PBF Energy Inc. (NYSE:PBF) today reported a third quarter 2016 income from operations of $129.7 million as compared to income from operations of $92.3 million for third quarter of 2015. Excluding special items, third quarter 2016 income from operations was $25.7 million as compared to income from operations of $300.6 million for the third quarter of 2015. Special items in the third quarter 2016 results include a net, non-cash, after-tax gain of $62.8 million, or $0.61 per share, lower-of-cost-or-market (“LCM”) inventory adjustment which increased operating income, and an after-tax charge of $1.9 million, or 0.02 per share, related to a change in the tax receivable liability agreement. Additionally, included in our results were net after-tax charges totaling approximately $4.2 million, or $0.04 per share, related to acquisition and other expenses.
The company reported third quarter 2016 net income of $56.4 million, and net income attributable to PBF Energy Inc. of $42.1 million or $0.43 per share. This compares to net income of $55.5 million, and net income attributable to PBF Energy Inc. of $42.8 million or $0.49 per share for the third quarter 2015. Adjusted fully-converted net loss for the third quarter 2016, excluding special items, was $16.5 million, or $0.16 per share on a fully-exchanged, fully -diluted basis, as described below, compared to adjusted fully-converted net income of $170.7 million, or $1.87 per share, for the third quarter 2015. PBF Energy’s financial results reflect the consolidation of PBF Logistics LP (NYSE: PBFX), a master limited partnership of which PBF indirectly owns the general partner and approximately 44.2% of the limited partner interests as of quarter-end.
Tom Nimbley, PBF Energy’s Chairman and CEO, said, “It was a challenging refining environment in the third quarter, with the exception of the Gulf Coast, average benchmark margins were down in every region and we experienced the added headwind of a 15 percent increase in the cost of compliance with the renewable fuels mandate.” Mr. Nimbley continued, “We continue to focus on our strategy to improve profitability and reliability and are committed to reducing operating expenses across our system. We believe that we are near a cyclical low in the refining environment and the ongoing and planned enhancements will strengthen the company’s operating results and increase margin capture when the market improves.”
Torrance Refinery acquisition and sale of Torrance Valley Pipeline Company LLC interest
On July 1, 2016, PBF announced that its subsidiary had closed its previously announced acquisition of the 155,000 barrel per day Torrance refinery, and related logistics assets, from ExxonMobil.
Subsequent to the purchase of the Torrance refinery, subsidiaries of PBF Energy sold, through a drop-down transaction with a subsidiary of PBF Logistics LP, a 50 percent equity stake in the Torrance Valley Pipeline Company LLC (“TVPC”). Proceeds from the transaction were $175.0 million.
TVPC owns the 189-mile San Joaquin Valley Pipeline system with a throughput capacity of approximately 110,000 barrels per day. The system, segregated into two parts, Northern and Southern portions, is comprised of the M55, M1 and M70 pipelines which are the primary crude gathering and transportation lines that supply PBF Energy’s Torrance refinery. The assets also include 11 pipeline stations with approximately one million barrels of combined tankage and truck unloading capability at two of the stations. PBF Logistics LP has entered into a ten-year term transportation services agreement with a subsidiary of PBF Energy containing minimum volume throughput commitments (“MVCs”) of approximately 50,000 barrels per day for the Northern logistics system and MVCs of approximately 70,000 barrels per day for the Southern logistics system and the usage of certain tanks.
PBF Energy Inc. Declares Dividend
The company announced today that it will pay a quarterly dividend of $0.30 per share of Class A common stock on November 22, 2016, to holders of record as of November 8, 2016.
Outlook
For the fourth quarter 2016, we expect East Coast total throughput to average 310,000 to 330,000 barrels per day; Mid-Continent total throughput is expected to average 130,000 to 140,000 barrels per day; Gulf Coast total throughput is expected to average 155,000 to 165,000 barrels per day and West Coast total throughput is expected to average 135,000 to 145,000 barrels per day.
Adjusted Fully-Converted Results
Adjusted fully-converted results assume the exchange of all PBF Energy Company LLC Series A Units and dilutive securities into shares of PBF Energy Inc. Class A common stock on a one-for-one basis, resulting in the elimination of the noncontrolling interest and a corresponding adjustment to the company’s tax provision.
Non-GAAP Measures
This earnings release, and the discussion during the management conference call, may include references to non-GAAP (Generally Accepted Accounting Principles) measures including Adjusted Fully-Converted Net Income, Adjusted Fully-Converted Net Income per fully-exchanged, fully-diluted share, gross refining margin, gross refining margin per barrel of throughput, EBITDA (Earnings before Interest, Income Taxes, Depreciation and Amortization), Adjusted EBITDA and projected EBITDA related to the refinery acquisitions. PBF believes that non-GAAP financial measures provide useful information about its operating performance and financial results. However, these measures have important limitations as analytical tools and should not be viewed in isolation or considered as alternatives for, or superior to, comparable GAAP financial measures. PBF’s non-GAAP financial measures may also differ from similarly named measures used by other companies. See the accompanying tables and footnotes in this release for additional information on the non-GAAP measures used in this release and reconciliations to the most directly comparable GAAP measures.
Conference Call Information
PBF Energy’s senior management will host a conference call and webcast regarding quarterly results and other business matters on Friday, October 28, 2016, at 8:30 a.m. ET. The call is being webcast and can be accessed at PBF Energy’s website, http://www.pbfenergy.com. The call can also be heard by dialing (888) 632-3384 or (785) 424-1675, conference ID: PBFQ316. The audio replay will be available two hours after the end of the call through November13, 2016, by dialing (800) 283-8183 or (402) 220-0867.
About PBF Energy Inc.
PBF Energy Inc. (NYSE:PBF) is one of the largest independent refiners in North America, operating, through its subsidiaries, oil refineries and related facilities in California, Delaware, Louisiana, New Jersey and Ohio. Our mission is to operate our facilities in a safe, reliable and environmentally responsible manner, provide employees with a safe and rewarding workplace, become a positive influence in the communities where we do business, and provide superior returns to our investors.
PBF Energy Inc. also currently indirectly owns the general partner and approximately 44.2% of the limited partnership interest of PBF Logistics LP (NYSE:PBFX).
