PBF Energy Q2 Earnings Call Highlights

Key Points

• PBF Energy reported strong second-quarter results, with adjusted EPS of $6.22 and adjusted EBITDA of $1.24 billion, supported by tight refined-product inventories, supply disruptions and strong market conditions.
• Management expects product markets to remain tight for months to quarters as global refining capacity stays offline or operates at reduced rates. PBF said its flexible crude slate and reliable Americas supply position it to benefit from elevated refining margins.
• PBF generated $1.6 billion in operating cash flow and reduced net debt by more than 62% during the quarter. The company also lowered 2026 capital-spending guidance to approximately $850 million as some refinery turnarounds were deferred to 2027.

PBF Energy NYSE: PBF reported second-quarter adjusted net income of $6.22 per share and adjusted EBITDA of $1.24 billion, as management pointed to strong refined-product markets, low inventories and global supply disruptions as key drivers of the quarter.

Chief Executive Officer Matt Lucey said disruptions tied to conflicts in the Middle East and Eastern Europe have reshaped crude and product markets. He said that, initially, roughly 15 million barrels per day of crude and 5 million barrels per day of refined products were effectively trapped inside the strait, although crude markets have shown flexibility through alternative routing, strategic-reserve supply and lower refining utilization in some regions.

Lucey said the company expects product markets to take longer than crude markets to normalize. He cited global product inventory drawdowns, reduced refining utilization outside the United States and more than 5 million barrels per day of refining capacity that is offline or operating at reduced rates. Some of that capacity has sustained physical damage, he said.

Market Outlook and Refining Position

Management said PBF’s refining footprint is positioned to benefit from its crude-slate flexibility and access to stable supply in the Americas. Lucey said the company has not experienced, and does not expect to experience, crude availability issues that would affect its operations.

“Product inventories will be slow to rebuild,” Lucey said, adding that the eventual restocking of inventories should support refining margins in coming quarters.

During the question-and-answer session, Lucey said the floor for refining margins has “unquestionably” risen in the current cycle, though he did not quantify a long-term margin outlook. Non-Executive Chairman Tom Nimbley said crude normalization could occur over “weeks to months,” while product-market normalization could take “months to quarters.”

Paul Davis, senior vice president of supply, trading and optimization, said backwardated crude and product markets have encouraged hand-to-mouth inventory management. He said PBF is participating in Gulf Coast dock demand and East Coast export demand, while its commercial team is focused on keeping refineries supplied and moving products out daily.

Operations, Turnarounds and Cost Initiatives

Senior Vice President and Head of Refining Mike Bukowski said all PBF refineries are currently operating well. The company restarted fire-affected units at its Martinez refinery in May and has been producing its full product slate there since then.

PBF plans to begin a hydrocracker turnaround at Martinez in the third quarter, with completion expected in October. The company also reached an agreement in July to repurchase two hydrogen plants that serve its Torrance refinery from Air Products. Bukowski said owning the facilities should improve Torrance reliability by allowing PBF to coordinate operations, maintenance and turnarounds across the refinery. The transaction is expected to close in the third quarter, subject to regulatory review and customary closing conditions.

At Chalmette, a May loss-of-containment event took a pretreater and reformer offline until repairs are completed later in the third quarter. Bukowski said the event did not materially reduce refinery throughput, though it increased naphtha production and slightly lowered finished gasoline yield. PBF moved its planned fourth-quarter Chalmette crude-unit and coker turnaround to 2027.

At Toledo, unplanned second-quarter work on the fluid catalytic cracker reduced throughput. However, the company used the outage to complete maintenance that allowed it to shift a planned fourth-quarter FCC turnaround to the first half of 2027. PBF expects East Coast assets to run uninterrupted until a Paulsboro crude-unit turnaround begins late in the fall.

The company’s Refining Business Improvement initiative included a circuit-wide energy-efficiency effort that reduced purchased natural gas per barrel, on a price-adjusted basis, by 20% from its 2024 baseline, according to Bukowski. PBF also said its procurement organization is midway through renegotiating or rebidding more than 60 contracts and expects roughly $60 million in annual savings on items including process chemicals, maintenance and equipment rentals.

Cash Flow, Debt Reduction and Capital Spending

Chief Financial Officer Joe Marino said PBF generated $1.6 billion of cash from operations during the quarter, including an approximately $430 million working-capital benefit. The benefit reflected lower inventory levels from the first quarter and the company’s net payable position in a higher-price environment.

PBF ended the quarter with $894 million in cash and about $855 million in net debt, with net debt to capitalization at 15%. The company reduced net debt by more than 62% during the quarter, including by repaying borrowings under its asset-backed lending facility and refinancing $802 million of 2028 senior notes. It issued $500 million of senior notes due 2034 as part of that effort.

Lucey said he expects PBF to end July with approximately $1.5 billion in cash. While management said shareholder returns remain part of its capital-allocation framework, Lucey emphasized that the company remains focused on strengthening its balance sheet and improving the competitiveness of its refining assets.

Second-quarter consolidated capital expenditures totaled $189 million, excluding approximately $56 million related to the Martinez rebuild. PBF lowered its 2026 capital-expenditure guidance by about $75 million to $850 million at the midpoint, largely because turnarounds at Toledo and Chalmette were moved into 2027.

Martinez Insurance Recoveries and Renewable Diesel

PBF recorded a $250 million gain on insurance recoveries related to the Martinez fire during the second quarter. Marino said the payment brought total recoveries to $1.25 billion, net of deductibles and retention, including amounts received in 2025. He said most spending associated with the rebuild is complete, though cleanup and demobilization work remains.

The insurance claim remains ongoing, and PBF expects additional funds as it works toward finalizing the claim in the second half of 2026. Lucey said he expects one more payment that could be similar in size to the most recent payment.

The company also reported $27.5 million of net income from its investment in SBR, or approximately $40 million of EBITDA. SBR produced an average of 15,100 barrels per day of renewable diesel during the quarter. Marino said production reflected reduced rates associated with an April catalyst change, but management has seen improved performance since installation and expects a longer runtime.

About PBF Energy (NYSE:PBF)

PBF Energy, Inc is an independent petroleum refiner organized in 2008 and headquartered in Parsippany, New Jersey. The company began trading on the New York Stock Exchange in July 2012 under the ticker symbol PBF. Since its formation, PBF Energy has grown through acquisitions and operational optimization, positioning itself as a leading supplier of refined petroleum products in the United States.

The company owns and operates five refineries located along the U.S. Gulf Coast, East Coast and in the Pacific Northwest, with a combined crude oil processing capacity of approximately 900,000 barrels per day.

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