PBF Energy Announces First Quarter 2022 Results

52 mins read
  • First quarter income from operations of $91.0 million (excluding special items, first quarter income from operations of $141.3 million)
  • Reduced consolidated debt by approximately $55 million in 2022 and approximately $390 million in 15 months
  • First quarter consolidated ending cash balance of approximately $1.4 billion

PARSIPPANY, N.J., April 28, 2022 — PBF Energy Inc. (NYSE:PBF) today reported first quarter 2022 income from operations of $91.0 million as compared to income from operations of $57.7 million for the first quarter of 2021. Excluding special items, first quarter 2022 income from operations was $141.3 million as compared to a loss from operations of $317.8 million for the first quarter of 2021. PBF Energy’s financial results reflect the consolidation of PBF Logistics LP (NYSE: PBFX), a master limited partnership of which PBF Energy indirectly owns the general partner and approximately 48% of the limited partner interests as of quarter-end.

The company reported a first quarter 2022 net loss of $3.3 million and net loss attributable to PBF Energy Inc. of $21.1 million or $(0.18) per share. This compares to net loss of $22.2 million, and net loss attributable to PBF Energy Inc. of $41.3 million or $(0.34) per share for the first quarter 2021. Non-cash special items included in the first quarter 2022 results, which decreased net income by a net, after-tax expense of $64.4 million, or $0.53 per share, consisted of a change in fair value of the contingent consideration associated with earn-out provisions related primarily to the Martinez Acquisition, a change in the tax receivable agreement liability, and a net tax expense on remeasurement of deferred tax assets. Adjusted fully-converted net income for the first quarter 2022, excluding special items, was $43.3 million, or $0.35 per share on a fully-exchanged, fully-diluted basis, as described below, compared to adjusted fully-converted net loss of $315.5 million or $(2.61) per share, for the first quarter 2021.

Tom Nimbley, PBF Energy’s Chairman and CEO, said, “Global supply and demand balances were tight coming into the year. Low product inventories have not recovered due to increasing demand and significant maintenance activity across the global refining system. In the first quarter, PBF completed nearly one third of our annual planned turnaround activities, advanced some planned activities due to a window provided by unplanned downtime and restarted limited secondary processing units on the East Coast. We are focused on putting our entire refining system in a position to run safely and reliably in anticipation of increasing seasonal demand.”

Mr. Nimbley concluded, “Looking ahead, demand is continuing to grow. Global product inventories are tight across the board. With these factors as a backdrop, the outlook for refining in 2022 and beyond, especially domestic refining, is favorable. We expect that with solid operating performance, PBF will be able to generate incremental free cash flow that can be used to strengthen our balance sheet and reward our investors.”

Liquidity and Financial Position
As of March 31, 2022, our operational liquidity was more than $2.6 billion based on approximately $1.4 billion of cash and more than $1.2 billion of borrowing availability under our asset-based lending facility. In addition, PBF Logistics LP liquidity included $53.3 million in cash and approximately $421.5 million of availability under its revolving credit facility.

In April 2022, the company repurchased a combined total principal amount of approximately $30.0 million of its 2028 6.00% Senior Notes and 2025 7.25% Senior Notes for an aggregate cash amount of approximately $25.8 million. Combined with the $25.0 million of debt repayments made by PBF Logistics LP, consolidated debt for PBF was reduced by more than $55.0 million

Strategic Update and Outlook
We remain focused on enhancing the profitability and reliability of our core operations. Our full-year refining capital expenditures in 2022 are expected to be in the $500 to $550 million range. We continue to focus on capital discipline, with turnaround and other mandatory spend accounting for over 96% of the total planned refining capital expenses for the year. Consistent with our prior year approach, we will be responsive with regards to the pace of capital expenditures and scope of turnarounds depending on market conditions. Our annual maintenance, environmental, regulatory and safety capital expenditures are consistently in the $150 to $200 million range. For the first half of 2022, we expect to incur turnaround-related capital expenditures of approximately $225 to $250 million.

PBF continues to advance our project for a renewable fuels production facility co-located at the Chalmette refinery. This strategically valuable project represents an initial step in PBF’s pursuit of producing sustainable fuels. The project incorporates certain idled assets, including an idle hydrocracker, along with a newly-constructed pre-treatment unit to establish a 20,000 barrel per day renewable diesel production facility. During the first quarter of 2022, we invested $40 million to continue to progress and incubate the project with the goal of being in production in the first half of 2023. Concurrent with our activities to progress the project, we are continuing discussions with potential strategic and financial partners.

