UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
(Mark one)
|
| | | | |
x☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: September 30, 20152022
Or
or |
| | | | |
¨☐ | 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: 001-35764
Commission File Number: 333-206728-02
PBF ENERGY INC.
PBF ENERGY COMPANY LLC
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| Delaware | 45-3763855 |
| Delaware | 61-1622166 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
DELAWARE | | 61-1622166 |
(State or other jurisdiction of
incorporation or organization)
| | (I.R.S. Employer
Identification No.)
|
| |
One Sylvan Way, Second Floor
Parsippany, New Jersey | | 07054 |
| Parsippany | New Jersey | 07054 |
| (Address of principal executive offices) | | (Zip Code) |
(973) 455-7500
(Registrant’sRegistrants’ 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 Stock | par value $.001 | PBF | 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.
PBF Energy Inc. Yes [x] No [ ]
PBF Energy Company LLC Yes [x] No [x][ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
PBF Energy Inc. Yes [x] No [ ]
PBF Energy Company LLC Yes [x] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer”filer,” “smaller reporting company”, and
“smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PBF Energy Inc. | Large accelerated filer | ☑ | Accelerated filer | o | | Accelerated filer o
| | Non-accelerated filerþ | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
| PBF Energy Company LLC | Large accelerated filer | ☐ | Accelerated filer | o | 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.
PBF Energy Inc. ☐
PBF Energy Company LLC ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
PBF Energy Inc. Yes [ ]☐ No [x]☑
PBF Energy Company LLC Yes ☐ No ☑
As of October 24, 2022, PBF Energy Inc. had 122,519,827 shares of Class A common stock and 13 shares of Class B common stock outstanding. PBF Energy Inc. is the sole managing member of, and owner of an equity interest representing approximately 99.3% of the outstanding economic interest in PBF Energy Company LLC as of September 30, 2022. There is no trading in the membership interest of PBF Energy Company LLC and therefore an aggregate market value based on such is not determinable. PBF Energy Company LLC has no common stock outstanding.
As of December 4, 2015, approximately 95.1% of the outstanding economic interests in PBF Energy Company LLC were owned by PBF Energy Inc. and the remaining economic interests were held by the members of PBF Energy Company LLC, other than PBF Energy Inc.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 20152022
TABLE OF CONTENTS
| | | | | | | | | | | | | | |
| CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS | |
| | | | |
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS | |
| | | | |
| |
| | | |
| | ITEM 1. | | |
| | PBF Energy Inc. | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | PBF Energy Company LLC | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| |
| | | | |
| | ITEM 2. | | |
| | ITEM 3. | | |
| | ITEM 4. | | |
| |
| |
| | | |
| | ITEM 1. | | |
| | | | |
| | ITEM 1A.6. | | |
| | ITEM 2 | | |
| | ITEM 6. | | |
| |
EXPLANATORY NOTE
This combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 (this “Form 10-Q”) is filed by PBF Energy Inc. (“PBF Energy”) and PBF Energy Company LLC (“PBF LLC”),. Each Registrant hereto is filing on its own behalf all of the information contained in this report that relates to such Registrant. Each Registrant hereto is not filing any information that does not relate to such Registrant, and therefore makes no representation as to any such information. PBF Energy is a Delaware limited liability company and holding company whose primary asset is an equity interest in PBF LLC. PBF Energy is the sole managing member is PBF Energy Inc. ("PBF Energy"). As of, September 30, 2015,and owner of an equity interest representing approximately 94.4%99.3% of the outstanding economic interests in PBF LLC were owned byas of September 30, 2022. PBF Energy operates and controls all of the remaining economic interests were held bybusiness and affairs and consolidates the membersfinancial results of PBF LLC, other than PBF Energy. PBF LLC and its subsidiaries' business and affairs are operated and controlled by PBF Energy.subsidiaries. PBF LLC is a holding company for the companies that directly and indirectly own and operate PBF Energy'sour business. PBF Holding Company LLC (“PBF Holding”) is a wholly-owned subsidiary of PBF LLC.LLC and PBF Finance Corporation (“PBF Finance”) is a wholly-owned subsidiary of PBF Holding. As of September 30, 2022, PBF LLC also holds a 53.7%47.7% limited partner interest and a non-economic general partner interest and all of the incentive distribution rights in PBF Logistics LP ("PBFX" or the "Partnership"(“PBFX”), a publicly traded master limited partnership.partnership (“MLP”). PBF LLC,Energy, through its ownership of the general partner of PBFX,PBF LLC, consolidates the financial results of PBFX and its subsidiaries and records a noncontrolling interest in its consolidated financial statements representing the economic interests of PBFX's unit holdersPBFX’s unitholders other than PBF LLC. Collectively, PBF LLCEnergy and its consolidated subsidiaries, including PBF LLC, PBF Holding, and PBFX are referred to hereinafter as the "Company"“Company” unless the context otherwise requires. Discussions or areas of this report that either apply only to PBF Energy or PBF LLC are clearly noted in such sections. Unless the context indicates otherwise, the terms “we,” “us,” and “our” refer to both PBF Energy and PBF LLC and its consolidated subsidiaries.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain “forward-looking statements”, as defined in the Private Securities Litigation Reform Act of 1995 (“PSLRA”), of expected future developments that 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 strategies, objectives, intentions, resources and expectations regarding future industry trends are forward-looking statements.statements made under the safe harbor provisions of the PSLRA except to the extent such statements relate to the operations of a partnership or limited liability company. 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, and, 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 uponon 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 in the section entitled “Risk Factors” in our prospectus dated October 30, 2015 (Registration No. 333-206728) filed with the SEC on October 30, 2015 (the “Prospectus”)under “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this QuarterlyForm 10-Q, the Annual Report on Form 10-Q.10-K for the year ended December 31, 2021 of PBF Energy and PBF LLC, which we refer to as our 2021 Annual Report on Form 10-K, and in our other filings with the U.S. Securities and Exchange Commission. All forward-looking information in this Quarterly Report on 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:
•supply, demand, prices and other market conditions for our products or crude oil, including volatility in commodity prices;prices or constraints arising from federal, state or local governmental actions or environmental and/or social activists that reduce crude oil production or availability in the regions in which we operate our pipelines and facilities;
•the possibility that the Merger Transaction (as defined in ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations) may not be consummated in the anticipated timeframe, on the contemplated terms or at all;
•the possibility that the expected synergies and value creation from the Merger Transaction will not be realized, or will not be realized within the expected time period;
•the risk that unexpected costs will be incurred in connection with the completion of the Merger Transaction;
•the risk that potential litigation in connection with the Merger Transaction may affect the timing or occurrence of the Merger Transaction or result in significant costs to us;
•the effects related to or resulting from Russia's military action in Ukraine, including the imposition of competitionadditional sanctions and export controls, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environment;
•the effectiveness of our crude oil sourcing strategies, including our crude by rail strategy and related commitments;
•our obligation to buy Renewable Identification Numbers (“RINs”) and market risks related to the volatility in our markets;the price of RINs required to comply with the Renewable Fuel Standard and greenhouse gas (“GHG”) emission credits required to comply with various GHG emission programs, such as Assembly Bill 32 (“AB 32”);
•changes in currency exchange rates, interest rates and capital costs;
•adverse developments in our relationship with both our key employees and unionized employees;
•our ability to operate our businesses efficiently, manage capital expenditures and costs (including general and administrative expenses) and generate earnings and cash flow;
•our substantial indebtedness;expectations with respect to our capital spending and turnaround projects;
•the continued effect of the coronavirus (“COVID-19”) pandemic, including resurgences and variants of the virus, as well as related governmental and consumer responses on our business, financial condition and results of operations;
•the impact of current and future laws, rulings and governmental regulations, including restrictions on the exploration and/or production of crude oil in the state of California, the implementation of rules and regulations regarding transportation of crude oil by rail or in response to the potential impacts of climate change, decarbonization and future energy transition;
•adverse impacts related to legislation by the federal government lifting the restrictions on exporting U.S. crude oil or subjecting us to trade and sanctions laws, which change frequently as a result of foreign policy developments, and which may necessitate changes to our crude oil acquisition activities;
•our ability to target and execute expense reduction measures and achieve opportunities to improve our liquidity, including continued repurchases of our outstanding debt securities or otherwise further reducing our debt, and/or potential sales of non-operating assets or other real property;
•political pressure and influence of environmental groups and other stakeholders on decisions and policies related to the refining and processing of crude oil and refined products, and the related adverse impacts from changes in our regulatory environment, such as the effects of compliance with AB 32, or from actions taken by environmental interest groups;
•the risk of cyber-attacks;
•our increased dependence on technology;
•the effects of competition in our markets;
•the inability of our subsidiaries to freely pay dividends or make distributions to us;
•our ability to make acquisitions or investments, including in renewable diesel production, on any announced time frame or at all, and to realize the benefits from such acquisitions or investments;
•liabilities arising from recent acquisitions or investments that are unforeseen or exceeded our expectation;
•our expectations and timing with respect to our acquisition activity and whether such acquisitions are accretive or dilutive to shareholders;
•adverse developments in our relationship with both our key employees and unionized employees;
•our indebtedness, including the impact of potential downgrades to our corporate credit rating, and unsecured notes;
•changes in currency exchange rates, interest rates and capital costs;
•restrictive covenants in our indebtedness that may adversely affect our operational flexibility;
•counterparty credit and performance risk exposure related to our supply and inventory intermediation arrangements expose us to counterparty credit and performance risk;arrangements;
•termination of our third amended and restated inventory intermediation agreement (“Third Inventory Intermediation AgreementsAgreement”) with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc. (“J. Aron”), which is scheduled to expire in December 2024 and could have a material adverse effect on our liquidity, as we would be required to finance our crude oil, intermediate and refined products inventory covered by the agreements.agreement. Additionally, we are obligated to repurchase from J. Aron certain crude oil, intermediates and finished products located at the Paulsboro and Delaware City refineries’ storage tanks(the “J. Aron Products”) upon termination of these agreements;the agreement;
•restrictive covenants in our indebtedness that may adversely affect our operational flexibility or ability to make distributions;
•payments by PBF Energy to the current and former holders of PBF LLC Series A Units and PBF LLC Series B Units under thePBF Energy’s tax receivable agreement entered with the PBF LLC Series A and PBF LLC Series B unitholders (the “Tax Receivable Agreement”) for certain tax benefits PBF Energywe may claim;
•our assumptions regarding payments arising under the tax receivable agreementPBF Energy’s Tax Receivable Agreement and other arrangements relating to our organizational structure are subject to change due to various factors, including, among other factors, the timing of exchanges of PBF LLC Series A Units for shares of PBF Energy'sEnergy Class A common stock as contemplated by the tax receivable agreement,Tax Receivable Agreement, the price of PBF Energy'sEnergy Class A common stock at the time of such exchanges, the extent to which such exchanges are taxable, and the amount and timing of our income;
•our expectations and timing with respect to our acquisition activity and whether such acquisitions are accretive or dilutive to PBF Energy's shareholders;
•our expectations and timing with respect to our capital improvement and turnaround projects;
•the status of an air permit to transfer crude through the Delaware City refinery's dock;
•the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions duerelated to problems at PBFX or with third partythird-party logistics infrastructure or operations, including pipeline, marine and rail transportation;
•the possibility that we might reduce or not make further dividend payments;
•the inability of our subsidiaries to freely pay dividends or make distributions to us;
•the impact of current and future laws, rulings and governmental regulations, including the implementation of rules and regulations regarding transportation of crude oil by rail;
•adverse impacts related to any change by the federal government in the restrictions on exporting U.S. crude oil including relaxing limitations on the export of certain types of crude oil or condensates or the lifting of the restrictions entirely;
•market risks related to the volatility in the price of Renewable Identification Numbers ("RINS") required to comply with the Renewable Fuel Standards;
•adverse impacts from changes in our regulatory environment or actions taken by environmental interest groups;
•our ability to consummate the pending acquisition of the ownership interests of the Torrance refinery and related logistics assets (collectively, the "Torrance Acquisition"), the timing for the closing of such acquisition and our plans for financing such acquisition;
•our ability to complete the successful integration of the completed acquisition of Chalmette Refining, L.L.C and related logistic assets (collectively, the "Chalmette Acquisition") and the pending Torrance Acquisition into our business and to realize the benefits from such acquisitions;
•unforeseen liabilities associated with the Chalmette Acquisition and/or Torrance Acquisition;
•the costs of PBF Energy being a public company, including Sarbanes-Oxley Act compliance;
•risk associated with the operation of PBFX as a separate, publicly-traded entity; and
•potential tax consequences related to our investment in PBFX; and
•receipt of regulatory approvals and compliance with contractual obligations required in connection with PBFX.
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 Quarterly Report on 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 Quarterly Report on Form 10-Q. Except as required by applicable law, including the securities laws of the United States, we do not intend 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 I – FINANCIAL INFORMATION
Item 1. Financial Statements
PBF ENERGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions, except share and per share data) | | | | | | | | | | | |
| September 30,
2022 | | December 31,
2021 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents (PBFX: $44.9 and $33.9, respectively) | $ | 1,908.6 | | | $ | 1,341.5 | |
| Accounts receivable | 1,630.2 | | | 1,277.6 | |
| Inventories | 2,689.5 | | | 2,505.1 | |
| Prepaid and other current assets | 343.6 | | | 75.0 | |
| Total current assets | 6,571.9 | | | 5,199.2 | |
| Property, plant and equipment, net (PBFX: $764.5 and $787.3, respectively) | 5,132.6 | | | 4,902.2 | |
| | | |
| Lease right of use assets | 686.6 | | | 717.1 | |
| | | |
| Deferred charges and other assets, net | 913.2 | | | 822.9 | |
| Total assets | $ | 13,304.3 | | | $ | 11,641.4 | |
| LIABILITIES AND EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 912.3 | | | $ | 911.7 | |
| Accrued expenses | 3,850.6 | | | 2,740.4 | |
| | | |
| | | |
| Deferred revenue | 74.8 | | | 42.7 | |
| | | |
| Current operating lease liabilities | 62.4 | | | 64.9 | |
| | | |
| Current debt (PBFX: $523.8 and $0.0, respectively) | 523.8 | | | — | |
| Total current liabilities | 5,423.9 | | | 3,759.7 | |
| | | |
| Long-term debt (PBFX: $0.0 and $622.5, respectively) | 1,447.7 | | | 4,295.8 | |
| Payable to related parties pursuant to Tax Receivable Agreement | 336.4 | | | 48.3 | |
| Deferred tax liabilities | 276.9 | | | 111.4 | |
| Long-term operating lease liabilities | 554.6 | | | 570.4 | |
| Long-term financing lease liabilities | 60.8 | | | 70.6 | |
| Other long-term liabilities | 327.5 | | | 252.4 | |
| Total liabilities | 8,427.8 | | | 9,108.6 | |
| Commitments and contingencies (Note 8) | | | |
| Equity: | | | |
| PBF Energy Inc. equity | | | |
| Class A common stock, $0.001 par value, 1,000,000,000 shares authorized, 122,303,893 shares outstanding at September 30, 2022, 120,319,577 shares outstanding at December 31, 2021 | 0.1 | | | 0.1 | |
| Class B common stock, $0.001 par value, 1,000,000 shares authorized, 13 shares outstanding at September 30, 2022, 15 shares outstanding at December 31, 2021 | — | | | — | |
| Preferred stock, $0.001 par value, 100,000,000 shares authorized, no shares outstanding at September 30, 2022 and December 31, 2021 | — | | | — | |
| Treasury stock, at cost, 6,745,361 shares outstanding at September 30, 2022 and 6,676,809 shares outstanding at December 31, 2021 | (170.6) | | | (169.1) | |
| Additional paid in capital | 2,930.7 | | | 2,874.0 | |
| Retained earnings (accumulated deficit) | 1,442.9 | | | (796.1) | |
| Accumulated other comprehensive income | 15.1 | | | 17.3 | |
| Total PBF Energy Inc. equity | 4,218.2 | | | 1,926.2 | |
| Noncontrolling interest | 658.3 | | | 606.6 | |
| Total equity | 4,876.5 | | | 2,532.8 | |
| Total liabilities and equity | $ | 13,304.3 | | | $ | 11,641.4 | |
See notes to condensed consolidated financial statements.
7
PBF ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions, except share and per share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Revenues | $ | 12,764.6 | | | $ | 7,186.7 | | | $ | 35,984.0 | | | $ | 19,009.4 | |
| Cost and expenses: | | | | | | | |
| Cost of products and other | 10,417.3 | | | 6,374.7 | | | 30,004.0 | | | 16,666.4 | |
| Operating expenses (excluding depreciation and amortization expense as reflected below) | 646.0 | | | 530.5 | | | 1,904.0 | | | 1,495.6 | |
| Depreciation and amortization expense | 128.1 | | | 112.8 | | | 366.5 | | | 338.5 | |
| Cost of sales | 11,191.4 | | | 7,018.0 | | | 32,274.5 | | | 18,500.5 | |
| General and administrative expenses (excluding depreciation and amortization expense as reflected below) | 168.2 | | | 64.1 | | | 374.9 | | | 166.9 | |
| Depreciation and amortization expense | 2.0 | | | 3.4 | | | 5.8 | | | 10.1 | |
| Change in fair value of contingent consideration | 3.0 | | | 0.1 | | | 130.9 | | | 26.2 | |
| | | | | | | |
| Loss (gain) on sale of assets | — | | | 0.2 | | | 0.3 | | | (0.4) | |
| Total cost and expenses | 11,364.6 | | | 7,085.8 | | | 32,786.4 | | | 18,703.3 | |
| Income from operations | 1,400.0 | | | 100.9 | | | 3,197.6 | | | 306.1 | |
| Other income (expense): | | | | | | | |
| Interest expense, net | (52.7) | | | (82.0) | | | (216.6) | | | (243.1) | |
| Change in Tax Receivable Agreement liability | (1.7) | | | — | | | (288.2) | | | — | |
| Change in fair value of catalyst obligations | (2.6) | | | 17.8 | | | (0.3) | | | 13.6 | |
| (Loss) gain on extinguishment of debt | (69.9) | | | 60.3 | | | (66.1) | | | 60.3 | |
| Other non-service components of net periodic benefit cost | 2.2 | | | 2.0 | | | 6.6 | | | 5.9 | |
| Income before income taxes | 1,275.3 | | | 99.0 | | | 2,633.0 | | | 142.8 | |
| Income tax expense | 191.1 | | | 20.3 | | | 316.3 | | | 16.4 | |
| Net income | 1,084.2 | | | 78.7 | | | 2,316.7 | | | 126.4 | |
| Less: net income attributable to noncontrolling interests | 27.8 | | | 19.6 | | | 77.7 | | | 60.7 | |
| Net income attributable to PBF Energy Inc. stockholders | $ | 1,056.4 | | | $ | 59.1 | | | $ | 2,239.0 | | | $ | 65.7 | |
| | | | | | | |
| Weighted-average shares of Class A common stock outstanding | | | | | | | |
| Basic | 122,113,570 | | | 120,268,046 | | | 121,299,726 | | | 120,230,369 | |
| Diluted | 126,585,809 | | | 121,354,089 | | | 125,092,933 | | | 121,607,207 | |
| Net income available to Class A common stock per share: | | | | | | | |
| Basic | $ | 8.65 | | | $ | 0.49 | | | $ | 18.46 | | | $ | 0.55 | |
| Diluted | $ | 8.40 | | | $ | 0.49 | | | $ | 18.03 | | | $ | 0.54 | |
See notes to condensed consolidated financial statements.
8
PBF ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in millions)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Net income | $ | 1,084.2 | | | $ | 78.7 | | | $ | 2,316.7 | | | $ | 126.4 | |
| Other comprehensive income (loss): | | | | | | | |
| Unrealized loss on available for sale securities | (0.9) | | | — | | | (2.6) | | | (0.5) | |
| | | | | | | |
| Net gain on pension and other post-retirement benefits | 0.3 | | | 0.2 | | | 0.4 | | | 0.6 | |
| Total other comprehensive income (loss) | (0.6) | | | 0.2 | | | (2.2) | | | 0.1 | |
| Comprehensive income | 1,083.6 | | | 78.9 | | | 2,314.5 | | | 126.5 | |
| Less: comprehensive income attributable to noncontrolling interests | 27.8 | | | 19.6 | | | 77.7 | | | 60.7 | |
| Comprehensive income attributable to PBF Energy Inc. stockholders | $ | 1,055.8 | | | $ | 59.3 | | | $ | 2,236.8 | | | $ | 65.8 | |
See notes to condensed consolidated financial statements.
9
PBF ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, in millions, except share and per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A
Common Stock | Class B
Common Stock | Additional
Paid-in
Capital | Retained
Earnings (Accumulated Deficit) | Accumulated
Other
Comprehensive
Income (Loss) | Treasury Stock | Noncontrolling
Interest | Total
Equity |
| Shares | Amount | Shares | Amount | Shares | Amount |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Balance, June 30, 2022 | 121,924,401 | | $ | 0.1 | | 13 | | $ | — | | $ | 2,915.8 | | $ | 386.5 | | $ | 15.7 | | 6,742,719 | | $ | (170.5) | | $ | 638.9 | | $ | 3,786.5 | |
| Comprehensive income (loss) | — | | — | | — | | — | | — | | 1,056.4 | | (0.6) | | — | | — | | 27.8 | | 1,083.6 | |
| | | | | | | | | | | |
| Distributions to PBF Logistics LP public unitholders | — | | — | | — | | — | | — | | — | | — | | — | | — | | (10.1) | | (10.1) | |
| Stock-based compensation expense | — | | — | | — | | — | | 5.3 | | — | | — | | — | | — | | 0.7 | | 6.0 | |
| Transactions in connection with stock-based compensation plans | 382,134 | | — | | | — | | 9.5 | | — | | — | | — | | — | | — | | 9.5 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Treasury stock purchases | (2,642) | | — | | — | | — | | 0.1 | | — | | — | | 2,642 | | (0.1) | | — | | — | |
| Other | — | | — | | — | | — | | — | | — | | — | | — | | — | | 1.0 | | 1.0 | |
| Balance, September 30, 2022 | 122,303,893 | | $ | 0.1 | | 13 | | $ | — | | $ | 2,930.7 | | $ | 1,442.9 | | $ | 15.1 | | 6,745,361 | | $ | (170.6) | | $ | 658.3 | | $ | 4,876.5 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Balance, June 30, 2021 | 120,247,995 | | $ | 0.1 | | 16 | | $ | — | | $ | 2,862.5 | | $ | (1,020.5) | | $ | (9.2) | | 6,636,172 | | $ | (168.5) | | $ | 582.5 | | $ | 2,246.9 | |
| Comprehensive income | — | | — | | — | | — | | — | | 59.1 | | 0.2 | | — | | — | | 19.6 | | 78.9 | |
| | | | | | | | | | | |
| Distributions to PBF Logistics LP public unitholders | — | | — | | — | | — | | — | | — | | — | | — | | — | | (10.0) | | (10.0) | |
| Stock-based compensation expense | — | | — | | — | | — | | 5.5 | | — | | — | | — | | — | | 0.8 | | 6.3 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Treasury stock purchases | (2,486) | | — | | — | | — | | — | | — | | — | | 2,486 | | — | | — | | — | |
| | | | | | | | | | | |
| Balance, September 30, 2021 | 120,245,509 | | $ | 0.1 | | 16 | | $ | — | | $ | 2,868.0 | | $ | (961.4) | | $ | (9.0) | | 6,638,658 | | $ | (168.5) | | $ | 592.9 | | $ | 2,322.1 | |
See notes to condensed consolidated financial statements.
10
PBF ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, in millions, except share and per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A
Common Stock | Class B
Common Stock | Additional
Paid-in
Capital | Retained
Earnings (Accumulated Deficit) | Accumulated
Other
Comprehensive
Income (Loss) | Treasury Stock | Noncontrolling
Interest | Total
Equity |
| | Shares | Amount | Shares | Amount | Shares | Amount |
| Balance, December 31, 2021 | 120,319,577 | | $ | 0.1 | | 15 | | $ | — | | $ | 2,874.0 | | $ | (796.1) | | $ | 17.3 | | 6,676,809 | | $ | (169.1) | | $ | 606.6 | | $ | 2,532.8 | |
| Comprehensive income (loss) | — | | — | | — | | — | | — | | 2,239.0 | | (2.2) | | — | | — | | 77.7 | | 2,314.5 | |
| | | | | | | | | | | |
| Distributions to PBF Logistics LP public unitholders | — | | — | | — | | — | | — | | — | | — | | — | | — | | (30.2) | | (30.2) | |
| Stock-based compensation expense | — | | — | | — | | — | | 18.5 | | — | | — | | — | | — | | 4.2 | | 22.7 | |
| Transactions in connection with stock-based compensation plans | 2,016,876 | | — | | — | | — | | 36.6 | | — | | — | | — | | — | | (1.3) | | 35.3 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Exchange of PBF Energy Company LLC Series A Units for PBF Energy Class A common stock | 35,992 | | — | | (2) | | — | | 0.1 | | — | | — | | — | | — | | (0.1) | | — | |
| | | | | | | | | | | |
| Treasury stock purchases | (68,552) | | — | | — | | — | | 1.5 | | — | | — | | 68,552 | | (1.5) | | — | | — | |
| Other | — | | — | | — | | — | | — | | — | | — | | — | | — | | 1.4 | | 1.4 | |
| Balance, September 30, 2022 | 122,303,893 | | $ | 0.1 | | 13 | | $ | — | | $ | 2,930.7 | | $ | 1,442.9 | | $ | 15.1 | | 6,745,361 | | $ | (170.6) | | $ | 658.3 | | $ | 4,876.5 | |
| | | | | | | | | | | |
| Balance, December 31, 2020 | 120,101,641 | | $ | 0.1 | | 16 | | $ | — | | $ | 2,846.2 | | $ | (1,027.1) | | $ | (9.1) | | 6,549,449 | | $ | (167.3) | | $ | 559.5 | | $ | 2,202.3 | |
| Comprehensive income | — | | — | | — | | — | | — | | 65.7 | | 0.1 | | — | | — | | 60.7 | | 126.5 | |
| | | | | | | | | | | |
| Distributions to PBF Logistics LP public unitholders | — | | — | | — | | — | | — | | — | | — | | — | | — | | (30.0) | | (30.0) | |
| Stock-based compensation expense | — | | — | | — | | — | | 18.3 | | — | | — | | — | | — | | 4.6 | | 22.9 | |
| Transactions in connection with stock-based compensation plans | 188,722 | | — | | — | | — | | (0.8) | | — | | — | | — | | — | | (1.0) | | (1.8) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Exchange of PBF Energy Company LLC Series A Units for PBF Energy Class A common stock | 44,355 | | — | | — | | — | | 0.2 | | — | | — | | — | | — | | (0.2) | | — | |
| Treasury stock purchases | (89,209) | | — | | — | | — | | 1.2 | | — | | — | | 89,209 | | (1.2) | | — | | — | |
| Other | — | | — | | — | | — | | 2.9 | | — | | — | | — | | — | | (0.7) | | 2.2 | |
| Balance, September 30, 2021 | 120,245,509 | | $ | 0.1 | | 16 | | $ | — | | $ | 2,868.0 | | $ | (961.4) | | $ | (9.0) | | 6,638,658 | | $ | (168.5) | | $ | 592.9 | | $ | 2,322.1 | |
See notes to condensed consolidated financial statements.
