PBF Energy Reports Fourth Quarter 2018 Results, Declares Dividend of $0.30 Per Share

PRNewswire 14-Feb-2019 6:30 AM

PARSIPPANY, N.J., Feb. 14, 2019 /PRNewswire/ -- PBF Energy Inc. (NYSE:PBF) today reported fourth quarter 2018 loss from operations of $446.2 million as compared to income from operations of $254.6 million for the fourth quarter of 2017. Excluding special items, fourth quarter 2018 income from operations was $213.2 million as compared to income from operations of $57.0 million for the fourth quarter of 2017.

PBF Energy Logo

The company reported fourth quarter 2018 net loss of $346.7 million and net loss attributable to PBF Energy Inc. of $353.7 million or $2.97 per share. This compares to net income of $260.4 million, and net income attributable to PBF Energy Inc. of $241.9 million or $2.14 per share for the fourth quarter of 2017.  Special items in the fourth quarter 2018 results, which decreased net income, by a net, after-tax charge of $483.5 million, or $4.00 per share, consisted of a lower-of-cost-or-market ("LCM") inventory adjustment and a charge associated with the residual costs on the early return of certain leased railcars, offset by a benefit related to the change in our Tax Receivable Agreement liability. Adjusted fully-converted net income for the fourth quarter 2018, excluding special items, was $125.8 million, or $1.03 per share on a fully-exchanged, fully-diluted basis, as described below, compared to an adjusted fully-converted net loss of $4.4 million or $0.04 per share, for the fourth quarter 2017.

Tom Nimbley, PBF Energy's Chairman and CEO, said, "Our strong fourth quarter results capped off a solid year for PBF Energy. We were able to demonstrate the flexibility of our high-complexity refining system by sourcing advantaged crude to help blunt the impact of an oversupplied product market, especially gasoline." Mr. Nimbley continued, "Looking forward, our outlook remains positive. Strong clean product demand should return inventories to their seasonal norms as we move into the spring maintenance season and make the shift to summer-grade gasoline. Additionally, we are strategically positioning PBF in front of the upcoming IMO marine fuel regulation changes by advancing our turnaround activities and completing the bulk of our major maintenance in the first half of 2019. Finally, PBF Energy continues to be a supportive sponsor of PBF Logistics and the elimination of the IDRs highlights our commitment to the future of PBF Logistics and its value as a partner in the growth of both companies."

Income from operations was $358.1 million for the year-ended December 31, 2018 as compared to income from operations of $731.6 million for the year-ended December 31, 2017. Excluding special items, income from operations was $718.0 million for the year-ended December 31, 2018 as compared to income from operations of $436.1 million for the year-ended December 31, 2017. Adjusted fully-converted net income for the year ended December 31, 2018, excluding special items, was $387.0 million, or $3.26 per share on a fully-exchanged, fully-diluted basis, as compared to adjusted fully-converted net income of $130.1 million, or $1.14 per share, for the year ended December 31, 2017. PBF Energy's financial results reflect the consolidation of PBF Logistics LP (NYSE:PBFX), a master limited partnership of which PBF indirectly owns the general partner and approximately 44.0% of the limited partner interests as of December 31, 2018.

Strategic Projects, Capital and Corporate Update
As previously disclosed, PBF Energy is progressing with the restart of the idled 12,000 barrel per day coker at the Chalmette refinery and the installation of a new hydrogen plant at the Delaware City refinery. Both projects are on schedule. We expect that the coker will be in service late in the fourth quarter of 2019 and the new hydrogen plant, which is being built and will be owned and operated by Linde, will be in service during the first quarter of 2020.  PBF Energy's capital expenses for the projects are expected to be approximately $110 million and $40 million for the coker and hydrogen plant, respectively.

In order to strategically position the company for the later part of 2019, as the expected benefits of the changing marine fuels standards being implemented with IMO 2020 begin to emerge, PBF has elected to accelerate the previously announced 2019 turnarounds at its Delaware City and Paulsboro refineries. The Delaware City coker turnaround, and other ancillary units, will now occur in the March to April time frame, and the Paulsboro crude unit turnaround originally planned for the third quarter will now occur in the second quarter of 2019.

PBF Logistics announced today an IDR simplification agreement in which PBF will receive 10,000,000 newly-issued common units in exchange for the elimination of PBF's IDRs. The transaction is subject to customary closing conditions. Closing of the transaction is expected to occur on February 28, 2019.  Pro forma for the transaction, PBF will own approximately 54% of the outstanding LP common units.

Throughput Guidance
Throughput guidance for the first quarter reflects ongoing maintenance activity and current expectations based on prevailing market conditions.  In addition to advancing the turnaround work on the East Coast, PBF is conducting repairs on piping and instrumentation associated with a pre-flash tower, located in Delaware City, which was damaged during an incident commencing on February 3, 2019.  The refinery's crude unit was not damaged and has been returned to service.

For the first quarter 2019, we expect East Coast total throughput to average 300,000 to 320,000 barrels per day; Mid-Continent total throughput is expected to average 135,000 to 145,000 barrels per day; Gulf Coast total throughput is expected to average 175,000 to 185,000 barrels per day and West Coast total throughput is expected to average 130,000 to 140,000 barrels per day.

For the full-year 2019, we expect East Coast total throughput to average 325,000 to 345,000 barrels per day; Mid-Continent total throughput is expected to average 150,000 to 160,000 barrels per day; Gulf Coast total throughput is expected to average 195,000 to 205,000 barrels per day and West Coast total throughput is expected to average 160,000 to 170,000 barrels per day.

PBF Energy Inc. Declares Dividend
The company announced today that it will pay a quarterly dividend of $0.30 per share of Class A common stock on March 14, 2019, to holders of record as of February 28, 2019.

Adjusted Fully-Converted Results
Adjusted fully-converted results assume the exchange of all PBF Energy Company LLC Series A Units and dilutive securities into shares of PBF Energy Inc. Class A common stock on a one-for-one basis, resulting in the elimination of the noncontrolling interest and a corresponding adjustment to the company's tax provision.