Expected throughput ranges (barrels per day)



Second Quarter 2022

Full-year 2022


Low

High

Low

High

East Coast

270,000

290,000


260,000

280,000

Mid-continent

150,000

160,000

140,000

150,000

Gulf Coast

180,000


190,000

175,000

185,000

West Coast

290,000

310,000

290,000

310,000

Total


890,000

950,000

865,000

925,000

Included in the throughput estimates above are the expected impacts of planned second quarter turnaround activity at our East Coast and West Coast facilities.

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 (Loss), Adjusted Fully-Converted Net Income (Loss) excluding special items, Adjusted Fully-Converted Net Income (Loss) per fully-exchanged, fully-diluted share, Income (Loss) from operations excluding special items, 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, April 28, 2022, 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) 869-3847 or (201) 689-8261. The audio replay will be available approximately two hours after the end of the call and will be available through the company’s website.

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, customers and vendors; risk relating to the securities markets generally; the supply, demand, prices and other market conditions for our products or crude oil; risk associated with the East Coast refining reconfiguration; our expectations with respect to our capital improvements and turnaround projects; risks associated with our obligation to buy Renewable Identification Numbers and related market risks related to the price volatility thereof; our ability to make, and realize the benefits from, acquisitions or investments, including in renewable diesel productions, on any announced time frame or at all; the effect of the COVID-19 pandemic and related governmental and consumer responses; our expectations regarding capital spending and the impact of market conditions on demand for the balance of 2022; 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 48% of the limited partnership interest of PBF Logistics LP (NYSE: PBFX).


EARNINGS RELEASE TABLES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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
















Three Months Ended







March 31,







2022


2021


Revenues


$        9,141.7


$        4,924.8










Cost and expenses:






Cost of products and other


8,206.2


4,191.0


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


620.4



481.3


Depreciation and amortization expense


118.3


114.1

          Cost of sales


8,944.9


4,786.4


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


53.5



47.8


Depreciation and amortization expense


1.9


3.4


Change in fair value of contingent consideration


50.3


30.1


Loss (gain) on sale of assets


0.1



(0.6)

Total cost and expenses


9,050.7


4,867.1

Income from operations


91.0


57.7

Other income (expense):







Interest expense, net



(78.4)


(80.3)


Change in Tax Receivable Agreement liability


(19.3)



Change in fair value of catalyst obligations


(4.9)


(10.0)


Other non-service components of net periodic benefit cost




2.2


2.0

Income (loss) before income taxes


(9.4)


(30.6)

Income tax benefit


(6.1)


(8.4)

Net income (loss)



(3.3)


(22.2)


Less: net income attributable to noncontrolling interests


17.8


19.1

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


$           (21.1)


$           (41.3)










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








Basic


$           (0.18)


$           (0.34)



Diluted


$           (0.18)


$           (0.34)



Weighted-average shares outstanding-basic


120,339,041


119,926,267




Weighted-average shares outstanding-diluted


120,339,041


120,905,716



















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)


$           (21.1)


$           (41.6)



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


$           (0.18)



$           (0.34)



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


123,549,205


120,905,716










See Footnotes to Earnings Release Tables

PBF ENERGY INC. AND SUBSIDIARIES

RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP

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












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




Three Months Ended



March 31,



2022


2021

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



$          (21.1)


$          (41.3)


Less: Income allocated to participating securities





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



(21.1)


(41.3)


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



(0.1)


(0.4)


Less: Income tax benefit  (Note 3)



0.1



0.1

Adjusted fully-converted net income (loss)



$          (21.1)


$          (41.6)

Special items (Note 4):







Add: Non-cash LCM inventory adjustment




(405.6)


Add: Change in fair value of contingent consideration




50.3


30.1


Add: Change in Tax Receivable Agreement liability



19.3



Add: Net tax expense on remeasurement of deferred tax assets



12.8


1.7


Less: Recomputed income tax on special items (Note 3)




(18.0)


99.9

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



$           43.3


$        (315.5)












Weighted-average shares outstanding of PBF Energy Inc.



