UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


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

For the quarterly period ended: ~~September~~June 30, ~~2021~~2022


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

For the transition period from to

Commission File Number: 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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☐

☑

☐

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. o

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

As of ~~October~~July 22, ~~2021,~~2022, there were ~~62,517,137~~62,740,190 common units outstanding.

PBF LOGISTICS LP

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION			67

Item 1. Financial Statements (Unaudited)			67
Condensed Consolidated Balance Sheets as of ~~September~~June ~~30, 2021~~3 0 , 2022 and December 31, ~~2020~~			6
~~Condensed Consolidated Statements of Operations for the Three and~~ ~~Nine~~ ~~Months Ended~~ ~~September~~ ~~30,~~ 2021 ~~and 2020~~			7
Condensed Consolidated Statements of ~~Cash Flows~~Operations for the Three ~~Nine~~and Six Months Ended ~~September~~June ~~30,~~3 0 , 2022 and 2021 ~~and 2020~~			8
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021			9
Notes to Condensed Consolidated Financial Statements			1011

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2526

Item 3. Quantitative and Qualitative Disclosures About Market Risk			4543

Item 4. Controls and Procedures			4543

PART II - OTHER INFORMATION			4645

Item 1. Legal Proceedings			4645

Item 1A. Risk Factors			4745

Item 6. Exhibits			4748

Signatures			4849

EXPLANATORY NOTE

PBF Logistics LP (“PBFX” or the “Partnership”) is a Delaware master limited partnership (“MLP”) 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 ~~September~~June 30, ~~2021,~~2022, owned ~~99.2%~~99.3% 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 owned 29,953,631 PBFX common units constituting an aggregate of ~~47.9%~~47.7% limited partner interest in PBFX, with the remaining ~~52.1%~~52.3% limited partner interest owned by public unitholders as of ~~September~~June 30, ~~2021.~~2022.

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2021~~2022 (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, storage and processing assets previously operated and owned by PBF Holding’s subsidiaries and PBF Holding’s previously held subsidiaries. As of ~~September~~June 30, ~~2021,~~2022, PBF Holding, together with its subsidiaries, owns and operates six oil refineries (two of which are operated as a single unit) 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,” “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 on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors and, of course, it is impossible for us to anticipate all factors that could affect our actual results.

Important factors that could cause actual results to differ materially from our expectations, which we refer to as “cautionary statements,” are disclosed under “Item 1A. Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” elsewhere in this Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (our ~~“2020~~“2021 Form 10-K”) and in our other filings with the 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:

•the risk that the Merger Transaction (as defined in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q) is not consummated during the expected time frame, or at all;

•failure of closing conditions, delays in the consummation of the Merger Transaction and changes to business plans, as circumstances warrant, and other factors, many of which are difficult to control or predict, that could affect PBF Energy’s or our ability to consummate the Merger Transaction;

•the occurrence of any event, change, or other circumstance that could give rise to the termination of the Merger Agreement (as defined in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q) and failure to consummate the Merger Transaction;

•changes in general economic conditions, including market and macro-economic disruptions resulting from pandemics, ~~including~~such as the ongoing coronavirus disease 2019, ~~(“COVID-19”)~~commonly known as COVID-19, pandemic, including resurgences and variants of the ~~Delta~~virus, and ~~other variants thereof, as well as~~ related governmental and consumer responses thereto;

•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;

•political pressure and influence of environmental groups and other stakeholders on decisions and policies related to the refining, processing and storing of crude oil and refined petroleum products;

•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 revenue subjects us to the business risks of PBF Energy, which 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 associated with PBF Energy’s Delaware City, Toledo and Torrance refineries, and any adverse developments 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 processing of crude oil and the receiving, handling, ~~storage~~storing and transferring of crude oil, refined products, natural gas and intermediates;

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

•the threat of cyber-attacks;

•our and PBF Energy’s increased dependence on technology;

•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 rail or in response to the potential impacts of climate change;

•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 various 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;

•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 qualifying income requirements and our status as a partnership for U.S. federal income tax purposes, as well as 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)
September 30,
2021 December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents $ 28,647 $ 36,284
Accounts receivable - affiliates 63,244 53,220
Accounts receivable 6,009 11,382
Prepaids and other current assets 4,383 2,590
Total current assets 102,283 103,476
Property, plant and equipment, net 798,832 820,174
Goodwill 6,332 6,332
Other non-current assets 3,132 3,570
Total assets $ 910,579 $ 933,552
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable - affiliates $ 3,962 $ 4,940
Accounts payable 3,887 4,602
Accrued liabilities 26,311 32,224
Deferred revenue 2,741 2,117
Total current liabilities 36,901 43,883
Long-term debt 647,124 720,845
Other long-term liabilities 1,377 1,607
Total liabilities 685,402 766,335
Commitments and contingencies (Note 9) 0 0
Equity:
Common unitholders (62,517,137 and 62,364,838 units issued and outstanding, as of September 30, 2021 and December 31, 2020, respectively) 225,177 167,217
Total equity 225,177 167,217
Total liabilities and equity $ 910,579 $ 933,552

~~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
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Revenue:
Affiliate $ 75,464 $ 70,716 $ 226,504 $ 218,681
Third-party 13,389 18,294 39,692 52,487
Total revenue 88,853 89,010 266,196 271,168
Costs and expenses:
Operating and maintenance expenses 27,265 22,730 77,760 75,385
General and administrative expenses 3,902 4,112 14,592 12,798
Depreciation and amortization 9,787 14,305 28,468 36,821
Impairment expense — 7,000 — 7,000
Change in contingent consideration 761 (14,765) 2,565 (14,235)
Total costs and expenses 41,715 33,382 123,385 117,769
Income from operations 47,138 55,628 142,811 153,399
Other expense:
Interest expense, net (10,027) (10,544) (30,526) (33,929)
Amortization of loan fees and debt premium (423) (328) (1,278) (1,309)
Accretion on discounted liabilities (6) (594) (18) (1,726)
Net income attributable to PBF Logistics LP unitholders $ 36,682 $ 44,162 $ 110,989 $ 116,435
Net income per limited partner unit:
Common units - basic $ 0.58 $ 0.71 $ 1.77 $ 1.87
Common units - diluted 0.58 0.71 1.76 1.87
Weighted-average limited partner units outstanding:
Common units - basic 62,887,914 62,519,105 62,820,193 62,424,217
Common units - diluted 62,997,487 62,529,489 62,934,116 62,429,475


	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	30,698	$	33,904

Accounts receivable - affiliates	47,331		61,724
Accounts receivable	5,400		5,549
Prepaids and other current assets	1,981		3,476
Total current assets	85,410		104,653
Property, plant and equipment, net	771,721		787,338
Goodwill	6,332		6,332
Other non-current assets	3,489		2,974
Total assets	$	866,952	$	901,297

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable - affiliates	$	4,486	$	4,096
Accounts payable	3,517		5,394
Accrued liabilities	12,238		16,812


Deferred revenue	2,465		2,372
Total current liabilities	22,706		28,674
Long-term debt	553,377		622,544
Other long-term liabilities	2,445		1,383
Total liabilities	578,528		652,601

Commitments and contingencies (Note 9)	0		0

Equity:

Common unitholders (62,732,078 and 62,574,644 units issued and outstanding, as of June 30, 2022 and December 31, 2021, respectively)	288,424		248,696




Total equity	288,424		248,696
Total liabilities and equity	$	866,952	$	901,297

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue:
Affiliate	$	79,624	$	75,107	$	155,609	$	151,040
Third-party	13,742		14,731		27,200		26,303
Total revenue	93,366		89,838		182,809		177,343

Costs and expenses:
Operating and maintenance expenses	28,191		25,447		57,606		50,495
General and administrative expenses	6,682		6,226		10,593		10,690
Depreciation and amortization	9,146		9,276		18,630		18,681

Change in contingent consideration	—		1,149		238		1,804
Total costs and expenses	44,019		42,098		87,067		81,670

Income from operations	49,347		47,740		95,742		95,673

Other expense:
Interest expense, net	(9,706)		(10,212)		(19,419)		(20,499)
Amortization of loan fees and debt premium	(415)		(426)		(833)		(855)
Accretion on discounted liabilities	(5)		(6)		(10)		(12)






Net income attributable to PBF Logistics LP unitholders	$	39,221	$	37,096	$	75,480	$	74,307

Net income per limited partner unit:
Common units - basic	$	0.62	$	0.59	$	1.20	$	1.18
Common units - diluted	0.62		0.59		1.20		1.18


Weighted-average limited partner units outstanding:
Common units - basic	63,050,107		62,785,212		63,000,110		62,737,272
Common units - diluted	63,205,739		62,982,884		63,078,204		62,859,734

See Notes to Condensed Consolidated Financial Statements.

PBF LOGISTICS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	110,989	$	116,435	Net income	$	75,480	$	74,307
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	28,468		36,821		Depreciation and amortization	18,630		18,681
Impairment expense		—		7,000

Amortization of loan fees and debt premium	Amortization of loan fees and debt premium	1,278		1,309		Amortization of loan fees and debt premium	833		855
Accretion on discounted liabilities	Accretion on discounted liabilities	18		1,726		Accretion on discounted liabilities	10		12
Unit-based compensation expense	Unit-based compensation expense	4,658		3,242		Unit-based compensation expense	3,478		3,823
Change in contingent consideration	Change in contingent consideration	2,565		(14,235)		Change in contingent consideration	238		1,804
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable - affiliates	Accounts receivable - affiliates	(10,024)		(7,846)		Accounts receivable - affiliates	14,393		(7,073)
Accounts receivable	Accounts receivable	5,373		(2,059)		Accounts receivable	149		6,235
Prepaids and other current assets	Prepaids and other current assets	(1,793)		(565)		Prepaids and other current assets	1,495		(1,560)

Accounts payable - affiliates	Accounts payable - affiliates	(978)		115		Accounts payable - affiliates	390		584
Accounts payable	Accounts payable	(639)		(5,674)		Accounts payable	(1,625)		95
Accrued liabilities	Accrued liabilities	3,382		7,748		Accrued liabilities	(2,391)		(7,760)
Deferred revenue	Deferred revenue	624		2,314		Deferred revenue	93		449
Other assets and liabilities	Other assets and liabilities	(217)		(4,902)		Other assets and liabilities	299		(167)
Net cash provided by operating activities	Net cash provided by operating activities	143,704		141,429		Net cash provided by operating activities	111,472		90,285

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

Expenditures for property, plant and equipment	Expenditures for property, plant and equipment	(6,892)		(9,635)		Expenditures for property, plant and equipment	(3,138)		(3,509)

Net cash used in investing activities	Net cash used in investing activities	$	(6,892)	$	(9,635)	Net cash used in investing activities	$	(3,138)	$	(3,509)

See Notes to Condensed Consolidated Financial Statements.

PBF LOGISTICS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(unaudited, in thousands)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2021		2020			2022		2021

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Distributions to unitholders	Distributions to unitholders	$	(56,216)	$	(69,718)	Distributions to unitholders	$	(37,598)	$	(37,462)

Proceeds from revolving credit facility		—		100,000

Repayment of revolving credit facility	Repayment of revolving credit facility	(75,000)		(170,000)		Repayment of revolving credit facility	(70,000)		(40,000)

Payment of contingent consideration	Payment of contingent consideration	(12,176)		—		Payment of contingent consideration	(2,685)		(12,176)
Deferred financing costs and other	Deferred financing costs and other	(1,057)		809		Deferred financing costs and other	(1,257)		(1,012)
Net cash used in financing activities	Net cash used in financing activities	(144,449)		(138,909)		Net cash used in financing activities	(111,540)		(90,650)

Net change in cash and cash equivalents	Net change in cash and cash equivalents	(7,637)		(7,115)		Net change in cash and cash equivalents	(3,206)		(3,874)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	36,284		34,966		Cash and cash equivalents, beginning of period	33,904		36,284
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	28,647	$	27,851	Cash and cash equivalents, end of period	$	30,698	$	32,410

Supplemental disclosure of non-cash investing and financing activities:	Supplemental disclosure of non-cash investing and financing activities:					Supplemental disclosure of non-cash investing and financing activities:
Accrued and unpaid capital expenditures	Accrued and unpaid capital expenditures	$	504	$	843	Accrued and unpaid capital expenditures	$	457	$	2,554
Contribution of net assets from PBF LLC	Contribution of net assets from PBF LLC	316		—		Contribution of net assets from PBF LLC	—		316

See Notes to Condensed Consolidated Financial Statements.

910

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

PBF Logistics LP (“PBFX” or the “Partnership”) is a Delaware master 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 ~~September~~June 30, ~~2021,~~2022, owned ~~99.2%~~99.3% 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 owned 29,953,631 PBFX common units constituting an aggregate of ~~47.9%~~47.7% limited partner interest in PBFX, with the remaining ~~52.1%~~52.3% limited partner interest owned by public unitholders as of ~~September~~June 30, ~~2021.~~2022.

PBFX engages in the processing of crude oil and the receiving, handling, ~~storage~~storing and transferring of crude oil, refined products, natural gas and intermediates. The Partnership generally 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 generate revenue from third-party transactions.

