UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~March 31,~~June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 333-186007

Commission File Number: 333-186007-07

PBF HOLDING COMPANY LLC

PBF FINANCE CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		27-2198168
Delaware		45-2685067
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Sylvan Way, Second Floor
Parsippany	New Jersey	07054
(Address of principal executive offices)		(Zip Code)

(973) 455-7500

(Registrants’ telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act.


Title of each class	Trading Symbol	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

PBF Holding Company LLC

☐

Yes

☒

PBF Finance Corporation

☐

Yes

☒

(Note: The registrant is a voluntary filer of reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 and has filed during the preceding 12 months all reports it would have been required to file by Section 13 or 15(d) of the Securities Exchange Act of 1934 if the registrant had been subject to one of such Sections.)

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

PBF Holding Company LLC

☒

Yes

☐

PBF Finance Corporation

☒

Yes

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated
filer

Accelerated filer

Non-accelerated filer

Smaller reporting
company

Emerging growth company

(Do not check if a
smaller reporting
company)

PBF Holding Company LLC

☐

☒

☐

PBF Finance Corporation

☐

☒

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

PBF Holding Company LLC

☐

Yes

☐

PBF Finance Corporation

☐

Yes

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

PBF Holding Company LLC

☐

Yes

☒

PBF Finance Corporation

☐

Yes

☒

PBF Holding Company LLC has no common stock outstanding. As of ~~April~~July 29, 2022, 100% of the membership interests of PBF Holding Company LLC were owned by PBF Energy Company LLC, and PBF Finance Corporation had 100 shares of common stock outstanding, all of which were held by PBF Holding Company LLC.

PBF Finance Corporation meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

PBF HOLDING COMPANY LLC

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~MARCH 31,~~JUNE 30, 2022

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

PART I – FINANCIAL INFORMATION

ITEM 1.

Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of ~~March~~ 3 1 ~~, 202~~2 June 30, 2022 and December 31, 20 212021

Condensed Consolidated Statements of Operations for the three and six months ended ~~March~~31 ~~, 202~~2 June 30, 2022 and ~~202~~12021

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ (L oss)for the three and six months ended ~~March 31, 202~~2 June 30, 2022 and ~~202~~12021

Condensed Consolidated Statements of Changes in Equity for the three and six months ended ~~March~~ 3 1 ~~, 202~~2 June 30, 2022 and ~~202~~12021

Condensed Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~March~~ 3 1 ~~, 202~~2 June 30, 2022 and ~~202~~12021

1011

Notes to Condensed Consolidated Financial Statements

1213

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

2933

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

4858

ITEM 4.

Controls and Procedures

5060

PART II – OTHER INFORMATION

ITEM 1.

ITEM 6.

EXPLANATORY NOTE

This combined Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2022 (this “Form 10-Q”) is filed by PBF Holding Company LLC (“PBF Holding”) and PBF Finance Corporation (“PBF Finance”). PBF Holding is a wholly-owned subsidiary of PBF Energy Company LLC (“PBF LLC”) and is the parent company for PBF LLC’s refinery operating subsidiaries. PBF Finance is a wholly-owned subsidiary of PBF Holding. PBF Holding is an indirect subsidiary of PBF Energy Inc. (“PBF Energy”), which is the sole managing member of, and owner of an equity interest representing approximately ~~99.2%~~99.3% of the outstanding economic interests in PBF LLC as of ~~March 31,~~June 30, 2022. PBF Energy operates and controls all of the business and affairs and consolidates the financial results of PBF LLC and its subsidiaries. PBF Logistics GP LLC is a wholly-owned subsidiary of PBF LLC and the general partner of PBF Logistics LP (“PBFX”), which is an affiliate of PBF Holding. PBF Holding, together with its consolidated subsidiaries, owns and operates oil refineries and related facilities in North America.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This combined Quarterly Report on Form 10-Q contains certain “forward-looking statements” of expected future developments that involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates” or similar expressions that relate to our strategy, plans or intentions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results.

Important factors that could cause actual results to differ materially from our expectations, which we refer to as "cautionary statements," are disclosed under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Form 10-Q, the Annual Report on Form 10-K for the year ended December 31, 2021 of PBF Holding and PBF Finance, which we refer to as our 2021 Annual Report on Form 10-K, and in our other filings with the U.S. Securities and Exchange Commission. All forward-looking information in this Quarterly Report on Form 10-Q and subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include:

•supply, demand, prices and other market conditions for our products or crude oil, including volatility in commodity prices or constraints arising from federal, state or local governmental actions or environmental and/or social activists that reduce crude oil production or availability in the regions in which we operate our pipelines and facilities;

•the effects related to or resulting from Russia’s military action in Ukraine, including the imposition of additional sanctions and export controls, as well as the broader impacts to the financial markets and the global macroeconomic and geopolitical environment;

•the effectiveness of our crude oil sourcing strategies, including our crude by rail strategy and related commitments;

•our obligation to buy Renewable Identification Numbers (“RINs”) and market risks related to the volatility in the price of RINs required to comply with the Renewable Fuel Standard and greenhouse gas (“GHG”) emission credits required to comply with various GHG emission programs, such as Assembly Bill 32 (“AB 32”);

•our ability to operate our businesses efficiently, manage capital expenditures and costs (including general and administrative expenses) and generate earnings and cash flow;

•our expectations with respect to our capital ~~improvement~~spending and turnaround projects;

•the continued effect of the coronavirus (“COVID-19”) pandemic, including resurgences and variants of the virus, as well as related governmental and consumer responses on our business, financial condition and results of operations;

•the impact of current and future laws, rulings and governmental regulations, including restrictions on the exploration and/or production of crude oil in the state of California, the implementation of rules and regulations regarding transportation of crude oil by rail or in response to the potential impacts of climate change, decarbonization and future energy transition;

•adverse impacts related to legislation by the federal government lifting the restrictions on exporting U.S. crude oil or subjecting us to trade and sanctions laws, which change frequently as a result of foreign policy developments, and which may necessitate changes to our crude oil acquisition activities;

•our ability to target and execute expense reduction measures and achieve opportunities to improve our liquidity, including continued repurchases of our outstanding debt securities or otherwise further reducing our debt, and/or potential sales of non-operating assets or other real property;

•political pressure and influence of environmental groups and other stakeholders on decisions and policies related to the refining and processing of crude oil and refined products, and the related adverse impacts from changes in our regulatory environment, such as the effects of compliance with AB 32, or from actions taken by environmental interest groups;

•the risk of cyber-attacks;

•our increased dependence on technology;

• the effects of competition in our markets;

•our ability to make acquisitions or investments, including in renewable diesel production, on any announced time frame or at all, and to realize the benefits from such acquisitions or investments;

•liabilities arising from recent acquisitions or investments that are unforeseen or exceeded our expectation;

•our expectations and timing with respect to our acquisition activity;

•adverse developments in our relationship with both our key employees and unionized employees;

•our substantial indebtedness, including the impact of potential downgrades to our corporate credit rating, ~~secured notes~~ and unsecured notes;

•changes in currency exchange rates, interest rates and capital costs;

•restrictive covenants in our indebtedness that may adversely affect our operational flexibility;

•counterparty credit and performance risk exposure related to our supply and inventory intermediation arrangements;

•termination of our third amended and restated inventory intermediation agreement ~~(��~~(“Third Inventory Intermediation Agreement”) with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc. (“J. Aron”) which is scheduled to expire in December 2024 and could have a material adverse effect on our liquidity, as we would be required to finance our crude oil, intermediate and refined products inventory covered by the agreement. Additionally, we are obligated to repurchase from J. Aron certain crude oil, intermediates and finished products (the “J. Aron Products”) upon termination of the agreement;

•our assumptions regarding payments arising under PBF Energy’s tax receivable agreement entered with the PBF LLC Series A and PBF LLC Series B unitholders and other arrangements relating to PBF Energy;

•the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions related to PBFX or with third-party logistics infrastructure or operations, including pipeline, marine and rail transportation; and

•any decisions we continue to make with respect to our energy-related logistics assets that may be transferred to PBFX.

We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Form 10-Q may not in fact occur. Accordingly, investors should not place undue reliance on those statements.

Our forward-looking statements speak only as of the date of this Form 10-Q. Except as required by applicable law, including the securities laws of the United States, we do not intend to update or revise any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions)


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,380.9	$	1,305.7	Cash and cash equivalents	$	2,110.1	$	1,305.7

Accounts receivable	Accounts receivable	1,810.0		1,272.0		Accounts receivable	1,962.1		1,272.0
Accounts receivable - affiliate	Accounts receivable - affiliate	4.4		4.1		Accounts receivable - affiliate	4.5		4.1

Inventories	Inventories	2,893.5		2,505.1		Inventories	2,976.3		2,505.1

Prepaid and other current assets	Prepaid and other current assets	233.3		71.7		Prepaid and other current assets	212.0		71.7
Total current assets	Total current assets	6,322.1		5,158.6		Total current assets	7,265.0		5,158.6

Property, plant and equipment, net	Property, plant and equipment, net	4,175.8		4,114.8		Property, plant and equipment, net	4,237.6		4,114.8
Lease right of use assets - third party	Lease right of use assets - third party	718.8		717.0		Lease right of use assets - third party	702.7		717.0
Lease right of use assets - affiliate	Lease right of use assets - affiliate	463.7		485.4		Lease right of use assets - affiliate	442.8		485.4

Deferred charges and other assets, net	Deferred charges and other assets, net	884.8		813.8		Deferred charges and other assets, net	921.6		813.8
Total assets	Total assets	$	12,565.2	$	11,289.6	Total assets	$	13,569.7	$	11,289.6
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	1,618.0	$	906.3	Accounts payable	$	1,338.2	$	906.3
Accounts payable - affiliate	Accounts payable - affiliate	51.9		61.7		Accounts payable - affiliate	47.3		61.7
Accrued expenses	Accrued expenses	3,285.8		2,728.3		Accrued expenses	3,948.4		2,728.3
Current operating lease liabilities - third party	Current operating lease liabilities - third party	70.5		64.8		Current operating lease liabilities - third party	66.6		64.8
Current operating lease liabilities - affiliate	Current operating lease liabilities - affiliate	92.6		90.7		Current operating lease liabilities - affiliate	95.7		90.7

Current debt	Current debt	29.9		—		Current debt	1,256.6		—

Deferred revenue	Deferred revenue	53.2		40.3		Deferred revenue	83.2		40.3

Total current liabilities	Total current liabilities	5,201.9		3,892.1		Total current liabilities	6,836.0		3,892.1

Long-term debt	Long-term debt	3,650.7		3,673.3		Long-term debt	1,459.3		3,673.3

Deferred tax liabilities	Deferred tax liabilities	16.1		24.2		Deferred tax liabilities	14.7		24.2
Long-term operating lease liabilities - third party	Long-term operating lease liabilities - third party	571.6		570.3		Long-term operating lease liabilities - third party	563.0		570.3
Long-term operating lease liabilities - affiliate	Long-term operating lease liabilities - affiliate	371.1		394.7		Long-term operating lease liabilities - affiliate	347.1		394.7
Long-term financing lease liabilities - third party	Long-term financing lease liabilities - third party	66.7		70.6		Long-term financing lease liabilities - third party	63.8		70.6
Other long-term liabilities	Other long-term liabilities	273.9		251.0		Other long-term liabilities	268.0		251.0
Total liabilities	Total liabilities	10,152.0		8,876.2		Total liabilities	9,551.9		8,876.2
Commitments and contingencies (Note 7)	Commitments and contingencies (Note 7)	0		0		Commitments and contingencies (Note 7)	0		0
Equity:	Equity:					Equity:
PBF Holding Company LLC equity	PBF Holding Company LLC equity					PBF Holding Company LLC equity
Member’s equity	Member’s equity	2,892.8		2,870.2		Member’s equity	2,908.4		2,870.2
Retained earnings (accumulated deficit)	Retained earnings (accumulated deficit)	(510.0)		(489.3)		Retained earnings (accumulated deficit)	1,079.8		(489.3)
Accumulated other comprehensive income	Accumulated other comprehensive income	19.3		20.3		Accumulated other comprehensive income	18.7		20.3
Total PBF Holding Company LLC equity	Total PBF Holding Company LLC equity	2,402.1		2,401.2		Total PBF Holding Company LLC equity	4,006.9		2,401.2
Noncontrolling interest	Noncontrolling interest	11.1		12.2		Noncontrolling interest	10.9		12.2
Total equity	Total equity	2,413.2		2,413.4		Total equity	4,017.8		2,413.4
Total liabilities and equity	Total liabilities and equity	$	12,565.2	$	11,289.6	Total liabilities and equity	$	13,569.7	$	11,289.6

See notes to condensed consolidated financial statements.

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions)


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
Revenues	Revenues		$	9,128.2		$	4,913.2	Revenues	$	14,064.0	$	6,883.2	$	23,192.2	$	11,796.4
Cost and expenses:	Cost and expenses:							Cost and expenses:
Cost of products and other	Cost of products and other		8,277.5			4,263.0		Cost of products and other	11,455.8		6,171.9		19,733.3		10,434.9
Operating expenses (excluding depreciation and amortization expense as reflected below)	Operating expenses (excluding depreciation and amortization expense as reflected below)		595.6			460.2		Operating expenses (excluding depreciation and amortization expense as reflected below)	613.8		462.3		1,209.4		922.5
Depreciation and amortization expense	Depreciation and amortization expense		108.9			104.7		Depreciation and amortization expense	110.9		102.3		219.8		207.0
Cost of sales	Cost of sales		8,982.0			4,827.9		Cost of sales	12,180.5		6,736.5		21,162.5		11,564.4
General and administrative expenses (excluding depreciation and amortization expense as reflected below)	General and administrative expenses (excluding depreciation and amortization expense as reflected below)		49.3			42.9		General and administrative expenses (excluding depreciation and amortization expense as reflected below)	145.9		47.9		195.2		90.8
Depreciation and amortization expense	Depreciation and amortization expense		1.9			3.4		Depreciation and amortization expense	1.9		3.3		3.8		6.7
Change in fair value of contingent consideration	Change in fair value of contingent consideration		50.1			29.5		Change in fair value of contingent consideration	77.6		(5.2)		127.7		24.3

Loss (gain) on sale of assets	Loss (gain) on sale of assets		0.1			(0.6)		Loss (gain) on sale of assets	0.2		—		0.3		(0.6)
Total cost and expenses	Total cost and expenses		9,083.4			4,903.1		Total cost and expenses	12,406.1		6,782.5		21,489.5		11,685.6
Income from operations	Income from operations		44.8			10.1		Income from operations	1,657.9		100.7		1,702.7		110.8
Other income (expense):	Other income (expense):							Other income (expense):
Interest expense, net	Interest expense, net		(68.2)			(69.6)		Interest expense, net	(75.4)		(69.9)		(143.6)		(139.5)
Change in fair value of catalyst obligations	Change in fair value of catalyst obligations		(4.9)			(10.0)		Change in fair value of catalyst obligations	7.2		5.8		2.3		(4.2)

Gain on extinguishment of debt								Gain on extinguishment of debt	3.8		—		3.8		—
Other non-service components of net periodic benefit cost	Other non-service components of net periodic benefit cost		2.2			2.0		Other non-service components of net periodic benefit cost	2.2		1.9		4.4		3.9
Income (loss) before income taxes	Income (loss) before income taxes		(26.1)			(67.5)		Income (loss) before income taxes	1,595.7		38.5		1,569.6		(29.0)
Income tax benefit	Income tax benefit		(8.1)			(10.6)		Income tax benefit	(1.2)		(4.3)		(9.3)		(14.9)
Net income (loss)	Net income (loss)		(18.0)			(56.9)		Net income (loss)	1,596.9		42.8		1,578.9		(14.1)
Less: net income (loss) attributable to noncontrolling interests	Less: net income (loss) attributable to noncontrolling interests		(1.1)			0.2		Less: net income (loss) attributable to noncontrolling interests	(0.6)		2.2		(1.7)		2.4
Net income (loss) attributable to PBF Holding Company LLC	Net income (loss) attributable to PBF Holding Company LLC		$	(16.9)		$	(57.1)	Net income (loss) attributable to PBF Holding Company LLC	$	1,597.5	$	40.6	$	1,580.6	$	(16.5)

See notes to condensed consolidated financial statements.

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in millions)


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
Net income (loss)	Net income (loss)		$	(18.0)		$	(56.9)	Net income (loss)	$	1,596.9	$	42.8	$	1,578.9	$	(14.1)
Other comprehensive income (loss):	Other comprehensive income (loss):							Other comprehensive income (loss):
Unrealized loss on available for sale securities			(1.1)			(0.6)
Unrealized (loss) gain on available for sale securities								Unrealized (loss) gain on available for sale securities	(0.6)		0.1		(1.7)		(0.5)
Net gain on pension and other post-retirement benefits	Net gain on pension and other post-retirement benefits		0.1			0.2		Net gain on pension and other post-retirement benefits	—		0.2		0.1		0.4
Total other comprehensive income (loss)	Total other comprehensive income (loss)		(1.0)			(0.4)		Total other comprehensive income (loss)	(0.6)		0.3		(1.6)		(0.1)
Comprehensive income (loss)	Comprehensive income (loss)		(19.0)			(57.3)		Comprehensive income (loss)	1,596.3		43.1		1,577.3		(14.2)
Less: comprehensive income (loss) attributable to noncontrolling interests	Less: comprehensive income (loss) attributable to noncontrolling interests		(1.1)			0.2		Less: comprehensive income (loss) attributable to noncontrolling interests	(0.6)		2.2		(1.7)		2.4
Comprehensive income (loss) attributable to PBF Holding Company LLC	Comprehensive income (loss) attributable to PBF Holding Company LLC		$	(17.9)		$	(57.5)	Comprehensive income (loss) attributable to PBF Holding Company LLC	$	1,596.9	$	40.9	$	1,579.0	$	(16.6)

See notes to condensed consolidated financial statements.

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(unaudited, in millions)


	Member’s Equity		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Accumulated deficit)		Noncontrolling Interest		Total Equity









Balance, March 31, 2022	$	2,892.8	$	19.3	$	(510.0)	$	11.1	$	2,413.2
Member distributions	—		—		(7.7)		—		(7.7)
Capital contributions from PBF LLC	9.0		—		—		—		9.0

Stock-based compensation	6.6		—		—		—		6.6

Comprehensive income (loss)	—		(0.6)		1,597.5		(0.6)		1,596.3
Other	—		—		—		0.4		0.4
Balance, June 30, 2022	$	2,908.4	$	18.7	$	1,079.8	$	10.9	$	4,017.8























Balance, March 31, 2021	$	2,825.6	$	(6.5)	$	(781.5)	$	10.8	$	2,048.4
Member distributions	—		—		(1.0)		—		(1.0)
Capital contributions from PBF LLC	8.9		—		—		—		8.9
Distribution of assets to PBF LLC	(0.3)		—		—		—		(0.3)
Stock-based compensation	6.9		—		—		—		6.9

Comprehensive income	—		0.3		40.6		2.2		43.1
Other	—		—		—		(0.7)		(0.7)

Balance, June 30, 2021	$	2,841.1	$	(6.2)	$	(741.9)	$	12.3	$	2,105.3

See notes to condensed consolidated financial statements.

Member’s Equity Accumulated
Other
Comprehensive
Income (Loss) Retained Earnings (accumulated deficit) Noncontrolling
Interest Total
Equity

Balance, December 31, 2021 $ 2,870.2 $ 20.3 $ (489.3) $ 12.2 $ 2,413.4
Member distributions — — (3.8) — (3.8)
Capital contributions from PBF LLC 16.0 — — — 16.0
Stock-based compensation expense 6.6 — — — 6.6
Comprehensive income (loss) — (1.0) (16.9) (1.1) (19.0)
Balance, March 31, 2022 $ 2,892.8 $ 19.3 $ (510.0) $ 11.1 $ 2,413.2
Balance, December 31, 2020 $ 2,809.7 $ (6.1) $ (723.4) $ 10.6 $ 2,090.8
Member distributions — — (1.0) — (1.0)
Capital contributions from PBF LLC 10.0 — — — 10.0
Stock-based compensation 5.9 — — — 5.9
Comprehensive income (loss) — (0.4) (57.1) 0.2 (57.3)
Balance, March 31, 2021 $ 2,825.6 $ (6.5) $ (781.5) $ 10.8 $ 2,048.4
PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(unaudited, in millions)


	Member’s Equity		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (accumulated deficit)		Noncontrolling Interest		Total Equity

Balance, December 31, 2021	$	2,870.2	$	20.3	$	(489.3)	$	12.2	$	2,413.4
Member distributions	—		—		(11.5)		—		(11.5)
Capital contributions from PBF LLC	25.0		—		—		—		25.0

Stock-based compensation expense	13.2		—		—		—		13.2

Comprehensive income (loss)	—		(1.6)		1,580.6		(1.7)		1,577.3
Other	—		—		—		0.4		0.4
Balance, June 30, 2022	$	2,908.4	$	18.7	$	1,079.8	$	10.9	$	4,017.8





Balance, December 31, 2020	$	2,809.7	$	(6.1)	$	(723.4)	$	10.6	$	2,090.8
Member distributions	—		—		(2.0)		—		(2.0)
Capital contributions from PBF LLC	18.9		—		—		—		18.9
Distribution of assets to PBF LLC	(0.3)		—		—		—		(0.3)
Stock-based compensation	12.8		—		—		—		12.8

Comprehensive income (loss)	—		(0.1)		(16.5)		2.4		(14.2)
Other	—		—		—		(0.7)		(0.7)
Balance, June 30, 2021	$	2,841.1	$	(6.2)	$	(741.9)	$	12.3	$	2,105.3

See notes to condensed consolidated financial statements.

