UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)



x	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, 2019

Oror



¨	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: 001-36446

PBF LOGISTICS LP

(Exact name of registrant as specified in its charter)



DELAWARE		35-2470286
(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

(Registrant’s 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
Common Units Representing Limited Partner Interests	PBFX	New York Stock Exchange

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.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes þ No o

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 o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o Emerging growth company þ

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. þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of ~~April 29,~~July 30, 2019, there were ~~62,001,349~~62,108,942 common units outstanding.

PBF LOGISTICS LP

TABLE OF CONTENTS

EXPLANATORY NOTE

PBF Logistics LP (“PBFX” or the “Partnership”) is a Delaware limited partnership formed in February 2013. PBF Logistics GP LLC (“PBF GP” or “our general partner”) serves as the general partner of PBFX. PBF GP is wholly-owned by PBF Energy Company LLC (“PBF LLC”). PBF Energy Inc. (“PBF Energy”) is the sole managing member of PBF LLC and, as of ~~March 31,~~June 30, 2019, owned 99.0% of the total economic interest in PBF LLC. In addition, PBF LLC is the sole managing member of PBF Holding Company LLC (“PBF Holding”), a Delaware limited liability company and affiliate of PBFX. PBF LLC owns 29,953,631 ~~of PBFX’s~~PBFX common units constituting an aggregate ~~54.1%~~48.2% limited partner interest in PBFX, with the remaining ~~45.9%~~51.8% limited partner interest owned by public unitholders as of ~~March 31,~~June 30, 2019.

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q (this “Form 10-Q”) to “Predecessor,” and “we,” “our,” “us,” or like terms, when used in the context of periods prior to the completion of certain acquisitions from PBF LLC, refer to PBF MLP Predecessor, our predecessor for accounting purposes (our “Predecessor”), which includes assets, liabilities and results of operations of certain crude oil, refined products, natural gas and intermediates transportation, terminaling and storage assets, previously operated and owned by certain of PBF Holding’s currently and previously held subsidiaries. As of ~~March 31,~~June 30, 2019, PBF Holding, together with its subsidiaries, owns and operates five oil refineries and related facilities in North America. PBF Energy, through its ownership of PBF LLC, controls all of the business and affairs of PBFX and PBF Holding.

References in this Form 10-Q to “PBF Logistics LP,” “PBFX,” the “Partnership” and “we,” “our,” or “us,” or like terms used in the context of periods on or after the completion of certain acquisitions from PBF LLC, refer to PBF Logistics LP and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q (including information incorporated by reference) contains certain “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995, which 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; 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 upon 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 “Item 1A. Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q; in our Annual Report on Form 10-K for the year ended December 31, 2018 ~~which we refer to as our 2018~~(our “2018 Form ~~10-K~~10-K”) and in our other filings with the ~~United States of America (“~~U.S.”) Securities and Exchange Commission (“SEC”). All forward-looking information in this 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:

our limited operating history as a separate public partnership;

changes in general economic conditions;

our ability to make, complete and integrate acquisitions from affiliates or third parties, and to realize the benefits from such acquisitions;

our ability to have sufficient cash from operations to enable us to pay the minimum quarterly distribution;

competitive conditions in our industry;

actions taken by our customers and competitors;

the supply of, and demand for, crude oil, refined products, natural gas and logistics services;

our ability to successfully implement our business plan;

our dependence on PBF Energy for a substantial majority of our ~~revenues~~revenue subjects us to the business risks of PBF Energy, which ~~includes~~include the possibility that contracts will not be renewed because they are no longer beneficial for PBF Energy;

a substantial majority of our revenue is generated at PBF Energy’s facilities, particularly at PBF Energy’s Delaware City, Toledo and Torrance refineries, and any adverse development at any of these facilities could have a material adverse effect on us;

our ability to complete internal growth projects on time and on budget;

the price and availability of debt and equity financing;

operating hazards and other risks incidental to the receiving, handling, storage and transferring of crude oil, ~~petroleum~~refined products, natural gas and ~~natural gas;~~intermediates;

natural disasters, weather-related delays, casualty losses and other matters beyond our control;

interest rates;

labor relations;

changes in the availability and cost of capital;

the effects of existing and future laws and governmental regulations, including those related to the shipment of crude oil by ~~trains;~~rail;

changes in insurance markets impacting costs and the level and types of coverage available;

the timing and extent of changes in commodity prices and demand for PBF Energy’s refined products and natural gas and the differential in the prices of different crude oils;

the suspension, reduction or termination of PBF Energy’s obligations under our commercial agreements;

disruptions due to equipment interruption or failure at our facilities, PBF Energy’s facilities or third-party facilities on which our business is dependent;

incremental costs as a separate public partnership;

our general partner and its affiliates, including PBF Energy, have conflicts of interest with us and limited duties to us and our unitholders, and they may favor their own interests to the detriment of us and our other common unitholders;

our partnership agreement restricts the remedies available to holders of our common units for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty;

holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors;

our tax treatment depends on our status as a partnership for U.S. federal income tax purposes, as well as our not being subject to a material amount of entity level taxation by individual states;

changes at any time (including on a retroactive basis) in the tax treatment of publicly traded partnerships, including related impacts on potential dropdown transactions with PBF LLC, or an investment in our common units;

our unitholders will be required to pay taxes on their share of our taxable income even if they do not receive any cash distributions from us;

the effects of future litigation; and

other factors discussed elsewhere in this Form 10-Q.

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 U.S., we undertake no obligation 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 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

PBF LOGISTICS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except unit data)


	March 31, 2019		December 31, 2018		June 30, 2019		December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	16,446	$	19,908	$	20,000	$	19,908
Accounts receivable - affiliates	43,931		37,052		47,279		37,052
Accounts receivable	5,157		7,511		5,129		7,511
Prepaids and other current assets	4,610		4,598		5,883		4,598
Total current assets	70,144		69,069		78,291		69,069
Property, plant and equipment, net	861,617		862,117		855,958		862,117
Goodwill	6,332		6,332		6,332		6,332
Other non-current assets	19,154		18,835		18,992		18,835
Total assets	$	957,247	$	956,353	$	959,573	$	956,353

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable - affiliates	$	4,714	$	12,047	$	5,469	$	12,047
Accounts payable and accrued liabilities	65,622		50,972
Accounts payable					5,422		4,660
Accrued liabilities					44,642		46,312
Deferred revenue	2,895		2,960		2,875		2,960
Total current liabilities	73,231		65,979		58,408		65,979
Long-term debt	677,773		673,324		769,219		673,324
Other long-term liabilities	24,567		23,860		24,952		23,860
Total liabilities	775,571		763,163		852,579		763,163

Commitments and contingencies (Note 9)

Equity:
Common unitholders (55,348,821 and 45,348,663 units issued and outstanding, as of March 31, 2019 and December 31, 2018, respectively)	13,985		23,718
Common unitholders (62,107,210 and 45,348,663 units issued and outstanding, as of June 30, 2019 and December 31, 2018, respectively)					106,994		23,718
Total PBF Logistics LP equity	13,985		23,718		106,994		23,718
Noncontrolling interest	167,691		169,472		—		169,472
Total equity	181,676		193,190		106,994		193,190
Total liabilities and equity	$	957,247	$	956,353	$	959,573	$	956,353

See Notes to Condensed Consolidated Financial Statements.

PBF LOGISTICS LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except unit and per unit data)


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2019			2018
Revenue:
Affiliate	$	71,332		$	60,864		$	74,656		$	63,785		$	145,988		$	124,649
Third-party	7,513			3,876			8,094			4,314			15,607			8,190
Total revenue	78,845			64,740			82,750			68,099			161,595			132,839

Costs and expenses:
Operating and maintenance expenses	29,916			19,880			28,553			20,724			58,469			40,604
General and administrative expenses	6,010			4,291			7,580			6,488			13,590			10,779
Depreciation and amortization	8,721			6,643			8,854			7,091			17,575			13,734
Total costs and expenses	44,647			30,814			44,987			34,303			89,634			65,117

Income from operations	34,198			33,926			37,763			33,796			71,961			67,722

Other expense:
Interest expense, net	(10,913		)	(9,585		)	(11,216		)	(10,029		)	(22,129		)	(19,614		)
Amortization of loan fees and debt premium	(449		)	(363		)	(446		)	(396		)	(895		)	(759		)
Accretion on discounted liabilities	(760		)	—			(773		)	—			(1,533		)	—
Net income	22,076			23,978			25,328			23,371			47,404			47,349
Less: Net loss attributable to Predecessor	—			(1,279		)	—			(1,084		)	—			(2,363		)
Less: Net income attributable to noncontrolling interest	4,719			4,022			3,162			4,363			7,881			8,385
Net income attributable to the partners	17,357			21,235			22,166			20,092			39,523			41,327
Less: Net income attributable to the IDR holder	—			2,959			—			3,415			—			6,370
Net income attributable to PBF Logistics LP unitholders	$	17,357		$	18,276		$	22,166		$	16,677		$	39,523		$	34,957

Net income per limited partner unit:
Common units - basic	$	0.35		$	0.43		$	0.37		$	0.39		$	0.72		$	0.83
Common units - diluted	0.35			0.43			0.37			0.39			0.72			0.83

Weighted-average limited partner units outstanding:
Common units - basic	49,151,927			42,129,377			60,279,287			42,231,119			54,748,755			42,176,202
Common units - diluted	49,318,133			42,236,092			60,364,347			42,294,616			54,776,257			42,190,136

See Notes to Condensed Consolidated Financial Statements.

PBF LOGISTICS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Three Months Ended March 31,						Six Months Ended June 30,
	2019			2018			2019			2018
Cash flows from operating activities:
Net income	$	22,076		$	23,978		$	47,404		$	47,349
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8,721			6,643			17,575			13,734
Amortization of loan fees and debt premium	449			363			895			759
Accretion on discounted liabilities	760			—			1,533			—
Unit-based compensation expense	964			834			4,351			3,497
Changes in operating assets and liabilities:
Accounts receivable - affiliates	(6,879		)	8,336			(10,227		)	9,344
Accounts receivable	2,354			115			2,382			(1,077		)
Prepaids and other current assets	(12		)	(598		)	(1,285		)	242
Accounts payable - affiliates	(3,385		)	(2,984		)	(2,630		)	(1,607		)
Accounts payable and accrued liabilities	13,302			6,908
Accounts payable							762			(2,572		)
Accrued liabilities							(2,857		)	(2,754		)
Deferred revenue	(65		)	(595		)	(85		)	(286		)
Other assets and liabilities	(76		)	(75		)	(1,932		)	(1,302		)
Net cash provided by operating activities	38,209			42,925			55,886			65,327

Cash flows from investing activities:
Knoxville Terminals Purchase							—			(58,000		)
Expenditures for property, plant and equipment	(11,220		)	(3,953		)	(15,152		)	(7,671		)
Net cash used in investing activities	(11,220		)	(3,953		)	(15,152		)	(65,671		)

Cash flows from financing activities:
Proceeds from issuance of common units							132,483			—
Acquisition of TVPC noncontrolling interest							(200,000		)	—
Distributions to unitholders	(27,951		)	(23,058		)	(59,625		)	(46,611		)
Distributions to TVPC members	(6,500		)	(5,000		)	(8,500		)	(11,250		)
Contribution from parent	—			1,131			—			4,193
Proceeds from revolving credit facility	16,000			—			196,000			64,000
Repayment of revolving credit facility	(12,000		)	(9,700		)	(101,000		)	(9,700		)
Net cash used in financing activities	(30,451		)	(36,627		)
Deferred financing costs							—			(271		)
Net cash (used in) provided by financing activities							(40,642		)	361

Net change in cash and cash equivalents	(3,462		)	2,345			92			17
Cash and cash equivalents at beginning of year	19,908			19,664			19,908			19,664
Cash and cash equivalents at end of period	$	16,446		$	22,009		$	20,000		$	19,681

Supplemental disclosure of non-cash investing and financing activities:
Accrued capital expenditures	$	1,247		$	414		$	405		$	24
Contribution of net assets from PBF LLC	259			—			242			—
Units issued in connection with the IDR Restructuring	215,300			—			215,300			—
Assets acquired under operating leases	482			—			482			—

See Notes to Condensed Consolidated Financial Statements.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

PBF Logistics LP (“PBFX” or the “Partnership”) is a Delaware limited partnership formed in February 2013. PBF Logistics GP LLC (“PBF GP” or “our general partner”) serves as the general partner of PBFX. PBF GP is wholly-owned by PBF Energy Company LLC (“PBF LLC”). PBF Energy Inc. (“PBF Energy”) is the sole managing member of PBF LLC and, as of ~~March 31,~~June 30, 2019, owned 99.0% of the total economic interest in PBF LLC. In addition, PBF LLC is the sole managing member of PBF Holding Company LLC (“PBF Holding”), a Delaware limited liability company and affiliate of PBFX. PBF LLC owns 29,953,631 PBFX common units constituting an aggregate ~~54.1%~~48.2% limited partner interest in PBFX, with the remaining ~~45.9%~~51.8% limited partner interest owned by public unitholders as of ~~March 31,~~June 30, 2019.

PBFX engages in the receiving, handling, storage and transferring of crude oil, refined products, natural gas and intermediates. The Partnership does not take ownership of or receive any payments based on the value of the crude oil, products, natural gas or intermediates that it handles and does not engage in the trading of any commodities. PBFX’s assets are integral to the operations of PBF Holding’s refineries, and as a result, the Partnership continues to generate a substantial majority of its revenue from transactions with PBF Holding. Additionally, certain of PBFX’s assets also generate revenue from third-party transactions.

On February 28, 2019, the Partnership closed on an Equity Restructuring Agreement (the “IDR Restructuring Agreement”) with PBF LLC and PBF GP, pursuant to which PBFX’s incentive distribution rights (“IDRs”) held by PBF LLC were canceled and converted into 10,000,000 newly issued PBFX common units (the “IDR Restructuring”). Transaction costs related to the IDR Restructuring were ~~$2,032~~$2,057 for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and were included in “General and administrative expenses” within the Partnership’s condensed consolidated ~~statement~~statements of operations. Subsequent to the closing of the IDR Restructuring, no distributions were made to PBF LLC with respect to the IDRs, and the newly issued PBFX common units are entitled to normal distributions.

On April 24, 2019, the Partnership entered into a Contribution Agreement with PBF LLC (the “TVPC Contribution Agreement”), pursuant to which PBF LLC contributed to the Partnership all of the issued and outstanding limited liability company interests of TVP Holding Company LLC (“TVP Holding”) for total consideration of $200,000 (the “TVPC Acquisition”). Subsequent to the closing of the TVPC Acquisition on May 31, 2019, the Partnership owns 100% of the equity interest in Torrance Valley Pipeline Company LLC (“TVPC”). Refer to Note 3 “Acquisitions” of the Notes to Condensed Consolidated Financial Statements for further discussion regarding the TVPC Acquisition.

Principles of Combination and Consolidation and Basis of Presentation

In connection with, and subsequent to, PBFX’s initial public offering (“IPO”), the Partnership has acquired certain assets from PBF LLC (collectively referred to as the “Contributed Assets”). Such acquisitions completed subsequent to the IPO were made through a series of drop-down transactions with PBF LLC (collectively referred to as the “Acquisitions from PBF”). The assets, liabilities and results of operations of the Contributed Assets prior to their acquisition by PBFX are collectively referred to as the “Predecessor.” The transactions through which PBFX acquired the Contributed Assets were transfers of assets between entities under common control. Accordingly, the accompanying condensed consolidated financial statements and related notes present the results of operations and cash flows of our Predecessor for all periods presented prior to the effective date of each transaction. The financial statements of our Predecessor have been prepared from the separate records maintained by PBF Energy and may not necessarily be indicative of the conditions that would have existed or the results of operations if the Predecessor had been operated as an unaffiliated entity. See (i) the Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”) for additional information regarding the Acquisitions from PBF and the ~~commercial~~ agreements ~~and amendments to other agreements~~that were entered into or amended with related parties ~~executed~~ in connection with these ~~acquisitions.~~acquisitions and (ii) Note 3 “Acquisitions” of the Notes to Condensed Consolidated Financial Statements for further discussion regarding the TVPC Acquisition.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with ~~United States of America~~U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, ~~they~~these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, PBFX has included all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, ~~and the~~ results of operations and cash flows of PBFX for the periods presented. The results of operations for the three and six months ended ~~March 31,~~June 30, 2019 are not necessarily indicative of the results that may be expected for the full year.

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

The Predecessor generally did not historically operate its respective assets for the purpose of generating ~~revenues~~revenue independent of other PBF Energy businesses prior to ~~PBFX’s~~the IPO or ~~for assets acquired in~~the effective dates of the Acquisitions from PBF, ~~prior to the effective dates of each transaction,~~ with the exception of the Paulsboro Lube Oil Terminal (as defined in Note 3 “Acquisitions” of the Notes to Condensed Consolidated Financial Statements). All intercompany accounts and transactions have been eliminated.

Summary of Significant Accounting Policies

Reclassifications

Certain amounts previously reported in the Partnership’s condensed consolidated financial statements for prior periods have been reclassified to conform to the presentation within this Quarterly Report on Form 10-Q. These reclassifications include the separation of “Accounts payable” and “Accrued liabilities” into two line items within the Partnership’s condensed consolidated balance sheets and statements of cash flows, as well as the corresponding statements within Note 13 “Condensed Consolidating Financial Statements of PBF Logistics” of the Notes to Condensed Consolidated Financial Statements.

Recently Adopted Accounting Guidance

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“~~ASU 2016-02”~~ASC 842”) to increase the transparency and comparability ~~about~~of leases among entities. Additional ASUs have been issued subsequent to ASU 2016-02 to provide supplementary clarification and implementation guidance for leases related to, among other things, the application of certain practical expedients, the rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2016-02 and these additional ASUs are now codified as Accounting Standards Codification Standard 842 - “Leases” (“ASC 842”). ASC 842 supersedes the lease accounting guidance in Accounting Standards Codification 840 ~~“Leases” (“ASC 840”),~~“Leases,” and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. The Partnership adopted ASC 842 effective January 1, 2019, using a modified retrospective approach. The adoption of ASC 842 resulted in the inclusion of less than $1,000 of operating leases recorded on the Partnership’s balance sheets, with operating lease right of use assets recorded in “Other non-current assets” and operating lease liabilities recorded in ~~“Accounts payable and accrued~~“Accrued liabilities” or “Other long-term liabilities” based on the future timing of lease payments. The adoption of ASC 842 did not materially impact the Partnership’s statements of operations or statements of cash flows. The Partnership’s condensed consolidated financial statements for the periods prior to the adoption of ASC 842 are not adjusted and are reported in accordance with the Partnership’s historical accounting policy. See Note 2 “Revenue” of the Notes to Condensed Consolidated Financial Statements for additional information about the impact of ASC 842 to the Partnership as a lessor.

In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”) to provide updated guidance on goodwill impairment testing. Under ASU 2017-04, Step 2 of the goodwill impairment analysis ~~Step 2~~ would be eliminated. This step required a comparison of the implied fair value ~~and~~to the carrying value of goodwill of the reporting unit. Subsequent to the effective date of ASU 2017-04, during the annual, or if applicable, interim goodwill impairment assessment, entities would perform the test by comparing the fair value of the reporting unit with the carrying value of the reporting unit. The impairment charge would be the excess amount of which carrying value is greater than fair value, with the total amount limited to the carrying value of goodwill. ASU 2017-04 is effective for goodwill impairment assessments beginning after December 15, 2019. ~~Early adoption is permitted, and the~~The Partnership early adopted the new standard ineffective January 1, 2019, and the adoption did not have a material impact on its condensed consolidated financial statements and related ~~disclosures~~disclosures.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This guidance amends the guidance on measuring credit losses on financial assets held at amortized cost. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This guidance is effective ~~January 1,~~for fiscal years beginning after December 15, 2019, ~~which is expected to~~including interim periods within those fiscal years. The Partnership does not expect that the adoption of this guidance will have ~~an immaterial~~a material impact ~~to the Partnership.~~on its condensed consolidated financial statements and related disclosures.

2. REVENUE

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration the Partnership expects to be entitled to in exchange for those goods or services.

As noted in Note 11 “Segment Information” of the Notes to Condensed Consolidated Financial Statements, the Partnership’s business consists of two reportable segments: (i) Transportation and Terminaling and (ii) Storage.