Pending Merger with PBF Energy

On July 27, 2022, the Partnership entered into a definitive merger agreement with PBF Energy and its subsidiaries, PBF LLC, Riverlands Merger Sub LLC, and PBFX Holdings Inc., and our general partner (the “Merger Agreement”), pursuant to which PBF Energy will acquire all of the publicly held common units representing limited partner interests in the Partnership not already owned by PBF Energy and its subsidiaries on the closing date of the transaction (the “Merger Transaction”). The Merger Agreement provides that each outstanding common unit of the Partnership held by an unaffiliated common unitholder will receive 0.270 shares of PBF Energy Class A common stock, par value $0.001 per share (“PBF Energy Class A common stock”), and $9.25 in cash, without interest. The Merger Agreement also provides that our general partner shall consider and, if appropriate, shall approve and declare and cause the Partnership to pay, in accordance with past practice for each completed fiscal quarter ending prior to the closing date, a cash distribution to holders of PBFX’s common units in an amount not less than $0.30 per common unit. The merger is expected to close in the fourth quarter of 2022, subject to customary closing conditions.

PBF Energy and PBF LLC, a subsidiary of PBF Energy that owns approximately 47.7% of PBFX’s common units, has entered into a voting and support agreement with PBFX committing to vote Partnership common units beneficially owned by PBF Energy and PBF LLC in favor of the Merger Transaction.

The terms of the Merger Transaction were unanimously approved by the Board of Directors of our general partner based on the unanimous approval and recommendation of its conflicts committee, comprised entirely of independent directors.

Upon closing, the Partnership will become an indirect wholly-owned subsidiary of PBF Energy, and the PBFX common units will cease to be listed on the NYSE and will be subsequently deregistered under the Exchange Act.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

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 dropdown 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. The accompanying condensed consolidated financial statements and related notes present solely the consolidated financial position and consolidated financial results of PBFX. Refer to the Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (the ~~“2020~~“2021 Form 10-K”) for additional information regarding the Acquisitions from PBF and the agreements that were entered into or amended with related parties in connection with these acquisitions.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, 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, results of operations and cash flows of PBFX for the periods presented. The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the full year.

The Predecessor generally did not operate its respective assets for the purpose of generating revenue independent of other PBF Energy businesses prior to the IPO or the effective dates of the Acquisitions from PBF. All intercompany accounts and transactions have been eliminated.

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

Recently ~~Issued~~Adopted Accounting ~~Pronouncements~~Guidance

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” ~~(“ASU 2020-04”)~~. The amendments in this ASU ~~2020-04~~ provide optional guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying GAAP to contracts, hedging relationships and other transactions affected by the expected market transition from London Interbank Offering Rate ~~(“LIBOR”)~~ and other interbank ~~rates if certain criteria are met.~~rates. The amendments in ASU 2020-04 are effective for all entities at any time beginning on March 12, 2020 through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of ASU 2020-04. The Partnership does not expect that thePartnership’s adoption of this guidance ~~will~~did not have, and is not anticipated to have, a material impact on its condensed consolidated financial statements and related disclosures.

2. REVENUE

Revenue Recognition

In accordance with FASB Accounting Standards Codification ~~Topic 606~~ “Revenue from Contracts with Customers (Topic 606),” revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration to which the Partnership expects to be entitled in exchange for those goods or services.

As disclosed in Note 11 “Segment Information” of the Notes to Condensed Consolidated Financial Statements, the Partnership’s business consists of 2 reportable segments: (i) Transportation and Terminaling and (ii) Storage.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Transportation and Terminaling Segment	Transportation and Terminaling Segment									Transportation and Terminaling Segment
Terminaling	Terminaling	$	37,628	$	35,468	$	114,849	$	108,196	Terminaling	$	37,068	$	38,386	$	72,466	$	77,221
Pipeline	Pipeline	20,980		19,974		62,667		60,732		Pipeline	21,404		21,113		43,706		41,687
Other	Other	11,110		11,550		34,387		35,016		Other	12,246		11,209		24,794		23,277
Total	Total	69,718		66,992		211,903		203,944		Total	70,718		70,708		140,966		142,185
Storage Segment	Storage Segment									Storage Segment
Storage	Storage	14,550		13,815		42,443		41,366		Storage	18,520		14,145		33,717		27,893
Other	Other	4,585		8,203		11,850		25,858		Other	4,128		4,985		8,126		7,265
Total	Total	19,135		22,018		54,293		67,224		Total	22,648		19,130		41,843		35,158
Total Revenue	Total Revenue	$	88,853	$	89,010	$	266,196	$	271,168	Total Revenue	$	93,366	$	89,838	$	182,809	$	177,343

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

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

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 crude oil, refined products and natural gas. Certain of the affiliate and third-party 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 an amount equal to the difference in actual volumes transported and/or throughput and the minimum volumes required under the agreement multiplied by the applicable contractual rate (each a “deficiency payment”). Deficiency payments are initially recorded as deferred revenue on the 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 deficiency payment amounts as a credit against volumes throughput in excess of its MVC, as applicable, during subsequent quarters under the terms of the applicable agreement. The Partnership recognizes operating revenue for the deficiency payments when credits are used for volumes transported in excess of MVCs or at the end of the contractual period. Unused credits determined to have a remote chance of being utilized by customers in the future are recognized as operating 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 crude oil and refined products storage contracts. In addition, the Partnership earns storage revenue under its processing agreement at its East Coast storage facility. Certain of these affiliate and third-party contracts contain capacity reservation agreements, under which 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 UNIT AND PER UNIT DATA)

MVC Payments to be Received

As of ~~September~~June 30, ~~2021,~~2022, MVC payments to be received, based on future performance obligations of the Partnership, related to noncancellable commercial terminaling, pipeline and storage agreements were as follows:


Remainder of 2021		$	30,021
2022		92,567
Remainder of 2022				Remainder of 2022	$	51,800
2023	2023	89,204		2023	94,590
2024	2024	87,175		2024	92,505
2025	2025	86,937		2025	92,253
2026				2026	—
Thereafter	Thereafter	—		Thereafter	—
Total MVC payments to be received (1)(2)	Total MVC payments to be received (1)(2)	$	385,904	Total MVC payments to be received (1)(2)	$	331,148

(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 is excluded.

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

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

Leases

Lessor Disclosures

The Partnership has leased certain of its assets under lease agreements with varying terms up to fifteen years, including leases of storage, terminaling, pipeline and processing assets. Certain of these leases include options to extend or renew the lease 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 lease agreements generally do not 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 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.

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 ~~September~~June 30, ~~2021,~~2022, 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., MVCs) and non-lease components (e.g., maintenance, labor charges, etc.). The Partnership accounts for the lease and non-lease components as a single lease component for every asset class.

Certain of the Partnership’s lease agreements include MVCs that are adjusted periodically based on a specified 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 offor these affiliate leases range from one to fifteen years. Leases with affiliates represent approximately ~~96%~~91% of the undiscounted contractual future rental income from the Partnership’s leased assets.

~~The table below quantifies lease revenue for the three and nine months ended September 30, 2021 and 2020:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Affiliate $ 38,305 $ 36,212 $ 112,275 $ 112,600
Third-party 9,508 13,449 26,303 40,173
Total lease revenue $ 47,813 $ 49,661 $ 138,578 $ 152,773

1314

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

The table below quantifies lease revenue for the three and six months ended June 30, 2022 and 2021:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Affiliate	$	44,695	$	37,122	$	86,156	$	73,970
Third-party	8,289		9,745		16,385		16,795
Total lease revenue	$	52,984	$	46,867	$	102,541	$	90,765

Undiscounted Cash Flows

The table below presents the fixed component of the undiscounted cash flows to be received for each of the periods presented for the Partnership’s operating leases with customers as of ~~September~~June 30, ~~2021:~~2022:


Remainder of 2021		$	36,059
2022		134,791
Remainder of 2022				Remainder of 2022	$	72,027
2023	2023	133,090		2023	138,453
2024	2024	131,874		2024	136,498
2025	2025	105,186		2025	109,816
2026				2026	79,395
Thereafter	Thereafter	128,339		Thereafter	53,313
Total undiscounted cash flows to be received	Total undiscounted cash flows to be received	$	669,339	Total undiscounted cash flows to be received	$	589,502

Assets Under Lease

The Partnership’s assets that are subject to lease are included in “Property, plant and equipment, net” within the Partnership’s condensed consolidated balance sheets. The table below quantifies, by category within property, plant and equipment, the assets that are subject to lease as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Land	Land	$	98,337	$	98,337	Land	$	98,337	$	98,337
Pipelines	Pipelines	321,998		321,254		Pipelines	322,758		322,437
Terminals and equipment	Terminals and equipment	83,387		83,387		Terminals and equipment	83,783		83,411
Storage facilities and processing units	Storage facilities and processing units	182,819		182,600		Storage facilities and processing units	183,588		183,493
		686,541		685,578			688,466		687,678
Accumulated depreciation	Accumulated depreciation	(127,853)		(109,153)		Accumulated depreciation	(146,209)		(133,962)
Net assets subject to lease	Net assets subject to lease	$	558,688	$	576,425	Net assets subject to lease	$	542,257	$	553,716

Deferred Revenue

The Partnership records deferred revenue when cash payments are received or due in advance of performance, including amounts which are refundable. Deferred revenue was ~~$2,741~~$2,465 and ~~$2,117~~$2,372 as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. ~~The increase~~Changes in ~~the~~ deferred revenue ~~balance as of September 30, 2021 is~~are 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 the customer and the services offered. The period between invoicing and when payment is due is not significant (i.e., generally within two months). For certain services and customer types, the Partnership requires payment before the services are performed for the customer.

1415

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

3. CURRENT EXPECTED CREDIT LOSSES

Credit Losses

The Partnership has exposure to credit losses through its collection of fees charged to customers for terminaling, pipeline, storage and processing services. The Partnership evaluates creditworthiness on an individual customer basis. The Partnership utilizes a financial review model for purposes of evaluating creditworthiness, which is based on information from financial statements and credit reports. The financial review model enables the Partnership to assess the customer’s risk profile and determine credit limits on the basis of their financial strength, including but not limited to, their liquidity, leverage, debt serviceability, longevity and how they pay their bills. The Partnership may require security in the form of letters of credit or cash payments in advance of product and services delivery for certain customers that are deemed higher risk. Additionally, the Partnership may hold customers’ product in storage at its facilities as collateral and/or deny access to its facilities, as allowable under commercial law or its contractual agreements, should payment not be received.

The Partnership reviews each customer’s credit risk profile at least annually, or more frequently if warranted. Following the widespread market disruption that has resulted from the coronavirus disease 2019 (“COVID-19”) pandemic and related governmental and consumer responses, the Partnership has been performing ongoing credit reviews of its customers including monitoring for any negative credit events such as customer bankruptcy or insolvency events. Based on its credit assessments, the Partnership may adjust payment terms or limit available trade credit for customers, and customers within certain industries, which are deemed to be at a higher risk.

The Partnership performs a quarterly allowance for doubtful accounts analysis to assess whether an allowance needs to be recorded for any outstanding trade receivables. In estimating credit losses, management reviews accounts that are past due, have known disputes or have experienced any negative credit events that may result in future collectability issues. There was no allowance for doubtful accounts recorded as of ~~September~~June 30, ~~2021~~2022 or December 31, ~~2020.~~2021.

4. PROPERTY, PLANT AND EQUIPMENT, NET

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


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Land	Land	$	115,957	$	115,957	Land	$	114,844	$	114,844
Pipelines	Pipelines	346,072		345,328		Pipelines	346,833		346,512
Terminals and equipment	Terminals and equipment	324,908		319,861		Terminals and equipment	324,139		321,082
Storage facilities and processing units	Storage facilities and processing units	202,007		200,662		Storage facilities and processing units	202,727		202,729
Construction in progress	Construction in progress	2,697		3,761		Construction in progress	1,970		2,991
		991,641		985,569			990,513		988,158
Accumulated depreciation	Accumulated depreciation	(192,809)		(165,395)		Accumulated depreciation	(218,792)		(200,820)
Property, plant and equipment, net	Property, plant and equipment, net	$	798,832	$	820,174	Property, plant and equipment, net	$	771,721	$	787,338

Depreciation expense was ~~$28,092~~$18,380 and ~~$31,065~~$18,431 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

1516

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

5. ~~GOODWILL AND~~ INTANGIBLES

The Partnership performed its annual goodwill impairment assessment as of July 1, 2021 and determined that the carrying value of goodwill was not impaired. As of September 30, 2021, the carrying amount of goodwill was $6,332, all of which was recorded within the Transportation and Terminaling segment.

The Partnership’s net intangibles consisted of the following:


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Customer contracts	Customer contracts	$	9,300	$	9,300	Customer contracts	$	9,300	$	9,300
Customer relationships	Customer relationships	5,900		5,900		Customer relationships	5,900		5,900
		15,200		15,200			15,200		15,200
Accumulated amortization	Accumulated amortization	(12,272)		(11,896)		Accumulated amortization	(12,647)		(12,397)
Total intangibles, net (1)	Total intangibles, net (1)	$	2,928	$	3,304	Total intangibles, net (1)	$	2,553	$	2,803

(1) Total intangibles, net are included in “Other non-current assets” within the Partnership’s condensed consolidated balance sheets.

Amortization expense was ~~$376~~$250 for each of the six month periods ended June 30, 2022 and ~~$5,756 for the nine months ended September 30, 2021 and 2020, respectively.~~2021.