910

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)


		Three Months Ended March 31,					Six Months Ended June 30,
		2022		2021			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	(18.0)	$	(56.9)	Net income (loss)	$	1,578.9	$	(14.1)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:					Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	114.7		111.8		Depreciation and amortization	233.5		221.3
Stock-based compensation	Stock-based compensation	7.1		6.4		Stock-based compensation	14.5		14.0
Change in fair value of catalyst obligations	Change in fair value of catalyst obligations	4.9		10.0		Change in fair value of catalyst obligations	(2.3)		4.2
Deferred income taxes	Deferred income taxes	(8.1)		(9.4)		Deferred income taxes	(9.3)		(13.8)
Non-cash change in inventory repurchase obligations	Non-cash change in inventory repurchase obligations	(40.7)		8.0		Non-cash change in inventory repurchase obligations	(3.4)		42.2
Non-cash lower of cost or market inventory adjustment	Non-cash lower of cost or market inventory adjustment	—		(405.6)		Non-cash lower of cost or market inventory adjustment	—		(669.6)
Change in fair value of contingent consideration	Change in fair value of contingent consideration	50.1		29.5		Change in fair value of contingent consideration	127.7		24.3

Gain on extinguishment of debt						Gain on extinguishment of debt	(3.8)		—
Pension and other post-retirement benefit costs	Pension and other post-retirement benefit costs	11.9		12.8		Pension and other post-retirement benefit costs	23.8		25.3

Loss (gain) on sale of assets	Loss (gain) on sale of assets	0.1		(0.6)		Loss (gain) on sale of assets	0.3		(0.6)

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(538.0)		(358.0)		Accounts receivable	(690.0)		(501.1)
Due to/from affiliates	Due to/from affiliates	(10.2)		5.1		Due to/from affiliates	(14.8)		6.5
Inventories	Inventories	(388.4)		(220.6)		Inventories	(471.3)		(280.4)
Prepaid and other current assets	Prepaid and other current assets	(161.5)		(79.6)		Prepaid and other current assets	(140.3)		(82.4)
Accounts payable	Accounts payable	682.3		291.0		Accounts payable	398.5		373.4
Accrued expenses	Accrued expenses	537.1		638.1		Accrued expenses	1,100.0		892.5
Deferred revenue	Deferred revenue	12.9		(25.8)		Deferred revenue	42.8		(18.8)
Other assets and liabilities	Other assets and liabilities	(13.3)		(23.8)		Other assets and liabilities	(28.6)		(46.0)
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	242.9	$	(67.6)	Net cash provided by (used in) operating activities	$	2,156.2	$	(23.1)

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:

Expenditures for property, plant and equipment	Expenditures for property, plant and equipment	(116.9)		(36.1)		Expenditures for property, plant and equipment	(223.4)		(81.1)
Expenditures for deferred turnaround costs	Expenditures for deferred turnaround costs	(82.2)		(16.8)		Expenditures for deferred turnaround costs	(166.8)		(38.5)
Expenditures for other assets	Expenditures for other assets	(25.0)		(6.3)		Expenditures for other assets	(43.6)		(16.5)

Net cash used in investing activities	Net cash used in investing activities	$	(224.1)	$	(59.2)	Net cash used in investing activities	$	(433.8)	$	(136.1)

See notes to condensed consolidated financial statements.

1011

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(unaudited, in millions)


		Three Months Ended March 31,					Six Months Ended June 30,
		2022		2021			2022		2021
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Contributions from PBF LLC	Contributions from PBF LLC	$	16.0	$	10.0	Contributions from PBF LLC	$	25.0	$	18.9
Distributions to members	Distributions to members	(3.9)		(1.0)		Distributions to members	(11.6)		(2.0)

Distributions to T&M and Collins shareholders						Distributions to T&M and Collins shareholders	—		(0.7)

Repurchase of 2028 6.00% Senior Notes						Repurchase of 2028 6.00% Senior Notes	(21.1)		—
Repurchase of 2025 7.25% Senior Notes						Repurchase of 2025 7.25% Senior Notes	(4.8)		—

Repayments of PBF Rail Term Loan	Repayments of PBF Rail Term Loan	—		(1.8)		Repayments of PBF Rail Term Loan	—		(3.7)

Repayments of revolver borrowings						Repayments of revolver borrowings	(900.0)		—

Payments on financing leases	Payments on financing leases	(3.0)		(3.5)		Payments on financing leases	(5.7)		(7.1)
Proceeds from insurance premium financing	Proceeds from insurance premium financing	47.3		48.9		Proceeds from insurance premium financing	32.4		28.0
Deferred financing costs and other	Deferred financing costs and other	(0.1)		0.5		Deferred financing costs and other	(32.2)		0.4
Net cash provided by financing activities		$	56.3	$	53.1
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	$	(918.0)	$	33.8

Net change in cash and cash equivalents	Net change in cash and cash equivalents	75.1		(73.7)		Net change in cash and cash equivalents	804.4		(125.4)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	1,305.7		1,570.1		Cash and cash equivalents, beginning of period	1,305.7		1,570.1
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	1,380.8	$	1,496.4	Cash and cash equivalents, end of period	$	2,110.1	$	1,444.7

Supplemental cash flow disclosures	Supplemental cash flow disclosures					Supplemental cash flow disclosures
Non-cash activities:	Non-cash activities:					Non-cash activities:
Accrued and unpaid capital expenditures	Accrued and unpaid capital expenditures	$	119.7	$	42.2	Accrued and unpaid capital expenditures	$	118.9	$	45.5
Assets acquired or remeasured under operating and financing leases	Assets acquired or remeasured under operating and financing leases	23.9		(152.8)		Assets acquired or remeasured under operating and financing leases	31.3		(127.9)
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest (net of capitalized interest of $4.1 million and $2.2 million in 2022 and 2021, respectively)		$	33.9	$	38.9
Interest (net of capitalized interest of $9.2 million and $4.8 million in 2022 and 2021, respectively)						Interest (net of capitalized interest of $9.2 million and $4.8 million in 2022 and 2021, respectively)	$	131.0	$	130.7
Income taxes	Income taxes	0.1		0.1		Income taxes	0.8		0.6

See notes to condensed consolidated financial statements.

1112

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Description of the Business

PBF Holding Company LLC (“PBF Holding”), a Delaware limited liability company, and PBF Finance Corporation (“PBF Finance”), a wholly-owned subsidiary of PBF Holding, together with the Company’s consolidated subsidiaries, owns and operates oil refineries and related facilities in North America. PBF Holding is a wholly-owned subsidiary of PBF Energy Company LLC (“PBF LLC”). PBF Energy Inc. (“PBF Energy”) is the sole managing member of, and owner of an equity interest representing approximately ~~99.2%~~99.3% of the outstanding economic interest in, PBF LLC as of ~~March 31,~~June 30, 2022. PBF Investments LLC, Toledo Refining Company LLC, Paulsboro Refining Company LLC (“PRC”), Delaware City Refining Company LLC (“DCR”), Chalmette Refining, L.L.C. (“Chalmette Refining”), PBF Energy Western Region LLC, Torrance Refining Company LLC, Torrance Logistics Company LLC and Martinez Refining Company LLC are PBF LLC’s principal operating subsidiaries and are all wholly-owned subsidiaries of PBF Holding. Collectively, PBF Holding and its consolidated subsidiaries are referred to hereinafter as the “Company”.

PBF Logistics GP LLC (“PBF GP”) serves as the general partner of PBF Logistics LP (“PBFX”). PBF GP is wholly-owned by PBF LLC. In a series of transactions, PBF Holding has distributed certain assets to PBF LLC, which in turn contributed those assets to PBFX (as described in “Note 6 - Related Party Transactions”).

Basis of Presentation

The unaudited condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, considered necessary for a fair presentation of the financial position and the results of operations and cash flows of the Company for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim Condensed Consolidated Financial Statements should be read in conjunction with the PBF Holding and PBF Finance financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the three and six months ended ~~March 31,~~June 30, 2022 are not necessarily indicative of the results to be expected for the full year.

Recently Adopted Accounting Guidance

In March 2020, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the effects of reference rate reform on financial reporting”. The amendments in this ASU provide optional guidance to alleviate the burden in accounting for reference rate reform, by allowing certain expedients and exceptions in applying GAAP to contracts, hedging relationships and other transactions affected by the expected market transition from London Interbank Offered Rate (“LIBOR”) and other interbank rates. The Company’s adoption of this guidance did not have, and is not anticipated to have, a material impact on its Consolidated Financial Statements and related disclosures.

1213

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. CURRENT EXPECTED CREDIT LOSSES

Credit Losses

The Company has exposure to credit losses primarily through its sales of refined products. The Company evaluates creditworthiness on an individual customer basis. The Company utilizes a financial review model for purposes of evaluating creditworthiness which is based on information from financial statements and credit reports. The financial review model enables the Company to assess the customer’s risk profile and determine credit limits on the basis of their financial strength, including but not limited to, their liquidity, leverage, debt serviceability, longevity and how they pay their bills. The Company may require security in the form of letters of credit or cash payments in advance of product delivery for certain customers that are deemed higher risk.

The Company’s payment terms on its trade receivables are relatively short, generally 30 days or less for a substantial majority of its refined products. As a result, the Company’s collection risk is mitigated to a certain extent by the fact that sales are collected in a relatively short period of time, allowing for the ability to reduce exposure on defaults if collection issues are identified. Notwithstanding, the Company reviews each customer’s credit risk profile at least annually or more frequently if warranted.

The Company performs a quarterly allowance for doubtful accounts analysis to assess whether an allowance needs to be recorded for any outstanding trade receivables. In estimating credit losses, management reviews accounts that are past due, have known disputes or have experienced any negative credit events that may result in future collectability issues. There was no allowance for doubtful accounts recorded as of ~~March 31,~~June 30, 2022 or December 31, 2021.

1314

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. INVENTORIES

Inventories consisted of the following:


March 31, 2022
June 30, 2022								June 30, 2022
(in millions)	(in millions)	Titled Inventory		Inventory Intermediation Agreement		Total		(in millions)	Titled Inventory		Inventory Intermediation Agreement		Total
Crude oil and feedstocks	Crude oil and feedstocks	$	1,198.2	$	210.9	$	1,409.1	Crude oil and feedstocks	$	1,232.4	$	220.0	$	1,452.4
Refined products and blendstocks	Refined products and blendstocks	1,030.3		310.7		1,341.0		Refined products and blendstocks	1,026.7		352.2		1,378.9
Warehouse stock and other	Warehouse stock and other	143.4		—		143.4		Warehouse stock and other	145.0		—		145.0
		$	2,371.9	$	521.6	$	2,893.5		$	2,404.1	$	572.2	$	2,976.3
Lower of cost or market adjustment	Lower of cost or market adjustment	—		—		—		Lower of cost or market adjustment	—		—		—
Total inventories	Total inventories	$	2,371.9	$	521.6	$	2,893.5	Total inventories	$	2,404.1	$	572.2	$	2,976.3


December 31, 2021
(in millions)	Titled Inventory		Inventory Intermediation Agreement		Total
Crude oil and feedstocks	$	953.5	$	151.4	$	1,104.9
Refined products and blendstocks	964.6		293.8		1,258.4
Warehouse stock and other	141.8		—		141.8
	$	2,059.9	$	445.2	$	2,505.1
Lower of cost or market adjustment	—		—		—
Total inventories	$	2,059.9	$	445.2	$	2,505.1

On October 25, 2021, PBF Holding and its subsidiaries, DCR, PRC and Chalmette Refining (collectively, the “PBF Entities”), entered into a third amended and restated inventory intermediation agreement (the “Third Inventory Intermediation Agreement”) with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc. (“J. Aron”), pursuant to which the terms of the existing inventory intermediation agreements were amended and restated in their entirety, including, among other things, pricing and an extension of terms. The Third Inventory Intermediation Agreement extends the term to December 31, 2024, which term may be further extended by mutual consent of the parties to December 31, 2025. On May 25, 2022, the PBF Entities entered into an amendment of the Third Inventory Intermediation Agreement to amend certain provisions thereof that related to and were impacted by amendments made on May 25, 2022 to the Revolving Credit Agreement (as defined below).

Pursuant to the Third Inventory Intermediation Agreement, J. Aron will continue to purchase and hold title to certain inventory, including crude oil, intermediate and certain finished products (the “J. Aron Products”) purchased or produced by the Paulsboro and Delaware City refineries (and, at the election of the PBF Entities, the Chalmette refinery) (the “Refineries”) and delivered into storage tanks at the Refineries (the “Storage Tanks”). The J. Aron Products are sold back to the Company as the J. Aron Products are discharged out of the Storage Tanks. These purchases and sales are settled daily, and pricing is trued-up monthly at the market prices related to those J. Aron Products. These transactions are considered to be made in contemplation of each other and, accordingly, do not result in the recognition of a sale when title passes from the Refineries to J. Aron. Additionally, J. Aron has the right to store the J. Aron Products purchased in Storage Tanks under the Third Inventory Intermediation Agreement and will retain these storage rights for the term of the agreement. PBF Holding continues to market and sell the J. Aron Products independently to third parties.

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At ~~March 31,~~June 30, 2022, the replacement value of inventories exceeded the last-in, first-out (“LIFO”) carrying value. There was no lower of cost or market (“LCM”) inventory reserve at ~~March 31,~~June 30, 2022 ~~and~~or December 31, 2021.

At June 30, 2021, the replacement value of inventories exceeded the LIFO carrying value. During the three months ended ~~March 31,~~June 30, 2021, the Company recorded an adjustment to value its inventories to the lower of cost or market which increased income from operations by ~~$405.6~~$264.0 million, reflecting ~~the net change in the~~no LCM inventory reserve at June 30, 2021 in comparison with an LCM reserve of $264.0 million at March 31, 2021. During the six months ended June 30, 2021, the company recorded an adjustment to value its inventories to the lower of cost or market which increased income from operations by $669.6 million, reflecting no LCM inventory reserve at June 30, 2021 in comparison with an LCM inventory reserve of $669.6 million at December 31, ~~2020 to $264.0 million at March 31, 2021.~~2020.

1416

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4. ACCRUED EXPENSES

Accrued expenses consisted of the following:


(in millions)	(in millions)	March 31, 2022		December 31, 2021		(in millions)	June 30, 2022		December 31, 2021
Inventory-related accruals	Inventory-related accruals	$	1,318.0	$	959.9	Inventory-related accruals	$	1,534.6	$	959.9
Renewable energy credit and emissions obligations (a)	Renewable energy credit and emissions obligations (a)	1,141.0		953.9		Renewable energy credit and emissions obligations (a)	1,325.6		953.9
Inventory intermediation agreement (b)	Inventory intermediation agreement (b)	268.6		280.1		Inventory intermediation agreement (b)	365.0		280.1
Accrued salaries and benefits						Accrued salaries and benefits	119.3		57.1
Excise and sales tax payable	Excise and sales tax payable	103.1		112.3		Excise and sales tax payable	115.4		112.3
Accrued transportation costs	Accrued transportation costs	94.7		91.0		Accrued transportation costs	110.6		91.0
Contingent consideration						Contingent consideration	90.9		—
Accrued utilities						Accrued utilities	74.5		73.0
Accrued capital expenditures	Accrued capital expenditures	76.4		62.6		Accrued capital expenditures	66.3		62.6
Accrued utilities		64.3		73.0
Accrued refinery maintenance and support costs						Accrued refinery maintenance and support costs	39.2		55.8
Accrued interest	Accrued interest	61.8		32.8		Accrued interest	33.2		32.8
Accrued refinery maintenance and support costs		41.5		55.8
Accrued salaries and benefits		26.4		57.1
Environmental liabilities	Environmental liabilities	14.0		14.3		Environmental liabilities	13.7		14.3
Current finance lease liabilities	Current finance lease liabilities	11.2		11.1		Current finance lease liabilities	11.4		11.1

Customer deposits	Customer deposits	1.6		3.5		Customer deposits	5.1		3.5
Other	Other	63.2		20.9		Other	43.6		20.9
Total accrued expenses	Total accrued expenses	$	3,285.8	$	2,728.3	Total accrued expenses	$	3,948.4	$	2,728.3

__________________________

(a) The Company is subject to obligations to purchase Renewable Identification Numbers (“RINs”) required to comply with the Renewable Fuel Standard. The Company’s overall RINs obligation is based on a percentage of domestic shipments of on-road fuels as established by Environmental Protection ~~Agency (“EPA”).~~Agency. To the degree the Company is unable to blend the required amount of biofuels to satisfy its RINs obligation, RINs must be purchased on the open market to avoid penalties and fines. The Company records its RINs obligation on a net basis in Accrued expenses when its RINs liability is greater than the amount of RINs earned and purchased in a given period and in Prepaid and other current assets when the amount of RINs earned and purchased is greater than the RINs liability. In addition, the Company is subject to obligations to comply with federal and state legislative and regulatory measures, including regulations in the state of California pursuant to Assembly Bill 32 (“AB 32”), to address environmental compliance and greenhouse gas and other emissions. These requirements include incremental costs to operate and maintain our facilities as well as to implement and manage new emission controls and programs. Renewable energy credit and emissions obligations fluctuate with the volume of applicable product sales and timing of credit purchases. The Company enters into forward purchase commitments in order to acquire its renewable energy and emissions credits at fixed prices. As of ~~March 31,~~June 30, 2022, the Company had entered into ~~$756.2~~$899.4 million of such forward purchase commitments with respect to its total accrued renewable energy and emissions obligations. ~~Final settlement of the Company’s RINs obligation for annual compliance years 2020 through 2022 are subject to final rule making by EPA.~~ Currently, our obligations are anticipated to require settlement in 2023. The Company’s AB 32 liability is part of a triennial period program which will be settled through 2024.

(b) The Company has the obligation to repurchase the J. Aron Products that are held in its Storage Tanks in accordance with the Inventory Intermediation Agreement with J. Aron. As of ~~March 31,~~June 30, 2022 and December 31, 2021, a liability is recognized for the Inventory Intermediation Agreement and is recorded at market price for the J. Aron owned inventory held in the Company’s Storage Tanks, with any change in the market price being recorded in Cost of products and other.

1517

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. CREDIT FACILITIES AND DEBT

Debt outstanding consists of the following:


(in millions)	(in millions)	March 31, 2022		December 31, 2021		(in millions)	June 30, 2022		December 31, 2021
2025 Senior Secured Notes(1)	2025 Senior Secured Notes(1)	$	1,250.0	$	1,250.0	2025 Senior Secured Notes(1)	$	1,250.0	$	1,250.0
2028 Senior Notes	2028 Senior Notes	826.5		826.5		2028 Senior Notes	801.6		826.5
2025 Senior Notes	2025 Senior Notes	669.5		669.5		2025 Senior Notes	664.5		669.5
Revolving Credit Facility	Revolving Credit Facility	900.0		900.0		Revolving Credit Facility	—		900.0

Catalyst financing arrangements	Catalyst financing arrangements	63.3		58.4		Catalyst financing arrangements	56.2		58.4
		3,709.3		3,704.4			2,772.3		3,704.4
Less — Current debt(1)	Less — Current debt(1)	(29.9)		—		Less — Current debt(1)	(1,256.6)		—
Unamortized premium	Unamortized premium	0.4		0.5		Unamortized premium	0.4		0.5
Unamortized deferred financing costs	Unamortized deferred financing costs	(29.1)		(31.6)		Unamortized deferred financing costs	(56.8)		(31.6)
Long-term debt	Long-term debt	$	3,650.7	$	3,673.3	Long-term debt	$	1,459.3	$	3,673.3

(1) On July 11, 2022, the Company fully redeemed all of the $1,250.0 million in aggregate principal amount outstanding of its 9.25% senior secured notes due 2025 (the “2025 Senior Secured Notes”); as such, as of June 30, 2022 this amount was classified as Current debt in the Condensed Consolidated Balance Sheets. Refer to “Note 13 - Subsequent Events” for more details.

Revolving Credit Facility

On May 25, 2022, PBF Holding and certain of its wholly-owned subsidiaries, as borrowers or subsidiary guarantors, entered into an amendment of its existing asset-based revolving credit agreement (the “Revolving Credit Agreement”), among PBF Holding, Bank of America, National Association as administrative agent, and certain other lenders. Among other things, the Revolving Credit Agreement amended and extended PBF Holding’s asset-based revolving credit facility (the “Revolving Credit Facility”) through January 2025 and increased the maximum commitment to $4.3 billion through May 2023 (currently set to adjust to $2.75 billion in May 2023 through January 2025). The amendments also redefine certain components of the Borrowing Base (as defined in the Revolving Credit Agreement) to reflect the existence of two tranches, tranche A which is comprised of existing lenders who have not elected to extend and whose commitments retain the existing maturity date under the existing revolving credit agreement of May 2, 2023 (the “Tranche A Commitments”) and tranche B, which is comprised of existing and new lenders whose commitments have an extended maturity date of January 31, 2025 (the “Tranche B Commitments”). The Tranche A Commitments total $1.55 billion and the Tranche B Commitments total $2.75 billion. The amendments also include changes to incorporate the adoption of Secured Overnight Financing Rate (“SOFR”) as a replacement of LIBOR, changes to joint lead arrangers, bookrunners, syndication agents and other titles, and other changes related to the foregoing. In addition, an accordion feature allows for additional Tranche B Commitments of up to an additional $500.0 million plus an amount equal to the Tranche A Commitments for existing Tranche A lenders.

Borrowings under the Revolving Credit Facility bear interest at the Alternative Base Rate plus the Applicable Margin or at the Term SOFR Rate plus the Applicable Margin (all as defined in the Revolving Credit Agreement). The Applicable Margin ranges from 0.25% to 1.00% for Alternative Base Rate Loans and from 1.25% to 2.00% for Term SOFR Loans, in each case depending on the Company’s corporate credit rating. In addition, the LC Participation Fee ranges from 1.00% to 1.75% depending on the Company’s corporate credit rating and the Fronting Fee is capped at 0.25%.

