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PBF Energy (PBF) Q2 Earnings Miss on Lower Refining Margin

Zacks Equity Research

PBF Energy Inc. PBF posted second-quarter 2019 earnings of 83 cents a share, missing the Zacks Consensus Estimate of 87 cents and deteriorating from the year-ago quarter’s $1.38. The underperformance was due to lower crude oil and feedstock throughput volumes. The decline in realized refining margin per barrel of throughput in the East Coast and Gulf Coast added to the concern.

Total revenues declined to $6,560 million from $7,444 million in the prior-year quarter. The top line, however, beat the Zacks Consensus Estimate of $6,044 million.  

Segmental Performance

Operating income at the Refining segment was $23.7 million, substantially down from $447.6 million a year ago.

The company generated profit of $37.8 million from the Logistics segment, which shows an improvement from the prior-year quarter’s $33.8 million.

Throughput Volumes

In the quarter under review, crude oil and feedstocks throughput volumes were 854.1 thousand barrels per day (BPD), down from 866.6 thousand BPD in the year-earlier quarter.  

The East Coast, Mid-Continent, Gulf Coast and West coast regions accounted for roughly 38%, 19%, 24% and 19%, respectively, of the total oil and feedstock throughput volume. 

Throughput Margins

Company-wide gross refining margin per barrel of throughput — excluding special items — was recorded at $9.10, lower than the year-earlier quarter’s $9.77. This was due to extended turnarounds activities.

Refining margin per barrel of throughput was $4.18 in the East Coast, down from $7.17 in the year-earlier quarter. Refining margin realized was $5.61 per barrel in the Gulf Coast, down from $7.92 in the prior-year quarter. However, the metric was $17.51 per barrel in the West Coast, up from $14.88 a year ago. Also, the metric was $14.87 a barrel in the Mid-Continent, higher than $12.63 a year ago.

Refinery operating expense per barrel of throughput was $5.27, higher than $5.11 in the year-ago quarter.

Capital Expenditure & Balance Sheet

Through the second quarter, the company spent $235.9 million capital on refining operations and $4 million on logistics businesses.

At the end of the quarter, the company had cash and cash equivalents of $204.1 million along with total debt of $2 billion, the debt-to-capitalization ratio being 37%. 

Guidance

PBF Energy projects total daily throughput volumes for the September quarter of 2019 from the East Coast in the range of 350,000-370,000 barrels, while the same from the Mid-Continent is anticipated in the band of 155,000-165,000 barrels. Total daily throughput volumes at the Gulf Coast are expected in the range of 170,000-180,000 barrels, while that at the West Coast is anticipated within 170,000-180,000 barrels.

Zacks Rank & Stocks to Consider

PBF Energy currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include World Fuel Services Corporation INT, Delek Logistics Partners, L.P. DKL and Oasis Midstream Partners LP OMP. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

World Fuel beat the Zacks Consensus Estimate in each of the prior four quarters, the average positive earnings surprise being 16.4%.

Delek Logistics is likely to see earnings growth of 4.9% through 2019.

Oasis Midstream has an average positive earnings surprise of 0.3% for the past four quarters.

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Delek Logistics Partners, L.P. (DKL) : Free Stock Analysis Report
 
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