PBF Energy (NYSE:PBF) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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The full earnings call is available at https://events.q4inc.com/attendee/105930101
Summary
PBF Energy reported an adjusted net loss of $0.88 per share and adjusted EBITDA of $68.7 million for the first quarter, with notable disruptions from the Martinez refinery and global oil market conditions.
The Martinez refinery is in the final stages of its restart, expected to fully resume operations by the weekend, contributing positively to the company’s future output.
Management highlighted the strategic importance of U.S. refining infrastructure amid global disruptions, with a focus on leveraging coastal complexity and ensuring reliable operations.
The company achieved its 2025 target of $230 million in annualized savings from its Refining Business Improvement program and is on track for $350 million by the end of 2026.
Future capital allocation priorities include deleveraging the balance sheet and focusing on shareholder returns, especially given the anticipated strong market conditions.
Full Transcript
OPERATOR
Good day everyone and welcome to the PBF Energy First Quarter 2026 Earnings Conference Call and webcast. At this time, all participants have been placed in a listen only mode and the floor will be open for questions following management’s prepared remarks. If anyone should require operator assistance during the conference, please press Star0 on your telephone keypad. Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir, you may begin. Thank you.
Colin Murray (Investor Relations)
Angeline. Good morning and welcome to today’s Call. With me today are Matt Lucey, our President and CEO, Mike Bukowski, our Senior Vice President and Head of Refining, Joe Marino, our CFO and several other members of our management team. Copies of today’s earnings Release and our 10Q filing, including supplemental information, are available on our website. Before getting started, I’d like to direct your attention to the Safe harbor statement contained in today’s press release. Statements that express the company’s or management’s expectations or predictions of the future are forward looking statements intended to be covered by the Safe harbor provisions under federal securities laws consistent with our prior periods. We’ll discuss our results excluding special items which are described in today’s press release. Also included in the press release is forward looking guidance information. For any questions on these items or other follow up questions, please contact Investor Relations after today’s call. I’ll now turn the call over to Matt Lucey.
Matt Lucey (President and CEO)
Thanks Colin. Good morning everyone and thank you for joining the call. Indeed, today is a moment with the disruption in the Middle East. The world is in greater need of the products we produce and therein lies the momentous opportunity for our company to perform and reward our shareholders for owning such critical infrastructure. Within pbf, the spotlight is squarely on Martinez. We are bringing Martinez back online and will shortly be supplying the California market with our full capabilities. This could not be coming at a better time for the West Coast California markets. There are three main areas of focus in terms of the restart at Martinez. The Cat Feed Hydrotreater, the Alkylation unit and the fcc. The Cat Feed hydrotreater and ALKI are up and both are running with the fcc. We expect to be making finished products this weekend. While the rebuild effort was completed in February, there is no question the restart took longer than expected. It was critical for us to ensure that all the work accomplished at Martinez over the last 14 months was capped off with a safe restart. Moving on to the broader environment, the events in the Middle east have caused the largest disruption ever in the oil markets. And the effects are indeed dramatic and constructive for PBF. Initially, approximately 15 million barrels per day of crude and 5 million barrels per day of product were trapped inside the Straits of Hormuz. The loss of crude barrels was most acutely felt in Asia. But the shortages have cascaded to other markets. 80% of the crude flowing through the Straits was destined for Asian refineries and those refineries in turn supplied products to many markets, including the US West Coast. As refining roads in Asia have been rationed due to lack of inputs, the loss of products has affected every market. Compounding this impact, the products stranded in the Arabian Gulf have tightened markets in Europe and subsequently the Atlantic Basin. In the near term, the markets will continue to adjust in real time to demand signals for both crude and products. Global pricing will dictate trade patterns. Increasingly, markets are calling for both US crude and US products to meet demand. While the US has been somewhat insulated, there are signs that demand is being impacted globally by both pricing supply issues. It has never been more evident that US refining is critical infrastructure. And this is most apparent in regions like the like the west coast and east coast that are short refined capacity and rely on imports from unstable sources to meet demand. It will take some time for trade patterns to normalize both during and and post the conflict in the Middle East. Refining fundamentals should remain strong throughout, supported by tight refining balances coupled with low product inventories around the world. Prior to this event, refining balances look constructive and the inevitable restocking should provide a favorable backdrop for quarters to come. PBF remains focused on controlling the aspects of our business that we can control. To be successful and enhance value for our investors, we must operate safely, reliably and responsibly, and we must do it as efficiently as possible. And with that, I’ll turn the call over to Mike Wachowski.
