year?

[Karen Davis, Senior VP & CFO at PBF Energy]

Well, I think it's I think it's important to note that the $250,000,000 payment is actually seen by the insurance companies as an upfront payment of 280 less the $30,000,000 deductible. So so that that is now behind us. It's also important to note that it's unallocated. So at this point, we can't tell you how much is for the property piece of it, how much of it is is is for BI. And future payments are going to be based on us demonstrating actual expenditures on on the rebuild and and whatnot in excess of that amount plus whatever the BI calculation is.

[Karen Davis, Senior VP & CFO at PBF Energy]

And BI, we should know, it covers, fixed expenses and, lost profit opportunity. And in terms of the cadence, as I mentioned, we have a dedicated team and we expect we have weekly meetings with the insurance companies and we are are very expectant that we'll be able to or we will be seeking quarterly payments.

[Matthew Lucey, President , CEO & Director at PBF Energy]

It's it's important to note that they're not two different policies. And so, as Karen said, we're gonna be working closely with them. And now here we are at the very April, and this is really the first month where the BI coverage is present. So in a short period of time, we'll be sitting down with them and reviewing April and setting up a program for the success of months, April, May, June, July going forward. And then at the same time, you're doing the rebuild and expending dollars and that's being tracked.

[Matthew Lucey, President , CEO & Director at PBF Energy]

And dollars are going to blend together at some point. So there's not going to be sort of explicit this dollars for that one. There's going to be one claim to our group of underwriters. We're working very, very closely with them. And I will tell you that from a working capital standpoint, and it goes to Neil's point earlier, it's just very good news that we've got this collaborative arrangement with them where they're putting the dollars in some case, some of the dollars are in front of spend that that is in front of us.

[Matthew Lucey, President , CEO & Director at PBF Energy]

So pleased with the relationships we have not only with our our underwriters, but our broker as well. The whole team has been working well together.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Great. And maybe one follow-up on the West Coast. I know, obviously, you've got your hands full right now with the Martinez refinery. But as we think about balances in general, right, I mean, expectations are that the market is very tight this year. You have two more refinery closures coming late this year and early next year, scheduled to close there in California.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Again, outlook looks increasingly tight. Can you maybe talk about how you view the outlook for product balances and whether you've seen anything in the behavior of imports over the last twelve months that would change how you think about what that might mean for margins and pricing going forward?

[Executive]

Well, look, this is Adam Smith one hundred one. The balance is what he said is tight. Mean, the market is definitively short and is going to be definitively short in a major way in a way that the state has never been before. And so on a gasoline side, you're going to, you know, be increasing the short by, you know, upwards of a 85,000 barrels a day pro form a basis. So, you know, every day, your need your the state of California is gonna have to attract over 250,000 barrels a day of gasoline.

[Executive]

That is a big number and the resupply is coming from far away. So you're going have a lot of boats on the water, not insignificantly jet as well. You're talking about on a pro form a basis upwards of needing to attract 70,000 barrels a day of jet on a daily basis short every day. It's going to create a volatile market because imports don't run like a Swiss clock and there's delays. The market needs to be able to attract the barrels, which is going to require a premium from where it's gone historically.

[Executive]

And then there'll be ebbs and flows and how it know, imports into the market. From our perspective, Torrance and Martinez are very, well positioned in regards to being able to be a low cost producer for the state and deliver these products every day. I must just also comment, it's a product story for sure, but just as big, maybe rivaling a bigger is the story on the crude side, because you have you're taking, two refineries, off that were consuming California grades of of which historically have been the most attractive barrels for the state. We've gotten some indications from the state that they're actually encouraging production, which we've been encouraging as well for them to do. But just with the refinery in the North and the refinery in the South, you have a fair amount of crude that's going to be opened up to the rest of the market to the refineries that are there because California has no alternative on its crude production.

[Executive]

It needs to be consumed in the state. So, we think the dynamic between on the crude side and the product realities, are going to create a pretty interesting market.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Perfect. Thanks, Matt.

[Operator]

Thank you. The next question comes from Connor Fitzpatrick from Bank of America. Your line is now open. Please go ahead.

[Conor Fitzpatrick, Vice President at Bank of America Merrill Lynch]

Good morning. Thanks for taking my question. This is a heavy repair and maintenance year for your West Coast footprint, but I was wondering if those activities could also improve those assets reliability going forward once they're completed. Should we expect Martinez and Torrance uptime to change over the next few years relative to the prior several years?

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

So for Martinez, yeah. We're we're we're going through a major turnaround there on the FCC block. And a big piece of that is work that's being done on the regenerator of the FCC. So we certainly look at every turnaround as an opportunity to improve the reliability of the facility. On the Torrent side, we have a hydrocracker turnaround in the second half of the year.

[Michael A. Bukowski, Senior VP & Head of Refining at PBF Energy]

And it's not as big as the FCC at Martinez, but it certainly does provide an opportunity to improve the reliability. On top of that, we have several reliability initiatives that are occurring across the entire system. And as we stated last year in a call sometime over the summertime, that was one of our our our major goals is to drive continuous improvement mindset and operational excellence across the system.

[Conor Fitzpatrick, Vice President at Bank of America Merrill Lynch]

Great. That's clear. And, you mentioned earlier, and news reports agree, the state of California is, at least after these recent closures, becoming more open to working with refiners to maintain fuel supply. Which California regulations are, in your opinion, the most onerous financially that would be most impactful to be modified, you know, assuming that these conversations involve those regulations?