120,339,041


119,926,267

     Conversion of PBF LLC Series A Units (Note 5)




927,990


979,449

     Common stock equivalents (Note 6)



2,282,174


Fully-converted shares outstanding – diluted



123,549,205


120,905,716












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




$          (0.18)


$          (0.34)


Adjusted fully-converted net income (loss) excluding special items per fully exchanged, fully diluted shares outstanding (Note 4, 6)



$           0.35


$          (2.61)










Three Months Ended

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



March 31,



2022



2021

Income from operations



$           91.0


$           57.7

Special Items (Note 4):







Add: Non-cash LCM inventory adjustment




(405.6)


Add: Change in fair value of contingent consideration




50.3


30.1

Income (loss) from operations excluding special items



$         141.3


$        (317.8)


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 millions)




















Three Months Ended




March 31,

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



2022


2021













Net income (loss)



$         (3.3)


$       (22.2)


     Add: Depreciation and amortization expense



120.2


117.5

     Add: Interest expense, net



78.4


80.3

     Add: Income tax benefit



(6.1)


(8.4)


EBITDA




$      189.2


$      167.2

Special Items (Note 4):






     Add: Non-cash LCM inventory adjustment




(405.6)

     Add: Change in fair value of contingent consideration



50.3



30.1

     Add: Change in Tax Receivable Agreement liability



19.3


EBITDA excluding special items



$      258.8


$     (208.3)






















Three Months Ended










March 31,


RECONCILIATION OF EBITDA TO ADJUSTED EBITDA



2022


2021








EBITDA



$      189.2


$      167.2

     Add: Stock-based compensation



7.7


7.4


     Add: Change in fair value of catalyst obligations



4.9


10.0

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




(405.6)

     Add: Change in fair value of contingent consideration (Note 4)



50.3


30.1


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



19.3


Adjusted EBITDA




$      271.4


$     (190.9)



See Footnotes to Earnings Release Tables

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES


CONDENSED CONSOLIDATED BALANCE SHEET DATA

(Unaudited, in millions)














March 31,


December 31,






2022


2021

Balance Sheet Data:






Cash and cash equivalents

$       1,434.6



$       1,341.5


Inventories

2,893.5


2,505.1


Total assets

12,948.3


11,641.4


Total debt

4,278.6



4,295.8







Total equity

2,526.1


2,532.8


Total equity excluding special items (Note 4, 13)

$       2,129.0


$       2,071.3










Total debt to capitalization ratio (Note 13)

63%



63%


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

67%


67%


Net debt to capitalization ratio (Note 13)

53%


54%


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

57%



59%






SUMMARIZED STATEMENT OF CASH FLOW DATA

(Unaudited, in millions)














Three Months Ended March 31,






2022


2021

Cash flows provided by (used in) operating activities

$          312.3


$           (13.7)


Cash flows used in investing activities

(225.5)


(60.5)

Cash flows provided by financing activities

6.3


5.9

     Net change in cash and cash equivalents

93.1


(68.3)


Cash and cash equivalents, beginning of period

1,341.5


1,609.5

Cash and cash equivalents, end of period

$       1,434.6


$       1,541.2









See Footnotes to Earnings Release Tables

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES


CONSOLIDATING FINANCIAL INFORMATION (Note 8)

(Unaudited, in millions)












Three Months Ended March 31, 2022


Refining


Logistics


Corporate


 Eliminations


Consolidated
Total

Revenues


$     9,128.2


$           89.4


$              —


$           (75.9)


$        9,141.7

Depreciation and amortization expense

108.8


9.5


1.9




120.2

Income (loss) from operations

146.1


46.4


(101.5)



91.0

Interest expense, net


3.1


10.1


65.2



78.4

Capital expenditures

223.1


1.4


1.0




225.5












Three Months Ended March 31, 2021


Refining


Logistics


Corporate


 Eliminations


Consolidated
Total

Revenues


$     4,913.2


$           87.5


$              —


$           (75.9)


$        4,924.8

Depreciation and amortization expense

104.7


9.4


3.4




117.5

Income (loss) from operations

85.9


47.9


(76.1)



57.7

Interest expense, net


1.8


10.7


67.8



80.3

Capital expenditures

58.1


1.3


1.1




60.5














Balance at March 31, 2022


Refining


Logistics


Corporate


 Eliminations


Consolidated Total

Total Assets


$   12,049.8


$         903.0


$           47.4


$           (51.9)