1618

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Revolving Credit Agreement contains customary covenants and restrictions on the activities of PBF Holding and its subsidiaries, including, but not limited to, limitations on incurring additional indebtedness, liens, negative pledges, guarantees, investments, loans, asset sales, mergers and acquisitions, prepayment of other debt, distributions, dividends and the repurchase of capital stock, transactions with affiliates and the ability of PBF Holding to change the nature of its business or its fiscal year; all as defined in the Revolving Credit Agreement.

In addition, the Revolving Credit Agreement has a financial covenant which requires that if at any time Excess Availability, as defined in the Revolving Credit Agreement, is less than the greater of (i) 10% of the lesser of the then existing Borrowing Base and the then aggregate Revolving Commitments of the Lenders (the “Financial Covenant Testing Amount”), and (ii) $100.0 million, and until such time as Excess Availability is greater than the Financial Covenant Testing Amount and $100.0 million for a period of 12 or more consecutive days, PBF Holding will not permit the Consolidated Fixed Charge Coverage Ratio, as defined in the Revolving Credit Agreement and determined as of the last day of the most recently completed quarter, to be less than 1 to 1. As of June 30, 2022, the Company is in compliance with all covenants in the Revolving Credit Agreement, including financial covenants.

PBF Holding’s obligations under the Revolving Credit Facility are (a) guaranteed by each of its domestic operating subsidiaries that are not Excluded Subsidiaries (as defined in the Revolving Credit Agreement) and (b) secured by a lien on (i) PBF LLC’s equity interest in PBF Holding and (ii) certain assets of PBF Holding and the subsidiary guarantors, including all deposit accounts (other than zero balance accounts, cash collateral accounts, trust accounts and/or payroll accounts, all of which are excluded from the definition of collateral), all accounts receivable, all hydrocarbon inventory (other than the J. Aron Products owned by J. Aron pursuant to the Third Inventory Intermediation Agreement) and to the extent evidencing, governing, securing or otherwise related to the foregoing, all general intangibles, chattel paper, instruments, documents, letter of credit rights and supporting obligations; and all products and proceeds of the foregoing.

Extinguishment of Debt

During the three months ended June 30, 2022, the Company made a number of open market repurchases of its 6.00% senior unsecured notes due 2028 (the “2028 Senior Notes”) and 7.25% senior unsecured notes due 2025 (the “2025 Senior Notes”) that resulted in the extinguishment of $24.9 million in principal of the 2028 Senior Notes and $5.0 million in principal of the 2025 Senior Notes. Total cash consideration paid to repurchase the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, totaled $25.9 million and the Company recognized a $3.8 million gain on the extinguishment of debt during the three and six months ended June 30, 2022.

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. RELATED PARTY TRANSACTIONS

Transactions and Agreements with PBFX

The Company entered into agreements with PBFX that establish fees for certain general and administrative services, and operational and maintenance services provided by the Company to PBFX. In addition, the Company executed terminal, pipeline and storage services agreements with PBFX under which PBFX provides commercial transportation, terminaling, storage and pipeline services to the Company. These agreements with PBFX include:

Contribution Agreements

Immediately prior to the closing of certain contribution agreements, which PBF LLC entered into with PBFX (collectively referred to as the “Contribution Agreements”), the Company contributed certain assets to PBF LLC. PBF LLC in turn contributed those assets to PBFX pursuant to the Contribution Agreements. Certain proceeds received by PBF LLC from PBFX in accordance with the Contribution Agreements were subsequently contributed by PBF LLC to the Company.

Commercial Agreements

The Company has entered into long-term, fee-based commercial agreements with PBFX relating to assets associated with the Contribution Agreements, the majority of which include a minimum volume commitment (“MVC”) and are supported by contractual fee escalations for inflation adjustments and certain increases in operating costs. Under these agreements, PBFX provides various pipeline, rail and truck terminaling and storage services to the Company and the Company has committed to provide PBFX with minimum fees based on minimum monthly throughput volumes. The Company believes the terms and conditions under these agreements, as well as the Omnibus Agreement and the Services Agreement (each as defined below) with PBFX, are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services.

Other Agreements

In addition to the commercial agreements described above, the Company has entered into an omnibus agreement with PBFX, PBF GP and PBF LLC, which has been amended and restated in connection with certain Contribution Agreements (as amended, the “Omnibus Agreement”). The Omnibus Agreement addresses the payment of an annual fee for the provision of various general and administrative services and reimbursement of salary and benefit costs for certain PBF Energy employees.

Additionally, the Company and certain of its subsidiaries have entered into an operation and management services and secondment agreement with PBFX (as amended, the “Services Agreement”), pursuant to which the Company and its subsidiaries provide PBFX with the personnel necessary for PBFX to perform its obligations under its commercial agreements. PBFX reimburses the Company for the use of such employees and the provision of certain infrastructure-related services to the extent applicable to its operations, including storm water discharge and waste water treatment, steam, potable water, access to certain roads and grounds, sanitary sewer access, electrical power, emergency response, filter press, fuel gas, API solids treatment, fire water and compressed air. The Services Agreement will terminate upon the termination of the Omnibus Agreement, provided that PBFX may terminate any service upon 30-days’ notice.

Refer to the Company’s 2021 Annual Report on Form 10-K (“Note 11 - Related Party Transactions” of the Notes to Consolidated Financial Statements) for a more complete description of the agreements with PBFX that were entered into prior to 2022. ~~No new material agreements or amendments were entered into during the three months ended March 31, 2022.~~

1720

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table reflects activity during 2022 related to commercial agreements between PBF Holding and PBFX:

Agreement

Initiation Date

Initial Term

Renewal

MVC

Force Majeure

Transportation and Terminaling

Toledo Truck Unloading & Terminaling Agreement (a)

4/1/2022

9 months

Evergreen

See note (b)

PBF Holding or PBFX can declare

___________________

(a)This commercial agreement with PBFX is considered a lease.

(b)The MVC is 5,500 bpd through December 31, 2022. Effective January 1, 2023, the MVC will decrease to 1,000 bpd.

Summary of Transactions with PBFX

A summary of the Company’s affiliate transactions with PBFX is as follows:


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	(in millions)		2022			2021		(in millions)	2022		2021		2022		2021
Reimbursements under affiliate agreements:	Reimbursements under affiliate agreements:							Reimbursements under affiliate agreements:
Services Agreement	Services Agreement		$	2.2		$	2.2	Services Agreement	$	2.1	$	2.1	$	4.3	$	4.3
Omnibus Agreement	Omnibus Agreement		1.8			1.8		Omnibus Agreement	2.3		1.9		4.1		3.7
Total expenses under affiliate agreements	Total expenses under affiliate agreements		76.0			75.9		Total expenses under affiliate agreements	79.6		75.1		155.6		151.0

Total reimbursements under the Omnibus Agreement are included in General and administrative expenses and reimbursements under the Services Agreement and expenses under affiliate agreements are included in Cost of products and other in the Company’s Condensed Consolidated Statements of Operations.

1821

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. COMMITMENTS AND CONTINGENCIES

In the ordinary conduct of the Company’s business, the Company is from time to time subject to lawsuits, investigations and claims, including class action proceedings, mass tort actions, tort actions, environmental claims and employee-related matters. The outcome of these matters cannot always be predicted accurately, but the Company accrues liabilities for these matters if the Company has determined that it is probable a loss has been incurred and the loss can be reasonably estimated. For such ongoing matters for which we have not recorded a liability but losses are reasonably possible, we are unable to estimate a range of possible losses at this time due to various reasons that may include but are not limited to, matters being in an early stage and not fully developed through pleadings, discovery or court proceedings, number of potential claimants being unknown or uncertainty regarding a number of different factors underlying the potential claims. However, the ultimate resolution of one or more of these contingencies could result in an adverse outcome that may have a material effect on our financial position, results of operations or cash flows.

Environmental Matters

The Company’s refineries, pipelines and related operations are subject to extensive and frequently changing federal, state and local laws and regulations, including, but not limited to, those relating to the discharge of materials into the environment or that otherwise relate to the protection of the environment (including in response to the potential impacts of climate change), waste management and the characteristics and the compositions of fuels. Compliance with existing and anticipated laws and regulations can increase the overall cost of operating the refineries, including remediation, operating costs and capital costs to construct, maintain and upgrade equipment and facilities.

These laws and permits raise potential exposure to future claims and lawsuits involving environmental and safety matters which could include soil and water contamination, air pollution, personal injury and property damage allegedly caused by substances which the Company manufactured, handled, used, released or disposed of, transported, or that relate to pre-existing conditions for which the Company has assumed responsibility. The Company believes that its current operations are in compliance with existing environmental and safety requirements. However, there have been and will continue to be ongoing discussions about environmental and safety matters between the Company and federal and state authorities, including notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures. While it is often difficult to quantify future environmental or safety related expenditures, the Company anticipates that continuing capital investments and changes in operating procedures will be required for the foreseeable future to comply with existing and new requirements, as well as evolving interpretations and more strict enforcement of existing laws and regulations.

In connection with the acquisition of the Torrance refinery and related logistics assets, the Company assumed certain pre-existing environmental liabilities. The estimated costs related to these remediation obligations totaled ~~$116.5~~$114.5 million as of ~~March 31,~~June 30, 2022 ($118.5 million as of December 31, 2021), and related primarily to remediation obligations to address existing soil and groundwater contamination and the related monitoring and clean-up activities. Costs related to these obligations are reassessed periodically or when changes to our remediation approach are identified. The current portion of the environmental liability is recorded in Accrued expenses and the non-current portion is recorded in Other long-term liabilities.

The aggregate environmental liability reflected in the Company’s Condensed Consolidated Balance Sheets was ~~$156.8~~$154.2 million and $155.3 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, of which ~~$142.8~~$140.5 million and $141.0 million, respectively, were classified as Other long-term liabilities. These liabilities include remediation and monitoring costs expected to be incurred over an extended period of time. Estimated liabilities could increase in the future when the results of ongoing investigations become known, are considered probable and can be reasonably estimated.

1922

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Contingent Consideration

In connection with the acquisition of the Martinez refinery and related logistics assets, the ~~Company entered into~~sale and purchase agreement dated June 11, 2019 includes an earn-out provision based on certain earnings thresholds of the Martinez refinery. Pursuant to the agreement, the Company will make payments to ~~the Seller~~Equilon Enterprises LLC d/b/a Shell Oil Products US based on future earnings at the Martinez refinery in excess of certain thresholds, as defined in the agreement, for a period of up to four years following the acquisition closing date (the “Martinez Contingent ~~Consideration”~~Consideration��). The Company recorded the acquisition date fair value of the earn-out provision as contingent consideration within “Other long-term liabilities” within the Company’s Condensed Consolidated Balance Sheets. Subsequent changes in the fair value of the Martinez Contingent Consideration are recorded in the Condensed Consolidated Statements of Operations. The fair value of the Martinez Contingent Consideration was estimated to be ~~$79.5~~$157.1 million as of ~~March 31,~~June 30, 2022 (of which $90.9 million is included within “Accrued expenses”) and $29.4 million as of December 31, ~~2021.~~2021 (all of which was included within “Other long-term liabilities”) on the Company’s Condensed Consolidated Balance Sheets.

8. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to the Company’s defined benefit plans consisted of the following:


(in millions)	(in millions)	Three Months Ended March 31,			(in millions)	Three Months Ended June 30,						Six Months Ended June 30,
Pension Benefits	Pension Benefits		2022				2021		Pension Benefits	2022		2021		2022		2021
Components of net periodic benefit cost:	Components of net periodic benefit cost:								Components of net periodic benefit cost:
Service cost	Service cost		$	13.9			$	14.4	Service cost	$	13.9	$	14.3	$	27.8	$	28.7
Interest cost	Interest cost		2.0				1.3		Interest cost	1.9		1.4		3.9		2.7
Expected return on plan assets	Expected return on plan assets		(4.4)				(3.6)		Expected return on plan assets	(4.3)		(3.5)		(8.7)		(7.1)

Net periodic benefit cost	Net periodic benefit cost		$	11.5			$	12.1	Net periodic benefit cost	$	11.5	$	12.2	$	23.0	$	24.3


(in millions)	(in millions)	Three Months Ended March 31,			(in millions)	Three Months Ended June 30,						Six Months Ended June 30,
Post-Retirement Medical Plan	Post-Retirement Medical Plan		2022				2021		Post-Retirement Medical Plan	2022		2021		2022		2021
Components of net periodic benefit cost:	Components of net periodic benefit cost:								Components of net periodic benefit cost:
Service cost	Service cost		$	0.2			$	0.4	Service cost	$	0.2	$	0.1	$	0.4	$	0.5
Interest cost	Interest cost		0.1				0.1		Interest cost	0.2		—		0.3		0.1
Amortization of prior service cost and actuarial loss	Amortization of prior service cost and actuarial loss		0.1				0.2		Amortization of prior service cost and actuarial loss	—		0.2		0.1		0.4
Net periodic benefit cost	Net periodic benefit cost		$	0.4			$	0.7	Net periodic benefit cost	$	0.4	$	0.3	$	0.8	$	1.0

2023

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. REVENUES

The following table provides information relating to the Company’s revenues from external customers for each product or group of similar products for the periods presented:


		Three Months Ended March 31,					Three Months Ended June 30,
(in millions)	(in millions)	2022		2021		(in millions)	2022		2021
Gasoline and distillates	Gasoline and distillates	$	8,037.7	$	4,230.1	Gasoline and distillates	$	12,520.9	$	5,990.6
Asphalt and blackoils	Asphalt and blackoils	458.9		215.4		Asphalt and blackoils	667.2		298.4
Feedstocks and other	Feedstocks and other	334.9		212.3		Feedstocks and other	451.9		290.6
Chemicals	Chemicals	207.0		194.7		Chemicals	291.2		230.4
Lubricants	Lubricants	89.7		60.7		Lubricants	132.8		73.2
Total Revenues	Total Revenues	$	9,128.2	$	4,913.2	Total Revenues	$	14,064.0	$	6,883.2

							Six Months Ended June 30,
(in millions)						(in millions)	2022		2021
Gasoline and distillates						Gasoline and distillates	$	20,558.6	$	10,220.7
Asphalt and blackoils						Asphalt and blackoils	1,126.1		513.8
Feedstocks and other						Feedstocks and other	786.8		502.9
Chemicals						Chemicals	498.2		425.1
Lubricants						Lubricants	222.5		133.9
Total Revenues						Total Revenues	$	23,192.2	$	11,796.4

The Company’s revenues are generated from the sale of refined products. These revenues are largely based on the current spot (market) prices of the products sold, which represent consideration specifically allocable to the products being sold on a given day, and the Company recognizes those revenues upon delivery and transfer of title to the products to our customers. The time at which delivery and transfer of title occurs is the point when the Company’s control of the products is transferred to the Company’s customers and when its performance obligation to its customers is fulfilled. Delivery and transfer of title are specifically agreed to between the Company and customers within the contracts. The Company also has contracts which contain fixed pricing, tiered pricing, minimum volume features with makeup periods, or other factors that have not materially been affected by Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

Deferred Revenue

The Company records deferred revenue when cash payments are received or are due in advance of performance, including amounts which are refundable. Deferred revenue was ~~$53.2~~$83.2 million and $40.3 million as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. Fluctuations in the deferred revenue balance are primarily driven by the timing and extent of cash payments received or due in advance of satisfying the Company’s performance obligations.

The Company’s payment terms vary by type and location of customers and the products offered. The period between invoicing and when payment is due is not significant (i.e. generally within two months). For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer.

2124

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. INCOME TAXES

PBF Holding is a limited liability company treated as a “flow-through” entity for income tax purposes. Accordingly, there is generally no benefit or expense for federal or state income tax in the PBF Holding financial statements apart from the income tax attributable to the 2 subsidiaries acquired in connection with the acquisition of Chalmette Refining and the Company’s wholly-owned Canadian subsidiary, PBF Energy Limited, which are treated as C-Corporations for income tax purposes, with the tax provision calculated based on the effective tax rate for the periods presented.

The reported income tax provision in the PBF Holding Condensed Consolidated Statements of Operations consists of the following:


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	(in millions)		2022		2021			(in millions)	2022		2021		2022		2021
Current income tax benefit			$	—	$	(1.2)
Current income tax expense (benefit)								Current income tax expense (benefit)	$	—	$	0.1	$	—	$	(1.1)
Deferred income tax benefit	Deferred income tax benefit		(8.1)		(9.4)			Deferred income tax benefit	(1.2)		(4.4)		(9.3)		(13.8)
Total income tax benefit	Total income tax benefit		$	(8.1)	$	(10.6)		Total income tax benefit	$	(1.2)	$	(4.3)	$	(9.3)	$	(14.9)

2225

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. FAIR VALUE MEASUREMENTS

The tables below present information about the Company’s financial assets and liabilities measured and recorded at fair value on a recurring basis and indicate the fair value hierarchy of the inputs utilized to determine the fair values as of ~~March 31,~~June 30, 2022 and December 31, 2021.

The Company has elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty; however, fair value amounts by hierarchy level are presented on a gross basis in the tables below. The Company has posted cash margin with various counterparties to support hedging and trading activities. The cash margin posted is required by counterparties as collateral deposits and cannot be offset against the fair value of open contracts except in the event of default. The Company has no derivative contracts that are subject to master netting arrangements that are reflected gross on the Condensed Consolidated Balance Sheets.


		As of March 31, 2022														As of June 30, 2022
		Fair Value Hierarchy						Total Gross Fair Value				Effect of Counter-party Netting		Net Carrying Value on Balance Sheet		Fair Value Hierarchy									Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
(in millions)	(in millions)	Level 1		Level 2		Level 3			(in millions)		Level 1						Level 2				Level 3
Assets:	Assets:														Assets:
Money market funds	Money market funds	$	45.9	$	—	$	—		$	45.9			N/A			$	45.9	Money market funds	$	11.0		$	—	$	—	$	11.0	N/A		$	11.0

Commodity contracts	Commodity contracts	197.2		—		—		197.2				(197.2)		—	Commodity contracts	98.4				2.2			—		100.6		(100.6)		—
Derivatives included with inventory intermediation agreement obligations	Derivatives included with inventory intermediation agreement obligations	—		60.4		—		60.4				—		60.4	Derivatives included with inventory intermediation agreement obligations	—				23.1			—		23.1		—		23.1

Liabilities:	Liabilities:														Liabilities:
Commodity contracts	Commodity contracts	249.1		—		—		249.1				(197.2)		51.9	Commodity contracts	119.8				—			—		119.8		(100.6)		19.2
Catalyst obligations	Catalyst obligations	—		63.3		—		63.3				—		63.3	Catalyst obligations	—				56.2			—		56.2		—		56.2
Renewable energy credit and emissions obligations	Renewable energy credit and emissions obligations	—		1,141.0		—		1,141.0				—		1,141.0	Renewable energy credit and emissions obligations	—				1,325.6			—		1,325.6		—		1,325.6
Contingent consideration obligation	Contingent consideration obligation	—		—		79.5		79.5				—		79.5	Contingent consideration obligation	—				—			157.1		157.1		—		157.1

2326

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	As of December 31, 2021
	Fair Value Hierarchy						Total Gross Fair Value		Effect of Counter-party Netting	Net Carrying Value on Balance Sheet
(in millions)	Level 1		Level 2		Level 3
Assets:
Money market funds	$	260.9	$	—	$	—	$	260.9	N/A	$	260.9

Commodity contracts	71.5		—		—		71.5		(71.5)	—
Derivatives included with inventory intermediation agreement obligations	—		19.7		—		19.7		—	19.7

Liabilities:
Commodity contracts	79.7		3.8		—		83.5		(71.5)	12.0
Catalyst obligations	—		58.4		—		58.4		—	58.4
Renewable energy credit and emissions obligations	—		953.9		—		953.9		—	953.9
Contingent consideration obligation	—		—		29.4		29.4		—	29.4

2427

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The valuation methods used to measure financial instruments at fair value are as follows:

•Money market funds categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted market prices and included within Cash and cash equivalents.

•The commodity contracts categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted prices in an active market. The commodity contracts categorized in Level 2 of the fair value hierarchy are measured at fair value using a market approach based upon future commodity prices for similar instruments quoted in active markets.

•The derivatives included with inventory intermediation agreement obligations and the catalyst obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based upon commodity prices for similar instruments quoted in active markets.

•Renewable energy credit and emissions obligations primarily represent our liability for the purchase of (i) biofuel credits (primarily RINs in the U.S.) needed to satisfy our obligation to blend biofuels into the products we produce and (ii) emission credits under the AB 32 and similar programs (collectively, the cap-and-trade systems). To the degree we are unable to blend biofuels (such as ethanol and biodiesel) at percentages required under the biofuel programs, we must purchase biofuel credits to comply with these programs. Under the cap-and-trade systems, we must purchase emission credits to comply with these systems. The liability for environmental credits is in part based on our deficit for such credits as of the balance sheet date, if any, after considering any credits acquired or under contract, and is equal to the product of the credits deficit and the market price of these credits as of the balance sheet date. The environmental credit obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based on quoted prices from an independent pricing service.

•When applicable, commodity contracts categorized in Level 3 of the fair value hierarchy consist of commodity price swap contracts that relate to forecasted purchases of crude oil for which quoted forward market prices are not readily available due to market illiquidity. The forward prices used to value these swaps are derived using broker quotes, prices from other third-party sources and other available market based data.

•The contingent consideration obligations at ~~March 31,~~June 30, 2022 and December 31, 2021 are categorized in Level 3 of the fair value hierarchy and are estimated using discounted cash flow models based on management’s estimate of the future cash flows related to the earn-out periods.

Non-qualified pension plan assets are measured at fair value using a market approach based on published net asset values of mutual funds as a practical expedient. As of ~~March 31,~~June 30, 2022 and December 31, 2021, ~~$19.7~~$19.2 million and $20.7 million, respectively, were included within Deferred charges and other assets, net for these non-qualified pension plan assets.

