PBF Energy Reports Fourth Quarter 2018 Results, Declares Dividend of $0.30 Per Share
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.
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 452,798 417,556 1,720,959 1,684,435
below)
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 85,537 71,400 276,955 214,547
expense as reflected below)
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 December 31, December 31,
FULLY-CONVERTED
NET INCOME (LOSS) AND ADJUSTED FULLY-CONVERTED NET
INCOME (LOSS) EXCLUDING SPECIAL ITEMS (Note 1)
---
2018 2017 2018 2017
Net income (loss) attributable to PBF Energy Inc. stockholders $(353,742) $241,892 $128,315 $415,517
156 232 748 1,043
Less:
Income allocated to participating securities
Income (loss) available to PBF Energy Inc. stockholders - basic (353,898) 241,660 127,567 414,474
(5,122) 7,069 4,668 16,746
Add:
Net income (loss) attributable to noncontrolling interest (Note 2)
1,332 (2,800) (1,214) (6,633)
Less:
Income tax benefit (expense) (Note 3)
Adjusted fully-converted net income (loss) $(357,688) $245,929 $131,021 $424,587
Special Items (Note 4):
651,734 (197,589) 351,278 (295,532)
Add:
Non-cash LCM inventory adjustment
(6,130) (250,357) (13,893) (250,922)
Add:
Change in Tax Receivable Agreement liability
25,451
Add:
Debt extinguishment costs
(43,761)
Add:
Gain on Torrance land sale
7,742 52,313
Add:
Early railcar return expense
(173,346) (173,346)
Add:
Net tax benefit related to the TCJA
193,499 193,499
Add:
Net tax expense on remeasurement of TRA associated deferred tax assets
(169,870) 177,427 (89,944) 206,364
Less:
Recomputed income taxes on special items
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 $(2.97) $2.14 $1.10 $3.73
diluted shares outstanding (Note 6)
Adjusted fully-converted net income (loss) excluding special items per $1.03 $(0.04) $3.26 $1.14
fully exchanged, fully diluted shares outstanding (Note 4)
Three Months Ended Year Ended
RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS December 31, December 31,
TO INCOME FROM OPERATIONS EXCLUDING SPECIAL
ITEMS
---
2018 2017 2018 2017
Income (loss) from operations (Note 16) $(446,236) $254,613 $358,120 $731,620
Special Items (Note 4):
651,734 (197,589) 351,278 (295,532)
Add:
Non-cash LCM inventory adjustment
(43,761)
Add:
Gain on Torrance land sale
7,742 52,313
Add:
Early railcar return expense
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 2018 2017 2018 2017
EBITDA EXCLUDING SPECIAL ITEMS
---
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:
$10.19 $14.44 $13.17 $14.74
Dated Brent (NYH) 2-1-1
$11.75 $19.44 $14.84 $15.88
WTI (Chicago) 4-3-1
$9.35 $13.00 $12.30 $13.57
LLS (Gulf Coast) 2-1-1
$11.82 $13.34 $15.48 $17.43
ANS (West Coast) 4-3-1
Crude Oil Differentials:
Dated Brent (foreign) less WTI $8.72 $6.16 $6.14 $3.39
$6.19 $10.52 $8.70 $7.16
Dated Brent less Maya (heavy, sour)
$15.38 $6.59 $13.90 $4.37
Dated Brent less WTS (sour)
$4.45 $3.88 $4.64 $3.66
Dated Brent less ASCI (sour)
$34.67 $16.48 $26.93 $12.24
WTI less WCS (heavy, sour)
$8.48 $(1.54) $2.86 $(0.26)
WTI less Bakken (light, sweet)
$19.19 $(1.53) $6.84 $(1.74)
WTI less Syncrude (light, sweet)
$(7.53) $(5.71) $(5.03) $(3.23)
WTI less LLS (light, sweet)
$(9.55) $(6.08) $(6.34) $(3.63)
WTI less ANS (light, sweet)
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, $10.00 $7.06 $9.09 $8.08
Note 10)
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)