Non-GAAP Measures
This earnings release, and the discussion during the management conference call, may include references to Non-GAAP (Generally Accepted Accounting Principles) measures including Adjusted Fully-Converted Net Income, Adjusted Fully-Converted Net Income excluding special items, Adjusted Fully-Converted Net Income per fully-exchanged, fully-diluted share, gross refining margin, gross refining margin excluding special items, gross refining margin per barrel of throughput, EBITDA (Earnings before Interest, Income Taxes, Depreciation and Amortization), EBITDA excluding special items and Adjusted EBITDA. PBF believes that Non-GAAP financial measures provide useful information about its operating performance and financial results. However, these measures have important limitations as analytical tools and should not be viewed in isolation or considered as alternatives for, or superior to, comparable GAAP financial measures. PBF's Non-GAAP financial measures may also differ from similarly named measures used by other companies. See the accompanying tables and footnotes in this release for additional information on the Non-GAAP measures used in this release and reconciliations to the most directly comparable GAAP measures.

Conference Call Information
PBF Energy's senior management will host a conference call and webcast regarding quarterly results and other business matters on Thursday, February 14, 2019, at 8:30 a.m. ET. The call is being webcast and can be accessed at PBF Energy's website, http://www.pbfenergy.com.  The call can also be accessed by dialing (877) 876-9173 or (785) 424-1667, conference ID: PBFQ418. The audio replay will be available two hours after the end of the call through February 28, 2019, by dialing (800) 723-0488 or (402) 220-2651.

Forward-Looking Statements
Statements in this press release relating to future plans, results, performance, expectations, achievements and the like are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which may be beyond the company's control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors and uncertainties that may cause actual results to differ include but are not limited to the risks disclosed in the company's filings with the SEC, as well as the risks disclosed in PBF Logistics LP's SEC filings and any impact PBF Logistics LP may have on the company's credit rating, cost of funds, employees, customer and vendors; risk relating to the securities markets generally; and the impact of adverse market conditions affecting the company, unanticipated developments, regulatory approvals, changes in laws and other events that negatively impact the company. All forward-looking statements speak only as of the date hereof. The company undertakes no obligation to revise or update any forward-looking statements except as may be required by applicable law.

About PBF Energy Inc.
PBF Energy Inc. (NYSE:PBF) is one of the largest independent refiners in North America, operating, through its subsidiaries, oil refineries and related facilities in California, Delaware, Louisiana, New Jersey and  Ohio. Our mission is to operate our facilities in a safe, reliable and environmentally responsible manner, provide employees with a safe and rewarding workplace, become a positive influence in the communities where we do business, and provide superior returns to our investors.

PBF Energy Inc. also currently indirectly owns the general partner and approximately 44.0% of the limited partnership interest of PBF Logistics LP (NYSE:PBFX).



PBF ENERGY INC. AND  SUBSIDIARIES

EARNINGS RELEASE TABLES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share data)




















Three Months Ended


Year Ended







December 31,


December 31,







2018


2017


2018


2017

Revenues


$

6,292,874



$

6,535,988



$

27,186,093



$

21,786,637















Cost and expenses:










Cost of products and other


6,102,661



5,709,100



24,503,393



18,863,621



Operating expenses (excluding depreciation and amortization expense as reflected
below)


452,798



417,556



1,720,959



1,684,435



Depreciation and amortization expense


95,373



80,192



359,126



277,992


Cost of sales


6,650,832



6,206,848



26,583,478



20,826,048



General and administrative expenses (excluding depreciation and amortization
expense as reflected below)


85,537



71,400



276,955



214,547



Depreciation and amortization expense


2,763



2,609



10,634



12,964



(Gain) loss on sale of assets


(22)



518



(43,094)



1,458


Total cost and expenses


6,739,110



6,281,375



26,827,973



21,055,017















Income (loss) from operations


(446,236)



254,613



358,120



731,620















Other income (expense):











Change in Tax Receivable Agreement liability


6,130



250,357



13,893



250,922



Change in fair value of catalyst leases


(196)



(1,236)



5,587



(2,247)



Debt extinguishment costs








(25,451)



Interest expense, net


(40,976)



(39,556)



(169,911)



(154,427)



Other non-service components of net periodic benefit cost (Note 16)



276



(1,097)



1,109



(1,402)


Income (loss) before income taxes


(481,002)



463,081



208,798



799,015


Income tax (benefit) expense


(134,329)



202,695



33,507



315,584


Net income (loss)


(346,673)



260,386



175,291



483,431



Less: net income attributable to noncontrolling interests


7,069



18,494



46,976



67,914


Net income (loss) attributable to PBF Energy Inc. stockholders


$

(353,742)



$

241,892



$

128,315



$

415,517















Net income (loss) available to Class A common stock per share:










Basic


$

(2.97)



$

2.19



$

1.11



$

3.78



Diluted


$

(2.97)



$

2.14



$

1.10



$

3.73



Weighted-average shares outstanding-basic


119,066,695



110,208,152



115,190,262



109,779,407



Weighted-average shares outstanding-diluted


119,066,695



114,773,845



118,773,606



113,898,845















Dividends per common share


$

0.30



$

0.30



$

1.20



$

1.20















Adjusted fully-converted net income (loss) and adjusted fully-converted net income (loss) per fully exchanged, fully diluted shares outstanding (Note 1):










Adjusted fully-converted net income (loss)


$

(357,688)



$

245,929



$

131,021



$

424,587



Adjusted fully-converted net income (loss) per fully exchanged, fully diluted share


$

(2.97)



$

2.14



$

1.10



$

3.73



Adjusted fully-converted shares outstanding - diluted (Note 6)


120,273,021



114,773,845



118,773,606



113,898,845















See Footnotes to Earnings Release Tables

 

PBF ENERGY INC. AND SUBSIDIARIES

RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP

(Unaudited, in thousands, except share and per share data)
