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

The following table provides information relating to the Partnership’s ~~revenues~~revenue for each service category by segment for the periods presented:


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		2019		2018
Transportation and Terminaling Segment
Terminaling	$	32,353	$	27,051	$	34,152	$	29,410	$	66,505	$	56,461
Pipeline	18,627		18,489		20,326		19,217		38,953		37,706
Other	14,979		12,131		15,178		12,506		30,157		24,637
Total	65,959		57,671		69,656		61,133		135,615		118,804
Storage Segment
Storage	12,886		7,069		13,094		6,966		25,980		14,035
Total	12,886		7,069		13,094		6,966		25,980		14,035
Total Revenue	$	78,845	$	64,740	$	82,750	$	68,099	$	161,595	$	132,839

PBFX recognizes revenue by charging fees for crude oil and refined products terminaling, ~~storing~~storage and pipeline services based on the greater of the contractual minimum volume commitment (“MVC”), as applicable, or the delivery of actual volumes transferred or stored based on contractual rates applied to throughput or storage volumes.

Minimum Volume Commitments

Transportation and Terminaling Segment

The Partnership’s Transportation and Terminaling segment consists of product terminals, pipelines, crude unloading facilities and other facilities capable of transporting and handling ~~barges~~crude oil, refined products and ~~ships.~~natural gas. Certain of ~~these~~the Transportation and Terminaling commercial agreements contain MVCs. Under these commercial agreements, if the Partnership’s customer fails to transport its minimum throughput volumes during any specified period, the customer will pay the Partnership a deficiency payment equal to the volume of the deficiency multiplied by the contractual rate then in effect. The deficiency payment is initially recorded as deferred revenue on the

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

Partnership’s balance sheets for all contracts in which the MVC deficiency makeup period is contractually longer than a fiscal quarter.

Certain of the Partnership’s customers may apply the amount of any such deficiency payments as a credit for volumes transported on the applicable pipeline or terminal system in excess of its MVC during the following quarters under the terms of the applicable agreement. The Partnership recognizes operating ~~revenues~~revenue for the deficiency payments when credits are used for volumes transported in excess of MVCs or at the end of the contractual period. If the Partnership determines, based on all available information, that it is remote that the Partnership’s customer will utilize these deficiency payments, the amount of the expected unused credits will be recognized as operating ~~revenues~~revenue in the period when that determination is made. The use or recognition of the credits is recorded as a reduction to deferred revenue.

Storage Segment

The Partnership earns storage revenue under ~~the~~ crude oil and refined products storage contracts through capacity reservation agreements, where the Partnership collects a fee for reserving storage capacity for customers in its facilities. Customers generally pay reservation fees based on the level of storage capacity reserved rather than the actual volumes stored.

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

As of ~~March 31,~~June 30, 2019, future fees for MVCs to be received related to noncancelable commercial terminaling, pipeline and storage agreements were as follows:


Remainder of 2019	$	85,525	$	58,496
2020	111,550		114,253
2021	111,293		113,355
2022	90,038		91,476
2023	87,549		87,199
Thereafter	173,287		170,794
Total MVC payments to be received ⁽¹⁾⁽²⁾	$	659,242	$	635,573

(1) All fixed consideration from contracts with customers is included in the amounts presented above. Variable consideration that is constrained or not required to be estimated as it reflects our efforts to perform is excluded.

(2) Arrangements deemed implicit leases are excluded from this table.

Leases

Lessor Disclosure Following the Adoption of ASC 842

The Partnership has leased certain of its assets under lease agreements with terms generally up to 15fifteen years, including leases of storage, terminaling and pipeline assets. Some leases include options to terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. The Partnership’s agreements generally do not ~~generally~~ provide an option for the lessee to purchase the leased equipment at the end of the lease term. However, in connection with the affiliate lease agreement for the interstate natural gas pipeline at ~~the~~ PBF Holding’s Paulsboro Refinery (the “Paulsboro Natural Gas Pipeline”), the Partnership granted a right of first refusal in favor of PBF LLC such that the Partnership would be required to give PBF Holding the first opportunity to purchase the Paulsboro Natural Gas Pipeline at market value prior to selling to an unrelated third party if PBF Holding refused to purchase it.

At inception, the Partnership determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. As of ~~March 31,~~June 30, 2019, all of the Partnership’s leases have been determined to be operating leases. Some of the Partnership’s lease arrangements contain lease components ~~(e.g.~~(e.g., MVCs) and non-lease components ~~(e.g.~~(e.g., maintenance, labor charges, etc.). The Partnership accounts for the lease and non-lease components as a single lease component.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

Certain of the Partnership’s lease agreements include MVCs that are adjusted periodically for an index or rate. The leases are initially measured using the projected payments adjusted for the index or rate in effect at the commencement date. The Partnership’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Partnership expects to derive significant future benefits from its leased assets following the end of the lease term, as the remaining useful life would be sufficient to allow the Partnership to enter into new leases for such assets.

In the normal course of business, the Partnership enters into contracts with PBF Holding and its refineries whereby PBF Holding and its refineries lease certain of the Partnership’s storage, terminaling and pipeline assets. The Partnership believes the terms and conditions under these leases are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services. The terms for these affiliate leases range from one to fifteen years. Leases with affiliates represent approximately ~~93%~~95% of the undiscounted future rental income from the Partnership’s leased assets. These affiliate lease arrangements accounted for ~~$36,087~~$38,693 of total lease revenue of $43,046 and ~~$28,973~~$74,780 of ~~the Partnership’s~~total lease revenue of $83,482 for the three and six months ended ~~March 31,~~June 30, 2019, respectively, and $28,556 of total lease revenue of $30,149 and $56,827 of total lease revenue of $59,925 for the three and six months ended June 30, 2018, respectively.

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

Undiscounted Cash Flows

The table below presents the fixed component of the undiscounted cash flows to be received for each of the first five years and the total remaining years for the Partnership’s operating leases as of ~~March 31,~~June 30, 2019:


Remainder of 2019	$	120,583	$	71,940
2020	160,528		150,193
2021	159,415		148,971
2022	149,212		138,768
2023	147,851		137,406
Thereafter	361,562		371,578
Total undiscounted future cash to be received	$	1,099,151	$	1,018,856

Assets Under Lease

The Partnership’s assets subject to lease are included in “Property, plant and equipment, net” within the Partnership’s condensed consolidated balance ~~sheet.~~sheets. The table below quantifies by property, plant and equipment category the assets that are subject to lease as of ~~March 31,~~June 30, 2019:


	March 31, 2019			June 30, 2019
Land	$	98,337		$	98,337
Pipelines	314,784			315,212
Terminals and equipment	49,309			50,235
Storage facilities	197,974			198,870
Construction in progress	4,487
	664,891			662,654
Accumulated depreciation	(57,044		)	(62,988		)
Net assets under lease	$	607,847		$	599,666

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

Deferred Revenue

The Partnership records deferred ~~revenues~~revenue when cash payments are received or due in advance of performance, including amounts which are refundable. Deferred revenue was ~~$2,895~~$2,875 and $2,960 as of ~~March 31,~~June 30, 2019 and December 31, 2018, respectively. The decrease in the deferred revenue balance as of ~~March 31,~~June 30, 2019 is primarily driven by the timing and extent of cash payments received in advance of satisfying the Partnership’s performance obligations for the comparative periods.

The Partnership’s payment terms vary by the type and location of our customer and the services offered. The period between invoicing and when payment is due is not significant ~~(i.e.~~(i.e., generally within two months). For certain services and customer types, the Partnership requires payment before the services are performed for the customer.

3. ACQUISITIONS

Third-Party Acquisitions

Knoxville Terminals Purchase

On April 16, 2018, the Partnership’s wholly-owned subsidiary, PBF Logistics Products Terminals LLC (“PLPT”), completed the purchase of two refined product terminals located in Knoxville, Tennessee (the “Knoxville

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

Terminals Purchase”), which include product tanks, pipeline connections to the Colonial Pipeline Company and Plantation Pipe Line Company pipeline systems and truck loading facilities (the “Knoxville Terminals”) from Cummins Terminals, Inc. (“Cummins”).

The aggregate purchase price for the Knoxville Terminals Purchase was $58,000, excluding working capital. The consideration was financed through a combination of cash on hand and borrowings under the Partnership’s Revolving Credit Facility (as defined in Note 6 “Debt” of the Notes to Condensed Consolidated Financial Statements). The final purchase price and fair value allocation were completed as of December 31, 2018.

PBFX accounted for the Knoxville Terminals Purchase as a business combination ~~under~~in accordance with GAAP whereby the Partnership recognizes assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition. Any excess consideration transferred over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.

The total purchase consideration and the fair values of the assets and liabilities at the acquisition date were as follows:



	Purchase Price
Gross purchase price	$	58,000
Working capital	356
Total consideration	$	58,356

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

The following table summarizes the final amounts recognized for assets acquired and liabilities assumed as of the acquisition date:



	Fair Value Allocation
Prepaids and other current assets	$	356
Property, plant and equipment	45,768
Intangibles*	5,900
Goodwill	6,332
Fair value of net assets acquired	$	58,356

* Intangibles are included in “Other non-current assets” within the Partnership’s condensed consolidated balance sheets.

The Partnership’s condensed consolidated financial statements for the ~~three~~six months ended ~~March 31,~~June 30, 2019 include the results of operations of the Knoxville Terminals subsequent to the Knoxville Terminals Purchase whereas the same period in 2018 does not include the results of operations of such ~~assets.~~assets prior to April 16, 2018. On an unaudited pro forma basis, the ~~revenues~~revenue and net income of PBFX assuming the acquisition had occurred on January 1, 2017, for the periods indicated, are shown below. The unaudited pro forma information does not purport to present what PBFX’s actual results would have been had the Knoxville Terminals Purchase occurred on January 1, 2017, nor is the financial information indicative of the results of future operations. The unaudited pro forma financial information includes the depreciation and amortization expense related to the acquisition and interest expense associated with the Knoxville Terminals Purchase financing.

Three Months Ended March 31, 2018
(Unaudited)
Pro forma revenues $ 67,724
Pro forma net income attributable to PBF Logistics LP unitholders: 18,490

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~



	Six Months Ended June 30, 2018
(Unaudited)	Six Months Ended June 30, 2018
Pro forma revenue	$	136,369
Pro forma net income attributable to PBF Logistics LP unitholders	35,153

East Coast Storage Assets Acquisition

On October 1, 2018, the Partnership closed the ~~purchase~~acquisition of CPI Operations LLC (“CPI”), whose assets include a storage facility with multi-use storage capacity, an Aframax-capable marine facility, a rail facility, a truck terminal, equipment, contracts and certain other idled assets (collectively, the “East Coast Storage Assets”) located on the Delaware River near Paulsboro, New Jersey (the “East Coast Storage Assets Acquisition”), which had been contemplated by an agreement dated as of July 16, 2018 between the Partnership and Crown Point International LLC (“Crown Point”). Additionally, the East Coast Storage Assets Acquisition includes an earn-out provision related to an existing commercial agreement with a third party, based on the future results of ~~restarting~~ certain of the acquired idled assets (the “Contingent Consideration”), which are expected to be restarted in the fourth quarter of 2019.

The aggregate purchase price for the East Coast Storage Assets Acquisition was $126,989, including working capital and the Contingent Consideration, which was comprised of an initial payment at closing of $75,000 with a remaining balance of $32,000 payable one year after closing. The residual purchase consideration consists of the Contingent Consideration. The consideration was financed through a combination of cash on hand and borrowings under the Partnership’s Revolving Credit Facility (as defined in Note 6 “Debt” of the Notes to Condensed Consolidated Financial Statements). The fair value allocation is subject to adjustment pending completion of the final purchase valuation, which was in process as of ~~March 31, 2019.~~June 30, 2019, as the purchase price and fair value allocation may be subject to adjustment due to changes in assumptions and timing that may impact the Contingent Consideration.

PBFX accounted for the East Coast Storage Assets Acquisition as a business combination under GAAP whereby the Partnership recognizes assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

The total purchase consideration and the estimated fair values of the assets and liabilities at the acquisition date were as follows:



	Purchase Price
Gross purchase price*	$	105,900
Estimated working capital adjustments	(11		)
Contingent Consideration **	21,100
Total consideration	$	126,989

* Includes $30,900 net present value payable of $32,000 due to Crown Point one year after closing, which is included in ~~“Accounts payable and accrued~~“Accrued liabilities” within the Partnership’s condensed consolidated balance sheets.

** Contingent Consideration is included in “Other long-term liabilities” within the Partnership’s condensed consolidated balance sheets.

The following table summarizes the estimated amounts recognized for assets acquired and liabilities assumed as of the acquisition date:


	Fair Value Allocation			Fair Value Allocation
Accounts receivable	$	436		$	436
Prepaids and other current assets	1,770			1,770
Property, plant and equipment	114,406			114,406
Intangibles*	13,300			13,300
Accounts payable and accrued liabilities	(2,173		)
Accounts payable				(902		)
Accrued liabilities				(1,271		)
Other long-term liabilities	(750		)	(750		)
Estimated fair value of net assets acquired	$	126,989		$	126,989

* Intangibles are included in “Other non-current assets” within the Partnership’s condensed consolidated balance sheets.

The East Coast Storage Assets Acquisition includes consideration in the form of the Contingent Consideration. Pursuant to the agreement, the Partnership and Crown Point will share equally in the future operating profits of the restarted assets, as defined in the agreement, over a contractual term of up to three years starting in ~~2020.~~2019. The

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

Partnership recorded the Contingent Consideration based on its estimated fair value of $21,100 at the acquisition date, which was recorded in “Other long-term liabilities” within the Partnership’s condensed consolidated balance sheets.

The Partnership’s condensed consolidated financial statements for the ~~three~~six months ended ~~March 31,~~June 30, 2019 include the results of operations of the East Coast Storage Assets subsequent to the East Coast Storage Assets Acquisition. The same period in 2018 does not include the results of operations of such assets. On an unaudited pro forma basis, the ~~revenues~~revenue and net income of PBFX assuming the acquisition had occurred on January 1, 2017, for the periods indicated, are shown below. The unaudited pro forma information does not purport to present what PBFX’s actual results would have been had the East Coast Storage Assets Acquisition occurred on January 1, 2017, nor is the financial information indicative of the results of future operations. The unaudited pro forma financial information includes the depreciation and amortization expense related to the acquisition and interest expense associated with the East Coast Storage Assets Acquisition financing.

Three Months Ended March 31, 2018
(Unaudited)
Pro forma revenues $ 70,548
Pro forma net income attributable to PBF Logistics LP unitholders: 16,200



	Six Months Ended June 30, 2018
(Unaudited)	Six Months Ended June 30, 2018
Pro forma revenue	$	144,454
Pro forma net income attributable to PBF Logistics LP unitholders	30,117

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

Acquisitions from PBF

The following ~~Acquisition~~Acquisitions from PBF ~~was a transaction~~were transactions between affiliate companies. As a result, the ~~acquisition was~~acquisitions were accounted for as ~~a transfer~~transfers of assets between entities under common control ~~under~~in accordance with GAAP. The assets and liabilities of the ~~Acquisition~~Acquisitions from PBF were transferred at their historical carrying value.

Development Assets Acquisition

On July 16, 2018, the Partnership entered into four contribution agreements with PBF LLC, pursuant to which PBF Energy contributed to PBFX certain of its subsidiaries (the “Development Assets Contribution Agreements”). Pursuant to the Development Assets Contribution Agreements, the Partnership acquired from PBF LLC all of the issued and outstanding limited liability company interests of: Toledo Rail Logistics Company LLC (“TRLC”), whose assets consist of a loading and unloading rail facility located at PBF Holding’s Toledo Refinery (the “Toledo Rail Products Facility”); Chalmette Logistics Company LLC (“CLC”), whose assets consist of a truck loading rack facility (the “Chalmette Truck Rack”) and a rail yard facility (the “Chalmette Rosin Yard”), both of which are located at PBF Holding’s Chalmette Refinery; Paulsboro Terminaling Company LLC (“PTC”), whose assets consist of a lube oil terminal facility located at PBF Holding’s Paulsboro Refinery (the “Paulsboro Lube Oil Terminal”); and DCR Storage and Loading Company LLC (“DSLC”), whose assets consist of an ethanol storage facility located at PBF Holding’s Delaware City Refinery (the “Delaware Ethanol Storage Facility” and collectively with the Toledo Rail Products Facility, the Chalmette Truck Rack, the Chalmette Rosin Yard, and the Paulsboro Lube Oil Terminal, the “Development Assets”). The acquisition of the Development Assets closed on July 31, 2018 for total consideration of $31,586, consisting of 1,494,134 common units issued to PBF LLC (the “Development Assets Acquisition”).

TVPC Acquisition

On April 24, 2019, the Partnership entered into the TVPC Contribution Agreement, pursuant to which the Partnership acquired from PBF LLC all of the issued and outstanding limited liability company interests of TVP Holding, which held the remaining 50% equity interests in TVPC. The TVPC Acquisition closed on May 31, 2019 for total consideration of $200,000 in cash, which was financed through proceeds from the April Registered Direct Offering (as defined in Note 7 “Equity” of the Notes to Condensed Consolidated Financial Statements) and borrowings under the Partnership’s Revolving Credit Facility (as defined in Note 6 “Debt” of the Notes to Condensed Consolidated Financial Statements). As a result of the TVPC Acquisition, the Partnership owns 100% of the equity interest in TVPC.

Acquisition Expenses

PBFX incurred acquisition related costs of ~~$121~~$930 and ~~$483~~$1,051 for the three and six months ended ~~March 31,~~June 30, 2019, respectively, primarily consisting of consulting and legal expenses related to the TVPC Acquisition and other pending and non-consummated acquisitions. PBFX incurred acquisition related costs of $669 and $1,152 for the three and six months ended June 30, 2018, respectively, primarily consisting of consulting and legal expenses related to the Knoxville Terminals Purchase and other pending and non-consummated acquisitions. These costs are included in “General and administrative expenses” within the Partnership’s condensed consolidated ~~statement~~statements of operations.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

4. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:


	March 31, 2019			December 31, 2018			June 30, 2019			December 31, 2018
Land	$	115,957		$	115,957		$	115,957		$	115,957
Pipelines	337,536			337,474			339,286			337,474
Terminals and equipment	277,877			259,441			279,325			259,441
Storage facilities	215,816			213,937			216,714			213,937
Construction in progress	7,937			20,439			6,910			20,439
	955,123			947,248			958,192			947,248
Accumulated depreciation	(93,506		)	(85,131		)	(102,234		)	(85,131		)
Property, plant and equipment, net	$	861,617		$	862,117		$	855,958		$	862,117

Depreciation expense was ~~$8,596~~$17,324 and ~~$6,643~~$13,611 for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018, respectively.

5. INTANGIBLES

The Partnership’s net ~~intangible~~intangibles balance consisted of the following:


	March 31, 2019			December 31, 2018			June 30, 2019			December 31, 2018
Customer contracts	$	13,300		$	13,300		$	13,300		$	13,300
Customer relationships	5,900			5,900			5,900			5,900
	19,200			19,200			19,200			19,200
Accumulated amortization	(520		)	(395		)	(646		)	(395		)
Total intangibles*	$	18,680		$	18,805		$	18,554		$	18,805

* Intangibles are included in “Other non-current assets” within the Partnership’s condensed consolidated balance sheets.

Amortization expense was ~~$125~~$251 and $0$123 for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018, respectively.

6. DEBT

Total debt was comprised of the following:


	March 31, 2019			December 31, 2018			June 30, 2019			December 31, 2018
2023 Notes	$	525,000		$	525,000		$	525,000		$	525,000
Revolving credit facility (a)(b)	160,000			156,000			251,000			156,000
Total debt outstanding	685,000			681,000			776,000			681,000
Unamortized debt issuance costs	(9,903		)	(10,496		)	(9,310		)	(10,496		)
Unamortized 2023 Notes premium	2,676			2,820			2,529			2,820
Net carrying value of debt	$	677,773		$	673,324		$	769,219		$	673,324

___________________


(a)	PBFX had $4,110 outstanding letters of credit and ~~$335,890~~$244,890 available under its $500,000 amended and restated revolving credit facility with Wells Fargo Bank, National Association, as administrative agent, and a syndicate of lenders (as amended, the “Revolving Credit Facility”) as of ~~March 31,~~June 30, 2019.

