PBF - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the PBF Energy Second Quarter 2018 Earnings Conference Call and Webcast. At this time, all participants have been placed in a listen-only mode, and the floor will be opened for your questions following management's prepared remarks. Please note, today's call may be recorded and I will be standing by if you should need any assistance. It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir, you may begin.

Colin Murray

Erica. you, Thank welcome and call. Good to morning today's me our President; are members our Nimbley, and Tom Lucey, Matt of team. CEO; our management Erik other With several today Young, CFO; our supplemental copy financial guidance A available website. our on earnings today's release, is and information including of operating throughput including

we the Before getting press that outlines express your by Federal results the quarterly filings or cost call, LCM with statements in describe could laws. the securities to our like and or many are the expectations cause SEC. attention under Consistent or Harbor on Safe which of it the Safe to started, factors the statements quarters, our In or our in approximately contained actual summary, from I'd release lower predictions this discuss with are we will statement that Harbor non-cash future, covered of today's intended direct market those management's to $XXX.X company's gain press release. million. contained in provisions be differ prior to results of forward-looking our There including a excluding after-tax expectations,

financial while As press certain measures will performance release, describing results. and PBF's be noted non-GAAP operating using we our in

Nimbley. appropriate of press tables Tom refer provided call reconciliations release. the GAAP in I'll measures For to to non-GAAP to the over today's please figure, the supplemental now turn

Thomas J. Nimbley

Colin. and joining everyone, thank call morning, Thank today. Good for you, you our

business. the $XXX expectations was EBITDA adjusted market ran this approximately and that when We reported million result. with and was good well we quarter, there to of second the is a in which For line our key the

we supported are that Market to distillates inventories, especially refining board for high and to in remain this Looking Product utilization. continues for across near the PBF season. as down market. ahead, driving export despite sector items fundamentals are up lining favorably the see strong inventory progressed a with summer and lows, strong clean by refinery cover the we number for a are be days general distillates specifically. favorable five-year for Demand through of products trending

see capacity most On seen barrels which wider continue takeaway assets to our continue the crude constraints for our side, benefit to and many we support move should system the advantaged WCS we've to differentials especially source East of many favorably. opportunities differentials the Coast.

under remains prices point more robust, ahead year can RFS in prices the week. RINs, despite House prominent hopeful the course particularly RINs EPA that this administrator you While the EPA biofuel we impacting RIN data These still were XXXX hearing a use. last facts acting control show are ethanol slightly even and at action prove at control use adversely this time RINs blending well without below quarter, on and in the average. since referenced second White negotiations EIA

system complexity ahead, IMO believe refining with high shift Looking marine standard we for prepared is XXXX. well the fuel upcoming our diesel

even more. As PBF PBF more we independent optimize the its have being does one on basis percentage all, have opportunity capacity system That refiner. but said throughput in of past, a has said than to coking the

the harsher the City's an will that which Delaware board as sell new in should XXXX well clean of refinery even third-party City. new have Del further from own for supply will received process of crude Delaware We required hydrogen incremental increase yield approval build permits hydrogen to to to as product slate. The of come hydrogen online all plant processor, a allow a and state QX and

by assets running will and through organic that value return and always our our high fundamentals. is to making as a projects reliably high safely incrementally will our do run investments to and selective over our Our put strategy, our our this assets strategy to succeed and in and and benefit. Matt We position I'll operational optionality employees products. market turn call executing capitalize sourcing by be on to now environment improve in of strong this the profitable in yield highlights. crude this our shareholders By assets

Matthew C. Lucey

Thanks.

a now in barrels was the to second assets. continue the this to during quarter full in well to did performing see the coupled and As in the ago late of in in continues approximately see should tank story clean the project by cracks well favorable potential and with continued of forward. during significant completed present as the to The our in differentials we Chalmette strong The a guidance. day system up deliver of temporary second with work moment accomplished narrowed generated and quarter, we as was results. on XX,XXX amount operations our exported refining strong is products asset. Total feedstock the line reasonably mentioned quarter, equipment Logistics We first expected throughput turnaround set XXX,XXX expectations but weakness Tom benefits restarted market this some second cracks and associated weight PBF second on average the and we offset per barrels was our run reformer quarter for of quarter significant availability and as system going per the which day, run quarter. challenges