Three Months Ended


Year Ended

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
FULLY-CONVERTED
NET INCOME (LOSS) AND ADJUSTED FULLY-CONVERTED  NET
INCOME (LOSS) EXCLUDING SPECIAL ITEMS (Note 1)


December 31,


December 31,


2018


2017


2018


2017

Net income (loss) attributable to PBF Energy Inc. stockholders


$      (353,742)


$       241,892


$       128,315


$       415,517

     Less: Income allocated to participating securities


156


232


748


1,043

Income (loss) available to PBF Energy Inc. stockholders - basic


(353,898)


241,660


127,567


414,474

     Add: Net income (loss) attributable to noncontrolling interest (Note 2)


(5,122)


7,069


4,668


16,746

     Less: Income tax benefit (expense) (Note 3)


1,332


(2,800)


(1,214)


(6,633)

Adjusted fully-converted net income (loss)


$      (357,688)


$       245,929


$       131,021


$       424,587

     Special Items (Note 4):









     Add: Non-cash LCM inventory adjustment 


651,734


(197,589)


351,278


(295,532)

     Add: Change in Tax Receivable Agreement liability 


(6,130)


(250,357)


(13,893)


(250,922)

     Add: Debt extinguishment costs





25,451

     Add: Gain on Torrance land sale




(43,761)


     Add: Early railcar return expense


7,742



52,313


     Add: Net tax benefit related to the TCJA 



(173,346)



(173,346)

     Add: Net tax expense on remeasurement of TRA associated deferred tax assets



193,499



193,499

     Less: Recomputed income taxes on special items


(169,870)


177,427


(89,944)


206,364

Adjusted fully-converted net income (loss) excluding special items


$       125,788


$          (4,437)


$       387,014


$       130,101
















Weighted-average shares outstanding of PBF Energy Inc. 


119,066,695


110,208,152


115,190,262


109,779,407

Conversion of PBF LLC Series A Units (Note 5)


1,206,326


3,798,023


1,938,089


3,823,783

Common stock equivalents (Note 6)


1,749,607


767,670


1,645,255


295,655

Fully-converted shares outstanding - diluted


122,022,628


114,773,845


118,773,606


113,898,845
















Adjusted fully-converted net income (loss) per fully exchanged, fully
diluted shares outstanding (Note 6)


$            (2.97)


$             2.14


$             1.10


$             3.73


Adjusted fully-converted net income (loss) excluding special items per
fully exchanged, fully diluted shares outstanding (Note 4)


$             1.03


$            (0.04)


$             3.26


$             1.14





















Three Months Ended


Year Ended

RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS
TO INCOME FROM OPERATIONS EXCLUDING SPECIAL
ITEMS


December 31,


December 31,


2018


2017


2018


2017

Income (loss) from operations (Note 16)


$      (446,236)


$       254,613


$       358,120


$       731,620

     Special Items (Note 4):









     Add: Non-cash LCM inventory adjustment


651,734


(197,589)


351,278


(295,532)

     Add: Gain on Torrance land sale




(43,761)


     Add: Early railcar return expense


7,742



52,313


Income from operations excluding special items


$       213,240


$         57,024


$       717,950


$       436,088


See Footnotes to Earnings Release Tables


















PBF ENERGY INC. AND SUBSIDIARIES

RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP

EBITDA RECONCILIATIONS (Note 7)

(Unaudited, in thousands)




















Three Months Ended


Year Ended



December 31,


December 31,

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND
EBITDA EXCLUDING SPECIAL ITEMS


2018


2017


2018


2017

Net income (loss)


$      (346,673)


$       260,386


$       175,291


$       483,431

Add: Depreciation and amortization expense


98,136


82,801


369,760


290,956

Add: Interest expense, net


40,976


39,556


169,911


154,427

Add: Income tax (benefit) expense


(134,329)


202,695


33,507


315,584

EBITDA



$      (341,890)


$       585,438


$       748,469


$    1,244,398

Special Items (Note 4):









Add: Non-cash LCM inventory adjustment


651,734


(197,589)


351,278


(295,532)

Add: Change in Tax Receivable Agreement liability 


(6,130)


(250,357)


(13,893)


(250,922)

Add: Debt extinguishment costs 





25,451

Add: Gain on Torrance land sale




(43,761)


Add: Early railcar return expense


7,742



52,313


EBITDA excluding special items


$       311,456


$       137,492


$    1,094,406


$       723,395
























Three Months Ended


Year Ended









December 31,


December 31,

RECONCILIATION OF EBITDA TO ADJUSTED EBITDA


2018


2017


2018


2017

EBITDA


$      (341,890)


$       585,438


$       748,469


$    1,244,398

Add:  Stock-based compensation


7,361


8,784


25,969


26,848

Add: Net non-cash change in fair value of catalyst leases


196


1,236


(5,587)


2,247

Add: Non-cash LCM inventory adjustment (Note 4)


651,734


(197,589)


351,278


(295,532)

Add: Change in Tax Receivable Agreement liability (Note 4)


(6,130)


(250,357)


(13,893)


(250,922)

Add: Debt extinguishment costs (Note 4)





25,451

Adjusted EBITDA



$       311,271


$       147,512


$    1,106,236


$       752,490



See Footnotes to Earnings Release Tables

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

CONSOLIDATED BALANCE SHEET DATA

(Unaudited, in thousands)















December 31,


December 31,







2018


2017


Balance Sheet Data:







Cash and cash equivalents

$                       597,286


$                       573,021



Inventories

1,865,831


2,213,797



Total assets

8,005,415


8,117,993



Total debt

1,933,694


2,191,650









Total equity

3,248,479


2,902,949



Total equity excluding special items (Note 4, 13)

$                     3,551,677


$                     2,950,154












Total debt to capitalization ratio (Note 13)

37 %


43 %



Total debt to capitalization ratio, excluding special items (Note 13)

35 %


43 %



Net debt to capitalization ratio (Note 13) 

29 %


36 %



Net debt to capitalization ratio, excluding special items (Note 13)

27 %


35 %











SUMMARIZED STATEMENT OF CASH FLOW DATA

(Unaudited, in thousands)