11
PBF ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2022 | | 2021 |
| Cash flows from operating activities: | | | |
| Net income | $ | 2,316.7 | | | $ | 126.4 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 388.9 | | | 361.2 | |
| | | |
| Stock-based compensation | 24.9 | | | 24.7 | |
| Change in fair value of catalyst obligations | 0.3 | | | (13.6) | |
| Deferred income taxes | 165.5 | | | 8.5 | |
| Change in Tax Receivable Agreement liability | 288.2 | | | — | |
| Non-cash change in inventory repurchase obligations | (21.1) | | | 46.0 | |
| | | |
| Non-cash lower of cost or market inventory adjustment | — | | | (669.6) | |
| Change in fair value of contingent consideration | 130.9 | | | 26.2 | |
| Loss (gain) on extinguishment of debt | 66.1 | | | (60.3) | |
| Pension and other post-retirement benefit costs | 35.7 | | | 38.0 | |
| Loss (gain) on sale of assets | 0.3 | | | (0.4) | |
| | | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | (352.6) | | | (543.9) | |
| Inventories | (184.4) | | | (475.6) | |
| Prepaid and other current assets | (268.6) | | | (67.0) | |
| Accounts payable | (15.4) | | | 34.2 | |
| Accrued expenses | 1,041.2 | | | 1,574.7 | |
| Deferred revenue | 32.1 | | | (4.9) | |
| | | |
| Other assets and liabilities | 0.2 | | | (78.9) | |
| Net cash provided by operating activities | $ | 3,648.9 | | | $ | 325.7 | |
| | | |
| Cash flows from investing activities: | | | |
| Expenditures for property, plant and equipment | (391.5) | | | (142.0) | |
| Expenditures for deferred turnaround costs | (240.3) | | | (64.6) | |
| Expenditures for other assets | (51.9) | | | (20.6) | |
| | | |
| Net cash used in investing activities | $ | (683.7) | | | $ | (227.2) | |
See notes to condensed consolidated financial statements.
12
PBF ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(unaudited, in millions)
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2022 | | 2021 |
| Cash flows from financing activities: | | | |
| | | |
| | | |
| | | |
| Distributions to PBFX public unitholders | $ | (29.5) | | | $ | (29.3) | |
| | | |
| Distributions to T&M and Collins shareholders | — | | | (0.7) | |
| | | |
| | | |
| Repurchase of 2028 6.00% Senior Notes | (21.1) | | | (69.7) | |
| Repurchase of 2025 7.25% Senior Notes | (4.8) | | | (21.2) | |
| Redemption of 2025 9.25% Senior Secured Notes | (1,307.4) | | | — | |
| Proceeds from revolver borrowings | 400.0 | | | — | |
| Repayments of revolver borrowings | (1,300.0) | | | — | |
| | | |
| Repayments of PBFX revolver borrowings | (100.0) | | | (75.0) | |
| Repayments of PBF Rail Term Loan | — | | | (5.5) | |
| Settlement of precious metal catalyst obligations | (37.3) | | | (18.5) | |
| | | |
| Payments on financing leases | (8.5) | | | (10.7) | |
| Proceeds from insurance premium financing | 10.5 | | | 7.0 | |
| | | |
| Payments of contingent consideration | (2.7) | | | (12.2) | |
| | | |
| | | |
| Deferred financing costs and other, net | 2.7 | | | 0.3 | |
| Net cash used in financing activities | $ | (2,398.1) | | | $ | (235.5) | |
| | | |
| Net change in cash and cash equivalents | 567.1 | | | (137.0) | |
| Cash and cash equivalents, beginning of period | 1,341.5 | | | 1,609.5 | |
| Cash and cash equivalents, end of period | $ | 1,908.6 | | | $ | 1,472.5 | |
| | | |
| Supplemental cash flow disclosures | | | |
| Non-cash activities: | | | |
| Accrued and unpaid capital expenditures | $ | 106.8 | | | $ | 65.0 | |
| Assets acquired or remeasured under operating and financing leases | 36.1 | | | (126.5) | |
| | | |
| Cash paid during the period for: | | | |
| Interest (net of capitalized interest of $15.9 million and $5.5 million in 2022 and 2021, respectively) | $ | 202.8 | | | $ | 196.6 | |
| Income taxes | 63.3 | | | 5.3 | |
See notes to condensed consolidated financial statements.
13
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands,millions, except unit and per unit data)
| | | | September 30,
2015 | | December 31,
2014 | | September 30,
2022 | | December 31,
2021 |
| ASSETS | | | | ASSETS | | | |
| Current assets: | | | | Current assets: | |
| Cash and cash equivalents | $ | 471,582 |
| | $ | 367,780 |
| |
| Cash and cash equivalents (PBFX: $44.9 and $33.9, respectively) | | Cash and cash equivalents (PBFX: $44.9 and $33.9, respectively) | $ | 1,905.7 | | | $ | 1,339.8 | |
| Accounts receivable | 395,624 |
| | 551,269 |
| Accounts receivable | 1,630.2 | | | 1,277.6 | |
| Inventories | 1,101,182 |
| | 1,102,261 |
| Inventories | 2,689.5 | | | 2,505.1 | |
| Prepaid expense and other current assets | 71,398 |
| | 32,452 |
| |
| | Prepaid and other current assets | | Prepaid and other current assets | 343.6 | | | 75.0 | |
| Total current assets | 2,039,786 |
| | 2,053,762 |
| Total current assets | 6,569.0 | | | 5,197.5 | |
| Property, plant and equipment, net (PBFX: $764.5 and $787.3, respectively) | | Property, plant and equipment, net (PBFX: $764.5 and $787.3, respectively) | 5,132.6 | | | 4,902.2 | |
| Lease right of use assets | | Lease right of use assets | 686.6 | | | 717.1 | |
| | | | | |
| Property, plant and equipment, net | 1,960,149 |
| | 1,936,839 |
| |
| Marketable securities | 234,249 |
| | 234,930 |
| |
| Deferred charges and other assets, net | 311,420 |
| | 332,669 |
| Deferred charges and other assets, net | 913.2 | | | 822.9 | |
| Total assets | $ | 4,545,604 |
| | $ | 4,558,200 |
| Total assets | $ | 13,301.4 | | | $ | 11,639.7 | |
| | | | | |
| LIABILITIES AND EQUITY | | | | LIABILITIES AND EQUITY | | | |
| Current liabilities: | | | | Current liabilities: | |
| Accounts payable | $ | 212,772 |
| | $ | 335,268 |
| Accounts payable | $ | 912.3 | | | $ | 911.7 | |
| Accrued expenses | 908,498 |
| | 1,130,905 |
| Accrued expenses | 3,820.0 | | | 2,792.6 | |
| Deferred revenue | 4,174 |
| | 1,227 |
| Deferred revenue | 74.8 | | | 42.7 | |
| | Current operating lease liabilities | | Current operating lease liabilities | 62.4 | | | 64.9 | |
| | Current debt (PBFX: $523.8 and $0.0, respectively) | | Current debt (PBFX: $523.8 and $0.0, respectively) | 523.8 | | | — | |
| Total current liabilities | 1,125,444 |
| | 1,467,400 |
| Total current liabilities | 5,393.3 | | | 3,811.9 | |
| | | | | |
| Delaware Economic Development Authority loan | 8,000 |
| | 8,000 |
| |
| Long-term debt | 1,373,122 |
| | 1,252,349 |
| |
| Intercompany note payable | 134,358 |
| | 109,754 |
| |
| Long-term debt (PBFX: $0.0 and $622.5, respectively) | | Long-term debt (PBFX: $0.0 and $622.5, respectively) | 1,447.7 | | | 4,295.8 | |
| Affiliate note payable | | Affiliate note payable | 351.7 | | | 375.2 | |
| Deferred tax liabilities | | Deferred tax liabilities | 24.9 | | | 24.2 | |
| Long-term operating lease liabilities | | Long-term operating lease liabilities | 554.6 | | | 570.4 | |
| Long-term financing lease liabilities | | Long-term financing lease liabilities | 60.8 | | | 70.6 | |
| Other long-term liabilities | 63,119 |
| | 62,750 |
| Other long-term liabilities | 327.5 | | | 252.4 | |
| Total liabilities | 2,704,043 |
| | 2,900,253 |
| Total liabilities | 8,160.5 | | | 9,400.5 | |
| | | | | |
| Commitments and contingencies (Note 9) |
| |
| |
| | | | | |
| Commitments and contingencies (Note 8) | | Commitments and contingencies (Note 8) | |
| Series B Units, 1,000,000 issued and outstanding, no par or stated value | 5,110 |
| | 5,110 |
| Series B Units, 1,000,000 issued and outstanding, no par or stated value | 5.1 | | | 5.1 | |
| | | | | |
| Equity: | | | | |
| Series A Units, 5,111,358 and 9,170,696 issued and outstanding, as of September 30, 2015 and December 31, 2014, no par or stated value | 50,847 |
| | 91,179 |
| |
| Series C Units, 85,893,850 and 81,981,119 issued and outstanding, as of September 30, 2015 and December 31, 2014, no par or stated value | 922,588 |
| | 865,954 |
| |
| Treasury units, at cost | (150,804 | ) | | (142,731 | ) | |
| Retained earnings/(Accumulated deficit) | 702,448 |
| | 528,942 |
| |
| Accumulated other comprehensive loss | (25,561 | ) | | (26,876 | ) | |
| PBF Energy Company LLC equity: | | PBF Energy Company LLC equity: | |
| Series A Units, 910,457 and 927,990 issued and outstanding at September 30, 2022 and December 31, 2021, no par or stated value | | Series A Units, 910,457 and 927,990 issued and outstanding at September 30, 2022 and December 31, 2021, no par or stated value | 17.5 | | | 17.6 | |
| Series C Units, 122,325,124 and 120,340,808 issued and outstanding at September 30, 2022 and December 31, 2021, no par or stated value | | Series C Units, 122,325,124 and 120,340,808 issued and outstanding at September 30, 2022 and December 31, 2021, no par or stated value | 2,262.9 | | | 2,245.0 | |
| Treasury stock, at cost | | Treasury stock, at cost | (170.6) | | | (169.1) | |
| Retained earnings (accumulated deficit) | | Retained earnings (accumulated deficit) | 2,466.4 | | | (390.9) | |
| Accumulated other comprehensive income | | Accumulated other comprehensive income | 18.1 | | | 20.3 | |
| Total PBF Energy Company LLC equity | 1,499,518 |
| | 1,316,468 |
| Total PBF Energy Company LLC equity | 4,594.3 | | | 1,722.9 | |
| Noncontrolling interest in PBFX | 336,933 |
| | 336,369 |
| |
| Noncontrolling interest | | Noncontrolling interest | 541.5 | | | 511.2 | |
| Total equity | 1,836,451 |
| | 1,652,837 |
| Total equity | 5,135.8 | | | 2,234.1 | |
| Total liabilities, Series B units and equity | $ | 4,545,604 |
| | $ | 4,558,200 |
| Total liabilities, Series B units and equity | $ | 13,301.4 | | | $ | 11,639.7 | |
See notes to condensed consolidated financial statements.
514
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands)millions)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Revenues | $ | 12,764.6 | | | $ | 7,186.7 | | | $ | 35,984.0 | | | $ | 19,009.4 | |
| Cost and expenses: | | | | | | | |
| Cost of products and other | 10,417.3 | | | 6,374.7 | | | 30,004.0 | | | 16,666.4 | |
| Operating expenses (excluding depreciation and amortization expense as reflected below) | 646.0 | | | 530.5 | | | 1,904.0 | | | 1,495.6 | |
| Depreciation and amortization expense | 128.1 | | | 112.8 | | | 366.5 | | | 338.5 | |
| Cost of sales | 11,191.4 | | | 7,018.0 | | | 32,274.5 | | | 18,500.5 | |
| General and administrative expenses (excluding depreciation and amortization expense as reflected below) | 167.3 | | | 63.7 | | | 373.2 | | | 165.3 | |
| Depreciation and amortization expense | 2.0 | | | 3.4 | | | 5.8 | | | 10.1 | |
| Change in fair value of contingent consideration | 3.0 | | | 0.1 | | | 130.9 | | | 26.2 | |
| | | | | | | |
| Loss (gain) on sale of assets | — | | | 0.2 | | | 0.3 | | | (0.4) | |
| Total cost and expenses | 11,363.7 | | | 7,085.4 | | | 32,784.7 | | | 18,701.7 | |
| Income from operations | 1,400.9 | | | 101.3 | | | 3,199.3 | | | 307.7 | |
| Other income (expense): | | | | | | | |
| Interest expense, net | (55.7) | | | (84.8) | | | (224.9) | | | (250.9) | |
| Change in fair value of catalyst obligations | (2.6) | | | 17.8 | | | (0.3) | | | 13.6 | |
| (Loss) gain on extinguishment of debt | (69.9) | | | 60.3 | | | (66.1) | | | 60.3 | |
| Other non-service components of net periodic benefit cost | 2.2 | | | 2.0 | | | 6.6 | | | 5.9 | |
| Income before income taxes | 1,274.9 | | | 96.6 | | | 2,914.6 | | | 136.6 | |
| Income tax expense (benefit) | 10.4 | | | (2.0) | | | 1.1 | | | (16.9) | |
| Net income | 1,264.5 | | | 98.6 | | | 2,913.5 | | | 153.5 | |
| Less: net income attributable to noncontrolling interests | 18.5 | | | 18.9 | | | 56.2 | | | 60.0 | |
| Net income attributable to PBF Energy Company LLC | $ | 1,246.0 | | | $ | 79.7 | | | $ | 2,857.3 | | | $ | 93.5 | |
|
| | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| Revenues | $ | 3,217,640 |
| | $ | 5,260,003 |
| | $ | 9,763,440 |
| | $ | 15,308,155 |
|
| | | | | | | |
| Cost and expenses: | | | | | | | |
| Cost of sales, excluding depreciation | 2,822,444 |
| | 4,670,908 |
| | 8,319,404 |
| | 13,754,048 |
|
| Operating expenses, excluding depreciation | 203,860 |
| | 202,625 |
| | 635,948 |
| | 682,246 |
|
| General and administrative expenses | 50,808 |
| | 37,307 |
| | 125,431 |
| | 106,947 |
|
| (Gain) loss on sale of assets | (142 | ) | | 18 |
| | (1,133 | ) | | (162 | ) |
| Depreciation and amortization expense | 48,133 |
| | 68,010 |
| | 144,401 |
| | 135,887 |
|
| | 3,125,103 |
| | 4,978,868 |
| | 9,224,051 |
| | 14,678,966 |
|
| | | | | | | | |
| Income from operations | 92,537 |
| | 281,135 |
| | 539,389 |
| | 629,189 |
|
| | | | | | | | |
| Other income (expenses): | | | | | | | |
| Change in fair value of catalyst leases | 4,994 |
| | 5,543 |
| | 8,982 |
| | 1,204 |
|
| Interest expense, net | (29,360 | ) | | (24,855 | ) | | (80,183 | ) | | (76,728 | ) |
| Net income | 68,171 |
| | 261,823 |
| | 468,188 |
| | 553,665 |
|
| Less: net income attributable to noncontrolling interests | 9,381 |
| | 4,637 |
| | 26,608 |
| | 7,328 |
|
| Net income attributable to PBF Energy Company LLC | $ | 58,790 |
| | $ | 257,186 |
| | $ | 441,580 |
| | $ | 546,337 |
|
See notes to condensed consolidated financial statements.
615
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands)millions)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Net income | $ | 1,264.5 | | | $ | 98.6 | | | $ | 2,913.5 | | | $ | 153.5 | |
| Other comprehensive income (loss): | | | | | | | |
| Unrealized loss on available for sale securities | (0.9) | | | — | | | (2.6) | | | (0.5) | |
| Net gain on pension and other post-retirement benefits | 0.3 | | | 0.2 | | | 0.4 | | | 0.6 | |
| Total other comprehensive income (loss) | (0.6) | | | 0.2 | | | (2.2) | | | 0.1 | |
| Comprehensive income | 1,263.9 | | | 98.8 | | | 2,911.3 | | | 153.6 | |
| Less: comprehensive income attributable to noncontrolling interests | 18.5 | | | 18.9 | | | 56.2 | | | 60.0 | |
| Comprehensive income attributable to PBF Energy Company LLC | $ | 1,245.4 | | | $ | 79.9 | | | $ | 2,855.1 | | | $ | 93.6 | |
|
| | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| Net income | $ | 68,171 |
| | $ | 261,823 |
| | $ | 468,188 |
| | $ | 553,665 |
|
| Other comprehensive income: | | | | |
| |
|
| Unrealized (loss) gain on available for sale securities | 119 |
| | (160 | ) | | 115 |
| | (75 | ) |
| Net gain on pension and other postretirement benefits | 400 |
| | 242 |
| | 1,200 |
| | 691 |
|
| Total other comprehensive income | 519 |
| | 82 |
| | 1,315 |
| | 616 |
|
| Comprehensive income | 68,690 |
| | 261,905 |
| | 469,503 |
| | 554,281 |
|
| Less: comprehensive income attributable to noncontrolling interests | 9,381 |
| | 4,637 |
| | 26,608 |
| | 7,328 |
|
| Comprehensive income attributable to PBF Energy Company LLC | $ | 59,309 |
| | $ | 257,268 |
| | $ | 442,895 |
| | $ | 546,953 |
|
See notes to condensed consolidated financial statements.
716
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, in millions, except unit data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Series A | Series C | Accumulated
Other
Comprehensive Income (Loss) | Retained
Earnings (Accumulated Deficit) | Noncontrolling
Interest | Treasury Stock | Total Member’s
Equity |
| Units | Amount | Units | Amount |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Balance, June 30, 2022 | 910,457 | | $ | 17.5 | | 121,945,632 | | $ | 2,257.7 | | $ | 18.7 | | $ | 1,220.4 | | $ | 531.4 | | $ | (170.5) | | $ | 3,875.2 | |
| Comprehensive income (loss) | — | | — | | — | | — | | (0.6) | | 1,246.0 | | 18.5 | | — | | 1,263.9 | |
| | | | | | | | | |
| | | | | | | | | |
| Distribution to members | — | | — | | — | | — | | — | | — | | (10.1) | | — | | (10.1) | |
| | | | | | | | | |
| | | | | | | | | |
| Stock-based compensation expense | — | | — | | — | | 5.3 | | — | | — | | 0.7 | | ��� | | 6.0 | |
| Transactions in connection with stock-based compensation plans | — | | — | | 382,134 | | (0.2) | | — | | — | | — | | — | | (0.2) | |
| Treasury stock purchases | — | | — | | (2,642) | | 0.1 | | — | | — | | — | | (0.1) | | — | |
| | | | | | | | | |
| Other | — | | — | | — | | — | | — | | — | | 1.0 | | — | | 1.0 | |
| Balance, September 30, 2022 | 910,457 | | $ | 17.5 | | 122,325,124 | | $ | 2,262.9 | | $ | 18.1 | | $ | 2,466.4 | | $ | 541.5 | | $ | (170.6) | | $ | 5,135.8 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Balance, June 30, 2021 | 994,192 | | $ | 17.8 | | 120,269,226 | | $ | 2,233.7 | | $ | (6.2) | | $ | (676.7) | | $ | 489.3 | | $ | (168.5) | | $ | 1,889.4 | |
| Comprehensive income | — | | — | | — | | — | | 0.2 | | 79.7 | | 18.9 | | — | | 98.8 | |
| | | | | | | | | |
| | | | | | | | | |
| Distribution to members | — | | — | | — | | — | | — | | — | | (10.0) | | — | | (10.0) | |
| Stock-based compensation expense | — | | — | | — | | 5.5 | | — | | — | | 0.8 | | — | | 6.3 | |
| | | | | | | | | |
| Treasury stock purchases | — | | — | | (2,486) | | — | | — | | — | | — | | — | | — | |
| | | | | | | | | |
| | | | | | | | | |
| Balance, September 30, 2021 | 994,192 | | $ | 17.8 | | 120,266,740 | | $ | 2,239.2 | | $ | (6.0) | | $ | (597.0) | | $ | 499.0 | | $ | (168.5) | | $ | 1,984.5 | |
See notes to condensed consolidated financial statements.
17
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, in millions, except unit data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Series A | Series C | Accumulated
Other
Comprehensive Income (Loss) | Retained
Earnings (Accumulated Deficit) | Noncontrolling
Interest | Treasury Stock | Total Member’s
Equity |
| Units | Amount | Units | Amount |
| Balance, December 31, 2021 | 927,990 | | $ | 17.6 | | 120,340,808 | | $ | 2,245.0 | | $ | 20.3 | | $ | (390.9) | | $ | 511.2 | | $ | (169.1) | | $ | 2,234.1 | |
| Comprehensive income (loss) | — | | — | | — | | — | | (2.2) | | 2,857.3 | | 56.2 | | — | | 2,911.3 | |
| | | | | | | | | |
| Exchange of Series A units for PBF Energy Class A common stock | (35,992) | | (0.1) | | 35,992 | | 0.1 | | — | | — | | — | | — | | — | |
| Distribution to members | — | | — | | — | | — | | — | | — | | (30.2) | | — | | (30.2) | |
| | | | | | | | | |
| | | | | | | | | |
| Stock-based compensation expense | — | | — | | — | | 18.5 | | — | | — | | 4.2 | | — | | 22.7 | |
| Transactions in connection with stock-based compensation plans | 18,459 | | — | | 2,016,876 | | (2.2) | | — | | — | | (1.3) | | — | | (3.5) | |
| Treasury stock purchases | — | | — | | (68,552) | | 1.5 | | — | | — | | — | | (1.5) | | — | |
| | | | | | | | | |
| Other | — | | — | | — | | — | | — | | — | | 1.4 | | — | | 1.4 | |
| Balance, September 30, 2022 | 910,457 | | $ | 17.5 | | 122,325,124 | | $ | 2,262.9 | | $ | 18.1 | | $ | 2,466.4 | | $ | 541.5 | | $ | (170.6) | | $ | 5,135.8 | |
| | | | | | | | | |
| Balance, December 31, 2020 | 970,647 | | $ | 17.6 | | 120,122,872 | | $ | 2,220.3 | | $ | (6.1) | | $ | (690.5) | | $ | 466.1 | | $ | (167.3) | | $ | 1,840.1 | |
| Comprehensive income | — | | — | | — | | — | | 0.1 | | 93.5 | | 60.0 | | — | | 153.6 | |
| | | | | | | | | |
| Exchange of Series A units for PBF Energy Class A common stock | (44,355) | | (0.2) | | 44,355 | | 0.2 | | — | | — | | — | | — | | — | |
| Distribution to members | — | | — | | — | | — | | — | | — | | (30.0) | | — | | (30.0) | |
| | | | | | | | | |
| Stock-based compensation expense | — | | — | | — | | 18.3 | | — | | — | | 4.6 | | — | | 22.9 | |
| | | | | | | | | |
| Transactions in connection with stock-based compensation plans | 67,900 | | 0.4 | | 188,722 | | (0.8) | | — | | — | | (1.0) | | — | | (1.4) | |
| Treasury stock purchases | — | | — | | (89,209) | | 1.2 | | — | | — | | — | | (1.2) | | — | |
| | | | | | | | | |
| Other | — | | — | | — | | — | | — | | — | | (0.7) | | — | | (0.7) | |
| Balance, September 30, 2021 | 994,192 | | $ | 17.8 | | 120,266,740 | | $ | 2,239.2 | | $ | (6.0) | | $ | (597.0) | | $ | 499.0 | | $ | (168.5) | | $ | 1,984.5 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | |
| | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
See notes to condensed consolidated financial statements.
18
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)millions) |
| | | | | | | |
| | Nine Months Ended
September 30, |
| | 2015 | | 2014 |
| Cash flows from operating activities: | | | |
| Net income | $ | 468,188 |
| | $ | 553,665 |
|
| Adjustments to reconcile net income to net cash provided by (used in) operations: | | | |
| Depreciation and amortization | 151,509 |
| | 141,547 |
|
| Stock-based compensation | 8,757 |
| | 5,377 |
|
| Change in fair value of catalyst lease obligations | (8,982 | ) | | (1,204 | ) |
| Non-cash change in inventory repurchase obligations | 53,370 |
| | (31,602 | ) |
| Pension and other post retirement benefit costs | 19,340 |
| | 16,462 |
|
| Gain on disposition of property, plant and equipment | (1,133 | ) | | (162 | ) |
| Change in non-cash lower of cost or market adjustment | 81,147 |
| | — |
|
| | | | |
| Changes in current assets and current liabilities: | | | |
| Accounts receivable | 155,645 |
| | (101,752 | ) |
| Inventories | (110,830 | ) | | (378,538 | ) |
| Prepaid expenses and other current assets | (38,946 | ) | | 25,104 |
|
| Accounts payable | (122,496 | ) | | (76,008 | ) |
| Accrued expenses | (331,617 | ) | | 269,687 |
|
| Deferred revenue | 2,947 |
| | (6,017 | ) |
| Other assets and liabilities | (21,959 | ) | | (15,616 | ) |
| Net cash provided by operations | 304,940 |
| | 400,943 |
|
| | | | |
| Cash flow from investing activities: | | | |
| Expenditures for property, plant and equipment | (288,909 | ) | | (258,875 | ) |
| Expenditures for deferred turnaround costs | (39,725 | ) | | (58,423 | ) |
| Expenditures for other assets | (7,275 | ) | | (13,446 | ) |
| Purchase of marketable securities | (1,609,286 | ) | | (1,188,906 | ) |
| Maturities of marketable securities | 1,609,983 |
| | 923,996 |
|
| Proceeds from sale of assets | 168,270 |
| | 74,343 |
|
| Net cash used in investing activities | (166,942 | ) | | (521,311 | ) |
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2022 | | 2021 |
| Cash flows from operating activities: | | | |
| Net income | $ | 2,913.5 | | | $ | 153.5 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 388.9 | | | 361.2 | |
| | | |
| Stock-based compensation | 24.9 | | | 24.7 | |
| Change in fair value of catalyst obligations | 0.3 | | | (13.6) | |
| Deferred income taxes | 0.7 | | | (15.6) | |
| Non-cash change in inventory repurchase obligations | (21.1) | | | 46.0 | |
| Non-cash lower of cost or market inventory adjustment | — | | | (669.6) | |
| Change in fair value of contingent consideration | 130.9 | | | 26.2 | |
| Loss (gain) on extinguishment of debt | 66.1 | | | (60.3) | |
| Pension and other post-retirement benefit costs | 35.7 | | | 38.0 | |
| Loss (gain) on sale of assets | 0.3 | | | (0.4) | |
| | | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | (352.6) | | | (543.9) | |
| Inventories | (184.4) | | | (475.6) | |
| Prepaid and other current assets | (268.6) | | | (67.0) | |
| Accounts payable | (15.4) | | | 34.2 | |
| Accrued expenses | 958.6 | | | 1,575.6 | |
| Deferred revenue | 32.1 | | | (4.9) | |
| Other assets and liabilities | 0.2 | | | (78.9) | |
| Net cash provided by operating activities | $ | 3,710.1 | | | $ | 329.6 | |
| | | |
| Cash flows from investing activities: | | | |
| Expenditures for property, plant and equipment | (391.5) | | | (142.0) | |
| Expenditures for deferred turnaround costs | (240.3) | | | (64.6) | |
| Expenditures for other assets | (51.9) | | | (20.6) | |
| | | |
| Net cash used in investing activities | $ | (683.7) | | | $ | (227.2) | |
See notes to condensed consolidated financial statements.