6. DEBT

Total debt was comprised of the following:


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
2023 Notes(1)	2023 Notes(1)	$	525,000	$	525,000	2023 Notes(1)	$	525,000	$	525,000

Revolving Credit Facility ~~(2)~~(3)	Revolving Credit Facility ~~(2)~~(3)	125,000		200,000		Revolving Credit Facility ~~(2)~~(3)	30,000		100,000
Total debt outstanding	Total debt outstanding	650,000		725,000		Total debt outstanding	555,000		625,000
Unamortized debt issuance costs	Unamortized debt issuance costs	(3,975)		(5,754)		Unamortized debt issuance costs	(2,197)		(3,383)
Unamortized 2023 Notes premium	Unamortized 2023 Notes premium	1,099		1,599		Unamortized 2023 Notes premium	574		927
Net carrying value of debt	Net carrying value of debt	$	647,124	$	720,845	Net carrying value of debt	$	553,377	$	622,544

___________________

(1)The 2023 Notes (as defined below) are due May 2023 and are included in Long-term debt as of June 30, 2022 as the Partnership has the ability and intent to refinance this debt through availability under other credit facilities, including credit facilities of the Partnership’s parent sponsor, PBF Energy, in the event the debt is not renewed at maturity.

(2)As of June 30, 2022, PBFX had ~~$4,008~~$3,508 of outstanding letters of credit and ~~$370,992~~$466,492 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 September 30, 2021.~~.

~~(2)~~(3)During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, PBFX made net repayments of ~~$75,000~~$70,000 under the Revolving Credit Facility.

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.

1617

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

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 on 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 ~~$511,442~~$516,925 and ~~$503,025~~$513,661 at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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 ~~$650,000~~$555,000 and ~~$636,442~~$546,925 as of ~~September~~June 30, ~~2021,~~2022, respectively, and ~~$725,000~~$625,000 and ~~$703,025~~$613,661 as of December 31, ~~2020,~~2021, respectively.

7. EQUITY

PBFX had ~~32,563,506~~32,778,447 outstanding common units held by the public as of ~~September~~June 30, ~~2021.~~2022. PBF LLC ~~owns~~owned 29,953,631 PBFX common units constituting an aggregate of ~~47.9%~~47.7% of PBFX’s limited partner interest as of ~~September~~June 30, ~~2021.~~2022.

Unit 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 ~~tables present~~table presents changes in PBFX common units outstanding:


		Three Months Ended September 30, 2021		Three Months Ended June 30,
		2021	2020	2022		2021

Balance at beginning of period	Balance at beginning of period	62,510,376	62,349,592		Balance at beginning of period	62,597,855	62,365,612
Vesting of phantom units, net of forfeitures	Vesting of phantom units, net of forfeitures	6,761	10,932		Vesting of phantom units, net of forfeitures	134,223	144,764

Balance at end of period	Balance at end of period	62,517,137	62,360,524		Balance at end of period	62,732,078	62,510,376


		Nine Months Ended September 30, 2021		Six Months Ended June 30,
		2021	2020	2022		2021

Balance at beginning of period	Balance at beginning of period	62,364,838	62,130,035		Balance at beginning of period	62,574,644	62,364,838
Vesting of phantom units, net of forfeitures	Vesting of phantom units, net of forfeitures	152,299	230,489		Vesting of phantom units, net of forfeitures	157,434	145,538

Balance at end of period	Balance at end of period	62,517,137	62,360,524		Balance at end of period	62,732,078	62,510,376

Additionally, ~~325,384~~308,427 of the Partnership’s phantom units issued under the PBFX 2014 Long-Term Incentive Plan 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, ~~2020.~~2021.

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.

1718

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

Equity Activity

The following tables summarize the changes in the carrying amount of the Partnership’s equity during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:

Common Units

Balance at December 31, ~~2020~~2021

~~167,217~~248,696

Quarterly distributions to unitholders ($0.30 per unit)

~~(18,926)~~(19,000)

Net income attributable to the partners

~~37,211~~36,259

Unit-based compensation expense

~~989~~654

Other

1581

Balance at March 31, ~~2021~~2022

~~186,506~~266,690

Quarterly distributions to unitholders ($0.30 per unit)

(19,054)

Net income attributable to the partners

39,221

Unit-based compensation expense

2,824

Other

(1,257)

Balance at June 30, 2022

288,424


	Common Units
Balance at December 31, 2020	$	167,217
Quarterly distributions to unitholders ($0.30 per unit)	(18,926)

Net income attributable to the partners	37,211
Unit-based compensation expense	989
Other	15
Balance at March 31, 2021	$	186,506
Quarterly distributions to unitholders ($0.30 per unit)	(19,023)

Net income attributable to the partners	37,096



Unit-based compensation expense	2,834

Other	(696)
Balance at June 30, 2021	$	206,717
~~Quarterly distributions to unitholders ($0.30 per unit)~~	~~(19,012)~~
~~Net income attributable to the partners~~	~~36,682~~
~~Unit-based compensation expense~~	~~835~~
~~Other~~	~~(45)~~
~~Balance at September 30, 2021~~	$	~~225,177~~

~~Common Units~~

~~Balance at December 31, 2019~~

~~105,083~~

~~Quarterly distributions to unitholders ($0.52 per unit)~~

~~(32,703)~~

~~Net income attributable to the partners~~

~~34,813~~

~~Unit-based compensation expense~~ ~~(1)~~

~~1,302~~

~~Other~~

~~(6)~~

~~Balance at March 31, 2020~~

~~108,489~~

~~Quarterly distributions to unitholders ($0.30 per unit)~~

~~(18,843)~~

~~Net income attributable to the partners~~

~~37,460~~

~~Unit-based compensation expense~~

~~945~~

~~Other~~

~~(805)~~

~~Balance at June 30, 2020~~

~~127,246~~

~~Quarterly distributions to unitholders ($0.30 per unit)~~

~~(18,847)~~

~~Net income attributable to the partners~~

~~44,162~~

~~Unit-based compensation expense~~

~~995~~

~~Balance at September 30, 2020~~

~~153,556~~

~~(1)~~ ~~Inclusive of $201 of expense associated with the accelerated vesting of phantom units in March 2020 for nonretirement eligible employees in accordance with their grant agreements.~~

1819

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

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 ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, PBFX made distribution payments as follows:


Related Earnings Period:	Related Earnings Period:	Q4 2020		Q1 2021		Q2 2021		Related Earnings Period:	Q4 2021		Q1 2022
Distribution date	Distribution date	March 17, 2021		May 27, 2021		August 26, 2021		Distribution date	March 10, 2022		May 26, 2022
Record date	Record date	February 25, 2021		May 13, 2021		August 12, 2021		Record date	February 24, 2022		May 12, 2022
Per unit	Per unit	$	0.30	$	0.30	$	0.30	Per unit	$	0.30	$	0.30
To public common unitholders	To public common unitholders	$	9,724	$	9,766	$	9,769	To public common unitholders	$	9,793	$	9,833
To PBF LLC	To PBF LLC	$	8,986	$	8,986	$	8,986	To PBF LLC	$	8,986	$	8,986
Total distribution	Total distribution	$	18,710	$	18,752	$	18,755	Total distribution	$	18,779	$	18,819

The quarterly distributions to limited partners for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 are shown in the table below. The Partnership’s distributions are declared subsequent to quarter end (distributions of $0.30 per unit were declared for each of the three-month periods ended ~~September 30, 2021 and 2020, distributions of $0.30 per unit were declared for each of the three-month periods ended~~ June 30, ~~2021~~2022 and ~~2020,~~2021 and distributions of $0.30 per unit were declared for each of the three-month periods ended March 31, ~~2021~~2022 and ~~2020)~~2021); therefore, the table represents total estimated distributions applicable to the period in which the distributions were earned:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

Limited partners’ distributions:	Limited partners’ distributions:									Limited partners’ distributions:
Common	Common	$	19,015	$	18,848	$	57,060	$	56,541	Common	$	19,093	$	19,021	$	38,186	$	37,945

Total distributions	Total distributions	$	19,015	$	18,848	$	57,060	$	56,541	Total distributions	$	19,093	$	19,021	$	38,186	$	37,945
Total cash distributions (1)	Total cash distributions (1)	$	18,771	$	18,708	$	56,278	$	56,119	Total cash distributions (1)	$	18,821	$	18,754	$	37,640	$	37,506

(1) 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 ~~314,128~~40,378 and ~~119,128~~392,506 anti-dilutive phantom units for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to ~~273,232~~119,128 and ~~285,515~~317,628 anti-dilutive phantom units for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

1920

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

The following table shows the calculation of net income per limited partner unit:


		Three Months Ended September 30,			Nine Months Ended September 30,					Three Months Ended June 30,					Six Months Ended June 30,
		2021		2020	2021	2020				2022			2021		2022		2021

Net income attributable to the partners:	Net income attributable to the partners:													Net income attributable to the partners:
Distributions declared	Distributions declared	$	19,015			$	18,848	$	57,060		$	56,541		Distributions declared	$	19,093		$	19,021	$	38,186	$	37,945
Earnings less distributions	Earnings less distributions	17,667				25,314		53,929			59,894			Earnings less distributions	20,128			18,075		37,294		36,362
Net income attributable to the partners	Net income attributable to the partners	$	36,682			$	44,162	$	110,989		$	116,435		Net income attributable to the partners	$	39,221		$	37,096	$	75,480	$	74,307

Weighted-average units outstanding - basic	Weighted-average units outstanding - basic	62,887,914				62,519,105		62,820,193			62,424,217			Weighted-average units outstanding - basic	63,050,107			62,785,212		63,000,110		62,737,272
Weighted-average units outstanding - diluted	Weighted-average units outstanding - diluted	62,997,487				62,529,489		62,934,116			62,429,475			Weighted-average units outstanding - diluted	63,205,739			62,982,884		63,078,204		62,859,734

Net income per limited partner unit - basic	Net income per limited partner unit - basic	$	0.58			$	0.71	$	1.77		$	1.87		Net income per limited partner unit - basic	$	0.62		$	0.59	$	1.20	$	1.18
Net income per limited partner unit - diluted	Net income per limited partner unit - diluted	0.58				0.71		1.76			1.87			Net income per limited partner unit - diluted	0.62			0.59		1.20		1.18

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 (including in response to the potential impacts of climate change), 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.

PBFX recorded a total liability related to environmental remediation obligations at certain of its assets of ~~$1,769~~$1,863 and ~~$1,760~~$1,695 as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, related to existing environmental liabilities.

During the first quarter of 2019, the Partnership notified certain agencies of an oil sheen present in the Schuylkill River near one of its facilities. Clean-up, identification and mitigation of the source were immediately initiated. The Pennsylvania Department of Environmental Protection (“PADEP”) approved the Site Characterization Report submitted by the Partnership. A Remedial Action Plan was submitted to the PADEP in October 2020. The PADEP approved the Remedial Action Plan in January 2021, and the response activities are substantially complete. Future remediation costs and any potential penalties are currently not expected to be material to the Partnership.

2021

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

Contingent Consideration

In connection with the Partnership’s acquisition of CPI Operations LLC from Crown Point International LLC (“Crown Point”) in October 2018, the purchase and sale agreement between the Partnership and Crown Point included an earn-out provision related to an existing commercial agreement with a third party, based on the future results of certain acquired idled assets (the “Contingent Consideration”). The Partnership and Crown Point agreed to share equally in the future operating profits of the restarted assets, as defined in the purchase and sale agreement, over a contractual term of up to three years starting in 2019. The Contingent Consideration recorded was ~~$2,508~~$485 and ~~$12,120~~$2,932 as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The Contingent Consideration is included in “Accrued liabilities” within the Partnership’s condensed consolidated balance sheets.

The Contingent Consideration is categorized in Level 3 of the fair value hierarchy and is estimated ~~using a discounted cash flow model~~ based on management’s estimate of the future cash flows associated with the recommenced idled assets. The changes in fair value of the obligation during the three and ~~nine~~six months ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ were ~~impacted~~ primarily due to the changes in the estimated future cash flows of the assets ~~accretion on the discounted liability~~ and settlement payments made by the Partnership.

Pursuant to the terms of the commercial agreement, the counterparty exercised its right to terminate the contract at the conclusion of the initial contract year, resulting in an adjustment in the fair value of the Contingent Consideration for the year ended December 31, 2020 of $16,429, reflecting the elimination of the estimated earn-out for years 2 and 3 of the performance period. Subsequent to the contract termination, the counterparty and the Partnership agreed to multiple extension agreements for certain of the originally contracted services on a limited basis through the third quarter of 2021. The ~~operating profits resulting from the contract extension remain subject to the~~ earn-out provision between the Partnership and Crown Point. As of the date of this Form 10-Q, the services with the counterparty have ceased. Any future agreements entered into related to the restarted processing unit assets could result in earn-out obligations for the Partnership during the three-year contractual period.Point runs through October 2022.