2528

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The table below summarizes the changes in fair value measurements categorized in Level 3 of the fair value hierarchy, which primarily includes the change in estimated future earnings related to the Martinez Contingent Consideration:


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	(in millions)		2022			2021		(in millions)	2022		2021		2022		2021
Balance at beginning of period	Balance at beginning of period		$	29.4		$	—	Balance at beginning of period	$	79.5	$	29.5	$	29.4	$	—
Additions	Additions		—			—		Additions	—		—		—		—

Settlements	Settlements		—			—		Settlements	—		—		—		—
Unrealized loss included in earnings			50.1			29.5
Unrealized loss (gain) included in earnings								Unrealized loss (gain) included in earnings	77.6		(5.2)		127.7		24.3

Balance at end of period	Balance at end of period		$	79.5		$	29.5	Balance at end of period	$	157.1	$	24.3	$	157.1	$	24.3

There were no transfers between levels during the three and six months ended ~~March 31,~~June 30, 2022 or the three and six months ended ~~March 31,~~June 30, 2021.

Fair value of debt

The table below summarizes the carrying value and fair value of debt as of ~~March 31,~~June 30, 2022 and December 31, 2021.


		March 31, 2022				December 31, 2021					June 30, 2022				December 31, 2021
(in millions)	(in millions)	Carrying value		Fair value		Carrying value		Fair value		(in millions)	Carrying value		Fair value		Carrying value		Fair value
2025 Senior Secured Notes (a)	2025 Senior Secured Notes (a)	$	1,250.0	$	1,292.8	$	1,250.0	$	1,192.7	2025 Senior Secured Notes (a)	$	1,250.0	$	1,307.3	$	1,250.0	$	1,192.7
2028 Senior Notes (a)	2028 Senior Notes (a)	826.5		660.2		826.5		520.9		2028 Senior Notes (a)	801.6		670.0		826.5		520.9
2025 Senior Notes (a)	2025 Senior Notes (a)	669.5		603.4		669.5		475.9		2025 Senior Notes (a)	664.5		621.2		669.5		475.9

Revolving Credit Facility (b)	Revolving Credit Facility (b)	900.0		900.0		900.0		900.0		Revolving Credit Facility (b)	—		—		900.0		900.0

Catalyst financing arrangements (c)	Catalyst financing arrangements (c)	63.3		63.3		58.4		58.4		Catalyst financing arrangements (c)	56.2		56.2		58.4		58.4
		3,709.3		3,519.7		3,704.4		3,147.9			2,772.3		2,654.7		3,704.4		3,147.9
Less - Current debt	Less - Current debt	(29.9)		(29.9)		—		—		Less - Current debt	(1,256.6)		(1,256.6)		—		—
Unamortized premium	Unamortized premium	0.4		n/a		0.5		n/a		Unamortized premium	0.4		n/a		0.5		n/a
Less - Unamortized deferred financing costs	Less - Unamortized deferred financing costs	(29.1)		n/a		(31.6)		n/a		Less - Unamortized deferred financing costs	(56.8)		n/a		(31.6)		n/a
Long-term debt	Long-term debt	$	3,650.7	$	3,489.8	$	3,673.3	$	3,147.9	Long-term debt	$	1,459.3	$	1,398.1	$	3,673.3	$	3,147.9

(a)The estimated fair value, categorized as a Level 2 measurement, was calculated based on the present value of future expected payments utilizing implied current market interest rates based on quoted prices of the outstanding senior notes.

(b)The estimated fair value approximates carrying value, categorized as a Level 2 measurement, as these borrowings bear interest based upon short-term floating market interest rates.

(c)Catalyst financing arrangements are valued using a market approach based upon commodity prices for similar instruments quoted in active markets and are categorized as a Level 2 measurement. The Company has elected the fair value option for accounting for its catalyst repurchase obligations as the Company’s liability is directly impacted by the change in fair value of the underlying catalyst.

2629

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. DERIVATIVES

The Company uses derivative instruments to mitigate certain exposures to commodity price risk. The Company entered into the Third Inventory Intermediation Agreement that contain purchase obligations for certain volumes of crude oil, intermediates and refined products. The purchase obligations related to crude oil, intermediates and refined products under these agreements are derivative instruments that have been designated as fair value hedges in order to hedge the commodity price volatility of certain refinery inventory. The fair value of these purchase obligation derivatives is based on market prices of the underlying crude oil, intermediates and refined products. The level of activity for these derivatives is based on the level of operating inventories.

As of ~~March 31,~~June 30, 2022 and December 31, 2021, there were ~~2,714,315~~2,741,075 and 2,081,783 barrels of crude oil and feedstocks outstanding under these derivative instruments designated as fair value hedges, respectively. As of ~~March 31,~~June 30, 2022, there were ~~1,881,877~~2,070,706 barrels of intermediates and refined products (2,070,550 barrels at December 31, 2021) outstanding under these derivative instruments designated as fair value hedges. These volumes represent the notional value of the contract.

The Company also enters into economic hedges primarily consisting of commodity derivative contracts that are not designated as hedges and are used to manage price volatility in certain crude oil and feedstock inventories as well as crude oil, feedstock, and refined product sales or purchases. The objective in entering into economic hedges is consistent with the objectives discussed above for fair value hedges. As of ~~March 31,~~June 30, 2022, there were ~~41,705,000~~37,209,000 barrels of crude oil and ~~2,225,000~~3,695,000 barrels of refined products (36,246,000 and 5,819,000, respectively, as of December 31, 2021), outstanding under short and long term commodity derivative contracts not designated as hedges representing the notional value of the contracts.

The Company also uses derivative instruments to mitigate the risk associated with the price of credits needed to comply with various governmental and regulatory environmental compliance programs. For such contracts that represent derivatives, the Company elects the normal purchase normal sale exception under ASC 815, Derivatives and Hedging, and therefore does not record them at fair value.

The following tables provide information regarding the fair values of derivative instruments as of ~~March 31,~~June 30, 2022 and December 31, 2021, and the line items in the Condensed Consolidated Balance Sheets in which fair values are reflected.


Description	Balance Sheet Location	Fair Value Asset/(Liability)
		(in millions)
Derivatives designated as hedging instruments:
~~March 31,~~June 30, 2022:

Derivatives included within the inventory intermediation agreement obligations	Accrued expenses	$	~~60.4~~23.1
December 31, 2021:

Derivatives included within the inventory intermediation agreement obligations	Accrued expenses	$	19.7

Derivatives not designated as hedging instruments:
~~March 31,~~June 30, 2022:
Commodity contracts	Accounts receivable	$	~~(51.9)~~(19.2)

December 31, 2021:
Commodity contracts	Accounts receivable	$	(12.0)

2730

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table provides information regarding gains or losses recognized in income on derivative instruments and the line items in the Condensed Consolidated Statements of Operations in which such gains and losses are reflected.


Description	Location of Gain or (Loss) Recognized in Income on Derivatives	Gain or (Loss) Recognized in Income on Derivatives
		(in millions)
Derivatives designated as hedging instruments:






For the three months ended ~~March 31,~~June 30, 2022:

Derivatives included within the inventory intermediation agreement obligations	Cost of products and other	$	~~40.7~~ (37.3)
For the three months ended ~~March 31,~~June 30, 2021:

Derivatives included within the inventory intermediation agreement obligations	Cost of products and other	$	~~(8.0)~~(34.2)
For the six months ended June 30, 2022:

Derivatives included within the inventory intermediation agreement obligations	Cost of products and other	$	3.4
For the six months ended June 30, 2021:

Derivatives included within the inventory intermediation agreement obligations	Cost of products and other	$	(42.2)

Derivatives not designated as hedging instruments:




For the three months ended ~~March 31,~~June 30, 2022:
Commodity contracts	Cost of products and other	$	~~(26.9)~~(25.2)
For the three months ended ~~March 31,~~June 30, 2021:
Commodity contracts	Cost of products and other	$	~~(14.8)~~(19.7)
For the six months ended June 30, 2022:
Commodity contracts	Cost of products and other	$	(52.1)
For the six months ended June 30, 2021:
Commodity contracts	Cost of products and other	$	(34.5)

Hedged items designated in fair value hedges:






For the three months ended ~~March 31,~~June 30, 2022:

Crude oil, intermediate and refined product inventory	Cost of products and other	$	~~(40.7)~~37.3
For the three months ended ~~March 31,~~June 30, 2021:

Crude oil, intermediate and refined product inventory	Cost of products and other	$	~~8.0~~34.2
For the six months ended June 30, 2022:

Crude oil, intermediate and refined product inventory	Cost of products and other	$	(3.4)
For the six months ended June 30, 2021:

Crude oil, intermediate and refined product inventory	Cost of products and other	$	42.2

The Company had no ineffectiveness related to the fair value hedges for the three and six months ended ~~March 31,~~June 30, 2022 or the three and six months ended ~~March~~ June 30, 2021.

31 ~~2021.~~

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13. SUBSEQUENT EVENTS

Extinguishment of Debt

~~In April~~On July 11, 2022, the Company ~~repurchased $29.9 million~~exercised its rights under the indenture governing the 2025 Senior Secured Notes to redeem all of the outstanding ~~6.00% senior unsecured notes due 2028~~2025 Senior Secured Notes at a price of 104.625% of the aggregate principal amount thereof plus accrued and ~~7.25% senior unsecured notes due~~unpaid interest. The aggregate redemption price for all 2025 ~~for cash consideration of approximately $25.8 million. These notes~~Senior Secured Notes approximated $1.3 billion plus accrued and unpaid interest. The 2025 Senior Secured Notes are reflected as Current debt on the Condensed Consolidated Balance Sheets and ~~were repurchased~~the redemption was financed using cash on hand as of June 30, 2022. The difference between the carrying value of the 2025 Senior Secured Notes on the date they were redeemed and the amount for which they were redeemed was $70.4 million and will be recorded as a Loss on extinguishment of debt in the Consolidated Statements of Operations in the third quarter of 2022.

In July 2022, the Company settled one of its precious metal financing arrangements at ~~March 31,~~its Torrance refinery with cash on hand as of June 30, 2022. The related ~~gain on extinguishment~~financing obligation of approximately ~~$3.8~~$6.7 million ~~will be recognized~~is included in ~~the second quarter of 2022~~Current debt in the Condensed Consolidated ~~Statements~~Balance Sheets as of ~~Operations.~~June 30, 2022.

Pending PBFX Merger

On July 27, 2022, PBF Energy and PBF LLC entered into a definitive agreement with PBFX (the “Merger Agreement”) (the Merger Agreement and the transactions contemplated thereby are referred to herein as the “Merger Transaction”) pursuant to which PBF Energy and PBF LLC will acquire all of the publicly held common units in PBFX representing limited partner interests in the publicly-traded master limited partnership not already owned by certain wholly-owned subsidiaries of PBF Energy and its affiliates.

The consideration to the PBFX common unitholders (other than PBF Energy and its affiliates) under the Merger Transaction consists of cash and PBF Energy Class A common stock. The holders of each outstanding PBFX common unit will receive cash consideration of $9.25 and 0.27 shares of PBF Energy Class A common stock for each PBFX common unit. PBF Energy and PBF LLC, as the beneficial owners of 47.7% of PBFX’s outstanding common units, have committed to vote such units to approve the transaction.

The terms of the Merger Transaction were unanimously approved by the conflicts committee (the “Conflicts Committee”) of the Board of Directors (the “PBFX Board”) of PBFX’s general partner and by the PBFX Board based on the unanimous approval and recommendation of the Conflicts Committee, which is comprised entirely of independent directors. Upon closing, PBFX will become an indirect wholly-owned subsidiary of PBF Energy and PBF LLC.

The Merger Transaction is subject to regulatory approval and customary closing conditions and the approval of the PBFX common unit holders (including PBF Energy); it is expected to close in the fourth quarter of 2022, however there can be no assurance that the Merger Transaction will be consummated in the anticipated timeframe, on the contemplated terms or at all.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited financial statements of PBF Holding included in the Annual Report on Form 10-K for the year ended December 31, 2021 and the unaudited financial statements and related notes included in this report. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements.”

Unless the context indicates otherwise, the terms “we,” “us,” and “our” refer to PBF Holding and its consolidated subsidiaries.

Overview

We are one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. We sell our products throughout the Northeast, Midwest, Gulf Coast and West Coast of the United States, as well as in other regions of the United States, Canada and Mexico and are able to ship products to other international destinations. As of ~~March 31,~~June 30, 2022, we own and operate six domestic oil refineries and related assets. Based on the current configuration our refineries have a combined processing capacity, known as throughput, of approximately 1,000,000 barrels per day (“bpd”), and a weighted-average Nelson Complexity Index of 13.2 based on current operating conditions. The complexity and throughput capacity of our refineries are subject to change dependent upon configuration changes we make to respond to market conditions, as well as a result of investments made to improve our facilities and maintain compliance with environmental and governmental regulations. Our six oil refineries are aggregated into one reportable segment.

Our six refineries are located in Delaware City, Delaware, Paulsboro, New Jersey, Toledo, Ohio, Chalmette, Louisiana, Torrance, California and Martinez, California. In 2020, we reconfigured our Delaware City and Paulsboro refineries (the “East Coast Refining Reconfiguration”), temporarily idling certain of our major processing units at the Paulsboro refinery, in order to operate the two refineries as one functional unit that we refer to as the “East Coast Refining System”. Each refinery is briefly described in the table below:

Refinery

Region

Nelson Complexity Index(1)

Throughput Capacity (in bpd)(1)

PADD

Crude Processed (2)

Source (2)

Delaware City

East Coast

13.6

180,000

light sweet through heavy sour

water, rail

Paulsboro

East Coast

10.4(3)

105,000(3)

light sweet through heavy sour

water

Toledo

Mid-Continent

11.0

180,000

light sweet

pipeline, truck, rail

Chalmette

Gulf Coast

13.0

185,000

light sweet through heavy sour

water, pipeline

Torrance

West Coast

13.8

166,000

medium and heavy

pipeline, water, truck

Martinez

West Coast

16.1

157,000

medium and heavy

pipeline and water

2933

________

(1) Reflects operating conditions at each refinery as of the date of this filing. Changes in complexity and throughput capacity reflect the result of current market conditions such as our East Coast Refining Reconfiguration, in addition to investments made to improve our facilities and maintain compliance with environmental and governmental regulations. Configurations at each of our refineries are evaluated and updated accordingly.

(2) Reflects the typical crude and feedstocks and related sources utilized under normal operating conditions and prevailing market environments.

(3) Under normal operating conditions and prevailing market environments, our Nelson Complexity Index and throughput capacity for the Paulsboro refinery would be 13.1 and 180,000, respectively. As a result of the East Coast Refining Reconfiguration, our Nelson Complexity Index and throughput capacity were reduced.

We are a wholly-owned subsidiary of PBF LLC and an indirect subsidiary of PBF Energy. PBF Finance is a wholly-owned subsidiary of PBF Holding. We are the parent company for PBF LLC’s refinery operating subsidiaries.

3034

Business Developments

Recent significant business developments affecting us are discussed below.

Pending PBFX Merger

Market Developments

We continue to adjust our operational plans to the evolving market conditions and continue to monitor and manage operating expenses through reductions in discretionary activities and third-party services. Market conditions currently include high crude oil prices, tight domestic supplies and elevated refining margins as a result of sustained increases in demand, coupled with global supply disruption related to sanctions imposed on Russia for its invasion of Ukraine.

We also remain focused on enhancing the profitability and reliability of our core operations. Our full-year refining capital expenditures are expected to range from $500.0 million to $550.0 million. ~~While our refining capital expenditures in 2022 are projected to increase in comparison to 2021, we~~We continue to focus on capital discipline, with turnaround and other mandatory spend accounting for the majority of total planned refining capital expenses for 2022. ~~Consistent with our prior year approach, we~~We will be responsive in regards to the pace of capital expenditures and scope of turnarounds depending on market conditions.

Renewable Diesel Project

We continue to advance on our project for a renewable fuels production facility co-located at our Chalmette refinery. The project incorporates certain idled assets at the refinery, 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~~second quarter of 2022, we invested approximately ~~$40.0~~$52.0 million in incremental capital to continue to progress and incubate the project with the goal of being in production in the first half of 2023. ~~Concurrent~~Concurrently with our activities to progress the project, we are continuing discussions with potential strategic and financial partners.

Factors Affecting Comparability Between Periods

Our results have been affected by the following events, the understanding of which will aid in assessing the comparability of our period to period financial performance and financial condition.

Market Developments

The impact of the unprecedented global health and economic crisis sparked by the COVID-19 pandemic at the end of the quarter ended March 31, 2020, created a shock in oil demand resulting in an economic challenge to our industry which has not occurred since our formation. This resulted in significant demand reduction for our refined products and atypical volatility in oil commodity prices. The demand for these products started to rebound in 2021 and continued to improve in the three and six months ended ~~March 31,~~June 30, 2022. Additionally, refining margins improved in the first ~~quarter~~half of 2022 as a result of global supply disruption.

Debt and Credit Facilities

Senior Notes

During the three months ended June 30, 2022, we made a number of open market repurchases of our 6.00% senior unsecured notes due 2028 (the “2028 Senior Notes”) and 7.25% senior unsecured notes due 2025 (the “2025 Senior Notes”) that resulted in the extinguishment of $24.9 million in principal of the 2028 Senior Notes and $5.0 million in principal of the 2025 Senior Notes. Total cash consideration paid to repurchase the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, totaled $25.9 million and we recognized a $3.8 million gain on the extinguishment of debt during the three and six months ended June 30, 2022.

Revolving Credit Facility

~~The outstanding borrowings under~~On May 25, 2022, we entered into an amendment of our existing asset-based revolving credit agreement (the “Revolving Credit Agreement”). Among other things, the Revolving Credit Agreement amended and extended PBF Holding’s asset-based revolving credit facility (the “Revolving Credit Facility”) ~~were~~through January 2025 and increased the maximum commitment to $4.3 billion through May 2023 (currently set to adjust to $2.75 billion in May 2023 through January 2025). The amendments also redefine certain components of the Borrowing Base (as defined in the Revolving Credit Agreement) to reflect the existence of the two tranches, tranche A which is comprised of existing lenders who have not elected to extend and whose commitments retain the existing maturity date under the existing revolving credit agreement of May 2, 2023 (the “Tranche A Commitments”) and tranche B, which is comprised of existing and new lenders whose commitments have an extended maturity date of January 31, 2025 (the “Tranche B Commitments”). The Tranche A Commitments total $1.55 billion and the Tranche B Commitments total $2.75 billion. The amendments also include changes to incorporate the adoption of Secured Overnight Financing Rate (“SOFR”) as a replacement of the London Interbank Offered Rate (“LIBOR”), changes to joint lead arrangers, bookrunners, syndication agents and other titles, and other changes related to the foregoing. In addition, an accordion feature allows for additional Tranche B Commitments of up to an additional $500.0 million plus an amount equal to the Tranche A Commitments for existing Tranche A lenders.

During the six months ended June 30, 2022, we made net repayments of $900.0 million on the Revolving Credit Facility, resulting in no outstanding borrowings as of ~~both March 31, 2022 and~~June 30, 2022. There was $900.0 million of outstanding borrowings under the Revolving Credit Facility as of December 31, 2021.

Agreements with PBFX

PBFX is a fee-based, growth-oriented, publicly traded Delaware master limited partnership formed by our indirect parent company, PBF Energy, to own or lease, operate, develop and acquire crude oil, refined petroleum products and natural gas terminals, pipelines, storage facilities and similar logistics assets. PBFX engages in the receiving, handling, storage and transferring of crude oil, refined products, natural gas and intermediates from sources located throughout the United States and Canada for PBF Energy in support of certain of our refineries, as well as for third-party customers.

We have entered into a series of agreements with PBFX, including contribution, commercial and operational agreements. Refer to “Note 6 - Related Party Transactions” of our Notes to Condensed Consolidated Financial Statements for descriptions of these agreements and their impact to our operations. Related party transactions that have an impact on the comparability of our period to period financial performance and financial condition are listed below.