1618

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)


(b)	During the ~~three~~six months ended ~~March 31,~~June 30, 2019, PBFX ~~made repayments~~incurred net borrowings of ~~$12,000 and borrowed $16,000~~$95,000 under the Revolving Credit Facility to fund the TVPC Acquisition, other capital expenditures and working capital requirements.

Fair Value Measurement

A fair value hierarchy (Level 1, Level 2, or Level 3) is used to categorize fair value amounts based on the quality of inputs used to measure fair value. Accordingly, fair values derived from Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Fair values derived from Level 2 inputs are based on quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are either directly or indirectly observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

The estimated fair value of the Revolving Credit Facility approximates its carrying value, categorized as a Level 2 measurement, as this borrowing bears interest based upon short-term floating market interest rates. The estimated fair value of the Partnership’s 6.875% Senior Notes due 2023 (the “2023 Notes”), 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 2023 Notes and was approximately ~~$536,938~~$542,778 and $515,336 at ~~March 31,~~June 30, 2019 and December 31, 2018, respectively. The carrying value and fair value of PBFX’s debt, exclusive of unamortized debt issuance costs and unamortized premium on the 2023 Notes, was ~~$685,000~~$776,000 and ~~$696,938~~$793,778 as of ~~March 31,~~June 30, 2019, respectively, and $681,000 and $671,336 as of December 31, 2018, respectively.

7. EQUITY

PBFX had ~~25,395,190~~32,153,579 common units held by the public outstanding as of ~~March 31,~~June 30, 2019. PBF LLC owns 29,953,631 ~~of PBFX’s~~PBFX common units constituting an aggregate of ~~54.1%~~48.2% of PBFX’s limited partner interest as of ~~March 31,~~June 30, 2019.

Share Activity

The partnership agreement authorizes PBFX to issue an unlimited number of additional partnership interests for the consideration of, and on the terms and conditions determined by, PBFX’s general partner without the approval of the unitholders. It is possible that PBFX will fund future acquisitions through the issuance of additional common units, subordinated units or other partnership interests.

The following table presents changes in PBFX common units outstanding:


	Three Months Ended March 31,		Three Months Ended June 30,
	2019	2018	2019	2018
Balance at beginning of period	45,348,663	41,900,708	55,348,821	41,900,708
Vesting of phantom units, net of forfeitures	158	—	172,889	172,354
New units issued	10,000,000	—	6,585,500	—
Balance at end of period	55,348,821	41,900,708	62,107,210	42,073,062



	Six Months Ended June 30,
	2019	2018
Balance at beginning of period	45,348,663	41,900,708
Vesting of phantom units, net of forfeitures	173,047	172,354
New units issued	16,585,500	—
Balance at end of period	62,107,210	42,073,062

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

On February 28, 2019, as a result of the closing of the IDR Restructuring, PBFX’s IDRs held by PBF LLC were canceled and converted into 10,000,000 newly issued PBFX common units. On April 24, 2019, the Partnership entered into subscription agreements to sell an aggregate of 6,585,500 common units to certain institutional investors in a registered direct public offering (the “April Registered Direct Offering”) for gross proceeds of approximately $135,000. The April Registered Direct Offering closed on April 29, 2019.

Additionally, 233,993 of the Partnership’s phantom units issued under the PBFX 2014 Long-Term Incentive Plan (“LTIP”) vested and were converted into common units held by certain directors, officers and current and former employees of our general partner or its affiliates during the year ended December 31, 2018.

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

Holders of any additional common units PBFX issues will be entitled to share equally with the then-existing common unitholders in PBFX’s distributions of available cash.

Noncontrolling Interest

Prior to the TVPC Acquisition, PBFX’s wholly-owned subsidiary, PBFX Operating Company LP (“PBF Op Co”), ~~holds~~held a 50% controlling interest in ~~Torrance Valley Pipeline Company LLC (“TVPC”),~~TVPC, with the other 50% equity interest in TVPC held by TVP Holding, ~~Company LLC (“TVP Holding”),~~ a subsidiary of PBF Holding. PBFX Op Co iswas the sole managing member of TVPC. PBFX, through its ownership of PBFX Op Co, ~~consolidates~~consolidated the financial results of TVPC and ~~records~~recorded a noncontrolling interest for the economic interest in TVPC held by TVP Holding. Noncontrolling interest on the condensed consolidated statements of operations ~~includes~~included the portion of net income or loss attributable to the economic interest in TVPC held by TVP Holding. Noncontrolling interest on the condensed consolidated balance sheets ~~includes~~included the portion of net assets of TVPC attributable to TVP Holding.

Subsequent to the TVPC Acquisition, PBFX owns 100% of the equity interest in TVPC and no longer records a noncontrolling interest related to TVPC.

Equity Activity

The following tables summarize the changes in the carrying amount of the Partnership’s equity during the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018:


	Common Units			Noncontrolling Interest			Total Equity			Common Units			Noncontrolling Interest			Total Equity
Balance at December 31, 2018	$	23,718		$	169,472		$	193,190		$	23,718		$	169,472		$	193,190
Quarterly distributions to unitholders ($0.5050 per unit)	(28,313		)	—			(28,313		)	(28,313		)	—			(28,313		)
Distributions to TVPC members	—			(6,500		)	(6,500		)	—			(6,500		)	(6,500		)
Net income attributable to the partners	17,357			4,719			22,076			17,357			4,719			22,076
Unit-based compensation expense	964			—			964			964			—			964
Other	259			—			259			259			—			259
Balance at March 31, 2019	$	13,985		$	167,691		$	181,676		$	13,985		$	167,691		$	181,676
Quarterly distributions to unitholders ($0.5100 per unit)										(32,079		)	—			(32,079		)
Distributions to TVPC members										—			(2,000		)	(2,000		)
Net income attributable to the partners										22,166			3,162			25,328
Acquisition of TVPC noncontrolling interest										(31,147		)	(168,853		)	(200,000		)
Unit-based compensation expense										3,387			—			3,387
Issuance of common units, net of expenses										132,483			—			132,483
Other										(1,801		)	—			(1,801		)
Balance at June 30, 2019										$	106,994		$	—		$	106,994

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)


	Net Investment			Common Units			IDR Holder			Noncontrolling Interest			Total Equity			Net Investment			Common Units			IDR Holder			Noncontrolling Interest			Total Equity
Balance at December 31, 2017	$	10,665		$	(17,544	)	$	2,736		$	171,903		$	167,760		$	10,665		$	(17,544	)	$	2,736		$	171,903		$	167,760
Net loss attributable to the Development Assets	(1,279		)	—			—			—			(1,279		)	(1,279		)	—			—			—			(1,279		)
Contributions to the Development Assets	1,131			—			—			—			1,131			1,131			—			—			—			1,131
Quarterly distributions to unitholders (including IDRs) ($0.4850 per unit)	—			(20,618		)	(2,736		)	—			(23,354		)	—			(20,618		)	(2,736		)	—			(23,354		)
Distributions to TVPC members	—			—			—			(5,000		)	(5,000		)	—			—			—			(5,000		)	(5,000		)
Net income attributable to the partners	—			18,276			2,959			4,022			25,257			—			18,276			2,959			4,022			25,257
Unit-based compensation expense	—			834			—			—			834			—			834			—			—			834
Other	—			(11		)	—			—			(11		)	—			(11		)	—			—			(11		)
Balance at March 31, 2018	$	10,517		$	(19,063	)	$	2,959		$	170,925		$	165,338		$	10,517		$	(19,063	)	$	2,959		$	170,925		$	165,338
Net loss attributable to the Development Assets																(1,084		)	—			—			—			(1,084		)
Contributions to the Development Assets																3,062			—			—			—			3,062
Quarterly distributions to unitholders (including IDRs) ($0.4900 per unit)																—			(20,942		)	(2,955		)	—			(23,897		)
Distributions to TVPC members																—			—			—			(6,250		)	(6,250		)
Net income attributable to the partners																—			16,681			3,411			4,363			24,455
Unit-based compensation expense																—			2,663			—			—			2,663
Other																—			(1,048		)	—			—			(1,048		)
Balance at June 30, 2018																$	12,495		$	(21,709	)	$	3,415		$	169,038		$	163,239

Cash Distributions

PBFX’s partnership agreement sets forth the calculation to be used to determine the amount and priority of cash distributions that the unitholders and general partner will receive.

During the six months ended June 30, 2019, PBFX made distribution payments as follows:



Related Earnings Period:	Q4 2018		Q1 2019
Distribution date	March 14, 2019		May 30, 2019
Record date	March 1, 2019		May 15, 2019
Per unit	$	0.5050	$	0.5100
To public common unitholders	$	12,825	$	16,398
To PBF LLC	15,126		15,276
Total distribution	$	27,951	$	31,674

1821

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

~~During the three months ended March 31, 2019, PBFX made a distribution payment as follows:~~

Related Earnings Period: Q4 2018
Distribution date March 14, 2019
Record date March 1, 2019
Per unit $ 0.5050
To public common unitholders $ 12,825
To PBF LLC 15,126
Total distribution $ 27,951

The allocation of total quarterly distributions to general and limited partners for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 is shown in the table below. The Partnership’s distributions are declared subsequent to quarter end (distributions of $0.5150 and $0.4950 per unit declared for the three months ended June 30, 2019 and 2018, respectively, and $0.5100 and $0.4900 per unit declared for the three months ended March 31, 2019 and 2018, respectively); therefore, the table represents total estimated distributions applicable to the period in which the distributions are earned:


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		2019		2018
IDR - PBF LLC ⁽¹⁾	$	—	$	2,959	$	—	$	3,415	$	—	$	6,370
Limited partners’ distributions:
Common	31,952		20,847		32,398		22,800		64,481		43,770
Total distributions	31,952		23,806		32,398		26,215		64,481		50,140
Total cash distributions ⁽²⁾	$	31,716	$	23,582	$	31,986	$	25,866	$	63,660	$	49,419

(1) Subsequent to the closing of the IDR Restructuring, the IDRs were canceled, no distributions were made to PBF LLC with respect to the IDRs and the newly issued PBFX common units are entitled to normal distributions.

(2) Excludes phantom unit distributions, which are accrued and paid upon vesting.

8. NET INCOME PER UNIT

Earnings in excess of distributions are allocated to the limited partners based on their respective ownership interests. Payments made to PBFX’s unitholders are determined in relation to actual distributions declared and are not based on the net income (loss) allocations used in the calculation of net income (loss) per unit.

Diluted net income per unit includes the effect of potentially dilutive units of PBFX’s common units that consist of unvested phantom units. There were no1,000 and 340,198 anti-dilutive phantom units for the three and six months ended ~~March 31,~~June 30, 2019, respectively, compared to 146,065 and ~~2018.~~429,503 anti-dilutive phantom units for the three and six months ended June 30, 2018, respectively.

In addition to the common units, PBFX has also identified the IDRs (prior to the IDR Restructuring) as participating securities and used the two-class method when calculating the net income per unit applicable to limited partners that is based on the weighted-average number of common units outstanding during the prior period. On February 28, 2019, PBFX closed the IDR Restructuring, which canceled and converted PBFX’s IDRs held by PBF LLC into 10,000,000 newly issued PBFX common units. Subsequently, no distributions were made to PBF LLC with respect to the IDRs and the newly issued PBFX common units are entitled to normal distributions.

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

When calculating basic earnings per unit under the two-class method for a master limited partnership, net income for the current reporting period is reduced by the amount of available cash that has been or will be distributed to the limited partners and IDR holder (prior to the IDR Restructuring) for that reporting period.

The following table shows the calculation of ~~earnings less distributions:~~net income per limited partner unit:

Three Months Ended March 31, 2019
Limited Partner Common Units
Net income attributable to the partners:
Distributions declared $ 31,952
Earnings less distributions (14,595 )
Net income attributable to the partners $ 17,357

Weighted-average units outstanding - basic 49,151,927
Weighted-average units outstanding - diluted 49,318,133

Net income per limited partner unit - basic $ 0.35
Net income per limited partner unit - diluted $ 0.35

Three Months Ended March 31, 2018
Limited Partner Common Units IDRs - PBF LLC Total
Net income attributable to the partners:
Distributions declared $ 20,847
$ 2,959
$ 23,806
Earnings less distributions (2,571 ) —
(2,571 )
Net income attributable to the partners $ 18,276
$ 2,959
$ 21,235

Weighted-average units outstanding - basic 42,129,377

Weighted-average units outstanding - diluted 42,236,092

Net income per limited partner unit - basic $ 0.43

Net income per limited partner unit - diluted $ 0.43

~~9. COMMITMENTS AND CONTINGENCIES~~

Certain of PBFX’s assets are collocated with PBF Holding’s Delaware City Refinery, and are located in Delaware’s coastal zone where certain activities are regulated under the Delaware Coastal Zone Act (the “CZA”). Therefore, determinations regarding the CZA that impact the Delaware City Refinery may potentially adversely impact the Partnership’s assets even if the Partnership is not directly involved.

The Delaware City Refinery appealed a Notice of Penalty Assessment and Secretary’s Order issued in March 2017 (the “2017 Secretary’s Order”), including a $150 fine, alleging violation of a 2013 Secretary’s Order authorizing crude oil shipment by barge (the “2013 Secretary’s Order”). The Delaware Department of Natural Resources and Environmental Control’s (“DNREC”) determined that the Delaware City Refinery had violated the 2013 Secretary’s Order by failing to make timely and full disclosure to DNREC about the nature and extent of certain shipments and had misrepresented the number of shipments that went to other facilities. The Notice of Penalty Assessment and 2017 Secretary’s Order conclude that the 2013 Secretary’s Order was violated by the



	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Net income attributable to the partners:
Distributions declared	$	32,398		$	64,481
Earnings less distributions	(10,232		)	(24,958		)
Net income attributable to the partners	$	22,166		$	39,523

Weighted-average units outstanding - basic	60,279,287			54,748,755
Weighted-average units outstanding - diluted	60,364,347			54,776,257

Net income per limited partner unit - basic	$	0.37		$	0.72
Net income per limited partner unit - diluted	0.37			0.72

2022

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

Delaware City Refinery by shipping crude oil from the Partnership’s Delaware City assets to three locations other than PBF Holding’s Paulsboro Refinery, on 15 days in 2014, making a total of 17 separate barge shipments containing approximately 35,700,000 gallons of crude oil in total. On April 28, 2017, the Delaware City Refinery appealed the Notice of Penalty Assessment and 2017 Secretary’s Order. On March 5, 2018, the Notice of Penalty Assessment was settled by DNREC, the Delaware Attorney General and the Delaware City Refinery for $100. The Delaware City Refinery made no admissions with respect to the alleged violations and agreed to request a CZA status decision prior to making crude oil shipments to destinations other than the Paulsboro Refinery. The Delaware City Refinery has paid the penalty. The CZA status decision was submitted to the DNREC and the outstanding appeal was withdrawn as required under the settlement agreement.



	Three Months Ended June 30, 2018
	Limited Partner Common Units			IDRs - PBF LLC		Total
Net income attributable to the partners:
Distributions declared	$	22,800		$	3,415	$	26,215
Earnings less distributions	(6,123		)	—		(6,123		)
Net income attributable to the partners	$	16,677		$	3,415	$	20,092

Weighted-average units outstanding - basic	42,231,119
Weighted-average units outstanding - diluted	42,294,616

Net income per limited partner unit - basic	$	0.39
Net income per limited partner unit - diluted	0.39



	Six Months Ended June 30, 2018
	Limited Partner Common Units			IDRs - PBF LLC		Total
Net income attributable to the partners:
Distributions declared	$	43,770		$	6,370	$	50,140
Earnings less distributions	(8,813		)	—		(8,813		)
Net income attributable to the partners	$	34,957		$	6,370	$	41,327

Weighted-average units outstanding - basic	42,176,202
Weighted-average units outstanding - diluted	42,190,136

Net income per limited partner unit - basic	$	0.83
Net income per limited partner unit - diluted	0.83

On December 28, 2016, DNREC issued a CZA permit (the “Ethanol Permit”) to the Delaware City Refinery allowing the utilization of existing tanks and existing marine loading equipment at their existing facilities to enable denatured ethanol to be loaded from storage tanks to marine vessels and shipped to offsite facilities. On January 13, 2017, the issuance of the Ethanol Permit was appealed by two environmental groups. On February 27, 2017, the Coastal Zone Industrial Board (the “Coastal Zone Board”) held a public hearing and dismissed the appeal, determining that the appellants did not have standing. The appellants filed an appeal of the Coastal Zone Board’s decision with the Delaware Superior Court (the “Superior Court”) on March 30, 2017. On January 19, 2018, the Superior Court rendered an Opinion regarding the decision of the Coastal Zone Board to dismiss the appeal of the Ethanol Permit for the ethanol project. The Judge determined that the record created by the Coastal Zone Board was insufficient for the Superior Court to make a decision, and therefore remanded the case back to the Coastal Zone Board to address the deficiency in the record. Specifically, the Superior Court directed the Coastal Zone Board to address any evidence concerning whether the appellants’ claimed injuries would be affected by the increased quantity of ethanol shipments. On remand, the Coastal Zone Board met on January 28, 2019 and reversed its previous decision on standing, ruling that the appellants have standing to appeal the issuance of the Ethanol Permit. The Delaware City Refinery is currently evaluating its appeal options.

On October 19, 2017, the Delaware City Refinery received approval from DNREC for the construction and operation of the ethanol marketing project to allow for a combined total loading of up to 10,000 barrels per day (“bpd”), on an annual average basis, of ethanol on to marine vessels at the marine piers and the terminal truck loading rack, subject to certain operational and emissions limitations as well as other conditions. On the same date, Delaware City Logistics Company LLC (“DCLC”) received DNREC approval for the construction of (i) four additional loading arms for each of lanes 4, 10 and 11 for purposes of loading ethanol at its truck loading rack and (ii) a vapor vacuum control system for loading lanes connected to the existing vapor recovery unit located at its terminal in Delaware City. This approval is also subject to certain operational and emission limitations as well as other conditions.9. COMMITMENTS AND CONTINGENCIES

Environmental Matters

PBFX’s assets, along with PBF Energy’s refineries, 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, waste management and the characteristics and the composition of fuels. Compliance with existing and anticipated laws and regulations can increase the overall cost of operating the Partnership’s assets, including remediation, operating costs and capital costs to construct, maintain and upgrade equipment and facilities.

In connection with PBF Holding’s acquisition of the Delaware City Refinery assets, Valero Energy Corporation (“Valero”) remains responsible for certain pre-acquisition environmental obligations upPBFX recorded a total liability related to ~~$20,000 and the predecessor to Valero in ownership of the refinery retains other historical obligations.~~

In connection with its acquisition of the Delaware City Refinery assets and the Paulsboro Refinery, PBF Holding and Valero purchased ten-year, $75,000 environmental insurance policies to insure against unknown environmental liabilities at each site. In connection with PBF Holding’s Toledo Refinery acquisition, Sunoco Inc.

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

~~(R&M) remains responsible for environmental remediation for conditions that existed on the closing date for twenty years from March 1, 2011, subject to certain limitations.~~

~~In connection with its purchase of the four refined product terminals from Plains All American Pipeline, L.P. (“Plains”), the Partnership is responsible for the~~ environmental remediation costs at certain of its assets of $2,493 and $2,587 for ~~conditions that existed on~~ the ~~closing date up to a maximum of $250 per year for ten years, with Plains remaining responsible for any~~period ended June 30, 2019 and ~~all additional costs above such amounts during such period. The environmental liability of $1,501 recorded as of March 31, 2019 ($1,570 as of~~ December 31, ~~2018) represents the present value of expected future costs discounted at a rate of 1.83%. At March 31, 2019, the undiscounted liability is $1,621 and the Partnership expects~~2018, respectively, related to ~~make aggregate payments for this liability of $1,250 over the next five years. The current portion of the~~existing environmental liability is recorded in “Accounts payable and accrued liabilities” and the non-current portion is recorded in “Other long-term liabilities” within the Partnership’s condensed consolidated balance sheets. liabilities.

During the ~~three months ended March 31,~~first quarter of 2019, the Partnership notified certain agencies of an oil sheen in the Schuylkill River potentially sourcing from one of ~~our~~its facilities. Clean up was immediately initiated, and oil is no longer being released into the waterway. The source of the oil is currently under investigation. Although full clean-up and remediation ~~costs~~activities have not been ~~finalized, it is~~completed, such incremental costs are not expected to be material to the Partnership.