The following table summarizes the changes in fair value of the Contingent Consideration for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Balance at beginning of period	Balance at beginning of period	$	1,748	$	27,899	$	12,120	$	26,086	Balance at beginning of period	$	485	$	598	$	2,932	$	12,120

Accretion on discounted liabilities		—		587		—		1,706

Settlements	Settlements	—		—		(12,176)		—		Settlements	—		—		(2,685)		(12,176)
Unrealized charge (gain) included in earnings		760		(14,766)		2,564		(14,072)
Unrealized charge included in earnings										Unrealized charge included in earnings	—		1,150		238		1,804
Balance at end of period	Balance at end of period	$	2,508	$	13,720	$	2,508	$	13,720	Balance at end of period	$	485	$	1,748	$	485	$	1,748

~~PBF LOGISTICS LP~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

10. RELATED PARTY TRANSACTIONS

Agreements with PBF Energy Entities

Commercial Agreements

PBFX currently derives a majority of its revenue from long-term, fee-based agreements with PBF Holding, which generally include MVCs 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 and the Services Agreement (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.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

Refer to the ~~2020~~2021 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 ~~2021. No new~~2022. The following table reflects activity during 2022 related to commercial agreements ~~or amendments were entered into during~~between PBFX and PBF Holding:

Agreement

Initiation Date

Initial Term

Renewal

MVC

Force Majeure

Transportation and Terminaling

Toledo Truck Unloading & Terminaling Agreement (a)

4/1/2022

9 months

Evergreen

See note (b)

PBFX or PBF Holding can declare

___________________

(a)This commercial agreement with PBF Holding is considered a lease.

(b)The MVC is 5,500 bpd through December 31, 2022. Effective January 1, 2023, the ~~nine months ended September 30, 2021.~~MVC will decrease to 1,000 bpd.

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.

Refer to the ~~2020~~2021 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 September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenue	Revenue	$	75,464	$	70,716	$	226,504	$	218,681	Revenue	$	79,624	$	75,107	$	155,609	$	151,040
Operating and maintenance expenses	Operating and maintenance expenses	2,171		2,171		6,512		6,512		Operating and maintenance expenses	2,170		2,170		4,341		4,341
General and administrative expenses	General and administrative expenses	1,816		1,895		5,531		5,843		General and administrative expenses	2,289		1,947		4,123		3,715

2223

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

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 for the condensed consolidated financial statements, as described in Note 2 “Summary of Accounting Policies” of the Notes to Consolidated Financial Statements in the ~~2020~~2021 Form 10-K.

The Partnership’s operating segments are organized into 2 reportable 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 does not have any foreign operations.

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 and other facilities capable of processing crude oil and handling crude oil, refined products and intermediates.

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, storage and processing services. The commercial agreements with PBF Holding are described in Note 10 “Related Party Transactions” of the Notes to Condensed Consolidated Financial Statements. 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.


		Three Months Ended September 30, 2021									Three Months Ended June 30, 2022
		Transportation and Terminaling		Storage		Corporate		Consolidated Total			Transportation and Terminaling		Storage		Corporate		Consolidated Total
Total revenue	Total revenue	$	69,718	$	19,135	$	—	$	88,853	Total revenue	$	70,718	$	22,648	$	—	$	93,366
Depreciation and amortization	Depreciation and amortization	7,613		2,174		—		9,787		Depreciation and amortization	7,087		2,059		—		9,146
Income (loss) from operations	Income (loss) from operations	42,744		8,296		(3,902)		47,138		Income (loss) from operations	43,113		12,916		(6,682)		49,347
Other expense	Other expense	—		—		10,456		10,456		Other expense	—		—		10,126		10,126
Capital expenditures	Capital expenditures	3,281		102		—		3,383		Capital expenditures	1,271		434		—		1,705


		Three Months Ended September 30, 2020									Three Months Ended June 30, 2021
		Transportation and Terminaling		Storage		Corporate		Consolidated Total			Transportation and Terminaling		Storage		Corporate		Consolidated Total
Total revenue	Total revenue	$	66,992	$	22,018	$	—	$	89,010	Total revenue	$	70,708	$	19,130	$	—	$	89,838
Depreciation and amortization	Depreciation and amortization	7,010		7,295		—		14,305		Depreciation and amortization	7,105		2,171		—		9,276
Income (loss) from operations	Income (loss) from operations	43,377		16,363		(4,112)		55,628		Income (loss) from operations	45,448		8,518		(6,226)		47,740
Other expense	Other expense	—		—		11,466		11,466		Other expense	—		—		10,644		10,644
Capital expenditures	Capital expenditures	1,438		325		—		1,763		Capital expenditures	2,254		1		—		2,255

2324

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)


		Nine Months Ended September 30, 2021									Six Months Ended June 30, 2022
		Transportation and Terminaling		Storage		Corporate		Consolidated Total			Transportation and Terminaling		Storage		Corporate		Consolidated Total
Total revenue	Total revenue	$	211,903	$	54,293	$	—	$	266,196	Total revenue	$	140,966	$	41,843	$	—	$	182,809
Depreciation and amortization	Depreciation and amortization	21,953		6,515		—		28,468		Depreciation and amortization	14,517		4,113		—		18,630
Income (loss) from operations	Income (loss) from operations	134,801		22,602		(14,592)		142,811		Income (loss) from operations	85,192		21,143		(10,593)		95,742
Other expense	Other expense	—		—		31,822		31,822		Other expense	—		—		20,262		20,262
Capital expenditures	Capital expenditures	6,590		302		—		6,892		Capital expenditures	2,573		565		—		3,138


		Nine Months Ended September 30, 2020									Six Months Ended June 30, 2021
		Transportation and Terminaling		Storage		Corporate		Consolidated Total			Transportation and Terminaling		Storage		Corporate		Consolidated Total
Total revenue	Total revenue	$	203,944	$	67,224	$	—	$	271,168	Total revenue	$	142,185	$	35,158	$	—	$	177,343
Depreciation and amortization	Depreciation and amortization	21,105		15,716		—		36,821		Depreciation and amortization	14,340		4,341		—		18,681
Income (loss) from operations	Income (loss) from operations	127,557		38,640		(12,798)		153,399		Income (loss) from operations	92,057		14,306		(10,690)		95,673
Other expense	Other expense	—		—		36,964		36,964		Other expense	—		—		21,366		21,366
Capital expenditures	Capital expenditures	6,469		3,166		—		9,635		Capital expenditures	3,309		200		—		3,509

Balance at September 30, 2021
Transportation and Terminaling Storage Corporate Consolidated Total
Total assets $ 686,222 $ 195,058 $ 29,299 $ 910,579


	Balance at June 30, 2022
	Transportation and Terminaling		Storage		Corporate		Consolidated Total
Total assets	$	650,111	$	189,100	$	27,741	$	866,952

Balance at December 31, 2020
Transportation and Terminaling Storage Corporate Consolidated Total
Total assets $ 715,308 $ 200,130 $ 18,114 $ 933,552


	Balance at December 31, 2021
	Transportation and Terminaling		Storage		Corporate		Consolidated Total
Total assets	$	688,005	$	188,393	$	24,899	$	901,297

12. SUBSEQUENT EVENTS

Cash Distribution

On ~~October~~July 28, ~~2021,~~2022, PBF GP’s board of directors announced a cash distribution, based on the results of the ~~third~~second quarter of ~~2021,~~2022, of $0.30 per unit. The distribution is payable on ~~November 30, 2021~~August 25, 2022 to PBFX unitholders of record at the close of business on ~~November 12, 2021.~~August 11, 2022.

Pending Merger with PBF Energy

On July 27, 2022, the Partnership entered into the Merger Agreement. The resulting Merger Transaction is subject to regulatory approval and customary closing conditions and is expected to close in the fourth quarter of 2022. The Merger Agreement provides that each outstanding common unit of the Partnership held by an unaffiliated common unitholder will receive 0.270 shares of PBF Energy Class A common stock and $9.25 in cash, without interest.

2425

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 ~~2020~~2021 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 ~~2020~~2021 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) 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~~MLP 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 ~~September~~June 30, ~~2021,~~2022, owned ~~99.2%~~99.3% of the total economic interest in PBF LLC. As of ~~September~~June 30, ~~2021,~~2022, PBF LLC owned 29,953,631 PBFX common units constituting an aggregate of ~~47.9%~~47.7% limited partner interest in PBFX, with the remaining ~~52.1%~~52.3% 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, storage and processing assets, including those previously operated and owned by PBF Holding’s subsidiaries and PBF Holding’s previously held subsidiaries.

Pending Merger with PBF Energy

On July 27, 2022, we entered into a definitive merger agreement with PBF Energy and its subsidiaries, PBF LLC, Riverlands Merger Sub LLC, and PBFX Holdings Inc., and our general partner (the “Merger Agreement”), pursuant to which PBF Energy will acquire all of our publicly held common units representing limited partner interests not already owned by PBF Energy and its subsidiaries on the closing date of the transaction (the “Merger Transaction”). The Merger Agreement provides that each of our outstanding common units held by an unaffiliated common unitholder will receive 0.270 shares of PBF Energy Class A common stock, par value $0.001 per share (“PBF Energy Class A common stock”), and $9.25 in cash, without interest. The Merger Agreement also provides that our general partner shall consider and, if appropriate, shall approve and declare and cause us to pay, in accordance with past practice for each completed fiscal quarter ending prior to the closing date, a cash distribution to holders of our common units in an amount not less than $0.30 per common unit. The merger is expected to close in the fourth quarter of 2022, subject to customary closing conditions.

PBF Energy and PBF LLC, a subsidiary of PBF Energy that owns approximately 47.7% of our common units, has entered into a voting and support agreement with us committing to vote our common units beneficially owned by PBF Energy and PBF LLC in favor of the Merger Transaction.

2526

~~Business Developments~~The terms of the Merger Transaction were unanimously approved by the Board of Directors of our general partner based on the unanimous approval and recommendation of its conflicts committee, comprised entirely of independent directors.

~~COVID-19~~

The outbreak of the COVID-19 pandemic negatively impacted worldwide economic and commercial activity and financial markets, as well as global demand for petroleum and petrochemical products starting in the first quarter of 2020. The COVID-19 pandemic, the Delta variant and other variants thereof, and resulting governmental and consumer responses also resulted in significant business and operational disruptions, including business and school closures, supply chain disruptions, travel restrictions, stay-at-home orders and limitations on the availability of workforces. Such impacts resulted in revenue declines due to lower demand and throughput volumes across certain of our facilities. Demand has continued to improve in 2021 but remains below pre-pandemic levels. In response to the COVID-19 pandemic,Upon closing, we have taken and are continuing to take steps to mitigate potential adverse impacts on our business and operations by limiting capital expenditures, reducing discretionary activities and third-party services and lowering our quarterly distribution to our minimum quarterly distribution of $0.30 per unit. This distribution reduction, effective with the distribution for the first quarter of 2020 that was paid on June 17, 2020, represents a strategic shift to build our cash flow coverage, de-lever our business and increase our financial resources as we continue to identify potential organic growth projects or strategic acquisitions. In addition, our parent sponsor and largest customer, PBF Energy, has endeavored to take the necessary steps to preserve liquidity and solidify its operations under the adverse market conditions caused by the COVID-19 pandemic, including reducing the amount of crude oil processed at its refineries and temporary idling of various units at certain refineries. Despite the measures we and PBF Energy have taken and the gradual increases in demand and overall market conditions in the current year, we and PBF Energy have been, and likely will continue to be, adversely impacted by the COVID-19 pandemic. We are unable to predict the ultimate outcome of the economic impact and can provide no assurance that measures taken to mitigate the impact of the COVID-19 pandemic will be effective.

~~The full extent to which the COVID-19 pandemic impacts our business and operations, or that~~become an indirect wholly-owned subsidiary of PBF Energy, ~~is unknown~~and our common units will cease to be listed on the NYSE and will ~~depend on~~be subsequently deregistered under the severity, location and duration of the effects and spread of COVID-19, and the Delta and other variants thereof, the effectiveness of the vaccine programs and the other actions undertaken by national, regional and local governments and health officials to contain the virus or treat its effects (including the ultimate efficacy of vaccine programs on new variants of the virus), related consumer responses and how quickly and to what extent economic conditions improve and normal business and operating conditions resume. As certain restrictions are lifted in various geographical locations throughout the U.S., we will continue to monitor and respond to the impacts that the COVID-19 pandemic has on our business and operations.Exchange Act.

Principles of Combination and Consolidation and Basis of Presentation

In general, our Predecessor did not historically operate its assets for the purpose of generating 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”). Such acquisitions completed subsequent to the IPO were made through a series of dropdown transactions with PBF LLC (collectively referred to as the “Acquisitions from PBF”). Upon the closing of 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 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. In addition, we generate third-party revenue from certain of our assets.

Agreements with PBF Energy Entities

Commercial Agreements

We currently derive a majority of our revenue from long-term, fee-based agreements with PBF Holding, which generally include minimum volume commitment (“MVC”) stipulations 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 and the Services Agreement (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.

Refer to our ~~2020~~2021 Form 10-K and Note 10 “Related Party Transactions” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements” in this Form 10-Q for a more complete description of our commercial agreements with PBF Holding, including those identified as leases.

Other Agreements

In addition to the commercial agreements described above, we 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.

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

Refer to our ~~2020~~2021 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 due to certain debt transactions and our annual inflation adjustment to our commercial agreements.