$      12,948.3














Balance at December 31, 2021


Refining


Logistics


Corporate



 Eliminations


Consolidated Total

Total Assets

$   10,753.3


$         901.3


$           48.5


$           (61.7)


$      11,641.4











See Footnotes to Earnings Release Tables


PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

MARKET INDICATORS AND KEY OPERATING INFORMATION

(Unaudited)


















Three Months Ended








March 31,

Market Indicators (dollars per barrel) (Note 9)


2022


2021


Dated Brent crude oil


$   101.75


$     61.16

West Texas Intermediate (WTI) crude oil


$     95.22


$     58.13

Light Louisiana Sweet (LLS) crude oil


$     97.50


$     60.26


Alaska North Slope (ANS) crude oil


$     96.13


$     61.07

Crack Spreads:






Dated Brent (NYH) 2-1-1


$     21.69


$     12.06


WTI (Chicago) 4-3-1


$     17.94



$     11.56


LLS (Gulf Coast) 2-1-1


$     24.14


$     12.05


ANS (West Coast-LA) 4-3-1


$     32.84


$     15.75


ANS (West Coast-SF) 3-2-1


$     29.39



$     12.92

Crude Oil Differentials:






Dated Brent (foreign) less WTI


$       6.54


$       3.03


Dated Brent less Maya (heavy, sour)


$     12.24


$       4.53


Dated Brent less WTS (sour)



$       6.74


$       2.26


Dated Brent less ASCI (sour)


$       8.63


$       2.77


WTI less WCS (heavy, sour)


$     15.31


$     12.01


WTI less Bakken (light, sweet)



$      (3.49)


$       0.50


WTI less Syncrude (light, sweet)


$       0.18


$       0.97


WTI less LLS (light, sweet)


$      (2.28)


$      (2.13)


WTI less ANS (light, sweet)



$      (0.92)


$      (2.94)

Natural gas (dollars per MMBTU)


$       4.59


$       2.72











Key Operating Information





Production (barrels per day (“bpd”) in thousands)


844.3


758.2


Crude oil and feedstocks throughput (bpd in thousands)


832.6


745.5

Total crude oil and feedstocks throughput (millions of barrels)


74.9


67.1

Consolidated gross margin per barrel of throughput


$       2.63


$       2.07


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


$     11.36


$       3.65

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


$       7.95


$       6.86

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






Heavy


34%



36%


Medium


32%


31%


Light


18%


18%


Other feedstocks and blends


16%



15%



Total throughput


100%


100%

Yield (% of total throughput)






Gasoline and gasoline blendstocks


48%


54%


Distillates and distillate blendstocks



34%


30%


Lubes


1%


1%


Chemicals


2%


2%


Other



16%


15%



Total yield


101%


102%











See Footnotes to Earnings Release Tables

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

 SUPPLEMENTAL OPERATING INFORMATION


(Unaudited)


















Three Months Ended








March 31,








2022


2021

Supplemental Operating Information – East Coast Refining System (Delaware City and Paulsboro)





Production (bpd in thousands)


264.6


242.3


Crude oil and feedstocks throughput (bpd in thousands)


263.1


242.8

Total crude oil and feedstocks throughput (millions of barrels)


23.7


21.9

Gross margin per barrel of throughput


$       1.93


$      (0.70)


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


$     11.03


$       2.48

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


$       7.34


$       5.91

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






Heavy


31%



26%


Medium


31%


41%


Light


12%


9%


Other feedstocks and blends


26%



24%



Total throughput


100%


100%

Yield (% of total throughput):






Gasoline and gasoline blendstocks


43%


44%


Distillates and distillate blendstocks



35%


34%


Lubes


2%


2%


Chemicals


2%


2%


Other



19%


18%



Total yield


101%


100%











Supplemental Operating Information – Mid-Continent (Toledo)





Production (bpd in thousands)


139.4


120.0


Crude oil and feedstocks throughput (bpd in thousands)


136.7


117.2

Total crude oil and feedstocks throughput (millions of barrels)


12.3


10.5

Gross margin per barrel of throughput


$       0.08


$       7.88


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


$       8.50


$       5.18

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


$       6.67


$       5.82

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






Medium


41%



43%


Light


53%


54%


Other feedstocks and blends


6%


3%



Total throughput


100%



100%

Yield (% of total throughput):