819
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)(continued)
(unaudited, in thousands)millions) |
| | | | | | | |
| | Nine Months Ended
September 30, |
| | 2015 | | 2014 |
| Cash flows from financing activities: | | | |
| Proceeds from issuance of PBFX common units, net of underwriters' discount and commissions | $ | — |
| | $ | 340,957 |
|
| Offering costs for issuance of PBFX common units | — |
| | (5,000 | ) |
| Distributions to PBFX unit holders | $ | (17,082 | ) | | $ | (2,573 | ) |
| Dividend and distributions payments | (152,838 | ) | | (283,680 | ) |
| Proceeds from PBFX Senior Notes | 350,000 |
| | — |
|
| Proceeds from PBFX revolver borrowings | 24,500 |
| | 140,100 |
|
| Repayments of PBFX revolver borrowings | (275,100 | ) | | — |
|
| Proceeds from PBFX Term Loan borrowings | — |
| | 300,000 |
|
| Repayments of PBFX Term Loan borrowings | (700 | ) | | (35,100 | ) |
| Proceeds from intercompany loan from PBF Energy Inc. | 71,904 |
| | 91,660 |
|
| Repayment of intercompany loan from PBF Energy Inc. | (47,300 | ) | | — |
|
| Proceeds from Rail Facility revolver borrowings | 102,075 |
| | 35,925 |
|
| Repayments of Rail Facility revolver borrowings | (71,938 | ) | | — |
|
| Proceeds from revolver borrowings | — |
| | 395,000 |
|
| Repayments of revolver borrowings | — |
| | (410,000 | ) |
| Purchases of treasury stock | (8,073 | ) | | (32,593 | ) |
| Deferred financing costs and other | (9,644 | ) | | (13,905 | ) |
| Net cash (used in) provided by financing activities | (34,196 | ) | | 520,791 |
|
| | | | |
| Net increase in cash and cash equivalents | 103,802 |
| | 400,423 |
|
| Cash and equivalents, beginning of period | 367,780 |
| | 76,970 |
|
| Cash and equivalents, end of period | $ | 471,582 |
| | $ | 477,393 |
|
| | | | |
| Supplemental cash flow disclosures | | | |
| Non-cash activities: | | | |
| Conversion of Delaware Economic Development Authority loan to grant | $ | — |
| | $ | 4,000 |
|
| Accrued distributions | $ | 115,228 |
| | $ | — |
|
| Accrued construction in progress and unpaid fixed assets | $ | 4,670 |
| | $ | 65,193 |
|
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2022 | | 2021 |
| Cash flows from financing activities: | | | |
| | | |
| | | |
| | | |
| Distributions to PBFX public unitholders | $ | (29.5) | | | $ | (29.3) | |
| Distributions to T&M and Collins shareholders | — | | | (0.7) | |
| | | |
| | | |
| Repurchase of 2028 6.00% Senior Notes | (21.1) | | | (69.7) | |
| Repurchase of 2025 7.25% Senior Notes | (4.8) | | | (21.2) | |
| Redemption of 2025 9.25% Senior Secured Notes | (1,307.4) | | | — | |
| Proceeds from revolver borrowings | 400.0 | | | — | |
| Repayments of revolver borrowings | (1,300.0) | | | — | |
| | | |
| Repayments of PBFX revolver borrowings | (100.0) | | | (75.0) | |
| | | |
| Payments of contingent consideration | (2.7) | | | (12.2) | |
| | | |
| Repayments of PBF Rail Term Loan | — | | | (5.5) | |
| Settlement of precious metal catalyst obligations | (37.3) | | | (18.5) | |
| | | |
| Payments on financing leases | (8.5) | | | (10.7) | |
| Proceeds from insurance premium financing | 10.5 | | | 7.0 | |
| Affiliate note payable with PBF Energy Inc., net | (23.5) | | | (1.0) | |
| | | |
| | | |
| | | |
| Deferred financing costs and other, net | (36.2) | | | (2.2) | |
| Net cash used in financing activities | (2,460.5) | | | (239.0) | |
| | | |
| Net change in cash and cash equivalents | 565.9 | | | (136.6) | |
| Cash and cash equivalents, beginning of period | 1,339.8 | | | 1,607.3 | |
| Cash and cash equivalents, end of period | $ | 1,905.7 | | | $ | 1,470.7 | |
| | | |
| Supplemental cash flow disclosures | | | |
| Non-cash activities: | | | |
| Accrued and unpaid capital expenditures | $ | 106.8 | | | $ | 65.0 | |
| Assets acquired or remeasured under operating and financing leases | 36.1 | | | (126.5) | |
| Cash paid during the period for: | | | |
| Interest (net of capitalized interest of $15.9 million and $5.5 million in 2022 and 2021, respectively) | $ | 202.8 | | | $ | 196.6 | |
| Income taxes | 2.0 | | | 1.8 | |
See notes to condensed consolidated financial statements.
920
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
Description of the Business
PBF Energy Inc. (“PBF Energy”) is the sole managing member of PBF Energy Company LLC ("(“PBF LLC" or the "Company"LLC”), which has a Delawarecontrolling interest in PBF LLC and its subsidiaries. PBF Energy consolidates the financial results of PBF LLC and its subsidiaries and records a noncontrolling interest in its Condensed Consolidated Financial Statements representing the economic interests of PBF LLC’s members other than PBF Energy (refer to “Note 9 - Equity”).
PBF Energy holds a 99.3% economic interest in PBF LLC as of September 30, 2022 through its ownership of PBF LLC Series C Units, which are held solely by PBF Energy. Holders of PBF LLC Series A Units, which are held by parties other than PBF Energy (“the members of PBF LLC other than PBF Energy”), hold the remaining 0.7% economic interest in PBF LLC. The amended and restated limited liability company agreement of PBF LLC provides that any PBF LLC Series A Units acquired by PBF Energy will automatically be reclassified as PBF LLC Series C Units in connection with such acquisition. PBF LLC, together with its consolidated subsidiaries, owns and operates oil refineries and related facilities in North America. PBF Energy Inc. ("PBF Energy") is the sole managing member of, and owner and of an equity interest representing approximately 94.4% of the outstanding economic interest in, PBF LLC as of September 30, 2015, with the remaining economic interests were held by the members of PBF LLC, other than PBF Energy. PBF Holding Company LLC ("PBF Holding") is a wholly-owned subsidiary of PBF LLC. Delaware City Refining Company LLC ("Delaware City Refining" or "DCR"), Delaware Pipeline Company LLC, PBF Power Marketing LLC, PBF Energy Limited, Paulsboro Refining Company LLC, Paulsboro Natural Gas Pipeline Company LLC and Toledo Refining Company LLC are PBF LLC’s principal operating subsidiaries and are all wholly-owned subsidiaries of PBF Holding.
As of September 30, 2015,2022, PBF LLC also holdsheld a 53.7%47.7% limited partner interest and all of the incentive distribution rights in PBF Logistics LP ("PBFX" or the "Partnership"(“PBFX”), a publicly tradedpublicly-traded master limited partnership (“MLP”) (refer to Note“Note 2 "PBF- PBF Logistics LP" of our Notes to Condensed Consolidated Financial Statements)LP”). PBF Logistics GPEnergy, through its ownership of PBF LLC, (“PBF GP”) ownsconsolidates the noneconomic general partner interest and serves as the general partnerfinancial results of PBFX and is wholly-owned byits subsidiaries and records a noncontrolling interest in its consolidated financial statements representing the economic interests of PBFX’s unitholders other than PBF LLC.LLC (refer to “Note 9 - Equity”). Collectively, PBF LLCEnergy and its consolidated subsidiaries, including PBF Holding and PBFX are referred to hereinafter as the "Company"“Company” unless the context otherwise requires.
On February 6, 2015, Discussions or areas of the Notes to Condensed Consolidated Financial Statements that either apply only to PBF Energy completed a public offering of 3,804,653 shares of Class A common stock in a secondary offering (the "February 2015 secondary offering"). All of the shares in the February 2015 secondary offering were sold by funds affiliated with Blackstone Group L.P., or Blackstone, and First Reserve Management, L.P., or First Reserve. In connection with the February 2015 secondary offering, Blackstone and First Reserve exchanged all of their remaining PBF LLC Series A Units for an equivalent number of shares of Class A common stock of PBF Energy, and as a result, Blackstone and First Reserve no longer hold any PBF LLC Series A Units or shares of PBF Energy Class A Common stock. The holders of PBF LLC Series B Units, which include certain executive officers of PBF Energy and others, received a portion of the proceeds of the sale of the PBF Energy Class A common stock by Blackstone and First Reserveare clearly noted in accordance with the amended and restated limited liability company agreement of PBF LLC. PBF Energy did not receive any proceeds from the February 2015 secondary offering. As of September 30, 2015, PBF Energy owns 85,893,850 PBF LLC Series C Units and PBF Energy's executive officers and directors and certain employees and others beneficially own 5,111,358 PBF LLC Series A Units. As of September 30, 2015, the holders of PBF Energy's issued and outstanding shares of Class A common stock have 94.4% of the voting power in PBF Energy and the members of PBF LLC, other than PBF Energy, through their holdings of Class B common stock have the remaining 5.6% of the voting power in PBF Energy.
Substantially all of the Company’s operations are in the United States. The Company operates in two reportable business segments: Refining and Logistics. The Company’s three oil refineries are all engaged in the refining of crude oil and other feedstocks into petroleum products, and are aggregated into the Refining segment. PBFX is a publicly traded master limited partnership that was formed to operate logistical assets such as crude oil and refined petroleum products terminals, pipelines, and storage facilities. PBFX's operations are aggregated into the Logistics segment. To generate earnings and cash flows from operations, the Company is primarily dependent upon processing crude oil and selling refined petroleum products at margins sufficient to cover fixed and variable costs and other expenses. Crude oil and refined petroleum products are commodities; and factors largely out of the Company’s control can cause prices to vary over time. The potential margin volatility can have a material effect on the Company’s financial position, earnings and cash flow. footnotes.
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
Basis of Presentation
The unaudited condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, considered necessary for a fair presentation of the financial position and the results of operations and cash flows of the Company for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements of the Company have been prepared in accordance with U.S.accounting principles generally accepted accounting principles ("GAAP"in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim condensed consolidated financial statementsCondensed Consolidated Financial Statements should be read in conjunction with the audited consolidatedPBF Energy and PBF LLC financial statements included in the prospectus dated October 30, 2015, as filed withAnnual Report on Form 10-K for the SEC on October 30, 2015 (the “Prospectus”).year ended December 31, 2021. The results of operations for the three and nine months ended September 30, 20152022 are not necessarily indicative of the results to be expected for the full year.
RecentRecently Adopted Accounting PronouncementsGuidance
In April 2015,March 2020, the FASBFinancial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the effects of reference rate reform on financial reporting”. The amendments in this ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifyingprovide optional guidance to alleviate the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which requires debt issuance costs relatedburden in accounting for reference rate reform, by allowing certain expedients and exceptions in applying GAAP to a recognized debt liability to be presented oncontracts, hedging relationships and other transactions affected by the balance sheet as a direct deductionexpected market transition from the debt liability rather than as an asset.London Interbank Offered Rate (“LIBOR”) and other interbank rates. The standard is effective for interim and annual periods beginning after December 15, 2015 and earlyCompany’s adoption is permitted. The Company is currently evaluating the impact of this new standardguidance did not have, and is not anticipated to have, a material impact on its consolidated financial statementsConsolidated Financial Statements and related disclosures.
In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-14”), which defers the effective date of ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) for all entities by one year. The guidance in ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. Under ASU 2015-14, this guidance becomes effective for interim and annual periods beginning after December 15, 2017 and permits the use of either the retrospective or cumulative effect transition method. Under ASU 2015-14, early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company continues to evaluate the impact of this new standard on its consolidated financial statements and related disclosures.
In September 2015, the FASB issued ASU No. 2015-16, "Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which requires (i) that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, (ii) that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date, (iii)that an entity present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. Under ASU 2015-16, this guidance becomes effective for annual periods beginning after December 15, 2016 and interim periods within annual periods beginning after December 15, 2017 with prospective application with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.
2. PBF LOGISTICS LP
On May 14, 2014, PBFX completed its initial public offering (the “PBFX Offering”) of 15,812,500 common units. As of September 30, 2015, PBF LLC holds a 53.7% limited partner interest in PBFX (consisting of 2,572,944 common units and 15,886,553 subordinated units) and all of PBFX's incentive distribution rights, with the remaining 46.3% limited partner interest held by public common unit holders. PBF LLC also owns indirectly a non-economic general partner interest in PBFX through its wholly-owned subsidiary, PBF GP, the general partner of PBFX.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
During the subordination period (as set forth in the partnership agreement of PBFX) holders of the subordinated units are not entitled to receive any distribution of available cash until the common units have received the minimum quarterly distribution plus any arrearages in the payment of the minimum quarterly distribution from prior quarters. If 2. PBF LOGISTICS LP
PBFX does not pay distributions on the subordinated units, the subordinated units will not accrue arrearages for those unpaid distributions. Each subordinated unit will convert into one common unit at the end of the subordination period.
is a fee-based, growth-oriented, publicly traded MLP that owns and operates crude oil and refined products terminals, pipelines, storage facilities and similar logistics assets. PBFX engages in the processing of crude oil and the receiving, handling, storage and transferring of crude oil, and the receipt, storage and delivery of crude oil, refined products, natural gas and intermediates. Allintermediates from sources located throughout the United States and Canada for PBF Energy in support of its refineries, as well as for third-party customers. As of September 30, 2022, a substantial majority of PBFX’s revenue isrevenues are derived from long-term, fee-based commercial agreements with PBF Holding Company LLC (“PBF Holding”), which include minimum volume commitments for receiving, handling, storing and transferring crude oil, and refined products and storing crude oil and refined products.natural gas. PBF LLCEnergy also has agreements with PBFX that establish fees for certain general and administrative services and operational and maintenance services provided by PBF Holding to PBFX. These transactions, other than those with third parties, are eliminated by PBF Energy and PBF LLC in consolidation.
PBFX’s initial assets consisted of a light crude oil rail unloading terminal at the Delaware City refinery that also services the Paulsboro refinery (which is referred to as the “Delaware City Rail Terminal”), and a crude oil truck unloading terminal at the Toledo refinery (which is referred to as the “Toledo Truck Terminal”) that are integral components of the crude oil delivery operations at all three of PBF Energy’s refineries. On September 30, 2014, PBF LLC contributed to PBFX all of the equity interests of Delaware City Terminaling Company II LLC, which assets consist solely of the Delaware City heavy crude unloading rack (the "DCR West Rack"), for total consideration of $150,000. On December 11, 2014, PBF LLC contributed to PBFX all of the issued and outstanding limited liability company interests of Toledo Terminaling Company LLC, whose assets consist of a tank farm and related facilities located at our Toledo refinery, including a propane storage and loading facility (the "Toledo Storage Facility"), for total consideration of $150,000. On May 14, 2015 PBF LLC contributed to PBFX all of the issued and outstanding limited liability company interests of Delaware Pipeline Company LLC ("DPC") and Delaware City Logistics Company LLC ("DCLC"), whose assets consist of a products pipeline, truck rack and related facilities located at our Delaware City refinery (collectively the "Delaware City Products Pipeline and Truck Rack"), for total consideration of $143,000.
PBFX, a variable interest entity, is consolidated by PBF Energy through its ownership of PBF LLC. PBF LLC, through its ownership of PBF Logistics GP LLC (“PBF GP”), has the sole ability to direct the activities of PBFX that most significantly impact its economic performance. PBF LLC is considered to be the primary beneficiary of PBFX for accounting purposes.
3. NONCONTROLLING INTEREST OF PBF ENERGY ANDWith respect to distributions paid during the nine months ended September 30, 2022, PBFX
Noncontrolling Interest in PBFX
paid a distribution on outstanding common units of $0.30 per unit on March 10, 2022, $0.30 per unit on May 26, 2022 and $0.30 per unit on August 25, 2022 of which $27.0 million was distributed to PBF LLC holdsand the balance was distributed to its public unitholders.
Pending Merger with PBFX
On July 27, 2022, PBF Energy and PBF LLC entered into a 53.7%definitive agreement with PBFX (the “Merger Agreement”) pursuant to which PBF Energy and PBF LLC will acquire all of the publicly held common units in PBFX representing limited partner interests in the MLP not already owned by certain wholly-owned subsidiaries of PBF Energy and its affiliates on the closing date of the transaction (the “Merger Transaction”).
The Merger Transaction will be accounted for in accordance with FASB Accounting Standards Codification (“ASC”) 810, Consolidation. Because the Company will control PBFX both before and after the Merger Transaction, the changes in the Company’s ownership interest in PBFX resulting from the Merger Transaction will be accounted for as an equity transaction, and owns allno gain or loss will be recognized in the Company’s Condensed Consolidated Statements of Operations. In addition, the tax effects of the Merger Transaction will be recorded as adjustments to other assets, deferred income taxes and additional paid-in capital consistent with ASC 740, Income Taxes (“ASC 740”).
The consideration to the PBFX common unitholders (other than PBF Energy and its affiliates) under the Merger Transaction consists of cash and PBF Energy Class A common stock. The Merger Agreement provides that, if completed, each outstanding PBFX Public Common Unit will have the right to receive (i) 0.27 shares of PBF Energy Class A common stock, par value $0.001 per share, (ii) $9.25 in cash, without interest, (iii) any dividends or other distributions to which the holder thereof becomes entitled to upon surrender of such outstanding common units held by an unaffiliated common unitholder in accordance with the Merger Agreement, and (iv) any cash in lieu of fractional shares of PBF Energy Class A common stock in accordance with the Merger Agreement. PBF Energy and PBF LLC, as the beneficial owners of 47.7% of PBFX’s incentive distribution rights, withoutstanding common units, have committed to vote such units to approve the remaining 46.3% limitedtransaction.
The terms of the Merger Transaction were unanimously approved by the conflicts committee (the “Conflicts Committee”) of the Board of Directors (the “PBFX Board”) of PBFX’s general partner interest ownedand by public common unit holders asthe PBFX Board based on the unanimous approval and recommendation of September 30, 2015. PBF LLCthe Conflicts Committee, which is also the sole membercomprised entirely of independent directors. Upon closing, PBFX will become an indirect wholly-owned subsidiary of PBF GP, the general partner of PBFX.
PBF LLC consolidates the financial results of PBFX,Energy and records a noncontrolling interest for the economic interest in PBFX held by the public common unit holders. Noncontrolling interest on the consolidated statements of operations includes the portion of net income or loss attributable to the economic interest in PBFX held by the public common unit holders of PBFX other than PBF LLC. Noncontrolling interest on the consolidated balance sheets includes the portion of net assets of PBFX attributable to the public common unit holders of PBFX.
The noncontrolling interest ownership percentage of PBFX as of September 30, 2015 and December 31, 2014, is calculated as follows:
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
|
| | | | | | | | |
| Units of PBFX Held by the Public |
| Units of PBFX Held by PBF LLC (Including Subordinated Units) |
| Total |
| December 31, 2014 | 15,812,500 |
| | 17,171,077 |
| | 32,983,577 |
|
| 47.9 | % | | 52.1 | % | | 100.0 | % |
| September 30, 2015 | 15,893,313 |
| | 18,459,497 |
| | 34,352,810 |
|
| | 46.3 | % | | 53.7 | % | | 100.0 | % |
3. CURRENT EXPECTED CREDIT LOSSES
Credit Losses
The following table summarizesCompany has exposure to credit losses primarily through its sales of refined products. The Company evaluates creditworthiness on an individual customer basis. The Company 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 changesCompany 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 Company may require security in equitythe form of letters of credit or cash payments in advance of product delivery for certain customers that are deemed higher risk.
The Company’s payment terms on its trade receivables are relatively short, generally 30 days or less for a substantial majority of its refined products. As a result, the Company’s collection risk is mitigated to a certain extent by the fact that sales are collected in a relatively short period of time, allowing for the controlling and noncontrolling interestsability to reduce exposure on defaults if collection issues are identified. Notwithstanding, the Company reviews each customer’s credit risk profile at least annually or more frequently if warranted.
The Company 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 PBF LLC for the nine months ended September 30, 2015 and 2014:
2022 or December 31, 2021.
|
| | | | | | | | | | | |
| | PBF Energy Company LLC Equity | | Noncontrolling
Interest in PBFX | | Total Equity |
| Balance at January 1, 2015 | $ | 1,316,468 |
| | $ | 336,369 |
| | $ | 1,652,837 |
|
| Comprehensive income | 442,895 |
| | 26,608 |
| | 469,503 |
|
| Dividends and distributions | (268,066 | ) | | (17,082 | ) | | (285,148 | ) |
| Issuance of additional PBFX common units | 11,390 |
| | (11,390 | ) | | — |
|
| Stock-based compensation | 6,329 |
| | 2,428 |
| | 8,757 |
|
| Exercise of PBF LLC options and warrants, net and other | (1,425 | ) | | — |
| | (1,425 | ) |
| Purchase of treasury stock | (8,073 | ) | | — |
| | (8,073 | ) |
| Balance at September 30, 2015 | $ | 1,499,518 |
| | $ | 336,933 |
| | $ | 1,836,451 |
|
|
| | | | | | | | | | | |
| | PBF Energy Company LLC Equity | | Noncontrolling
Interest in PBFX | | Total Equity |
| Balance at January 1, 2014 | $ | 1,779,710 |
| | $ | — |
| | $ | 1,779,710 |
|
| Comprehensive income | 546,953 |
| | 7,328 |
| | 554,281 |
|
| Dividends and distributions | (283,680 | ) | | (2,573 | ) | | (286,253 | ) |
| Issuance of additional PBFX common units | 4,249 |
| | (4,249 | ) | | — |
|
| Stock-based compensation | 4,724 |
| | 653 |
| | 5,377 |
|
| Record noncontrolling interest upon completion of the PBFX Offering | — |
| | 335,957 |
| | 335,957 |
|
| Exercise of PBF LLC options and warrants, net and other | 2,477 |
| | — |
| | 2,477 |
|
| Purchase of treasury stock | (32,593 | ) | | — |
| | (32,593 | ) |
| Balance at September 30, 2014 | $ | 2,021,840 |
| | $ | 337,116 |
| | $ | 2,358,956 |
|
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
4. INVENTORIES
Inventories consisted of the following:
| | | | | | | | | | | | | | | | | |
| September 30, 2022 |
| (in millions) | Titled Inventory | | Inventory Intermediation Agreement | | Total |
| Crude oil and feedstocks | $ | 1,069.3 | | | $ | 144.4 | | | $ | 1,213.7 | |
| | | | | |
| Refined products and blendstocks | 1,089.3 | | | 239.7 | | | 1,329.0 | |
| Warehouse stock and other | 146.8 | | | — | | | 146.8 | |
| $ | 2,305.4 | | | $ | 384.1 | | | $ | 2,689.5 | |
| Lower of cost or market adjustment | — | | | — | | | — | |
| Total inventories | $ | 2,305.4 | | | $ | 384.1 | | | $ | 2,689.5 | |
| | | September 30, 2015 | |
| | Titled Inventory | | Inventory Supply and Intermediation Arrangements | | Total | |
| December 31, 2021 | | December 31, 2021 |
| (in millions) | | (in millions) | Titled Inventory | | Inventory Intermediation Agreement | | Total |
| Crude oil and feedstocks | $ | 954,744 |
| | $ | 21,288 |
| | $ | 976,032 |
| Crude oil and feedstocks | $ | 953.5 | | | $ | 151.4 | | | $ | 1,104.9 | |
| Refined products and blendstocks | 545,279 |
| | 310,238 |
| | 855,517 |
| Refined products and blendstocks | 964.6 | | | 293.8 | | | 1,258.4 | |
| Warehouse stock and other | 40,890 |
| | — |
| | 40,890 |
| Warehouse stock and other | 141.8 | | | — | | | 141.8 | |
| | $ | 1,540,913 |
| | $ | 331,526 |
| | $ | 1,872,439 |
| | $ | 2,059.9 | | | $ | 445.2 | | | $ | 2,505.1 | |
| Lower of cost or market reserve | (662,638 | ) | | (108,619 | ) | | (771,257 | ) | |
| Lower of cost or market adjustment | | Lower of cost or market adjustment | — | | | — | | | — | |
| Total inventories | $ | 878,275 |
| | $ | 222,907 |
| | $ | 1,101,182 |
| Total inventories | $ | 2,059.9 | | | $ | 445.2 | | | $ | 2,505.1 | |
|
| | | | | | | | | | | |
| December 31, 2014 |
| | Titled Inventory | | Inventory Supply and Intermediation Arrangements | | Total |
| Crude oil and feedstocks | $ | 918,756 |
| | $ | 61,122 |
| | $ | 979,878 |
|
| Refined products and blendstocks | 520,308 |
| | 255,459 |
| | 775,767 |
|
| Warehouse stock and other | 36,726 |
| | — |
| | 36,726 |
|
| | $ | 1,475,790 |
| | $ | 316,581 |
| | $ | 1,792,371 |
|
| Lower of cost or market reserve | (609,774 | ) | | (80,336 | ) | | (690,110 | ) |
| Total inventories | $ | 866,016 |
| | $ | 236,245 |
| | $ | 1,102,261 |
|
Inventory under inventory supplyOn October 25, 2021, PBF Holding and intermediation arrangements includes certain crude oil stored at the Company’sits subsidiaries, Delaware City refinery's storage facilities thatRefining Company LLC, Paulsboro Refining Company LLC and Chalmette Refining, L.L.C. (“Chalmette Refining”) (collectively, the Company will purchase as it is consumed in connection with its crude supply agreement;“PBF Entities”), entered into a third amended and intermediates and light finished products sold to counterparties in connection with therestated inventory intermediation agreements and stored in the Paulsboro and Delaware City refineries' storage facilities.