Year Ended December 31,







2018


2017


Cash flows provided by operations

$                        837,938


$                        685,861


Cash flows used in investing activities

(685,597)


(687,011)


Cash flows used in financing activities

(128,076)


(172,103)


Net increase (decrease) in cash and cash equivalents

24,265


(173,253)


Cash and cash equivalents, beginning of period

573,021


746,274


Cash and cash equivalents, end of period

$                        597,286


$                        573,021








See Footnotes to Earnings Release Tables

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

CONSOLIDATING FINANCIAL INFORMATION (Note 8)

(Unaudited, in thousands)












Three Months Ended December 31, 2018


Refining


Logistics


Corporate 


 Eliminations


Consolidated
Total

Revenues

$    6,281,466


$         80,045


$                —


$        (68,637)


$    6,292,874

Depreciation and amortization expense

86,749


8,624


2,763



98,136

Income (loss) from operations (Note 14, 16)

(397,665)


38,571


(82,433)


(4,709)


(446,236)

Interest expense, net

1,092


12,093


27,791



40,976

Capital expenditures (Note 17)

175,246


89,069


1,445



265,760












Three Months Ended December 31, 2017


Refining


Logistics


Corporate 


 Eliminations


Consolidated
Total

Revenues

$    6,532,514


$         67,213


$                —


$        (63,739)


$    6,535,988

Depreciation and amortization expense

72,884


7,308


2,609



82,801

Income (loss) from operations (Note 14, 16)

293,018


35,614


(70,672)


(3,347)


254,613

Interest expense, net

1,262


9,745


28,549



39,556

Capital expenditures 

58,423


18,158


512



77,093












Year Ended December 31, 2018


Refining


Logistics


Corporate


Eliminations


Consolidated
Total

Revenues

$ 27,162,079


$      283,440


$               —


$     (259,426)


$ 27,186,093

Depreciation and amortization expense

329,317


29,809


10,634



369,760

Income (loss) from operations (Note 14, 16)

498,287


143,870


(266,218)


(17,819)


358,120

Interest expense, net

7,601


43,033


119,277



169,911

Capital expenditures (Note 17)

552,020


175,696


6,171



733,887












Year Ended December 31, 2017


Refining


Logistics


Corporate 


 Eliminations


Consolidated
Total

Revenues

$  21,769,703


$       257,588


$                —


$      (240,654)


$  21,786,637

Depreciation and amortization expense

253,588


24,404


12,964



290,956

Income (loss) from operations (Note 14, 16)

814,033


143,379


(211,227)


(14,565)


731,620

Interest expense, net

4,695


33,363


116,369



154,427

Capital expenditures (Note 17)

633,294


90,258


3,483



727,035






















Balance at December 31, 2018


Refining


Logistics


Corporate


Eliminations


Consolidated
Total

Total Assets (Note 15)

$    6,988,059


$       956,353


$         98,055


$        (37,052)


$    8,005,415












Balance at December 31, 2017


Refining


Logistics


Corporate 


 Eliminations


Consolidated
Total

Total Assets (Note 15)

$    7,287,384


$       748,215


$       123,211


$        (40,817)


$    8,117,993





















See Footnotes to Earnings Release Tables

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

MARKET INDICATORS AND KEY OPERATING INFORMATION

(Unaudited, amounts in thousands except as indicated)


















Three Months Ended


Year Ended






December 31,


December 31,

Market Indicators (dollars per barrel) (Note 9)

2018


2017


2018


2017

Dated Brent Crude

$           68.70


$            61.39


$           71.34


$           54.18

West Texas Intermediate (WTI) crude oil

$           59.98


$            55.23


$           65.20


$           50.79

Light Louisiana Sweet (LLS) crude oil 

$           67.51


$            60.94


$           70.23


$           54.02

Alaska North Slope (ANS) crude oil 

$           69.53


$            61.31


$           71.54


$           54.43

Crack Spreads:








     Dated Brent (NYH) 2-1-1

$           10.19


$            14.44


$           13.17


$           14.74

     WTI (Chicago) 4-3-1

$           11.75


$            19.44


$           14.84


$           15.88

     LLS (Gulf Coast) 2-1-1

$             9.35


$            13.00


$           12.30


$           13.57

     ANS (West Coast) 4-3-1

$           11.82


$            13.34


$           15.48


$           17.43

Crude Oil Differentials:








     Dated Brent (foreign) less WTI

$             8.72


$              6.16


$             6.14


$             3.39

     Dated Brent less Maya (heavy, sour)

$             6.19


$            10.52


$             8.70


$             7.16

     Dated Brent less WTS (sour)

$           15.38


$              6.59


$           13.90


$             4.37

     Dated Brent less ASCI (sour)

$             4.45


$              3.88


$             4.64


$             3.66

     WTI less WCS (heavy, sour)

$           34.67


$            16.48


$           26.93


$           12.24

     WTI less Bakken (light, sweet)

$             8.48


$            (1.54)


$             2.86


$            (0.26)

     WTI less Syncrude (light, sweet)

$           19.19


$            (1.53)


$             6.84


$            (1.74)

     WTI less LLS (light, sweet) 

$           (7.53)


$            (5.71)


$           (5.03)


$            (3.23)

     WTI less ANS (light, sweet) 

$           (9.55)


$            (6.08)


$           (6.34)


$            (3.63)

Natural gas (dollars per MMBTU)

$             3.72


$              2.92


$             3.07


$             3.02













Key Operating Information








Production (barrels per day ("bpd") in thousands)

850.8


872.3


854.5


802.9

Crude oil and feedstocks throughput (bpd in thousands)

842.7


870.9


849.7


807.4

Total crude oil and feedstocks throughput (millions of barrels)

77.5


80.1


310.0


294.7

Consolidated gross margin per barrel of throughput 

$           (4.62)


$             4.11


$             1.94


$             3.25

Gross refining margin, excluding special items, per barrel of throughput (Note 4,
Note 10)