35 % 33 % 36 % 34 %
Heavy
30 % 30 % 30 % 30 %
Medium
22 % 23 % 21 % 21 %
Light
13 % 14 % 13 % 15 %
Other feedstocks and blends
100 % 100 % 100 % 100 %
Total throughput
Yield (% of total throughput)
50 % 51 % 50 % 50 %
Gasoline and gasoline blendstocks
33 % 31 % 32 % 30 %
Distillates and distillate blendstocks
1 % 1 % 1 % 1 %
Lubes
2 % 2 % 2 % 2 %
Chemicals
15 % 15 % 16 % 16 %
Other
101 % 100 % 101 % 99 %
Total yield
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):
26 % 26 % 27 % 31 %
Heavy
47 % 44 % 47 % 40 %
Medium
9 % 12 % 8 % 11 %
Light
18 % 18 % 18 % 18 %
Other feedstocks and blends
100 % 100 % 100 % 100 %
Total throughput
Yield (% of total throughput):
46 % 48 % 46 % 46 %
Gasoline and gasoline blendstocks
33 % 33 % 33 % 31 %
Distillates and distillate blendstocks
2 % 2 % 2 % 2 %
Lubes
1 % 1 % 1 % 1 %
Chemicals
17 % 15 % 17 % 18 %
Other
99 % 99 % 99 % 98 %
Total yield
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):
30 % 36 % 32 % 37 %
Medium
68 % 63 % 66 % 61 %
Light
2 % 1 % 2 % 2 %
Other feedstocks and blends
100 % 100 % 100 % 100 %
Total throughput
Yield (% of total throughput):
52 % 55 % 53 % 54 %
Gasoline and gasoline blendstocks
37 % 33 % 35 % 33 %
Distillates and distillate blendstocks
6 % 6 % 5 % 6 %
Chemicals
7 % 8 % 8 % 9 %
Other
102 % 102 % 101 % 102 %
Total yield
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):
38 % 36 % 39 % 38 %
Heavy
18 % 16 % 19 % 22 %
Medium
29 % 35 % 29 % 25 %
Light
15 % 13 % 13 % 15 %
Other feedstocks and blends
100 % 100 % 100 % 100 %
Total throughput
Yield (% of total throughput):
44 % 44 % 43 % 45 %
Gasoline and gasoline blendstocks
36 % 32 % 34 % 32 %
Distillates and distillate blendstocks
1 % 2 % 1 % 2 %
Chemicals
21 % 21 % 24 % 20 %
Other
102 % 99 % 102 % 99 %
Total yield
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):
78 % 77 % 81 % 74 %
Heavy
10 % 7 % 7 % 8 %
Medium
12 % 16 % 12 % 18 %
Other feedstocks and blends
100 % 100 % 100 % 100 %
Total throughput
Yield (% of total throughput):
60 % 62 % 59 % 64 %
Gasoline and gasoline blendstocks
28 % 27 % 28 % 22 %
Distillates and distillate blendstocks
15 % 14 % 15 % 14 %
Other
103 % 103 % 102 % 100 %
Total yield
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
$ per barrel of
$ per barrel of
GROSS REFINING MARGIN AND GROSS REFINING MARGIN throughput throughput
EXCLUDING SPECIAL ITEMS
---
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
$ per barrel of
$ per barrel of
GROSS REFINING MARGIN AND GROSS REFINING MARGIN throughput throughput
EXCLUDING SPECIAL ITEMS
---
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 Year Ended December 31,
December 31,
2018 2017 2018 2017
Net LCM inventory adjustment (charge) $(651,734) $197,589 $(351,278) $295,532
benefit in income (loss) from operations
Net LCM inventory adjustment (charge) (482,283) 119,326 (259,946) 178,475
benefit in net income (loss)
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 Year Ended December 31,
December 31,
2018 2017 2018 2017
Refining segment income (expense) related to other $373 $(919) $1,488 $(1,176)
non-service components of net periodic benefit cost
Corporate expense related to other non-service (97) (178) (379) (226)
components of net periodic benefit cost
Total income (expense) related to other non-service $276 $(1,097) $1,109 $(1,402)
components of net periodic benefit cost
(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.