Summary of Transactions with PBFX

A summary of transactions with PBFX is as follows (in millions):


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
Reimbursements under affiliate agreements:	Reimbursements under affiliate agreements:							Reimbursements under affiliate agreements:
Services Agreement	Services Agreement		$	2.2		$	2.2	Services Agreement	$	2.1	$	2.1	$	4.3	$	4.3
Omnibus Agreement	Omnibus Agreement		1.8			1.8		Omnibus Agreement	2.3		1.9		4.1		3.7
Total expenses under affiliate agreements	Total expenses under affiliate agreements		76.0			75.9		Total expenses under affiliate agreements	79.6		75.1		155.6		151.0

3237

Results of Operations

The following tables reflect our financial and operating highlights for the three and six months ended ~~March 31,~~June 30, 2022 and 2021 (amounts in millions):


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
Revenues	Revenues		$	9,128.2		$	4,913.2	Revenues	$	14,064.0	$	6,883.2	$	23,192.2	$	11,796.4
Cost and expenses:	Cost and expenses:							Cost and expenses:
Cost of products and other	Cost of products and other		8,277.5			4,263.0		Cost of products and other	11,455.8		6,171.9		19,733.3		10,434.9
Operating expenses (excluding depreciation and amortization expense as reflected below)	Operating expenses (excluding depreciation and amortization expense as reflected below)		595.6			460.2		Operating expenses (excluding depreciation and amortization expense as reflected below)	613.8		462.3		1,209.4		922.5
Depreciation and amortization expense	Depreciation and amortization expense		108.9			104.7		Depreciation and amortization expense	110.9		102.3		219.8		207.0
Cost of sales	Cost of sales		8,982.0			4,827.9		Cost of sales	12,180.5		6,736.5		21,162.5		11,564.4
General and administrative expenses (excluding depreciation and amortization expense as reflected below)	General and administrative expenses (excluding depreciation and amortization expense as reflected below)		49.3			42.9		General and administrative expenses (excluding depreciation and amortization expense as reflected below)	145.9		47.9		195.2		90.8
Depreciation and amortization expense	Depreciation and amortization expense		1.9			3.4		Depreciation and amortization expense	1.9		3.3		3.8		6.7
Change in fair value of contingent consideration	Change in fair value of contingent consideration		50.1			29.5		Change in fair value of contingent consideration	77.6		(5.2)		127.7		24.3

Loss (gain) on sale of assets	Loss (gain) on sale of assets		0.1			(0.6)		Loss (gain) on sale of assets	0.2		—		0.3		(0.6)
Total cost and expenses	Total cost and expenses		9,083.4			4,903.1		Total cost and expenses	12,406.1		6,782.5		21,489.5		11,685.6
Income from operations	Income from operations		44.8			10.1		Income from operations	1,657.9		100.7		1,702.7		110.8
Other income (expense):	Other income (expense):							Other income (expense):
Interest expense, net	Interest expense, net		(68.2)			(69.6)		Interest expense, net	(75.4)		(69.9)		(143.6)		(139.5)
Change in fair value of catalyst obligations	Change in fair value of catalyst obligations		(4.9)			(10.0)		Change in fair value of catalyst obligations	7.2		5.8		2.3		(4.2)

Gain on extinguishment of debt								Gain on extinguishment of debt	3.8		—		3.8		—
Other non-service components of net periodic benefit cost	Other non-service components of net periodic benefit cost		2.2			2.0		Other non-service components of net periodic benefit cost	2.2		1.9		4.4		3.9
Income (loss) before income taxes	Income (loss) before income taxes		(26.1)			(67.5)		Income (loss) before income taxes	1,595.7		38.5		1,569.6		(29.0)
Income tax benefit	Income tax benefit		(8.1)			(10.6)		Income tax benefit	(1.2)		(4.3)		(9.3)		(14.9)
Net income (loss)	Net income (loss)		(18.0)			(56.9)		Net income (loss)	1,596.9		42.8		1,578.9		(14.1)
Less: net income (loss) attributable to noncontrolling interests	Less: net income (loss) attributable to noncontrolling interests		(1.1)			0.2		Less: net income (loss) attributable to noncontrolling interests	(0.6)		2.2		(1.7)		2.4
Net income (loss) attributable to PBF Holding Company LLC	Net income (loss) attributable to PBF Holding Company LLC		$	(16.9)		$	(57.1)	Net income (loss) attributable to PBF Holding Company LLC	$	1,597.5	$	40.6	$	1,580.6	$	(16.5)
Consolidated gross margin	Consolidated gross margin		$	146.2		$	85.3	Consolidated gross margin	$	1,883.5	$	146.7	$	2,029.7	$	232.0
Gross refining margin (1)	Gross refining margin (1)		$	850.7		$	650.2	Gross refining margin (1)	$	2,608.2	$	711.3	$	3,458.9	$	1,361.5

_____________________

(1) See Non-GAAP Financial Measures.

3338


Operating Highlights	Operating Highlights	Three Months Ended March 31,				Operating Highlights	Three Months Ended June 30,								Six Months Ended June 30,
			2022					2021				2022			2021			2022			2021
Key Operating Information	Key Operating Information										Key Operating Information
Production (bpd in thousands)	Production (bpd in thousands)		844.3					758.2			Production (bpd in thousands)	958.8			894.5			901.6			824.6
Crude oil and feedstocks throughput (bpd in thousands)	Crude oil and feedstocks throughput (bpd in thousands)		832.6					745.5			Crude oil and feedstocks throughput (bpd in thousands)	942.2			874.2			887.7			810.4
Total crude oil and feedstocks throughput (millions of barrels)	Total crude oil and feedstocks throughput (millions of barrels)		74.9					67.1			Total crude oil and feedstocks throughput (millions of barrels)	85.8			79.6			160.7			146.7
Consolidated gross margin per barrel of throughput	Consolidated gross margin per barrel of throughput		$	1.96				$	1.28		Consolidated gross margin per barrel of throughput	$	21.96		$	1.84		$	12.64		$	1.59
Gross refining margin, excluding special items, per barrel of throughput (1)	Gross refining margin, excluding special items, per barrel of throughput (1)		$	11.36				$	3.65		Gross refining margin, excluding special items, per barrel of throughput (1)	$	30.41		$	5.62		$	21.54		$	4.72
Refinery operating expense, per barrel of throughput	Refinery operating expense, per barrel of throughput		$	7.95				$	6.86		Refinery operating expense, per barrel of throughput	$	7.16		$	5.81		$	7.53		$	6.29

Crude and feedstocks (% of total throughput) (2)	Crude and feedstocks (% of total throughput) (2)										Crude and feedstocks (% of total throughput) (2)
Heavy	Heavy		34		%			36		%	Heavy	31		%	36		%	33		%	36		%
Medium	Medium		32		%			31		%	Medium	34		%	25		%	33		%	28		%
Light	Light		18		%			18		%	Light	20		%	23		%	19		%	21		%
Other feedstocks and blends	Other feedstocks and blends		16		%			15		%	Other feedstocks and blends	15		%	16		%	15		%	15		%
Total throughput	Total throughput		100		%			100		%	Total throughput	100		%	100		%	100		%	100		%

Yield (% of total throughput)	Yield (% of total throughput)										Yield (% of total throughput)
Gasoline and gasoline blendstocks	Gasoline and gasoline blendstocks		48		%			54		%	Gasoline and gasoline blendstocks	47		%	54		%	48		%	54		%
Distillates and distillate blendstocks	Distillates and distillate blendstocks		34		%			30		%	Distillates and distillate blendstocks	36		%	29		%	35		%	30		%
Lubes	Lubes		1		%			1		%	Lubes	1		%	1		%	1		%	1		%
Chemicals	Chemicals		2		%			2		%	Chemicals	1		%	2		%	2		%	2		%
Other	Other		16		%			15		%	Other	17		%	16		%	16		%	15		%
Total yield	Total yield		101		%			102		%	Total yield	102		%	102		%	102		%	102		%

_____________________

(1) See Non-GAAP Financial Measures.

(2) 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.

3439

The table below summarizes certain market indicators relating to our operating results as reported by Platts.


		Three Months Ended March 31,				Three Months Ended June 30,						Six Months Ended June 30,
				2022			2021			2022		2021		2022		2021
			(dollars per barrel, except as noted)							(dollars per barrel, except as noted)
Dated Brent crude oil	Dated Brent crude oil			$	101.75		$	61.16	Dated Brent crude oil	$	113.93	$	68.87	$	107.84	$	65.08
West Texas Intermediate (WTI) crude oil	West Texas Intermediate (WTI) crude oil			$	95.22		$	58.13	West Texas Intermediate (WTI) crude oil	$	108.77	$	66.19	$	101.99	$	62.22
Light Louisiana Sweet (LLS) crude oil	Light Louisiana Sweet (LLS) crude oil			$	97.50		$	60.26	Light Louisiana Sweet (LLS) crude oil	$	110.33	$	68.05	$	103.91	$	64.22
Alaska North Slope (ANS) crude oil	Alaska North Slope (ANS) crude oil			$	96.13		$	61.07	Alaska North Slope (ANS) crude oil	$	112.17	$	68.58	$	104.15	$	64.89
Crack Spreads	Crack Spreads								Crack Spreads
Dated Brent (NYH) 2-1-1	Dated Brent (NYH) 2-1-1			$	21.69		$	12.06	Dated Brent (NYH) 2-1-1	$	55.26	$	17.40	$	38.47	$	14.77
WTI (Chicago) 4-3-1	WTI (Chicago) 4-3-1			$	17.94		$	11.56	WTI (Chicago) 4-3-1	$	44.53	$	18.84	$	31.24	$	15.26
LLS (Gulf Coast) 2-1-1	LLS (Gulf Coast) 2-1-1			$	24.14		$	12.05	LLS (Gulf Coast) 2-1-1	$	50.39	$	15.87	$	37.27	$	13.99
ANS (West Coast-LA) 4-3-1	ANS (West Coast-LA) 4-3-1			$	32.84		$	15.75	ANS (West Coast-LA) 4-3-1	$	53.56	$	21.28	$	43.20	$	18.56
ANS (West Coast-SF) 3-2-1	ANS (West Coast-SF) 3-2-1			$	29.39		$	12.92	ANS (West Coast-SF) 3-2-1	$	56.14	$	21.21	$	42.76	$	17.13
Crude Oil Differentials	Crude Oil Differentials								Crude Oil Differentials
Dated Brent (foreign) less WTI	Dated Brent (foreign) less WTI			$	6.54		$	3.03	Dated Brent (foreign) less WTI	$	5.16	$	2.68	$	5.85	$	2.86
Dated Brent less Maya (heavy, sour)	Dated Brent less Maya (heavy, sour)			$	12.24		$	4.53	Dated Brent less Maya (heavy, sour)	$	9.99	$	4.72	$	11.11	$	5.25
Dated Brent less WTS (sour)	Dated Brent less WTS (sour)			$	6.74		$	2.26	Dated Brent less WTS (sour)	$	5.64	$	2.41	$	6.19	$	2.34
Dated Brent less ASCI (sour)	Dated Brent less ASCI (sour)			$	8.63		$	2.77	Dated Brent less ASCI (sour)	$	8.75	$	3.13	$	8.69	$	2.95
WTI less WCS (heavy, sour)	WTI less WCS (heavy, sour)			$	15.31		$	12.01	WTI less WCS (heavy, sour)	$	18.52	$	13.09	$	16.96	$	12.61
WTI less Bakken (light, sweet)	WTI less Bakken (light, sweet)			$	(3.49)		$	0.50	WTI less Bakken (light, sweet)	$	(3.97)	$	0.23	$	(3.73)	$	0.35
WTI less Syncrude (light, sweet)	WTI less Syncrude (light, sweet)			$	0.18		$	0.97	WTI less Syncrude (light, sweet)	$	(4.38)	$	1.24	$	(2.03)	$	1.17
WTI less LLS (light, sweet)	WTI less LLS (light, sweet)			$	(2.28)		$	(2.13)	WTI less LLS (light, sweet)	$	(1.56)	$	(1.86)	$	(1.92)	$	(2.00)
WTI less ANS (light, sweet)	WTI less ANS (light, sweet)			$	(0.92)		$	(2.94)	WTI less ANS (light, sweet)	$	(3.40)	$	(2.39)	$	(2.16)	$	(2.67)
Natural gas (dollars per MMBTU)	Natural gas (dollars per MMBTU)			$	4.59		$	2.72	Natural gas (dollars per MMBTU)	$	7.50	$	2.98	$	6.04	$	2.85

Three Months Ended~~March 31,~~ June 30, 2022 Compared to the Three Months Ended ~~March 31,~~June 30, 2021

Overview— Net ~~loss~~income was ~~$18.0~~$1,596.9 million for the three months ended ~~March 31,~~June 30, 2022 compared to a net ~~loss~~income of ~~$56.9~~$42.8 million for the three months ended ~~March 31,~~June 30, 2021.

Our results for the three months ended ~~March 31,~~June 30, 2022 were negatively impacted by ~~our~~ special ~~item related to~~items consisting of a change in fair value of the contingent consideration ~~of $50.1 million related to~~associated with the acquisition of the Martinez refinery and ~~logistics~~logistic assets (the “Martinez ~~Acquisition”~~Contingent Consideration”). of $77.6 million, partially offset by a gain on the extinguishment of debt associated with the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes of $3.8 million. Our results for the three months ended ~~March 31,~~June 30, 2021 were positively impacted by special items consisting of a non-cash lower of cost or market (“LCM”) inventory adjustment ~~special item~~ of approximately ~~$405.6~~$264.0 million ~~offset by the~~and a change in the fair value of ~~contingent consideration of $29.5 million related to~~ the Martinez ~~Acquisition.~~

Contingent Consideration of $5.2 million.

Excluding the impact of these special items, when comparing our results to the three months ended ~~March 31,~~June 30, 2021, we experienced an increase in the demand for our refined products, evidenced by higher throughput volumes and barrels sold at ~~all~~the majority of our refineries, as well as overall stronger ~~refining~~ margins due to favorable movements in crack spreads and crude oil differentials. These improving metrics have positively impacted our revenues, cost of products sold and operating income. During the three months ended March 31, 2021, despite signs of demand recovery and improving refining margins in the Mid-Continent, our results continued to be negatively impacted by the ongoing COVID-19 pandemic. In addition, in the first quarter of 2021, we experienced unfavorable movements in certain crude oil differentials and overall lower throughput volumes and barrels sold across our refineries.

Revenues— Revenues totaled ~~$9.1~~$14.1 billion for the three months ended ~~March 31,~~June 30, 2022 compared to ~~$4.9~~$6.9 billion for the three months ended ~~March 31,~~June 30, 2021, an increase of approximately ~~$4.2~~$7.2 billion, or ~~85.7%~~104.3%. Revenues per barrel were ~~$107.42~~$146.12 and ~~$67.31~~$78.29 for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively, an increase of ~~59.6%~~86.6% directly related to higher hydrocarbon commodity prices. For the three months ended ~~March 31,~~June 30, 2022, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~263,100~~292,100 bpd, ~~136,700~~161,700 bpd, ~~163,100~~199,500 bpd and ~~269,700~~288,900 bpd, respectively. For the three months ended ~~March 31,~~June 30, 2021, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~242,800~~250,000 bpd, ~~117,200~~150,400 bpd, ~~153,800~~174,600 bpd and ~~231,700~~299,200 bpd, respectively. For the three months ended ~~March 31,~~June 30, 2022, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~318,700~~339,500 bpd, ~~139,800~~167,500 bpd, ~~175,700~~213,900 bpd and ~~310,000~~336,800 bpd, respectively. For the three months ended ~~March 31,~~June 30, 2021, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately ~~270,800~~286,700 bpd, ~~129,800~~149,300 bpd, ~~154,000~~191,300 bpd and ~~256,400~~338,800 bpd, respectively.

The throughput rates at ~~all of~~ our refineries were overall higher in the three months ended ~~March 31,~~June 30, 2022 compared to the same period in ~~2021.~~2021, despite turnaround activity at the Torrance refinery during the three months ended June 30, 2022. We plan to continue operating our refineries based on demand and current market conditions. Total refined product barrels sold were higher than throughput rates, reflecting sales from inventory as well as sales and purchases of refined products outside our refineries.

Consolidated Gross Margin— Consolidated gross margin totaled ~~$146.2~~$1,883.5 million for the three months ended ~~March 31,~~June 30, 2022 compared to ~~$85.3~~$146.7 million for the three months ended ~~March 31,~~June 30, 2021, an increase of approximately ~~$60.9~~$1,736.8 million. Gross refining margin (as described below in Non-GAAP Financial Measures) totaled ~~$850.7~~$2,608.2 million, or ~~$11.36~~$30.41 per barrel of throughput for the three months ended ~~March 31,~~June 30, 2022 compared to ~~$650.2~~$711.3 million, or ~~$9.70~~$8.94 per barrel of throughput for the three months ended ~~March 31,~~June 30, 2021, an increase of approximately ~~$200.5~~$1,896.9 million. Gross refining margin excluding special items totaled ~~$850.7~~$2,608.2 million or ~~$11.36~~$30.41 per barrel of throughput for the three months ended ~~March 31,~~June 30, 2022 compared to ~~$244.6~~$447.3 million or ~~$3.65~~$5.62 per barrel of throughput for the three months ended ~~March 31,~~June 30, 2021, an increase of ~~$606.1~~$2,160.9 million.

During the three months ended ~~March 31,~~June 30, 2022, our ~~gross~~ margin calculations were not impacted by special items. Consolidated gross margin and gross refining margin increased due to favorable movements in certain crack spreads and crude oil differentials and higher throughput volumes and barrels sold at all of our refineries. For the three months ended ~~March 31,~~June 30, 2021, ~~the~~ special ~~item~~items impacting our ~~gross~~ margin calculations ~~related to~~included a non-cash LCM ~~inventory~~ benefit of approximately ~~$405.6~~$264.0 million on a net basis, resulting from anthe increase in crude oil and refined product prices ~~from~~at the ~~year ended 2020~~end of the second quarter of 2021 in comparison to the prices at the end of the first quarter of 2021.

Additionally, our results continue to be impacted by significant costs to comply with the Renewable Fuel Standard. Total Renewable Fuel Standard compliance costs were ~~$194.4~~$432.7 million for the three months ended ~~March 31,~~June 30, 2022 in comparison to ~~$283.1~~$297.6 million for ~~the~~ three months ended ~~March 31,~~months ended June 30, 2021.

Average industry margins were ~~mostly~~ favorable during the three months ended ~~March 31,~~June 30, 2022 in comparison to the same period in 2021, primarily due to varying timing and extent of the impacts of the COVID-19 pandemic on regional demand and commodity prices, in addition to increased refining margins as a result of global supply disruptions.

Favorable movements in ~~these~~ benchmark crude differentials typically result in lower crude costs and positively impact our earnings while reductions in these benchmark crude differentials typically result in higher crude costs and negatively impact our earnings.

On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately ~~$21.69~~$55.26 per barrel, or ~~79.9%~~217.6% higher, in the three months ended ~~March 31,~~June 30, 2022, as compared to ~~$12.06~~$17.40 per barrel in the same period in 2021. Our margins were positively impacted from our refinery specific slate on the East Coast by ~~strengthened~~strengthening Dated Brent/Maya ~~differentials,~~differential, which increased by ~~$7.71~~$5.27 per barrel, slightly offset by weakened WTI/Bakken differentials, which decreased by ~~$3.99~~$4.20 per barrel, in comparison to the same period in 2021. The WTI/WCS differential increased to ~~$15.31~~$18.52 per barrel in the three months ended ~~March 31,~~June 30, 2022 compared to ~~$12.01~~$13.09 in the same period in 2021, which favorably impacted our cost of heavy Canadian crude.

Across the Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was ~~$17.94~~$44.53 per barrel, or ~~55.2%~~136.4% higher, in the three months ended ~~March 31,~~June 30, 2022 as compared to ~~$11.56~~$18.84 per barrel in the same period in 2021. Our margins were negatively impacted from our refinery specific slate in the Mid-Continent by a decreasing WTI/Bakken differential, ~~and~~which averaged a premium of $3.97 per barrel in the three months ended June 30, 2022, as compared to a discount of $0.23 per barrel in the same period in 2021. Additionally, the WTI/Syncrude differential ~~which decreased by $3.99~~averaged a premium $4.38 per barrel ~~and $0.79~~during the three months ended June 30, 2022 as compared to a discount of $1.24 per barrel ~~respectively.~~in the same period of 2021.

On the Gulf Coast, the LLS (Gulf Coast) 2-1-1 industry crack spread was ~~$24.14~~$50.39 per barrel, or ~~100.3%~~217.5% higher, in the three months ended ~~March 31,~~June 30, 2022 as compared to ~~$12.05~~$15.87 per barrel in the same period in 2021. Margins on the Gulf Coast were ~~negatively~~positively impacted from our refinery specific slate by a ~~weakening~~strengthening WTI/LLS differential, which averaged a premium of ~~$2.28~~$1.56 per barrel during the three months ended ~~March 31,~~June 30, 2022 as compared to a premium of ~~$2.13~~$1.86 per barrel in the same period of 2021.

On the West Coast the ANS (West Coast) 4-3-1 industry crack spread was ~~$32.84~~$53.56 per barrel, or ~~108.5%~~151.7% higher, in the three months ended ~~March 31,~~June 30, 2022 as compared to ~~$15.75~~$21.28 per barrel in the same period in 2021. Additionally, the ANS (West Coast) 3-2-1 industry crack spread was ~~$29.39~~$56.14 per barrel, or ~~127.5%~~164.7% higher, in the three months ended ~~March 31,~~June 30, 2022 as compared to ~~$12.92~~$21.21 per barrel in the same period in 2021. Our margins on the West Coast were ~~positively~~negatively impacted from our refinery specific slate by ~~a strengthening~~weakened WTI/ANS differential, which averaged a premium of ~~$0.92~~$3.40 per barrel during the three months ended ~~March 31,~~June 30, 2022 as compared to a premium of ~~$2.94~~$2.39 per barrel in the same period of 2021.

Operating Expenses— Operating expenses totaled ~~$595.6~~$613.8 million, or ~~$7.95~~$7.16 per barrel of throughput, for the three months ended ~~March 31,~~June 30, 2022 compared to ~~$460.2~~$462.3 million, or ~~$6.86~~$5.81 per barrel of throughput, for the three months ended ~~March 31,~~June 30, 2021, an increase of ~~approximately $135.4~~$151.5 million, or ~~29.4%~~32.8%. Increase in operating expenses was mainly attributable to increases in natural gas volumes and price across our refineries when compared to the same period in 2021. Additionally, we experienced higher outside services, maintenance and operational costs due to increased production when compared to the same period in 2021.

General and Administrative Expenses— General and administrative expenses totaled ~~$49.3~~$145.9 million for the three months ended ~~March 31,~~June 30, 2022 compared to ~~$42.9~~$47.9 million for the three months ended ~~March 31,~~June 30, 2021, an increase of approximately ~~$6.4~~$98.0 million or ~~14.9%~~204.6%. ~~This~~The increase in general and administrative expenses for the three months ended June 30, 2022 in comparison to the three months ended June 30, 2021 is primarily related to ~~increased salaries, wages~~higher employee-related expenses, including incentive compensation. Our general and ~~benefits~~administrative expenses are comprised of personnel, facilities and other infrastructure costs necessary to support our refineries.

Loss on Sale of Assets— There was a loss on the sale of assets of $0.2 million for the three months ended June 30, 2022, related to the sale of non-operating refinery assets. There was no gain or loss on sale of assets for the three months ended June 30, 2021.

