PBF Energy Q3 Earnings Call Highlights

Key Points

• PBF Energy reported strong third-quarter results, with adjusted earnings of $12.78 per share and approximately $2.3 billion in adjusted EBITDA, supported by tight refined-product supplies and strong demand.
• The company reduced net debt by more than $1.2 billion during the quarter and over $2 billion year to date. Debt repayments and refinancing are expected to reduce 2027 interest expense by at least $130 million, while the quarterly dividend increased 18%.
• PBF expects continued support from constrained refining capacity and wider crude differentials, while its improvement program is projected to exceed $350 million in annualized savings by year-end and renewable diesel investment SBR contributed $62 million of equity income.

PBF Energy NYSE: PBF reported third-quarter adjusted net income of $12.78 per share and adjusted EBITDA of approximately $2.3 billion, as tight refined-product supplies and firm demand supported strong market conditions. The company also continued to reduce leverage, cutting net debt by more than $1.2 billion during the quarter and more than $2 billion year to date.

President and CEO Matt Lucey said the company intends to use the current earnings environment to make lasting operational and financial improvements. “The company reduced net debt by more than $1.2 billion during the quarter and by more than $2 billion this year,” Lucey said, adding that the balance-sheet changes have placed PBF in its strongest financial position since its formation.

Refining market remains supply constrained

Lucey said disruptions to oil markets have been most visible in refined products rather than crude oil. While flows through the Strait of Hormuz had recovered to roughly three-quarters of pre-war levels, product flows remained below pre-war levels, he said.

More than 5 million barrels per day of global refining capacity was offline, including some capacity with physical damage, according to Lucey. He also said global inventories were about 500 million barrels below pre-war levels, leaving “essentially zero cushion in the system.”

Benchmark margins reflected those conditions. The New York Harbor 2-1-1 crack spread averaged nearly $65 per barrel during the third quarter, compared with about $26 per barrel a year earlier, Lucey said. He characterized the market as entering a higher cycle marked by elevated volatility and a bias toward wider crude-oil differentials.

PBF expects its complex coastal refining system to benefit from those conditions, particularly as freight costs and growing supplies of heavy crude widen light-heavy crude differentials. Lucey said the company’s crude flexibility and proximity to supply provide a tailwind heading into the fourth quarter.

During the question-and-answer session, Senior Vice President of Commercial Tom O’Connor said discounted Latin American heavy crudes were a key driver of wider price differentials. Higher freight costs have pushed free-on-board valuations in South America lower, while Canadian markets have followed, he said.

Operations, turnarounds and improvement program

PBF processed about 924,000 barrels per day across its refining system during the third quarter, in line with its guidance. For the fourth quarter, the company expects total throughput of 925,000 to 985,000 barrels per day.

Senior Vice President and Head of Refining Mike Bukowski said the Martinez hydrocracker turnaround began in September and was completed in October as planned. The Paulsboro crude-unit turnaround followed a similar timetable, and both projects were completed within budget and industry benchmark targets.

At Chalmette, the pretreater and reformer that had been offline since May returned to service. Bukowski said the refinery was not affected by Hurricane Isaias. With planned turnarounds completed, management said it sees a clearer operating runway for the remainder of 2026.

The company’s refining business improvement initiative generated more than $230 million of annualized cost improvements included in its 2026 plans and is expected to exceed $350 million by year-end, according to Bukowski. He said capital reductions tied to the program were tracking at about $88 million, above the company’s $70 million commitment, including approximately $54 million from turnaround-related savings.

• Natural-gas intensity across the refining system was down about 11% year to date.
• Toledo improved overall energy intensity by 10% to 15%, Bukowski said.
• Strategic sourcing efforts identified about $55 million of annual savings across three waves of contract renewals.

PBF is also pursuing smaller projects intended to improve yields, utilization and costs rather than large-scale capacity expansions. At Chalmette, the first phase of a jet-fuel project was completed in the third quarter. The project upgrades high-sulfur diesel and currently produces about 10,000 barrels per day of jet fuel; the company plans to increase that capability to 20,000 barrels per day in 2027.

A similar Paulsboro project planned for 2027 is expected to increase gasoline yield and blending capability by about 10,000 barrels per day, management said.

Debt reduction and capital allocation

Chief Financial Officer Joe Marino said PBF generated approximately $1.9 billion in cash from operations during the quarter, including a $56 million working-capital benefit. Consolidated capital expenditures totaled $177 million, excluding about $8 million for the Martinez rebuild and $46.5 million related to the purchase of hydrogen assets from Air Products.

PBF maintained its 2026 capital-expenditure guidance of $825 million to $875 million, excluding capital related to the Martinez rebuild.

The company ended the quarter with approximately $2.5 billion in cash, $2.1 billion of total debt and $426 million of net cash. In September, PBF issued $550 million of 0% exchangeable notes due in 2032 and redeemed $500 million of 7.875% senior notes due in 2030. It also acquired two hydrogen plants serving the Torrance refinery, financed with a seller promissory note of about $340 million.

After the quarter ended, PBF redeemed its remaining $800 million of 9.875% senior notes due in 2030 using cash on hand. Marino said gross debt subsequently stood at about $1.4 billion, including the Air Products promissory note, and that refinancing and debt repayment actions are expected to lower 2027 interest expense by at least $130 million.

The company also increased its quarterly dividend by 18%. Lucey said PBF intends to keep a strong balance sheet given refining-market volatility while allocating capital to high-return, margin-enhancing projects and shareholder returns.

Renewable diesel contribution

PBF recorded $62 million of equity income from its SBR renewable diesel investment, equivalent to about $72 million of EBITDA. SBR produced approximately 19,200 barrels per day of renewable diesel in the third quarter, at the upper end of guidance, and PBF expects fourth-quarter production of 18,000 to 20,000 barrels per day.

Marino said PBF received its first dividend distribution from SBR during the quarter, totaling about $20 million. He attributed the renewable business’s performance to strong margins, a tighter heating-oil-to-bean-oil spread and elevated Renewable Identification Number prices.

About PBF Energy (NYSE:PBF)

PBF Energy Inc NYSE: PBF is an independent petroleum refiner and supplier of transportation fuels, heating oil, petrochemical feedstocks, lubricants, asphalt and other refined petroleum products. The company purchases crude oil and other feedstocks, processes them at its refineries, and sells the resulting products to branded and unbranded fuel retailers, distributors, wholesalers and commercial customers.

PBF operates refineries in several major U.S. refining regions, including the East Coast, Midwest, Gulf Coast and West Coast.

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