$           10.00


$             7.06


$             9.09


$             8.08

Refinery operating expense, per barrel of throughput (Note 11)

$             5.56


$             5.01


$             5.34


$             5.52

Crude and feedstocks (% of total throughput) (Note 12)








     Heavy

35 %


33 %


36 %


34 %

     Medium

30 %


30 %


30 %


30 %

     Light

22 %


23 %


21 %


21 %

     Other feedstocks and blends

13 %


14 %


13 %


15 %

          Total throughput

100 %


100 %


100 %


100 %

Yield (% of total throughput)








     Gasoline and gasoline blendstocks

50 %


51 %


50 %


50 %

     Distillates and distillate blendstocks

33 %


31 %


32 %


30 %

     Lubes

1 %


1 %


1 %


1 %

     Chemicals

2 %


2 %


2 %


2 %

     Other

15 %


15 %


16 %


16 %

          Total yield

101 %


100 %


101 %


99 %

























See Footnotes to Earnings Release Tables

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

SUPPLEMENTAL OPERATING INFORMATION

(Unaudited, amounts in thousands except as indicated)




















Three Months Ended


Year Ended







December 31,


December 31,







2018


2017


2018


2017

Supplemental Operating Information - East Coast (Delaware City and Paulsboro)








Production (bpd in thousands)

327.5


359.3


340.2


332.5

Crude oil and feedstocks throughput (bpd in thousands)

331.2


362.4


344.7


338.2

Total crude oil and feedstocks throughput (millions of barrels)

30.5


33.3


125.8


123.4

Gross margin per barrel of throughput 

$            (11.54)


$                1.47


$                0.25


$                0.89

Gross refining margin, excluding special items, per barrel of throughput (Note 4, Note 10)

$                8.55


$                4.02


$                7.43


$                5.46

Refinery operating expense, per barrel of throughput (Note 11)

$                5.12


$                4.28


$                4.68


$                4.44

Crude and feedstocks (% of total throughput) (Note 12):








     Heavy

26 %


26 %


27 %


31 %

     Medium

47 %


44 %


47 %


40 %

     Light

9 %


12 %


8 %


11 %

     Other feedstocks and blends

18 %


18 %


18 %


18 %

          Total throughput

100 %


100 %


100 %


100 %

Yield (% of total throughput):








     Gasoline and gasoline blendstocks

46 %


48 %


46 %


46 %

     Distillates and distillate blendstocks

33 %


33 %


33 %


31 %

     Lubes

2 %


2 %


2 %


2 %

     Chemicals

1 %


1 %


1 %


1 %

     Other

17 %


15 %


17 %


18 %

          Total yield

99 %


99 %


99 %


98 %














Supplemental Operating Information - Mid-Continent (Toledo)








Production (bpd in thousands)

152.9


143.8


151.5


148.2

Crude oil and feedstocks throughput (bpd in thousands)

149.8


141.5


149.6


145.2

Total crude oil and feedstocks throughput (millions of barrels)

13.8


13.0


54.6


53.0

Gross margin per barrel of throughput 

$              (9.90)


$                9.18


$                5.07


$                5.52

Gross refining margin, excluding special items, per barrel of throughput (Note 4, Note 10)

$              17.76


$              12.17


$              13.46


$              10.28

Refinery operating expense, per barrel of throughput (Note 11)

$                5.30


$                5.33


$                5.12


$                5.24

Crude and feedstocks (% of total throughput) (Note 12):








     Medium

30 %


36 %


32 %


37 %

     Light

68 %


63 %


66 %


61 %

     Other feedstocks and blends

2 %


1 %


2 %


2 %

          Total throughput

100 %


100 %


100 %


100 %

Yield (% of total throughput):








     Gasoline and gasoline blendstocks

52 %


55 %


53 %


54 %

     Distillates and distillate blendstocks

37 %


33 %


35 %


33 %

     Chemicals

6 %


6 %


5 %


6 %

     Other

7 %


8 %


8 %


9 %

          Total yield

102 %


102 %


101 %


102 %














Supplemental Operating Information - Gulf Coast (Chalmette)








Production (bpd in thousands)

192.1


187.7


189.2


182.3

Crude oil and feedstocks throughput (bpd in thousands)

188.7


190.1


185.6


184.5

Total crude oil and feedstocks throughput (millions of barrels)

17.3


17.5


67.7


67.4

Gross margin per barrel of throughput

$                0.27


$                2.94


$              (0.27)


$                3.69

Gross refining margin, excluding special items, per barrel of throughput (Note 4, Note 10)

$                5.83


$                6.12


$                6.41


$                8.34

Refinery operating expense, per barrel of throughput (Note 11)

$                4.65


$                4.51


$                4.66


$                4.84

Crude and feedstocks (% of total throughput) (Note 12):








     Heavy

38 %


36 %


39 %


38 %

     Medium

18 %


16 %


19 %


22 %

     Light

29 %


35 %


29 %


25 %

     Other feedstocks and blends

15 %


13 %


13 %


15 %

          Total throughput

100 %


100 %


100 %


100 %

Yield (% of total throughput):








     Gasoline and gasoline blendstocks

44 %


44 %


43 %


45 %

     Distillates and distillate blendstocks

36 %


32 %


34 %


32 %

     Chemicals

1 %


2 %


1 %


2 %

     Other

21 %


21 %


24 %


20 %

          Total yield

102 %


99 %


102 %


99 %














Supplemental Operating Information - West Coast (Torrance)








Production (bpd in thousands)

178.3


181.5


173.6


139.9

Crude oil and feedstocks throughput (bpd in thousands)

173.0


176.9


169.8


139.5

Total crude oil and feedstocks throughput (millions of barrels)

15.9


16.3


61.9


50.9

Gross margin per barrel of throughput

$                5.09


$                4.26


$                2.33


$                2.84

Gross refining margin, excluding special items, per barrel of throughput (Note 4, Note 10)

$              10.57


$              10.24


$              11.60


$              11.80

Refinery operating expense, per barrel of throughput (Note 11)