Depreciation and Amortization Expense— Depreciation and amortization expense totaled $112.8 million for the three months ended June 30, 2022 (including $110.9 million recorded within Cost of sales) compared to $105.6 million for the three months ended June 30, 2021 (including $102.3 million recorded within Cost of sales), an increase of $7.2 million. The increase was a result of a general increase to our fixed ~~expenses.~~asset base due to capital projects and turnarounds completed since the second quarter of 2021.

Change in Fair Value of Contingent Consideration— Change in fair value of contingent consideration represented a loss of $77.6 million and a gain of $5.2 million for the three months ended June 30, 2022 and June 30, 2021, respectively. These losses and gains were primarily related to the Martinez Contingent Consideration.

Change in Fair Value of Catalyst Obligations— Change in fair value of catalyst obligations represented a gain of $7.2 million for the three months ended June 30, 2022 compared to a gain of $5.8 million for the three months ended June 30, 2021. These gains relate to the change in value of the precious metals underlying the sale and leaseback of our refineries’ precious metal catalysts, which we are obligated to repurchase at fair market value upon lease termination.

Gain on Extinguishment of Debt— Gain on the extinguishment of debt totaled $3.8 million in the three months ended June 30, 2022, and relates to the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes. There were no such gains or losses recorded in the same period of 2021.

Interest Expense, net— Interest expense totaled $75.4 million for the three months ended June 30, 2022 compared to $69.9 million for the three months ended June 30, 2021, an increase of approximately $5.5 million. Interest expense includes interest on long-term debt, costs related to the sale and leaseback of our precious metal catalysts, financing costs associated with the Inventory Intermediation Agreement with J. Aron, letter of credit fees associated with the purchase of certain crude oils and the amortization of deferred financing costs.

Income Tax Expense— As PBF Holding is a limited liability company treated as a “flow-through” entity for income tax purposes, our Condensed Consolidated Financial Statements generally do not include a benefit or expense for income taxes for the three months ended June 30, 2022 and June 30, 2021, respectively, apart from the income tax attributable to two subsidiaries acquired in connection with the Chalmette refinery in the fourth quarter of 2015 and PBF Energy Limited (“PBF Ltd.”). These subsidiaries are treated as C-Corporations for income tax purposes. An income tax benefit of $1.2 million was recorded for the three months ended June 30, 2022 in comparison to an income tax benefit of $4.3 million recorded for the three months ended June 30, 2021, primarily attributable to the results of PBF Ltd.

Six Months EndedJune 30, 2022 Compared to the Six Months Ended June 30, 2021

Overview— Net income was $1,578.9 million for the six months ended June 30, 2022 compared to net loss of $14.1 million for the six months ended June 30, 2021.

Our results for the six months ended June 30, 2022 were negatively impacted by special items consisting of a change in fair value of the Martinez Contingent Consideration of $127.7 million, partially offset by a gain on the extinguishment of debt associated with the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes of $3.8 million. Our results for the six months ended June 30, 2021 were positively impacted by a non-cash LCM inventory adjustment special item of approximately $669.6 million, offset by the change in the fair value of the Martinez Contingent Consideration of $24.3 million.

Excluding the impact of these special items, when comparing our results to the six months ended June 30, 2021, we experienced an increase in the demand for our refined products, evidenced by higher throughput volumes and barrels sold at all of our refineries, as well as overall stronger refining margins due to favorable movements in crack spreads and crude oil differentials. These improving metrics have positively impacted our revenues, cost of products sold and operating income.

Revenues— Revenues totaled $23.2 billion for the six months ended June 30, 2022 compared to $11.8 billion for the six months ended June 30, 2021, an increase of approximately $11.4 billion, or 96.6%. Revenues per barrel were $127.97 and $73.31 for the six months ended June 30, 2022 and 2021, respectively, an increase of 74.6% directly related to higher hydrocarbon commodity prices. For the six months ended June 30, 2022, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately 277,700 bpd, 149,300 bpd, 181,400 bpd and 279,300 bpd, respectively. For the six months ended June 30, 2021, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately 246,400 bpd, 133,900 bpd, 164,400 bpd and 265,700 bpd, respectively. For the six months ended June 30, 2022, total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately 329,200 bpd, 153,700 bpd, 194,900 bpd and 323,500 bpd, respectively. For the six months ended June 30, 2021, total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately 278,800 bpd, 139,700 bpd, 172,700 bpd and 297,800 bpd, respectively.

Overall the throughput rates were higher in the six months ended June 30, 2022 compared to the same period in 2021, despite turnaround activity at several refineries during the six months ended June 30, 2022. We plan to continue operating our refineries based on demand and current market conditions. Total refined product barrels sold were higher than throughput rates, reflecting sales from inventory as well as sales and purchases of refined products outside our refineries.

Consolidated Gross Margin— Consolidated gross margin totaled $2,029.7 million for the six months ended June 30, 2022, compared to $232.0 million for the six months ended June 30, 2021, an increase of approximately $1,797.7 million. Gross refining margin (as described below in Non-GAAP Financial Measures) totaled $3,458.9 million, or $21.54 per barrel of throughput for the six months ended June 30, 2022 compared to $1,361.5 million, or $9.29 per barrel of throughput for the six months ended June 30, 2021, an increase of approximately $2,097.4 million. Gross refining margin excluding special items totaled $3,458.9 million or $21.54 per barrel of throughput for the six months ended June 30, 2022 compared to $691.9 million or $4.72 per barrel of throughput for the six months ended June 30, 2021, an increase of $2,767.0 million.

During the six months ended June 30, 2022, our margin calculations were not impacted by special items. Consolidated gross margin and gross refining margin increased due to favorable movements in certain crack spreads and crude oil differentials and higher throughput volumes and barrels sold at all of our refineries. For the six months ended June 30, 2021, special items impacting our margin calculations included a non-cash LCM inventory benefit of approximately $669.6 million on a net basis, resulting from an increase in crude oil and refined product prices from the year ended 2020 to the end of the second quarter of 2021.

Additionally, our results continue to be impacted by significant costs to comply with the Renewable Fuel Standard. Total Renewable Fuel Standard compliance costs were $627.1 million for the six months ended June 30, 2022 in comparison to $580.7 million for the six months ended June 30, 2021.

Average industry margins were favorable during the six months ended June 30, 2022 in comparison to the same period in 2021, primarily due to varying timing and extent of the impacts of the COVID-19 pandemic on regional demand and commodity prices, in addition to increased refining margins as a result of global supply disruptions.

Favorable movements in these benchmark crude differentials typically result in lower crude costs and positively impact our earnings while reductions in these benchmark crude differentials typically result in higher crude costs and negatively impact our earnings.

On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately $38.47 per barrel, or 160.5% higher, in the six months ended June 30, 2022, as compared to $14.77 per barrel in the same period in 2021. Our margins were impacted from our refinery specific slate on the East Coast by strengthened Dated Brent/Maya differentials, which increased by $5.86 per barrel, slightly offset by weakened WTI/Bakken differentials, which decreased by $4.08 per barrel, in comparison to the same period in 2021. The WTI/WCS differential increased to $16.96 per barrel in the six months ended June 30, 2022 compared to $12.61 in the same period in 2021, which favorably impacted our cost of heavy Canadian crude.

Across the Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was $31.24 per barrel, or 104.7% higher, in the six months ended June 30, 2022 as compared to $15.26 per barrel in the same period in 2021. Our margins were negatively impacted from our refinery specific slate in the Mid-Continent by a decreasing WTI/Bakken differential and WTI/Syncrude differential, which decreased by $4.08 per barrel and $3.20 per barrel, respectively.

On the Gulf Coast, the LLS (Gulf Coast) 2-1-1 industry crack spread was $37.27 per barrel, or 166.4% higher, in the six months ended June 30, 2022 as compared to $13.99 per barrel in the same period in 2021. Margins on the Gulf Coast were positively impacted from our refinery specific slate by a strengthened WTI/LLS differential, which averaged a premium of $1.92 per barrel during the six months ended June 30, 2022 as compared to a premium of $2.00 per barrel in the same period of 2021.

On the West Coast, the ANS (West Coast) 4-3-1 industry crack spread was $43.20 per barrel, or 132.8% higher, in the six months ended June 30, 2022 as compared to $18.56 per barrel in the same period in 2021. Additionally (West Coast) 3-2-1 industry crack spread was $42.76 per barrel, or 149.6% higher, in the six months ended June 30, 2022 as compared to $17.13 per barrel in the same period in 2021. Our margins on the West Coast were positively impacted from our refinery specific slate by a strengthening WTI/ANS differential, which averaged a premium of $2.16 per barrel during the six months ended June 30, 2022 as compared to a premium of $2.67 per barrel in the same period of 2021.

Operating Expenses— Operating expenses totaled $1,209.4 million, or $7.53 per barrel of throughput, for the six months ended June 30, 2022 compared to $922.5 million, or $6.29 per barrel of throughput, for the six months ended June 30, 2021, an increase of approximately $286.9 million, or 31.1%. The increase in operating expenses was mainly attributable to increases in natural gas volumes and price across our refineries when compared to the same period in 2021. Additionally, we experienced higher outside services, maintenance and operational costs due to increased production when compared to the same period in 2021.

General and Administrative Expenses— General and administrative expenses totaled $195.2 million for the six months ended June 30, 2022 compared to $90.8 million for the six months ended June 30, 2021, an increase of approximately $104.4 million or 115.0%. The increase in general and administrative expenses for the six months ended June 30, 2022 in comparison to the six months ended June 30, 2021 primarily related to higher employee-related expenses, including incentive compensation. Our general and administrative expenses are comprised of personnel, facilities and other infrastructure costs necessary to support our refineries and related logistics assets.

Loss (Gain) on Sale of Assets— There was a loss of ~~$0.1~~$0.3 million and a gain of $0.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021, respectively, related primarily to the sale of non-operating refinery assets.

Depreciation and Amortization Expense— Depreciation and amortization expense totaled ~~$110.8~~$223.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 (including ~~$108.9~~$219.8 million recorded within Cost of sales) compared to ~~$108.1~~$213.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021 (including ~~$104.7~~$207.0 million recorded within Cost of sales), an increase of approximately ~~$2.7~~$9.9 million. The slight increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed since the ~~first~~second quarter of 2021.

Change in Fair Value of Contingent Consideration— Change in fair value of contingent consideration represented a loss of ~~$50.1~~$127.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 in comparison to a loss of ~~$29.5~~$24.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021. These losses were related to the changes in estimated fair value of the ~~contingent consideration associated with the~~ Martinez ~~Acquisition (the “Martinez~~ Contingent ~~Consideration”).~~Consideration.

Change in Fair Value of Catalyst Obligations— Change in fair value of catalyst obligations represented a ~~loss~~gain of ~~$4.9~~$2.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to a loss of ~~$10.0~~$4.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021. These gains and losses relate to the change in value of the precious metals underlying the sale and leaseback of our refineries’ precious metal catalysts, which we are obligated to repurchase at fair market value upon lease termination.

Gain on Extinguishment of Debt— Gain on the extinguishment of debt of $3.8 million incurred in the six months ended June 30, 2022 relates to the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes. There were no such gain or loss in the same period of 2021.

Interest Expense, net— Interest expense totaled ~~$68.2~~$143.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to ~~$69.6~~$139.5 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, ~~a decrease~~an increase of approximately ~~$1.4~~$4.1 million. This net decrease in interest expense is mainly attributable to lower outstanding debt due to the repurchase of a portion of the 6.00% senior unsecured notes due 2028 (the “2028 Senior Notes”) and 7.25% senior unsecured notes due 2025 (the “2025 Senior Notes”), in the second half of 2021. Interest expense includes interest on long-term debt, costs related to the sale and leaseback of our precious metal catalysts, financing costs associated with the Third Inventory Intermediation Agreement with J. Aron, letter of credit fees associated with the purchase of certain crude oils and the amortization of deferred financing costs.

Income Tax Expense— As PBF Holding is a limited liability company treated as a “flow-through” entity for income tax purposes, our Condensed Consolidated Financial Statements generally do not include a benefit or expense for income taxes for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021, respectively, apart from the income tax attributable to two subsidiaries acquired in connection with the acquisition of the Chalmette refinery in the fourth quarter of 2015 and PBF ~~Energy Limited (“PBF Ltd”).~~Ltd. These subsidiaries are treated as C-Corporations for income tax purposes. An income tax benefit of ~~$8.1~~$9.3 million was recorded for the ~~three~~six months ended ~~March 31,~~June 30, 2022 in comparison to an income tax benefit of ~~$10.6~~$14.9 million recorded for the ~~three~~six months ended ~~March 31,~~June 30, 2021, primarily attributable to the results of PBF Ltd.

3846

Non-GAAP Financial Measures

Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with GAAP (“Non-GAAP”). These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and our calculations thereof may not be comparable to similarly entitled measures reported by other companies.

Special Items

The Non-GAAP measures presented include EBITDA excluding special items and gross refining margin excluding special items. Special items for the periods presented relate to LCM inventory adjustments, ~~and~~ changes in fair value of contingent ~~consideration.~~consideration, and gain on extinguishment of debt. See “Notes to Non-GAAP Financial Measures” below for more details on all special items disclosed. 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 helpful 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.

Gross Refining Margin and Gross Refining Margin Excluding Special Items

Gross refining margin is defined as consolidated gross margin excluding refinery depreciation and operating expenses. We believe both gross refining margin and gross refining margin excluding special items are important measures of operating performance and provide useful information to investors because they are helpful metric comparisons to the industry refining margin benchmarks, as the refining margin benchmarks do not include a charge for refinery operating expenses and depreciation. In order to assess our operating performance, we compare our gross refining margin (revenues less cost of products and other) to industry refining margin benchmarks and crude oil prices as defined in the table below.

Neither gross refining margin nor gross refining margin excluding special items should be considered an alternative to consolidated gross margin, income from operations, net cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Gross refining margin and gross refining margin excluding special items presented by other companies may not be comparable to our presentation, since each company may define these terms differently.

3947

The following table presents our GAAP calculation of gross margin and a reconciliation of gross refining margin to the most directly comparable GAAP financial measure, consolidated gross margin, on a historical basis, as applicable, for each of the periods indicated (in millions, except per barrel amounts):


				Three Months Ended June 30,
							2022						2021
													$		per barrel of throughput		$		per barrel of throughput
Calculation of consolidated gross margin:												Calculation of consolidated gross margin:
Revenues												Revenues	$	14,064.0	$	163.99	$	6,883.2	$	86.52
Less: Cost of sales												Less: Cost of sales	12,180.5		142.03		6,736.5		84.68
Consolidated gross margin												Consolidated gross margin	$	1,883.5	$	21.96	$	146.7	$	1.84
Reconciliation of consolidated gross margin to gross refining margin and gross refining margin excluding special items:												Reconciliation of consolidated gross margin to gross refining margin and gross refining margin excluding special items:
Consolidated gross margin												Consolidated gross margin	$	1,883.5	$	21.96	$	146.7	$	1.84
Add: Refinery operating expense												Add: Refinery operating expense	613.8		7.16		462.3		5.81
Add: Refinery depreciation expense												Add: Refinery depreciation expense	110.9		1.29		102.3		1.29
Gross refining margin												Gross refining margin	$	2,608.2	$	30.41	$	711.3	$	8.94
Special items:(1)												Special items:(1)
Add: Non-cash LCM inventory adjustment												Add: Non-cash LCM inventory adjustment	—		—		(264.0)		(3.32)

Gross refining margin excluding special items												Gross refining margin excluding special items	$	2,608.2	$	30.41	$	447.3	$	5.62

		Three Months Ended March 31,											Six Months Ended June 30,
		2022						2021					2022				2021
		$			per barrel of throughput			$		per barrel of throughput			$		per barrel of throughput		$		per barrel of throughput
Calculation of consolidated gross margin:	Calculation of consolidated gross margin:											Calculation of consolidated gross margin:
Revenues	Revenues	$	9,128.2		$	121.82		$	4,913.2	$	73.22	Revenues	$	23,192.2	$	144.35	$	11,796.4	$	80.44
Less: Cost of sales	Less: Cost of sales	8,982.0			119.86			4,827.9		71.94		Less: Cost of sales	21,162.5		131.71		11,564.4		78.85
Consolidated gross margin	Consolidated gross margin	$	146.2		$	1.96		$	85.3	$	1.28	Consolidated gross margin	$	2,029.7	$	12.64	$	232.0	$	1.59
Reconciliation of consolidated gross margin to gross refining margin and gross refining margin excluding special items:	Reconciliation of consolidated gross margin to gross refining margin and gross refining margin excluding special items:											Reconciliation of consolidated gross margin to gross refining margin and gross refining margin excluding special items:
Consolidated gross margin	Consolidated gross margin	$	146.2		$	1.96		$	85.3	$	1.28	Consolidated gross margin	$	2,029.7	$	12.64	$	232.0	$	1.59
Add: Refinery operating expense	Add: Refinery operating expense	595.6			7.95			460.2		6.86		Add: Refinery operating expense	1,209.4		7.53		922.5		6.29
Add: Refinery depreciation expense	Add: Refinery depreciation expense	108.9			1.45			104.7		1.56		Add: Refinery depreciation expense	219.8		1.37		207.0		1.41
Gross refining margin	Gross refining margin	$	850.7		$	11.36		$	650.2	$	9.70	Gross refining margin	$	3,458.9	$	21.54	$	1,361.5	$	9.29
Special items:(1)	Special items:(1)											Special items:(1)
Add: Non-cash LCM inventory adjustment	Add: Non-cash LCM inventory adjustment	—			—			(405.6)		(6.05)		Add: Non-cash LCM inventory adjustment	—		—		(669.6)		(4.57)
Gross refining margin excluding special items	Gross refining margin excluding special items	$	850.7		$	11.36		$	244.6	$	3.65	Gross refining margin excluding special items	$	3,458.9	$	21.54	$	691.9	$	4.72

——————————

See Notes to Non-GAAP Financial Measures.

EBITDA, EBITDA Excluding Special Items and Adjusted EBITDA

Our management uses EBITDA (earnings before interest, income taxes, depreciation and amortization), EBITDA excluding special items and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our Board of Directors, creditors, analysts and investors concerning our financial performance. Our outstanding indebtedness for borrowed money and other contractual obligations also include similar measures as a basis for certain covenants under those agreements which may differ from the Adjusted EBITDA definition described below.

EBITDA, EBITDA excluding special items and Adjusted EBITDA are not presentations made in accordance with GAAP and our computation of EBITDA, EBITDA excluding special items and Adjusted EBITDA may vary from others in our industry. In addition, Adjusted EBITDA contains some, but not all, adjustments that are taken into account in the calculation of the components of various covenants in the agreements governing our senior notes and other credit facilities. EBITDA, EBITDA excluding special items and Adjusted EBITDA should not be considered as alternatives to income from operations or net income as measures of operating performance. In addition, EBITDA, EBITDA excluding special items and Adjusted EBITDA are not presented as, and should not be considered, an alternative to cash flows from operations as a measure of liquidity. 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, gain on extinguishment of debt, change in the fair value of contingent consideration, and certain other non-cash items. Other companies, including other companies in our industry, may calculate EBITDA, EBITDA excluding special items and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. EBITDA, EBITDA excluding special items and Adjusted EBITDA also have limitations as analytical tools and

should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include that EBITDA, EBITDA excluding special items and Adjusted EBITDA:

•do not reflect depreciation expense or our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

•do not reflect changes in, or cash requirements for, our working capital needs;

•do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

•do not reflect realized and unrealized gains and losses from certain hedging activities, which may have a substantial impact on our cash flow;

•do not reflect certain other non-cash income and expenses; and

•exclude income taxes that may represent a reduction in available cash.

The following tables reconcile net income (loss) as reflected in our results of operations to EBITDA, EBITDA excluding special items and Adjusted EBITDA for the periods presented (in millions):


		Three Months Ended March 31,						Three Months Ended June 30,			Six Months Ended June 30,
			2022		2021				2022		2021		2022		2021

Reconciliation of net income (loss) to EBITDA and EBITDA excluding special items:	Reconciliation of net income (loss) to EBITDA and EBITDA excluding special items:						Reconciliation of net income (loss) to EBITDA and EBITDA excluding special items:
Net income (loss)	Net income (loss)		$	(18.0)	$	(56.9)	Net income (loss)		$	1,596.9	$	42.8	$	1,578.9	$	(14.1)
Add: Depreciation and amortization expense	Add: Depreciation and amortization expense		110.8		108.1		Add: Depreciation and amortization expense		112.8		105.6		223.6		213.7
Add: Interest expense, net	Add: Interest expense, net		68.2		69.6		Add: Interest expense, net		75.4		69.9		143.6		139.5
Add: Income tax benefit	Add: Income tax benefit		(8.1)		(10.6)		Add: Income tax benefit		(1.2)		(4.3)		(9.3)		(14.9)
EBITDA	EBITDA		$	152.9	$	110.2	EBITDA		$	1,783.9	$	214.0	$	1,936.8	$	324.2
Special Items:(1)	Special Items:(1)						Special Items:(1)
Add: Non-cash LCM inventory adjustment	Add: Non-cash LCM inventory adjustment		—		(405.6)		Add: Non-cash LCM inventory adjustment		—		(264.0)		—		(669.6)
Add: Change in fair value of contingent consideration	Add: Change in fair value of contingent consideration		50.1		29.5		Add: Change in fair value of contingent consideration		77.6		(5.2)		127.7		24.3

Add: Gain on extinguishment of debt							Add: Gain on extinguishment of debt		(3.8)		—		(3.8)		—

EBITDA excluding special items	EBITDA excluding special items		$	203.0	$	(265.9)	EBITDA excluding special items		$	1,857.7	$	(55.2)	$	2,060.7	$	(321.1)

Reconciliation of EBITDA to Adjusted EBITDA:	Reconciliation of EBITDA to Adjusted EBITDA:						Reconciliation of EBITDA to Adjusted EBITDA:
EBITDA	EBITDA		$	152.9	$	110.2	EBITDA		$	1,783.9	$	214.0	$	1,936.8	$	324.2
Add: Stock-based compensation	Add: Stock-based compensation		7.1		6.4		Add: Stock-based compensation		7.4		7.6		14.5		14.0
Add: Change in fair value of catalyst obligations	Add: Change in fair value of catalyst obligations		4.9		10.0		Add: Change in fair value of catalyst obligations		(7.2)		(5.8)		(2.3)		4.2
Add: Non-cash LCM inventory adjustment (1)	Add: Non-cash LCM inventory adjustment (1)		—		(405.6)		Add: Non-cash LCM inventory adjustment (1)		—		(264.0)		—		(669.6)
Add: Change in fair value of contingent consideration (1)	Add: Change in fair value of contingent consideration (1)		50.1		29.5		Add: Change in fair value of contingent consideration (1)		77.6		(5.2)		127.7		24.3

Add: Gain on extinguishment of debt (1)							Add: Gain on extinguishment of debt (1)		(3.8)		—		(3.8)		—
Adjusted EBITDA	Adjusted EBITDA		$	215.0	$	(249.5)	Adjusted EBITDA		$	1,857.9	$	(53.4)	$	2,072.9	$	(302.9)

——————————

See Notes to Non-GAAP Financial Measures.