In connection with PBF Holding’s acquisition of the Torrance Refinery and related logistics assets, PBF Holding is responsible for all known and unknown environmental liabilities at each site acquired in connection with the acquisition. The total estimated liability of known environmental obligations associated with the San Joaquin Valley pipeline system, which consists of the M55, M1 and M70 crude pipeline systems including pipeline stations with storage capacity and truck unloading capacity (the “Torrance Valley Pipeline”), was $538 as of March 31, 2019 ($132 as of December 31, 2018). In accordance with the contribution agreement associated with the Partnership’s acquisition of a 50% equity interest in TVPC from PBF LLC (the “TVPC Acquisition”), PBF Holding has indemnified the Partnership for any and all costs associated with environmental remediation for obligations that existed on or before August 31, 2016, including all known or unknown events, which includes the recorded liability of approximately $538. As of March 31, 2019, the Partnership expects to make the full aggregate payment for this liability within the next five years. The current portion of the environmental liability is recorded in “Accounts payable and accrued liabilities” and the non-current portion is recorded in “Other long-term liabilities” within the Partnership’s condensed consolidated balance sheets. PBFX has recorded a receivable from PBF Holding in “Accounts receivable - affiliates” within the Partnership’s condensed consolidated balance sheets for such anticipated payments related to the known pre-existing Torrance Valley Pipeline environmental obligations for which PBFX is indemnified.

In connection with the purchase of the Toledo, Ohio refined products terminal assets from Sunoco Logistics Partners L.P. (“Sunoco”) by the Partnership’s wholly-owned subsidiary, PLPT, the Partnership did not assume and is currently not aware of any pre-existing environmental obligations. If pre-acquisition environmental obligations are identified, Sunoco is responsible for any liabilities up to $2,000 identified to have occurred since 2002. For liabilities arising prior to 2002, Sunoco is indemnified by the prior owner under an agreement between Sunoco and the prior owner, and the Partnership is entitled to be reimbursed for all amounts paid related to such liabilities on a full pass-through basis.

In connection with the Knoxville Terminals Purchase, the Partnership did not assume, and is currently not aware of, any pre-existing environmental obligations. Additionally, the Partnership and Cummins purchased a ten-year, $30,000 environmental insurance policy against unknown environmental liabilities. For items not covered by the insurance policy, Cummins remains responsible for pre-acquisition environmental obligations up to $5,800.

In connection with the East Coast Storage Assets Acquisition, the Partnership assumed the pre-existing environmental obligations associated with the East Coast Storage Assets. The total estimated liability of known environmental obligations associated with the East Coast Storage Assets was $885 as of March 31, 2019 ($885 as of December 31, 2018). As of March 31, 2019, the Partnership expects to make aggregate payments for this liability of $430 over the next five years. The current portion of the environmental liability is recorded in “Accounts payable

2223

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

and accrued liabilities” and the non-current portion is recorded in “Other long-term liabilities” within the Partnership’s condensed consolidated balance sheets. Additionally, the Partnership and Crown Point purchased a ten-year, $30,000 environmental insurance policy with a retention of not less than $500 against unknown environmental liabilities.

Contingent Consideration

In connection with the East Coast Storage Assets Acquisition, the purchase agreement between the Partnership and Crown Point included the Contingent Consideration. Pursuant to the agreement, the Partnership and Crown Point will share equally in the future operating profits of the restarted assets, as defined in the agreement, over a contractual term of up to three years starting in ~~2020.~~2019. The Contingent Consideration was ~~$22,046~~$22,534 as of ~~March 31,~~June 30, 2019 ($21,100 as of December 31, 2018) representing the present value of expected future payments discounted at a blended rate of 8.79% and is recorded in “Other long-term liabilities” within the Partnership’s condensed consolidated balance sheets. At ~~March 31,~~June 30, 2019, the estimated undiscounted liability totaled $27,978, based on the Partnership’s anticipated total annual earn-out payments.

10. RELATED PARTY TRANSACTIONS

Agreements with PBF Energy Entities

Commercial Agreements

PBFX currently derives ~~the~~a majority of its revenue from long-term, fee-based agreements with PBF Holding, supported by MVCs, as applicable, and contractual fee escalations for inflation adjustments and certain increases in operating costs. PBFX believes the terms and conditions under these agreements, as well as the Omnibus Agreement ~~(as defined below)~~ and the Services Agreement ~~(as~~(each as defined below), each with PBF Holding, are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services.

See the 2018 Form 10-K for a more complete description of PBFX’s commercial agreements with PBF Holding, including those identified as leases, which were entered into prior to 2019. The following ~~are~~table reflects activity during 2019 related to commercial agreements ~~entered into~~ between PBFX and PBF ~~Holding during 2019:~~Holding:



Agreements	Initiation Date	Initial Term	Renewals (a)	MVC	Force Majeure
Transportation and Terminaling
Amended and Restated Rail Agreements (b)	5/8/2014	7 years, 8 months	N/A	125,000 bpd	PBFX or PBF Holding can declare
Delaware Pipeline Services Agreement- Magellan Connection	11/1/2016	2 years, 5 months	See note (c)	~~N/A~~ See note (c)
Delaware City Terminaling Services Agreement (d)	1/1/2022	4 years	2 x 5	95,000 bpd
Amended and Restated Torrance Valley Pipeline Transportation Services Agreement- South Pipeline	8/31/2016	10 years	2 x 5	75,000 bpd (e)
Storage
East Coast Storage Assets Terminal Storage Agreement	1/1/2019	8 years	Evergreen	2,953,725 barrels ~~(e)~~(f)	PBFX or PBF Holding can declare

___________________


(a)	PBF Holding has the option to extend the agreements for up to two additional five-year terms, as applicable.


(b)	In 2019, the Partnership amended (effective as of January 1, 2019) the existing Amended and Restated Rail Agreements between Delaware City Terminaling Company LLC (“DCTC”) and PBF Holding for the inclusion of services through certain rail infrastructure at the East Coast Storage Assets.

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

(c)

In connection with the inclusion of an additional destination at the Magellan connection under the Delaware Pipeline Services Agreement, Delaware Pipeline Company LLC (“DPC”) and PBF Holding ~~(the “Delaware Pipeline Services Agreement”)~~ agreed to a two-year, five-month MVC (the “Magellan MVC”) under the Delaware Pipeline Services Agreement. ~~The Magellan MVC expired on March 31, 2019.~~

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

The Magellan MVC expired on March 31, 2019, subsequent to which, the Partnership has been billing actual throughput on the Magellan connection.


(d)	The Delaware City Terminaling Services Agreement between DCTC and PBF Holding will commence in 2022 subsequent to the expiration of the Amended and Restated Rail Agreements and includes additional services to be provided by PBFX as operator of other rail facilities owned by PBF Holding’s subsidiaries.


(e)	In connection with the TVPC Acquisition on May 31, 2019, the Torrance Valley Pipeline Transportation Services Agreement- South Pipeline was amended and restated to increase the MVC from 70,000 bpd to 75,000 bpd.


(f)	Reflects the overall shell capacity as stipulated by the storage agreement. The storage MVC is subject to the effective operating capacity of each tank, which can be impacted by routine tank maintenance and other factors.

Other Agreements

In addition to the commercial agreements described above, PBFX has entered into an omnibus agreement with PBF GP, PBF LLC and PBF Holding, which has been amended and restated in connection with certain of the Acquisitions from PBF (as amended, the “Omnibus Agreement”). This 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, PBFX has entered into an operation and management services and secondment agreement with PBF Holding and certain of its subsidiaries (as amended, the “Services Agreement”), pursuant to which PBF Holding and its subsidiaries provide PBFX with the personnel necessary for the Partnership to perform its obligations under its commercial agreements. PBFX reimburses PBF Holding 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 the Partnership may terminate any service upon 30-days’ notice.

See the 2018 Form 10-K for a more complete description of the Omnibus Agreement and the Services Agreement.

Summary of Transactions

A summary of revenue and expense transactions with the Partnership’s affiliates, including expenses directly charged and allocated to the Partnership, is as follows:


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		2019		2018
Revenue	$	71,332	$	60,864	$	74,656	$	63,785	$	145,988	$	124,649
Operating and maintenance expenses	2,105		1,674		2,171		1,674		4,276		3,348
General and administrative expenses	1,762		1,700		1,752		1,737		3,514		3,437

11. SEGMENT INFORMATION

The Partnership’s operations are comprised of operating segments, which are strategic business units that offer different services in various geographical locations. PBFX has evaluated the performance of each operating segment based on its respective operating income. The operating segments adhere to the accounting polices used

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

for the consolidated financial statements, as described in Note 2 “Summary of Accounting Policies” of the Notes to Consolidated Financial Statements in the 2018 Form 10-K.

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

The Partnership’s operating segments are organized into two reportable ~~segments,~~segments: (i) Transportation and Terminaling and (ii) Storage. Operations that are not included in either the Transportation and Terminaling or the Storage segments are included in Corporate.

The Partnership’s Transportation and Terminaling segment consists of operating segments that include product terminals, pipelines, crude unloading facilities and other facilities capable of transporting and handling crude oil, refined products and natural gas. The Partnership’s Storage segment consists of operating segments that include storage facilities capable of handling crude oil, refined products and intermediates.

~~Revenues are~~Revenue is generated from third-party transactions as well as commercial agreements entered into with PBF Holding under which the Partnership receives fees for transportation, terminaling and storage of crude oil, refined products and natural gas. The commercial agreements with PBF Holding are ~~described~~discussed in Note 10 “Related Party Transactions” of the Notes to Condensed Consolidated Financial Statements. The Partnership does not have any foreign operations. Certain general and administrative expenses and interest and financing costs are included in Corporate as they are not directly attributable to a specific reporting segment. Identifiable assets are those used by the operating segments, whereas assets included in Corporate are principally cash, deposits and other assets that are not associated with operations specific to a reporting segment.


	Three Months Ended March 31, 2019									Three Months Ended June 30, 2019
	Transportation and Terminaling		Storage		Corporate			Consolidated Total		Transportation and Terminaling		Storage		Corporate			Consolidated Total
Total revenue	$	65,959	$	12,886	$	—		$	78,845	$	69,656	$	13,094	$	—		$	82,750
Depreciation and amortization expense	6,901		1,820		—			8,721
Depreciation and amortization										6,879		1,975		—			8,854
Income (loss) from operations	36,551		3,657		(6,010		)	34,198		40,529		4,814		(7,580		)	37,763
Interest expense, net, amortization of loan fees and debt premium and accretion on discounted liabilities	—		—		12,122			12,122		—		—		12,435			12,435
Capital expenditures	10,544		676		—			11,220		1,689		2,243		—			3,932

Three Months Ended March 31, 2018
Transportation and Terminaling Storage Corporate Consolidated Total
Total revenue $ 57,671
$ 7,069
$ —
$ 64,740
Depreciation and amortization expense 5,718
925
—
6,643
Income (loss) from operations 34,226
3,991
(4,291 ) 33,926
Interest expense, net and amortization of loan fees and debt premium —
—
9,948
9,948
Capital expenditures 3,867
86
—
3,953

Balance at March 31, 2019
Transportation and Terminaling Storage Corporate Consolidated Total
Total assets $ 733,191
$ 221,319
$ 2,737
$ 957,247



	Three Months Ended June 30, 2018
	Transportation and Terminaling		Storage		Corporate			Consolidated Total
Total revenue	$	61,133	$	6,966	$	—		$	68,099
Depreciation and amortization	6,166		925		—			7,091
Income (loss) from operations	36,234		4,050		(6,488		)	33,796
Interest expense, net and amortization of loan fees and debt premium	—		—		10,425			10,425
Capital expenditures, including the Knoxville Terminals Purchase	61,716		2		—			61,718

2526

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)



	Six Months Ended June 30, 2019
	Transportation and Terminaling		Storage		Corporate			Consolidated Total
Total revenue	$	135,615	$	25,980	$	—		$	161,595
Depreciation and amortization	13,780		3,795		—			17,575
Income (loss) from operations	77,080		8,471		(13,590		)	71,961
Interest expense, net, amortization of loan fees and debt premium and accretion on discounted liabilities	—		—		24,557			24,557
Capital expenditures	12,233		2,919		—			15,152



	Six Months Ended June 30, 2018
	Transportation and Terminaling		Storage		Corporate			Consolidated Total
Total revenue	$	118,804	$	14,035	$	—		$	132,839
Depreciation and amortization	11,884		1,850		—			13,734
Income (loss) from operations	70,460		8,041		(10,779		)	67,722
Interest expense, net and amortization of loan fees and debt premium	—		—		20,373			20,373
Capital expenditures, including the Knoxville Terminals Purchase	65,583		88		—			65,671



	Balance at June 30, 2019
	Transportation and Terminaling		Storage		Corporate		Consolidated Total
Total assets	$	730,250	$	220,030	$	9,293	$	959,573



	Balance at December 31, 2018
	Transportation and Terminaling		Storage		Corporate		Consolidated Total
Total assets	$	731,505	$	219,326	$	5,522	$	956,353

12. SUBSEQUENT EVENTS

Cash Distribution

On ~~May~~August 1, 2019, PBF GP’s board of directors announced a cash distribution, based on the results of the ~~first~~second quarter of 2019, of ~~$0.5100~~$0.5150 per unit. The distribution is payable on ~~May~~August 30, 2019 to PBFX unitholders of record at the close of business on ~~May~~August 15, 2019.

~~April Registered Direct Offering~~

On April 24, 2019, the Partnership entered into subscription agreements to sell an aggregate of 6,585,500 common units to certain institutional investors in a registered direct public offering (the “April Registered Direct Offering”) for gross proceeds of approximately $135,000. The April Registered Direct Offering closed on April 29, 2019.

~~TVPC Acquisition~~

On April 24, 2019, the Partnership entered into a Contribution Agreement with PBF LLC pursuant to which PBF LLC will contribute to the Partnership all of the issued and outstanding limited liability interests of TVP Holding for total consideration of $200,000 (the “TVPC Acquisition”). Subsequent to the completion of the transaction, which is expected to close in the second quarter of 2019, the Partnership will own 100% of TVPC.

2627

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

~~DCLC,~~Delaware City Logistics Company LLC, DPC, DCTC, Toledo Terminaling Company LLC, PLPT, PBFX Op Co, TVPC, Paulsboro Natural Gas Pipeline Company LLC, TRLC, CLC, PTC, DSLC and CPI serve as guarantors of the obligations under the 2023 Notes. These guarantees are full and unconditional and joint and several. For purposes of the following footnote, the Partnership is referred to as “Issuer.” The indenture dated May 12, 2015, as supplemented, among the Partnership, PBF Logistics Finance Corporation (“PBF Logistics Finance”), the guarantors party thereto and Deutsche Bank Trust Company Americas, as Trustee, governs subsidiaries designated as “Guarantor Subsidiaries.” In addition, PBF LLC provides a limited guarantee of collection of the principal amount of the 2023 Notes but is not otherwise subject to the covenants of the indenture. Refer to PBF LLC’s condensed consolidated financial statements, which are included in its Quarterly Report on Form 10-Q for the period ended ~~March 31,~~June 30, 2019.

The 2023 Notes were co-issued by PBF Logistics Finance. For purposes of the following footnote, PBF Logistics Finance is referred to as “Co-Issuer.” The Co-Issuer has no independent assets or operations.

The following supplemental combining and condensed consolidating financial information reflects the Issuer’s separate accounts, the combined accounts of the Guarantor Subsidiaries, the combining and consolidating adjustments and eliminations and the Issuer’s consolidated accounts for the dates and periods indicated. For purposes of the following combining and consolidating information, the Issuer’s investment in its subsidiaries and the Guarantor Subsidiaries’ ~~investment~~investments in ~~its~~their subsidiaries are accounted for under the equity method of accounting.

2728

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

CONDENSED CONSOLIDATING BALANCE SHEET


	March 31, 2019											June 30, 2019
	Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
ASSETS
Current assets:
Cash and cash equivalents	$	1,457	$	14,989	$	—	$	—		$	16,446	$	6,836	$	13,164	$	—	$	—		$	20,000
Accounts receivable - affiliates	119		43,812		—		—			43,931		580		46,699		—		—			47,279
Accounts receivable	365		4,792		—		—			5,157		365		4,764		—		—			5,129
Prepaids and other current assets	796		3,814		—		—			4,610		1,512		4,371		—		—			5,883
Due from related parties	172,765		601,135		—		(773,900		)	—		180,784		654,745		—		(835,529		)	—
Total current assets	175,502		668,542		—		(773,900		)	70,144		190,077		723,743		—		(835,529		)	78,291
Property, plant and equipment, net	—		861,617		—		—			861,617		—		855,958		—		—			855,958
Goodwill	—		6,332		—		—			6,332		—		6,332		—		—			6,332
Other non-current assets	—		19,154		—		—			19,154		—		18,992		—		—			18,992
Investment in subsidiaries	1,169,668		—		—		(1,169,668		)	—		1,382,665		—		—		(1,382,665		)	—
Total assets	$	1,345,170	$	1,555,645	$	—	$	(1,943,568	)	$	957,247	$	1,572,742	$	1,605,025	$	—	$	(2,218,194	)	$	959,573

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable - affiliates	$	755	$	3,959	$	—	$	—		$	4,714	$	1,085	$	4,384	$	—	$	—		$	5,469
Accounts payable and accrued liabilities	51,522		14,100		—		—			65,622
Accounts payable												1,121		4,301		—		—			5,422
Accrued liabilities												39,578		5,064		—		—			44,642
Deferred revenue	—		2,895		—		—			2,895		—		2,875		—		—			2,875
Due to related parties	601,135		172,765		—		(773,900		)	—		654,745		180,784		—		(835,529		)	—
Total current liabilities	653,412		193,719		—		(773,900		)	73,231		696,529		197,408		—		(835,529		)	58,408
Long-term debt	677,773		—		—		—			677,773		769,219		—		—		—			769,219
Other long-term liabilities	—		24,567		—		—			24,567		—		24,952		—		—			24,952
Total liabilities	1,331,185		218,286		—		(773,900		)	775,571		1,465,748		222,360		—		(835,529		)	852,579

Commitments and contingencies (Note 9)

Equity:
Net investment	—		1,169,668		—		(1,169,668		)	—		—		1,382,665		—		(1,382,665		)	—
Common unitholders	13,985		—		—		—			13,985		106,994		—		—		—			106,994
Total PBF Logistics LP equity	13,985		1,169,668		—		(1,169,668		)	13,985
Noncontrolling interest	—		167,691		—		—			167,691
Total equity	13,985		1,337,359		—		(1,169,668		)	181,676		106,994		1,382,665		—		(1,382,665		)	106,994
Total liabilities and equity	$	1,345,170	$	1,555,645	$	—	$	(1,943,568	)	$	957,247	$	1,572,742	$	1,605,025	$	—	$	(2,218,194	)	$	959,573

2829

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

CONDENSED CONSOLIDATING BALANCE SHEET


	December 31, 2018											December 31, 2018
	Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
ASSETS
Current assets:
Cash and cash equivalents	$	4,010	$	15,898	$	—	$	—		$	19,908	$	4,010	$	15,898	$	—	$	—		$	19,908
Accounts receivable - affiliates	9		37,043		—		—			37,052		9		37,043		—		—			37,052
Accounts receivable	365		7,146		—		—			7,511		365		7,146		—		—			7,511
Prepaids and other current assets	1,137		3,461		—		—			4,598		1,137		3,461		—		—			4,598
Due from related parties	161,613		561,605		—		(723,218		)	—		161,613		561,605		—		(723,218		)	—
Total current assets	167,134		625,153		—		(723,218		)	69,069		167,134		625,153		—		(723,218		)	69,069
Property, plant and equipment, net	—		862,117		—		—			862,117		—		862,117		—		—			862,117
Goodwill	—		6,332		—		—			6,332		—		6,332		—		—			6,332
Other non-current assets	—		18,835		—		—			18,835		—		18,835		—		—			18,835
Investment in subsidiaries	1,133,775		—		—		(1,133,775		)	—		1,133,775		—		—		(1,133,775		)	—
Total assets	$	1,300,909	$	1,512,437	$	—	$	(1,856,993	)	$	956,353	$	1,300,909	$	1,512,437	$	—	$	(1,856,993	)	$	956,353