Coast clean in weeks the extend our averaging operated completed quarter. XX,XXX product Paulsboro on able of run per barrels was In quarter opportunities set which and well. production to record our uncover the levels to refinery to couple it The within results quarter the and first increase of The second the for Toledo, quarter. asphalt into in well and was evaluate yield day April while turnaround enhance Since impacted first margins. to continues the and well refinery of favorable continue for our budget, of We very advantage plant take the other the East environment. did then crack ran

of of in especially wider Our beneficiary and results complexity a WCS. advantage been differentials Delaware these crude be having show the has and high assets, particular will

operating for the $X.XX were expenses excellent in continues refinery to Lastly line Torrance, Liability were our it expectation. perform which well. with is and

Our coupled drove differentials clean with products yield high favorable those of results. crude strong

Toledo availability planned of be downtime year. Torrance, high. do system remainder the remainder and any Chalmette should the of the for have the For not year,

Our crude turnaround go complete a fall. I'll the City and focused activity With for Erik, which on Aeromax the financials. turnaround is set work unit, and has smaller over set for East mid-October. to Coast turn its begin in mid-September Coker work has Paulsboro on by be will Delaware with scheduled reformer to November. work its (XX:XX:XX) who'll scheduled that, units in through it

C. Erik Young

Thank you, Matt.

on will results comments quarter our the LCM aforementioned reminder a exclude non-cash second item. As

adjusted of $XXX.X of million per exchanged reported net and a income or income approximately fully $XXX.X fully fully operations converted For the second quarter, PBF million $X.XX basis. on from diluted share

$XXX includes million, compensation approximately comparable to $X expense. non-cash stock-based EBITDA was of consensus million Our approximately which estimates

For interest million was the G&A the expense please tax effective million and purposes effective quarter, XX%. were approximately approximately use for quarter expenses an forward, and $XX.X PBF's million. rate rate expense of was XX%, $XX.X continue depreciation to was $XX.X amortization for going modeling

CapEx for cash XXXX $XXX million at PBF in billion Terminals approximately These Logistics. and for quarter was our by while corporate could quarter was expense and for the year including figures which incremental $XXX Our full CapEx expense range quarter Consolidated as $X.X approximately to $XXX RIN the $XX PBF our net $XXX consolidated includes current in burden by million the the compared expense we million million, RIN see million, With with respect second to million balance for $X incurred of Refining paid approximately the $XXX million. liquidity million the totaled the to $XXX still million and an sheet, acquisition. exclude we rate, $XX debt-to-cap both Logistics Knoxville ended of XX%. our a

growth approved any quarterly its call Also encourage that that of consecutive increase take our provided plans. dividend to I of pleased Operator, questions. opening we'd board today, our distribution this additional and to to Lastly, note later Logistics details be earnings share. you $X.XX pleased announced a and completed listen quarterly its has we're to announce we've morning. PBF remarks XXth per on

Operator

the to open The In one Thank we limit one to company follow-up. questions. turn you. requests call each question and all that moment, a callers will

with go Wells queue from the additional We'll questions. Read first Please Roger rejoin sir. to may Fargo. ahead, You go

Roger D. Read

Yeah. Good morning.

Matthew C. Lucey

morning. Good

Thomas J. Nimbley

morning. Good

Roger D. Read

may we could you then, a preview idea, thinking bit, the be to and is here, little economics worse opportunities I'm Texas mentioned an rail as you barrels. in there us crude WCS talk the on, in the there anything of it else, extreme guess, And we've by particularly West well? give gets differentials the maybe could the the year what rolls that I seen as East as Coast,