Due to the lower crude oil and refined product pricing environment at the end of 2014 and into the third quarter of 2015, the Company recorded adjustments to value its inventories to the lower of cost or market. During the three months ended September 30, 2015, the Company recorded an adjustment to value its inventories to the lower of cost or market which decreased both operating income and net income by $208,313 reflecting the net change in the lower of cost or market inventory reserve from $562,944 at June 30, 2015 to $771,257 at September 30, 2015. During the nine months ended September 30, 2015, the Company recorded an adjustment to value its inventories to the lower of cost or market which decreased both operating income and net income by $81,147 reflecting the net change in the lower of cost or market inventory reserve from $690,110 at December 31, 2014 to $771,257 at September 30, 2015.
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
5. DEFERRED CHARGES AND OTHER ASSETS, NET
Deferred charges and other assets, net consisted of the following: |
| | | | | | | |
| | September 30,
2015 | | December 31,
2014 |
| Deferred turnaround costs, net | $ | 183,618 |
| | $ | 204,987 |
|
| Catalyst, net | 71,516 |
| | 77,322 |
|
| Deferred financing costs, net | 34,495 |
| | 32,280 |
|
| Linefill | 10,230 |
| | 10,230 |
|
| Restricted cash | 1,500 |
| | 1,521 |
|
| Intangible assets, net | 231 |
| | 357 |
|
| Other | 9,830 |
| | 5,972 |
|
| Total deferred charges and other assets, net | $ | 311,420 |
| | $ | 332,669 |
|
6. ACCRUED EXPENSES
Accrued expenses consisted of the following:
|
| | | | | | | |
| | September 30,
2015 | | December 31,
2014 |
| Inventory-related accruals | $ | 407,678 |
| | $ | 588,297 |
|
| Inventory supply and intermediation arrangements | 212,930 |
| | 253,549 |
|
| Accrued distribution | 115,228 |
| | — |
|
| Accrued transportation costs | 49,548 |
| | 59,959 |
|
| Accrued salaries and benefits | 37,766 |
| | 56,117 |
|
| Excise and sales tax payable | 20,430 |
| | 40,444 |
|
| Accrued interest | 20,100 |
| | 23,127 |
|
| Accrued utilities | 9,633 |
| | 22,337 |
|
| Customer deposits | 8,910 |
| | 24,659 |
|
| Accrued construction in progress | 4,634 |
| | 31,452 |
|
| Renewable energy credit obligations | — |
| | 286 |
|
| Other | 21,641 |
| | 30,678 |
|
| Total accrued expenses | $ | 908,498 |
| | $ | 1,130,905 |
|
The Company has the obligation to repurchase certain intermediates and finished products that are held in the Company’s refinery storage tanks at the Delaware City and Paulsboro refineries in accordance with theagreement (the “Third Inventory Intermediation AgreementsAgreement”) with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc. ("(“J. Aron"Aron”), pursuant to which the terms of the existing inventory intermediation agreements were amended and restated in their entirety, including, among other things, pricing and an extension of terms. The Third Inventory Intermediation Agreement extends the term to December 31, 2024, which term may be further extended by mutual consent of the parties to December 31, 2025. On May 25, 2022, the PBF Entities entered into an amendment of the Third Inventory Intermediation Agreement to amend certain provisions thereof that related to and were impacted by amendments made on May 25, 2022 to the Revolving Credit Agreement (as defined below).
Pursuant to the Third Inventory Intermediation Agreement, J. Aron will continue to purchase and hold title to certain inventory, including crude oil, intermediate and certain finished products (the “J. Aron Products”) purchased or produced by the Paulsboro and Delaware City refineries (and, at the election of the PBF Entities, the Chalmette refinery) (the "Refineries") and delivered into storage tanks at the Refineries (the "Storage Tanks"). A liability is recognized forThe J. Aron Products are sold back to the Inventory supply and intermediation arrangements and is recorded at market price forCompany as the J. Aron owned inventory held in the Company's storage tanks under the Inventory Intermediation Agreements, with any change in the market price being recorded in cost of sales.
The Company has the obligation to purchase and sell feedstocks under a supply agreement with Statoil Marketing and Trading (US) Inc. ("Statoil") for its Delaware City refinery (the “Crude Supply Agreement”). Statoil purchases the refinery's production of certain feedstocks or purchases feedstocks from third parties on the refineries' behalf. Legal title to the feedstocks is held by Statoil and the feedstocksProducts are held in the refinery's storage tanks until they are needed for further use in the refining process. At that time, the products are drawndischarged out of the storage tanks and purchased by the refinery.Storage Tanks. These purchases and sales are settled daily, and pricing is trued-up monthly at the daily market prices related to those
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
products. J. Aron Products. These transactions are considered to be made in contemplation of each other and, accordingly, do not result in the recognition of a sale when title passes from the refineryRefineries to Statoil.J. Aron. Additionally, J. Aron has the right to store the J. Aron Products purchased in Storage Tanks under the Third Inventory remainsIntermediation Agreement and will retain these storage rights for the term of the agreement. PBF Holding continues to market and sell the J. Aron Products independently to third parties.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2022, the replacement value of inventories exceeded the last-in, first-out (“LIFO”) carrying value. There was no lower of cost or market (“LCM”) inventory reserve at September 30, 2022 or December 31, 2021.
At September 30, 2021, the replacement value of inventories exceeded the LIFO carrying value. During the nine months ended September 30, 2021, the Company recorded an adjustment to value its inventories to the lower of cost andor market which increased income from operations by $669.6 million, reflecting no LCM inventory reserve at September 30, 2021 in comparison with an LCM inventory reserve of $669.6 million at December 31, 2020.
5. ACCRUED EXPENSES
Accrued expenses consisted of the net cash receipts result in a liability.following:
| | | | | | | | | | | |
PBF Energy (in millions) | September 30, 2022 | | December 31, 2021 |
| Inventory-related accruals | $ | 1,625.7 | | | $ | 959.9 | |
| Renewable energy credit and emissions obligations (a) | 1,233.8 | | | 953.9 | |
| Accrued salaries and benefits | 182.3 | | | 59.5 | |
| Inventory intermediation agreement (b) | 121.6 | | | 280.1 | |
| Accrued transportation costs | 114.4 | | | 91.0 | |
| Excise and sales tax payable | 111.0 | | | 112.7 | |
| Contingent consideration | 94.4 | | | 2.9 | |
| Accrued income tax payable | 89.3 | | | — | |
| Accrued utilities | 86.6 | | | 73.0 | |
| Accrued capital expenditures | 49.7 | | | 62.8 | |
| Accrued refinery maintenance and support costs | 37.3 | | | 55.8 | |
| Accrued interest | 34.9 | | | 37.7 | |
| Environmental liabilities | 15.0 | | | 14.9 | |
| Current finance lease liabilities | 11.6 | | | 11.1 | |
| Customer deposits | 3.2 | | | 3.5 | |
| Other | 39.8 | | | 21.6 | |
| Total accrued expenses | $ | 3,850.6 | | | $ | 2,740.4 | |
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | |
PBF LLC (in millions) | September 30, 2022 | | December 31, 2021 |
| Inventory-related accruals | $ | 1,625.7 | | | $ | 959.9 | |
| Renewable energy credit and emissions obligations (a) | 1,233.8 | | | 953.9 | |
| Accrued salaries and benefits | 182.3 | | | 59.5 | |
| Inventory intermediation agreement (b) | 121.6 | | | 280.1 | |
| Accrued transportation costs | 114.4 | | | 91.0 | |
| Excise and sales tax payable | 111.0 | | | 112.7 | |
| Contingent consideration | 94.4 | | | 2.9 | |
| Accrued interest | 91.4 | | | 86.0 | |
| Accrued utilities | 86.6 | | | 73.0 | |
| Accrued capital expenditures | 49.7 | | | 62.8 | |
| Accrued refinery maintenance and support costs | 37.3 | | | 55.8 | |
| Environmental liabilities | 15.0 | | | 14.9 | |
| Current finance lease liabilities | 11.6 | | | 11.1 | |
| Customer deposits | 3.2 | | | 3.5 | |
| Accrued income tax payable | 1.9 | | | — | |
| Other | 40.1 | | | 25.5 | |
| Total accrued expenses | $ | 3,820.0 | | | $ | 2,792.6 | |
______________________
(a) The Company is subject to obligations to purchase Renewable Identification Numbers ("RINs"(“RINs”) required to comply with the Renewable FuelsFuel Standard. The Company'sCompany’s overall RINs obligation is based on a percentage of domestic shipments of on-road fuels as established by the Environmental Protection Agency ("EPA").Agency. To the degree the Company is unable to blend the required amount of biofuels to satisfy its RINs obligation, RINs must be purchased on the open market to avoid penalties and fines. The Company records its RINs obligation on a net basis in Accrued Expensesexpenses when its RINs liability is greater than the amount of RINs earned and purchased in a given period and in Prepaid expenses and other current assets when the amount of RINs earned and purchased is greater than the RINs liability.
7. CREDIT FACILITIES
On April 29, 2015, PBF Rail Logistics LLC ("PBF Rail" In addition, the Company is subject to obligations to comply with federal and state legislative and regulatory measures, including regulations in the state of California pursuant to Assembly Bill 32 (“AB 32”), an indirect wholly-owned subsidiaryto address environmental compliance and greenhouse gas and other emissions. These requirements include incremental costs to operate and maintain our facilities as well as to implement and manage new emission controls and programs. Renewable energy credit and emissions obligations fluctuate with the volume of PBF Holding,applicable product sales and timing of credit purchases. The Company enters into forward purchase commitments in order to acquire its renewable energy and emissions credits at fixed prices. As of September 30, 2022, the Company had entered into the First Amendment to Loan Agreement (as amended, the “Rail Facility”) among Credit Agricole Corporate + Investment Bank as Administrative Agent, Deutsche Bank Trust Company Americas as Collateral Agent, DVB Bank SE as Syndication Agent, ING Bank, a branchapproximately $852.4 million of ING-DiBa AG as Documentation Agent and certain other Continuing Lenders, as defined in the agreement. The primary purpose of the Rail Facility is to fund the acquisition by PBF Rail of coiled and insulated crude tank cars and non-coiled and non-insulated general purpose crude tank cars. The amendments to the Rail Facility include the extension of the maturity to April 29, 2017, the reduction of the total commitment from $250,000 to $150,000, and the reduction of the commitment fee on the unused portion of the Rail Facility.
On May 12, 2015, PBFX entered into an indenture among the Partnership, PBF Logistics Finance Corporation, a Delaware corporation and wholly-owned subsidiary of the Partnership ("PBF Logistics Finance," and together with the Partnership, the "Issuers"), the Guarantors named therein (certain subsidiaries of PBFX) and Deutsche Bank Trust Company Americas, as Trustee, under which the Issuers issued $350,000 in aggregate principal amount of 6.875% Senior Notes due 2023 (the "PBFX Senior Notes"). PBF LLC has provided a limited guarantee of collection of the principal amount of the PBFX Senior Notes, but is not otherwise subject to the covenants of the indenture. Of the $350,000 aggregate PBFX Senior Notes, $19,910 were purchased by certain of PBF Energy’s officers and directors and their affiliates and family members pursuant to a separate private placement transaction. After deducting offering expenses, PBFX received net proceeds of approximately $343,000 from the PBFX Senior Notes offering.
PBF LLC, exclusive of its consolidating subsidiaries, provides a limited guarantee of collection of the principal amount of the PBFX Senior Notes. Under the PBF LLC parent company limited guarantee, PBF LLC would not have any obligation to make principal paymentssuch forward purchase commitments with respect to its total accrued renewable energy and emissions obligations. Our RIN obligations will be settled in accordance with established regulatory deadlines. The Company’s AB 32 liability is part of a triennial period program which will be settled through 2024.
(b) The Company has the notes unless all remedies, includingobligation to repurchase the J. Aron Products that are held in its Storage Tanks in accordance with the Inventory Intermediation Agreement with J. Aron. As of September 30, 2022 and December 31, 2021, a liability is recognized for the Inventory Intermediation Agreement and is recorded at market price for the J. Aron owned inventory held in the contextCompany’s Storage Tanks, with any change in the market price being recorded in Cost of bankruptcy proceedings, have first been fully exhausted against PBFX with respect to such payment obligation,products and holders of the PBFX Senior Notes are still owed amounts in respect of the principal of the notes. PBF LLC is not otherwise subject to the covenants of the indenture governing the notes. As a result of the limited guarantee the following PBF LLC parent company balance sheets and statements of operations support the limited guarantee of collection.other.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT
6. CREDIT FACILITIES AND BARREL DATA)
|
| | | | | | | |
| PBF ENERGY COMPANY LLC (PARENT COMPANY) |
| BALANCE SHEETS |
| (in thousands) |
| | | | |
| | September 30,
2015 | | December 31,
2014 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 83,924 |
| | $ | 135,210 |
|
| Due from related parties | 268,090 |
| | — |
|
| Other current assets | 15,234 |
| | — |
|
| Total current assets | 367,248 |
| | 135,210 |
|
| Intercompany note receivable | 18,178 |
| | 12,510 |
|
| Investment in subsidiaries | 1,235,039 |
| | 1,173,854 |
|
| Total assets | $ | 1,620,465 |
| | $ | 1,321,574 |
|
| | | | |
| LIABILITIES AND EQUITY | | | |
| | | | |
| Current liabilities: | | | |
| Due to related parties | $ | 115,228 |
| | $ | — |
|
| | | | |
| Total equity | 1,505,237 |
| | 1,321,574 |
|
| Total liabilities and equity | $ | 1,620,465 |
| | $ | 1,321,574 |
|
| | | | | | | | | | | | | | |
| (in millions) | | September 30, 2022 | | December 31, 2021 |
| 2025 Senior Secured Notes | | $ | — | | | $ | 1,250.0 | |
| 2028 Senior Notes | | 801.6 | | | 826.5 | |
| 2025 Senior Notes | | 664.5 | | | 669.5 | |
| | | | |
| PBFX 2023 Senior Notes (1) | | 525.0 | | | 525.0 | |
| Revolving Credit Facility | | — | | | 900.0 | |
| PBFX Revolving Credit Facility | | — | | | 100.0 | |
| | | | |
| Catalyst financing arrangements | | 21.3 | | | 58.4 | |
| | 2,012.4 | | | 4,329.4 | |
| Less — Current debt (1) | | (523.8) | | | — | |
| Unamortized premium (1) | | 0.4 | | | 1.4 | |
| Unamortized deferred financing costs (1) | | (41.3) | | | (35.0) | |
| Long-term debt | | $ | 1,447.7 | | | $ | 4,295.8 | |
|
| | | | | | | | | | | | | | | |
| PBF ENERGY COMPANY LLC (PARENT COMPANY) |
| STATEMENT OF OPERATIONS |
| (in thousands) |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| Equity in earnings of subsidiaries | $ | 59,083 |
| | $ | 257,191 |
| | $ | 441,770 |
| | $ | 546,180 |
|
| Interest (expense) income | (293 | ) | | (5 | ) | | (190 | ) | | 157 |
|
| Net income | $ | 58,790 |
| | $ | 257,186 |
| | $ | 441,580 |
| | $ | 546,337 |
|
8. MARKETABLE SECURITIES
(1) The U.S Treasury securities purchased by the Company with the proceeds from the PBFX Offering2023 Senior Notes, inclusive of unamortized premium and deferred financing costs of $1.2 million, are used as collateral to secure a three-year, $300,000 term loan facility entered into by PBFX (the "PBFX Term Loan"). PBFX anticipates holding the securities for an indefinite amount of time (the securities will be rolled over as they mature). As necessarydue May 2023 and at the discretion of PBFX, these securities are expected to be liquidated and the proceeds used to fund future capital expenditures. While PBFX does not routinely sell marketable securities prior to their scheduled maturity dates, some of PBFX's investments may be held and restricted for the purpose of funding future capital expenditures and acquisitions, so these investments are classified as available-for-sale marketable securitiesCurrent debt as they may occasionally be sold priorof September 30, 2022 within the Company’s Condensed Consolidated Balance Sheet.
PBF Holding Revolving Credit Facility
On May 25, 2022, PBF Holding and certain of its wholly-owned subsidiaries, as borrowers or subsidiary guarantors, entered into an amendment of its existing asset-based revolving credit agreement (the “Revolving Credit Agreement”), among PBF Holding, Bank of America, National Association as administrative agent, and certain other lenders. Among other things, the Revolving Credit Agreement amended and extended PBF Holding’s asset-based revolving credit facility (the “Revolving Credit Facility”) through January 2025 and increased the maximum commitment to their scheduled$4.3 billion through May 2023 (currently set to adjust to $2.75 billion in May 2023 through January 2025). The amendments also redefine certain components of the Borrowing Base (as defined in the Revolving Credit Agreement) to reflect the existence of two tranches, tranche A which is comprised of existing lenders who have not elected to extend and whose commitments retain the existing maturity dates duedate under the existing revolving credit agreement of May 2, 2023 (the “Tranche A Commitments”) and tranche B, which is comprised of existing and new lenders whose commitments have an extended maturity date of January 31, 2025 (the “Tranche B Commitments”). The Tranche A Commitments total $1.55 billion and the Tranche B Commitments total $2.75 billion. The amendments also include changes to incorporate the adoption of Secured Overnight Financing Rate (“SOFR”) as a replacement of LIBOR, changes to joint lead arrangers, bookrunners, syndication agents and other titles, and other changes related to the unexpected timingforegoing. In addition, an accordion feature allows for additional Tranche B Commitments of cash needs.up to an additional $500.0 million plus an amount equal to the Tranche A Commitments for existing Tranche A lenders.
Borrowings under the Revolving Credit Facility bear interest at the Alternative Base Rate plus the Applicable Margin or at the Term SOFR Rate plus the Applicable Margin (all as defined in the Revolving Credit Agreement). The carrying value of these marketable securities approximates fair valueApplicable Margin ranges from 0.25% to 1.00% for Alternative Base Rate Loans and are measured using Level 1 inputs.from 1.25% to 2.00% for Term SOFR Loans, in each case depending on the Company’s corporate credit rating. In addition, the LC Participation Fee ranges from 1.00% to 1.75% depending on the Company’s corporate credit rating and the Fronting Fee is capped at 0.25%.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
The maturitiesRevolving Credit Agreement contains customary covenants and restrictions on the activities of PBF Holding and its subsidiaries, including, but not limited to, limitations on incurring additional indebtedness, liens, negative pledges, guarantees, investments, loans, asset sales, mergers and acquisitions, prepayment of other debt, distributions, dividends and the repurchase of capital stock, transactions with affiliates and the ability of PBF Holding to change the nature of its business or its fiscal year; all as defined in the Revolving Credit Agreement.
In addition, the Revolving Credit Agreement has a financial covenant which requires that if at any time Excess Availability, as defined in the Revolving Credit Agreement, is less than the greater of (i) 10% of the marketable securities range from onelesser of the then existing Borrowing Base and the then aggregate Revolving Commitments of the Lenders (the “Financial Covenant Testing Amount”), and (ii) $100.0 million, and until such time as Excess Availability is greater than the Financial Covenant Testing Amount and $100.0 million for a period of 12 or more consecutive days, PBF Holding will not permit the Consolidated Fixed Charge Coverage Ratio, as defined in the Revolving Credit Agreement and determined as of the last day of the most recently completed quarter, to three months and are classified on the balance sheet in non-current assets.
be less than 1 to 1. As of September 30, 2015 and December 31, 2014,2022, the Company held $234,249is in compliance with all covenants in the Revolving Credit Agreement, including financial covenants.
PBF Holding’s obligations under the Revolving Credit Facility are (a) guaranteed by each of its domestic operating subsidiaries that are not Excluded Subsidiaries (as defined in the Revolving Credit Agreement) and $234,930, respectively,(b) secured by a lien on (i) PBF LLC’s equity interest in marketable securities. The gross unrecognized holding gainsPBF Holding and losses as(ii) certain assets of September 30, 2015PBF Holding and December 31, 2014 were not material. The net realized gains the subsidiary guarantors, including all deposit accounts (other than zero balance accounts, cash collateral accounts, trust accounts and/or lossespayroll accounts, all of which are excluded from the saledefinition of marketable securities were immaterial forcollateral), all accounts receivable, all hydrocarbon inventory (other than the J. Aron Products owned by J. Aron pursuant to the Third Inventory Intermediation Agreement) and to the extent evidencing, governing, securing or otherwise related to the foregoing, all general intangibles, chattel paper, instruments, documents, letter of credit rights and supporting obligations; and all products and proceeds of the foregoing.
Extinguishment of Debt
During the three and nine months ended September 30, 20152022, the Company exercised its rights under the indenture governing the 9.25% senior secured notes due 2025 (the “2025 Senior Secured Notes”) to redeem all of the outstanding 2025 Senior Secured Notes at a price of 104.625% of the aggregate principal amount thereof plus accrued and 2014.unpaid interest. The aggregate redemption price for all 2025 Senior Secured Notes approximated $1.3 billion plus accrued and unpaid interest. The difference between the carrying value of the 2025 Senior Secured Notes on the date they were redeemed and the amount for which they were redeemed was $69.9 million and was recorded as a loss on extinguishment of debt in the Consolidated Statements of Operations.
During the nine months ended September 30, 2022, the Company made a number of open market repurchases of its 6.00% senior unsecured notes due 2028 (the “2028 Senior Notes”) and 7.25% senior unsecured notes due 2025 (the “2025 Senior Notes”) that resulted in the extinguishment of $24.9 million in principal of the 2028 Senior Notes and $5.0 million in principal of the 2025 Senior Notes. Total cash consideration paid to repurchase the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, totaled $25.9 million and the Company recognized a $3.8 million gain on the extinguishment of debt during the nine months ended September 30, 2022.
9.During the three and nine months ended September 30, 2021, the Company made a number of open market repurchases of its 2028 Senior Notes and its 2025 Senior Notes that resulted in the extinguishment of $117.7 million in principal of the 2028 Senior Notes and $35.0 million in principal of the 2025 Senior Notes. Total cash consideration paid to repurchase the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, totaled $90.9 million and the Company recognized a $60.3 million gain on the extinguishment of debt during the three and nine months ended September 30, 2021.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. AFFILIATE NOTE PAYABLE - PBF LLC
As of September 30, 2022 and December 31, 2021, PBF LLC had an outstanding note payable with PBF Energy for an aggregate principal amount of $351.7 million and $375.2 million, respectively. The note payable has a maturity date of April 2030, an annual interest rate of 2.5% and may be prepaid in whole or in part at any time, at the option of PBF LLC without penalty or premium.
8. COMMITMENTS AND CONTINGENCIES
In the ordinary conduct of the Company’s business, the Company is from time to time subject to lawsuits, investigations and claims, including class action proceedings, mass tort actions, tort actions, environmental claims and employee-related matters. The outcome of these matters cannot always be predicted accurately, but the Company accrues liabilities for these matters if the Company has determined that it is probable a loss has been incurred and the loss can be reasonably estimated. For such ongoing matters for which we have not recorded a liability but losses are reasonably possible, we are unable to estimate a range of possible losses at this time due to various reasons that may include but are not limited to, matters being in an early stage and not fully developed through pleadings, discovery or court proceedings, number of potential claimants being unknown or uncertainty regarding a number of different factors underlying the potential claims. However, the ultimate resolution of one or more of these contingencies could result in an adverse outcome that may have a material effect on our financial position, results of operations or cash flows.
Environmental Matters
The Company’s refineries, pipelines and related operations 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 compositions of fuels. Compliance with existing and anticipated laws and regulations can increase the overall cost of operating the refineries, including remediation, operating costs and capital costs to construct, maintain and upgrade equipment and facilities.
These laws and permits raise potential exposure to future claims and lawsuits involving environmental and safety matters which could include soil and water contamination, air pollution, personal injury and property damage allegedly caused by substances which the Company manufactured, handled, used, released or disposed of, transported, or that relate to pre-existing conditions for which the Company has assumed responsibility. The Company believes that its current operations are in compliance with existing environmental and safety requirements. However, there have been and will continue to be ongoing discussions about environmental and safety matters between the Company and federal and state authorities, including notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures. While it is often difficult to quantify future environmental or safety related expenditures, the Company anticipates that continuing capital investments and changes in operating procedures will be required for the foreseeable future to comply with existing and new requirements, as well as evolving interpretations and more strict enforcement of existing laws and regulations.
In connection with the Paulsboroacquisition of the Torrance refinery acquisition,and related logistics assets, the Company assumed certain pre-existing environmental liabilities. The estimated costs related to these remediation obligations. The environmental liability of $10,714 recordedobligations totaled $112.5 million as of September 30, 2015 ($10,4762022 ($118.5 million as of December 31, 2014) represents2021), and related primarily to remediation obligations to address existing soil and groundwater contamination and the present value of expected future costs discounted at a rate of 8%.related monitoring and clean-up activities. Costs related to these obligations are reassessed periodically or when changes to our remediation approach are identified. The current portion of the environmental liability is recorded in accruedAccrued expenses and the non-current portion is recorded in otherOther long-term liabilities. As of September 30, 2015 and December 31, 2014, this liability is self-guaranteed by the Company.
In connection with the acquisition of the Delaware City assets, Valero Energy Corporation ("Valero") remains responsible for certain pre-acquisition environmental obligations up to $20,000 and the predecessor to Valero in ownership of the refinery retains other historical obligations.
In connection with the acquisition of the Delaware City assets and the Paulsboro refinery, the Company and Valero purchased ten year, $75,000 environmental insurance policies to insure against unknown environmental liabilities at each site. In connection with the Toledo refinery acquisition, Sunoco, Inc. (R&M) ("Sunoco") remains responsible for environmental remediation for conditions that existed on the closing date for twenty years from March 1, 2011, subject to certain limitations.
