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PBF Energy Reports Second Quarter 2020 Results

- Second quarter income from operations of $620.8 million (excluding special items, second quarter loss from operations of $433.7 million )

- Bolstered liquidity by more than $1.5 billion through sale of hydrogen plants and notes offering

- Reduced 2020 capital expenditures by approximately 50%, a more than $350 million reduction

- Implemented more than $250 million of additional cost reductions and cash conservation measures


PARSIPPANY, N.J. , July 31, 2020 /PRNewswire/ -- PBF Energy Inc. (NYSE:PBF) today reported second quarter 2020 income from operations of $620.8 million as compared to income from operations of $9.5 million for the second quarter of 2019. Excluding special items, second quarter 2020 loss from operations was $433.7 million as compared to income from operations of $191.5 million for the second quarter of 2019. 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 48% of the limited partner interests as of quarter-end.

PBF Energy Logo
PBF Energy Logo

The company reported second quarter 2020 net income of $413.0 million and net income attributable to PBF Energy Inc. of $389.1 million or $3.23 per share. This compares to net loss of $21.6 million , and net loss attributable to PBF Energy Inc. of $32.2 million or $(0.27) per share for the second quarter 2019. Special items included in the second quarter 2020 results, which increased net income by a net, after-tax benefit of $777.2 million , or $6.42 per share, consisted of a lower-of-cost-or-market ("LCM") inventory adjustment, change in the fair value of the earn-out provisions, primarily in connection with the Martinez acquisition (the "Contingent Consideration"), and gain on sale of hydrogen plants, slightly offset by severance costs related to a reduction in the workforce. Adjusted fully-converted net loss for the second quarter 2020, excluding special items, was $384.8 million , or $(3.19) per share on a fully-exchanged, fully-diluted basis, as described below, compared to adjusted fully-converted net income of $101.1 million or $0.83 per share, for the second quarter 2019.

Tom Nimbley , PBF Energy's Chairman and CEO, said, "Our second quarter financial performance reflects the staggering impact the pandemic had on our business and the underlying impact to demand for our essential products. Through these trying times our people have responded with vigor to protect each other and our customers, and remained focused on the reliability of our ongoing operations. We made significant adjustments to our operations and took several actions to reduce our overall cash burn rate. In the current environment, liquidity and protecting the balance sheet are our primary objectives. With our strong cash balance and increased availability on our existing credit facilities, we are confident that we have the financial flexibility to navigate the current market." Mr. Nimbley continued, "We appear to have passed the low point of demand, particularly for gasoline and diesel, and have seen demand rebound broadly to approximately 80% of pre-COVID levels with the exception of jet fuel which will likely take much longer to recover." Mr. Nimbley concluded, "Across the country and globe, regions are responding differently to the challenges presented by the pandemic and we will likely experience demand recovery at an uneven pace as the pandemic runs its course. We remain at a fragile intersection on the recovery path and we will continue to run our operations in a safe, reliable and environmentally responsible manner and be responsive to market conditions."

Liquidity and Financial Position
In response to the pandemic, we have taken several steps to protect our balance sheet and increase the financial liquidity of the company. As of July 2020 , our liquidity was approximately $1.9 billion based on our estimated $1.2 billion of cash, excluding cash held at PBF Logistics LP, and more than $700 million of availability under our asset-backed revolving credit facility.

On May 7, 2020 , PBF announced that its indirect subsidiary, PBF Holding Company LLC successfully priced $1.0 billion of 9.25% senior secured notes due 2025 in a private offering. The offering closed on May 13, 2020 .

Strategic Update and Outlook
Employee and operational safety continue to be an ongoing priority in our pandemic response. We have implemented a number of safety protocols, social distancing requirements, issued personal protective equipment to all employees and enhanced facility cleanings all focused on protecting our dedicated front line employees who have remained on the job throughout the current crisis and returning employees as they come back to the office. As a result of our efforts, operations at all of our facilities have remained unaffected by worker unavailability and we have continued uninterrupted supply of our critical products to our customers.