Furthermore, our results of operations may not be comparable to our historical results of operations due to the termination of the CPI Processing Agreement (as defined below). In connection with the Partnership’s acquisition of CPI Operations LLC (“CPI”) from Crown Point International LLC, the purchase and sale agreement included an earn-out provision related to an existing commercial agreement (the “CPI Processing Agreement”), based on the future results of certain acquired idled assets, which recommenced operations in October 2019. In the third quarter of 2020, pursuant to the terms of the CPI Processing Agreement, the counterparty exercised its right to terminate the contract at the conclusion of the initial contract year, effective in the fourth quarter of 2020 (the “CPI Contract Termination”). While the counterparty and the Partnership subsequently agreed to extensions of certain of the originally contracted services under the CPI Processing Agreement through the third quarter of 2021, the limited nature of these services affected the comparability of our results of operations, specifically within our Storage segment, on a year-over-year basis. As of the date of this Form 10-Q, the services have ceased. Refer to “Results of Operations” below for further discussion.

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, throughputting and processing crude oil, refined products and natural gas. A majority of our 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 for 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. The impact of the unprecedented global health and economic crisis sparked by the COVID-19 pandemic was amplified late in the first quarter of 2020 due to movements made by the world’s largest oil producers to increase market share. This created simultaneous shocks in oil supply and demand resulting in an economic challenge to our industry which has not occurred since our formation. These factors have resulted in significant demand destruction for refined petroleum products and atypical volatility in oil commodity prices. Although the effects may be mitigated by MVC provisions in certain of our commercial contracts, this overall demand destruction and market environment could lead to lower storageor throughput volumes processed at our assets, which could negatively impact our results of operations and cash flows. Demand has continued to improve in 2021 but remains below pre-pandemic levels. While it is impossible to estimate the duration or complete financial impact of the COVID-19 pandemic, a significant portion of the negative impacts and risk to us may be mitigated through our MVCs within the commercial agreements with PBF Holding. Refer to “Risk Factors” included in “Item 1A.” of our ~~2020~~2021 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. Identifying and executing acquisitions and organic growth projects is a key part of our strategy, and we believe that we are well-positioned to acquire logistics assets from PBF Energy and third parties should such opportunities arise. However, there is no guarantee that we will be able to identify attractive organic growth projects or acquisitions in the future, or be able to consummate any such opportunities identified. Additionally, 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 $500.0 million amended and restated revolving credit facility (as amended, the “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 ~~September~~June 30, ~~2021,~~2022, PBF Holding accounts for a substantial majority of our revenue and we continue to expect that a majority of our revenue for the foreseeable future will be derived from operations supporting PBF Holding’s refineries. We continue to explore further diversification of our customer base by potentially developing additional third-party throughput volumes in our existing system and continuing to explore expanding 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.

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 and utilized 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~~MVCs under certain commercial agreements, our results of operations will be impacted by:

•PBF Energy’s utilization of our assets in excess of 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 or storage 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 and outside contractor costs, utilities, insurance premiums, repairs and maintenance charges 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, amortization ~~impairment expense~~ and change in contingent consideration. 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, amortization ~~impairment expense~~ and change in contingent consideration attributable to PBFX, which excludes the results of Acquisitions from PBF prior to the effective dates of such transactions and earnings attributable to the CPI Operations LLC (“CPI”) earn-out (the portion of earnings associated with an earn-out provision related to the purchase of CPI). 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 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 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, income 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 definitions of such 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.

Results of Operations

A discussion and analysis of the factors contributing to our results of operations are 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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. The following data should be read in conjunction with our Condensed Consolidated Financial Statements and the ~~Notes~~notes thereto included in “Item 1. Financial Statements.”


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Revenue:	Revenue:									Revenue:
Affiliate	Affiliate	$	75,464	$	70,716	$	226,504	$	218,681	Affiliate	$	79,624	$	75,107	$	155,609	$	151,040
Third-party	Third-party	13,389		18,294		39,692		52,487		Third-party	13,742		14,731		27,200		26,303
Total revenue	Total revenue	88,853		89,010		266,196		271,168		Total revenue	93,366		89,838		182,809		177,343

Costs and expenses:	Costs and expenses:									Costs and expenses:
Operating and maintenance expenses	Operating and maintenance expenses	27,265		22,730		77,760		75,385		Operating and maintenance expenses	28,191		25,447		57,606		50,495
General and administrative expenses	General and administrative expenses	3,902		4,112		14,592		12,798		General and administrative expenses	6,682		6,226		10,593		10,690
Depreciation and amortization	Depreciation and amortization	9,787		14,305		28,468		36,821		Depreciation and amortization	9,146		9,276		18,630		18,681
Impairment expense		—		7,000		—		7,000

Change in contingent consideration	Change in contingent consideration	761		(14,765)		2,565		(14,235)		Change in contingent consideration	—		1,149		238		1,804
Total costs and expenses	Total costs and expenses	41,715		33,382		123,385		117,769		Total costs and expenses	44,019		42,098		87,067		81,670

Income from operations	Income from operations	47,138		55,628		142,811		153,399		Income from operations	49,347		47,740		95,742		95,673

Other expense:	Other expense:									Other expense:
Interest expense, net	Interest expense, net	(10,027)		(10,544)		(30,526)		(33,929)		Interest expense, net	(9,706)		(10,212)		(19,419)		(20,499)
Amortization of loan fees and debt premium	Amortization of loan fees and debt premium	(423)		(328)		(1,278)		(1,309)		Amortization of loan fees and debt premium	(415)		(426)		(833)		(855)
Accretion on discounted liabilities	Accretion on discounted liabilities	(6)		(594)		(18)		(1,726)		Accretion on discounted liabilities	(5)		(6)		(10)		(12)

Net income attributable to PBF Logistics LP unitholders	Net income attributable to PBF Logistics LP unitholders	$	36,682	$	44,162	$	110,989	$	116,435	Net income attributable to PBF Logistics LP unitholders	$	39,221	$	37,096	$	75,480	$	74,307

Other data:	Other data:									Other data:
EBITDA attributable to PBFX	EBITDA attributable to PBFX	$	56,839	$	59,281	$	171,778	$	174,457	EBITDA attributable to PBFX	$	58,077	$	57,016	$	113,939	$	114,939
Adjusted EBITDA	Adjusted EBITDA	57,890		60,519		176,865		178,459		Adjusted EBITDA	57,487		59,979		114,068		118,975
Distributable cash flow	Distributable cash flow	46,782		48,486		143,495		136,233		Distributable cash flow	49,619		48,535		95,319		96,713
Capital expenditures	Capital expenditures	3,383		1,763		6,892		9,635		Capital expenditures	1,705		2,255		3,138		3,509

Reconciliation of Non-GAAP Financial Measures

As described in “How We Evaluate Our ~~Operations,”~~Operations” above, 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, which is the most directly comparable GAAP financial measure of operating performance on a historical basis, for the periods indicated.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Net income	Net income	$	36,682	$	44,162	$	110,989	$	116,435	Net income	$	39,221	$	37,096	$	75,480	$	74,307
Interest expense, net	Interest expense, net	10,027		10,544		30,526		33,929		Interest expense, net	9,706		10,212		19,419		20,499
Amortization of loan fees and debt premium	Amortization of loan fees and debt premium	423		328		1,278		1,309		Amortization of loan fees and debt premium	415		426		833		855
Accretion on discounted liabilities	Accretion on discounted liabilities	6		594		18		1,726		Accretion on discounted liabilities	5		6		10		12
Change in contingent consideration	Change in contingent consideration	761		(14,765)		2,565		(14,235)		Change in contingent consideration	—		1,149		238		1,804
Impairment expense		—		7,000		—		7,000

Depreciation and amortization	Depreciation and amortization	9,787		14,305		28,468		36,821		Depreciation and amortization	9,146		9,276		18,630		18,681
EBITDA	EBITDA	57,686		62,168		173,844		182,985		EBITDA	58,493		58,165		114,610		116,158

Less: Earnings attributable to the CPI earn-out	Less: Earnings attributable to the CPI earn-out	847		2,887		2,066		8,528		Less: Earnings attributable to the CPI earn-out	416		1,149		671		1,219
EBITDA attributable to PBFX	EBITDA attributable to PBFX	56,839		59,281		171,778		174,457		EBITDA attributable to PBFX	58,077		57,016		113,939		114,939
Non-cash unit-based compensation expense	Non-cash unit-based compensation expense	835		995		4,658		3,242		Non-cash unit-based compensation expense	2,824		2,834		3,478		3,823
Cash interest	Cash interest	(10,066)		(10,760)		(30,678)		(34,481)		Cash interest	(9,741)		(10,266)		(19,497)		(20,612)
Maintenance capital expenditures attributable to PBFX		(826)		(1,030)		(2,263)		(6,985)
Maintenance capital expenditures										Maintenance capital expenditures	(1,541)		(1,049)		(2,601)		(1,437)
Distributable cash flow	Distributable cash flow	$	46,782	$	48,486	$	143,495	$	136,233	Distributable cash flow	$	49,619	$	48,535	$	95,319	$	96,713

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Net cash provided by operating activities	Net cash provided by operating activities	$	53,419	$	61,741	$	143,704	$	141,429	Net cash provided by operating activities	$	44,150	$	35,463	$	111,472	$	90,285
Change in operating assets and liabilities	Change in operating assets and liabilities	(4,925)		(9,122)		4,272		10,869		Change in operating assets and liabilities	7,461		15,324		(12,803)		9,197
Interest expense, net	Interest expense, net	10,027		10,544		30,526		33,929		Interest expense, net	9,706		10,212		19,419		20,499
Non-cash unit-based compensation expense	Non-cash unit-based compensation expense	(835)		(995)		(4,658)		(3,242)		Non-cash unit-based compensation expense	(2,824)		(2,834)		(3,478)		(3,823)
EBITDA	EBITDA	57,686		62,168		173,844		182,985		EBITDA	58,493		58,165		114,610		116,158

Less: Earnings attributable to the CPI earn-out	Less: Earnings attributable to the CPI earn-out	847		2,887		2,066		8,528		Less: Earnings attributable to the CPI earn-out	416		1,149		671		1,219
EBITDA attributable to PBFX	EBITDA attributable to PBFX	56,839		59,281		171,778		174,457		EBITDA attributable to PBFX	58,077		57,016		113,939		114,939
Non-cash unit-based compensation expense	Non-cash unit-based compensation expense	835		995		4,658		3,242		Non-cash unit-based compensation expense	2,824		2,834		3,478		3,823
Cash interest	Cash interest	(10,066)		(10,760)		(30,678)		(34,481)		Cash interest	(9,741)		(10,266)		(19,497)		(20,612)
Maintenance capital expenditures attributable to PBFX		(826)		(1,030)		(2,263)		(6,985)
Maintenance capital expenditures										Maintenance capital expenditures	(1,541)		(1,049)		(2,601)		(1,437)
Distributable cash flow	Distributable cash flow	$	46,782	$	48,486	$	143,495	$	136,233	Distributable cash flow	$	49,619	$	48,535	$	95,319	$	96,713

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Net income	Net income	$	36,682	$	44,162	$	110,989	$	116,435	Net income	$	39,221	$	37,096	$	75,480	$	74,307
Interest expense, net	Interest expense, net	10,027		10,544		30,526		33,929		Interest expense, net	9,706		10,212		19,419		20,499
Amortization of loan fees and debt premium	Amortization of loan fees and debt premium	423		328		1,278		1,309		Amortization of loan fees and debt premium	415		426		833		855
Accretion on discounted liabilities	Accretion on discounted liabilities	6		594		18		1,726		Accretion on discounted liabilities	5		6		10		12
Change in contingent consideration	Change in contingent consideration	761		(14,765)		2,565		(14,235)		Change in contingent consideration	—		1,149		238		1,804
Impairment expense		—		7,000		—		7,000

Depreciation and amortization	Depreciation and amortization	9,787		14,305		28,468		36,821		Depreciation and amortization	9,146		9,276		18,630		18,681
EBITDA	EBITDA	57,686		62,168		173,844		182,985		EBITDA	58,493		58,165		114,610		116,158

Less: Earnings attributable to the CPI earn-out	Less: Earnings attributable to the CPI earn-out	847		2,887		2,066		8,528		Less: Earnings attributable to the CPI earn-out	416		1,149		671		1,219
EBITDA attributable to PBFX	EBITDA attributable to PBFX	56,839		59,281		171,778		174,457		EBITDA attributable to PBFX	58,077		57,016		113,939		114,939
Acquisition and transaction costs		—		6		—		116

Non-cash unit-based compensation expense	Non-cash unit-based compensation expense	835		995		4,658		3,242		Non-cash unit-based compensation expense	2,824		2,834		3,478		3,823
East Coast Terminals environmental remediation costs	East Coast Terminals environmental remediation costs	216		237		429		644		East Coast Terminals environmental remediation costs	45		129		110		213

East Coast Storage Assets one-time, incremental revenue										East Coast Storage Assets one-time, incremental revenue	(3,459)		—		(3,459)		—
Adjusted EBITDA	Adjusted EBITDA	$	57,890	$	60,519	$	176,865	$	178,459	Adjusted EBITDA	$	57,487	$	59,979	$	114,068	$	118,975

Three Months Ended ~~September~~June 30, ~~2021~~2022 Compared to the Three Months Ended ~~September~~June 30, ~~2020~~2021