$                7.61


$                6.85


$                7.61


$                9.35

Crude and feedstocks (% of total throughput) (Note 12):








     Heavy

78 %


77 %


81 %


74 %

     Medium

10 %


7 %


7 %


8 %

     Other feedstocks and blends

12 %


16 %


12 %


18 %

          Total throughput

100 %


100 %


100 %


100 %

Yield (% of total throughput):








     Gasoline and gasoline blendstocks

60 %


62 %


59 %


64 %

     Distillates and distillate blendstocks

28 %


27 %


28 %


22 %

     Other

15 %


14 %


15 %


14 %

          Total yield

103 %


103 %


102 %


100 %














See Footnotes to Earnings Release Tables

 

 

PBF ENERGY INC. AND SUBSIDIARIES

RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP

GROSS REFINING MARGIN / GROSS REFINING MARGIN PER BARREL OF THROUGHPUT (Note 10)

(Unaudited, in thousands, except per barrel amounts)























Three Months Ended


Three Months Ended









December 31, 2018


December 31, 2017


RECONCILIATION OF CONSOLIDATED GROSS MARGIN TO
GROSS REFINING MARGIN AND GROSS REFINING MARGIN
EXCLUDING SPECIAL ITEMS

$


per barrel of
throughput


$


per barrel of
throughput


Calculation of consolidated gross margin:









Revenues

$    6,292,874


$           81.16


$    6,535,988


$           81.58


Less: Cost of Sales 

6,650,832


85.78


6,206,848


77.47


Consolidated gross margin

$      (357,958)


$            (4.62)


$       329,140


$             4.11


Reconciliation of consolidated gross margin to gross refining
margin:









Consolidated gross margin

$      (357,958)


$            (4.62)


$       329,140


$             4.11



Add: PBFX operating expense

26,983


0.35


19,280


0.24



Add: PBFX depreciation expense

8,624


0.11


7,159


0.09



Less: Revenues of PBFX

(80,045)


(1.03)


(66,513)


(0.83)



Add: Refinery operating expense (Note 16)

430,951


5.56


401,683


5.01



Add: Refinery depreciation expense 

86,749


1.12


73,033


0.91


Gross refining margin

$       115,304


$             1.49


$       763,782


$             9.53


   Special Items (Note 4):










Add: Non-cash LCM inventory adjustment

651,734


8.41


(197,589)


(2.47)



Add: Early railcar return expense

7,742


0.10




Gross refining margin excluding special items

$       774,780


$           10.00


$       566,193


$             7.06
























Year Ended


Year Ended









December 31, 2018


December 31, 2017


RECONCILIATION OF CONSOLIDATED GROSS MARGIN TO
GROSS REFINING MARGIN AND GROSS REFINING MARGIN
EXCLUDING SPECIAL ITEMS

$


per barrel of
throughput


$


per barrel of
throughput


Calculation of consolidated gross margin:









Revenues

$  27,186,093


$           87.67


$  21,786,637


$           73.92


Less: Cost of Sales 

26,583,478


85.73


20,826,048


70.67


Consolidated gross margin

$       602,615


$             1.94


$       960,589


$             3.25


Reconciliation of consolidated gross margin to gross refining
margin:









Consolidated gross margin

$       602,615


$             1.94


$       960,589


$             3.25



Add: PBFX operating expense

84,410


0.27


66,443


0.23



Add: PBFX depreciation expense

29,417


0.09


23,721


0.08



Less: Revenues of PBFX

(281,511)


(0.91)


(254,813)


(0.86)



Add: Refinery operating expense (Note 16)

1,654,749


5.34


1,626,440


5.52



Add: Refinery depreciation expense

329,709


1.06


254,271


0.86


Gross refining margin

$    2,419,389


$             7.79


$    2,676,651


$             9.08


   Special Items (Note 4):










Add: Non-cash LCM inventory adjustment 

351,278


1.13


(295,532)


(1.00)



Add: Early railcar return expense

52,313


0.17




Gross refining margin excluding special items

$    2,822,980


$             9.09


$    2,381,119


$             8.08

















See Footnotes to Earnings Release Tables


 

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

FOOTNOTES TO EARNINGS RELEASE TABLES


(1) Adjusted fully-converted information is presented in this table as management believes that these Non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful to investors to compare our results across the periods presented and facilitates an understanding of our operating results. We also use these measures to evaluate our operating performance. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The differences between adjusted fully-converted and GAAP results are explained in footnotes 2 through 6.


(2) Represents the elimination of the noncontrolling interest associated with the ownership by the members of PBF Energy Company LLC ("PBF LLC") other than PBF Energy Inc., as if such members had fully exchanged their PBF LLC Series A Units for shares of PBF Energy's Class A common stock.


(3) Represents an adjustment to reflect our annualized statutory corporate tax rate of approximately 26.0% and 39.6% for the 2018 and 2017 periods, respectively, applied to net income (loss) attributable to noncontrolling interests for all periods presented. The adjustment assumes the full exchange of existing PBF LLC Series A Units as described in footnote 2. Our statutory tax rates were reduced in 2018 as a result of the Tax Cuts and Jobs Act (the "TCJA") enactment.


(4) The Non-GAAP measures presented include adjusted fully-converted net income excluding special items, income from operations excluding special items, EBITDA excluding special items and gross refining margin excluding special items. Special items presented for the year ended December 31, 2018 relate to a lower of cost or market ("LCM") inventory adjustment, changes in the Tax Receivable Agreement liability, gain on the sale of assets related to the Torrance land sale and charges associated with the early return of certain leased railcars. Special items for the year ended December 31, 2017 relate to an LCM inventory adjustment, changes in the Tax Receivable Agreement liability, debt extinguishment costs, a net tax benefit related to the TCJA enactment and a net tax expense associated with the remeasurement of the Tax Receivable Agreement associated deferred tax assets, as discussed further below. Additionally, the cumulative effects of all current and prior period special items on equity are shown in footnote 13.