In 2010, New York State adopted a Low-Sulfur Heating Oil mandate that, beginning July 1, 2012, requires all heating oil sold in New York State to contain no more than 15 parts per million ("PPM") sulfur. Since July 1, 2012, other states in the Northeast market began requiring heating oil sold in their state to contain no more than 15 PPM sulfur. Currently, six Northeastern states require heating oil with 15 PPM or less sulfur. By July 1, 2016, two more states are expected to adopt this requirement and by July 1, 2018 most of the remaining Northeastern states (except for Pennsylvania and New Hampshire) will require heating oil with 15 PPM or less sulfur. All of the heating oil the Company currently produces meets these specifications. The mandate and other requirements do not currently have a material impact on the Company's financial position, results of operations or cash flows.
The EPA issued the final Tier 3 Gasoline standards on March 3, 2014 under the Clean Air Act. This final rule establishes more stringent vehicle emission standards and further reduces the sulfur content of gasoline starting in January of 2017. The new standard is set at 10 PPM sulfur in gasoline on an annual average basis starting January 1, 2017, with a credit trading program to provide compliance flexibility. The EPA responded to industry comments on the proposed rule and maintained the per gallon sulfur cap on gasoline at the existing 80 PPM cap. The standards set by the new rule are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
The EPA was required to release the final annual standards for the Reformulated Fuels Standard ("RFS") for 2014 no later than Nov 29, 2013 and for 2015 no later than Nov 29, 2014. The EPA did not meet these requirements but did release proposed standards for 2014. The EPA did not finalize this proposal in 2014. However, in May 2015,
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
the EPA re-proposed annual standards for RFS 2 for 2014, and proposed new standards for 2015 and 2016 and biomass-based diesel volumes for 2017. The EPA is proposing volume requirementsaggregate environmental liability reflected in the annual standardsCompany’s Condensed Consolidated Balance Sheets was $153.8 million and $157.0 million at September 30, 2022 and December 31, 2021, respectively, of which while below the volumes originally set by Congress, would$138.8 million and $142.1 million, respectively, were classified as Other long-term liabilities. These liabilities include remediation and monitoring costs expected to be incurred over an extended period of time. Estimated liabilities could increase renewable fuel use in the U.S. above historical levelsfuture when the results of ongoing investigations become known, are considered probable and provide for steady growth over time. The EPA is also proposing to increasecan be reasonably estimated.
Contingent Consideration
In connection with the required volumeacquisition of biomass-based diesel in 2015, 2016,the Martinez refinery and 2017 while maintainingrelated logistics assets, the opportunity for growth in other advanced biofuels. The EPA has solicited commentssale and purchase agreement dated June 11, 2019 includes an earn-out provision based on certain earnings thresholds of the proposed annual standards and held public hearings on June 25, 2015. Final action on this proposal is expected by November 30, 2015. If they are issued, the final standards may have a material impact on the Company's cost of compliance with RFS 2.
On September 12, 2012, the EPA issued final amendmentsMartinez refinery. Pursuant to the New Source Performance Standards ("NSPS")agreement, the Company will make payments to Equilon Enterprises LLC d/b/a Shell Oil Products US based on future earnings at the Martinez refinery in excess of certain thresholds, as defined in the agreement, for petroleum refineries, including standards for emissionsa period of nitrogen oxides from process heaters and work practice standards and monitoring requirements for flares.up to four years following the acquisition closing date (the “Martinez Contingent Consideration”). The Company has evaluatedrecorded the impactacquisition date fair value of the regulation and amended standards on its refinery operations and currently does not expectearn-out provision as contingent consideration within “Other long-term liabilities” within the cost to complyCompany’s Condensed Consolidated Balance Sheets. Subsequent changes in the fair value of the Martinez Contingent Consideration are recorded in the Condensed Consolidated Statements of Operations. The fair value of the Martinez Contingent Consideration was estimated to be material.
In addition, the EPA published a Final Rule to the Clean Water Act ("CWA") Section 316(b) in August 2014 regarding cooling water intake structures$160.1 million as of September 30, 2022 (of which includes requirements for petroleum refineries. The purpose$93.9 million is included within Accrued expenses) and $29.4 million as of this rule is to prevent fish from being trapped against cooling water intake screens (impingement) and to prevent fish from being drawn through cooling water systems (entrainment). Facilities will be required to implement Best Technology Available (BTA) as soon as possible, but state agencies have the discretion to establish implementation time lines. The Company continues to evaluate the impactDecember 31, 2021 (all of this regulation, and at this time does not anticipate it having a material impactwhich was included within Other long-term liabilities) on the Company’s financial position,Condensed Consolidated Balance Sheets.
In connection with the PBFX acquisition of CPI Operations LLC from Crown Point International LLC (“Crown Point”) in October 2018, the purchase and sale agreement between PBFX and Crown Point included an earn-out provision related to an existing commercial agreement with a third-party, based on the future results of operations or cash flows.
The Delaware City Rail Terminal and DCR West Rack are collocated with the Delaware City refinery, and are located in Delaware's coastal zone where certain activities are regulated under the Delaware Coastal Zone act. On June 14, 2013, two administrative appeals were filed by the Sierra Club and Delaware Audubon (collectively the "Appellants") regarding an air permit Delaware City Refining obtained to allow loading of crude oil onto barges. The appeals allege that both the loading of crude oil onto barges and the operation of the Delaware City Rail Terminal violate Delaware’s Coastal Zone Act.acquired idled assets (the “PBFX Contingent Consideration”). PBFX and Crown Point will 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 first appealPBFX Contingent Consideration recorded was $0.5 million and $2.9 million as of September 30, 2022 and December 31, 2021, respectively, representing the present value of expected future payments. The short-term PBFX Contingent Consideration is Number 2013-1 before the State Coastal Zone Industrial Control Board (the “CZ Board”), and the second appeal is before the Environmental Appeals Board (the "EAB") and appeals Secretary’s Order No. 2013-A-0020. The CZ Board held a hearingincluded within Accrued expenses on the first appeal on July 16, 2013, and ruled in favor of Delaware City Refining and the State of Delaware and dismissed the Appellants’ appeal for lack of standing.Company’s Condensed Consolidated Balance Sheets. The Appellants appealed that decision to the Delaware Superior Court, New Castle County, Case No. N13A-09-001 ALR, and Delaware City Refining and the State of Delaware filed cross-appeals. A hearing on the second appeal before the EAB, case no. 2013-06, was held on January 13, 2014, and the EAB ruled in favor of Delaware City Refining and the State and dismissed the appeal for lack of jurisdiction. The Appellants also filed a Notice of Appeal with the Superior Court appealing the EAB’s decision. On March 31, 2015 the Superior Court affirmed the decisions by both the CZ Board and the EAB stating they both lacked jurisdiction to rule on the Appellants' appeal. The Appellants appealed to the Delaware Supreme Court, and, on November 5, 2015, the Delaware Supreme Court affirmed the Superior Court decision.
The Company is also currently subject to certain other existing environmental claims and proceedings. The Company believes that there is only a remote possibility that future costs related to any of these other known contingent liability exposures would have a material impact on its financial position, results of operations or cash flows.
PBF LLC Limited Liability Company Agreement
The holders of limited liability company interests in PBF LLC, including PBF Energy, generally have to include for purposes of calculating their U.S. federal, state and local income taxes their share of any taxable income of PBF LLC, regardless of whether such holders receive cash distributions from PBF LLC. PBF Energy ultimately may not receive cash distributions from PBF LLC equal to its share of such taxable income or even equal to the actual tax due with respect to that income. For example, PBF LLC is required to include in taxable income PBF LLC’s allocable share of PBFX’s taxable income and gains (such share to be determined pursuant to the partnership
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
agreement of PBFX), regardless of the amount of cash distributions received by PBF LLC fromearn-out provision between PBFX and such taxable income and gains will flow-through to PBF Energy to the extent of its allocable share of the taxable income of PBF LLC. As a result, at certain times, the amount of cash otherwise ultimately available to PBF Energy on account of its indirect interestCrown Point concluded in PBFX may not be sufficient for PBF Energy to pay the amount of taxes it will owe on account of its indirect interests in PBFX.October 2022.
Taxable income of PBF LLC generally is allocated to the holders of PBF LLC units (including PBF Energy) pro rata in accordance with their respective share of the net profits and net losses of PBF LLC. In general, PBF LLC is required to make periodic tax distributions to the members of PBF LLC, including PBF Energy, pro rata in accordance with their respective percentage interests for such period (as determined under the amended and restated limited liability company agreement of PBF LLC), subject to available cash and applicable law and contractual restrictions (including pursuant to our debt instruments) and based on certain assumptions. Generally, these tax distributions are required to be in an amount equal to our estimate of the taxable income of PBF LLC for the year multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual or corporate resident in New York, New York (taking into account the nondeductibility of certain expenses). If, with respect to any given calendar year, the aggregate periodic tax distributions were less than the actual taxable income of PBF LLC multiplied by the assumed tax rate, PBF LLC is required to make a “true up” tax distribution, no later than March 15 of the following year, equal to such difference, subject to the available cash and borrowings of PBF LLC. PBF LLC obtains funding to pay its tax distributions by causing PBF Holding to distribute cash to PBF LLC and from distributions it receives from PBFX.
Tax Receivable Agreement
PBF Energy entered into a tax receivable agreement with the PBF LLC Series A and PBF LLC Series B Unit holdersunitholders (the “Tax Receivable Agreement”) that provides for the payment by PBF Energy to such persons of an amount equal to 85% of the amount of the benefits, if any, that PBF Energy is deemed to realize as a result of (i) increases in tax basis, as described below, and (ii) certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. For purposes of the Tax Receivable Agreement, the benefits deemed realized by PBF Energy will be computed by comparing the actual income tax liability of PBF Energy (calculated with certain assumptions) to the amount of such taxes that PBF Energy would have been required to pay had there been no increase to the tax basis of the assets of PBF LLC as a result of purchases or exchanges of PBF LLC Series A Units for shares of PBF Energy’sEnergy Class A common stock and had PBF Energy not entered into the Tax Receivable Agreement. The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless: (i) PBF Energy exercises its right to terminate the Tax Receivable Agreement, (ii) PBF Energy breaches any of its material obligations under the Tax Receivable Agreement or (iii) certain changes of control occur, in which case all obligations under the Tax Receivable Agreement will generally be accelerated and due as calculated under certain assumptions.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The payment obligations under the Tax Receivable Agreement are obligations of PBF Energy and not of PBF LLC.LLC, PBF Holding or PBFX. In general, PBF Energy expects to obtain funding for these annual payments from PBF LLC, primarily through tax distributions, which PBF LLC makes on a pro-rata basis to its owners. Such owners include PBF Energy, which holds a 94.4%99.3% interest in PBF LLC as of September 30, 2015 (89.9%2022 (99.2% as of December 31, 2014)2021). PBF LLC generally obtains funding to pay its tax distributions by causing PBF Holding to distribute cash to PBF LLC and from distributions it receives from PBFX.
As of September 30, 2022 and December 31, 2021, the Company recognized liabilities of $336.4 million and $48.3 million related to the Tax Receivable Agreement obligation, reflecting the estimate of the undiscounted amounts that PBF Energy expects to pay under the agreement, net of the impact of any deferred tax asset valuation allowance recognized in accordance with ASC 740. As future taxable income is recognized, increases in our Tax Receivable Agreement liability may be necessary in conjunction with the revaluation of deferred tax assets. Refer to “Note 12 - Income Taxes” for more details.
9. EQUITY
Noncontrolling Interest in PBF LLC
PBF Energy is the sole managing member of, and has a controlling interest in, PBF LLC. As the sole managing member of PBF LLC, PBF Energy operates and controls all of the business and affairs of PBF LLC and its subsidiaries. PBF Energy’s equity interest in PBF LLC was approximately 99.3% and 99.2% as of September 30, 2022 and December 31, 2021, respectively.
PBF Energy consolidates the financial results of PBF LLC and its subsidiaries, and records a noncontrolling interest for the economic interest in PBF Energy held by the members of PBF LLC other than PBF Energy. Noncontrolling interest on the Condensed Consolidated Statements of Operations includes the portion of net income or loss attributable to the economic interest in PBF Energy held by the members of PBF LLC other than PBF Energy. Noncontrolling interest on the Condensed Consolidated Balance Sheets reflects the portion of net assets of PBF Energy attributable to the members of PBF LLC other than PBF Energy.
The noncontrolling interest ownership percentages in PBF LLC as of December 31, 2021 and September 30, 2022 are calculated as follows:
| | | | | | | | | | | | | | | | | |
| Holders of PBF LLC Series A Units | | Outstanding Shares of PBF Energy Class A Common Stock | | Total * |
| December 31, 2021 | 927,990 | | 120,319,577 | | 121,247,567 |
| 0.8% | | 99.2% | | 100.0% |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| September 30, 2022 | 910,457 | | 122,303,893 | | 123,214,350 |
| 0.7% | | 99.3% | | 100.0% |
——————————
* Assumes all of the holders of PBF LLC Series A Units exchange their PBF LLC Series A Units for shares of PBF Energy’s Class A common stock on a one-for-one basis.
Noncontrolling Interest in PBFX
PBF LLC held a 47.7% limited partner interest in PBFX with the remaining 52.3% limited partner interest owned by the public common unitholders as of September 30, 2022. PBF LLC is also the sole member of PBF GP, the general partner of PBFX.
PBF Energy, through its ownership of PBF LLC, consolidates the financial results of PBFX, and records a noncontrolling interest for the economic interest in PBFX held by the public common unitholders.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
11. DIVIDENDS AND DISTRIBUTIONSNoncontrolling interest on the Condensed Consolidated Statements of Operations includes the portion of net income or loss attributable to the economic interest in PBFX held by the public common unitholders of PBFX other than PBF Energy (through its ownership in PBF LLC). Noncontrolling interest on the Condensed Consolidated Balance Sheets includes the portion of net assets of PBFX attributable to the public common unitholders of PBFX.
With respect to dividendsThe noncontrolling interest ownership percentages in PBFX as of December 31, 2021 and distributions paid during the nine months ended September 30, 2015,2022 are calculated as follows:
| | | | | | | | | | | | | | | | | |
| Units of PBFX Held by the Public | | Units of PBFX Held by PBF LLC | | Total |
| | | | | |
| | | | | |
| December 31, 2021 | 32,621,013 | | 29,953,631 | | 62,574,644 |
| 52.1% | | 47.9% | | 100.0% |
| September 30, 2022 | 32,788,031 | | 29,953,631 | | 62,741,662 |
| 52.3% | | 47.7% | | 100.0% |
Noncontrolling Interest in PBF LLC made aggregate non-tax quarterly distributions of $81,954, or $0.90 per unit, to its members, of which $77,287 was distributed prorata to PBF Energy andHolding
In connection with the balance was distributed to its other members. PBF Energy used this $77,287 to pay quarterly cash dividends of $0.30 per share of Class A common stock on March 10, 2015, May 27, 2015 and August 10, 2015. In addition, during the nine months ended September 30, 2015, PBF LLC made aggregate tax distributions to its members of $186,112, of which $175,551 was distributed to PBF Energy.
With respect to distributions paid during the nine months ended September 30, 2015, PBFX paid a distribution on outstanding common and subordinated units of $0.33 per unit on March 4, 2015, $0.35 per unit on May 29, 2015 and $0.37 per unit on August 31, 2015 for a total distribution of $35,772, of which $18,690 was distributed to PBF LLC and the balance was distributed to its public unit holders.
12. TREASURY UNITS
On August 19, 2014, PBF Energy's Board of Directors authorized the repurchase of up to $200,000acquisition of the Company's Series C Units,Chalmette refinery, PBF Holding records noncontrolling interests in two subsidiaries of Chalmette Refining. PBF Holding, through the repurchase of PBF Energy’s Class A common stock (the "Repurchase Program"). On October 29, 2014, PBF Energy's Board of Directors approvedChalmette Refining, owns an additional $100,000 increase to the existing Repurchase Program. As of September 30, 2015, the80% ownership interest in both Collins Pipeline Company has purchased approximately 6.05 million of the Company's Series C Units under the Repurchase Program, for a total of $150,804 through the purchase of PBF Energy’s Class A common stock in open market transactions. Duringand T&M Terminal Company. In the three and nine months ended September 30, 2015,2022 the Company repurchased 142,487recorded noncontrolling interest in the gains and 284,771losses of the Company's Series C Units, respectively, for $4,073these subsidiaries of $0.3 million and $8,073, respectively through the purchase of PBF Energy’s Class A common stock in open market transactions. During both,$(1.4) million, respectively. In the three and nine months ended September 30, 2014,2021 the Company repurchased 1,354,943recorded noncontrolling interest in the (losses) earnings of the Company's Series C Units for $32,593 through the purchasethese subsidiaries of PBF Energy’s Class A common stock in open market transactions.
The following table summarizes PBF Energy's Class A common stock repurchase activity under the Repurchase Program:$(0.1) million and $2.3 million, respectively.
|
| | | | | | |
| Number of shares purchased (1) | | Cost of purchased shares |
| Shares purchased as of December 31, 2014 | 5,765,946 |
| | $ | 142,731 |
|
| Shares purchased during the nine months ended September 30, 2015 | 284,771 |
| | 8,073 |
|
| Shares purchased as of September 30, 2015 | 6,050,717 |
| | $ | 150,804 |
|
| __________ | | | |
| (1) - The shares purchased include only those shares that have settled as of the period end date. |
These repurchases may be made from time to time through various methods, including open market transactions, block trades, accelerated share repurchases, privately negotiated transactions or otherwise, certain of which may be effected through Rule 10b5-1 and Rule 10b-18 plans. The timing and number of shares repurchased will depend on a variety of factors, including price, capital availability, legal requirements and economic and market conditions. PBF Energy is not obligated to purchase any shares under the Repurchase Program, and repurchases may be suspended or discontinued at any time without prior notice.
As of September 30, 2015, PBF Energy has the ability to purchase an additional $149,196 in Class A common stock under the approved Repurchase Program.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT
Changes in Equity and Noncontrolling Interests
The following tables summarize the changes in equity for the controlling and noncontrolling interests of PBF Energy for the nine months ended September 30, 2022 and 2021, respectively:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PBF Energy (in millions) | PBF Energy Inc. Equity | | Noncontrolling
Interest in PBF LLC | | Noncontrolling
Interest in PBF Holding | | Noncontrolling
Interest in PBFX | | Total Equity |
| Balance at January 1, 2022 | $ | 1,926.2 | | | $ | 95.4 | | | $ | 12.2 | | | $ | 499.0 | | | $ | 2,532.8 | |
| Comprehensive income (loss) | 2,236.8 | | | 21.5 | | | (1.4) | | | 57.6 | | | 2,314.5 | |
| Dividends and distributions | — | | | — | | | — | | | (30.2) | | | (30.2) | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Stock-based compensation expense | 18.5 | | | — | | | — | | | 4.2 | | | 22.7 | |
| Transactions in connection with stock-based compensation plans | 36.6 | | | — | | | — | | | (1.3) | | | 35.3 | |
| Exchanges of PBF Energy Company LLC Series A Units for PBF Energy Class A common stock | 0.1 | | | (0.1) | | | — | | | — | | | — | |
| Other | — | | | — | | | 1.4 | | | — | | | 1.4 | |
| | | | | | | | | |
| Balance at September 30, 2022 | $ | 4,218.2 | | | $ | 116.8 | | | $ | 12.2 | | | $ | 529.3 | | | $ | 4,876.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PBF Energy (in millions) | PBF Energy Inc. Equity | | Noncontrolling
Interest in PBF LLC | | Noncontrolling
Interest in PBF Holding | | Noncontrolling
Interest in PBFX | | Total Equity |
| Balance at January 1, 2021 | $ | 1,642.8 | | | $ | 93.4 | | | $ | 10.6 | | | $ | 455.5 | | | $ | 2,202.3 | |
| Comprehensive income | 65.8 | | | 0.7 | | | 2.3 | | | 57.7 | | | 126.5 | |
| Dividends and distributions | — | | | — | | | (0.7) | | | (30.0) | | | (30.7) | |
| | | | | | | | | |
| Stock-based compensation expense | 18.3 | | | — | | | — | | | 4.6 | | | 22.9 | |
| Transactions in connection with stock-based compensation plans | (0.8) | | | — | | | — | | | (1.0) | | | (1.8) | |
| | | | | | | | | |
| Exchanges of PBF Energy Company LLC Series A Units for PBF Energy Class A common stock | 0.2 | | | (0.2) | | | — | | | — | | | — | |
| | | | | | | | | |
| Other | 2.9 | | | — | | | — | | | — | | | 2.9 | |
| Balance at September 30, 2021 | $ | 1,729.2 | | | $ | 93.9 | | | $ | 12.2 | | | $ | 486.8 | | | $ | 2,322.1 | |
PBF ENERGY INC. AND BARREL DATA)PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13.The following tables summarize the changes in equity for the controlling and noncontrolling interests of PBF LLC for the nine months ended September 30, 2022 and 2021, respectively:
| | | | | | | | | | | | | | | | | | | | | | | |
PBF LLC (in millions) | PBF Energy Company LLC Equity | | Noncontrolling Interest in PBF Holding | | Noncontrolling
Interest in PBFX | | Total Equity |
| Balance at January 1, 2022 | $ | 1,722.9 | | | $ | 12.2 | | | $ | 499.0 | | | $ | 2,234.1 | |
| Comprehensive income (loss) | 2,855.1 | | | (1.4) | | | 57.6 | | | 2,911.3 | |
| Dividends and distributions | — | | | — | | | (30.2) | | | (30.2) | |
| | | | | | | |
| | | | | | | |
| Stock-based compensation expense | 18.5 | | | — | | | 4.2 | | | 22.7 | |
| Transactions in connection with stock-based compensation plans | (2.2) | | | — | | | (1.3) | | | (3.5) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Other | — | | | 1.4 | | | — | | | 1.4 | |
| | | | | | | |
| Balance at September 30, 2022 | $ | 4,594.3 | | | $ | 12.2 | | | $ | 529.3 | | | $ | 5,135.8 | |
| | | | | | | | | | | | | | | | | | | | | | | |
PBF LLC (in millions) | PBF Energy Company LLC Equity | | Noncontrolling Interest in PBF Holding | | Noncontrolling
Interest in PBFX | | Total Equity |
| Balance at January 1, 2021 | $ | 1,374.0 | | | $ | 10.6 | | | $ | 455.5 | | | $ | 1,840.1 | |
| Comprehensive income | 93.6 | | | 2.3 | | | 57.7 | | | 153.6 | |
| Dividends and distributions | — | | | (0.7) | | | (30.0) | | | (30.7) | |
| | | | | | | |
| | | | | | | |
| Stock-based compensation expense | 18.3 | | | — | | | 4.6 | | | 22.9 | |
| Transactions in connection with stock-based compensation plans | (0.4) | | | — | | | (1.0) | | | (1.4) | |
| | | | | | | |
| | | | | | | |
| Balance at September 30, 2021 | $ | 1,485.5 | | | $ | 12.2 | | | $ | 486.8 | | | $ | 1,984.5 | |
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10. EMPLOYEE BENEFIT PLANS
The components of net periodic benefit cost related to the Company’s defined benefit plans consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | Three Months Ended September 30, | | Nine Months Ended September 30, |
| Pension Benefits | 2022 | | 2021 | | 2022 | | 2021 |
| Components of net periodic benefit cost: | | | | | | | |
| Service cost | $ | 13.9 | | | $ | 14.4 | | | $ | 41.7 | | | $ | 43.1 | |
| Interest cost | 1.8 | | | 1.3 | | | 5.8 | | | 4.0 | |
| Expected return on plan assets | (4.3) | | | (3.6) | | | (13.1) | | | (10.7) | |
| Amortization of prior service cost and actuarial loss | 0.1 | | | 0.1 | | | 0.1 | | | 0.1 | |
| | | | | | | |
| Net periodic benefit cost | $ | 11.5 | | | $ | 12.2 | | | $ | 34.5 | | | $ | 36.5 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | Three Months Ended September 30, | | Nine Months Ended September 30, |
| Post-Retirement Medical Plan | 2022 | | 2021 | | 2022 | | 2021 |
| Components of net periodic benefit cost: | | | | | | | |
| Service cost | $ | 0.2 | | | $ | 0.3 | | | $ | 0.6 | | | $ | 0.8 | |
| Interest cost | — | | | 0.1 | | | 0.3 | | | 0.2 | |
| Amortization of prior service cost and actuarial loss | 0.2 | | | 0.1 | | | 0.3 | | | 0.5 | |
| | | | | | | |
| Net periodic benefit cost | $ | 0.4 | | | $ | 0.5 | | | $ | 1.2 | | | $ | 1.5 | |
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| Pension Benefits | | 2015 | | 2014 | | 2015 |
| 2014 |
| Components of net periodic benefit cost: | | | | | | | | |
| Service cost | | $ | 5,790 |
| | $ | 5,134 |
| | $ | 17,369 |
| | $ | 14,276 |
|
| Interest cost | | 710 |
| | 616 |
| | 2,126 |
| | 1,787 |
|
| Expected return on plan assets | | (830 | ) | | (546 | ) | | (2,489 | ) | | (1,609 | ) |
| Amortization of prior service costs | | 13 |
| | 13 |
| | 39 |
| | 26 |
|
| Amortization of loss | | 311 |
| | 277 |
| | 933 |
| | 757 |
|
| Net periodic benefit cost | | $ | 5,994 |
| | $ | 5,494 |
| | $ | 17,978 |
| | $ | 15,237 |
|
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11. REVENUES
As described in “Note 15 - Segment Information”, the Company’s business consists of the Refining segment and Logistics segment. The following table provides information relating to the Company’s revenues for each product or group of similar products or services by segment for the periods presented.
| | | | | | | | | | | | |
| Three Months Ended September 30, | |
| (in millions) | 2022 | | 2021 | |
| Refining Segment: | | | | |
| Gasoline and distillates | $ | 11,244.4 | | | $ | 6,143.4 | | |
| Asphalt and blackoils | 603.9 | | | 329.2 | | |
| Feedstocks and other | 554.3 | | | 380.3 | | |
| Chemicals | 246.4 | | | 240.7 | | |
| Lubricants | 103.3 | | | 79.7 | | |
| Total | 12,752.3 | | | 7,173.3 | | |
| Logistics Segment: | | | | |
| Logistics | 89.6 | | | 88.9 | | |
| Total revenues prior to eliminations | 12,841.9 | | | 7,262.2 | | |
| Elimination of intercompany revenues | (77.3) | | | (75.5) | | |
| Total Revenues | $ | 12,764.6 | | | $ | 7,186.7 | | |
| | | | |
| Nine Months Ended September 30, | |
| (in millions) | 2022 | | 2021 | |
| Refining Segment: | | | | |
| Gasoline and distillates | $ | 31,803.0 | | | $ | 16,364.1 | | |
| Asphalt and blackoils | 1,730.0 | | | 843.0 | | |
| Feedstocks and other | 1,341.1 | | | 883.2 | | |
| Chemicals | 744.6 | | | 665.8 | | |
| Lubricants | 325.8 | | | 213.6 | | |
| Total | 35,944.5 | | | 18,969.7 | | |
| Logistics Segment: | | | | |
| Logistics | 272.4 | | | 266.2 | | |
| Total revenues prior to eliminations | 36,216.9 | | | 19,235.9 | | |
| Elimination of intercompany revenues | (232.9) | | | (226.5) | | |
| Total Revenues | $ | 35,984.0 | | | $ | 19,009.4 | | |
The majority of the Company’s revenues are generated from the sale of refined products reported in the Refining segment. These revenues are largely based on the current spot (market) prices of the products sold, which represent consideration specifically allocable to the products being sold on a given day, and the Company recognizes those revenues upon delivery and transfer of title to the products to our customers. The time at which delivery and transfer of title occurs is the point when the Company’s control of the products is transferred to the Company’s customers and when its performance obligation to its customers is fulfilled. Delivery and transfer of title are specifically agreed to between the Company and customers within the contracts. The Refining segment also has contracts which contain fixed pricing, tiered pricing, minimum volume features with makeup periods, or other factors that have not materially been affected by ASC 606, Revenue from Contracts with Customers.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| Post Retirement Medical Plan | | 2015 | | 2014 | | 2015 | | 2014 |
| Components of net periodic benefit cost: | | | | | | | | |
| Service cost | | $ | 243 |
| | $ | 269 |
| | $ | 731 |
| | $ | 747 |
|
| Interest cost | | 134 |
| | 125 |
| | 403 |
| | 353 |
|
| Amortization of prior service costs | | 76 |
| | 52 |
| | 228 |
| | 107 |
|
| Amortization of loss (gain) | | — |
| | — |
| | — |
| | (4 | ) |
| Net periodic benefit cost | | $ | 453 |
| | $ | 446 |
| | $ | 1,362 |
| | $ | 1,203 |
|
Deferred Revenue
14.The Company records deferred revenue when cash payments are received or are due in advance of performance, including amounts which are refundable. Deferred revenue was $74.8 million and $42.7 million as of September 30, 2022 and December 31, 2021, respectively. Fluctuations in the deferred revenue balance are primarily driven by the timing and extent of cash payments received or due in advance of satisfying the Company’s performance obligations.