Thomas J. Nimbley

source time. to that to differential that XX much is between amount East can isn't moving the a as other of Obviously, it that are have you pretty XX,XXX when looks it's means Chalmette is And be WCS as for a to is spread, of happen you longer, of, going you've and XX a wide got market ability barrels, alternative some now Roger. XX,XXX months than know continue the the for situation (XX:XX:XX). just now move will. what and versus somewhere been right significant to and then Coast, going barrels �� some we perhaps but and Permian, that's Torrance some going the some to if TI that well. on to going function period going totally see it's the run by day that. that right Most clear in more to continuing this TI of a Brent to We going of we barrel layer Sure, in And be volume, we like of to we'll

in crude said, to puts – us. to us a but position a I run, believe a crude we difficult as profitable favorable this So source for a

pipelines – higher side, side we in can but there, who more everybody crudes obviously volumes we as it's Permian-based that, exposure Permian story we'll that, booked, today not do the good who trying try for run do volume but some to pretty us see have though. On some to a source those volumes the but to is anybody in Toledo, huge basically of source are on we distressed if

Roger D. Read

reformer that a what some weak, for the things let's question, there next, restart a here Yeah, Can you OpEx follow-up you've looking and on row we do an to over quarters focus little Chalmette, been of maybe give XX can of but idea at XX definitely. here more. – corrected, margins I on with a margins Torrance of good should commentary the what put us touched kind essentially say, there, the now detail? the help of now more to here, be definitely the Chalmette months several in is bit little the at have which good, guess performance

Thomas J. Nimbley

opportunity captured focus, manifest. optimization mentioned of whether sold Well, I laundry to a Yeah. fair asphalt which to barrels over amount a but allows say we've Matt numbers. we took to jargon, we're list the want list be things talked have of because last time things It's that us a in was increase they pretty in be lot of ingenuity, player focus, not question Paulsboro Torrance lot if Chalmette they at venture. optimization in have that all, there now, we've a of that's we the into we the great had. pursuing asphalt we into but pursuing shifted shouldn't markets with big day, Gulf that full There our asphalt the cracks a going focus good there's into Chalmette and money like a literally that have a new we barrels started our Coast vigor. and And made plant, broken throughput months, of that lot we opportunities as candidly those opportunities put was produce when XX,XXX Torrance they developed right of optimization a captured self-help, and at be the the – some we honest, now still to were In or starting into some a Torrance, all significant and put percentage economic. creativity, a Torrance of of marriage joint before, that a at use that a we Vegas whether And and there in day perfectly is in business high XX,XXX saw you three very to of

right has They would to substitutions. looking fence inside line clearly of narrow it to ground area on percentage and hit and we now of opportunities in – to test but we other by suffice than are to would Chalmette we distillate Chalmette. operations there's particularly We products value very envelope fertile and the the is, I doing crude think, a like, we're see then modifying different lower focusing like, say programs increase that we're upside, a verify or yield high some the that

Matthew C. Lucey

reformer (XX:XX:XX), those And EBITDA range. process that right values, Roger incremental units size from see octane million to a from year $XX should million at the just depending you to on $XX

Roger D. Read

Great. Thank you. Okay.

Operator

We'll go go next Please ahead. to Neil Sachs. Mehta Goldman from

Carly Davenport

Good questions. working the for is morning. Davenport ops for from on on quarter. This Was capital impact Carly flow just Thanks there on the of? number should we Neil. during is one aware first any My taking that be cash

C. Erik Young

balance We positive of had capital about million sheet. $XX hit the working

Carly Davenport

Thank margins in follow-up California, would just West Coast weakness my third in we've seen Great. you. quarter. refining And on Okay. then some be here the

in how Torrance thoughts you that that to the get forward your with power wanted on context? earnings then market going of So view that and just along

Thomas J. Nimbley

when clearly on Right running think inventory into much reasonably balanced can will you everything runs pretty get things is everything that now I Those Torrance. supply-demand. the is change. well well, market position including a a case, that's California

system That the it continue results against it assumes and day, at any Coast. other we'd the You that summer, in get cooling PBF run West heat control. now the believe going to into be temperatures. will personally to is our the refinery how under just on you're Torrance temperature, seeing going refinery some we cuts operations progress we our end wind best make and the that Right up because the humidity, frankly put of operating are of up to I in of

So an earnings happy power that standpoint, standpoint, are we facility. we very earnings from purchased

Carly Davenport

you. Thank Great.

Operator

we And Read Wells Roger from you. take follow-up will go, a Please ahead. go from Thank Fargo.