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable - affiliates	$	1,239	$	10,808	$	—	$	—		$	12,047	$	1,239	$	10,808	$	—	$	—		$	12,047
Accounts payable and accrued liabilities	41,023		9,949		—		—			50,972
Accounts payable												1,176		3,484		—		—			4,660
Accrued liabilities												39,847		6,465		—		—			46,312
Deferred revenue	—		2,960		—		—			2,960		—		2,960		—		—			2,960
Due to related parties	561,605		161,613		—		(723,218		)	—		561,605		161,613		—		(723,218		)	—
Total current liabilities	603,867		185,330		—		(723,218		)	65,979		603,867		185,330		—		(723,218		)	65,979
Long-term debt	673,324		—		—		—			673,324		673,324		—		—		—			673,324
Other long-term liabilities	—		23,860		—		—			23,860		—		23,860		—		—			23,860
Total liabilities	1,277,191		209,190		—		(723,218		)	763,163		1,277,191		209,190		—		(723,218		)	763,163

Commitments and contingencies (Note 9)

Equity:
Net investment	—		1,133,775		—		(1,133,775		)	—		—		1,133,775		—		(1,133,775		)	—
Common unitholders	23,718		—		—		—			23,718		23,718		—		—		—			23,718
Total PBF Logistics LP equity	23,718		1,133,775		—		(1,133,775		)	23,718		23,718		1,133,775		—		(1,133,775		)	23,718
Noncontrolling interest	—		169,472		—		—			169,472		—		169,472		—		—			169,472
Total equity	23,718		1,303,247		—		(1,133,775		)	193,190		23,718		1,303,247		—		(1,133,775		)	193,190
Total liabilities and equity	$	1,300,909	$	1,512,437	$	—	$	(1,856,993	)	$	956,353	$	1,300,909	$	1,512,437	$	—	$	(1,856,993	)	$	956,353

2930

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


	Three Months Ended March 31, 2019														Three Months Ended June 30, 2019
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
Revenue:
Affiliate	$	—		$	71,332		$	—	$	—		$	71,332		$	—		$	74,656		$	—	$	—		$	74,656
Third-party	—			7,513			—		—			7,513			—			8,094			—		—			8,094
Total revenue	—			78,845			—		—			78,845			—			82,750			—		—			82,750

Costs and expenses:
Operating and maintenance expenses	—			29,916			—		—			29,916			—			28,553			—		—			28,553
General and administrative expenses	6,010			—			—		—			6,010			7,580			—			—		—			7,580
Depreciation and amortization	—			8,721			—		—			8,721			—			8,854			—		—			8,854
Total costs and expenses	6,010			38,637			—		—			44,647			7,580			37,407			—		—			44,987

Income (loss) from operations	(6,010		)	40,208			—		—			34,198			(7,580		)	45,343			—		—			37,763

Other income (expense):
Equity in earnings of subsidiaries	39,722			—			—		(39,722		)	—			44,846			—			—		(44,846		)	—
Interest expense, net	(10,913		)	—			—		—			(10,913		)	(11,216		)	—			—		—			(11,216		)
Amortization of loan fees and debt premium	(449		)	—			—		—			(449		)	(446		)	—			—		—			(446		)
Accretion on discounted liabilities	(274		)	(486		)	—		—			(760		)	(276		)	(497		)	—		—			(773		)
Net income	22,076			39,722			—		(39,722		)	22,076			25,328			44,846			—		(44,846		)	25,328
Less: Net income attributable to noncontrolling interest	—			4,719			—		—			4,719			—			3,162			—		—			3,162
Net income attributable to PBF Logistics LP unitholders	$	22,076		$	35,003		$	—	$	(39,722	)	$	17,357		$	25,328		$	41,684		$	—	$	(44,846	)	$	22,166

3031

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


	Three Months Ended March 31, 2018														Three Months Ended June 30, 2018
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
Revenue:
Affiliate	$	—		$	60,864		$	—	$	—		$	60,864		$	—		$	63,785		$	—	$	—		$	63,785
Third-party	—			3,876			—		—			3,876			—			4,314			—		—			4,314
Total revenue	—			64,740			—		—			64,740			—			68,099			—		—			68,099

Costs and expenses:
Operating and maintenance expenses	—			19,880			—		—			19,880			—			20,724			—		—			20,724
General and administrative expenses	4,291			—			—		—			4,291			6,488			—			—		—			6,488
Depreciation and amortization	—			6,643			—		—			6,643			—			7,091			—		—			7,091
Total costs and expenses	4,291			26,523			—		—			30,814			6,488			27,815			—		—			34,303

Income (loss) from operations	(4,291		)	38,217			—		—			33,926			(6,488		)	40,284			—		—			33,796

Other income (expense):
Equity in earnings of subsidiaries	38,217			—			—		(38,217		)	—			40,284			—			—		(40,284		)	—
Interest expense, net	(9,585		)	—			—		—			(9,585		)	(10,029		)	—			—		—			(10,029		)
Amortization of loan fees and debt premium	(363		)	—			—		—			(363		)	(396		)	—			—		—			(396		)
Net income	23,978			38,217			—		(38,217		)	23,978			23,371			40,284			—		(40,284		)	23,371
Less: Net loss attributable to Predecessor	—			(1,279		)	—		—			(1,279		)	—			(1,084		)	—		—			(1,084		)
Less: Net income attributable to noncontrolling interest	—			4,022			—		—			4,022			—			4,363			—		—			4,363
Net income attributable to the partners	23,978			35,474			—		(38,217		)	21,235			23,371			37,005			—		(40,284		)	20,092
Less: Net income attributable to the IDR holder	2,959			—			—		—			2,959			3,415			—			—		—			3,415
Net income attributable to PBF Logistics LP unitholders	$	21,019		$	35,474		$	—	$	(38,217	)	$	18,276		$	19,956		$	37,005		$	—	$	(40,284	)	$	16,677

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)~~

~~13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS~~

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

Three Months Ended March 31, 2019
Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Combining and Consolidating Adjustments Total
Cash flows from operating activities:
Net income $ 22,076
$ 39,722
$ —
$ (39,722 ) $ 22,076
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization —
8,721
—
—
8,721
Amortization of loan fees and debt premium 449
—
—
—
449
Accretion on discounted liabilities 274
486
—
—
760
Unit-based compensation expense 964
—
—
—
964
Equity in earnings of subsidiaries (39,722 ) —
—
39,722
—
Changes in operating assets and liabilities:
Accounts receivable - affiliates (110 ) (6,769 ) —
—
(6,879 )
Accounts receivable —
2,354
—
—
2,354
Prepaids and other current assets 341
(353 ) —
—
(12 )
Accounts payable - affiliates (484 ) (2,901 ) —
—
(3,385 )
Accounts payable and accrued liabilities 9,863
3,439
—
—
13,302
Amounts due to (from) related parties 28,378
(28,378 ) —
—
—
Deferred revenue —
(65 ) —
—
(65 )
Other assets and liabilities —
(76 ) —
—
(76 )
Net cash provided by operating activities 22,029
16,180
—
—
38,209

Cash flows from investing activities:
Expenditures for property, plant and equipment —
(11,220 ) —
—
(11,220 )
Investment in subsidiaries (631 ) —
—
631
—
Net cash used in investing activities $ (631 ) $ (11,220 ) $ —
$ 631
$ (11,220 )

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

CONDENSED CONSOLIDATING STATEMENT OF ~~CASH FLOWS (Continued)~~OPERATIONS

Three Months Ended March 31, 2019
Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Combining and Consolidating Adjustments Total
Cash flows from financing activities:
Distributions to unitholders $ (27,951 ) $ —
$ —
$ —
$ (27,951 )
Distributions to TVPC members —
(6,500 ) —
—
(6,500 )
Contribution from parent —
631
—
(631 ) —
Proceeds from revolving credit facility 16,000
—
—
—
16,000
Repayment of revolving credit facility (12,000 ) —
—
—
(12,000 )
Net cash used in financing activities (23,951 ) (5,869 ) —
(631 ) (30,451 )

Net change in cash and cash equivalents (2,553 ) (909 ) —
—
(3,462 )
Cash and cash equivalents at beginning of year 4,010
15,898
—
—
19,908
Cash and cash equivalents at end of period $ 1,457
$ 14,989
$ —
$ —
$ 16,446



	Six Months Ended June 30, 2019
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
Revenue:
Affiliate	$	—		$	145,988		$	—	$	—		$	145,988
Third-party	—			15,607			—		—			15,607
Total revenue	—			161,595			—		—			161,595

Costs and expenses:
Operating and maintenance expenses	—			58,469			—		—			58,469
General and administrative expenses	13,590			—			—		—			13,590
Depreciation and amortization	—			17,575			—		—			17,575
Total costs and expenses	13,590			76,044			—		—			89,634

Income (loss) from operations	(13,590		)	85,551			—		—			71,961

Other income (expense):
Equity in earnings of subsidiaries	84,568			—			—		(84,568		)	—
Interest expense, net	(22,129		)	—			—		—			(22,129		)
Amortization of loan fees and debt premium	(895		)	—			—		—			(895		)
Accretion on discounted liabilities	(550		)	(983		)	—		—			(1,533		)
Net income	47,404			84,568			—		(84,568		)	47,404
Less: Net income attributable to noncontrolling interest	—			7,881			—		—			7,881
Net income attributable to PBF Logistics LP unitholders	$	47,404		$	76,687		$	—	$	(84,568	)	$	39,523

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS



	Six Months Ended June 30, 2018
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
Revenue:
Affiliate	$	—		$	124,649		$	—	$	—		$	124,649
Third-party	—			8,190			—		—			8,190
Total revenue	—			132,839			—		—			132,839

Costs and expenses:
Operating and maintenance expenses	—			40,604			—		—			40,604
General and administrative expenses	10,779			—			—		—			10,779
Depreciation and amortization	—			13,734			—		—			13,734
Total costs and expenses	10,779			54,338			—		—			65,117

Income (loss) from operations	(10,779		)	78,501			—		—			67,722

Other income (expense):
Equity in earnings of subsidiaries	78,501			—			—		(78,501		)	—
Interest expense, net	(19,614		)	—			—		—			(19,614		)
Amortization of loan fees and debt premium	(759		)	—			—		—			(759		)
Net income	47,349			78,501			—		(78,501		)	47,349
Less: Net loss attributable to Predecessor	—			(2,363		)	—		—			(2,363		)
Less: Net income attributable to noncontrolling interest	—			8,385			—		—			8,385
Net income attributable to the partners	47,349			72,479			—		(78,501		)	41,327
Less: Net income attributable to the IDR holder	6,370			—			—		—			6,370
Net income attributable to PBF Logistics LP unitholders	$	40,979		$	72,479		$	—	$	(78,501	)	$	34,957

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Three Months Ended March 31, 2018
Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Combining and Consolidating Adjustments Total
Cash flows from operating activities:
Net income $ 23,978
$ 38,217
$ —
$ (38,217 ) $ 23,978
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization —
6,643
—
—
6,643
Amortization of loan fees and debt premium 363
—
—
—
363
Unit-based compensation expense 834
—
—
—
834
Equity in earnings of subsidiaries (38,217 ) —
—
38,217
—
Changes in operating assets and liabilities:
Accounts receivable - affiliates (23 ) 8,359
—
—
8,336
Accounts receivable —
115
—
—
115
Prepaids and other current assets 30
(628 ) —
—
(598 )
Accounts payable - affiliates (1,470 ) (1,514 ) —
—
(2,984 )
Accounts payable and accrued liabilities 10,172
(3,264 ) —
—
6,908
Amounts due to (from) related parties 29,243
(29,243 ) —
—
—
Deferred revenue —
(595 ) —
—
(595 )
Other assets and liabilities —
(75 ) —
—
(75 )
Net cash provided by operating activities 24,910
18,015
—
—
42,925

Cash flows from investing activities:
Expenditures for property, plant and equipment —
(3,953 ) —
—
(3,953 )
Investment in subsidiaries (462 ) —
—
462
—
Net cash used in investing activities $ (462 ) $ (3,953 ) $ —
$ 462
$ (3,953 )



	Six Months Ended June 30, 2019
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
Cash flows from operating activities:
Net income	$	47,404		$	84,568		$	—	$	(84,568	)	$	47,404
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	—			17,575			—		—			17,575
Amortization of loan fees and debt premium	895			—			—		—			895
Accretion on discounted liabilities	550			983			—		—			1,533
Unit-based compensation expense	4,351			—			—		—			4,351
Equity in earnings of subsidiaries	(84,568		)	—			—		84,568			—
Changes in operating assets and liabilities:
Accounts receivable - affiliates	(571		)	(9,656		)	—		—			(10,227		)
Accounts receivable	—			2,382			—		—			2,382
Prepaids and other current assets	(375		)	(910		)	—		—			(1,285		)
Accounts payable - affiliates	(154		)	(2,476		)	—		—			(2,630		)
Accounts payable	(55		)	817			—		—			762
Accrued liabilities	(1,586		)	(1,271		)	—		—			(2,857		)
Amounts due to (from) related parties	73,969			(73,969		)	—		—			—
Deferred revenue	—			(85		)	—		—			(85		)
Other assets and liabilities	(1,784		)	(148		)	—		—			(1,932		)
Net cash provided by operating activities	38,076			17,810			—		—			55,886

Cash flows from investing activities:
Expenditures for property, plant and equipment	—			(15,152		)	—		—			(15,152		)
Investment in subsidiaries	(3,108		)	—			—		3,108			—
Net cash used in investing activities	$	(3,108	)	$	(15,152	)	$	—	$	3,108		$	(15,152	)

3435

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS ~~(Continued)~~(continued)


	Three Months Ended March 31, 2018														Six Months Ended June 30, 2019
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
Cash flows from financing activities:
Net proceeds from issuance of common units															$	132,483		$	—		$	—	$	—		$	132,483
Acquisition of TVPC noncontrolling interest															(200,000		)	—			—		—			(200,000		)
Distributions to unitholders	$	(23,058	)	$	—		$	—	$	—		$	(23,058	)	(59,625		)	—			—		—			(59,625		)
Distributions to TVPC members	—			(5,000		)	—		—			(5,000		)	—			(8,500		)	—		—			(8,500		)
Contribution from parent	—			1,593			—		(462		)	1,131			—			3,108			—		(3,108		)	—
Proceeds from revolving credit facility															196,000			—			—		—			196,000
Repayment of revolving credit facility	(9,700		)	—			—		—			(9,700		)	(101,000		)	—			—		—			(101,000		)
Net cash used in financing activities	(32,758		)	(3,407		)	—		(462		)	(36,627		)	(32,142		)	(5,392		)	—		(3,108		)	(40,642		)

Net change in cash and cash equivalents	(8,310		)	10,655			—		—			2,345			2,826			(2,734		)	—		—			92
Cash and cash equivalents at beginning of year	10,909			8,755			—		—			19,664			4,010			15,898			—		—			19,908
Cash and cash equivalents at end of period	$	2,599		$	19,410		$	—	$	—		$	22,009		$	6,836		$	13,164		$	—	$	—		$	20,000

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	Six Months Ended June 30, 2018
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
Cash flows from operating activities:
Net income	$	47,349		$	78,501		$	—	$	(78,501	)	$	47,349
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	—			13,734			—		—			13,734
Amortization of loan fees and debt premium	759			—			—		—			759
Unit-based compensation expense	3,497			—			—		—			3,497
Equity in earnings of subsidiaries	(78,501		)	—			—		78,501			—
Changes in operating assets and liabilities:
Accounts receivable - affiliates	—			9,344			—		—			9,344
Accounts receivable	—			(1,077		)	—		—			(1,077		)
Prepaids and other current assets	3			239			—		—			242
Accounts payable - affiliates	300			(1,907		)	—		—			(1,607		)
Accounts payable	328			(2,900		)	—		—			(2,572		)
Accrued liabilities	(489		)	(2,265		)	—		—			(2,754		)
Amounts due to (from) related parties	18,442			(18,442		)	—		—			—
Deferred revenue	—			(286		)	—		—			(286		)
Other assets and liabilities	(1,049		)	(253		)	—		—			(1,302		)
Net cash (used in) provided by operating activities	(9,361		)	74,688			—		—			65,327

Cash flows from investing activities:
Knoxville Terminals Purchase	—			(58,000		)	—		—			(58,000		)
Expenditures for property, plant and equipment	—			(7,671		)	—		—			(7,671		)
Investment in subsidiaries	(850		)	—			—		850			—
Net cash used in investing activities	$	(850	)	$	(65,671	)	$	—	$	850		$	(65,671	)

3537

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)

13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (continued)



	Six Months Ended June 30, 2018
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
Cash flows from financing activities:
Distributions to unitholders	$	(46,611	)	$	—		$	—	$	—		$	(46,611	)
Distributions to TVPC members	—			(11,250		)	—		—			(11,250		)
Contribution from parent	—			5,043			—		(850		)	4,193
Proceeds from revolving credit facility	64,000			—			—		—			64,000
Repayment of revolving credit facility	(9,700		)	—			—		—			(9,700		)
Deferred financing costs and other	(271		)	—			—		—			(271		)
Net cash provided by (used in) financing activities	7,418			(6,207		)	—		(850		)	361

Net change in cash and cash equivalents	(2,793		)	2,810			—		—			17
Cash and cash equivalents at beginning of year	10,909			8,755			—		—			19,664
Cash and cash equivalents at end of period	$	8,116		$	11,565		$	—	$	—		$	19,681

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

You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q. The following information and such unaudited condensed consolidated financial statements should also be read in conjunction with the audited consolidated financial statements and related notes, together with our discussion and analysis of financial condition and results of operations in our 2018 Form 10-K. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. The cautionary statements made in this Form 10-Q should be read as applying to all related forward-looking statements wherever they appear in this Form 10-Q. 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. You should read “Risk Factors” in our 2018 Form 10-K and “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-Q. In this Item 2, all references to “we,” “us,” “our,” the “Partnership,” “PBFX” or similar terms for periods prior to the effective dates of each of the Acquisitions from PBF (as defined below) ~~prior to the effective date of each acquisition~~ refer to the Predecessor. For periods subsequent to the effective dates of each of the Acquisitions from PBF, these terms refer to the Partnership and its subsidiaries.

Overview

We are a fee-based, growth-oriented, Delaware master limited partnership formed in February 2013 by subsidiaries of PBF Energy to own or lease, operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets. PBF GP is our general partner and is wholly-owned by PBF LLC. PBF Energy is the sole managing member of PBF LLC and, as of ~~March 31,~~June 30, 2019, owned 99.0% of the total economic interest in PBF LLC. PBF LLC owns 29,953,631 ~~of PBFX’s~~PBFX common units constituting an aggregate ~~54.1%~~48.2% limited partner interest in PBFX, with the remaining ~~45.9%~~51.8% limited partner interest owned by public unitholders.

Our business includes the assets, liabilities and results of operations of certain crude oil, refined products, natural gas and intermediates terminaling, pipeline and storage assets, including those previously operated and owned by PBF Holding’s subsidiaries and PBF Holding’s previously held subsidiaries.

Business Developments

IDR Restructuring Agreement

On February 28, 2019, we closed on an Equity Restructuring Agreement (the “IDR Restructuring Agreement”) with PBF LLC and PBF GP, pursuant to which PBFX’s incentive distribution rights (“IDRs”) held by PBF LLC were canceled and converted into 10,000,000 newly issued PBFX common units (the “IDR Restructuring”). Transaction costs related to the IDR Restructuring were ~~$2.0~~$2.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and were included in “General and administrative expenses” within the Partnership’s condensed consolidated ~~statement~~statements of operations. Subsequent to the closing of the IDR Restructuring, no distributions were made to PBF LLC with respect to the IDRs, and the newly issued PBFX common units are entitled to normal distributions.

April Registered Direct Offering

On April 24, 2019, we entered into subscription agreements to sell an aggregate of 6,585,500 common units to certain institutional investors in a registered direct public offering (the “April Registered Direct Offering”) for gross proceeds of approximately $135.0 million. The April Registered Direct Offering closed on April 29, 2019.