Summary

Our net income for the three months ended ~~September~~June 30, ~~2021 decreased~~2022 increased by approximately ~~$7.5~~$2.1 million to ~~$36.7~~$39.2 million from ~~$44.2~~$37.1 million for the three months ended ~~September~~June 30, ~~2020.~~2021. The ~~decrease~~increase in net income was primarily due to the following:

•an increase in ~~change in contingent consideration of approximately $15.5 million due to the extension of certain services under the CPI Processing Agreement through the third quarter of 2021;~~

•an increase in operating and maintenance expenses of approximately $4.5 million, or 20.0%, as a result of higher outside services and other fees coinciding with increased throughput at certain of our assets, higher utilities expenses due to increased energy usage and increased maintenance activity; and

•~~a decrease in~~ total revenue of approximately ~~$0.2~~$3.5 million, or ~~0.2%~~3.9%, primarily attributable to ~~the CPI Contract Termination, offset by~~ inflation rate adjustments implemented in accordance with certain of our commercial agreements (the “Inflation Rate Increase”), higher revenues at our East Coast storage facility related to increased affiliate activity, as well as the implementation of an MVC under a third-party customer contract, and ~~increased throughput at certain of our assets;~~

higher pass-through utilities costs, offset by the ~~following:~~

•commencement of a ~~decrease in impairment expense of approximately $7.0 million, or 100.0%, resulting from an impairment charge incurred in 2020;~~new commercial agreement with a reduced MVC at our Delaware City rail facility;

•a decrease in ~~depreciation and amortization~~change in contingent consideration of approximately ~~$4.5~~$1.1 million, or ~~31.6%~~100.0%, due to ~~certain CPI assets being fully depreciated~~lower current period adjustments to management’s estimates regarding the underlying earn-out provision; and ~~amortized in the fourth quarter of 2020 as a result of the CPI Contract Termination;~~

•a decrease in other expenses of approximately ~~$1.0~~$0.5 million, or ~~8.8%~~4.9%, primarily related to a decrease in interest expense as a result of lower borrowings under our Revolving Credit ~~Facility~~Facility;

offset by the following:

•an increase in operating and maintenance expenses of approximately $2.7 million, or 10.8%, as a ~~decrease in accretion on discounted liabilities~~result of higher utilities costs due to ~~lower outstanding applicable liabilities;~~increased energy rates and usage and higher additive costs; and

•~~a decrease~~an increase in general and administrative expenses of approximately ~~$0.2~~$0.5 million, or ~~5.1%~~7.3%, ~~due to decreased unit-based compensation expense.~~driven by higher expenses associated with the Omnibus Agreement.

Depreciation and amortization was relatively consistent during the comparative periods with no significant fluctuation activity.

EBITDA attributable to PBFX for the three months ended ~~September~~June 30, ~~2021 decreased~~2022 increased by approximately ~~$2.4~~$1.1 million to ~~$56.8~~$58.1 million from ~~$59.3~~$57.0 million for the three months ended ~~September~~June 30, ~~2020~~2021 due to the factors noted above, excluding the impact of depreciation and amortization, ~~impairment expense,~~ interest expense, net, amortization of loan fees and debt premium, accretion on discounted liabilities, change in contingent consideration and earnings attributable to the CPI earn-out.

Adjusted EBITDA for the three months ended ~~September~~June 30, ~~2021~~2022 decreased by approximately ~~$2.6~~$2.5 million to ~~$57.9~~$57.5 million from ~~$60.5~~$60.0 million for the three months ended ~~September~~June 30, ~~2020~~2021 due to the factors noted above, excluding the impact of ~~acquisition and transaction costs,~~ unit-based compensation, ~~and~~ certain environmental remediation ~~costs.~~costs and certain one-time, incremental revenues.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 Compared to the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

Summary

Our net income for the ~~nine~~six months ended ~~September~~June 30, ~~2021 decreased~~2022 increased by approximately ~~$5.4~~$1.2 million to ~~$111.0~~$75.5 million from ~~$116.4~~$74.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The ~~decrease~~increase in net income was primarily due to the following:

•an increase in ~~change in contingent consideration of approximately $16.8 million due to the extension of certain services under the CPI Processing Agreement through the third quarter of 2021;~~

•~~a decrease in~~ total revenue of approximately ~~$5.0~~$5.5 million, or ~~1.8%~~3.1%, primarily attributable to the ~~CPI Contract Termination, offset by the~~ Inflation Rate Increase, higher revenues at our East Coast storage facility related to increased affiliate activity, as well as the implementation of an MVC under a third-party customer contract, higher pass-through utilities costs, and increased throughput at certain of our assets, ~~and affiliate product sales;~~

•~~an increase in operating and maintenance expenses of approximately $2.4 million, or 3.2%, as a result of higher utilities expenses due to increased energy usage and increased maintenance activity; and~~

•~~an increase in general and administrative expenses of approximately $1.8 million, or 14.0%, due to increased unit-based compensation expense;~~

offset by the ~~following:~~

•commencement of a ~~decrease in depreciation and amortization of approximately $8.4 million, or 22.7%, due to certain CPI assets being fully depreciated and amortized in the fourth quarter of 2020 as~~new commercial agreement with a ~~result of the CPI Contract Termination;~~reduced MVC at our Delaware City rail facility;

•a decrease in ~~impairment expense~~change in contingent consideration of approximately ~~$7.0~~$1.6 million, or ~~100.0%~~86.8%, ~~resulting from an impairment charge incurred in 2020;~~due to lower current period adjustments to management’s estimates regarding the underlying earn-out provision; and

•a decrease in other expenses of approximately ~~$5.1~~$1.1 million, or ~~13.9%~~5.2%, primarily related to a decrease in interest expense as a result of lower borrowings under our Revolving Credit ~~Facility~~Facility;

offset by the following:

•an increase in operating and maintenance expenses of approximately $7.1 million, or 14.1%, as a ~~decrease in accretion on discounted liabilities~~result of higher utilities costs due to ~~lower outstanding applicable liabilities.~~increased energy rates and usage, higher additive costs and higher outside services and other fees coinciding with increased throughput at certain of our assets.

General and administrative expenses and depreciation and amortization were relatively consistent during the comparative periods with no significant fluctuation activity.

EBITDA attributable to PBFX for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 decreased by approximately ~~$2.7~~$1.0 million to ~~$171.8~~$113.9 million from ~~$174.5~~$114.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 due to the factors noted above, excluding the impact of depreciation and amortization, ~~impairment expense,~~ interest expense, net, amortization of loan fees and debt premium, accretion on discounted liabilities, change in contingent consideration and earnings attributable to the CPI earn-out.

Adjusted EBITDA for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 decreased by approximately ~~$1.6~~$4.9 million to ~~$176.9~~$114.1 million from ~~$178.5~~$119.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 due to the factors noted above, excluding the impact of ~~acquisition and transaction costs,~~ unit-based compensation, ~~and~~ certain environmental remediation ~~costs.~~

costs and certain one-time, incremental revenues.

3534

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 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 our reportable segments based on the segment operating income. Segment operating income is defined as net revenue less operating expenses, depreciation and amortization and change in contingent consideration. 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 provide an explanation of our results of operations of the Transportation and Terminaling segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
(in thousands, except for total throughput and lease tank capacity)	(in thousands, except for total throughput and lease tank capacity)									(in thousands, except for total throughput and lease tank capacity)

Revenue:	Revenue:									Revenue:
Affiliate	Affiliate	$	64,362	$	60,662	$	194,253	$	187,517	Affiliate	$	63,797	$	64,299	$	127,281	$	129,891
Third-party	Third-party	5,356		6,330		17,650		16,427		Third-party	6,921		6,409		13,685		12,294
Total revenue	Total revenue	69,718		66,992		211,903		203,944		Total revenue	70,718		70,708		140,966		142,185

Costs and expenses:	Costs and expenses:									Costs and expenses:
Operating and maintenance expenses	Operating and maintenance expenses	19,361		16,605		55,149		55,282		Operating and maintenance expenses	20,518		18,155		41,257		35,788

Depreciation and amortization	Depreciation and amortization	7,613		7,010		21,953		21,105		Depreciation and amortization	7,087		7,105		14,517		14,340
Total costs and expenses	Total costs and expenses	26,974		23,615		77,102		76,387		Total costs and expenses	27,605		25,260		55,774		50,128
Transportation and Terminaling Segment Operating Income	Transportation and Terminaling Segment Operating Income	$	42,744	$	43,377	$	134,801	$	127,557	Transportation and Terminaling Segment Operating Income	$	43,113	$	45,448	$	85,192	$	92,057

Key Operating Information	Key Operating Information									Key Operating Information
Transportation and Terminaling Segment	Transportation and Terminaling Segment									Transportation and Terminaling Segment
Terminals	Terminals									Terminals
Total throughput (bpd)(1)	Total throughput (bpd)(1)	263,389		199,139		247,167		240,159		Total throughput (bpd)(1)	279,692		257,765		258,311		238,922
Lease tank capacity (average lease capacity barrels per month)(2)	Lease tank capacity (average lease capacity barrels per month)(2)	2,027,334		2,587,334		2,313,001		2,343,637		Lease tank capacity (average lease capacity barrels per month)(2)	2,256,829		2,421,334		2,349,178		2,455,834
Pipelines	Pipelines									Pipelines
Total throughput (bpd)(1)	Total throughput (bpd)(1)	164,103		143,273		157,172		153,909		Total throughput (bpd)(1)	147,691		153,834		159,452		153,650
Lease tank capacity (average lease capacity barrels per month)(2)	Lease tank capacity (average lease capacity barrels per month)(2)	1,175,380		1,123,864		1,080,644		1,144,915		Lease tank capacity (average lease capacity barrels per month)(2)	1,270,012		1,031,234		1,235,834		1,032,490

(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.

3635

Three Months Ended ~~September~~June 30, ~~2021~~2022 Compared to the Three Months Ended ~~September~~June 30, ~~2020~~2021

Our Transportation and Terminaling operating income for the three months ended ~~September~~June 30, ~~2021~~2022 decreased by approximately ~~$0.6~~$2.3 million to ~~$42.7~~$43.1 million from ~~$43.4~~$45.4 million for the three months ended ~~September~~June 30, ~~2020.~~2021. The decrease in operating income was primarily due to the following:

•an increase in operating and maintenance expenses of approximately ~~$2.8~~$2.4 million, or ~~16.6%~~13.0%, as a result of higher ~~outside services and other fees coinciding with increased throughput at certain of our assets, higher~~ utilities ~~expenses~~costs due to increased energy rates and usage and ~~increased maintenance activity; and~~

•~~an increase in depreciation and amortization of approximately $0.6 million, or 8.6%, related to the timing of assets being placed in service;~~

~~offset by the following:~~

•~~an increase in total revenue of approximately $2.7 million, or 4.1%, primarily attributable to the Inflation Rate Increase and increased throughput at certain of our assets.~~higher additive costs.

~~Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020~~

~~Our Transportation~~Revenue and Terminaling operating income for the nine months ended September 30, 2021 increased by approximately $7.2 million to $134.8 million from $127.6 million for the nine months ended September 30, 2020. The increase in operating income was primarily due to the following:

•~~an increase in total revenue of approximately $8.0 million, or 3.9%, primarily attributable to the Inflation Rate Increase, increased throughput at certain of our assets and affiliate product sales;~~

~~offset by the following:~~

•~~an increase in~~ depreciation and amortization ~~of approximately $0.8 million, or 4.0%, related to the timing of assets being placed in service.~~

~~Operating and maintenance expenses~~ were relatively consistent during the comparative periods with no significant fluctuation activity.

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

Our Transportation and Terminaling operating income for the six months ended June 30, 2022 decreased by approximately $6.9 million to $85.2 million from $92.1 million for the six months ended June 30, 2021. The decrease in operating income was primarily due to the following:

•an increase in operating and maintenance expenses of approximately $5.5 million, or 15.3%, as a result of higher utilities costs due to increased energy rates and usage, higher additive costs and higher outside services and other fees coinciding with increased throughput at certain of our assets;

•a decrease in total revenue of approximately $1.2 million, or 0.9%, primarily attributable to the commencement of a new commercial agreement with a reduced MVC at our Delaware City rail facility, offset by the Inflation Rate Increase, higher pass-through utilities costs and increased throughput at certain of our assets; and

•an increase in depreciation and amortization of approximately $0.2 million, or 1.2%, related to the timing of assets being placed in service.