Roger D. Read

talk economics how Del that today then back I at about sort hydrogen think impacting be and I hydrogen should go guess of, and didn't really have quite plant, on the the you think to quickly. I'd we onwards? that does that about how Could you, City for we compare XXXX

Thomas J. Nimbley

as is lease in, come will I said It arrangement. project, fourth quarter. The Yeah. a third-party

Delaware inside So, of plant we'll today powerful and payment, little which operate going bit of third-party harsh market is units clearly cracking, MARPOL. of a machine, capital a will of do hydrogen and is what for rewarding refinery lots this fixed and you then the and to crudes who is we'll hydro cost we that and of is is attractive it expect and the to – spending that the give it hydrogen gives lease When up absence is actually have be which hydrotreating build hydrogen. a would higher gravity us the it lots exist various you market them be and a hook insufficient and coking, of attractive exists there'll and running sulfur, provider the lower hydrogen a in

just gets with However it (XX:XX:XX), coming exacerbated. MARPOL

heavier make standpoint negatively which big we or amount a expect So, we'll obviously, impacted of little bit post-MARPOL the world. wind to the us sulfur a higher up to with more We'll actually be, from But hydrocracker a diesel. threatened bit a play price in it fee. will allow more is increase little crudes

Roger D. Read

– Okay, thanks. – one today you I from do else that. hydrogen it you or Where quick simply follow-up not on is source And then available on the guess East Coast? somewhere do

Thomas J. Nimbley

are hydrogen no there no that has East Coast – there's third-party Actually plant. really a refinery third

small in and a what sufficient is it's of hydrogen the for off most reformer but we do is hydrogen hydrogen, really produced use. we that own have total there in the from to actually run City Delaware example, comes a we In plant there periodically, run can for we we but not we addition that – the plant that So Paulsboro hydrogen have reformer. we source hydrogen in way that it

first, would plant That's the the be country. this the East way on So, hydrogen the rest in by party the Coast. built third the more norm of

Roger D. Read

there is kind any, availability the And this uplift impact point? you Right. frame from EBITDA of, can additional – at margin

C. Erik Young

as with of world. you're million it today's and probably Tom call $XX a Roger, IMO, $XX in I XXXX expect it we XXXX say increases, But in in million mentioned. would – post what north environment,

Roger D. Read

the obviously RFS, anything been now to expectation you but things, happen? after that the I But and can issues, Okay. question you add something comments little Thanks. from new following else I've RINs then the that, mentioned administrator. favorable would think election between you, last for maybe And year, same November, can

C. Erik Young

think I Yeah. find been do the administration working has to a solution.

some The it's they're today's declined granted in other lending not has the is to not side to been at look there simplest fact the refiners, the an have group way increased. in but EPA, it of easy by manage. But waivers market yet

been high So proven that bunk. to needs RIN has biofuel the side prices whole argument the be

we'll continue EPA. be a would've that compromise with I and and a And a so, a there maybe, with one. there'll do new or fashion. was White worked. needs that think House And Maybe, in go we'll that the back comprehensive work agreement is be to to But addressed think to we addressed there joint

Roger D. Read

Okay, great. you. Thank

Operator

we'll go Sankey you. Please ahead. next go Mizuho. And Paul to from Thank

Paul Sankey

Good morning all.

C. Erik Young

Welcome back.

Thomas J. Nimbley

morning. Good

Paul Sankey

there. we or through X wondering don't the are is this XXXX? a seeing ones, Very seems was from know selection barrel will already to what you you to we soon change through is or impacts it impact do presumably It coming I guys you And going a was the more everyone impacting good that's, think XXXX the was wondering if are But number million Thanks. is, you. I he's day kind impressive to late in for I wait of, guess the you is question be have with. of how be be a market. Can till ready working do I follow-up I some what think what how said you given questions little previously. Roger see going specific guess come asked but to just bit IMO

Thomas J. Nimbley

Paul. It's again. Thank your to good you, voice hear

Paul Sankey

Same dulcet Tom, for Jersey. New tones you, of the

Thomas J. Nimbley

Here, IMO started I to a goes going probably To this, be show you believe clear off already December been are I I a IMO. Look, go. that has don't pretty some it's we to switch in think for think on manner. XX. we've light personally limited well-positioned extent, up on