Although we believe that Non-GAAP financial measures excluding the impact of special items provide useful supplemental information to investors regarding the results and performance of our business and allow for useful period-over-period comparisons, such Non-GAAP measures should only be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP.


Special Items:


LCM inventory adjustment - LCM is a GAAP requirement related to inventory valuation that mandates inventory to be stated at the lower of cost or market. Our inventories are stated at the lower of cost or market. Cost is determined using last-in, first-out ("LIFO") inventory valuation methodology, in which the most recently incurred costs are charged to cost of sales and inventories are valued at base layer acquisition costs. Market is determined based on an assessment of the current estimated replacement cost and net realizable selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may exceed market values. In such instances, we record an adjustment to write down the value of inventory to market value in accordance with GAAP. In subsequent periods, the value of inventory is reassessed and an LCM inventory adjustment is recorded to reflect the net change in the LCM inventory reserve between the prior period and the current period.


 

The following table includes the LCM inventory reserve as of each date presented (in thousands): 



2018


2017

January 1,

$        300,456


$        595,988

September 30,


498,045

December 31,

651,734


300,456




The following table includes the corresponding impact of changes in the LCM inventory reserve on income (loss) from operations and net income (loss) for the periods presented (in thousands):














Three Months Ended
December 31,


Year Ended December 31,




2018


2017


2018


2017

Net LCM inventory adjustment (charge)
benefit in income (loss) from operations


$  (651,734)


$   197,589


$      (351,278)


$        295,532

Net LCM inventory adjustment (charge)
benefit in net income (loss)


(482,283)


119,326


(259,946)


178,475











Change in Tax Receivable Agreement liability- During the three months and year ended December 31, 2018 we recorded a change in the Tax Receivable Agreement liability that increased income before income taxes by $6.1 million and $13.9 million ($4.5 million and $10.3 million, net of tax), respectively. During the three months and year ended December 31, 2017 PBF Energy recorded a change in the Tax Receivable Agreement liability that increased income before taxes by $250.4 million and $250.9 million ($151.2 million and $151.5 million, net of tax), respectively. The changes in the Tax Receivable Agreement liabilities reflect charges or benefits attributable to changes in PBF Energy's obligation under the Tax Receivable Agreement due to factors out of our control such as changes in tax rates.


Gain on Torrance land sale- During the year ended December 31, 2018 we recorded a gain on the sale of a parcel of real property acquired as part of the Torrance refinery, but not part of the refinery itself. The gain increased income from operations and net income by $43.8 million and $32.4 million, respectively. There was no such gain in the year ended December 31, 2017.


Early Return of Railcars- During the three months ended and year ended December 31, 2018 we recognized certain expenses within Cost of sales associated with the voluntary early return of certain leased railcars. These charges decreased income from operations by $7.7 million and $52.3 million ($5.7 million and $38.7 million, net of tax), respectively. There were no such expenses in the year ended December 31, 2017.


Debt Extinguishment Costs- During the year ended December 31, 2017, we recorded pre-tax debt extinguishment costs of $25.5 million related to the redemption of the 2020 Senior Secured Notes. These nonrecurring charges decreased net income by $15.4 million for the year ended December 31, 2017. There were no such costs in the year ended December 31, 2018.


TCJA Enactment- The Company made a one-time adjustment in 2017 to deferred tax assets and liabilities in relation to the TCJA. The prior year net income tax expense impact of $20.2 million consists of a net tax expense of $193.5 million associated with the remeasurement of the Tax Receivable Agreement associated deferred tax assets and a net tax benefit of $173.3 million for the reduction of our deferred tax liabilities as a result of the TCJA.


Recomputed Income taxes on special items - The income tax impact of the special items, other than TCJA related items, were calculated using the tax rates shown in footnote 3 above.


(5) Represents an adjustment to weighted-average diluted shares outstanding to assume the full exchange of existing PBF LLC Series A Units as described in footnote 2 above.


(6) Represents weighted-average diluted shares outstanding assuming the conversion of all common stock equivalents, including options and warrants for PBF LLC Series A Units and performance share units and options for shares of PBF Energy Class A common stock as calculated under the treasury stock method (to the extent the impact of such exchange would not be anti-dilutive) for the three months and years ended December 31, 2018 and 2017, respectively. Common stock equivalents exclude the effects of options and warrants to purchase 1,278,242 and 1,293,242 shares of PBF Energy Class A common stock and PBF LLC Series A Units because they are anti-dilutive for the three months and year ended December 31, 2018, respectively. Common stock equivalents exclude the effects of options and warrants to purchase 3,537,500 and 6,820,275 shares of PBF Energy Class A common stock and PBF LLC Series A Units because they are anti-dilutive for the three months and year ended December 31, 2017, respectively. For periods showing a net loss, all common stock equivalents are considered anti-dilutive.


(7) EBITDA (Earnings before Interest, Income Taxes, Depreciation and Amortization) and Adjusted EBITDA are supplemental measures of performance that are not required by, or presented in accordance with GAAP. We use these Non-GAAP financial measures as a supplement to our GAAP results in order to provide additional metrics on factors and trends affecting our business. EBITDA and Adjusted EBITDA are measures of operating performance that are not defined by GAAP and should not be considered substitutes for net income as determined in accordance with GAAP. In addition, because EBITDA and Adjusted EBITDA are not calculated in the same manner by all companies, they are not necessarily comparable to other similarly titled measures used by other companies. EBITDA and Adjusted EBITDA have their limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.


(8) We operate in two reportable segments: Refining and Logistics. Our operations that are not included in the Refining and Logistics segments are included in Corporate. As of December 31, 2018, the Refining segment includes the operations of our oil refineries and related facilities in Delaware City, Delaware, Paulsboro, New Jersey, Toledo, Ohio, New Orleans, Louisiana and Torrance, California. The Logistics segment includes the operations of PBF Logistics LP ("PBFX"), a growth-oriented master limited partnership which owns or leases, operates, develops and acquires crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets. PBFX's assets primarily consist of rail and truck terminals and unloading racks, storage facilities and pipelines, a substantial portion of which were acquired from or contributed by PBF LLC and are located at, or nearby, our refineries. PBFX provides various rail, truck and marine terminaling services, pipeline transportation services and storage services to PBF Holding and/or its subsidiaries and third party customers through fee-based commercial agreements.