We are actively responding to the impacts of the pandemic and ongoing rebalancing in the global oil markets. In late March and through the second quarter of 2020, we reduced the amount of crude oil processed at our refineries in response to the decreased demand for our products and temporarily idled units at certain of our refineries to optimize our production in light of prevailing market conditions. We made progress on our initial expense reduction measures announced in March 2020 . Our goal remains to achieve an operating expense reduction of approximately $250 million in 2020 as compared to our originally budgeted expectations. A certain portion of the reductions are related to running at lower rates during the second quarter of 2020 but the majority are purposeful operating expense reductions that we expect to translate into durable, long-term savings.

Our refining capital spending program is on track to meet our revised guidance of approximately $360 million for 2020, with the bulk of the spending having occurred in the first and second quarters. For the remainder of 2020, we expect to incur approximately $90 to $100 million in refining capital expenditures.

We operated our refineries at reduced rates during the second quarter and, based on current market conditions, we plan on continuing to operate our refineries at lower utilization until such time that sustained product demand justifies higher production. We expect near-term throughput to be in the 700,000 to 800,000 barrel per day range for our refining system.

Sale of Hydrogen Plants
On April 17, 2020 , we closed on the sale of five hydrogen plants to Air Products and Chemicals, Inc. for gross cash proceeds of $530.0 million . We entered into off-take arrangements for hydrogen on terms in line with similar arrangements in place throughout our refining system.

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, Income 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 Friday, July 31, 2020, 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: PBFQ220. The audio replay will be available two hours after the end of the call through August 14, 2020 , by dialing (800) 839-0866 or (402) 220-0662.

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; risks associated with the recent acquisition of the Martinez refinery, and related logistics assets; the duration and severity of the COVID-19 pandemic and certain developments in the global oil markets and their impact on the global macroeconomic conditions; 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


Six Months Ended







June 30,


June 30,







2020


2019


2020


2019

Revenues


$

2,515.8



$

6,560.0



$

7,793.3



$

11,776.2















Cost and expenses:










Cost of products and other


1,753.1



5,955.8



7,716.4



10,165.0



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


442.1



433.2



973.8



912.2



Depreciation and amortization expense


122.3



104.2



239.0



207.2


Cost of sales


2,317.5



6,493.2



8,929.2



11,284.4



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


57.9



53.6



140.4



111.2



Depreciation and amortization expense


2.8



2.9



5.7



5.7



Change in fair value of contingent consideration


(12.1)





(64.9)





(Gain) loss on sale of assets


(471.1)



0.8



(471.1)



0.8


Total cost and expenses


1,895.0



6,550.5



8,539.3



11,402.1















Income (loss) from operations


620.8



9.5



(746.0)



374.1















Other income (expense):











Interest expense, net


(65.5)



(42.1)



(114.7)



(81.6)



Change in Tax Receivable Agreement liability






(11.6)





Change in fair value of catalyst obligations


(5.1)



0.5



6.6



(2.6)



Debt extinguishment costs






(22.2)





Other non-service components of net periodic benefit cost



1.1





2.1



(0.1)


Income (loss) before income taxes


551.3



(32.1)



(885.8)



289.8


Income tax expense (benefit)


138.3



(10.5)



(236.3)



70.0


Net income (loss)


413.0



(21.6)



(649.5)



219.8



Less: net income attributable to noncontrolling interests


23.9



10.6



27.3



22.8


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


$

389.1



$

(32.2)



$

(676.8)



$

197.0















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











Basic


$

3.24



$

(0.27)



$

(5.66)



$

1.64




Diluted


$

3.23



$

(0.27)



$

(5.67)



$

1.63




Weighted-average shares outstanding-basic


120,010,882



119,181,845



119,499,392



119,885,386




Weighted-average shares outstanding-diluted


121,428,900



119,181,845



120,612,601



122,020,444















Dividends per common share


$



$

0.30



$



$

0.60















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)


$

392.4



$

(32.7)



$

(684.3)



$

198.8