3639

TVPC Acquisition

On April 24, 2019, we entered into a Contribution Agreement with PBF LLC (the “TVPC Contribution Agreement”), pursuant to which PBF LLC ~~will contribute~~contributed to us all of the issued and outstanding limited liability company interests of TVP Holding Company LLC (“TVP Holding”), which held the remaining 50% equity interest in Torrance Valley Pipeline Company LLC (“TVPC”), for total consideration of $200.0 million (the “TVPC Acquisition”). Subsequent to the ~~completion~~closing of the ~~transaction, which is expected to close in the second quarter of~~TVPC Acquisition on May 31, 2019, we ~~will~~ own 100% of the equity interest in TVPC. The transaction was financed through a combination of proceeds from the April Registered Direct Offering and borrowings under our five-year $500.0 million amended and restated revolving credit facility (as amended, the “Revolving Credit Facility”).

Principles of Combination and Consolidation and Basis of Presentation

In general, our Predecessor did not historically operate its assets for the purpose of generating ~~revenues~~revenue independent of other PBF Energy businesses that we support. In connection with, and subsequent to, our initial public offering (“IPO”), we have acquired certain assets from PBF LLC (collectively referred to as the “Contributed Assets”). The acquisitions completed subsequent to the IPO were made through a series of drop-down transactions with PBF LLC (collectively referred to as the “Acquisitions from PBF”). Upon the closing of ~~our~~the IPO and the Acquisitions from PBF, we entered into commercial and service agreements with subsidiaries of PBF Energy, under which we operate our assets for the purpose of generating fee-based ~~revenues.~~revenue. We receive, handle and transfer crude oil, refined products and natural gas from sources located throughout the U.S. and Canada and store crude oil, refined products and intermediates for PBF Energy in support of its refineries located in Paulsboro, New ~~Jersey,~~Jersey; Delaware ~~City, Delaware,~~City; Delaware; Toledo, ~~Ohio,~~Ohio; Chalmette, ~~Louisiana~~Louisiana; and Torrance, California. In addition, we generate third-party revenue from certain of our assets.

Agreements with PBF Energy Entities

Commercial Agreements

We currently derive ~~the~~a majority of our revenue from long-term, fee-based agreements with PBF Holding, supported by minimum volume commitment (“MVC”) stipulations, as applicable, and contractual fee escalations for inflation adjustments and certain increases in operating costs. We believe the terms and conditions under these agreements, as well as the Omnibus Agreement ~~(as defined below)~~ and the Services Agreement ~~(as~~(each as defined below), each with PBF Holding, are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services.

~~See~~Refer to the 2018 Form 10-K and Note 10 “Related Party Transactions” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements” for a more complete description of our commercial agreements with PBF Holding, including those identified as ~~leases, which were entered into prior to 2019. The following are commercial agreements we entered into with PBF Holding during 2019:~~leases.



~~Agreements~~	~~Initiation Date~~	~~Initial Term~~	~~Renewals (a)~~	~~MVC~~	~~Force Majeure~~
~~Transportation and Terminaling~~
~~Amended and Restated Rail Agreements (b)~~	~~5/8/2014~~	~~7 years, 8 months~~	~~N/A~~	~~125,000 bpd~~	~~PBFX or PBF Holding can declare~~
~~Delaware Pipeline Services Agreement- Magellan Connection~~	~~11/1/2016~~	~~2 years, 5 months~~	~~See note (c)~~	~~N/A~~
~~Delaware City Terminaling Services Agreement (d)~~	~~1/1/2022~~	~~4 years~~	~~2 x 5~~	~~95,000 bpd~~
~~Storage~~
~~East Coast Storage Assets Terminal Storage Agreement~~	~~1/1/2019~~	~~8 years~~	~~Evergreen~~	~~2,953,725 barrels (e)~~	~~PBFX or PBF Holding can declare~~

~~___________________~~


~~(a)~~	~~PBF Holding has the option to extend the agreements for up to two additional five-year terms, as applicable.~~


~~(b)~~	In 2019, we amended (effective as of January 1, 2019) the existing Amended and Restated Rail Agreements between Delaware City Terminaling Company LLC (“DCTC”) and PBF Holding for the inclusion of services through certain rail infrastructure at the East Coast Storage Assets (as defined below).


~~(c)~~	In connection with the inclusion of an additional destination at the Magellan connection under the Delaware Pipeline Services Agreement, Delaware Pipeline Company LLC (“DPC”) and PBF Holding (the “Delaware Pipeline Services Agreement”) agreed to a two-year, five-month MVC (the “Magellan MVC”) under the Delaware Pipeline Services Agreement. The Magellan MVC expired on March 31, 2019.


~~(d)~~	The Delaware City Terminaling Services Agreement between DCTC and PBF Holding will commence in 2022 subsequent to the expiration of the Amended and Restated Rail Agreements and includes additional services to be provided by us as operator of other rail facilities owned by PBF Holding’s subsidiaries.


~~(e)~~	Reflects the overall shell capacity as stipulated by the storage agreement. The storage MVC is subject to the effective operating capacity of each tank, which can be impacted by routine tank maintenance and other factors.

Other Agreements

In addition to the commercial agreements described above, we have entered into an omnibus agreement with PBF GP, PBF LLC and PBF Holding, which has been amended and restated in connection with certain of the Acquisitions from PBF (as amended, the “Omnibus Agreement”). This 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, we~~We have also entered into an operation and management services and secondment agreement with PBF Holding and certain of its subsidiaries (as amended, the “Services Agreement”), pursuant to which PBF Holding and its subsidiaries provide us with the personnel necessary for us to perform our obligations under our commercial agreements. We reimburse PBF Holding for the use of such employees and the provision of certain ~~infrastructure-related~~infrastructure-

related services to the extent applicable to our 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.operations. The Services Agreement will terminate upon the termination of the Omnibus Agreement, provided that we may terminate any service upon 30-days’ notice.

See the 2018 Form 10-K for a more complete description of the Omnibus Agreement and the Services Agreement.

Factors Affecting the Comparability of Our Financial Results

Our results of operations may not be comparable to our historical results of operations ~~for~~due to our recent acquisition activity, which is discussed in Note 3 “Acquisitions” of the ~~reasons described below:~~

~~Revenue.~~ ~~Our reported logistics assets revenues are fee-based, and a majority are subject~~Notes to ~~contractual MVCs. These fees are indexed for inflation~~Condensed Consolidated Financial Statements included in ~~accordance with either the Federal Energy Regulatory Commission indexing methodology, the U.S. Producer Price Index or the U.S. Consumer Price Index for All Urban Consumers.~~

~~Financing.~~ Historically, we have financed our operations and capital expenditure requirements through internally generated cash flows, proceeds generated by equity and debt offerings and borrowings under our five-year $500.0 million amended and restated revolving credit facility (as amended, the “Revolving Credit Facility”). During the three months ended March 31, 2019, we had net borrowings of $4.0 million to fund capital expenditures and working capital requirements. On July 30, 2018, the Partnership completed a registered direct offering of an aggregate of 1,775,750 common units for gross proceeds of approximately $35.0 million. On July 31, 2018, the Partnership issued 1,494,134 common units, having an aggregate value of $31.6 million, to PBF LLC in connection with the Development Assets Acquisition (as defined below).

~~IDR Restructuring.~~ ~~On February 13, 2019, we entered into~~“Item 1. Financial Statements,” the IDR Restructuring, ~~Agreement with PBF LLC~~recent debt and ~~PBF GP, pursuant~~equity transactions and our annual adjustment to our commercial agreements for inflation.

As a result of our recent acquisitions, we incurred additional revenue, operating and maintenance expenses and general and administrative expenses. As a result of the IDR Restructuring, which ~~the~~closed on February 28, 2019, IDRs held by PBF LLC were canceled and converted into 10,000,000 newly issued PBFX common ~~units. The IDR Restructuring closed on February 28, 2019. Subsequent to the closing of the IDR Restructuring,~~units, no distributions were made to PBF LLC with respect to the IDRs and the newly issued PBFX common units are entitled to normal distributions.

~~Third-Party Transactions.~~ On April 16, 2018, we, through our wholly-owned subsidiary, PBF Logistics Products Terminals LLC, completed the purchase of two refined product terminals located in Knoxville, Tennessee (the “Knoxville Terminals”) from Cummins Terminals, Inc. (the “Knoxville Terminals Purchase”). On July 16, 2018, we entered into an agreement with Crown Point International LLC (“Crown Point”) to purchase its wholly-owned subsidiary, CPI Operations LLC, whose assets include a storage facility with multi-use storage capacity, an Aframax-capable marine facility, a rail facility, a truck terminal, equipment, contracts and certain other idled assets located on the Delaware River near Paulsboro, New Jersey (collectively, the “East Coast Storage Assets”). The acquisition of the East Coast Storage Assets (the “East Coast Storage Assets Acquisition”) closed on October 1, 2018.

~~Development Assets Acquisition.~~ On July 31, 2018, we acquired from PBF LLC all of the issued and outstanding limited liability company interests of Toledo Rail Logistics Company LLC (“TRLC”), whose assets consist of a loading and unloading rail facility located at PBF Holding’s Toledo Refinery (the “Toledo Rail Products Facility”); Chalmette Logistics Company LLC (“CLC”), whose assets consist of a truck loading rack facility (the “Chalmette Truck Rack”) and a rail yard facility (the “Chalmette Rosin Yard”), both of which are located at PBF Holding’s Chalmette Refinery; Paulsboro Terminaling Company LLC (“PTC”), whose assets consist of a lube oil terminal facility located at PBF Holding’s Paulsboro Refinery (the “Paulsboro Lube Oil Terminal”); and DCR Storage and Loading Company LLC (“DSLC”), whose assets consist of an ethanol storage facility located at PBF Holding’s Delaware City Refinery (the “Delaware Ethanol Storage Facility” and collectively with the Toledo Rail Products Facility, the Chalmette Truck Rack, the Chalmette Rosin Yard, and the Paulsboro Lube Oil Terminal, the “Development Assets”). Subsequent to closing on the Development Assets Acquisition, we entered into services agreements with PBF Holding associated with the Development Assets, with the exception of the Paulsboro Lube Oil Terminal.

As a result of the ~~transaction noted above, our results may not be comparable due~~TVPC Acquisition, we no longer record a noncontrolling interest related to ~~additional revenue, operating and maintenance expenses and general and administrative expenses associated with such transactions.~~TVPC on either the condensed consolidated balance sheets or the condensed consolidated statements of operations.

Other Factors That Will Significantly Affect Our Results

Supply and Demand for Crude Oil, Refined Products and Natural Gas. We generate revenue by charging fees for receiving, handling, transferring, storing and throughputting crude oil, refined products and natural gas. ~~The~~A majority of our ~~revenues are~~revenue is derived from MVC, fee-based commercial agreements with subsidiaries of PBF Energy with initial terms ranging from one to fifteen years, which enhance the stability of our cash flows. The volume of crude oil, refined products and natural gas that is throughput or stored depends substantially on PBF Energy’s operational needs which are largely impacted by refining margins. Refining margins are greatly dependent upon the price of crude oil or other refinery feedstocks, refined products and natural gas.

Factors driving the prices of petroleum-based commodities include supply and demand infor crude oil, gasoline and other refined products. Supply and demand for these products depend on numerous factors outside of our control, including changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, logistics constraints, availability of imports, marketing of competitive fuels, crude oil price differentials and government regulation. Please read “Risk Factors” included in “Item 1A.” of our 2018 Form 10-K.

Acquisition and Organic Growth Opportunities. We may acquire additional logistics assets from PBF Energy or third parties. Under our Omnibus Agreement, subject to certain exceptions, we have a right of first offer on certain logistics assets owned by PBF Energy to the extent PBF Energy decides to sell, transfer or otherwise dispose

of any of those assets. We also have a right of first offer to acquire additional logistics assets that PBF Energy may construct or acquire in the future. Our commercial agreements provide us with options to purchase certain assets at PBF Holding’s refineries related to our business in the event PBF Energy permanently shuts down PBF Holding’s refineries. In addition, our commercial agreements provide us with the right to use certain assets at PBF Holding’s refineries in the event of a temporary shutdown. Furthermore, we may pursue strategic asset acquisitions from third parties or organic growth projects to the extent such acquisitions or projects complement our or PBF Energy’s existing asset base or provide attractive potential returns. We believe that we are well-positioned to acquire logistics assets from PBF Energy and third parties should such opportunities arise, and identifying and executing acquisitions and organic growth projects is a key part of our strategy. However, if we do not complete acquisitions or organic growth projects on economically acceptable terms, our future growth will be limited, and the acquisitions or projects we do complete may reduce, rather than increase, our cash available for distribution. These acquisitions and organic

growth projects could also affect the comparability of our results from period to period. We expect to fund future growth capital expenditures primarily from a combination of cash-on-hand, borrowings under our Revolving Credit Facility and the issuance of additional equity or debt securities. To the extent we issue additional units to fund future acquisitions or expansion capital expenditures, the payments of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level.

Third-Party Business. As of ~~March 31,~~June 30, 2019, PBF Holding accounts for ~~the~~a substantial majority of our ~~revenues~~revenue and we continue to expect that ~~the~~a majority of our revenue for the foreseeable future will be derived from operations supporting PBF Energy’s refineries. We are examining further diversification of our customer base by potentially developing additional third-party throughput volumes in our existing system and continuing to expand our asset portfolio to service third-party customers. Unless we are successful in attracting additional third-party customers, our ability to increase volumes will be dependent on PBF Holding, which has no obligation under our commercial agreements to supply our facilities with additional volumes in excess of its MVCs. If we are unable to increase throughput or storage volumes, future growth may be limited.

~~Noncontrolling Interest.~~ As a result of PBFX Op Co’s acquisition from PBF LLC of 50% of the issued and outstanding limited liability company interests of Torrance Valley Pipeline Company LLC (“TVPC”) (the “TVPC Acquisition”), PBFX Op Co became the managing member of TVPC and fully consolidates TVPC. With respect to the consolidation of TVPC, we record a noncontrolling interest for the remaining 50% economic interest in TVPC held by TVP Holding Company LLC (“TVP Holding”). Noncontrolling interest on the condensed consolidated statements of operations includes the portion of net income or loss attributable to the economic interest in TVPC held by TVP Holding. Noncontrolling interest on the condensed consolidated balance sheets includes the portion of net assets of TVPC attributable to TVP Holding.

How We Evaluate Our Operations

Our management uses a variety of financial and operating metrics to analyze our business and segment performance. These metrics are significant factors in assessing our operating results and profitability and include, but are not limited to, volumes, including terminal and pipeline throughput and storage capacity; operating and maintenance expenses; and EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow. We define EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow below.

Volumes. The amount of revenue we generate primarily depends on the volumes of crude oil, refined products and natural gas that we throughput at our terminaling and pipeline operations and our available storage capacity. These volumes are primarily affected by the supply of and demand for crude oil, refined products and natural gas in the markets served directly or indirectly by our assets. Although PBF Energy has committed to minimum volumes under the commercial agreements, our results of operations will be impacted by:

PBF Energy’s utilization of our assets in excess of the MVCs;

our ability to identify and execute accretive acquisitions and organic expansion projects and capture incremental PBF Energy or third-party volumes; and

our ability to increase throughput volumes at our facilities and provide additional ancillary services at those terminals and pipelines.

Operating and Maintenance Expenses. Our management seeks to maximize the profitability of our operations by effectively managing operating and maintenance expenses. These expenses are comprised primarily of labor expenses, outside contractor expenses, utility costs, insurance premiums, repairs and maintenance expenses and related property taxes. These expenses generally remain relatively stable across broad ranges of throughput volumes but can fluctuate from period to period depending on the mix of activities performed during that period and the timing of these expenses. We will seek to manage our maintenance expenditures on our assets by scheduling maintenance over time to avoid significant variability in our maintenance expenditures and to minimize their impact on our cash flow.

EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and Distributable Cash Flow. We define EBITDA as net income (loss) before net interest expense (including amortization of loan fees and debt premium and accretion on discounted liabilities), income tax expense, depreciation and amortization expense. We define EBITDA attributable to PBFX as net income (loss) attributable to PBFX before net interest expense (including amortization of loan fees and debt premium and accretion on discounted liabilities), income tax expense, depreciation and amortization expense attributable to PBFX, which excludes the results of Acquisitions from PBF prior to the effective dates of such transactions. We define Adjusted EBITDA as EBITDA attributable to PBFX excluding acquisition and transaction costs, non-cash unit-based compensation expense and items that meet the conditions

of unusual, infrequent and/or non-recurring charges. We define distributable cash flow as EBITDA attributable to PBFX plus non-cash unit-based compensation expense, less cash interest, maintenance capital expenditures attributable to PBFX and income taxes. Distributable cash flow will not reflect changes in working capital balances. EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow are not presentations made in accordance with U.S. generally accepted accounting principles (“GAAP”).

EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

our operating performance as compared to other ~~publicly-traded~~publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA, financing methods;

the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;

our ability to incur and service debt and fund capital expenditures; and

the viability of acquisitions and other capital expenditure projects and the economic returns on various investment opportunities.

We believe that the presentation of EBITDA, EBITDA attributable to PBFX and Adjusted ~~EIBITDA provide~~EBITDA provides useful information to investors in assessing our financial condition and results of operations and assists in evaluating our ongoing operating performance for current and comparative periods. We believe that the presentation of distributable cash flow provides useful information to investors as it is a widely accepted financial indicator used

by investors to compare partnership performance and provides investors with another perspective of the operating performance of our assets and the cash our business is generating. EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow should not be considered alternatives to net income, ~~operating~~ income ~~cash~~ from operations, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect net income and net cash provided by operating activities. Additionally, because EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our ~~definition~~definitions of such ~~matters~~measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow are reconciled to net income and net cash provided by operating activities in “—Results of Operations” below.

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Results of Operations

A discussion and analysis of the factors contributing to our results of operations isare presented below. The financial statements, together with the following information, are intended to provide investors with a reasonable basis for assessing our historical operations but should not serve as the only criteria for predicting our future performance.

Combined Overview. The following tables summarize our results of operations and financial data for the three and six months ended ~~March 31,~~June 30, 2019 and 2018. The following data should be read in conjunction with our Condensed Consolidated Financial Statements and the Notes thereto included in “Item 1. Financial Statements.”

Three Months Ended
March 31,
2019 2018
(In thousands)
Revenue:
Affiliate $ 71,332
$ 60,864
Third-party 7,513
3,876
Total revenue 78,845
64,740

Costs and expenses:
Operating and maintenance expenses 29,916
19,880
General and administrative expenses 6,010
4,291
Depreciation and amortization 8,721
6,643
Total costs and expenses 44,647
30,814

Income from operations 34,198
33,926

Other expense:
Interest expense, net (10,913 ) (9,585 )
Amortization of loan fees and debt premium (449 ) (363 )
Accretion on discounted liabilities (760 ) —
Net income 22,076
23,978
Less: Net loss attributable to Predecessor —
(1,279 )
Less: Net income attributable to noncontrolling interest 4,719
4,022
Net income attributable to the partners 17,357
21,235
Less: Net income attributable to the IDR holder —
2,959
Net income attributable to PBF Logistics LP unitholders $ 17,357
$ 18,276

Other Data:
EBITDA attributable to PBFX $ 36,822
$ 36,317
Adjusted EBITDA 42,957
37,634
Distributable cash flow 25,413
26,246
Capital expenditures 11,220
3,953



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(In thousands)
Revenue:
Affiliate	$	74,656		$	63,785		$	145,988		$	124,649
Third-party	8,094			4,314			15,607			8,190
Total revenue	82,750			68,099			161,595			132,839

Costs and expenses:
Operating and maintenance expenses	28,553			20,724			58,469			40,604
General and administrative expenses	7,580			6,488			13,590			10,779
Depreciation and amortization	8,854			7,091			17,575			13,734
Total costs and expenses	44,987			34,303			89,634			65,117

Income from operations	37,763			33,796			71,961			67,722

Other expense:
Interest expense, net	(11,216		)	(10,029		)	(22,129		)	(19,614		)
Amortization of loan fees and debt premium	(446		)	(396		)	(895		)	(759		)
Accretion on discounted liabilities	(773		)	—			(1,533		)	—
Net income	25,328			23,371			47,404			47,349
Less: Net loss attributable to Predecessor	—			(1,084		)	—			(2,363		)
Less: Net income attributable to noncontrolling interest	3,162			4,363			7,881			8,385
Net income attributable to the partners	22,166			20,092			39,523			41,327
Less: Net income attributable to the IDR holder	—			3,415			—			6,370
Net income attributable to PBF Logistics LP unitholders	$	22,166		$	16,677		$	39,523		$	34,957

Other Data:
EBITDA attributable to PBFX	$	42,534		$	36,070		$	79,356		$	72,387
Adjusted EBITDA	48,336			39,402			91,293			77,036
Distributable cash flow	34,123			28,100			59,536			54,346
Capital expenditures, including the Knoxville Terminals Purchase	3,932			61,718			15,152			65,671

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Reconciliation of Non-GAAP Financial Measures

As described in “How We Evaluate Our Operations,” our management uses EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow to analyze our performance. The following table presents a reconciliation of EBITDA, EBITDA attributable to PBFX and distributable cash flow to net income, the most directly comparable GAAP financial measure of operating performance on a historical basis, for the periods indicated.