PBFX currently does not generate significant third party revenue and intersegment related-party revenues are eliminated in consolidation. From a PBF Energy perspective, our chief operating decision maker evaluates the Logistics segment as a whole without regard to any of PBFX's individual operating segments.


(9) As reported by Platts.


(10) Gross refining margin and gross refining margin per barrel of throughput are Non-GAAP measures because they exclude refinery operating expenses, depreciation and amortization and gross margin of PBFX. Gross refining margin per barrel is gross refining margin, divided by total crude and feedstocks throughput. We believe they are important measures of operating performance and provide useful information to investors because gross refining margin per barrel is a helpful metric comparison to the industry refining margin benchmarks shown in the Market Indicators Tables, as the industry benchmarks do not include a charge for refinery operating expenses and depreciation. Other companies in our industry may not calculate gross refining margin and gross refining margin per barrel in the same manner. Gross refining margin and gross refining margin per barrel of throughput have their limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.


(11) Represents refinery operating expenses, including corporate-owned logistics assets, excluding depreciation and amortization, divided by total crude oil and feedstocks throughput.


(12) We define heavy crude oil as crude oil with American Petroleum Institute (API) gravity less than 24 degrees. We define medium crude oil as crude oil with API gravity between 24 and 35 degrees. We define light crude oil as crude oil with API gravity higher than 35 degrees.


(13) The total debt to capitalization ratio is calculated by dividing total debt by the sum of total debt and total equity. This ratio is a measurement that management believes is useful to investors in analyzing our leverage. Net debt and the net debt to capitalization ratio are Non-GAAP measures. Net debt is calculated by subtracting cash and cash equivalents from total debt. We believe these measurements are also useful to investors since we have the ability to and may decide to use a portion of our cash and cash equivalents to retire or pay down our debt. Additionally, as described in footnote 4 above, we have also presented the total debt to capitalization and net debt to capitalization ratios excluding the cumulative effects of special items on equity.


















December 31,


December 31,








2018


2017








(in thousands)

Total debt

$     1,933,694


$     2,191,650

Total equity 

3,248,479


2,902,949

Total capitalization 

$     5,182,173


$     5,094,599





Total debt 

$     1,933,694


$     2,191,650

Total equity excluding special items 

3,551,677


2,950,154

Total capitalization excluding special items

$     5,485,371


$     5,141,804





Total equity

$     3,248,479


$     2,902,949

  Special Items (Note 4)




    Add: Non-cash LCM inventory adjustment

651,734


300,456

    Add: Change in Tax Receivable Agreement liability

(290,323)


(276,430)

    Add: Debt extinguishment costs

25,451


25451

    Add: Gain on Torrance land sale

(43,761)


    Add: Early railcar return expense

52,313


    Less: Recomputed income taxes on special items

(112,369)


(22,425)

    Add: Net tax expense on TCJA related special items

20,153


20,153

       Net impact of special items to equity

303,198


47,205

Total equity excluding special items

$     3,551,677


$     2,950,154











Total debt

$     1,933,694


$     2,191,650

    Less: Cash and cash equivalents

597,286


573,021

Net Debt 

$     1,336,408


$     1,618,629











Total debt to capitalization ratio

37 %


43 %

Total debt to capitalization ratio, excluding special items

35 %


43 %

Net debt to capitalization ratio 

29 %


36 %

Net debt to capitalization ratio, excluding special items

27 %


35 %











(14) The Logistics segment includes 100% of the income from operations of the Torrance Valley Pipeline Company LLC ("TVPC"), as TVPC is consolidated by PBFX. PBFX records net income attributable to noncontrolling interest for the 50% equity interest in TVPC held by PBF Holding. PBF Holding (included in the Refining segment) records equity income in investee related to its 50% noncontrolling ownership interest in TVPC. For the purposes of the consolidated PBF Energy financial statements, PBF Holding's equity income in investee and PBFX's net income attributable to noncontrolling interest eliminate in consolidation.


(15) The Logistics segment includes 100% of the assets of TVPC as TVPC is consolidated by PBFX. PBFX records a noncontrolling interest for the 50% equity interest in TVPC held by PBF Holding. PBF Holding (included in the Refining segment) records an equity investment in TVPC reflecting its noncontrolling ownership interest. For the purposes of the consolidated PBF Energy financial statements, PBFX's noncontrolling interest in TVPC and PBF Holding's equity investment in TVPC eliminate in consolidation.


(16) The Company adopted ASU 2017-07 effective January 1, 2018. The new guidance requires the bifurcation of net periodic benefit cost. The service cost component is presented within Income from operations, while the other components are reported separately outside of operations. This guidance was applied retrospectively in the consolidated statements of operations.


The following table shows the effect of the adoption of ASU 2017-07 on our financial statements (in thousands):














Three Months Ended
December 31,


Year Ended December 31,




2018


2017


2018


2017

Refining segment income (expense) related to other
non-service components of net periodic benefit cost


$          373


$         (919)


$            1,488


$          (1,176)

Corporate expense related to other non-service
components of net periodic benefit cost


(97)


(178)


(379)


(226)

Total income (expense) related to other non-service
components of net periodic benefit cost


$          276


$      (1,097)


$            1,109


$          (1,402)











(17) For the three months ended December 31, 2018, the Logistics segment includes capital expenditures of $75.0 million related to the PBFX acquisition of the East Coast Storage Assets on October 1, 2018. For the years ended December 31, 2018 and December 31, 2017, the Logistics segment also includes capital expenditures of $58.4 million for the PBFX acquisition of the Knoxville Terminals on April 16, 2018 and $10.1 million for the PBFX acquisition of the Toledo Products Terminal on April 17, 2017.

 


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SOURCE PBF Energy Inc.