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PBF Energy (PBF) Q1 Earnings Miss on Weak Refining Margin

Zacks Equity Research
There are reasons for energy investors to get concerned as the probable tariff could hurt domestic refiners in two ways.

PBF Energy Inc. PBF posted first-quarter 2019 loss of $1.18 a share, wider than the Zacks Consensus Estimate of 95 cents and the year-ago quarter loss of 29 cents. The underperformance can be attributed to a decline in refining margin per barrel of throughput following strong turnarounds and maintenance activities. Lower crude oil and feedstocks throughput volumes added to the concern.

Total revenues fell to $5,216 million from $5,803 million in the prior-year quarter. The top line, however, beat the Zacks Consensus Estimate of $4,520 million.  

Segmental Performance

Operating income at the Refining segment was $389.5 million, up from $127 million in the year-ago quarter.

The company generated profit of $34.2 million from the Logistics segment, which shows an improvement from the prior-year quarter’s $33.9 million.

Throughput Volumes

In the quarter under review, crude oil and feedstocks throughput volumes were 743.1 thousand barrels per day (BPD), down from 799.6 thousand BPD in the year-ago quarter.

The East Coast, Mid-Continent, Gulf Coast and West coast regions accounted for roughly 41%, 20%, 22% and 17%, respectively, of the total oil and feedstocks throughput volume. 

Throughput Margins

Company-wide gross refining margin per barrel of throughput — excluding special items — was recorded at $6.38, lower than the year-earlier quarter’s $7.26. This was owing to strong turnarounds and maintenance activities.

Refining margin per barrel of throughput was $3.35 in the East Coast, down from $6.47 in the year-earlier quarter. Refining margin realized was $3.33 per barrel in the Gulf Coast, down from $4.45 in the prior-year quarter. The metric was $10.76 per barrel in the West Coast, down from $10.81 in the prior-year quarter. However, the metric was $12.28 a barrel in the Mid-Continent, higher than $8.22 a year ago.

Refining operating expense per barrel of throughput was $6.78, higher than $5.72 in the year-ago quarter.         

Capital Expenditure & Balance Sheet

Through the first quarter, the company spent $247.1 million capital on refining operations and $11.2 million on logistics businesses.

At the end of the quarter, the company had cash and cash equivalents of $418.3 million along with total debt of $2.2 billion, the debt-to-capitalization ratio being 39%. 

Guidance

PBF Energy projects total daily throughput volumes for the June quarter of 2019 from the East Coast in the range of 320,000-340,000 barrels, while the same from the Mid-Continent is expected in the band of 160,000-170,000 barrels. Total daily throughput volumes at the Gulf Coast are expected in the range of 190,000-200,000 barrels, while that at the West Coast is anticipated within 160,000-170,000 barrels.

Through 2019, the company anticipates total daily throughput volumes from the East Coast between 330,000 barrels and 350,000 barrels. The same from the Mid-Continent is projected at 150,000-160,000 barrels, while the Gulf Coast is anticipated to generate 190,000-200,000 barrels.

Zacks Rank and Key Picks

PBF Energy currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space are ProPetro Holding Corp. PUMP, Parsley Energy PE and TransCanada Corp. TRP, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.   

The Zacks Consensus Estimate for Midland, TX-based ProPetro’s 2019 earnings is pegged at $2.42, indicating 21% growth over the year-ago reported figure. Next year’s forecast is $2.70, hinting at 11.5% growth.

The Zacks Consensus Estimate for Austin, TX-based Parsley’s 2019 earnings stands at $1.53, implying an 8.5% improvement over the prior-year reported number. Next year’s projection is $2.47, calling for 61.8% growth.

TransCanada has beaten estimates in the last four quarters, the average being 19%.

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