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Notes to Non-GAAP Financial Measures

The following notes are applicable to the Non-GAAP Financial Measures above:

(1) 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 net impact of these LCM inventory adjustments are included in income from operations, but are excluded from the operating results presented, as applicable, in order to make such information comparable between periods.

The following table includes the LCM inventory reserve as of each date presented (in millions):


		2022		2021			2022		2021
January 1,	January 1,	$	—	$	669.6	January 1,	$	—	$	669.6
March 31,	March 31,	—		264.0		March 31,	—		264.0
June 30,						June 30,	—		—

The following table includes the corresponding impact of changes in the LCM inventory reserve on both income from operations and net income (loss) for the periods presented (in millions):

Three Months Ended March 31,
2022 2021
Net LCM inventory adjustment benefit in both income from operations and net income (loss) $ — $ 405.6


	Three Months Ended June 30,				Six Months Ended June 30,

	2022		2021		2022		2021
Net LCM inventory adjustment benefit in both income from operations and net income (loss)	$	—	$	264.0	$	—	$	669.6

Change in Fair Value of Contingent Consideration - During the three months ended ~~March 31,~~June 30, 2022, we recorded a change in fair value of ~~the contingent consideration related to~~ the Martinez Contingent Consideration which decreased income from operations and net income by ~~$50.1~~$77.6 million. During the ~~three~~six months ended ~~March 31, 2021,~~June 30, 2022, we recorded a change in ~~the~~ fair value of ~~the contingent consideration related to~~ the Martinez Contingent Consideration which decreased income from operations and net income by ~~$29.5~~$127.7 million. During the three months ended June 30, 2021, we recorded a change in fair value of the Martinez Contingent Consideration which increased income from operations and net income by $5.2 million. During the six months ended June 30, 2021, we recorded a change in fair value of the Martinez Contingent Consideration which decreased income from operations and net income by $24.3 million.

Gain on Extinguishment of Debt - During the three and six months ended June 30, 2022, we recorded a pre-tax gain on extinguishment of debt related to the repurchase of a portion of the 2028 Senior Notes and the 2025 Senior Notes, which increased income before income taxes and net income by $3.8 million. There was no such gain during the three and six months ended June 30, 2021.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity are our cash flows from operations, cash and cash equivalents and borrowing availability under our credit facility, as described below. We believe that our cash flows from operations and available capital resources will be sufficient to meet our and our subsidiaries’ capital expenditures, working capital needs and debt service requirements for the next twelve months. However, our ability to generate sufficient cash flow from operations depends, in part, on petroleum oil market pricing and general economic, political and other factors beyond our control. WeAs of June 30, 2022, we are in compliance ~~as of March 31, 2022~~ with all covenants, including financial covenants, in all our debt agreements.

Cash Flow Analysis

Cash Flows from Operating Activities

Net cash provided by operating activities was ~~$242.9~~$2,156.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to net cash used in operating activities of ~~$67.6~~$23.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021. Our ~~overall increase in~~operating cash ~~provided by operating activities was primarily driven by~~flows for the six months ended June 30, 2022 include our net income of $1,578.9 million and net changes in operating assets and liabilities reflecting cash proceeds of ~~$120.9~~$196.3 million, driven by the timing of inventory purchases, payments for accrued expenses and accounts payable, and collections of accounts receivable. Change in accrued expenses is due primarily to an increase in renewable energy credit and emissions obligations, as a result of an increase in our unfunded RINs obligation as of ~~March 31,~~June 30, 2022. Our overall increase in cash provided by operating ~~cash flows for the three months ended March 31, 2022~~activities also ~~include our net loss of $18.0 million,~~included depreciation and amortization of ~~$114.7~~$233.5 million, change in the fair value of the ~~contingent consideration associated with~~ the Martinez ~~Acquisition~~Contingent Consideration of ~~$50.1~~$127.7 million, pension and other post-retirement benefits costs of ~~$11.9~~$23.8 million, stock-based compensation of ~~$7.1 million, change in the fair value of our catalyst obligations of $4.9~~$14.5 million, and gain on sale of assets of ~~$0.1~~$0.3 million, partially offset by ~~net non-cash charges related to the change in the fair value of our inventory repurchase obligations of $40.7 million and~~ deferred income taxes of ~~$8.1 million. Our operating cash flows for the three months ended March 31, 2021 included our net loss of $56.9~~$9.3 million, ~~a non-cash charge of $405.6 million relating to an LCM inventory adjustment, deferred income taxes of $9.4 million and~~ gain on ~~sale~~extinguishment of ~~assets~~debt related to the repurchase of $0.6 million, partially offset by depreciation and amortization of $111.8 million, change in the fair value of the contingent consideration associated with the Martinez Acquisition of $29.5 million, pension and other post-retirement benefits costs of $12.8 million, change in the fair valuea portion of our ~~catalyst obligations~~2028 Senior Notes and 2025 Senior Notes of ~~$10.0~~$3.8 million, net non-cash charges related to the change in the fair value of our inventory repurchase obligations of ~~$8.0~~$3.4 million and change in the fair value of our catalyst obligations of $2.3 million. Our operating cash flows for the six months ended June 30, 2021 included our net loss of $14.1 million, a non-cash charge of $669.6 million relating to an LCM inventory adjustment, deferred income taxes of $13.8 million and gain on sale of assets of $0.6 million, partially offset by depreciation and amortization of $221.3 million, net non-cash charges related to the change in fair value of our inventory repurchase obligations of $42.2 million, pension and other post-retirement benefits costs of $25.3 million, change in the fair value of the the Martinez Contingent Consideration of $24.3 million, stock-based compensation of ~~$6.4~~$14.0 million, and change in the fair value of our catalyst obligations of $4.2 million. In addition, net changes in operating assets and liabilities reflect cash proceeds of ~~$226.4~~$343.7 million primarily driven by our accrued expense increase in renewable energy credit and emissions obligations as a result of our increase in the unfunded RINs obligation as of June 30, 2021, timing of inventory purchases, payments for other accrued expenses and accounts payable and collections of accounts receivable.

Cash Flows from Investing Activities

Net cash used in investing activities was ~~$224.1~~$433.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to net cash used in investing activities of ~~$59.2~~$136.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021. The net cash flows used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was comprised of cash outflows of capital expenditures totaling ~~$116.9~~$223.4 million, expenditures for refinery turnarounds of ~~$82.2~~$166.8 million, and expenditures for other assets of ~~$25.0~~$43.6 million. ~~Net~~The net cash used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2021 was comprised of cash outflows of capital expenditures totaling ~~$36.1~~$81.1 million, expenditures for refinery turnarounds of ~~$16.8~~$38.5 million, and expenditures for other assets of ~~$6.3~~$16.5 million.

4352

Cash Flows from Financing Activities

Net cash ~~provided by~~used in financing activities was ~~$56.3~~$918.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to net cash provided by financing activities of ~~$53.1~~$33.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021. For the ~~three~~six months ended ~~March 31,~~June 30, 2022, net cash used in financing activities consisted primarily of net repayments on the Revolving Credit Facility of $900.0 million, $25.9 million related to the repurchase of the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, distributions to members of $11.6 million, payments on finance leases of $5.7 million, and deferred financing costs and other of $32.2 million, partially offset by proceeds from insurance premium financing of $32.4 million, and proceeds from contributions from PBF LLC of $25.0 million. For the six months ended June 30, 2021, net cash provided by financing activities consisted primarily of proceeds from insurance premium financing of ~~$47.3~~$28.0 million, ~~and~~ proceeds from contributions from PBF LLC of ~~$16.0 million, partially offset by distributions to members of $3.9 million, payments on finance leases of $3.0~~$18.9 million, and deferred financing costs and other of $0.1 million. For the three months ended March 31, 2021, net cash provided by financing activities consisted primarily of cash proceeds from insurance premium financing of $48.9 million, proceeds from contributions from PBF LLC of $10.0 million, and deferred financing costs and other of $0.5$0.4 million, partially offset by payments on finance leases of ~~$3.5~~$7.1 million, principal amortization payments of the $35.0 million PBF Rail term loan of ~~$1.8~~$3.7 million, and distributions to members of ~~$1.0~~$2.7 million.

Debt and Credit Facility

Revolving Credit Facility

On May 25, 2022, we entered into an amendment of our Revolving Credit Agreement. Among other things, the Revolving Credit Agreement amended and extended the Revolving Credit Facility through January 2025 and increased the maximum commitment to $4.3 billion through May 2023 (currently set to adjust to $2.75 billion in May 2023 through January 2025). The amendments also redefine certain components of the Borrowing Base (as defined in the Revolving credit Agreement) to reflect the existence of the two tranches, Tranche A Commitments and Tranche B Commitments. The Tranche A Commitments total $1.55 billion and the Tranche B Commitments total $2.75 billion. The amendments also include changes to incorporate the adoption of SOFR as a replacement of LIBOR, changes to joint lead arrangers, bookrunners, syndication agents and other titles, and other changes related to the foregoing. In addition, an accordion feature allows for additional Tranche B Commitments of up to an additional $500.0 million plus an amount equal to the Tranche A Commitments for existing Tranche A lenders.

Long-Term Debt Related Transactions

On July 11, 2022, we exercised our rights under the indenture governing the 9.25% senior secured notes due 2025 (the “2025 Senior Secured Notes”) to redeem all of the outstanding 2025 Senior Secured Notes at a price of 104.625% of the aggregate principal amount thereof plus accrued and unpaid interest. The aggregate redemption price for all 2025 Senior Secured Notes approximated $1.3 billion plus accrued and unpaid interest. The difference between the carrying value of the 2025 Senior Secured Notes on the date they were redeemed and the amount for which they were redeemed was $70.4 million and will be recorded as a Loss on extinguishment of debt in the Consolidated Statements of Operations in the third quarter of 2022.

During the three months ended June 30, 2022, we made a number of open market repurchases of our 2028 Senior Notes and 2025 Senior Notes that resulted in the extinguishment of $24.9 million in principal. Total cash consideration paid to repurchase the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, totaled $25.9 million and the Company recognized a $3.8 million gain on the extinguishment of debt during the three and six months ended June 30, 2022.

Liquidity

As of ~~March 31,~~June 30, 2022, our operational liquidity was more than ~~$2.6~~$4.4 billion ~~($2.4 billion as of December 31, 2021),~~ which consists of ~~$1.4~~$2.1 billion of cash, and more than ~~$1.2~~$2.3 billion of borrowing availability under our Revolving Credit Facility, which includes our cash on hand.

As of ~~March 31,~~June 30, 2022, outstanding letters of credit totaled approximately ~~$609.9~~$1,047.5 million.

We have executed a plan to strengthen our balance sheet and increase our flexibility and responsiveness by incorporating certain adjustments to our operations and other cost saving measures. In an effort to preserve the positive recovery trends experienced during 2021 and the three and six months ended ~~March 31,~~June 30, 2022, we remain committed to our plan in the current year with notable events within the past twelve months highlighted below:

•July 2022 full redemption of our 2025 Senior Secured Notes using cash on hand as of June 30, 2022, resulting in future annual interest savings of approximately $115.0 million;

•Extinguishment of $258.9 million of our 2028 Senior Notes and 2025 Senior Notes to date, resulting in annual cash interest savings of approximately $16.3 million;

•In May 2022, completed a multi-year extension of our Revolving Credit Facility, with an aggregate commitment of $4.3 billion.

•In October 2021, executed the Third Inventory Intermediation Agreement with J. Aron through 2024, covering certain crude oil, intermediate and finished products across our East Coast and Chalmette refineries;

•Continued various cost reduction and cash preservation initiatives, which includes a flexible capital expenditures strategy based on market conditions and operating expenses related to discretionary activities and third-party services; and

•Continued the temporary suspension of PBF Energy’s quarterly dividend of $0.30 per share, which currently preserves approximately $35.0 million of cash each quarter, to support the balance sheet.

We are actively responding to the ongoing rebalancing in the global oil markets. We continue to adjust our operational plans to the evolving market conditions and continue to target and execute expense reduction measures. We also remain committed to assessing other opportunities that could improve our liquidity, including by further reducing debt and/or potential sales of non-operating assets or other real property, although there can be no assurance that we will do so. We may, at any time and from time to time, seek to continue to repurchase or retire our outstanding debt securities through cash purchases (and/or exchanges for equity or debt), in open-market purchases, block trades, privately negotiated transactions or otherwise, upon such terms and at such prices as we may determine. We will evaluate any such transactions in light of then-existing market conditions, taking into account our current liquidity and prospects for future access to capital, the trading prices of our debt securities, legal requirements and contractual restrictions and economic and market conditions. The amounts involved in any such transactions, individually or in the aggregate, may be material. We are not obligated to repurchase any of our debt securities other than as set forth in the applicable indentures, and repurchases may be made or suspended or discontinued at any time without prior notice.

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We may incur additional indebtedness in the future, including additional secured indebtedness, subject to the satisfaction of any debt incurrence and, if applicable, lien incurrence limitation covenants in our existing financing agreements. Although we were in compliance with incurrence covenants during the ~~three~~six months ended ~~March 31,~~June 30, 2022, to the extent that any of our activities triggered these covenants, there are no assurances that conditions could not change significantly, and that such changes could adversely impact our ability to meet some of these incurrence covenants at the time that we needed to. Failure to meet the incurrence covenants could impose certain incremental restrictions on, among other matters, our ability to incur new debt (including secured debt) and also may limit the extent to which we may pay future dividends, make new investments, repurchase our outstanding debt or stock or incur new liens.

WeAs of June 30, 2022, we are in compliance ~~as of March 31, 2022~~ with all covenants, including financial covenants, in all of our debt agreements.

Working Capital

Our working capital at ~~March 31,~~June 30, 2022 was ~~$1,120.2~~$429.0 million, consisting of ~~$6,322.1~~$7,265.0 million in total current assets and ~~$5,201.9~~$6,836.0 million in total current liabilities. Our working capital at December 31, 2021 was $1,266.5 million, consisting of $5,158.6 million in total current assets and $3,892.1 million in total current liabilities.

Capital Spending

Capital spending was ~~$224.1~~$433.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and was primarily comprised of turnaround costs at our Delaware City, Chalmette, Torrance and Martinez refineries. Capital spend also included costs associated with safety related enhancements and facility improvements at our refineries. Our full-year refining capital expenditures are expected to range from $500.0 million to $550.0 million.

Crude and Feedstock Supply Agreements

Certain of our purchases of crude oil under our agreements with foreign national oil companies require that we post letters of credit, if open terms are exceeded, and arrange for shipment. We pay for the crude when invoiced, at which time any applicable letters of credit are lifted. We have a contract with Saudi Arabian Oil Company (“Saudi Aramco”) pursuant to which we have been purchasing up to approximately 100,000 bpd of crude oil from Saudi Aramco that is processed at our Paulsboro refinery. In connection with the acquisition of the Chalmette refinery we entered into a contract with Petróleos de Venezuela S.A. (“PDVSA”) for the supply of 40,000 to 60,000 bpd of crude oil that can be processed at any of our East or Gulf Coast refineries. We have not sourced crude oil under this agreement since 2017 when PDVSA suspended deliveries due to the parties’ inability to agree to mutually acceptable payment terms and because of U.S. government sanctions against PDVSA. Notwithstanding the suspension, the U.S. government sanctions imposed against PDVSA and Venezuela prevented us from purchasing crude oil under this agreement. In connection with the closing of the acquisition of the Torrance refinery, we entered into a crude supply agreement with Exxon Mobil Oil Corporation (“ExxonMobil”) for approximately 60,000 bpd of crude oil that can be processed at our Torrance refinery. We currently purchase all of our crude and feedstock needs independently from a variety of suppliers on the spot market or through term agreements for our Delaware City and Toledo refineries.

We currently have various crude supply agreements with terms through 2025 with Shell plc for approximately 145,000 bpd, in the aggregate, to support our West Coast and Mid-Continent refinery operations. In addition, we have certain offtake agreements for our West Coast system with the same counterparty for clean products with varying terms up to 15 years.

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Inventory Intermediation Agreement

On October 25, 2021, wePBF Holding and ~~our~~its subsidiaries, Delaware City Refining Company LLC (“DCR”), Paulsboro Refining Company LLC (“PRC”) and Chalmette Refining, ~~L.L.C.~~L.L.C (“Chalmette Refining”), entered into the Third Inventory Intermediation Agreement with J. Aron, pursuant to which the terms of the previous inventory intermediation agreements were amended and restated in their entirety, including, among other things, pricing and an extension of terms. The Third Inventory Intermediation Agreement extends the term to December 31, 2024, which term may be further extended by mutual consent of the parties to December 31, 2025. If not extended or replaced, at expiration, we will be required to repurchase the inventories outstanding under the Third Inventory Intermediation Agreement at that time. On May 25, 2022, the PBF Entities entered into an amendment of the Third Inventory Intermediation Agreement to amend certain provisions thereof that related to and were impacted by amendments made on May 25, 2022 to the Revolving Credit Agreement.

At ~~March 31,~~June 30, 2022, the LIFO value of the J. Aron Products included within Inventory in our Condensed Consolidated Balance Sheets was ~~$521.6~~$572.2 million. We accrue a corresponding liability for such crude oil, intermediates and finished products.

Distribution Policy

In cases when there is sufficient cash and cash equivalents and borrowing capacity, we are permitted under our debt agreements to make distributions; however, our ability to continue to comply with our debt covenants is, to a significant degree, subject to our operating results, which are dependent on a number of factors outside of our control.

We make, from time to time, distributions to PBF LLC, if necessary, in order for PBF LLC to make pro rata distributions to its members, including PBF Energy, necessary to fund in excess of one year’s cash dividend payments by PBF Energy. In response to the adverse impact caused by the COVID-19 pandemic, PBF Energy, among other things, suspended its quarterly dividend of $0.30 per share. While it is impossible to estimate the duration or ultimate financial impact of the COVID-19 pandemic on our business, we will continue to monitor and evaluate our distribution policy as market conditions develop and our business outlook becomes clearer.

Supplemental Guarantor Financial Information

As of ~~March 31,~~June 30, 2022, PBF Services Company LLC, DCR, PBF Power Marketing LLC, PRC, Toledo Refining Company LLC, Chalmette Refining, PBF Western Region LLC, Torrance Refining Company LLC (“Torrance Refining”), Martinez Refining Company LLC (“MRC”), PBF International Inc. and PBF Investments LLC are 100% owned subsidiaries of PBF Holding and serve as guarantors of the obligations under the ~~9.25% senior secured notes due~~ 2025 ~~(the “2025~~ Senior Secured ~~Notes”),~~Notes, the 2025 Senior Notes and 2028 Senior Notes. These guarantees are full and unconditional and joint and several. PBF Holding serves as the “Issuer”. The indentures dated May 30, 2017 and January 24, 2020, among PBF Holding, PBF Finance, the guarantors party thereto, Wilmington Trust, National Association, as trustee and Deutsche Bank Trust Company Americans, as Paying Agent, Registrar, Transfer Agent and Authenticating Agent, and the indenture dated May 13, 2020, among PBF Holding, PBF Finance, the guarantors party thereto and Wilmington Trust, National Association, as Trustee, Paying Agent, Registrar, Transfer Agent, Authenticating Agent and Notes Collateral Agent, govern subsidiaries designated as “Guarantor Subsidiaries”. PBF Ltd, PBF Transportation Company LLC, PBF Rail Logistics Company LLC, MOEM Pipeline LLC, Collins Pipeline Company, T&M Terminal Company, Torrance Basin Pipeline Company LLC, Torrance Logistics Company LLC, Torrance Pipeline Company LLC, Martinez Terminal Company LLC, Martinez Pipeline Company LLC and PBFWR Logistics Holdings LLC are consolidated subsidiaries of the Company that are not guarantors of the 2025 Senior Secured Notes, 2025 Senior Notes and 2028 Senior Notes. The 2025 Senior Secured Notes, 2025 Senior Notes and 2028 Senior Notes were co-issued by PBF Finance. For purposes of the following information, PBF Finance is referred to as “Co-Issuer.” The Co-Issuer has no independent assets or operations.

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The following tables present summarized information for the Issuer and the Guarantor Subsidiaries on a combined basis after elimination of (i) intercompany transactions and balances among the Issuer and the Guarantor Subsidiaries and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor.