The Company’s payment terms vary by type and location of customers and the products offered. The period between invoicing and when payment is due is not significant (i.e. generally within two months). For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12. INCOME TAXES
PBF Energy is required to file federal and applicable state corporate income tax returns and recognizes income taxes on its pre-tax income (loss), which to-date has consisted primarily of its share of PBF LLC’s pre-tax income (loss) (approximately 99.3% and 99.2% as of September 30, 2022 and December 31, 2021, respectively). PBF LLC is organized as a limited liability company and PBFX is an MLP, both of which are treated as “flow-through” entities for federal income tax purposes and therefore are not subject to income taxes apart from the income tax attributable to the two subsidiaries acquired in connection with the acquisition of Chalmette Refining and PBF Holding’s wholly-owned Canadian subsidiary, PBF Energy Limited, that are treated as C-Corporations for income tax purposes, with the tax provision calculated based on the effective tax rate for the periods presented.
Valuation Allowance
The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of existing deferred tax assets. Negative evidence evaluated as part of this assessment includes cumulative losses incurred over a three-year period. Such objective evidence could limit PBF Energy’s ability to consider other subjective evidence, such as PBF Energy’s projections for future taxable income as market conditions, commodity prices and demand for refined products normalize.
On the basis of this evaluation, a valuation allowance is recorded to recognize only the portion of deferred tax assets that are more likely than not to be realized. The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryover period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as PBF Energy’s projections for future taxable income.
The Company evaluated all available positive and negative evidence and determined that a significant portion of the $308.5 million valuation allowance, as of December 31, 2021, associated with deferred tax assets should be released because the Company believed that it had become more likely than not that the deferred tax assets would be realized. In the Company' s evaluation of the need for and amount of a valuation allowance on its deferred tax assets at June 30, 2022, the Company placed the most weight on objectively verifiable direct evidence, including its recent and historical operating results and the significant improvement in its operating profitability. The specific positive factors and evidence considered in the realizability of its deferred tax assets included the cumulative pre-tax income that the Company generated over the three-year period ended June 30, 2022. This resulted in the release of approximately $197.6 million of the valuation allowance in the six months ended June 30, 2022. The remaining portion of the valuation allowance in the amount of $110.9 million was released in the three months ended September 30, 2022.
Inflation Reduction Act
On August 16, 2022, the Inflation Reduction Act (“the Act”) was enacted and signed into law in the United States. The Act is a budget reconciliation package that includes significant law changes relating to tax, climate change, energy, and health care. The tax provisions include, among other items, a corporate alternative minimum tax of 15%, an excise tax of 1% on corporate stock buy-backs, energy-related tax credits, and additional IRS funding. The Company is currently assessing the potential impact that the tax provisions of the Act may have on our Condensed Consolidated Financial Statements.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The income tax provision in the PBF Energy Condensed Consolidated Statements of Operations consists of the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| (in millions) | 2022 | | 2021 | | 2022 | | 2021 |
| Current income tax expense | $ | 85.8 | | | $ | 8.3 | | | $ | 150.8 | | | $ | 7.9 | |
| Deferred income tax expense | 105.3 | | | 12.0 | | | 165.5 | | | 8.5 | |
| Total income tax expense | $ | 191.1 | | | $ | 20.3 | | | $ | 316.3 | | | $ | 16.4 | |
The income tax provision is based on earnings before taxes attributable to PBF Energy and excludes earnings before taxes attributable to noncontrolling interests as such interests are generally not subject to income taxes except as noted above. PBF Energy’s effective income tax rate for the three and nine months ended September 30, 2022, was 15.3% and 12.4%, respectively. PBF Energy’s effective income tax rate for the three and nine months ended September 30, 2021, was 25.6% and 20.0%, respectively.
PBF Energy’s effective income tax rate for the three and nine months ended September 30, 2022, including the impact of income attributable to noncontrolling interests of $27.8 million and $77.7 million, respectively, was 15.0% and 12.0%, respectively. PBF Energy’s effective income tax rate for the three and nine months ended September 30, 2021, including the impact of income attributable to noncontrolling interests of $19.6 million and $60.7 million, respectively, was 20.5% and 11.5%, respectively.
For the three and nine months ended September 30, 2022 and September 30, 2021, the difference between the United States statutory rate and PBF Energy’s effective tax rate was primarily attributable to the changes in the deferred tax asset valuation allowance.
The reported income tax provision in the PBF LLC Condensed Consolidated Statements of Operations consists of the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| (in millions) | 2022 | | 2021 | | 2022 | | 2021 |
| Current income tax expense (benefit) | $ | 0.4 | | | $ | (0.2) | | | $ | 0.4 | | | $ | (1.3) | |
| Deferred income tax expense (benefit) | 10.0 | | | (1.8) | | | 0.7 | | | (15.6) | |
| Total income tax expense (benefit) | $ | 10.4 | | | $ | (2.0) | | | $ | 1.1 | | | $ | (16.9) | |
The Company has determined there are no material uncertain tax positions as of September 30, 2022. The Company does not have any unrecognized tax benefits.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13. FAIR VALUE MEASUREMENTS
The tables below present information about the Company'sCompany’s financial assets and liabilities measured and recorded at fair value on a recurring basis and indicate the fair value hierarchy of the inputs utilized to determine the fair values as of September 30, 20152022 and December 31, 2014.2021.
We haveThe Company has elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty; however, fair value amounts by hierarchy level are presented on a gross basis in the tables below. We haveThe Company has posted cash margin with various counterparties to support hedging and trading activities. The cash margin posted is required by counterparties as collateral deposits and cannot be offset against the fair value of open contracts except in the event of default. We haveThe Company has no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.Condensed Consolidated Balance Sheets.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2022 |
| Fair Value Hierarchy | | Total Gross Fair Value | | Effect of Counter-party Netting | | Net Carrying Value on Balance Sheet |
| (in millions) | Level 1 | | Level 2 | | Level 3 | | |
| Assets: | | | | | | | | | | | |
| Money market funds | $ | 93.6 | | | $ | — | | | $ | — | | | $ | 93.6 | | | N/A | | $ | 93.6 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Commodity contracts | 354.2 | | | 32.6 | | | — | | | 386.8 | | | (366.6) | | | 20.2 | |
| Derivatives included with inventory intermediation agreement obligations | — | | | 40.9 | | | — | | | 40.9 | | | — | | | 40.9 | |
| | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | |
| Commodity contracts | 360.3 | | | 6.3 | | | — | | | 366.6 | | | (366.6) | | | — | |
| Catalyst obligations | — | | | 21.3 | | | — | | | 21.3 | | | — | | | 21.3 | |
| Renewable energy credit and emissions obligations | — | | | 1,233.8 | | | — | | | 1,233.8 | | | — | | | 1,233.8 | |
| Contingent consideration obligations | — | | | — | | | 160.6 | | | 160.6 | | | — | | | 160.6 | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, 2021 |
| Fair Value Hierarchy | | Total Gross Fair Value | | Effect of Counter-party Netting | | Net Carrying Value on Balance Sheet |
| (in millions) | Level 1 | | Level 2 | | Level 3 | | |
| Assets: | | | | | | | | | | | |
| Money market funds | $ | 270.1 | | | $ | — | | | $ | — | | | $ | 270.1 | | | N/A | | $ | 270.1 | |
| | | | | | | | | | | |
| Commodity contracts | 71.5 | | | — | | | — | | | 71.5 | | | (71.5) | | | — | |
| Derivatives included with inventory intermediation agreement obligations | — | | | 19.7 | | | — | | | 19.7 | | | — | | | 19.7 | |
| | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | |
| Commodity contracts | 79.7 | | | 3.8 | | | — | | | 83.5 | | | (71.5) | | | 12.0 | |
| Catalyst obligations | — | | | 58.4 | | | — | | | 58.4 | | | — | | | 58.4 | |
| Renewable energy credit and emissions obligations | — | | | 953.9 | | | — | | | 953.9 | | | — | | | 953.9 | |
| Contingent consideration obligations | — | | | — | | | 32.3 | | | 32.3 | | | — | | | 32.3 | |
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | As of September 30, 2015 |
| | Fair Value Hierarchy | | Total Gross Fair Value | | Effect of Counter-party Netting | | Net Carrying Value on Balance Sheet |
| | Level 1 | | Level 2 | | Level 3 | | |
| Assets: | | | | | | | | | | | |
| Money market funds | $ | 342,414 |
| | $ | — |
| | $ | — |
| | $ | 342,414 |
| | N/A |
| | $ | 342,414 |
|
| Marketable securities | 234,249 |
| | — |
| | — |
| | 234,249 |
| | N/A |
| | 234,249 |
|
| Non-qualified pension plan assets | 9,441 |
| | — |
| | — |
| | 9,441 |
| | N/A |
| | 9,441 |
|
| Commodity contracts | 148,907 |
| | 10,710 |
| | 838 |
| | 160,455 |
| | (137,670 | ) | | 22,785 |
|
| Derivatives included with intermediation agreement obligations | — |
| | 44,684 |
| | — |
| | 44,684 |
| | — |
| | 44,684 |
|
| Derivatives included with inventory supply arrangement obligations | — |
| | 1,031 |
| | — |
| | 1,031 |
| | — |
| | 1,031 |
|
| Liabilities: | | | | | | | | | | | |
| Commodity contracts | 134,702 |
| | 1,945 |
| | 1,023 |
| | 137,670 |
| | (137,670 | ) | | — |
|
| Catalyst lease obligations | — |
| | 27,577 |
| | — |
| | 27,577 |
| | — |
| | 27,577 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, 2014 |
| | Fair Value Hierarchy | | Total Gross Fair Value | | Effect of Counter-party Netting | | Net Carrying Value on Balance Sheet |
| | Level 1 | | Level 2 | | Level 3 | |
| Assets: | | | | | | | | | | | |
| Money market funds | $ | 5,575 |
| | $ | — |
| | $ | — |
| | $ | 5,575 |
| | N/A |
| | $ | 5,575 |
|
| Marketable securities | 234,930 |
| | — |
| | — |
| | 234,930 |
| | N/A |
| | 234,930 |
|
| Non-qualified pension plan assets | 5,494 |
| | — |
| | — |
| | 5,494 |
| | N/A |
| | 5,494 |
|
| Commodity contracts | 415,023 |
| | 12,093 |
| | 1,715 |
| | 428,831 |
| | (397,676 | ) | | 31,155 |
|
| Derivatives included with inventory intermediation agreement obligations | — |
| | 94,834 |
| | — |
| | 94,834 |
| | — |
| | 94,834 |
|
| Derivatives included with inventory supply arrangement obligations | — |
| | 4,251 |
| | — |
| | 4,251 |
| | — |
| | 4,251 |
|
| Liabilities: | | | | | | | | | | | |
| Commodity contracts | 390,144 |
| | 7,338 |
| | 194 |
| | 397,676 |
| | (397,676 | ) | | — |
|
| Catalyst lease obligations | — |
| | 36,559 |
| | — |
| | 36,559 |
| | — |
| | 36,559 |
|
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
The valuation methods used to measure financial instruments at fair value are as follows:
•Money market funds categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted market prices and included within Cash and cash equivalents.
Marketable securities, consisting primarily of US Treasury securities, categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted market prices.
Non-qualified pension plan assets categorized in Level 1 of the fair value hierarchy are measured at fair value using a market approach based on published net asset values of mutual funds and included within Deferred charges and other assets, net.
•The commodity contracts categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted prices in an active market. The commodity contracts categorized in Level 2 of the fair value hierarchy are measured at fair value using a market approach based upon future commodity prices for similar instruments quoted in active markets.
•The derivatives included with inventory intermediation agreement obligations and the catalyst obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based upon commodity prices for similar instruments quoted in active markets.
•Renewable energy credit and emissions obligations primarily represent our liability for the purchase of (i) biofuel credits (primarily RINs in the U.S.) needed to satisfy our obligation to blend biofuels into the products we produce and (ii) emission credits under the AB 32 and similar programs (collectively, the cap-and-trade systems). To the degree we are unable to blend biofuels (such as ethanol and biodiesel) at percentages required under the biofuel programs, we must purchase biofuel credits to comply with these programs. Under the cap-and-trade systems, we must purchase emission credits to comply with these systems. The liability for environmental credits is in part based on our deficit for such credits as of the balance sheet date, if any, after considering any credits acquired or under contract, and is equal to the product of the credits deficit and the market price of these credits as of the balance sheet date. The environmental credit obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based on quoted prices from an independent pricing service.
•When applicable, commodity contracts categorized in Level 3 of the fair value hierarchy consist ofcommodity price swap contracts that relate to forecasted purchases of crude oil for which quoted forward market prices are not readily available due to market illiquidity. The forward prices used to value these swaps wereare derived using broker quotes, prices from other third partythird-party sources and other available market based data.
•The derivatives included with inventory supply arrangementcontingent consideration obligations derivatives included with inventory intermediation agreement obligationsat September 30, 2022 and the catalyst lease obligationsDecember 31, 2021 are categorized in Level 23 of the fair value hierarchy and are estimated using discounted cash flow models based on management’s estimate of the future cash flows related to the earn-out periods.
Non-qualified pension plan assets are measured at fair value using a market approach based upon commodity priceson published net asset values of mutual funds as a practical expedient. As of September 30, 2022 and December 31, 2021, $18.4 million and $20.7 million, respectively, were included within Deferred charges and other assets, net for similar instruments quoted in active markets.
these non-qualified pension plan assets.
The table below summarizes the changes in fair value measurements categorized in Level 3 of the fair value hierarchy:hierarchy, which primarily includes the change in estimated future earnings related to both the Martinez Contingent Consideration and the PBFX Contingent Consideration:
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| (in millions) | 2022 | | 2021 | | 2022 | | 2021 |
| Balance at beginning of period | $ | 157.6 | | | $ | 26.1 | | | $ | 32.3 | | | $ | 12.1 | |
| Additions | — | | | — | | | — | | | — | |
| | | | | | | |
| Settlements | — | | | — | | | (2.6) | | | (12.1) | |
| Unrealized loss included in earnings | 3.0 | | | 0.1 | | | 130.9 | | | 26.2 | |
| | | | | | | |
| | | | | | | |
| Balance at end of period | $ | 160.6 | | | $ | 26.2 | | | $ | 160.6 | | | $ | 26.2 | |
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | | 2015 | | 2014 | | 2015 | | 2014 |
| Balance at beginning of period | | $ | 1,905 |
| | $ | 2,689 |
| | $ | 1,521 |
| | $ | (23,365 | ) |
| Purchases | | — |
| | — |
| | — |
| | — |
|
| Settlements | | (1,238 | ) | | (9,020 | ) | | (12,549 | ) | | (5,353 | ) |
| Unrealized gain included in earnings | | (852 | ) | | 19,377 |
| | 10,843 |
| | 41,764 |
|
| Transfers into Level 3 | | — |
| | — |
| | — |
| | — |
|
| Transfers out of Level 3 | | — |
| | — |
| | — |
| | — |
|
| Balance at end of period | | $ | (185 | ) | | $ | 13,046 |
| | $ | (185 | ) | | $ | 13,046 |
|
There were no transfers between levels during the three and nine months ended September 30, 20152022 or the three and 2014, respectively.nine months ended September 30, 2021.
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
Fair value of debt
The table below summarizes the faircarrying value and carryingfair value of debt as of September 30, 20152022 and December 31, 2014.2021.
| | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 |
| (in millions) | Carrying value | | Fair
value | | Carrying value | | Fair
value |
| 2025 Senior Secured Notes (a) | $ | — | | | $ | — | | | $ | 1,250.0 | | | $ | 1,192.7 | |
| 2028 Senior Notes (a) | 801.6 | | | 686.4 | | | 826.5 | | | 520.9 | |
| 2025 Senior Notes (a) | 664.5 | | | 632.4 | | | 669.5 | | | 475.9 | |
| | | | | | | |
| PBFX 2023 Senior Notes (a) | 525.0 | | | 523.4 | | | 525.0 | | | 513.7 | |
| Revolving Credit Facility (b) | — | | | — | | | 900.0 | | | 900.0 | |
| PBFX Revolving Credit Facility (b) | — | | | — | | | 100.0 | | | 100.0 | |
| | | | | | | |
| Catalyst financing arrangements (c) | 21.3 | | | 21.3 | | | 58.4 | | | 58.4 | |
| 2,012.4 | | | 1,863.5 | | | 4,329.4 | | | 3,761.6 | |
| Less - Current debt | (523.8) | | | (523.8) | | | — | | | — | |
| Unamortized premium | 0.4 | | | n/a | | 1.4 | | | n/a |
| Less - Unamortized deferred financing costs | (41.3) | | | n/a | | (35.0) | | | n/a |
| Long-term debt | $ | 1,447.7 | | | $ | 1,339.7 | | | $ | 4,295.8 | | | $ | 3,761.6 | |
|
| | | | | | | | | | | | | | | |
| | September 30, 2015 | | December 31, 2014 |
| | Carrying value | | Fair value | | Carrying value | | Fair value |
| Senior Secured Notes (a) | $ | 669,354 |
| | $ | 680,548 |
| | $ | 668,520 |
| | $ | 675,580 |
|
| PBFX Senior Notes (a) | 350,000 |
| | 328,976 |
| | — |
| | — |
|
| PBFX Term Loan (b) | 234,200 |
| | 234,200 |
| | 234,900 |
| | 234,900 |
|
| Rail Facility (b) | 67,491 |
| | 67,491 |
| | 37,270 |
| | 37,270 |
|
| PBFX Revolving Credit Facility (b) | 24,500 |
| | 24,500 |
| | 275,100 |
| | 275,100 |
|
| Revolving Loan (b) | — |
| | — |
| | — |
| | — |
|
| Catalyst leases (c) | 27,577 |
| | 27,577 |
| | 36,559 |
| | 36,559 |
|
| | 1,373,122 |
| | 1,363,292 |
| | 1,252,349 |
| | 1,259,409 |
|
| Less - Current maturities | — |
| | — |
| | — |
| | — |
|
| Long-term debt | $ | 1,373,122 |
| | $ | 1,363,292 |
| | $ | 1,252,349 |
| | $ | 1,259,409 |
|
(a) The estimated fair value, 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 Senior Secured Notes and the PBFX Senior Notes.outstanding senior notes.
(b) The estimated fair value approximates carrying value, categorized as a Level 2 measurement, as these borrowings bear interest based upon short-term floating market interest rates.
(c) Catalyst leasesfinancing arrangements are valued using a market approach based upon commodity prices for similar instruments quoted in active markets and are categorized as a Level 2 measurement. The Company has elected the fair value option for accounting for its catalyst lease repurchase obligations as the Company'sCompany’s liability is directly impacted by the change in fair value of the underlying catalyst.
15.
14. DERIVATIVES
The Company uses derivative instruments to mitigate certain exposures to commodity price risk. The Company’s crude supply agreement containsCompany entered into the Third Inventory Intermediation Agreement that contain purchase obligations for certain volumes of crude oil, and other feedstocks. In addition, the Company entered into Inventory Intermediation Agreements commencing in July 2013 that contain purchase obligations for certain volumes of intermediates and refined products. The purchase obligations related to crude oil, feedstocks, intermediates and refined products under these agreements are derivative instruments that have been designated as fair value hedges in order to hedge the commodity price volatility of certain refinery inventory. The fair value of these purchase obligation derivatives is based on market prices of the underlying crude oil, intermediates and refined products. The level of activity for these derivatives is based on the level of operating inventories.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2015,2022 and December 31, 2021, there were 238,3062,022,873 and 2,081,783 barrels of crude oil and feedstocks (662,579 barrels at December 31, 2014) outstanding under these derivative instruments designated as fair value hedges, and no barrels (no barrels at December 31, 2014) outstanding under these derivative instruments not designated as hedges.respectively. As of September 30, 2015,2022, there were 3,130,7661,016,884 barrels of intermediates and refined products (3,106,325(2,070,550 barrels at December 31, 2014)2021) outstanding under these derivative instruments designated as fair value hedges and no barrels (no barrels at December 31, 2014) outstanding under these derivative instruments not designated as hedges. These volumes represent the notional value of the contract.
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
The Company also enters into economic hedges primarily consisting of commodity derivative contracts that are not designated as hedges and are used to manage price volatility in certain crude oil and feedstock inventories as well as crude oil, feedstock, and refined product sales or purchases. The objective in entering into economic hedges is consistent with the objectives discussed above for fair value hedges. As of September 30, 2015,2022, there were 45,651,00059,925,000 barrels of crude oil and 2,277,00010,056,000 barrels of refined products (47,339,000(36,246,000 and 1,970,871,5,819,000, respectively, as of December 31, 2014)2021), outstanding under short and long term commodity derivative contracts not designated as hedges representing the notional value of the contracts.
The Company also uses derivative instruments to mitigate the risk associated with the price of credits needed to comply with various governmental and regulatory environmental compliance programs. For such contracts that represent derivatives, the Company elects the normal purchase normal sale exception under ASC 815, Derivatives and Hedging, and therefore does not record them at fair value.