Mike Bukowski (Senior Vice President and Head of Refining)
Thank you, Matt. Good morning, everyone. Before updating on the progress of our refining business improvement program, I’ll provide a few comments on first quarter operations and our Martinez refinery status. Outside of the west coast, our refining system ran reasonably well. All of our refineries navigated record cold temperatures with minimal disruptions on the West Coast. As Matt mentioned, Martinez is in the final stages of its phased restart. The process to restore it has been methodical and required many levels of safety and process checks to ensure that all equipment was correctly manufactured and installed. Before we introduced hydrocarbons, the cat feed, hydrotreater and alkylation unit have been operating and producing finished products as well as the intermediates required for the startup of the fluid catalytic cracking unit this weekend. The Martinez team and a supporting cast too numerous to mention worked tirelessly to get us to this point. My thanks to all involved in the project. Additionally, while Martinez operations were being restored, Torrance underwent a turnaround early in the first quarter and with that event complete as a clean Runway for the remainder of 2026. I’m happy to report that we’re seeing progress from our RBI program. We achieved our 2025 target of $230 million of annualized run rate savings. This goal includes approximately $160 million of OpEx reductions against our 2024 benchmark and is incorporated in our full 2026 budget. While the ongoing Martinez process is causing some noise with the first quarter results, we are very comfortable in meeting or even exceeding our stated targets. While we are improving our maintenance and operational efficiency and reducing energy consumption, our main priority will always be to focus on safe, reliable and responsible operations across our system. With that, I’ll now turn the call over to Joe Varino for our financial overview.
Joe Varino
Thanks, Mike for the first quarter excluding special items, we reported adjusted Net loss of $0.88 per share, an adjusted EBITDA of $68.7 million. Our discussion of first quarter results excludes the net effect of special items, including $11.5 million in incremental OpEx related to the Martinez refinery incident, a $106.5 million gain on insurance recoveries, $313 million LCM inventory adjustment, a $9.4 million gain relating to PBS, 50% share of SBR’s LCM adjustment for the quarter, and approximately $9.4 million of charges associated with the RBI initiative, as well as other items detailed in the reconciling tables in today’s press release. PBS results reflect several unfavorable conditions that manifested in the first quarter both operationally and commercially. Capture rates for the quarter were negatively impacted by west coast operations, the higher flat price environment increasing the headwind of low value products, higher RINS expense and derivative losses recognized in the quarter. These capture headwinds more than offset benefits from the improving jet to diesel spreads and certain crew diffs. Operationally, our Torrance refinery was in planned turnaround during January and February, while our Martinez refinery restart was delayed. We built up inventory levels in the first quarter primarily in anticipation of the planned restart of Martinez. This occurred as global pricing for hydrocarbon surged on the back of the conflict in the Middle east, resulting in losses in our typical hedge program. Our results for the quarter reflect an aggregate derivative loss of a little over $200 million. Approximately half of this loss related to unrealized amounts expected to be mostly offset in the second quarter as the physical barrels run through our refining system. The $106.5 million gain on insurance recoveries related to the Martinez fire is a result of the fourth unallocated payment agreed to and received in the first quarter. This brings our total insurance recoveries to $1 billion net of our deductibles and retention, including the amounts received in 2025. Important to note, while the bulk of the spending related to Martinez is behind us, the claim is ongoing and we expect to recover incremental funds as we continue to work with our insurance providers towards potential additional interim payments and finalization of the claim in an expeditious manner, shifting back to our normal quarterly results. Discussion Also included in our results is an approximate $8 million EBITDA benefit excluding LCM Impacts related to PBS equity investment in St. Bernard Renewables FDR produced an average of 16,700 barrels per day of renewable diesel in the first quarter. FDR’s production was as expected, but results reflect the impact of improving market conditions in the renewable fuel space with the finalization of the RVO in March. With the setting of the 2026-27 RVO, the markets now have the ability to stabilize and should result in favorable margins. PBF’s cash used in operations for the quarter was $324 million, which includes a working capital draw of approximately $340 million, mainly due to movements in inventory and the impact on our net payable position as a result of rapidly moving commodity prices. On our last call we mentioned our expectations for elevated first quarter CapEx and working capital outflows primarily related to the Martinez restart and normal seasonal inventory patterns. The capital spending for the Martinez rebuild is essentially behind us and we expect working capital normalize as operations restart and full cash Invested in consolidated CapEx for the quarter was $320 million which includes refining, corporate and logistics. This amount excludes first quarter capital of approximately $189 million related to the Martinez incident. On the surface, the Q1 figure might be slightly higher than expected and this is because it includes approximately $100 million of net carryover from 2025 that had not been cash settled at year end. The balance is our normal quarterly incurred amount including including the turnaround at Torrance. Given that and the noise related to the Martinez rebuild, it would be helpful to more broadly consider the 2025 and 2026 capital programs over a two year period. We ended the quarter with $542 million in cash and approximately $2.3 billion of debt to debt. At quarter end, our net debt TO cap was 36% and our current liquidity is approximately $2.4 billion. Based on current commodity prices, cash and borrowing capacity. Under our abl, our net debt increased in the first quarter due to planned capital expenditures, continued spend on the Martinez restart and working capital outflows, primarily related to a build in inventory going forward. Inventory should normalize as operations ramp up and we should see a resulting tailwind in working capital cash flows. Additionally, with our capital spend for the Martinez rebuild predominantly behind us, we expect to further progress our Martinez insurance claim and receive additional payments once realized. These factors alone should principally offset the increase in net debt experienced in Q1. Maintaining our firm financial footing and a resilient balance sheet remain priorities as we look ahead. We expect to use periods of strength to focus on reducing both our gross and net debt Operator, we completed our opening remarks and we’d be pleased to take any questions.
OPERATOR
Thank you. In a moment we will open the call to questions. The company requests that all callers limit each turn to one question …
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