[Matthew Lucey, President , CEO & Director at PBF Energy]

I think they they go across the spectrum, you know, and you look at it, you know, some of the cost with a b 32, they have to be looked at in in regards to, is it creating a unlevel playing field for the refiners in the state as compared to the the amount of fuel that's imported into the state. You can sort of quickly wrap your mind around. They've gotten themselves into a situation where, regulatorily, they're squeezing their in state participants and and to some degree ignoring the importers. That will have to change. There has to be a a level playing field.

[Matthew Lucey, President , CEO & Director at PBF Energy]

And in regards to continually raising the bar, the amount of capital that is on specific projects, I think they have to take a closer look again and making sure that they're not making the in state refiners uncompetitive. And as I said, there's been collaborative conversations, proof will be in the pudding. I've been pleased with with the dialogue. I think we've got a team that has done extraordinary work and sort of building bridges and and building relationships and and, like I said, working collaboratively. But at the end of the day, we need a business plan that that makes sense, and we need to be successful.

[Matthew Lucey, President , CEO & Director at PBF Energy]

And our success will create success for the people there and lowering energy prices. So there is, to some degree, it's across the spectrum. So we'll see as we go.

[Conor Fitzpatrick, Vice President at Bank of America Merrill Lynch]

Thanks. That's all I have.

[Operator]

Thank you. And the final question comes from Jason Gabelman from TD Cowen. Your line is now open. Please go ahead.

[Jason Gabelman, MD - Equity Research at TD Cowen]

Yes. Hey, good morning. Thanks for taking my questions. I had a few cleanup questions on the Martinez outage I was hoping you could help with. Do you have an estimate of the total cost of repairs?

[Jason Gabelman, MD - Equity Research at TD Cowen]

And then can you also just it's unclear if the business insurance proceeds are being negotiated and paid out monthly or if that happens once the outage is over, if you could just confirm that. And then it seems like the startup timing was pushed out slightly from by 4Q to during 4Q. So if you just discuss what the critical path is to fully restarting Martinez? Thanks.

[Matthew Lucey, President , CEO & Director at PBF Energy]

Alright. So on the last point, my intention was not to do a slight of hand, and I'm not I'm not trying to parse words. But, you know, we're we're circling the the September as a time to bring the plan up, and that hasn't changed. To the degree it does or it needs to, we'll certainly communicate that in a prompt fashion, but there's no indication at this point that that's changed. In regards to the total rebuild cost, we're not going get into that at the moment primarily because the numbers are somewhat fluid, but to a great degree, it's moot for our shareholders because as Karen alluded to before, the $30,000,000 of deductible and retention has been paid.

[Matthew Lucey, President , CEO & Director at PBF Energy]

And so the cost going forward will be covered by our property program with the coverage that we have. So obviously, numbers are being worked and being worked hard, but we're not in a position to share them at the moment. In regards to a specific monthly payment, there is no hard fast schedule. It is a collaborative effort with our underwriters. We've got the appropriate programs in place and we'll be working closely with them sort of as we expend money or as the BI claims pile up to lay them out for them and then they'll be working with us appropriately.

[Jason Gabelman, MD - Equity Research at TD Cowen]

Okay. Great. And then my my follow-up is just on, non core divestments, and and you announced the sale of those terminals. And I'm wondering within the logistics EBITDA bucket, how much you would consider kind of non core to refining business?

[Matthew Lucey, President , CEO & Director at PBF Energy]

I don't have that number for you. These were sort of obvious. We thought they like I said before, they they would have would just carry more value for others than they would for us. As an example, we bought the planes terminal. There's three terminals when we bought it and one is connected to our Paulsboro Refinery.

[Matthew Lucey, President , CEO & Director at PBF Energy]

We maintain that refinery that that terminal because, again, it's more intertwined. Not to say it could be sold, but the noncore nature was different than the assets that were included in the package. So it's something that we are continually looking at and to the degree that we feel like we can create value and where we an opportunity where you can sell something for 10 times and obviously you see where we're trading or we historically trade, that should create value for our shareholders.

[Jason Gabelman, MD - Equity Research at TD Cowen]

Great. Thanks for the answers.

[Operator]

Thank you. We have reached the end of the question and answer session. I will now turn the call over to Matt Lusky for closing remarks. Please go ahead, sir.

[Matthew Lucey, President , CEO & Director at PBF Energy]

Well, thank you. Thank you to everyone participating, and we look forward to speaking to you again in July for the second quarter review. Have a great day.

[Operator]

Thank you. This concludes our conference call for today. Thank you all for participating. You may now disconnect.

Participants

Executives

• Colin Murray, Vice President, Investor Relations
• Matthew Lucey, President , CEO & Director
• Michael A. Bukowski, Senior VP & Head of Refining
• Karen Davis, Senior VP & CFO
• Thomas O'Connor, Senior Vice President of Commodity Risk & Strategy

Analysts

• Roger Read, Senior Energy Analyst at Wells Fargo Securities
• Manav Gupta, Executive Director at UBS Group
• John Abbott, E&P Research Vice President at Wolfe Research, LLC
• Paul Cheng, Analyst at Scotiabank
• Matthew Blair, Managing Director at TPH&Co
• Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs
• Ryan Todd, Senior Research Analyst at Piper Sandler Companies
• Executive
• Conor Fitzpatrick, Vice President at Bank of America Merrill Lynch
• Jason Gabelman, MD - Equity Research at TD Cowen