The following tables provide information aboutregarding the fair values of these derivative instruments as of September 30, 20152022 and December 31, 20142021, and the line items in the consolidated balance sheetCondensed Consolidated Balance Sheets in which the fair values are reflected.
| | | | | | | | |
| Description |
Balance Sheet Location | Fair Value
Asset/(Liability) |
| | (in millions) |
| Derivatives designated as hedging instruments: | | |
| September 30, 2022: | | |
| | |
| Derivatives included within the inventory intermediation agreement obligations | Accrued expenses | $ | 40.9 | |
| December 31, 2021: | | |
| | |
| Derivatives included within the inventory intermediation agreement obligations | Accrued expenses | $ | 19.7 | |
| | |
| Derivatives not designated as hedging instruments: | | |
| September 30, 2022: | | |
| Commodity contracts | Accounts receivable | $ | 20.2 | |
| | |
| December 31, 2021: | | |
| Commodity contracts | Accounts receivable | $ | (12.0) | |
|
| | | | |
| Description |
Balance Sheet Location | Fair Value Asset/(Liability) |
| Derivatives designated as hedging instruments: | | |
| September 30, 2015: | | |
| Derivatives included with inventory supply arrangement obligations | Accrued expenses | $ | 1,031 |
|
| Derivatives included with the intermediation agreement obligations | Accrued expenses | $ | 44,684 |
|
| December 31, 2014 | | |
| Derivatives included with inventory supply arrangement obligations | Accrued expenses | $ | 4,251 |
|
| Derivatives included with the intermediation agreement obligations | Accrued expenses | $ | 94,834 |
|
| | | |
| Derivatives not designated as hedging instruments: | | |
| September 30, 2015: | | |
| Commodity contracts | Accounts receivable | $ | 22,785 |
|
| December 31, 2014 | | |
| Commodity contracts | Accounts receivable | $ | 31,155 |
|
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
The following tables providetable provides information about the gainregarding gains or losslosses recognized in income on these derivative instruments and the line items in the consolidated financial statementsCondensed Consolidated Statements of Operations in which such gains and losses are reflected. |
| | | | |
| Description | Location of Gain or (Loss) Recognized in Income on Derivatives | Gain or (Loss) Recognized in Income on Derivatives |
| Derivatives designated as hedging instruments: | | |
| For the three months ended September 30, 2015: | | |
| Derivatives included with inventory supply arrangement obligations | Cost of sales | $ | 1,409 |
|
| Derivatives included with the intermediation agreement obligations | Cost of sales | $ | 34,424 |
|
| For the three months ended September 30, 2014: | | |
| Derivatives included with inventory supply arrangement obligations | Cost of sales | $ | 2,729 |
|
| Derivatives included with the intermediation agreement obligations | Cost of sales | $ | 20,900 |
|
| For the nine months ended September 30, 2015: | | |
| Derivatives included with inventory supply arrangement obligations | Cost of sales | $ | (3,220 | ) |
| Derivatives included with the intermediation agreement obligations | Cost of sales | $ | (50,150 | ) |
| For the nine months ended September 30, 2014: | | |
| Derivatives included with inventory supply arrangement obligations | Cost of sales | $ | 1,660 |
|
| Derivatives included with the intermediation agreement obligations | Cost of sales | $ | 29,942 |
|
| | | |
| Derivatives not designated as hedging instruments: | | |
| For the three months ended September 30, 2015: | | |
| Commodity contracts | Cost of sales | $ | 31,017 |
|
| For the three months ended September 30, 2014: | | |
| Commodity contracts | Cost of sales | $ | 70,624 |
|
| For the nine months ended September 30, 2015: | | |
| Commodity contracts | Cost of sales | $ | (14,080 | ) |
| For the nine months ended September 30, 2014: | | |
| Commodity contracts | Cost of sales | $ | 101,902 |
|
| | | |
| Hedged items designated in fair value hedges: | | |
| For the three months ended September 30, 2015: | | |
| Crude oil and feedstock inventory | Cost of sales | $ | (1,409 | ) |
| Intermediate and refined product inventory | Cost of sales | $ | (34,424 | ) |
| For the three months ended September 30, 2014: | | |
| Crude oil and feedstock inventory | Cost of sales | $ | (2,729 | ) |
| Intermediate and refined product inventory | Cost of sales | $ | (20,900 | ) |
| For the nine months ended September 30, 2015: | | |
| Crude oil and feedstock inventory | Cost of sales | $ | 3,220 |
|
| Intermediate and refined product inventory | Cost of sales | $ | 50,150 |
|
| For the nine months ended September 30, 2014: | | |
| Crude oil and feedstock inventory | Cost of sales | $ | (1,660 | ) |
| Intermediate and refined product inventory | Cost of sales | $ | (29,942 | ) |
| | | | | | | | |
| Description | Location of Gain or (Loss) Recognized in Income on Derivatives | Gain or (Loss)
Recognized in
Income on Derivatives |
| | (in millions) |
| Derivatives designated as hedging instruments: | | |
| For the three months ended September 30, 2022: | | |
| | |
| Derivatives included within the inventory intermediation agreement obligations | Cost of products and other | $ | 17.7 | |
| For the three months ended September 30, 2021: | | |
| | |
| Derivatives included within the inventory intermediation agreement obligations | Cost of products and other | $ | (3.8) | |
| For the nine months ended September 30, 2022: | | |
| | |
| Derivatives included within the inventory intermediation agreement obligations | Cost of products and other | $ | 21.1 | |
| For the nine months ended September 30, 2021: | | |
| | |
| Derivatives included within the inventory intermediation agreement obligations | Cost of products and other | $ | (46.0) | |
| | |
| Derivatives not designated as hedging instruments: | | |
| For the three months ended September 30, 2022: | | |
| | |
| Commodity contracts | Cost of products and other | $ | 28.6 | |
| For the three months ended September 30, 2021: | | |
| | |
| Commodity contracts | Cost of products and other | $ | (33.2) | |
| For the nine months ended September 30, 2022: | | |
| Commodity contracts | Cost of products and other | $ | (23.5) | |
| For the nine months ended September 30, 2021: | | |
| Commodity contracts | Cost of products and other | $ | (67.7) | |
| | |
| Hedged items designated in fair value hedges: | | |
| For the three months ended September 30, 2022: | | |
| | |
| Crude oil, intermediate and refined product inventory | Cost of products and other | $ | (17.7) | |
| For the three months ended September 30, 2021: | | |
| | |
| Crude oil, intermediate and refined product inventory | Cost of products and other | $ | 3.8 | |
| For the nine months ended September 30, 2022: | | |
| | |
| Crude oil, intermediate and refined product inventory | Cost of products and other | $ | (21.1) | |
| For the nine months ended September 30, 2021: | | |
| | |
| Crude oil, intermediate and refined product inventory | Cost of products and other | $ | 46.0 | |
The Company had no ineffectiveness related to the Company's fair value hedges for the three and nine months ended September 30, 20152022 or the three and 2014.nine months ended September 30, 2021.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
16.15. SEGMENT INFORMATION
The Company'sCompany’s operations are organized into two reportable segments, Refining and Logistics. Operations that are not included in the Refining andor Logistics segments are included in Corporate. Intersegment transactions are eliminated in the consolidated financial statementsCondensed Consolidated Financial Statements and are included in Eliminations.the Eliminations column below.
Refining
Refining
As of September 30, 2015, the Company 'sThe Company’s Refining Segmentsegment includes the operations of its threesix refineries, whichincluding certain related logistics assets that are not owned by PBFX. The Company’s refineries are located in Toledo, Ohio, Delaware City, Delaware, and Paulsboro, New Jersey.Jersey, Toledo, Ohio, Chalmette, Louisiana, Torrance, California and Martinez, California. The refineries produce unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. The Company purchases crude oil, other feedstocks and blending components from various third-party suppliers. The Company sells products throughout the Northeast, Midwest, Gulf Coast and MidwestWest Coast of the United States, as well as in other regions of the United States, Canada and Canada,Mexico, and is able to ship products to other international destinations. As of September 30, 2015, the refineries have a combined processing capacity, known as throughput, of approximately 540,000 barrels per day ("bpd"), and a weighted-average Nelson Complexity Index of 11.3.
Logistics
The Company formedCompany’s Logistics segment is comprised of PBFX, a publicly traded master limited partnership,publicly-traded MLP, formed to own or lease, operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets. PBFX'sPBFX’s assets primarily consist of (i) a rail terminal which has a double loop track and ancillary pumpingtruck terminals and unloading equipmentracks, tank farms and pipelines that were acquired from or contributed by PBF LLC and are located at, or nearby, the Delaware City refinery with an unloading capacity of approximately 130,000 bpd; (ii) a truck terminal comprised of six lease automatic custody transfer units accepting crude oil deliveries by truck located at the Toledo refinery designed for total throughput capacity of up to approximately 22,500 bpd; (iii) a heavy crude rail unloading rack located at the Delaware City refinery with an unloading capacity of at least 40,000 bpd; (iv) a tank farm with aggregate storage capacity of approximately 3.9 million barrels, including a propane storage and loading facility with throughput capacity of 11,000 bpd at the Toledo Refinery; (v) a 23.4 mile 16-inch interstate petroleum products pipeline with capacity in excess of 125,000 bpd at the Delaware City refinery and; (vi) a 15-lane, 76,000 bpd capacity truck loading rack utilized to distribute gasoline, distillates and liquefied petroleum gas at the Delaware City refinery.Company’s refineries. PBFX provides various rail, truck and truckmarine terminaling services, pipeline transportation services and storage services to PBF Holding and/or its subsidiaries and third-party customers through long-termfee-based commercial agreements. PBFX currently does not generate third party revenuesignificant third-party revenues and as such intersegment related-party revenues are eliminated in consolidation. PriorFrom a PBF Energy and PBF LLC perspective, the Company’s chief operating decision maker evaluates the Logistics segment as a whole without regard to the PBFX Offering, PBFX's assets were operated within the refining operationsany of the Company's Delaware City and Toledo refineries. The assets did not generate third party revenue and were not considered to be a separate reportable segment.
PBFX’s individual operating segments.
The Company evaluates the performance of its segments based primarily on income from operations. Income from operations includes those revenues and expenses that are directly attributable to management of the respective segment. The Logistics segment'ssegment’s revenues include inter-segmentintersegment transactions with the Company'sCompany’s Refining segment at prices the Company believes are substantially equivalent to the prices that could have been negotiated with unaffiliated parties with respect to similar services. Activities of the Company'sCompany’s business that are not included in the two operating segments are included in Corporate. Such activities consist primarily of corporate staff operations and other items that are not specific to the normal operations of the two operating segments. The Company does not allocate certain items of othernon-operating income and expense items, including income taxes, to the individual segments. The Refining segment’s operating subsidiaries and PBFX are primarily pass-through entities with respect to income taxes.
Total assets of each segment consist of property, plant and equipment, inventories, cash and cash equivalents, accounts receivable and other assets directly associated with the segment’s operations. Corporate assets consist primarily of non-operating property, plant and equipment and other assets not directly related to the Company’s refinery and logistics operations.
Disclosures regarding ourthe Company’s reportable segments with reconciliations to consolidated totals for the three and nine months ended September 30, 20152022 and September 30, 20142021 are presented below. The Logistics segment's results include financial information of the predecessor of PBFX for periods prior to May 13, 2014, and the financial information of PBFX for the period beginning May 14, 2014, the completion date of the PBFX Offering. In connection with the contributioncertain contributions by PBF LLC of the DCR West Rack, the Toledo Storage Facility and the Delaware City Products Pipeline and Truck Rack,to PBFX, the accompanying segment information has beenis retrospectively adjusted to include the historical results of the DCR West Rack, Toledo Storage Facility and the Delaware City Products Pipeline and Truck Rackthose assets in the Logistics Segmentsegment for all periods presented prior to such contributions.contributions, as applicable.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2022 |
PBF Energy - (in millions) | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 12,752.3 | | | $ | 89.6 | | | $ | — | | | $ | (77.3) | | | $ | 12,764.6 | |
| Depreciation and amortization expense | 119.1 | | | 9.0 | | | 2.0 | | | — | | | 130.1 | |
| Income (loss) from operations | 1,522.9 | | | 44.7 | | | (167.6) | | | — | | | 1,400.0 | |
| Interest expense, net | 3.2 | | | 9.7 | | | 39.8 | | | — | | | 52.7 | |
| Capital expenditures | 242.4 | | | 1.5 | | | 2.9 | | | — | | | 246.8 | |
| | | | | | | | | |
| Three Months Ended September 30, 2021 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 7,173.3 | | | $ | 88.9 | | | $ | — | | | $ | (75.5) | | | $ | 7,186.7 | |
| Depreciation and amortization expense | 103.0 | | | 9.8 | | | 3.4 | | | — | | | 116.2 | |
| Income (loss) from operations | 116.7 | | | 47.1 | | | (62.9) | | | — | | | 100.9 | |
| Interest expense, net | 3.7 | | | 10.4 | | | 67.9 | | | — | | | 82.0 | |
| Capital expenditures | 83.1 | | | 3.4 | | | 1.1 | | | — | | | 87.6 | |
| | | | | | | | | |
| Nine Months Ended September 30, 2022 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 35,944.5 | | | $ | 272.4 | | | $ | — | | | $ | (232.9) | | | $ | 35,984.0 | |
| Depreciation and amortization expense | 338.9 | | | 27.6 | | | 5.8 | | | — | | | 372.3 | |
| Income (loss) from operations | 3,552.4 | | | 140.4 | | | (495.2) | | | — | | | 3,197.6 | |
| Interest expense, net | 11.8 | | | 30.0 | | | 174.8 | | | — | | | 216.6 | |
| Capital expenditures | 672.9 | | | 4.6 | | | 6.2 | | | — | | | 683.7 | |
| | | | | | | | | |
| Nine Months Ended September 30, 2021 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 18,969.7 | | | $ | 266.2 | | | $ | — | | | $ | (226.5) | | | $ | 19,009.4 | |
| Depreciation and amortization expense | 310.0 | | | 28.5 | | | 10.1 | | | — | | | 348.6 | |
| Income (loss) from operations | 349.4 | | | 142.8 | | | (186.1) | | | — | | | 306.1 | |
| Interest expense, net | 7.2 | | | 31.8 | | | 204.1 | | | — | | | 243.1 | |
| Capital expenditures | 216.4 | | | 6.9 | | | 3.9 | | | — | | | 227.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at September 30, 2022 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Total assets | $ | 12,414.0 | | | $ | 868.2 | | | $ | 63.1 | | | $ | (41.0) | | | $ | 13,304.3 | |
| | | | | | | | | |
| Balance at December 31, 2021 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Total assets | $ | 10,753.3 | | | $ | 901.3 | | | $ | 48.5 | | | $ | (61.7) | | | $ | 11,641.4 | |
PBF ENERGY INC. AND BARREL DATA)
Prior to the PBFX Offering, the Company did not operate the PBFX assets independent of the Refining segment. Total assets of each segment consist of net property, plant and equipment, inventories, cash and cash equivalents, accounts receivables and other assets directly associated with the segment’s operations. Corporate assets consist primarily of property, plant and equipment and other assets not directly related to our refinery and logistic operations.
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2015 |
| Refining |
| Logistics |
| Corporate | | Eliminations |
| Consolidated Total |
| Revenues | $ | 3,217,640 |
|
| $ | 37,082 |
|
| $ | — |
| | $ | (37,082 | ) |
| $ | 3,217,640 |
|
| Depreciation and amortization expense | 44,366 |
|
| 1,649 |
|
| 2,118 |
| | — |
|
| 48,133 |
|
| Income (loss) from operations | 114,925 |
| | 27,463 |
| | (49,851 | ) | | — |
| | 92,537 |
|
| Interest expense, net | 4,110 |
| | 7,180 |
| | 18,070 |
| | — |
| | 29,360 |
|
| Capital expenditures | 81,969 |
| | 962 |
| | 573 |
| | — |
| | 83,504 |
|
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, 2014 |
| | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 5,260,003 |
| | $ | 17,060 |
| | $ | — |
| | $ | (17,060 | ) | | $ | 5,260,003 |
|
| Depreciation and amortization expense | 63,532 |
| | 1,177 |
| | 3,301 |
| | — |
| | 68,010 |
|
| Income (loss) from operations | 316,244 |
| | 5,942 |
| | (41,051 | ) | | — |
| | 281,135 |
|
| Interest expense, net | 5,314 |
| | 827 |
| | 18,714 |
| | — |
| | 24,855 |
|
| Capital expenditures | 110,340 |
| | 14,874 |
| | 32,642 |
| | — |
| | 157,856 |
|
|
| | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2015 |
| | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 9,763,440 |
| | $ | 104,796 |
| | $ | — |
| | $ | (104,796 | ) | | $ | 9,763,440 |
|
| Depreciation and amortization expense | 131,817 |
| | 4,919 |
| | 7,665 |
| | — |
| | 144,401 |
|
| Income (loss) from operations | 591,005 |
| | 71,914 |
| | (123,530 | ) | | — |
| | 539,389 |
|
| Interest expense, net | 13,387 |
| | 14,065 |
| | 52,731 |
| | — |
| | 80,183 |
|
| Capital expenditures | 332,544 |
| | 1,182 |
| | 2,183 |
| | — |
| | 335,909 |
|
|
| | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2014 |
| | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 15,308,155 |
| | $ | 29,409 |
| | $ | — |
| | $ | (29,409 | ) | | $ | 15,308,155 |
|
| Depreciation and amortization expense | 122,858 |
| | 2,906 |
| | 10,123 |
| | — |
| | 135,887 |
|
| Income (loss) from operations | 741,483 |
| | 4,491 |
| | (116,785 | ) | | — |
| | 629,189 |
|
| Interest expense, net | 20,404 |
| | 1,183 |
| | 55,141 |
| | — |
| | 76,728 |
|
| Capital expenditures | 250,701 |
| | 40,993 |
| | 39,050 |
| | — |
| | 330,744 |
|
|
| | | | | | | | | | | | | | | | | | | |
| | Balance at September 30, 2015 |
| | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Total assets | $ | 4,062,727 |
| | $ | 432,663 |
| | $ | 74,486 |
| | $ | (24,272 | ) | | $ | 4,545,604 |
|
|
| | | | | | | | | | | | | | | | | | | |
| | Balance at December 31, 2014 |
| | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Total assets | $ | 4,135,494 |
| | $ | 410,141 |
| | $ | 24,195 |
| | $ | (11,630 | ) | | $ | 4,558,200 |
|
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT,
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2022 |
PBF LLC - (in millions) | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 12,752.3 | | | $ | 89.6 | | | $ | — | | | $ | (77.3) | | | $ | 12,764.6 | |
| Depreciation and amortization expense | 119.1 | | | 9.0 | | | 2.0 | | | — | | | 130.1 | |
| Income (loss) from operations | 1,522.9 | | | 44.7 | | | (166.7) | | | — | | | 1,400.9 | |
| Interest expense, net | 3.2 | | | 9.7 | | | 42.8 | | | — | | | 55.7 | |
| Capital expenditures | 242.4 | | | 1.5 | | | 2.9 | | | — | | | 246.8 | |
| | | | | | | | | |
| Three Months Ended September 30, 2021 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 7,173.3 | | | $ | 88.9 | | | $ | — | | | $ | (75.5) | | | $ | 7,186.7 | |
| Depreciation and amortization expense | 103.0 | | | 9.8 | | | 3.4 | | | — | | | 116.2 | |
| Income (loss) from operations | 116.7 | | | 47.1 | | | (62.5) | | | — | | | 101.3 | |
| Interest expense, net | 3.7 | | | 10.4 | | | 70.7 | | | — | | | 84.8 | |
| Capital expenditures | 83.1 | | | 3.4 | | | 1.1 | | | — | | | 87.6 | |
| | | | | | | | | |
| Nine Months Ended September 30, 2022 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 35,944.5 | | | $ | 272.4 | | | $ | — | | | $ | (232.9) | | | $ | 35,984.0 | |
| Depreciation and amortization expense | 338.9 | | | 27.6 | | | 5.8 | | | — | | | 372.3 | |
| Income (loss) from operations | 3,552.4 | | | 140.4 | | | (493.5) | | | — | | | 3,199.3 | |
| Interest expense, net | 11.8 | | | 30.0 | | | 183.1 | | | — | | | 224.9 | |
| Capital expenditures | 672.9 | | | 4.6 | | | 6.2 | | | — | | | 683.7 | |
| | | | | | | | | |
| Nine Months Ended September 30, 2021 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 18,969.7 | | | $ | 266.2 | | | $ | — | | | $ | (226.5) | | | $ | 19,009.4 | |
| Depreciation and amortization expense | 310.0 | | | 28.5 | | | 10.1 | | | — | | | 348.6 | |
| Income (loss) from operations | 349.4 | | | 142.8 | | | (184.5) | | | — | | | 307.7 | |
| Interest expense, net | 7.2 | | | 31.8 | | | 211.9 | | | — | | | 250.9 | |
| Capital expenditures | 216.4 | | | 6.9 | | | 3.9 | | | — | | | 227.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at September 30, 2022 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Total assets | $ | 12,414.0 | | | $ | 868.2 | | | $ | 60.2 | | | $ | (41.0) | | | $ | 13,301.4 | |
| | | | | | | | | |
| Balance at December 31, 2021 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Total assets | $ | 10,753.3 | | | $ | 901.3 | | | $ | 46.8 | | | $ | (61.7) | | | $ | 11,639.7 | |
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
16. NET INCOME PER UNITSHARE OF PBF ENERGY
The Company grants certain equity-based compensation awards to employees and non-employee directors that are considered to be participating securities. Due to the presence of participating securities, the Company has calculated net income per share of PBF Energy Class A common stock using the two-class method.
The following table sets forth the computation of basic and diluted net income per share of PBF Energy Class A common stock attributable to PBF Energy for the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | |
| (in millions, except share and per share amounts) | Three Months Ended September 30, | | Nine Months Ended September 30, |
| Basic Earnings Per Share: | 2022 | | 2021 | | 2022 | | 2021 |
| Allocation of earnings: | | | | | | | |
| Net income attributable to PBF Energy Inc. stockholders | $ | 1,056.4 | | | $ | 59.1 | | | $ | 2,239.0 | | | $ | 65.7 | |
| Less: Income allocated to participating securities | — | | | — | | | — | | | — | |
| Income available to PBF Energy Inc. stockholders - basic | $ | 1,056.4 | | | $ | 59.1 | | | $ | 2,239.0 | | | $ | 65.7 | |
| Denominator for basic net income per Class A common share - weighted average shares | 122,113,570 | | | 120,268,046 | | | 121,299,726 | | | 120,230,369 | |
| Basic net income attributable to PBF Energy per Class A common share | $ | 8.65 | | | $ | 0.49 | | | $ | 18.46 | | | $ | 0.55 | |
| | | | | | | |
| Diluted Earnings Per Share: | | | | | | | |
| Numerator: | | | | | | | |
| Income available to PBF Energy Inc. stockholders - basic | $ | 1,056.4 | | | $ | 59.1 | | | $ | 2,239.0 | | | $ | 65.7 | |
Plus: Net income attributable to noncontrolling interest (1) | 9.2 | | | 0.7 | | | 21.4 | | | 0.7 | |
Less: Income tax expense on net income attributable to noncontrolling interest (1) | (2.3) | | | (0.2) | | | (5.5) | | | (0.2) | |
Numerator for diluted net income per PBF Energy Class A common share - net income attributable to PBF Energy Inc. stockholders (1) | $ | 1,063.3 | | | $ | 59.6 | | | $ | 2,254.9 | | | $ | 66.2 | |
| | | | | | | |
Denominator:(1) | | | | | | | |
| Denominator for basic net income per PBF Energy Class A common share-weighted average shares | 122,113,570 | | | 120,268,046 | | | 121,299,726 | | | 120,230,369 | |
Effect of dilutive securities:(2) | | | | | | | |
| Conversion of PBF LLC Series A Units | 910,457 | | | 994,192 | | | 920,529 | | | 989,314 | |
| Common stock equivalents | 3,561,782 | | | 91,851 | | | 2,872,678 | | | 387,524 | |
| Denominator for diluted net income per PBF Energy Class A common share-adjusted weighted average shares | 126,585,809 | | | 121,354,089 | | | 125,092,933 | | | 121,607,207 | |
| Diluted net income attributable to PBF Energy Inc. stockholders per PBF Energy Class A common share | $ | 8.40 | | | $ | 0.49 | | | $ | 18.03 | | | $ | 0.54 | |
| | | | | | | |
PBF ENERGY INC. AND BARREL DATA)PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) The diluted earnings per share calculation generally assumes the conversion of all outstanding PBF LLC Series A Units to PBF Energy Class A common stock. The net income attributable to PBF Energy used in the numerator of the diluted earnings per share calculation is adjusted to reflect the net income, as well as the corresponding income tax expense (based on a 25.9% estimated annualized statutory corporate tax rate for the three and nine months ended September 30, 2022 and a 26.6% estimated annualized statutory corporate tax rate for the three and nine months ended September 30, 2021), attributable to the converted units.
(2) Represents an adjustment to weighted-average diluted shares outstanding to assume the full exchange of common stock equivalents, including options and warrants for PBF LLC Series A Units and performance share units and options for shares of PBF Energy Class A common stock as calculated under the treasury stock method (to the extent the impact of such exchange would not be anti-dilutive). Common stock equivalents exclude the effects of performance share units and options and warrants to purchase 3,102,413 and 7,361,773 shares of PBF Energy Class A common stock and PBF LLC Series A units because they are anti-dilutive for the three and nine months ended September 30, 2022, respectively. Common stock equivalents exclude the effects of performance share units and options and warrants to purchase 11,113,779 and 11,041,279 shares of PBF Energy Class A common stock and PBF LLC Series A units because they are anti-dilutive for the three and nine months ended September 30, 2021, respectively. For periods showing a net loss, all common stock equivalents and unvested restricted stock are considered anti-dilutive.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
17. SUBSEQUENT EVENTS
Cash DistributionDividend Declared
On October 29, 2015,27, 2022, PBF Energy's Board of Directors declaredEnergy announced a dividend of $0.30$0.20 per share on outstanding PBF Energy Class A common stock. The dividend was paidis payable on November 24, 201529, 2022 to PBF Energy Class A common stockholders of record at the close of business on November 9, 2015. PBF LLC made an aggregate non-tax quarterly distribution of $30,818 or $0.30 per unit, pro rata, to its members, of which $29,297 was distributed to PBF Energy and the balance was distributed to its other members.14, 2022.
PBFX Distributions
On October 29, 2015,27, 2022, the Board of Directors of PBF GP declaredannounced a distribution of $0.39$0.30 per unit on outstanding common and subordinated units of PBFX. The distribution of $13,751 was paidis payable on November 30, 201518, 2022 to PBFX unit holdersunitholders of record at the close of business on November 13, 2015.7, 2022.
Chalmette Acquisition
On November 1, 2015, the Company acquired from ExxonMobil Oil Corporation, Mobil Pipe Line Company and PDV Chalmette, L.L.C. (collectively, the "Chalmette Sellers"), the ownership interests of Chalmette Refining, L.L.C. (“Chalmette Refining”), which owns the Chalmette refinery and related logistics assets (collectively, the "Chalmette Acquisition"). The Chalmette refinery, located outside of New Orleans, Louisiana, is a dual-train coking refinery and is capable of processing both light and heavy crude oil.
Chalmette Refining owns 100% of the MOEM Pipeline, providing access to the Empire Terminal, as well as the CAM Connection Pipeline, providing access to the Louisiana Offshore Oil Port facility through a third party pipeline. Chalmette Refining also owns 80% of each of the Collins Pipeline Company and T&M Terminal Company, both located in Collins, Mississippi, which provide a clean products outlet for the refinery to the Plantation and Colonial Pipelines. Also included in the acquisition are a marine terminal capable of importing waterborne feedstocks and loading or unloading finished products; a clean products truck rack which provides access to local markets; and a crude and product storage facility.
The aggregate purchase price for the Chalmette Acquisition was $322,000 in cash, plus estimated inventory and working capital of $233,083, which is subject to final valuation within ninety days of closing. The transaction was financed through a combination of cash on hand and borrowings under the Company’s existing revolving credit line. A determination of the acquisition-date fair values of the assets acquired and the liabilities assumed and the working capital at closing calculation is pending the completion of an independent appraisal and other evaluations.
The Chalmette Acquisition provides the Company with a broader more diversified asset base and increases the number of operating refineries from three to four and the Company's combined crude oil throughput capacity. The acquisition also provides the Company with a presence in the attractive Petroleum Administration for Defense Districts ("PADD") 3 market.
October 2015 Equity Offering
On October 13, 2015, the PBF Energy completed a public offering of an aggregate of 11,500,000 shares of Class A common stock, including 1,500,000 shares of Class A common stock that was sold pursuant to the exercise of an over-allotment option, for net proceeds of $344,000, after deducting underwriting discounts and commissions and other offering expenses (the "October 2015 Equity Offering"). In conjunction with the October 2015 Equity Offering, PBF Energy purchased an aggregate of 11,500,000 PBF LLC Series C Units.Tax Distribution
Immediately following theIn October 2015 Equity Offering, PBF Energy owned 97,393,8502022, PBF LLC Series C Units and PBF Energy's executive officers and directors and certain employees beneficially owned 5,111,358 PBF LLC Series A Units, and the holdersmade a total of PBF Energy's issued and outstanding shares$1,130.1 million of Class A common stock had 95.0%tax distributions to its members, of the voting power inwhich $1,121.8 million was distributed to PBF Energy and the members ofremaining balance was distributed to PBF LLC’s other members. The tax distribution made to PBF Energy increased the PBF LLC other thanAffiliate note payable with PBF Energy through their holdings of Class B common stock hadthat eliminates in consolidation at the remaining 5.0% of the voting power in PBF Energy.Energy level.