Gasoline and gasoline blendstocks


54%


59%


Distillates and distillate blendstocks


35%


32%


Chemicals



6%


5%


Other


7%


6%



Total yield


102%


102%











See Footnotes to Earnings Release Tables


PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

 SUPPLEMENTAL OPERATING INFORMATION

(Unaudited)


















Three Months Ended








March 31,








2022


2021

Supplemental Operating Information – Gulf Coast (Chalmette)






Production (bpd in thousands)


166.2


159.2

Crude oil and feedstocks throughput (bpd in thousands)


163.1


153.8

Total crude oil and feedstocks throughput (millions of barrels)


14.6


13.8


Gross margin per barrel of throughput


$       4.63


$       3.63

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


$     11.96


$       5.44

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


$       6.62


$       5.38


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






Heavy


16%


8%


Medium


43%


44%


Light


30%



31%


Other feedstocks and blends


11%


17%



Total throughput


100%


100%

Yield (% of total throughput):






Gasoline and gasoline blendstocks



40%


47%


Distillates and distillate blendstocks


39%


34%


Chemicals


1%


2%


Other



22%


21%



Total yield


102%


104%











Supplemental Operating Information – West Coast (Torrance and Martinez)





Production (bpd in thousands)


274.1


236.7


Crude oil and feedstocks throughput (bpd in thousands)


269.7


231.7

Total crude oil and feedstocks throughput (millions of barrels)


24.3


20.9

Gross margin per barrel of throughput


$       1.30


$      (1.57)


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


$     12.75


$       2.91

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


$     10.01


$       9.36

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






Heavy


66%



83%


Medium


21%


5%


Other feedstocks and blends


13%


12%



Total throughput


100%



100%

Yield (% of total throughput):






Gasoline and gasoline blendstocks


58%


64%


Distillates and distillate blendstocks


28%


24%


Other



16%


14%



Total yield


102%


102%











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 millions, except per barrel amounts)




































Three Months Ended


Three Months Ended








March 31, 2022


March 31, 2021

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

$      9,141.7


$       122.00


$      4,924.8


$         73.40


     Less: Cost of sales

8,944.9


119.37


4,786.4


71.33

Consolidated gross margin

$         196.8


$           2.63


$         138.4



$           2.07

Reconciliation of consolidated gross margin to gross refining margin:








Consolidated gross margin

$         196.8


$           2.63


$         138.4


$           2.07


Add: PBFX operating expense

29.3



0.39


25.0


0.37


Add: PBFX depreciation expense

9.5


0.13


9.4


0.14


Less: Revenues of PBFX


(89.4)


(1.19)


(87.5)


(1.30)


Add: Refinery operating expense

595.6


7.95


460.2


6.86



Add: Refinery depreciation expense

108.9


1.45


104.7


1.56

Gross refining margin

$         850.7


$         11.36


$         650.2



$           9.70

   Special Items (Note 4):









Add: Non-cash LCM inventory adjustment



(405.6)


(6.05)

Gross refining margin excluding special items

$         850.7



$         11.36


$         244.6


$           3.65















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 PBF Energy’s estimated annualized statutory corporate tax rate of approximately 25.9% and 26.6% for the 2022 and 2021 periods, respectively, applied to net income (loss) attributable to noncontrolling interest for all periods presented. The adjustment assumes the full exchange of existing PBF LLC Series A Units as described in footnote 2.











(4) The Non-GAAP measures presented include adjusted fully-converted net income (loss) excluding special items, income (loss) from operations excluding special items, EBITDA excluding special items and gross refining margin excluding special items. Special items for the three months ended March 31, 2022 and 2021 relate to LCM inventory adjustments, change in fair value of contingent consideration, changes in the Tax Receivable Agreement liability, and net tax expense on the remeasurement of deferred tax assets, all 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 the 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 millions):














2022


2021

January 1,


$                 —


$           669.6

March 31,



264.0











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 millions):

















Three Months Ended
March 31,











2022


2021

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


$                 —


$           405.6

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



297.7












Change in Fair Value of Contingent Consideration –  During the three months ended March 31, 2022, we recorded a change in fair value of the contingent consideration primarily related to the Martinez Contingent Consideration which decreased income from operations and net income by $50.3 million and $37.3 million, respectively. During the three months ended March 31, 2021, we recorded a change in the fair value of the contingent consideration primarily related to the Martinez Contingent Consideration which decreased income from operations and net income by $30.1 million and $22.1 million, respectively.