Summarized Balance Sheets (in millions) March 31,
2022 December 31,
2021
ASSETS
Current Assets (1)
$ 6,005.9 $ 4,840.0
Non-Current Assets 5,867.6 5,754.0
Due from non-guarantor subsidiaries 16,929.9 16,211.0
LIABILITIES AND EQUITY
Current liabilities (1)
$ 4,823.1 $ 3,645.0
Long-term liabilities 4,836.6 4,862.0
Due to non-guarantor subsidiaries 16,864.3 16,100.0
(1) Includes $4.4 million and $51.9 million of accounts receivable and accounts payable, respectively, related to transactions with PBFX as of March 31, 2022. Includes $4.1 million and $61.7 million of accounts receivable and accounts payable, respectively, related to transactions with PBFX as of December 31, 2021. Refer to “Note 6 - Related Party Transactions” of our Notes to Condensed Consolidated Financial Statements for further information.
Three Months Ended March 31,
Summarized Statements of Operations (in millions) 2022 2021
Revenues $ 9,023.9 $ 4,888.8
Cost of sales 8,111.8 4,305.0
Gross margin 912.1 583.8
Income from operations 811.1 507.8
Net income 691.1 401.6
Net income attributable to PBF Holding Company LLC 692.2 401.4
Non-guarantor intercompany sales with the Issuer and Guarantor subsidiaries $ 736.1 $ 468.5
Non-guarantor intercompany cost of sales with the Issuer and Guarantor subsidiaries 27.0 9.9
Affiliate revenues related to transactions with PBFX (1)
4.0 4.0
Affiliate expenses related to transactions with PBFX (1)
76.0 75.9
(1) Refer to “Note 6 - Related Party Transactions” of our Notes to Condensed Consolidated Financial Statements for further information.


Summarized Balance Sheets (in millions)	June 30, 2022		December 31, 2021
ASSETS
Current Assets (1)	$	6,933.7	$	4,840.0
Non-Current Assets	5,928.9		5,754.0
Due from non-guarantor subsidiaries	17,811.9		16,211.0

LIABILITIES AND EQUITY
Current liabilities (1)	$	6,390.5	$	3,645.0
Long-term liabilities	2,601.3		4,862.0
Due to non-guarantor subsidiaries	17,812.8		16,100.0

(1) Includes $4.5 million and $47.3 million of accounts receivable and accounts payable, respectively, related to transactions with PBFX as of June 30, 2022. Includes $4.1 million and $61.7 million of accounts receivable and accounts payable, respectively, related to transactions with PBFX as of December 31, 2021. Refer to “Note 6 - Related Party Transactions” of our Notes to Condensed Consolidated Financial Statements for further information.


	Three Months Ended June 30,				Six Months Ended June 30,
Summarized Statements of Operations (in millions)	2022		2021		2022		2021
Revenues	$	13,938.7	$	6,802.2	$	22,962.6	$	11,691.0
Cost of sales	11,139.7		6,082.0		19,251.5		10,387.0
Gross margin	2,799.0		720.2		3,711.1		1,304.0
Income from operations	2,573.6		673.6		3,384.7		1,181.4

Net income	2,495.2		594.2		3,186.3		995.8
Net income attributable to PBF Holding Company LLC	2,495.8		592.0		3,188.0		993.4

Non-guarantor intercompany sales with the Issuer and Guarantor subsidiaries	$	940.0	$	574.2	$	1,676.1	$	1,042.7
Non-guarantor intercompany cost of sales with the Issuer and Guarantor subsidiaries	41.8		22.9		68.8		32.8
Affiliate revenues related to transactions with PBFX (1)	4.4		4.0		8.4		8.0
Affiliate expenses related to transactions with PBFX (1)	79.6		75.1		155.6		151.0
(1) Refer to “Note 6 - Related Party Transactions” of our Notes to Condensed Consolidated Financial Statements for further information.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks, including changes in commodity prices and interest rates. Our primary commodity price risk is associated with the difference between the prices we sell our refined products and the prices we pay for crude oil and other feedstocks. We may use derivative instruments to manage the risks from changes in the prices of crude oil and refined products, natural gas, interest rates, or to capture market opportunities.

Commodity Price Risk

Our earnings, cash flow and liquidity are significantly affected by a variety of factors beyond our control, including the supply of, and demand for, crude oil, other feedstocks, refined products and natural gas. The supply of and demand for these commodities depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, planned and unplanned downtime in refineries, pipelines and production facilities, production levels, the availability of imports, the marketing of competitive and alternative fuels, and the extent of government regulation. As a result, the prices of these commodities can be volatile. Our revenues fluctuate significantly with movements in industry refined product prices, our cost of sales fluctuates significantly with movements in crude oil and feedstock prices and our operating expenses fluctuate with movements in the price of natural gas. We manage our exposure to these commodity price risks through our supply and offtake agreements as well as through the use of various commodity derivative instruments.

We may use non-trading derivative instruments to manage exposure to commodity price risks associated with the purchase or sale of crude oil and feedstocks, finished products and natural gas outside of our supply and offtake agreements. The derivative instruments we use include physical commodity contracts and exchange-traded and over-the-counter financial instruments. We mark-to-market our commodity derivative instruments and recognize the changes in their fair value in our statements of operations.

At ~~March 31,~~June 30, 2022 and December 31, 2021, we had gross open commodity derivative contracts representing ~~43.9~~40.9 million barrels and 42.1 million barrels, respectively, with an unrealized net loss of ~~$51.9~~$19.2 million and $12.0 million, respectively. The open commodity derivative contracts as of ~~March 31,~~June 30, 2022 expire at various times during 2022 and 2023.

We carry inventories of crude oil, intermediates and refined products (“hydrocarbon inventories”) on our Condensed Consolidated Balance Sheets, the values of which are subject to fluctuations in market prices. Our hydrocarbon inventories totaled approximately ~~34.0~~34.2 million barrels and 30.2 million barrels at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. The average cost of our hydrocarbon inventories was approximately ~~$80.86~~$82.78 and $78.29 per barrel on a LIFO basis at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. At ~~March 31,~~June 30, 2022 and December 31, 2021, the replacement value of inventory exceeded the LIFO carrying value. If market prices of our inventory decline to a level below our average cost, we may be required to write down the carrying value of our hydrocarbon inventories to market.

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Our predominant variable operating cost is energy, which is comprised primarily of natural gas and electricity. We are therefore sensitive to movements in natural gas prices. Assuming normal operating conditions, we expect our annual consumption to range from 75 million to 95 million MMBTUs of natural gas amongst our six refineries. Accordingly, a $1.00 per MMBTU change in natural gas prices would increase or decrease our natural gas costs by approximately $75.0 million to $95.0 million.

Compliance Program Price Risk

We are exposed to market risks related to our obligations to buy and the volatility in the price of credits needed to comply with various governmental and regulatory compliance programs, which includes RINs, required to comply with the Renewable Fuel Standard. Our overall RINs obligation is based on a percentage of our domestic shipments of on-road fuels as established by Environmental Protection Agency. To the degree we are unable to blend the required amount of biofuels to satisfy our RINs obligation, we must purchase RINs on the open market. To mitigate the impact of the market risk relating to our obligations on our results of operations and cash flows, we may elect to purchase RINs or other environmental credits as part of our liability management strategy.

In addition, we are exposed to risks associated with complying with federal and state legislative and regulatory measures to address greenhouse gas and other emissions. Requirements to reduce emissions could result in increased costs to operate and maintain our facilities as well as implement and manage new emission controls and programs put in place. For example, in September 2016, the state of California ~~enacted~~extended AB 32, ~~which further reduces~~to reduce greenhouse gas emission targets to 40% below 1990 levels by 2030. Compliance with such emission standards may require the purchase of emission credits or similar instruments.

Certain of these compliance contracts or instruments qualify as derivative instruments. For certain of these contracts, we elect the normal purchase normal sale exception under Accounting Standards Codification 815, Derivatives and Hedging, for such instruments, and therefore do not record these contracts at their fair value.

Interest Rate Risk

The maximum commitment under our Revolving Credit Facility is ~~$3.4~~$4.3 billion. Borrowings under the Revolving Credit Facility bear interest either at the Alternative Base Rate plus the Applicable Margin or at ~~Adjusted London Interbank Offering~~the Term SOFR Rate ~~(“LIBOR”)~~ plus the Applicable Margin, all as defined in the Revolving Credit Agreement. At ~~March 31,~~June 30, 2022, we had ~~$900.0 million~~no outstanding balance in variable interest debt. If this facility was fully drawn, a 1.0% change in the interest rate would increase or decrease our interest expense by approximately ~~$22.0~~$22.4 million annually.

We also have interest rate exposure in connection with our Third Inventory Intermediation Agreement under which we pay a time value of money charge based on LIBOR.

Credit Risk

We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties. We continue to closely monitor the creditworthiness of customers to whom we grant credit and establish credit limits in accordance with our credit policy.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We conducted evaluations under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)) as of ~~March 31,~~June 30, 2022. Based upon these evaluations, as required by Exchange Act Rule 13a-15(b), the principal executive officer and principal financial officer, concluded that our disclosure controls and procedures are effective as of ~~March 31,~~June 30, 2022.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal controls over financial reporting during the quarter ended ~~March 31,~~June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On September 11, 2020, DCR received two Citations and Notification of Penalties, with sub-parts, from the Occupational Safety and Health Administration of the U.S. Department of Labor (“OSHA”) related to a combustion incident occurring on March 11, 2020. The citation seeks to impose penalties in the amount of $401,923 related to alleged violations of the Occupation Safety and Health Act of 1970. An informal conference with OSHA on October 2, 2020 was unsuccessful in resolving the matter, and, as a result, DCR filed a Notice of Contest with OSHA contesting the citations in their entirety at the end of the informal conference. OSHA filed its Complaint on December 13, 2020, and DCR filed its response on January 4, 2021. OSHA and DCR participated in mandatory meditation on February 2, 2021, which was unsuccessful. On February 25, 2021, the Occupational Safety and Health Review Commission granted the parties’ Joint Motion for Additional Time for the Parties to Discuss Settlement. The Court has since granted multiple additional extensions. On May 27, 2021, the parties notified the court that settlement negotiations are continuing and have continued to provide updates on the settlement negotiations. Subsequently, OSHA and DCR reached a settlement agreement with an assessed penalty of $401,923 and DCR agreed to undertake certain abatement measures. On January 24, 2022, DCR and the United Steelworkers signed the settlement agreement, and on January 25, 2022, OSHA executed the agreement. On March 28, 2022, the settlement agreement became a final Commission order and DCR paid the assessed penalty in accordance with the terms of the settlement agreement on April 4, 2022.

On September 27, 2021, DCR received a Notice of Administrative Penalty Assessment and Secretary’s Order from the Delaware Department of Natural Resources and Environmental Control, seeking to impose penalties in the amount of $285,000 related to alleged Title V permit violations occurring in 2019 and 2020. On October 15, 2021, DCR filed a Notice of Appeal before Delaware’s Environmental Appeals Board, contesting the Secretary’s findings and requesting a hearing. On November 2, 2021, the Environmental Appeals Board scheduled a Pre-Hearing Conference for April 8, 2022 and Hearing Date for April 26, 2022. On March 17, 2022, the parties entered into a settlement agreement, pursuant to which DCR did not admit to any of the allegations and denied any liability but agreed to pay an administrative penalty of $250,000 and withdraw its appeal.

In connection with the acquisition of the Torrance refinery and related logistics assets, we assumed certain pre-existing environmental liabilities related to certain environmental remediation obligations to address existing soil and groundwater contamination and monitoring activities, which reflect the estimated cost of the remediation obligations. In addition, in connection with the acquisition of the Torrance refinery and related logistics assets, we purchased a ten year, $100.0 million environmental insurance policy to insure against unknown environmental liabilities.

On February 4, 2021, we received a letter from the South Coast Air Quality Management District (“SCAQMD”) proposing to settle a Notice of Violation (“NOV”) relating to 15 Title V deviations alleged to have occurred in the second half of 2017 for $1.3 million. On October 8, 2021, we reached settlement in principle with the SCAQMD to pay a penalty of $250,000 for 14 of the Title V deviations and a penalty of $1.3 million for the remaining deviation, which covers the period of 2017 through 2021 and the ~~negotiation of~~ settlement agreements ishave been executed.

On April 17, 2019, we received a NOV from the SCAQMD relating to Title V deviations alleged to have occurred in ~~process.~~second half of 2018 self-reported Title V deviations. In May 2022, the SCAQMD requested that we present a settlement proposal to resolve the NOV. On June 16, 2022, we presented a settlement offer of $456,820 to settle the NOV and are awaiting a response from the SCAQMD. On July 22, 2022, the SCAQMD presented a counter proposal of $1.2 million. We are currently evaluating the SCAQMD’s proposal.

In connection with self-reported flaring events that occurred at the Paulsboro Refinery between 2016 and 2020, in October 2021, the New Jersey Department of Environmental Protection (“NJDEP”) initiated discussions with PRC regarding potential penalties for alleged violations related to the self-reported flaring events. Although a formal NOV has not been issued, NJDEP provided a calculation sheet of potential penalties totaling approximately $1.6 million. We are currently challenging certain of those potential penalties and are in discussions with NJDEP regarding a potential settlement. On March 17, 2022, the parties reached an agreement with respect to an agreed total penalty amount of $1.0 million. The parties are in the process of negotiating a settlement agreement.

As the ultimate outcomes of the matters discussed above are uncertain, we cannot currently estimate the final amount or timing of their resolution but any such amount is not expected to have a material impact on our financial position, results of operations or cash flows, individually or in the aggregate.

On February 17, 2017, in Arnold Goldstein, et al. v. Exxon Mobil Corporation, et al., we and PBF LLC, and our subsidiaries, PBF Western Region LLC and Torrance Refining and the manager of our Torrance refinery along with ExxonMobil were named as defendants in a class action and representative action complaint filed on behalf of Arnold Goldstein, John Covas, Gisela Janette La Bella and others similarly situated. The complaint was filed in the Superior Court of the State of California, County of Los Angeles and alleges negligence, strict liability, ultra-hazardous activity, a continuing private nuisance, a permanent private nuisance, a continuing public nuisance, a permanent public nuisance and trespass resulting from the February 18, 2015 electrostatic precipitator (“ESP”) explosion at the Torrance refinery which was then owned and operated by

ExxonMobil. The operation of the Torrance refinery by the PBF entities subsequent to our acquisition in July 2016 is also referenced in the complaint. To the extent that plaintiffs’ claims relate to the ESP explosion, ExxonMobil retained responsibility for any liabilities that would arise from the lawsuit pursuant to the agreement relating to the acquisition of the Torrance refinery. On July 2, 2018, the court granted leave to plaintiffs to file a Second Amended Complaint alleging groundwater contamination. With the filing of the Second Amended Complaint, plaintiffs added an additional plaintiff, Hany Youssef. On October 15, 2019, the judge granted certification to two limited classes of property owners with Youssef as the sole class representative and named plaintiff, rejecting two other proposed subclasses based on negligence and on strict liability for ultrahazardous activities. The certified subclasses relate to trespass claims for ground contamination and nuisance for air emissions. On February 5, 2021, our motion for Limited Extension of Discovery Cut-Off and a Motion by plaintiffs for Leave to File Third Amended Complaint were heard by the court. On May 5, 2021, the Court granted plaintiffs leave to amend their complaint for the third time to substitute Navarro for Youssef. On May 12, 2021, plaintiffs filed their Third Amended Complaint (“TAC”) that contained significant changes and new claims, including individual claims, that were not included in the motion for leave to amend plaintiffs presented to the Court. On June 9, 2021, we filed a Motion to Dismiss/Strike the TAC. On June 23, 2021, plaintiffs filed their opposition to our Motion to Dismiss/Strike, to which we filed our reply on July 2, 2021. A hearing on the Motion to Dismiss/Strike the TAC was held on August 2, 2021 and the court ordered that the TAC be struck and that the parties meet and confer with respect to the complaint. After meeting and conferring, plaintiffs agreed to submit a corrected TAC with changes reflecting the removal of Youssef and the substitution of Navarro as the named Plaintiff. On August 23, 2021, the Court approved the parties’ stipulation to take Navarro’s deposition on September 23, 2021. Also, on August 23, 2021, the Court approved the parties’ stipulation to continue the pretrial dates with the new deadlines. On October 8, 2021, plaintiffs filed their Motion to Appoint Navarro as Class Representative. On October 29, 2021, we filed our opposition to this motion. On November 15, 2021, plaintiffs filed their reply. On February 8, 2022, the Court held a hearing on plaintiff’s Motion to Appoint Navarro as Class Representative but did not act on the motion. Instead, the court ordered the parties to submit draft orders for the Court’s consideration. ~~All~~After considering the parties’ proposed orders, on July 5, 2022, the Court issued a final order ruling that Plaintiffs’ Motion to Substitute José Navarro as Class Representative was denied and decertifying both of Plaintiffs’ proposed Air and Ground Subclasses. The order provided that the case will proceed with Navarro as the sole plaintiff and required the parties ~~have~~to meet and confer and propose a schedule for the remaining pretrial dates and a trial date. On July 19, 2022, Plaintiff filed ~~draft orders~~a petition with the Ninth Circuit Court ~~as required and are awaiting~~of Appeals seeking permission to appeal the District Court’s ~~order. All other dates are stayed pending~~decertification order finding that Navarro is an inadequate class representative. Our answer to the ~~Court issuing its order.~~petition was filed on July 29, 2022. We presently believe the outcome of this litigation will not have a material impact on our financial position, results of operations, or cash flows.

On September 7, 2021, MRC filed a Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief against the Bay Area Air Quality Management District (“BAAQMD”) requesting the Court to declare as invalid, unenforceable, and ultra vires the BAAMQD’s July 21, 2021, adoption of Rule 6-5 Amendment. MRC is also seeking a writ of mandate ordering the BAAQMD to vacate and rescind the adoption of the Rule 6-5 Amendment, as well as appropriate declaratory relief, injunctive relief, and reasonable costs incurred by MRC to bring this Petition/Complaint. In the Petition/Complaint MRC alleges that: its feasible alternative Particulate Matter (“PM”) reduction proposal that would achieve significant PM reductions while avoiding the significant costs and environmental impacts of the BAAQMD’s adopted PM limit, was improperly removed from consideration and not presented to the BAAQMD Board when the Rule 6-5 Amendment was adopted with the current PM standard; when adopting the Rule 6-5 Amendment, the BAAQMD flagrantly ignored numerous mandatory requirements of the California Environmental Quality Act and the California Health and Safety Code; the BAAQMD’s adoption of the Rule 6-5 Amendment also violated California common law; and these failings render the Rule 6-5 Amendment ultra vires, illegal, and unenforceable. We held mandatory settlement conferences with the BAAQMD on October 27, 2021 and December 15, 2021. We expect another mandatory settlement conference to be held in the third quarter of 2022. The parties are currently compiling the administrative record for completeness and certification. We presently believe the outcome will not have a material impact on our financial position, results of operations, or cash flows.

The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), also known as “Superfund,” imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons who are considered to be responsible for the release of a “hazardous substance” into the environment. These persons include the current or former owner or operator of the disposal site or sites where the release occurred and companies that disposed of or arranged for the disposal of the hazardous substances. Under CERCLA, such persons may be subject to joint and several liability for investigation and the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies. As discussed more fully above, certain of our sites are subject to these laws and we may be held liable for investigation and remediation costs or claims for natural resource damages. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment. Analogous state laws impose similar responsibilities and liabilities on responsible parties. In our current normal operations, we have generated waste, some of which falls within the statutory definition of a “hazardous substance” and some of which may have been disposed of at sites that may require cleanup under Superfund.

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Item 6. Exhibits

The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this report and such Exhibit Index is incorporated herein by reference.

EXHIBIT INDEX


Exhibit Number						Description

10.1†						Form of 2023-2025 Performance Share Unit Agreement (incorporated by reference to Exhibit 10.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated April 12, 2022 (File No. 001-35764)).

10.2†						Form of 2023-2025 Performance Unit Agreement (incorporated by reference to Exhibit 10.2 filed with PBF Energy Inc.’s Current Report on Form 8-K dated April 12, 2022 (File No. 001-35764)).

10.3†						Amendment No. 1 to PBF Energy Inc. Amended and Restated 2017 Equity Incentive Plan (incorporated by reference to Appendix A to PBF Energy Inc.’s Definitive Proxy Statement on Schedule 14A filed on April 13, 2022 (File No. 001-35764)).

10.4**						Third Amendment to Senior Secured Revolving Credit Agreement, dated May 2, 2018 (incorporated by reference to Exhibit 10.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated May 27, 2022 (File No. 001-35764)).

10.5**						First Amendment to the Third Amended and Restated Inventory Intermediation Agreement dated as of October 25, 2021, among J. Aron & Company LLC, PBF Holding Company LLC, Delaware City Refining Company LLC, Paulsboro Refining Company LLC, and Chalmette Refining, L.L.C (incorporated by reference to Exhibit 10.2 filed with PBF Energy Inc.’s Current Report on Form 8-K dated May 27, 2022 (File No. 001-35764)).

22.1*						List of Guarantor Subsidiaries

31.1*						Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Holding Company LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification of Erik Young, Chief Financial Officer of PBF Holding Company LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1* (1)						Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Holding Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2* (1)						Certification of Erik Young, Chief Financial Officer of PBF Holding Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						XBRL Instance Document.

101.SCH						XBRL Taxonomy Extension Schema Document.

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB						XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

——————————


*			Filed herewith.
†			Indicates management compensatory plan or arrangement.
(1)			This exhibit should not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.
**			Denotes that fees, payment terms and other competitively sensitive business terms have been redacted in accordance with Item 601(b)(10)(iv) Regulation S-K.

5464

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PBF Holding Company LLC

Date:

~~May 4,~~August 3, 2022

By:

/s/ Erik Young

Erik Young
Senior Vice President, Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)

PBF Finance Corporation

Date:

~~May 4,~~August 3, 2022

By:

/s/ Erik Young

Erik Young
Senior Vice President, Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)

5565