3736

Storage Segment

The following table and discussion provide an explanation of our results of operations of the Storage segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
(in thousands, except for storage capacity reserved and total throughput)	(in thousands, except for storage capacity reserved and total throughput)									(in thousands, except for storage capacity reserved and total throughput)

Revenue:	Revenue:									Revenue:
Affiliate	Affiliate	$	11,102	$	10,054	$	32,251	$	31,164	Affiliate	$	15,827	$	10,808	$	28,328	$	21,149
Third-party	Third-party	8,033		11,964		22,042		36,060		Third-party	6,821		8,322		13,515		14,009
Total revenue	Total revenue	19,135		22,018		54,293		67,224		Total revenue	22,648		19,130		41,843		35,158

Costs and expenses:	Costs and expenses:									Costs and expenses:
Operating and maintenance expenses	Operating and maintenance expenses	7,904		6,125		22,611		20,103		Operating and maintenance expenses	7,673		7,292		16,349		14,707

Depreciation and amortization	Depreciation and amortization	2,174		7,295		6,515		15,716		Depreciation and amortization	2,059		2,171		4,113		4,341
Impairment expense		—		7,000		—		7,000

Change in contingent consideration	Change in contingent consideration	761		(14,765)		2,565		(14,235)		Change in contingent consideration	—		1,149		238		1,804
Total costs and expenses	Total costs and expenses	10,839		5,655		31,691		28,584		Total costs and expenses	9,732		10,612		20,700		20,852
Storage Segment Operating Income	Storage Segment Operating Income	$	8,296	$	16,363	$	22,602	$	38,640	Storage Segment Operating Income	$	12,916	$	8,518	$	21,143	$	14,306

Key Operating Information	Key Operating Information									Key Operating Information
Storage Segment	Storage Segment									Storage Segment
Storage capacity reserved (average shell capacity barrels per month)(1)	Storage capacity reserved (average shell capacity barrels per month)(1)	7,727,436		7,687,505		7,667,832		7,634,264		Storage capacity reserved (average shell capacity barrels per month)(1)	7,728,150		7,670,900		7,814,688		7,638,031
Total throughput (bpd)(2)	Total throughput (bpd)(2)	19,227		21,835		16,779		24,704		Total throughput (bpd)(2)	6,144		23,113		7,872		15,535

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

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

Three Months Ended ~~September~~June 30, ~~2021~~2022 Compared to the Three Months Ended ~~September~~June 30, ~~2020~~2021

Our Storage operating income for the three months ended ~~September~~June 30, ~~2021 decreased~~2022 increased by approximately ~~$8.1~~$4.4 million to ~~$8.3~~$12.9 million from ~~$16.4~~$8.5 million for the three months ended ~~September~~June 30, ~~2020.~~2021. The ~~decrease~~increase in operating income was primarily due to the following:

•an increase in ~~change in contingent consideration~~total revenue of approximately ~~$15.5~~$3.5 million, ~~due~~or 18.4%, primarily attributable to the ~~extension~~Inflation Rate Increase and higher revenues at our East Coast storage facility related to increased affiliate activity, as well as the implementation of ~~certain services~~an MVC under ~~the CPI Processing Agreement through the third quarter of 2021;~~a third-party customer contract;

•a decrease in ~~total revenue~~change in contingent consideration of approximately ~~$2.9~~$1.1 million, or ~~13.1%~~100.0%, ~~primarily attributable~~due to lower current period adjustments to management’s estimates regarding the underlying earn-out provision; and

•a decrease in depreciation and amortization of approximately $0.1 million, or 5.2%, related to the ~~CPI Contract Termination; and~~timing of the retirement of assets;

offset by the following:

•an increase in operating and maintenance expenses of approximately ~~$1.8~~$0.4 million, or ~~29.0%~~5.2%, ~~due to higher utilities expenses~~ as a result of higher utilities costs due to increased energy ~~usage~~rates and ~~increased maintenance activity;~~

~~offset by the following:~~

•~~a decrease in impairment expense of $7.0 million, or 100.0%, resulting from an impairment charge incurred in 2020; and~~

•a decrease in depreciation and amortization of approximately $5.1 million, or 70.2%, due to certain CPI assets being fully depreciated and amortized in the fourth quarter of 2020 as a result of the CPI Contract Termination.usage.

~~Nine~~

Six Months Ended ~~September~~June 30, ~~2021~~2022 Compared to the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

Our Storage operating income for the ~~nine~~six months ended ~~September~~June 30, ~~2021 decreased~~2022 increased by approximately ~~$16.0~~$6.8 million to ~~$22.6~~$21.1 million from ~~$38.6~~$14.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The ~~decrease~~increase in operating income was primarily due to the following:

•an increase in ~~change in contingent consideration~~total revenue of approximately ~~$16.8~~$6.7 million, ~~due~~or 19.0%, primarily attributable to the ~~extension~~Inflation Rate Increase and higher revenues at our East Coast storage facility related to increased affiliate activity, as well as the implementation of ~~certain services~~an MVC under ~~the CPI Processing Agreement through the third quarter of 2021;~~a third-party customer contract;

•a decrease in ~~total revenue~~change in contingent consideration of approximately ~~$12.9~~$1.6 million, or ~~19.2%~~86.8%, ~~primarily attributable~~due to lower current period adjustments to management’s estimates regarding the underlying earn-out provision; and

•a decrease in depreciation and amortization of approximately $0.2 million, or 5.3%, related to the ~~CPI Contract Termination; and~~timing of the retirement of assets;

offset by the following:

•an increase in operating and maintenance expenses of approximately ~~$2.5~~$1.6 million, or ~~12.5%~~11.2%, ~~due to higher utilities expenses~~ as a result of higher utilities costs due to increased energy ~~usage~~rates and ~~increased maintenance activity;~~

~~offset by the following:~~

•a decrease in depreciation and amortization of approximately $9.2 million, or 58.5%, due to certain CPI assets being fully depreciated and amortized in the fourth quarter of 2020 as a result of the CPI Contract Termination; and

•~~a decrease in impairment expense of $7.0 million, or 100.0%, resulting from an impairment charge incurred in 2020.~~usage.

Liquidity and Capital Resources

Due to the COVID-19 pandemic and the current challenging and volatile market conditions, starting in the first quarter of 2020, our business and operating results have been impacted by demand destruction for refined petroleum products as a result of the worldwide economic slowdown and governmental and consumer responses, including travel restrictions and stay-at-home orders. Such conditions have improved in 2021 but continue to affect our operations and financial condition due to changes in the usage and level of demand for our services, including a reduction in third-party and incremental affiliate revenue. We expect our ongoing sources of liquidity to include cash generated from operations ~~(a significant portion of which are supported by MVCs in~~(including proceeds from our commercial ~~agreements)~~agreements with PBF Holding), borrowings under our Revolving Credit Facility and issuances of additional debt and equity securities as appropriate given market conditions. ~~Additionally, we remain focused on opportunities to support~~We believe our ~~financial position in~~balances of cash, cash equivalents, cash generated from operations, borrowings under the ~~current environment, including limiting capital expenditures, reducing discretionary activities~~Revolving Credit Facility and ~~third-party services~~potential issuances of debt and continually assessing our quarterly distribution level. While it is impossible to estimate the duration or complete financial impact of the COVID-19 pandemic and volatile market conditions, we expect that these sources of fundsequity securities will be ~~adequate~~sufficient to ~~provide for our short-term~~satisfy cash requirements over the next twelve months and long-term liquidity needs, including our debt service, capital expenditures and distributions on our units. We may also pursue other strategic initiatives to strengthen our financial position, including debt and/or equity securities repurchases, to the extent such initiatives can be funded without impairing our liquidity. Refer to “Risk Factors” included in “Item 1A.” of our 2020 Form 10-K for further information.beyond.

~~Our largest customer is our affiliate, PBF Holding, a subsidiary of our parent sponsor. PBF Energy has initiated several steps as part of a strategic plan to navigate current volatile markets~~We have paid, and preserve or enhance its liquidity, including asset sales, new debt issuances, temporarily idling various units at certain refineries to optimize production, reductions in capital and operating expenditures, suspension of its dividend and exploring other potential opportunistic financing activities. We believe such actions will allow PBF Energy to continue to honor its commercial agreements with us.

In response to the impacts of the COVID-19 pandemic, we reduced our quarterly distribution to our minimum quarterly distribution of $0.30 per unit effective with the distribution for the first quarter of 2020. This reduction represents a strategic shift to build our cash flow coverage, de-lever our business and increase our financial resources as we continue to pursue potential organic growth projects or strategic acquisition opportunities. However, we 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 ~~$19.0~~$19.1 million per quarter or approximately ~~$76.0~~$76.4 million on an annualized basis, based on the number of common units outstanding as of ~~September~~June 30, ~~2021.~~2022.

As of ~~September~~June 30, ~~2021,~~2022, we had approximately ~~$399.6~~$497.2 million of liquidity, including approximately ~~$28.6~~$30.7 million in cash and cash equivalents, and access to approximately ~~$371.0~~$466.5 million under our Revolving Credit Facility.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we made cash distribution payments as follows (in thousands, except per unit data):


Related Earnings Period:	Related Earnings Period:	Q4 2020		Q1 2021		Q2 2021		Related Earnings Period:	Q4 2021		Q1 2022
Distribution date	Distribution date	March 17, 2021		May 27, 2021		August 26, 2021		Distribution date	March 10, 2022		May 26, 2022
Record date	Record date	February 25, 2021		May 13, 2021		August 12, 2021		Record date	February 24, 2022		May 12, 2022
Per unit	Per unit	$	0.30	$	0.30	$	0.30	Per unit	$	0.30	$	0.30
To public common unitholders	To public common unitholders	$	9,724	$	9,766	$	9,769	To public common unitholders	$	9,793	$	9,833
To PBF LLC	To PBF LLC	$	8,986	$	8,986	$	8,986	To PBF LLC	$	8,986	$	8,986
Total distribution	Total distribution	$	18,710	$	18,752	$	18,755	Total distribution	$	18,779	$	18,819

4038

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 the covenants under the Revolving Credit Facility as of ~~September~~June 30, ~~2021.~~2022.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we made net repayments of ~~$75.0~~$70.0 million under the Revolving Credit Facility.

Our 6.875% Senior Notes due 2023 (the “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.~~2023 and are included in Long-term debt as of June 30, 2022 as we have the ability and intent to refinance this debt through availability under other credit facilities, including credit facilities of our parent sponsor, PBF Energy, in the event the debt is not renewed at maturity. 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 ~~September~~June 30, ~~2021,~~2022, 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:


		Nine Months Ended September 30,					Six Months Ended June 30,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Net cash provided by operating activities	Net cash provided by operating activities	$	143,704	$	141,429	Net cash provided by operating activities	$	111,472	$	90,285
Net cash used in investing activities	Net cash used in investing activities	(6,892)		(9,635)		Net cash used in investing activities	(3,138)		(3,509)
Net cash used in financing activities	Net cash used in financing activities	(144,449)		(138,909)		Net cash used in financing activities	(111,540)		(90,650)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	$	(7,637)	$	(7,115)	Net change in cash and cash equivalents	$	(3,206)	$	(3,874)

Cash Flows from Operating Activities

Net cash provided by operating activities increased by approximately ~~$2.3~~$21.2 million to ~~$143.7~~$111.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to ~~$141.4~~$90.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The increase in net cash provided by operating activities was primarily the result of an increase in the net changes in operating assets and liabilities of approximately ~~$6.6~~$22.0 million primarily driven by the timing of collection of accounts receivables and liability payments and an increase in net income of approximately $1.2 million, offset by a net ~~increase~~decrease in non-cash charges relating to depreciation and amortization, ~~impairment expense,~~ amortization of loan fees and debt premium, accretion on discounted liabilities, unit-based compensation and change in contingent consideration of approximately ~~$1.1 million, offset by a decrease in net income of approximately $5.4~~$2.0 million.

4139

Cash Flows from Investing Activities

Net cash used in investing activities decreased by approximately ~~$2.7~~$0.4 million to ~~$6.9~~$3.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to ~~$9.6~~$3.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The decrease in net cash used in investing activities was due to a decrease in capital expenditures of approximately ~~$2.7~~$0.4 million ~~primarily related to continued reductions in~~resulting from the timing of capital ~~spending in the current year in response to the COVID-19 pandemic.~~projects.

Cash Flows from Financing Activities

Net cash used in financing activities increased by approximately ~~$5.5~~$20.9 million to ~~$144.4~~$111.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to ~~$138.9~~$90.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. Net cash used in financing activities for the ~~nine~~six months ended ~~September~~June 30, 2021 consisted of net repayments of $75.0 million under our Revolving Credit Facility, distributions to unitholders of $56.2 million, a $12.2 million earn-out payment under the CPI Processing Agreement and deferred financing costs and other costs of $1.1 million. Net cash used in financing activities for the nine months ended September 30, 20202022 consisted of net repayments of $70.0 million under our Revolving Credit Facility, ~~and~~ distributions to unitholders of ~~$69.7~~$37.6 million, ~~offset by~~a $2.7 million payment of contingent consideration and deferred financing costs and other of $1.3 million. Net cash used in financing activities for the six months ended June 30, 2021 consisted of net repayments of $40.0 million under our Revolving Credit Facility, distributions to unitholders of $37.5 million, a $12.2 million payment of contingent consideration and deferred financing costs and other of ~~$0.8~~$1.0 million.

Capital Expenditures

Our capital requirements have consisted of, and are expected to continue to consist of: expansion, maintenance 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 assets, the construction, development or acquisition of equipment at our facilities or projects that provide 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 our transportation, terminaling, storage and processing assets and to maintain equipment reliability, integrity and safety. Regulatory capital expenditures are expenditures made to attain or maintain compliance with regulatory standards (including in response to the potential impacts of climate change). Examples of regulatory capital expenditures are expenditures incurred to address environmental laws or regulations.