Change in Tax Receivable Agreement liability –  During the three months ended March 31, 2022, we recorded a change in the Tax Receivable Agreement liability that decreased income before income taxes and net income by $19.3 million and $14.3 million, respectively. There was no change to the Tax Receivable Agreement liability during the three months ended March 31, 2021. The changes in the Tax Receivable Agreement liability reflect charges or benefits attributable to changes in our obligation under the Tax Receivable Agreement due to factors out of our control such as changes in tax rates, as well as periodic adjustments to our liability based, in part, on an updated estimate of the amounts that we expect to pay, using assumptions consistent with those used in our concurrent estimate of the deferred tax asset valuation allowance.











Net Tax Expense on Remeasurement of Deferred Tax Assets – During the three months ended March 31, 2022, we recorded a deferred tax valuation allowance of $316.3 million in accordance with ASC 740 (an increase of $7.8 million when compared to December 31, 2021, which includes a tax benefit of approximately $5.0 million related to our net change in the Tax Receivable Agreement liability and a net tax expense of $12.8 million related primarily to the remeasurement of deferred tax assets). During the three months ended March 31, 2021, we recorded an increase to our deferred tax valuation allowance of $1.7 million in accordance with ASC 740.











(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.


(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 ended March 31, 2022 and 2021, respectively. Common stock equivalents exclude the effects of performance share units and options and warrants to purchase 14,804,565 and 11,699,893 shares of PBF Energy Class A common stock and PBF LLC Series A units because they are anti-dilutive for the three months ended March 31, 2022 and March 31, 2021, respectively. For periods showing a net loss, all common stock equivalents and unvested restricted stock 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. Adjusted EBITDA is defined as EBITDA before adjustments for items such as stock-based compensation expense, the non-cash change in the fair value of catalyst obligations, the write down of inventory to the LCM, changes in the liability for Tax Receivable Agreement due to factors out of our control, such as changes in tax rates, change in the fair value of contingent consideration and certain other non-cash items. 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 March 31, 2022, the Refining segment includes the operations of our oil refineries and related facilities in Delaware City, Delaware, Paulsboro, New Jersey, Toledo, Ohio, Chalmette, Louisiana, Torrance, California and Martinez, 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, we have also presented the total debt to capitalization and net debt to capitalization ratios excluding the cumulative effects of special items on equity.












March 31,


December 31,





2022


2021




(in millions)

Total debt

$      4,278.6


$      4,295.8

Total equity

2,526.1


2,532.8

Total capitalization

$      6,804.7



$      6,828.6





Total debt

$      4,278.6


$      4,295.8

Total equity excluding special items

2,129.0


2,071.3

Total capitalization excluding special items

$      6,407.6



$      6,367.1





Total equity

$      2,526.1


$      2,532.8

  Special Items (Note 4)




    Add: Non-cash LCM inventory adjustments


    Add: Change in fair value of contingent consideration


(11.0)


(61.3)

    Add: Gain on sale of hydrogen plants

(471.1)


(471.1)

    Add: Gain on Torrance land sales

(87.8)


(87.8)

    Add: Impairment expense


98.8


98.8

    Add: LIFO inventory decrement

83.0


83.0

    Add: Turnaround acceleration costs

56.2


56.2

    Add: Severance and reconfiguration costs


30.0


30.0

    Add: Early railcar return expense

64.8


64.8

    Add: Gain on extinguishment of debt

(32.2)


(32.2)

    Add: Change in Tax Receivable Agreement liability


(596.3)


(615.6)

    Less: Recomputed income taxes on special items

213.8


231.8

    Add: Net tax expense on remeasurement of deferred tax assets

234.5


221.7

    Add: Net tax expense on TCJA related special items


20.2


20.2

       Net equity impact related to special items

(397.1)


(461.5)

Total equity excluding special items

$      2,129.0


$      2,071.3








Total debt


$      4,278.6


$      4,295.8

    Less: Cash and cash equivalents

1,434.6


1,341.5

Net Debt




$      2,844.0


$      2,954.3








Total debt to capitalization ratio


63%


63%

Total debt to capitalization ratio, excluding special items

67%


67%

Net debt to capitalization ratio

53%


54%

Net debt to capitalization ratio, excluding special items


57%


59%

SOURCE PBF Energy Inc.