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2019			2018
	(In thousands)						(In thousands)
Net income	$	22,076		$	23,978		$	25,328		$	23,371		$	47,404		$	47,349
Interest expense, net	10,913			9,585			11,216			10,029			22,129			19,614
Amortization of loan fees and debt premium	449			363			446			396			895			759
Accretion on discounted liabilities	760			—			773			—			1,533			—
Depreciation and amortization	8,721			6,643			8,854			7,091			17,575			13,734
EBITDA	42,919			40,569			46,617			40,887			89,536			81,456
Less: Predecessor EBITDA	—			(1,131		)	—			(912		)	—			(2,043		)
Less: Noncontrolling interest EBITDA	6,097			5,383			4,083			5,729			10,180			11,112
EBITDA attributable to PBFX	36,822			36,317			42,534			36,070			79,356			72,387
Non-cash unit-based compensation expense	964			834			3,387			2,663			4,351			3,497
Cash interest	(11,136		)	(9,580		)	(11,290		)	(10,049		)	(22,426		)	(19,629		)
Maintenance capital expenditures attributable to PBFX	(1,237		)	(1,325		)	(508		)	(584		)	(1,745		)	(1,909		)
Distributable cash flow	$	25,413		$	26,246		$	34,123		$	28,100		$	59,536		$	54,346

The following table presents a reconciliation of EBITDA, EBITDA attributable to PBFX and distributable cash flow to net cash provided by operating activities, the most directly comparable GAAP financial measure of liquidity on a historical basis, for the periods indicated.


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2019			2018
	(In thousands)						(In thousands)
Net cash provided by operating activities	$	38,209		$	42,925		$	17,677		$	22,402		$	55,886		$	65,327
Change in operating assets and liabilities	(5,239		)	(11,107		)	21,111			11,119			15,872			12
Interest expense, net	10,913			9,585			11,216			10,029			22,129			19,614
Non-cash unit-based compensation expense	(964		)	(834		)	(3,387		)	(2,663		)	(4,351		)	(3,497		)
EBITDA	42,919			40,569			46,617			40,887			89,536			81,456
Less: Predecessor EBITDA	—			(1,131		)	—			(912		)	—			(2,043		)
Less: Noncontrolling interest EBITDA	6,097			5,383			4,083			5,729			10,180			11,112
EBITDA attributable to PBFX	36,822			36,317			42,534			36,070			79,356			72,387
Non-cash unit-based compensation expense	964			834			3,387			2,663			4,351			3,497
Cash interest	(11,136		)	(9,580		)	(11,290		)	(10,049		)	(22,426		)	(19,629		)
Maintenance capital expenditures attributable to PBFX	(1,237		)	(1,325		)	(508		)	(584		)	(1,745		)	(1,909		)
Distributable cash flow	$	25,413		$	26,246		$	34,123		$	28,100		$	59,536		$	54,346

4445

The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure of operating performance on a historical basis, for the periods indicated.


	Three Months Ended March 31,					Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018			2019		2018
	(In thousands)					(In thousands)
Net income	$	22,076	$	23,978		$	25,328	$	23,371		$	47,404	$	47,349
Interest expense, net	10,913		9,585			11,216		10,029			22,129		19,614
Amortization of loan fees and debt premium	449		363			446		396			895		759
Accretion on discounted liabilities	760		—			773		—			1,533		—
Depreciation and amortization	8,721		6,643			8,854		7,091			17,575		13,734
EBITDA	42,919		40,569			46,617		40,887			89,536		81,456
Less: Predecessor EBITDA	—		(1,131		)	—		(912		)	—		(2,043		)
Less: Noncontrolling interest EBITDA	6,097		5,383			4,083		5,729			10,180		11,112
EBITDA attributable to PBFX	36,822		36,317			42,534		36,070			79,356		72,387
Acquisition and transaction costs	2,153		483			955		669			3,108		1,152
Non-cash unit-based compensation expense	964		834			3,387		2,663			4,351		3,497
East Coast Terminals environmental remediation costs	2,136		—			1,460		—			3,596		—
PNGPC tariff true-up adjustment	882		—			—		—			882		—
Adjusted EBITDA	$	42,957	$	37,634		$	48,336	$	39,402		$	91,293	$	77,036

The following table presents a reconciliation of net income attributable to noncontrolling interest and noncontrolling interest EBITDA, for informational ~~purposes.~~purposes, for the periods indicated.


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		2019		2018
	(In thousands)				(In thousands)
Net income attributable to noncontrolling interest	$	4,719	$	4,022	$	3,162	$	4,363	$	7,881	$	8,385
Depreciation and amortization related to noncontrolling interest*	1,378		1,361		921		1,366		2,299		2,727
Noncontrolling interest EBITDA	$	6,097	$	5,383	$	4,083	$	5,729	$	10,180	$	11,112

* Represents 50% of depreciation and amortization for TVPC for the ~~three~~two and five months ended ~~March~~May 31, 2019 and the three and six months ended June 30, 2018. Subsequent to the TVPC Acquisition, we own 100% of the equity interest in TVPC and no longer record noncontrolling interest.

Three Months Ended ~~March 31,~~June 30, 2019 Compared to the Three Months Ended ~~March 31,~~June 30, 2018

Summary. Our net income for the three months ended ~~March 31,~~June 30, 2019 ~~decreased~~increased by approximately ~~$1.9~~$2.0 million to ~~$22.1~~$25.3 million from ~~$24.0~~$23.4 million for the three months ended ~~March 31,~~June 30, 2018. The ~~decrease~~increase in net income was primarily due to the following:

an increase in total revenue of approximately $14.7 million, or 21.5%, primarily attributable to operations of recently acquired or constructed assets, inflation rate adjustments implemented in accordance with certain of our commercial agreements (the “Inflation Rate Increase”) and increased throughput at certain of our TVPC assets;

partially offset by the following:

an increase in operating and maintenance expenses of approximately ~~$10.0~~$7.8 million, or ~~50.5%~~37.8%, as a result of ~~increased outside services and utilities expenses within our Transportation and Terminaling segment, higher environmental clean-up costs and~~ expenses related to the operations of recently acquired ~~assets;~~assets, higher environmental clean-up costs, increased utility expenses coinciding with increased throughput at certain of our TVPC assets and increased

maintenance activity within our Storage segment, partially offset by lower outside services expenses within our Transportation and Terminaling segment;

an increase in general and administrative expenses of approximately ~~$1.7~~$1.1 million, or ~~40.1%~~16.8%, as a result of ~~transaction~~increased acquisition costs ~~related to the IDR Restructuring~~ and higher unit-based compensation ~~expense, partially offset by lower acquisition related costs;~~expense;

an increase in depreciation and amortization expenses of approximately ~~$2.1~~$1.8 million, or ~~31.3%~~24.9%, related to the timing of acquisitions and new assets being placed in service;

an increase in interest expense, net of approximately ~~$1.3~~$1.2 million, or ~~13.9%~~11.8%, attributable to higher borrowings under our Revolving Credit Facility;

and

an increase in accretion of discounted liabilities of approximately $0.8 million ~~or 100.0%,~~ attributable to the accretion of the discounted liabilities recorded in connection with ~~the East~~our purchase of CPI Operations LLC on October 1, 2018 (the “East Coast Storage Assets ~~Acquisition;~~Acquisition”).

~~partially offset~~

EBITDA attributable to PBFX for the three months ended June 30, 2019 increased by approximately $6.5 million to $42.5 million from $36.1 million for the three months ended June 30, 2018 due to the factors noted above, excluding the impact of depreciation and amortization, interest expense, net, accretion on discounted liabilities and noncontrolling interest.

Adjusted EBITDA for the three months ended June 30, 2019 increased by approximately $8.9 million to $48.3 million from $39.4 million for the three months ended June 30, 2018 due to the factors noted above, excluding the impact of acquisition costs, unit-based compensation and certain environmental remediation costs.

Six Months Ended June 30, 2019 Compared to the Six Months Ended June 30, 2018

Summary.Our net income for the six months ended June 30, 2019 increased by approximately $0.1 million to $47.4 million from $47.3 million for the six months ended June 30, 2018. The increase in net income was primarily due to the following:

an increase in total revenue of approximately ~~$14.1~~$28.8 million, or ~~21.8%~~21.6%, primarily attributable to operations of recently acquired or constructed assets, the Inflation Rate Increase and ~~inflation rate adjustments implemented in accordance with~~increased throughput at certain of our ~~commercial agreements (the “Inflation Rate Increase”),~~TVPC assets, partially offset by a decrease in revenue at our 24” interstate natural gas pipeline servicing PBF Holding’s Paulsboro Refinery (the “Paulsboro Natural Gas Pipeline”) due to a reduction in its pipeline tariff based on the lower than budget Paulsboro Natural Gas Pipeline project costs, which were finalized during the ~~three months ended March 31,~~first quarter of 2019 (the “PNGPC Rate Adjustment”).;

partially offset by the following:

an increase in operating and maintenance expenses of approximately $17.9 million, or 44.0%, as a result of expenses related to the operations of recently acquired assets, higher environmental clean-up costs and increased utilities expenses coinciding with increased throughput at certain of our TVPC assets;

an increase in general and administrative expenses of approximately $2.8 million, or 26.1%, as a result of transaction costs related to the IDR Restructuring and higher unit-based compensation expense, partially offset by lower acquisition related costs;

an increase in depreciation and amortization expenses of approximately $3.8 million, or 28.0%, related to the timing of acquisitions and new assets being placed in service;

an increase in interest expense, net of approximately $2.5 million, or 12.8%, attributable to higher borrowings under our Revolving Credit Facility; and

an increase in accretion of discounted liabilities of approximately $1.5 million attributable to the accretion of the discounted liabilities recorded in connection with the East Coast Storage Assets Acquisition.

EBITDA attributable to PBFX for the ~~three~~six months ended ~~March 31,~~June 30, 2019 increased by approximately ~~$0.5~~$7.0 million to ~~$36.8~~$79.4 million from ~~$36.3~~$72.4 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018 due to the factors noted above, excluding the impact of depreciation and amortization, interest expense, net, accretion on discounted liabilities and noncontrolling interest.

Adjusted EBITDA for the ~~three~~six months ended ~~March 31,~~June 30, 2019 increased by approximately ~~$5.3~~$14.3 million to ~~$43.0~~$91.3 million from ~~$37.6~~$77.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018 due to the factors noted above, excluding the impact of acquisition and transaction costs, unit-based compensation, certain environmental remediation costs and ~~certain other infrequent and/or non-recurring charges.~~

the PNGPC tariff true-up adjustment.

Segment Information

Our operations are comprised of operating segments, which are strategic business units that offer different services in various geographical locations. We review operations in two reportable segments: (i) Transportation and ~~Terminaling;~~Terminaling and (ii) Storage. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of ~~its~~our reportable segments based on the segment operating income. Segment operating income is defined as net revenue less operating expenses and depreciation and amortization. General and administrative expenses and interest expenses not included in the Transportation and Terminaling and Storage segments are included in Corporate. Segment reporting is further discussed in Note 11 “Segment Information” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements.”

Transportation and Terminaling Segment

The following table and discussion isprovide an explanation of our results of operations of the Transportation and Terminaling segment for the three and six months ended ~~March 31,~~June 30, 2019 and 2018:


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		2019		2018
(in thousands, except for total throughput and lease tank capacity)
Revenue:
Affiliate	$	61,429	$	53,795	$	64,513	$	56,819	$	125,942	$	110,614
Third-party	4,530		3,876		5,143		4,314		9,673		8,190
Total revenue	65,959		57,671		69,656		61,133		135,615		118,804

Costs and expenses:
Operating and maintenance expenses	22,507		17,727		22,248		18,733		44,755		36,460
Depreciation and amortization	6,901		5,718		6,879		6,166		13,780		11,884
Total costs and expenses	29,408		23,445		29,127		24,899		58,535		48,344
Transportation and Terminaling Segment Operating Income	$	36,551	$	34,226	$	40,529	$	36,234	$	77,080	$	70,460

Key Operating Information
Transportation and Terminaling Segment
Terminals
Total throughput (bpd) ⁽¹⁾	249,781		197,398		275,076		268,430		262,772		255,973
Lease tank capacity (average lease capacity barrels per month) ⁽²⁾	2,415,744		2,137,302		2,185,882		1,589,784		2,300,813		1,869,693
Pipelines
Total throughput (bpd) ⁽¹⁾	147,149		152,757		161,809		166,900		154,520		159,868
Lease tank capacity (average lease capacity barrels per month) ⁽²⁾	1,175,024		1,536,912		1,500,714		1,574,740		1,338,769		1,555,930

(1) Calculated as the sum of the average throughput per day for each asset group for the period presented.

(2) Lease capacity is based on tanks in service and average lease capacity available during the period.

Three Months Ended ~~March 31,~~June 30, 2019 Compared to the Three Months Ended ~~March 31,~~June 30, 2018

Revenue. Revenue increased by approximately ~~$8.3~~$8.5 million, or ~~14.4%~~13.9%, to ~~$66.0~~$69.7 million for the three months ended ~~March 31,~~June 30, 2019 compared to ~~$57.7~~$61.1 million for the three months ended ~~March 31,~~June 30, 2018. The increase in revenue was primarily attributable to operations of recently acquired or constructed assets, increased throughput ~~in excess of MVC levels~~ at certain of our TVPC assets and the Inflation Rate Increase.

Operating and maintenance expenses. Operating and maintenance expenses increased by approximately $3.5 million, or 18.8%, to $22.2 million for the three months ended June 30, 2019 compared to $18.7 million for the three months ended June 30, 2018. The increase in operating and maintenance expenses was primarily attributable to higher environmental clean-up costs, expenses related to the operations of recently acquired assets and increased utility expenses coinciding with increased throughput at certain of our TVPC assets, partially offset by lower outside services expenses.

Depreciation and amortization. Depreciation and amortization expense increased by approximately $0.7 million, or 11.6%, to $6.9 million for the three months ended June 30, 2019 compared to $6.2 million for the three months ended June 30, 2018. The increase in depreciation and amortization expense was primarily attributable to the timing of new assets being placed in service.

Six Months Ended June 30, 2019 Compared to theSix Months Ended June 30, 2018

Revenue.Revenue increased by approximately $16.8 million, or 14.2%, to $135.6 million for the six months ended June 30, 2019 compared to $118.8 million for the six months ended June 30, 2018. The increase in revenue was primarily attributable to operations of recently acquired or constructed assets, increased throughput at certain of our TVPC assets and the Inflation Rate Increase, partially offset by a ~~$0.8~~$0.9 million decrease in revenue at the Paulsboro Natural Gas Pipeline due to the PNGPC Rate Adjustment.

Operating and maintenance expenses. Operating and maintenance expenses increased by approximately ~~$4.8~~$8.3 million, or ~~27.0%~~22.8%, to ~~$22.5~~$44.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 compared to ~~$17.7~~$36.5 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018. The increase in operating and maintenance expenses was primarily attributable to higher ~~outside services and utilities expenses, higher~~ environmental clean-up costs, ~~and~~ expenses related to the operations of recently acquired assets and increased utility expenses coinciding with increased throughput at certain of our TVPC assets.

Depreciation and amortization. Depreciation and amortization expense increased by approximately ~~$1.2~~$1.9 million, or ~~20.7%~~16.0%, to ~~$6.9~~$13.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 compared to ~~$5.7~~$11.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018. The increase in depreciation and amortization expense was primarily attributable to the timing of ~~the~~our purchase of two refined product terminals located in Knoxville, Tennessee on April 16, 2018 (the “Knoxville Terminals ~~Purchase~~Purchase”) and new assets being placed in service.

Storage Segment

The following table and discussion isprovide an explanation of our results of operations of the Storage segment for the three and six months ended ~~March 31,~~June 30, 2019 and 2018:


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		2019		2018
(in thousands, except for storage capacity reserved)
Revenue:
Affiliate	$	9,903	$	7,069	$	10,143	$	6,966	$	20,046	$	14,035
Third-party	2,983		—		2,951		—		5,934		—
Total revenue	12,886		7,069		13,094		6,966		25,980		14,035

Costs and expenses:
Operating and maintenance expenses	7,409		2,153		6,305		1,991		13,714		4,144
Depreciation and amortization	1,820		925		1,975		925		3,795		1,850
Total costs and expenses	9,229		3,078		8,280		2,916		17,509		5,994
Storage Segment Operating Income	$	3,657	$	3,991	$	4,814	$	4,050	$	8,471	$	8,041

Key Operating Information
Storage Segment
Storage capacity reserved (average shell capacity barrels per month) ⁽¹⁾	7,932,693		4,478,755		8,053,983		4,412,673		7,993,338		4,445,714

(1) Storage capacity is based on tanks in service and average shell capacity available during the period.

Three Months Ended ~~March 31,~~June 30, 2019 Compared to the Three Months Ended ~~March 31,~~June 30, 2018

Revenue. Revenue increased by approximately ~~$5.8~~$6.1 million, or ~~82.3%~~88.0%, to ~~$12.9~~$13.1 million for the three months ended ~~March 31,~~June 30, 2019 compared to ~~$7.1~~$7.0 million for the three months ended ~~March 31,~~June 30, 2018. The increase in revenue was primarily attributable to the operations of the assets acquired in connection with the East Coast Storage Assets ~~operations.~~Acquisition (the “East Coast Storage Assets”) and the Inflation Rate Increase.

Operating and maintenance expenses. Operating and maintenance expenses increased by approximately ~~$5.3~~$4.3 million, or ~~244.1%~~216.7%, to ~~$7.4~~$6.3 million for the three months ended ~~March 31,~~June 30, 2019 compared to ~~$2.2~~$2.0 million for the three months ended ~~March 31,~~June 30, 2018. The increase in operating and maintenance expenses was primarily attributable to expenses associated with the East Coast Storage ~~Assets.~~Assets, as well as increased maintenance activity.

Depreciation and amortization. Depreciation and amortization expense increased by approximately ~~$0.9~~$1.1 million, or ~~96.8%~~113.5%, to ~~$1.8~~$2.0 million for the three months ended ~~March 31,~~June 30, 2019 compared to $0.9 million for the three months ended ~~March 31,~~June 30, 2018. The increase in depreciation and amortization expense was primarily attributable to the timing of the East Coast Storage Assets Acquisition.

Six Months Ended June 30, 2019 Compared to theSix Months Ended June 30, 2018

48Revenue. Revenue increased by approximately $11.9 million, or 85.1%, to $26.0 million for the six months ended June 30, 2019 compared to $14.0 million for the six months ended June 30, 2018. The increase in revenue was primarily attributable to the East Coast Storage Assets operations and the Inflation Rate Increase.

Operating and maintenance expenses. Operating and maintenance expenses increased by approximately $9.6 million, or 230.9%, to $13.7 million for the six months ended June 30, 2019 compared to $4.1 million for the

six months ended June 30, 2018. The increase in operating and maintenance expenses was primarily attributable to expenses associated with the East Coast Storage Assets, as well as increased maintenance activity.

Depreciation and amortization. Depreciation and amortization expense increased by approximately $1.9 million, or 105.1%, to $3.8 million for the six months ended June 30, 2019 compared to $1.9 million for the six months ended June 30, 2018. The increase in depreciation and amortization expense was primarily attributable to the timing of the East Coast Storage Assets Acquisition.

Liquidity and Capital Resources

We expect our ongoing sources of liquidity to include cash generated from operations (including proceeds from our commercial agreements with PBF Holding), borrowings under our Revolving Credit Facility and issuances of additional debt and equity securities as appropriate given market conditions. We expect that these sources of funds will be adequate to provide for our short-term and long-term liquidity needs, including capital expenditures and distributions on our units.