I think the in so is it things the be they getting view, to and in whatever anybody IMO think at rather strategy shippers, the on the want be to change and consensus. port, the to directors that number, question. deciding looking a do ship to compliant board barrel a to – need producers, much you're it when get it's new our million in X be going loaded whether is, to in chain, see, I here's starts the every supply to pretty got refiners, you've fuel, – addressing this got significant example be oil that's should what because have this An boards talked a if you every it you be room about, all

increase up sweet-sour X replacing refiners, a wind diesel for the then – a You're widen sulfur don't barrels enemy, look-alike, spreads so million barrel and do million sweet which when bigger barrel and of disappearing oil bottom it increase light-heavy and with it problem big while basically gas because high-sulfur I it who margin in clear is think personally a in particularly an a be that or X factor to going demand it's bunker the spreads gas and the and going by there's a ability significant. basis pretty X.X, today. distillate fuel XXX oil have effectively day global is made to that only, stream position, out But will and we sweet you a distillate be demand, the simply to is will very on think million demand can result without in distillate will higher that creative. demand industry it's

be – that not somebody or I going to Arab on bartering as look maybe crude And that have can there stream right opportunities So running seeing XX. to does That'll find look is of a capability said on we're this capacity too that clear see I cannot have wait or think, think people start on Basrah any I crudes, hydrotreating a And I capability like suspect has December not to you lot coking to momentum happen. there's got way coking to for barrel. a way as till around people pull PBF be going But bottom mid-year. or who going thing to who late. sour or not is to whether

Paul Sankey

could the are all not use fuel it's move excess mean around? a going it, you to of heavy were like lot you generating I presumably that How you more? but

Thomas J. Nimbley

out we bought tankage terminal that we up to here. that's hook into reasons barrel okay, the can at figure question. coker true. a we're is our to is and see their great can Paulsboro into And but we there advantage and plants. its big distillate heated heated a – we've logistics just And lot barrels but importantly how mean a we're need play. of we (XX:XX:XX) hydrocrackers how one and of play big Logistics announced when you advantage that, import make X is certainly, candidly and It's has people about every talk And produced coker, barges. tankage with AXION can bought a as look Delaware the do of because we feed million to we City a three run I to together, going

need figure pipes. hot to You have out to how

opportunities is big but has play. be to some is logistics but work there here, So that done some there's a there,

Paul Sankey

We then it's And there that the sale question. that is you're could looking. market to anything out if day the know you dreaded can frame for work your how we stock But, Great. (XX:XX:XX) know the I I've M&A that final M&A. got one, on is add this, in and ask always every to

Particularly wondering there MPC-Andeavor made. sure and from, there's couple a your As market. you acquisition of if on today, mergers I'm notably merger you of the is, in minor that the the a Thanks mentioned view, relatively impact just of

Thomas J. Nimbley

Yeah.

consolidation. I raised in no MPC-Andeavor was – the there's the think it I has bar merger say changer, a doubt of but terms that wouldn't significantly game

ago, company well, come support check to if to you have fully big this continuing, our rewarded management – we and be event contributing three a is the of MARPOL, and careful company. would couple know write or same four as not MARPOL candidly are we to to advance these along somebody that. know deal and say, as the in only pretty want But at ask I lost opposed big the because wide We of don't absent and something that the bid shareholders, a it's very a is time to on be if going it's of like probably facilities, getting At MARPOL you something MARPOL then but number a years buying of that year wanted and grow thing.

we don't look. anything we So have really to now but right continue

Operator

this Thank no time have we And you. further questions. at

to like turn over for Nimbley I'd back to remarks. closing Tom So it

Thomas J. Nimbley

Thank Holly's you of forward call, you attending seeing attended call. you who've next look those time. for today's Thank And you. we'll to everybody

Operator

to like at for feel free time. their thank today's everybody I'd disconnect participation your any line conference to on call. Please

PBF Energy (PBF) 2 Aug 182018 Q2 Earnings call transcript