Capital expenditures for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 were as follows:


		Nine Months Ended September 30,					Six Months Ended June 30,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Expansion	Expansion	$	3,888	$	1,789	Expansion	$	248	$	1,356
Maintenance	Maintenance	2,263		6,985		Maintenance	2,601		1,437
Regulatory	Regulatory	741		861		Regulatory	289		716
Total capital expenditures	Total capital expenditures	$	6,892	$	9,635	Total capital expenditures	$	3,138	$	3,509

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We currently expect to spend approximately ~~$3.0~~$12.0 million to ~~$6.0~~$16.0 million for the remainder of ~~2021~~2022 for capital expenditures. Of the total expected remaining capital expenditures, approximately ~~$2.5~~$8.0 million to ~~$4.5~~$11.0 million relate to maintenance 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 forecasted capital expenditures for the remainder of ~~2021.~~2022. We may rely on external sources including incremental borrowings under the Revolving Credit Facility and issuances of equity and debt securities to fund any significant future expansion.

~~Contractual Obligations~~Material Cash Requirements

With the exception of activity under the Revolving Credit Facility, there have been no significant changes in our material cash requirements (including known contractual ~~obligations~~and other obligations) since those reported in our ~~2020~~2021 Form 10-K. Refer to Note 6 “Debt” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information regarding our debt obligations.

~~Off-Balance Sheet Arrangements~~Other

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 ~~$4.0~~$3.5 million.

Environmental and Other Matters

Environmental Regulations

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, 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, and, historically, spills at truck and rail racks and terminals have resulted in contamination of the environment, including soils and groundwater.

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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 ~~September~~June 30, ~~2021,~~2022, we have recorded a total liability related to environmental remediation costs of ~~$1.8~~$1.9 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.

Supplemental Guarantor Financial Information

The following consolidated subsidiaries serve as guarantors of the obligations under the 2023 Notes:

•Delaware City Logistics Company LLC;

•Delaware Pipeline Company LLC;

•Delaware City Terminaling Company LLC;

•Toledo Terminaling Company LLC;

•PBF Logistics Products Terminals LLC;

•PBFX Operating Company LLC;

•Torrance Valley Pipeline Company LLC;

•Paulsboro Natural Gas Pipeline Company LLC;

•Toledo Rail Logistics Company LLC;

•Chalmette Logistics Company LLC;

•Paulsboro Terminaling Company LLC;

•DCR Storage and Loading Company LLC;

•CPI Operations LLC; and

•PBFX Ace Holdings LLC.

These guarantees are full and unconditional and joint and several.

PBF Logistics LP serves as “Issuer,” with PBF Logistics Finance Corporation (“PBF Finance”) as “Co-Issuer.” The indenture dated May 12, 2015, as supplemented, among us, PBF 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 restrictions included in the indenture. Refer to PBF LLC’s condensed consolidated financial statements, which are included in the combined Quarterly Report on Form 10-Q for the period ended ~~September~~June 30, ~~2021~~2022 filed by PBF LLC and PBF Energy.

The Co-Issuer has no independent assets or operations, and we do not have any subsidiaries designated as “Non-Guarantor Subsidiaries.” As such, the consolidated results of the Issuer and Guarantor Subsidiaries are reflected in our Condensed Consolidated Financial Statements included in “Item 1. Financial Statements.”

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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. We have minimal direct exposure to risks associated with fluctuating commodity 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 experience modest volume gains and losses, which we sometimes refer to as imbalances, through the operations of 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 ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, 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 ~~September~~June 30, ~~2021,~~2022, we had ~~$125.0~~$30.0 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 ~~$4.0~~$3.8 million change in our interest expense, assuming we were to borrow all $500.0 million available under the Revolving Credit Facility.

We continually monitor our market risk exposure, ~~including the impact and developments related to the COVID-19 pandemic, which has introduced significant~~particularly in times of elevated volatility in the financial markets. In response to adverse market conditions, we can take steps to mitigate potential adverse impacts on our business and operations by limiting capital expenditures, reducing discretionary activities and third-party services and lowering our quarterly distribution to, or maintaining our quarterly distribution at, our minimum quarterly distribution of $0.30 per unit. Such measures can serve to build our cash flow coverage, de-lever our business and increase our financial resources, while allowing us to continue to identify potential organic growth projects or strategic acquisitions. In addition, our parent sponsor and largest customer, PBF Energy, can take steps to preserve its liquidity and solidify its operations under adverse market conditions by reducing the amount of crude oil processed at its refineries and temporarily idling various units at certain refineries. When adverse market conditions arise, we are unable to predict the ultimate outcome of the economic impact of such conditions and can provide no assurance that measures taken to mitigate potential adverse impacts will be effective.

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 amended) as of ~~September~~June 30, ~~2021.~~2022. 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 ~~September~~June 30, ~~2021.~~2022.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting during the three months ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be involved in litigation, legal or governmental proceedings and other claims arising out of or relating to our operations in the normal course of business. Except as set forth in our filings with the SEC or below, we do not believe that we are a party to any such matters that will have a material adverse impact on our financial condition, results of operations or statements of cash flows and we are not aware of any such matters contemplated to be brought against us.

On December 28, 2016, the Delaware Department of Natural Resources and Environmental Control issued a Coastal Zone Act permit for ethanol (the “Ethanol Permit”) to Delaware City Refining Company LLC (“DCR”) 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 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. The Coastal Zone Board notified the parties in January of 2020 that it concurred with the parties’ proposed course of action. The appellants and DCR subsequently filed a motion with the Superior Court requesting relief consistent with what was described to the Coastal Zone Board. In March of 2020, the Superior Court issued a letter relinquishing jurisdiction over the matter and concurring with the parties’ proposal to allow the case to proceed to a hearing on the merits before the Coastal Zone Board. The parties must now jointly propose to the Coastal Zone Board a schedule for pre-hearing activity and a merits hearing to resolve the matter. The parties must, therefore, submit to the Coastal Zone Board a joint proposed schedule to govern future proceedings related to the merits hearing to resolve the matter.

~~On December~~ 4, 2020, the Pennsylvania Department of Environmental Protection (the “PADEP”) issued a draft Consent Order and Agreement (“CAO”) to the Partnership’s wholly-owned subsidiary, PBF Logistics Products Terminals LLC (“PLPT”), with respect to two alleged violations at the Philadelphia terminal for failure to: 1)(i) test and inspect regulated piping as required in accordance with industry standards; and 2)(ii) have a professional engineering certification that all above ground storage tanks meet the applicable performance standards and requirements as a result of an alleged release of oil on January 10, 2019 into the Schuylkill River resulting from a pipe leak that was not contained by emergency containment structure. The draft order included a proposed penalty of $0.8 million. ~~The~~On December 15, 2021, the Partnership ~~is currently communicating with~~entered into a final CAO and agreed to pay the $0.8 million penalty. Under the final CAO, the Partnership capped its future liability at $0.3 million if the PADEP regarding the allegations and the settlement offer. As part of the ongoing communications, on October 22, 2021, the PADEP provided an updated draft order updating the corrective action items and explicitly reserving the PADEP’s rightwere to bring ana subsequent enforcement action under the Clean Streams Law (the “CSL”) for environmental damage allegedly caused by the release of oil ~~that resulted~~from PLPT’s operational violations. Under the final CAO, the Partnership also reserved its rights to challenge any subsequent enforcement action brought by the PADEP under the CSL. On January 13, 2022, the Partnership received from the PADEP, a Consent Assessment of Civil Penalty alleging violations under the CSL of over $1.0 million. However, because of the final CAO cap, the PADEP’s penalty demand to settle these alleged ~~operational~~ violations is $0.3 million. On April 13, 2022, the Partnership entered into the final CAO and ~~capping~~agreed to pay the ~~penalty amount for such violations at~~ $0.3 million ~~in addition to the original penalty amount.~~penalty.

Item 1A. Risk Factors

There have been no significant changes from the risk factors previously disclosed in “Item 1A. Risk Factors” of our ~~2020~~2021 Form ~~10-K.~~10-K, except as follows:

The Merger Transaction is subject to conditions, including some conditions that may not be satisfied on a timely basis, if at all. Failure to complete the Merger Transaction, or significant delays in completing the Merger Transaction, could negatively affect our business and financial results and the trading prices of our common units.

The completion of the Merger Transaction is not assured and is subject to certain risks, including the risk that certain conditions of the Merger Agreement, such as required regulatory approvals, some of which are beyond our and PBF Energy’s control, are not satisfied or waived, which may prevent, delay or otherwise result in the Merger Transaction not occurring. The Merger Agreement contains conditions that, if not satisfied or waived, would result in the Merger Transaction not occurring, even though our common unitholders may have voted in favor of the Merger Transaction-related proposals presented to them. Failure to complete, or significant delays in completing, the Merger Transaction with PBF Energy could negatively affect the price of our common units and may have a material adverse impact on our subsequent financial condition, results of operations and cash flows.

We may be subject to lawsuits regarding the Merger Transaction, which could materially adversely affect our operations and financial condition or prevent or delay completion of the Merger Transaction.

Our directors and officers may be subject to lawsuits relating to the Merger Transaction. While we will evaluate and defend against any actions vigorously, the costs of the defense of such lawsuits and other effects of such litigation could have an adverse effect on our operations and financial condition. Failure to complete, or significant delays in completing, the Merger Transaction with PBF Energy could negatively affect the price of our common units and may have a material adverse impact on our subsequent financial condition, results of operations and cash flows.

Because the exchange ratio under the Merger Agreement is fixed and because the market price of PBF Energy Class A common stock will fluctuate prior to the completion of the Merger Transaction, our public unitholders cannot be sure of the market value of the PBF Energy Class A common stock they will receive as merger consideration relative to the value of our common units they exchange.

The market value of the consideration that our public unitholders will receive in the Merger Transaction will depend on the trading price of PBF Energy Class A common stock at the closing of the Merger. The exchange ratio that determines the number of shares of PBF Energy Class A common stock that our public unitholders will receive in the Merger is fixed at 0.270 shares of PBF Energy Class A common stock for each Partnership common unit. This means that there is no mechanism contained in the Merger Agreement that would adjust the number of shares of PBF Energy Class A common stock that our public unitholders will receive based on any decreases or increases in the trading price of PBF Energy Class A common stock. Stock or unit price changes may result from a variety of factors (many of which are beyond PBF Energy’s and our control), including:

•changes in PBF Energy’s or our business, operations and prospects;

•changes in market assessments of PBF Energy’s or our business, operations and prospects;

•changes in market assessments of the likelihood that the Merger Transaction will be completed;

•interest rates, commodity prices, general market, industry and economic conditions and other factors generally affecting the price of PBF Energy’s common stock or our common units; and

•federal, state and local legislation, governmental regulation and legal developments in the businesses in which PBF Energy and we operate.

If the price of PBF Energy Class A common stock on the closing date of the Merger Transaction is less than the price of PBF Energy Class A common stock on the date the Merger Agreement was executed, then the market value of the merger consideration will be less than contemplated at the time the Merger Agreement was executed.

We will be subject to business uncertainties while the Merger Transaction is pending, which could adversely affect our business.

Uncertainty about the effect of the Merger Transaction on employees of our subsidiaries and the companies that do business with us may have an adverse effect on us. These uncertainties may impair our ability to attract, retain and motivate key personnel and suppliers until the Merger Transaction is completed and for a period of time thereafter, and could cause those that transact with us to seek to change their existing business relationships with us.

We may incur substantial transaction-related costs in connection with the Merger Transaction.

We and PBF Energy expect to incur nonrecurring transaction-related costs associated with completing the Merger Transaction. Nonrecurring transaction costs include, but are not limited to, fees paid to legal, financial and accounting advisors, filing fees, proxy solicitation costs and printing costs.

The Merger Transaction with PBF Energy is a taxable transaction and the resulting tax liability of our common unitholders, if any, will depend on each such common unitholder’s particular situation.

The receipt of cash and PBF Energy Class A common stock as merger consideration in exchange for our publicly traded common units in the Merger Transaction will be treated as a taxable sale by such common unitholders for U.S. federal income tax purposes. The amount of ordinary income and capital gain or loss recognized by each common unitholder in the Merger Transaction will vary depending on each common unitholder’s particular situation, including:

•the amount of cash and PBF Energy Class A common stock received by the common unitholder as consideration in the Merger Transaction;

•the adjusted tax basis of the common units exchanged by the common unitholder in the Merger Transaction;

•the amount of depreciation and amortization deductions previously allocated to the common unitholder; and

•the amount of any suspended passive losses that may be available to the common unitholder in respect of its common units to offset a portion of any gain recognized by the common unitholder.

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 +						Agreement and Plan of Merger, dated July 27, 2022, by and among PBF Energy Inc., PBF Energy Company LLC, PBFX Holdings Inc., Riverlands Merger Sub LLC, PBF Logistics LP and PBF Logistics GP LLC (incorporated by reference herein to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-36446) filed on July 28, 2022).
10.1						Voting and Support Agreement, dated July 27, 2022, by and among PBF Energy Inc., PBF Energy Company LLC and PBF Logistics LP (incorporated by reference herein to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-36446) filed on July 28, 2022).
22.1*						List of Guarantor Subsidiaries.
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.
101.INS						XBRL Instance Document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.
104						The cover page from the Partnership’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2021,~~2022, formatted as Inline XBRL (included in Exhibit 101).

——————

* Filed herewith.


*			Filed herewith.
**			This exhibit should not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.
+			Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request.

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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:

~~October~~July 28, ~~2021~~2022

By:

/s/ Erik Young

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

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	Balance at September 30, 2021
	Transportation and Terminaling		Storage		Corporate		Consolidated Total
Total assets	$	686,222	$	195,058	$	29,299	$	910,579