We have paid, and intend to continue to pay, at least the minimum quarterly distribution of $0.30 per unit per quarter, or $1.20 per unit on an annualized basis, which aggregates to approximately ~~$16.8~~$18.9 million per quarter and approximately ~~$67.2~~$75.6 million on an annualized basis based on the number of common units outstanding as of ~~March 31,~~June 30, 2019. Immediately following the closing of the April Registered Direct Offering, our expected minimum distribution will increase to approximately $18.8 million per quarter or approximately $75.2 million on an annualized basis.

During the ~~three~~six months ended ~~March 31,~~June 30, 2019, we made a cash distribution ~~payment~~payments as follows (in thousands except per unit data):


Related Earnings Period:	Q4 2018		Q4 2018		Q1 2019
Distribution date	March 14, 2019		March 14, 2019		May 30, 2019
Record date	March 1, 2019		March 1, 2019		May 15, 2019
Per unit	$	0.5050	$	0.5050	$	0.5100
To public common unitholders	$	12,825	$	12,825	$	16,398
To PBF LLC	15,126		15,126		15,276
Total distribution	$	27,951	$	27,951	$	31,674

Credit Facilities

The Revolving Credit Facility is available to fund working capital, acquisitions, distributions and capital expenditures and for other general partnership purposes. We have the ability to increase the maximum amount of the Revolving Credit Facility by an aggregate amount of up to $250.0 million, to a total facility size of $750.0 million, subject to receiving increased commitments from the lenders or other financial institutions and satisfaction of certain conditions. Obligations under the Revolving Credit Facility are guaranteed by our restricted subsidiaries and secured by a first priority lien on our assets and those of our restricted subsidiaries. The maturity date of the Revolving Credit Facility is July 30, 2023 and may be extended for one year on up to two occasions, subject to certain customary terms and conditions. We are in compliance with our covenants under the Revolving Credit Facility as of ~~March 31,~~June 30, 2019.

During the ~~three~~six months ended ~~March 31,~~June 30, 2019, we made repayments of ~~$12.0~~$101.0 million and borrowed ~~$16.0~~$196.0 million under the Revolving Credit Facility to fund the TVPC Acquisition and other capital expenditures and working capital requirements.

Our 2023 Notes have an aggregate principal amount of $525.0 million with interest payable semi-annually on May 15 and November 15. The 2023 Notes mature on May 15, 2023. The 2023 Notes contain customary terms, events of default and covenants for an issuer of non-investment grade debt securities. These covenants include limitations or restrictions on us and our restricted subsidiaries’ ability to, among other things, make distributions.

These covenants are subject to a number of important limitations and exceptions. As of ~~March 31,~~June 30, 2019, we are in compliance with all covenants under the 2023 Notes.

Cash Flows

The following table sets forth our cash flows for the periods indicated:


	Three Months Ended March 31,						Six Months Ended June 30,
	2019			2018			2019			2018
	(In thousands)						(In thousands)
Net cash provided by operating activities	$	38,209		$	42,925		$	55,886		$	65,327
Net cash used in investing activities	(11,220		)	(3,953		)	(15,152		)	(65,671		)
Net cash used in financing activities	(30,451		)	(36,627		)
Net cash (used in) provided by financing activities							(40,642		)	361
Net change in cash and cash equivalents	$	(3,462	)	$	2,345		$	92		$	17

Cash Flows from Operating Activities

Net cash provided by operating activities decreased by approximately ~~$4.7~~$9.4 million to ~~$38.2~~$55.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 compared to ~~$42.9~~$65.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018. The decrease in net cash provided by operating activities was primarily the result of a decrease in the net changes in operating assets and liabilities of approximately ~~$5.9~~$15.9 million primarily driven by the timing of collection of accounts receivables and liability payments, ~~and a decrease in net income of approximately $1.9 million,~~ partially offset by a net increase in non-cash charges relating to depreciation and amortization, amortization of loan fees and debt premium, accretion on discounted liabilities and unit-based compensation of approximately ~~$3.1~~$6.4 million and an increase in net income of approximately $0.1 million.

Cash Flows from Investing Activities

Net cash used in investing activities ~~increased~~decreased by approximately ~~$7.3~~$50.5 million to ~~$11.2~~$15.2 million for the six months ended June 30, 2019 compared to $65.7 million for the ~~three~~six months ended ~~March 31, 2019 compared to $4.0 million for the three months ended March 31,~~June 30, 2018. The ~~increase~~decrease in net cash used in investing activities was primarily due to the Knoxville Terminals Purchase of $58.0 million in April 2018, partially offset by an increase in capital expenditures of approximately ~~$7.3~~$7.5 million primarily related to projects associated with ~~the recently acquired Development Assets and the East Coast Storage Assets.~~recent acquisitions.

Cash Flows from Financing Activities

Net cash used in financing activities ~~decreased~~changed by approximately ~~$6.2~~$41.0 million to ~~$30.5~~$40.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 compared to ~~$36.6~~net cash provided by financing activities of $0.4 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018. The cash outflows for the ~~three~~six months ended ~~March 31,~~June 30, 2019 were primarily driven by the acquisition of the TVPC noncontrolling interest for $200.0 million, distributions to unitholders of ~~$28.0~~$59.6 million and distributions to TVPC members of ~~$6.5~~$8.5 million, partially offset by proceeds from issuance of common units of $132.5 million and net borrowings from our Revolving Credit Facility of ~~$4.0~~$95.0 million. Net cash ~~used in~~provided by financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2018 consisted of ~~distributions to unitholders of $23.1 million, repayment of~~net borrowings under our Revolving Credit Facility of ~~$9.7~~$54.3 million and ~~distributions to TVPC members of $5.0 million, partially offset by~~ a contribution from PBF LLC of ~~$1.1~~$4.2 million related to the pre-acquisition activities of the ~~Paulsboro Natural Gas Pipeline.~~Acquisitions from PBF in 2018, partially offset by distributions to unitholders of $46.6 million, distributions to TVPC members of $11.3 million and deferred financing costs of $0.3 million.

Capital Expenditures

Our capital requirements have consisted of, and are expected to continue to consist of, expansion ~~capital expenditures,~~, maintenance ~~capital expenditures~~ and regulatory capital expenditures. Expansion capital expenditures are expenditures incurred for acquisitions or capital improvements that we expect will increase our operating income or operating capacity over the long term. Examples of expansion capital expenditures include the acquisition of equipment and the construction, development

or acquisition of unloading equipment or other equipment at our facilities or additional throughput or storage capacity to the extent such capital expenditures are expected to expand our operating capacity or increase our operating income. Maintenance capital expenditures are expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our

long-term operating income or operating capacity. Examples of maintenance capital expenditures are expenditures for the refurbishment and replacement of terminals and to maintain equipment reliability, integrity and safety. Regulatory capital expenditures are expenditures made to attain or maintain compliance with regulatory standards. Examples of regulatory capital expenditures are expenditures incurred to address environmental laws or regulations.

Capital expenditures for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018 were as follows:


	Three Months Ended March 31,				Six Months Ended June 30,
	2019		2018		2019		2018
	(In thousands)				(In thousands)
Expansion	$	9,491	$	2,606
Expansion*					$	12,710	$	63,582
Maintenance	1,483		1,325		2,124		2,060
Regulatory	246		22		318		29
Total capital expenditures	$	11,220	$	3,953	$	15,152	$	65,671

* Expansion capital expenditures include our acquisitions for the periods presented.

We currently expect to spend an additional aggregate of between approximately ~~$17.0~~$15.0 million and ~~$25.0~~$20.0 million for the remainder of 2019 for capital expenditures. Of the total expected capital expenditures, between approximately ~~$12.0~~$11.0 million and ~~$15.0~~$14.0 million relate to maintenance or regulatory capital expenditures. We anticipate the forecasted maintenance capital expenditures will be funded primarily with cash from operations and through borrowings under the Revolving Credit Facility as needed. We currently have not included any potential future acquisitions in our budgeted capital expenditures for the ~~twelve months ending December 31,~~remainder of 2019. We may rely on external sources including other borrowings under the Revolving Credit Facility, and issuances of equity and debt securities to fund any significant future expansion.

On April 24, 2019, we entered into athe TVPC Contribution Agreement, ~~with PBF LLC~~ pursuant to which PBF LLC ~~will contribute~~contributed to us all of the issued and outstanding limited liability company interests of TVP Holding ~~Company LLC~~ for total consideration of $200.0 million. We ~~expect to finance~~financed the TVPC Acquisition with $135.0 million of gross proceeds from the April Registered Direct Offering and $65.0 million of borrowings under the Revolving Credit Facility.

Under the Omnibus Agreement, PBF Energy has agreed to reimburse us for any costs up to $20.0 million per event (net of any insurance recoveries) that we incur for repairs required due to the failure of any Contributed Asset to operate in substantially the same manner and condition as such asset was operating prior to the closing of ~~our~~the IPO and each of the Acquisitions from PBF during the first five years after the ~~closing~~closings of ~~our~~the IPO and each of the Acquisitions from PBF, and any matters related thereto.

Contractual Obligations

With the exception of activity under the Revolving Credit Facility, including borrowings to fund capital expenditures and working capital requirements, there have been no significant changes in our contractual obligations since those reported in our 2018 Form 10-K. Refer to Note 6 “Debt” ~~and Note 12 “Subsequent Events”~~ of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information regarding our debt ~~obligations and subsequent events.~~obligations.

In connection with the East Coast Storage Assets Acquisition, our $32.0 million payable to Crown Point International LLC is due on October 1, 2019.

Off-Balance Sheet Arrangements

We have not entered into any transactions, agreements or other contractual arrangements that would result in off-balance sheet liabilities, other than outstanding letters of credit in the amount of $4.1 million.

Environmental and Other Matters

Environmental Regulation

Our operations are subject to extensive and frequently changing federal, state and local laws, regulations and ordinances relating to the protection of the environment. Among other things, these laws and regulations govern the emission or discharge of pollutants into or onto the land, air and water, the handling and disposal of solid and hazardous wastes and the remediation of contamination. As with the industry generally, compliance with existing and anticipated environmental laws and regulations increases our overall cost of business, including our capital costs to develop, maintain, operate and upgrade equipment and facilities. While these laws and regulations affect our maintenance and regulatory capital expenditures and net income, we believe they do not necessarily affect our competitive position, as the operations of our competitors are similarly affected. We believe our facilities are in substantial compliance with applicable environmental laws and regulations. However, these laws and regulations, ~~are subject to changes, or to changes in~~as well as the interpretation of such laws and regulations, are subject to changes by regulatory authorities, and continued and future compliance with such laws and regulations may require us to incur significant expenditures. Additionally, violation of environmental laws, regulations and permits can result in the imposition of significant administrative, civil and criminal penalties, injunctions limiting our operations, investigatory or remedial liabilities or construction bans or delays in the development of additional facilities or equipment. Furthermore, a release of hydrocarbons or hazardous substances into the environment could, to the extent the event is not insured, subject us to substantial expenses, including costs to comply with applicable laws and regulations and to resolve claims by third parties for personal injury or property damage or by the U.S. federal government or state governments for natural resources damages. These impacts could directly and indirectly affect our business and have an adverse impact on our financial position, results of operations and liquidity. We cannot currently determine the amounts of such future impacts.

Environmental Liabilities

Contaminations resulting from spills of crude oil or petroleum products are not unusual within the petroleum terminaling or transportation industries. Historic spills at truck and rail racks and terminals, as a result of past operations, have resulted in contamination of the environment, including soils and groundwater.

Pursuant to the contribution agreements entered into in connection with the IPO and the Acquisitions from PBF, PBF Energy has agreed to indemnify us for certain known and unknown environmental liabilities that are based on conditions in existence at our Predecessor’s properties and associated with the ownership or operation of the Contributed Assets and arising from the conditions that existed prior to the closings of the IPO and the Acquisitions from PBF. In addition, we have agreed to indemnify PBF Energy for (i) certain events and conditions associated with the ownership or operation of our assets that occur, as applicable, after the closing of each Acquisition from PBF (including the IPO), and (ii) environmental liabilities related to our assets if the environmental liability is the result of the negligence, willful misconduct or criminal conduct of us or our employees, including those seconded to us. As a result, we may incur environmental expenses in the future, which may be substantial.

As of ~~March 31,~~June 30, 2019, we have recorded a total liability related to environmental remediation costs of approximately ~~$2.9~~$2.5 million related to existing environmental liabilities. Refer to Note 9 “Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices. Because we do not generally own the crude oil, refined products or natural gas that is distributed through our facilities, and because all of our commercial agreements with PBF Energy require PBF Energy to bear the risk of any material volume

loss relating to the services we provide, we have minimal direct exposure to risks associated with fluctuating commodity prices.

We experience modest volume gains and losses, which we sometimes refer to as imbalances, within our assets as a result of variances in tank storage meter readings and volume fluctuations within certain of our terminals. We use a year-to-date weighted-average market price to value our assets and liabilities related to product imbalances. For the three and six months ended ~~March 31,~~June 30, 2019, the impact from our imbalances was not material to our results. In practice, we expect to settle positive refined product imbalances at the end of each year by selling excess volumes at current market prices. We may be required to purchase refined product volumes in the open market to make up negative imbalances or settle through cash payments.

Debt that we incur under the Revolving Credit Facility bears interest at a variable rate and exposes us to interest rate risk. At ~~March 31,~~June 30, 2019, we had ~~$160.0~~$251.0 million outstanding in variable interest debt. A 1.0% change in the interest rate associated with the borrowings outstanding under this facility would result in a ~~$3.9~~$4.2 million change in our interest expense, assuming we were to borrow all $500.0 million available under the Revolving Credit Facility.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures that is designed to provide reasonable assurance that information which is required to be disclosed is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management in a timely manner. Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we have evaluated the effectiveness of our system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of ~~March 31,~~June 30, 2019. Based on that evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures are effective as of ~~March 31,~~June 30, 2019.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting during the three months ended ~~March 31,~~June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

5355

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Although, from time to time, we may be involved in litigation and claims arising out of our operations in the normal course of business, we do not believe that we are a party to any litigation that will have a material adverse impact on our financial condition, results of operations or statements of cash flows. We are not aware of any material legal or governmental proceedings against us or contemplated to be brought against ~~us.~~us, except as follows:

On December 28, 2016, the Delaware Department of Natural Resources and Environmental Control issued a Coastal Zone Act permit (the “Ethanol Permit”) to the Delaware City Refinery allowing the utilization of existing tanks and existing marine loading equipment at their existing facilities to enable denatured ethanol to be loaded from storage tanks to marine vessels and shipped to offsite facilities. On January 13, 2017, the issuance of the Ethanol Permit was appealed by two environmental groups. On February 27, 2017, the Coastal Zone Industrial Board (the “Coastal Zone Board”) held a public hearing and dismissed the appeal, determining that the appellants did not have standing. The appellants filed an appeal of the Coastal Zone Board’s decision with the Delaware Superior Court (the “Superior Court”) on March 30, 2017. On January 19, 2018, the Superior Court rendered an Opinion regarding the decision of the Coastal Zone Board to dismiss the appeal of the Ethanol Permit for the ethanol project. The judge determined that the record created by the Coastal Zone Board was insufficient for the Superior Court to make a decision, and therefore remanded the case back to the Coastal Zone Board to address the deficiency in the record. Specifically, the Superior Court directed the Coastal Zone Board to address any evidence concerning whether the appellants’ claimed injuries would be affected by the increased quantity of ethanol shipments. On remand, the Coastal Zone Board met on January 28, 2019 and reversed its previous decision on standing, ruling that the appellants have standing to appeal the issuance of the Ethanol Permit. The parties to the action have filed a joint motion with the Coastal Zone Board, requesting that the Coastal Zone Board concur with the parties’ proposal to secure from the Superior Court confirmation that all rights and claims are preserved for any subsequent appeal to the Superior Court, and that the matter then be scheduled for a hearing on the merits before the Coastal Zone Board.

Item 1A. Risk Factors

There have been no significant changes from the risk factors previously disclosed in “Item 1A. Risk Factors” of our 2018 Form ~~10-K.~~10-K, except as follows:

The commencement of the operations of our processing units at our East Coast Storage Assets represents a new operational activity, which is subject to different risks and operational hazards than our existing operations.

We anticipate commencing operation of our processing units at our East Coast Storage Assets in the fourth quarter of 2019. These operations are subject to all of the risks and operational hazards inherent in processing petroleum, including:

damages to our facilities, related equipment and surrounding properties caused by floods, fires, severe weather, explosions and other natural disasters and acts of terrorism;

interruption of service or processing capability due to a major accident, power outage, act of terrorism or other unforeseen events;

failure to restart timely processing operations following a suspension or shutdown;

mechanical or structural failures at our facility;

curtailments of operations relative to severe seasonal weather;

inadvertent damage to our facilities from construction, farm and utility equipment; and

other hazards.

These risks could result in substantial losses due to personal injury and/or loss of life, severe damage to and destruction of property and equipment and pollution or other environmental damage, as well as business interruptions or shutdown of our facility. Any such event or unplanned shutdown could have a material adverse effect on our business, financial condition and results of operations. A significant accident at our facility could result in serious injury or death to our employees or contractors, could expose us to significant liability for personal injury claims and reputational risk.

Item 6. Exhibits

The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this Form 10-Q, and such Exhibit Index is incorporated herein by reference.

EXHIBIT INDEX



Exhibit Number		Description
2.1		~~Equity Restructuring~~Contribution Agreement dated ~~February 13,~~as of April 24, 2019 by and ~~among~~between PBF Logistics LP and PBF Energy Company LLC ~~PBF Logistics GP LLC, and PBF Logistics LP~~ (incorporated by reference ~~herein~~ to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-36446) filed on ~~February 14,~~April 26, 2019).
~~3.1~~10.1		~~Third Amended and Restated Agreement of the Limited Partnership of~~First Amendment to PBF Logistics LP 2014 Long-Term Incentive Plan (incorporated by reference ~~herein to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-36446) filed on February 14, 2019).~~
4.1*		~~Seventh Supplemental Indenture dated as of October 25, 2018, among CPI Operations LLC, PBF Logistics LP, PBF Logistics Finance Corporation, and Deutsche Bank Trust Company Americas, as trustee.~~
10.1*		~~Joinder Agreement dated as of October 25, 2018, among CPI Operations LLC and Wells Fargo Bank, National Association, as Administrative Agent.~~
~~10.2~~		Amendment to Amended and Restated Delaware City Rail Terminaling Services Agreement, dated February 13, 2019, by and between PBF Holding Company LLC, Delaware City Terminaling Company LLC and CPI Operations LLC (incorporated by reference herein to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-36446) filed on ~~February 14, 2019).~~
~~10.3~~		Terminaling Services Agreement, dated February 13, 2019, by and between PBF Holding Company LLC, Delaware City Terminaling Company LLC and CPI Operations LLC (incorporated by reference herein to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-36446) filed on February 14,April 24, 2019).
31.1*		Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Logistics LP 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 Logistics LP pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1/*		Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Logistics LP pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2/*		Certification of Erik Young, Chief Financial Officer of PBF Logistics LP pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*		~~Supplemental Financial Information of Torrance Valley Pipeline Company LLC.~~
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.



~~Exhibit Number~~		~~Description~~
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

——————

* Filed herewith.

** This exhibit should not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.

5557

Signatures

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



			PBF Logistics LP
		By:	PBF Logistics GP LLC, its general partner

Date:	~~May~~August 1, 2019		By:	/s/ Erik Young
				Erik Young Senior Vice President, Chief Financial Officer and Director (Duly Authorized Officer and Principal Financial Officer)

5658



PART I - FINANCIAL INFORMATION	56

Item 1. Financial Statements (Unaudited)	56
Condensed Consolidated Balance Sheets as of ~~March 31,~~June 30, 2019 and December 31, 2018	56
Condensed Consolidated Statements of Operations for the Three and Six Months Ended ~~March 31,~~June 30, 2019 and 2018	67
Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2019 and 2018	78
Notes to Condensed Consolidated Financial Statements	89

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3639

Item 3. Quantitative and Qualitative Disclosures About Market Risk	5255

Item 4. Controls and Procedures	5355

PART II - OTHER INFORMATION	5456

Item 1. Legal Proceedings	5456

Item 1A. Risk Factors	5456

Item 6. Exhibits	5457

Signatures	5658