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
7.0% Senior Secured Notes due 2023
On November 24, 2015, PBF Holding completed the offering of $500,000 aggregate principal amount of 7.0% Senior Secured Notes due 2023. The net proceeds of approximately $490,000, after deducting the initial purchasers’ discount and estimated offering expenses, are intended to be used for general corporate purposes, including to fund a portion of the purchase price for the pending acquisition of the Torrance refinery and related assets.
Revolving Loan
In November 2015, PBF Holding increased the maximum availability under the Revolving Loan to $2,600,000 in accordance with its accordion feature.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unauditedaudited financial statements of PBF Energy and PBF LLC included in the Annual Report on Form 10-K for the year ended December 31, 2021 and the notes thereto included elsewhere in this report. 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,included in our prospectus dated October 30, 2015, as filed with the SEC on October 30, 2015 (the “Prospectus”).this report. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. 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. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements.”
Unless the context otherwise requires, references to “PBF LLC,” “we,” “us,” “our” or the “Company” refer to PBF Energy Company LLC and its consolidated subsidiaries, including PBF Holding and PBFX. Unless the context otherwise requires, references to “PBF Energy” refer to PBF Energy Inc., PBF LLC's parent, and its consolidated subsidiaries.
PBF Energy is the sole managing member of, and owner of an equity interest representing approximately 99.3% of the outstanding economic interests in PBF LLC and operates and controls allas of the business and affairs of PBF LLC.September 30, 2022. PBF LLC is a holding company for the companies that directly orand indirectly own and operate PBF Energy’sour business. PBF Holding is a wholly-owned subsidiary of PBF LLC and PBF Finance is the parent company for our refining operations.a wholly-owned subsidiary of PBF Holding. As of September 30, 2022, PBF LLC consolidatesalso holds a 47.7% limited partner interest and a non-economic general partner interest in PBFX, a publicly-traded MLP.
Unless the financial results ofcontext indicates otherwise, the terms “we,” “us,” and “our” refer to PBF Energy and its consolidated subsidiaries, including PBF LLC, PBF Holding and its subsidiaries and PBFX and records a noncontrolling interest for the economic interestsits subsidiaries. Discussions on areas that either apply only to PBF Energy or PBF LLC are clearly noted in PBFX held by the public common unit holders of PBFX.such sections.
Overview
We are one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. We sell our products throughout the Northeast, Midwest, Gulf Coast and MidwestWest Coast of the United States, as well as in other regions of the United States, Canada and Canada,Mexico and are able to ship products to other international destinations. We were formed in 2008 to pursue acquisitions of crude oil refineries and downstream assets in North America. As of September 30, 20152022, we ownedown and operated threeoperate six domestic oil refineries and related assets, which we acquired in 2010 and 2011. Ourassets. Based on the current configuration our refineries have a combined processing capacity, known as throughput, of approximately 540,0001,000,000 barrels per day ("bpd"(“bpd”), and a weighted-average Nelson Complexity Index of 11.3. On November 1, 201513.2 based on current operating conditions. The complexity and throughput capacity of our refineries are subject to change dependent upon configuration changes we closed onmake to respond to market conditions, as well as a result of investments made to improve our acquisitionfacilities and maintain compliance with environmental and governmental regulations. We operate in two reportable business segments: Refining and Logistics. Our six oil refineries are all engaged in the refining of crude oil and other feedstocks into petroleum products, and are aggregated into the Refining segment. PBFX operates certain logistics assets such as crude oil and refined petroleum products terminals, pipelines, and storage facilities, which are aggregated into the Logistics segment.
Our six refineries are located in Delaware City, Delaware, Paulsboro, New Jersey, Toledo, Ohio, Chalmette, Louisiana, Torrance, California and Martinez, California. In 2020, we reconfigured our Delaware City and Paulsboro refineries (the “East Coast Refining Reconfiguration”), temporarily idling certain of our major processing units at the Paulsboro refinery, in order to operate the two refineries as one functional unit that we refer to as the “East Coast Refining System”. Each refinery is briefly described in the table below:
| | | | | | | | | | | | | | | | | | | | |
| Refinery | Region | Nelson Complexity Index (1) | Throughput Capacity (in bpd) (1) | PADD | Crude Processed (2) | Source (2) |
| Delaware City | East Coast | 13.6 | 180,000 | 1 | light sweet through heavy sour | water, rail |
| Paulsboro | East Coast | 10.4(3) | 105,000(3) | 1 | light sweet through heavy sour | water |
| Toledo | Mid-Continent | 11.0 | 180,000 | 2 | light sweet | pipeline, truck, rail |
| Chalmette | Gulf Coast | 13.0 | 185,000 | 3 | light sweet through heavy sour | water, pipeline |
| Torrance | West Coast | 13.8 | 166,000 | 5 | medium and heavy | pipeline, water, truck |
| Martinez | West Coast | 16.1 | 157,000 | 5 | medium and heavy | pipeline and water |
________
(1) Reflects operating conditions at each refinery as of the ownership interestsdate of Chalmettethis filing. Changes in complexity and throughput capacity reflect the result of current market conditions such as our East Coast Refining L.L.C. ("Chalmette Refining"). See Business DevelopmentsReconfiguration, in addition to investments made to improve our facilities and maintain compliance with environmental and governmental regulations. Configurations at each of our refineries are evaluated and updated accordingly.
(2) Reflects the typical crude and feedstocks and related sources utilized under normal operating conditions and prevailing market environments.
(3) Under normal operating conditions and prevailing market environments, our Nelson Complexity Index and throughput capacity for additional information.the Paulsboro refinery would be 13.1 and 180,000, respectively. As a result of the East Coast Refining Reconfiguration, our Nelson Complexity Index and throughput capacity were reduced.
As of September 30, 2015, our three refineries are located in Toledo, Ohio, Delaware City, Delaware and Paulsboro, New Jersey. Our Mid-Continent refinery at Toledo processes light, sweet crude, has a throughput capacity of 170,000 bpd and a Nelson Complexity Index of 9.2. The majority of Toledo’s West Texas Intermediate ("WTI") based crude is delivered via pipelines that originate in both Canada and the United States. Since our acquisition of Toledo in 2011, we have added additional truck and rail crude unloading capabilities that provide feedstock sourcing flexibility for the refinery and enables Toledo to run a more cost-advantaged crude slate. Our East Coast refineries at Delaware City and Paulsboro have a combined refining capacity of 370,000 bpd and Nelson Complexity Indices of 11.3 and 13.2, respectively. These high-conversion refineries process primarily medium and heavy, sour crudes and have historically received the bulk of their feedstock via ships and barges on the Delaware River.
Since our acquisition of the Delaware City refinery, we expanded and upgraded the existing on-site railroad infrastructure, including the expansion of the crude rail unloading facilities. Currently, crude delivered by rail to this facility is consumed at our Delaware City refinery. We also transport some of the crude delivered by rail from Delaware City via barge to our Paulsboro refinery or other third party destinations. In 2014 we completed a project to expand the Delaware City heavy crude rail unloading terminal capability at the refinery from 40,000 bpd to 80,000 bpd and added additional unloading spots to the dual-loop track light crude rail unloading facility, which has increased its unloading capability from 105,000 bpd to 130,000 bpd. These projects bring total rail crude
unloading capability up to 210,000 bpd, subject to the delivery of coiled and insulated railcars, the development of crude rail loading infrastructure in Canada and the use of unit trains. The Delaware City rail unloading facilities, including the facilities now owned by PBFX, allows our East Coast refineries to source WTI price-based crude oils from Western Canada and the Mid-Continent, which we believe at times may provide cost advantages versus traditional Brent based international crudes.
As of September 30, 2015,2022, PBF Energy owned 85,893,850122,325,124 PBF LLC Series C Units and our current and former executive officers and directors and certain employees and others held 5,111,358910,457 PBF LLC Series A Units (we refer to all of the holders of the PBF LLC Series A Units as “the members of PBF LLC other than PBF Energy”). As a result, the holders of PBF Energy'sour issued and outstanding shares of our PBF Energy Class A common stock have approximately 94.4%99.3% of the voting power in us, and the members of PBF LLC other than PBF Energy through their holdings of Class B common stock have approximately 5.6%0.7% of the voting power in us. See "Business Developments - October 2015 Equity Offering."us (99.2% and 0.8% as of December 31, 2021, respectively).
Business Developments
Recent significant business developments affecting the Companyus are discussed below.
Chalmette AcquisitionPending Merger with PBFX
On November 1, 2015, the Company acquired from ExxonMobil Oil Corporation, Mobil Pipe Line Company and PDV Chalmette, L.L.C., the ownership interests of Chalmette Refining, which owns the Chalmette refinery and related logistics assets (collectively, the "Chalmette Acquisition"). The Chalmette refinery, located outside of New Orleans, Louisiana, is a 189,000 barrel per day, dual-train coking refinery with a Nelson Complexity of 12.7 and is capable of processing both light and heavy crude oil.
Chalmette Refining owns 100% of the MOEM Pipeline, providing access to the Empire Terminal, as well as the CAM Connection Pipeline, providing access to the Louisiana Offshore Oil Port facility through a third party pipeline. Chalmette Refining also owns 80% of each of the Collins Pipeline Company and T&M Terminal Company, both located in Collins, Mississippi, which provide a clean products outlet for the refinery to the Plantation and Colonial Pipelines. Also included in the acquisition are a marine terminal capable of importing waterborne feedstocks and loading or unloading finished products; a clean products truck rack which provides access to local markets; and a crude and product storage facility with approximately 7.5 million barrels of shell capacity.
The aggregate purchase price for the Chalmette Acquisition was $322.0 million in cash, plus inventory and working capital of $233.1 million, which is subject to final valuation within ninety days of closing. The transaction was financed through a combination of cash on hand and borrowings under the Company’s existing revolving credit line. A determination of the acquisition-date fair values of the assets acquired and the liabilities assumed and the working capital at closing calculation is pending the completion of an independent appraisal and other evaluations.
The Chalmette Acquisition provides the Company with a broader more diversified asset base and increases the number of operating refineries from three to four and the Company's combined crude oil throughput capacity from 540,000 bpd to approximately 730,000 bpd. The acquisition also provides the Company with a presence in the attractive Petroleum Administration for Defense Districts ("PADD") 3 market.
Pending Torrance Acquisition
On September 29, 2015, PBF HoldingJuly 27, 2022, we entered into a definitive Saleagreement with PBFX (the “Merger Agreement”) pursuant to which we will acquire all of the publicly held common units in PBFX representing limited partner interests in the MLP not already owned by us on the closing date of the transaction (the “Merger Transaction).
The Merger Transaction will be accounted for in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 810, Consolidation. Because we will control PBFX both before and Purchaseafter the Merger Transaction, the changes in our ownership interest in PBFX resulting from the Merger Transaction will be accounted for as an equity transaction, and no gain or loss will be recognized in our Condensed Consolidated Statements of Operations. In addition, the tax effects of the Merger Transaction will be recorded as adjustments to other assets, deferred income taxes and additional paid-in capital consistent with ASC 740, Income Taxes (“ASC 740”).
The consideration to the PBFX common unitholders (other than us and our affiliates) under the Merger Transaction consists of cash and PBF Energy Class A common stock. The Merger Agreement (the “Torrance Saleprovides that, if completed, each outstanding PBFX Public Common Unit will have the right to receive (i) 0.27 shares of PBF Energy Class A common stock, par value $0.001 per share, (ii) $9.25 in cash, without interest, (iii) any dividends or other distributions to which the holder thereof becomes entitled to upon surrender of such outstanding common units held by an unaffiliated common unitholder in accordance with the Merger Agreement, and Purchase Agreement”)(iv) any cash in lieu of fractional shares of PBF Energy Class A common stock in accordance with ExxonMobil Oil Corporationthe Merger Agreement. We, as the beneficial owners of 47.7% of PBFX’s outstanding common units, have committed to vote such units to approve the transaction.
The terms of the Merger Transaction were unanimously approved by the Conflicts Committee and its subsidiary, Mobil Pacific Pipeline Company (together,by the "Torrance Sellers")PBFX Board (all as defined in “Note 2 - PBF Logistics LP” of our Notes to Condensed Consolidated Financial Statements), based on the unanimous approval and recommendation of the Conflicts Committee, which is comprised entirely of independent directors. Upon closing, PBFX will become our indirect wholly-owned subsidiary.
The Merger Transaction is subject to purchasecustomary closing conditions and the Torrance refinery, and related logistics assets (collectively,approval of the "Torrance Acquisition")PBFX common unitholders (including PBF Energy). The Torrance refinery, located on 750 acres in Torrance, California, is a high-conversion 155,000 barrel per day, delayed-coking refinery with a Nelson Complexity of 14.9. The facility is strategically positioned in Southern California with advantaged logistics connectivity that offers flexible raw material sourcing and product distribution opportunities primarily in the California, Las Vegas and Phoenix area
markets. Including the estimated contribution of the Chalmette refinery, the Torrance Acquisition will further increase the Company's total throughput capacity to approximately 900,000 bpd.
In addition to refining assets, the Torrance Acquisition includes a number of high-quality logistics assets including a sophisticated network of crude and products pipelines, product distribution terminals and refinery crude and product storage facilities. The most significant of the logistics assets is a 171-mile crude gathering and transportation system which delivers San Joaquin Valley crude oil directly from the field to the refinery. Additionally, included in the transaction are several pipelines which provide access to sources of crude oil including the Ports of Long Beach and Los Angeles, as well as clean product outlets with a direct pipeline supplying jet fuel to the Los Angeles airport. The Torrance refinery also has crude and product storage facilities with approximately 8.6 million barrels of shell capacity.
The purchase price for the Torrance Acquisition is $537.5 million, plus inventory and working capital to be valued at closing. The purchase price is also subject to other customary purchase price adjustments. The Torrance Acquisition is expected to close in the secondfourth quarter of 2016, subject2022, however there can be no assurance that the Merger Transaction will be consummated in the anticipated timeframe, on the contemplated terms or at all.
Market Developments
We continue to satisfaction of customary closing conditions. Additionally, as a condition of closing, the Torrance refinery is to be restored to full working order with respectadjust our operational plans to the event that occurred on February 18, 2015 resultingevolving market conditions and continue to monitor and manage operating expenses through reductions in damage to the electrostatic precipitatordiscretionary activities and related systems,third-party services. Market conditions currently include high crude oil prices, tight domestic supplies and shall have operatedelevated refining margins as required under the Torrance Sale and Purchase Agreement for a period of at least fifteen days after such restoration. We expect to finance the transaction with a combination of cash on hand, debt, including the proceeds from the issuance of the 7.0% Senior Secured Notes due 2023, and proceeds contributed to us in connection with PBF Energy's equity offering completed on October 13, 2015. In addition, PBF Energy has guaranteed all payment and performance obligations of PBF Holding that relate to or arise out of the Sale and Purchase Agreement related to the Torrance Acquisition. Following the expected completion of the Torrance Acquisition, our weighted average Nelson Complexity Index will increase to 12.2.
October 2015 Equity Offering
On October 13, 2015, PBF Energy completed a public offering of an aggregate of 11,500,000 shares of Class A common stock, including 1,500,000 shares of Class A common stock that was sold pursuant to the exercise of an over-allotment option, for net proceeds of $344.0 million, after deducting underwriting discounts and commissions and other offering expenses (the “October 2015 Equity Offering”). In conjunction with the October 2015 Equity Offering, PBF Energy purchased an aggregate of 11,500,000 PBF LLC Series C Units. We intend to use the proceeds to fund a portion of the purchase price for the Torrance Acquisition. However, subject to the timing of the closing of the Torrance Acquisition, we may use the net proceeds of the October 2015 Equity Offering to pay down indebtedness incurred to fund the Chalmette Acquisition (or for capital in lieu of indebtedness we might otherwise borrow).
As a result of the October 2015 Equity Offering, PBF Energy now owns 97,393,850 PBF LLC Series C Units and PBF Energy’s executive officers and directors and certain employees beneficially own 5,111,358 PBF LLC Series A Units, and the holderssustained increases in demand, coupled with global supply disruption related to sanctions imposed on Russia for its invasion of PBF Energy’s issued and outstanding shares of Class A common stock have 95.0% of the voting power in PBF Energy and the members of PBF LLC other than PBF Energy through their holdings of Class B common stock have the remaining 5.0% of the voting power in PBF Energy.Ukraine.
7.0% Senior Secured Notes due 2023
On November 24, 2015, PBF Holding completed the offering of $500 million aggregate principal amount of 7.0% Senior Secured Notes due 2023. The net proceeds of approximately $490 million, after deducting the initial purchasers’ discount and estimated offering expenses, are intended to be used for general corporate purposes, including to fund a portion of the purchase price for the pending Torrance Acquisition.
Revolving Loan
In November 2015 the Company increased the maximum availability under the Revolving Loan to $2.6 billion in accordance with its accordion feature.
Renewable Diesel Project
We continue to advance our project for a renewable fuels production facility co-located at our Chalmette refinery (the “Renewable Diesel Project”). The project incorporates certain idled assets at the refinery, including an idle hydrocracker, along with a newly-constructed pre-treatment unit to establish a 20,000 barrel per day renewable diesel production facility. During the third quarter of 2022, we invested approximately $103.0 million in capital to progress and incubate the project with the goal of being in production in the first half of 2023. Concurrent with our activities to progress the project, we are continuing discussions with potential strategic and financial partners.
Factors Affecting Comparability Between Periods
Our results have been affected by the following events, the understanding of which must be understoodwill aid in order to assessassessing the comparability of our period to period financial performance and financial condition.
Debt and Credit Facilities
Initial Public OfferingSenior Notes
PBFX’s 6.875% senior notes (the “PBFX 2023 Senior Notes”) are due May 2023 and are classified as Current debt as of PBFXSeptember 30, 2022 within our Condensed Consolidated Balance Sheet.
During the three months ended September 30, 2022, we exercised our rights under the indenture governing the 9.25% senior secured notes due 2025 (the “2025 Senior Secured Notes”) to redeem all of the outstanding 2025 Senior Secured Notes at a price of 104.625% of the aggregate principal amount thereof plus accrued and unpaid interest. The aggregate redemption price for all 2025 Senior Secured Notes approximated $1.3 billion plus accrued and unpaid interest. The difference between the carrying value of the 2025 Senior Secured Notes on the date they were redeemed and the amount for which they were redeemed was $69.9��million and was recorded as a loss on extinguishment of debt in the Consolidated Statements of Operations.
During the nine months ended September 30, 2022, we made a number of open market repurchases of our 6.00% senior unsecured notes due 2028 (the “2028 Senior Notes”) and 7.25% senior unsecured notes due 2025 (the “2025 Senior Notes”) that resulted in the extinguishment of $24.9 million in principal of the 2028 Senior Notes and $5.0 million in principal of the 2025 Senior Notes. Total cash consideration paid to repurchase the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, totaled $25.9 million and we recognized a $3.8 million gain on the extinguishment of debt during the nine months ended September 30, 2022.
During the three months ended September 30, 2021, we made a number of open market purchases of our 2028 Senior Notes and our 2025 Senior Notes that resulted in the extinguishment of $117.7 million in principal of the 2028 Senior Notes and $35.0 million in principal of the 2025 Senior Notes. Total cash consideration paid to repurchase the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, totaled $90.9 million and we recognized a $60.3 million gain on the extinguishment of debt during the three and nine months ended September 30, 2021.
Revolving Credit Facility
On May 14, 2014, 25, 2022, we entered into an amendment of our existing asset-based revolving credit agreement (the “Revolving Credit Agreement”). Among other things, the Revolving Credit Agreement amended and extended PBF Holding’s asset-based revolving credit facility (the “Revolving Credit Facility”) through January 2025 and increased the maximum commitment to $4.3 billion through May 2023 (currently set to adjust to $2.75 billion in May 2023 through January 2025). The amendments also redefine certain components of the Borrowing Base (as defined in the Revolving Credit Agreement) to reflect the existence of the two tranches, tranche A which is comprised of existing lenders who have not elected to extend and whose commitments retain the existing maturity date under the existing revolving credit agreement of May 2, 2023 (the “Tranche A Commitments”) and tranche B, which is comprised of existing and new lenders whose commitments have an extended maturity date of January 31, 2025 (the “Tranche B Commitments”). The Tranche A Commitments total $1.55 billion and the Tranche B Commitments total $2.75 billion. The amendments also include changes to incorporate the adoption of Secured Overnight Financing Rate (“SOFR”) as a replacement of the London Interbank Offered Rate (“LIBOR”), changes to joint lead arrangers, bookrunners, syndication agents and other titles, and other changes related to the foregoing. In addition, an accordion feature allows for additional Tranche B Commitments of up to an additional $500.0 million plus an amount equal to the Tranche A Commitments for existing Tranche A lenders.
During the nine months ended September 30, 2022, we made net repayments of $900.0 million on the Revolving Credit Facility, resulting in no outstanding borrowings as of September 30, 2022. There was $900.0 million of outstanding borrowings under the Revolving Credit Facility as of December 31, 2021.
PBFX completed its initial public offeringRevolving Credit Facility
During the nine months ended September 30, 2022, PBFX made net repayments of $100.0 million on the PBFX five-year, $500.0 million amended and restated revolving credit facility (the “PBFX Offering”Revolving Credit Facility”), resulting in no outstanding borrowings as of 15,812,500 common units, including 2,062,500 common units issued upon exercise of the over-allotment option that was granted to the underwriters, at a price to the public of $23.00 per unit. On September 30, 2014, PBF LLC completed a transaction to contribute to PBFX the Delaware City heavy crude unloading rack ("DCR West Rack") for total consideration of $150.0 million, consisting of $135.02022. There was $100.0 million of cashoutstanding borrowings under the PBFX Revolving Credit Facility as of December 31, 2021.
Catalyst Financing Obligations
During the three months ended September 30, 2022 and $15.0September 30, 2021, we settled certain of our precious metals financing arrangements, which represented a reduction of debt of approximately $37.3 million of PBFX common units, or 589,536 common units (the "DCR West Rack Acquisition"). On December 11, 2014, PBF LLC completed a transaction to contribute to PBFX the tank farm and related facilities located at our Toledo refinery, including a propane storage and loading facility (the "Toledo Storage Facility") for total consideration of $150.0$18.5 million, consisting of $135.0 million of cash and $15.0 million of PBFX common units, or 620,935 common units (the "Toledo Storage Facility Acquisition"). On May 14, 2015 PBF LLC contributed to PBFX all of the issued and outstanding limited liability company interests of Delaware Pipeline Company LLC ("DPC") and Delaware City Logistics Company LLC ("DCLC"), whose assets consist of a products pipeline, truck rack and related facilities located at our Delaware City refinery (collectively the "Delaware City Products Pipeline and Truck Rack"), for total consideration of $143.0 million, consisting of $112.5 million of cash and $30.5 million of PBFX common units, or 1,288,420 common units.respectively.
Tax Receivable Agreement
As of September 30, 2015,2022, PBF LLC holdsEnergy recognized a 53.7% limited partner interest in PBFX (consistingliability for the Tax Receivable Agreement of 2,572,944 common units and 15,886,553 subordinated units), with$336.4 million ($48.3 million as of December 31, 2021) reflecting the remaining 46.3% limited partner interest held by the public unit holders. PBF LLC also owns allestimate of the incentive distribution rights and indirectly owns a non-economic general partner interest in PBFX through its wholly-owned subsidiary, PBF Logistics GP LLC (“PBF GP”),undiscounted amounts that the general partner of PBFX. DuringCompany expected to pay under the subordination period (as set forth in the partnership agreement, of PBFX) holdersnet of the subordinated units are not entitled to receive any distribution of available cash until the common units have received the minimum quarterly distribution plus any arrearages in the payment of the minimum quarterly distribution from prior quarters. If PBFX does not pay distributions on the subordinated units, the subordinated units will not accrue arrearages for those unpaid distributions. Each subordinated unit will convert into one common unit at the end of the subordination period.
PBFX is a fee-based, growth-oriented, Delaware master limited partnership formed by PBF Energy to own or lease, operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets. PBFX engages in the receiving, handling and transferring of crude oil and the receipt, storage and delivery of crude oil, refined products and intermediates. PBFX’s assets consistimpact of a light crude oil rail unloading terminal at the Delaware City refinery that also services the Paulsboro refinery (which we refer to as the “Delaware City Rail Terminal”), a crude oil truck unloading terminal at the Toledo refinery (which we refer to as the “Toledo Truck Terminal”), the DCR West Rack, the Toledo Storage Facility and the Delaware City Products Pipeline and Truck Rack. All of PBFX’s revenue is derived from long-term, fee-based commercial agreements with subsidiaries of PBF LLC, which include minimum volume commitments, for receiving, handling, transferring and storing crude oil and refined products. These transactions are eliminated by PBF LLC in consolidation.
Secondary Offerings
On February 6, 2015, PBF Energy completed a public offering of 3,804,653 shares of Class A common stock in a secondary offering (the "February 2015 secondary offering"). All of the shares in the February 2015 secondary offering were sold by funds affiliated with Blackstone Group L.P., or Blackstone, and First Reserve Management, L.P., or First Reserve. In connection with the February 2015 secondary offering, Blackstone and First Reserve exchanged all of their remaining PBF LLC Series A Units for an equivalent number of shares of Class A common stock of PBF Energy, and as a result, Blackstone and First Reserve no longer hold any PBF LLC Series A Units or shares of PBF Energy's Class A common stock. The holders of PBF LLC Series B Units, which include certain executive officers of PBF Energy and others, received a portion of the proceeds of the sale of the
PBF Energy Class A common stock by Blackstone and First Reservedeferred tax asset valuation allowance recognized in accordance with the amended and restated limitedASC 740. As future taxable income is recognized, increases in our Tax Receivable Agreement liability company agreement of PBF LLC. PBF Energy did not receive any proceeds from the February 2015 secondary offering. In addition,may be necessary in January, March and June of 2014, PBF Energy also completed three separate secondary offerings for a total of 48,000,000 shares of Class A common stock. All such shares were sold by funds affiliated with Blackstone and First Reserve.
Rail Facility Revolving Credit Facility
Effective March 25, 2014, PBF Rail Logistics Company LLC (“PBF Rail”), an indirect wholly-owned subsidiary of PBF Holding, entered into a $250.0 million secured revolving credit agreement (the “Rail Facility”). The primary purpose of the Rail Facility is to fund the acquisition by PBF Rail of coiled and insulated crude tank cars and non-coiled and non-insulated general purpose crude tank cars (the "Eligible Railcars") before December 2015. The amount available to be advanced under the Rail Facility equals 70% of the lesser of the aggregate Appraised Value of the Eligible Railcars, or the aggregate Purchase Price of such Eligible Railcars, as these terms are defined in the credit agreement.
On April 29, 2015, the Rail Facility was amended to, among other things, extend the maturity to April 29, 2017, reduce the total commitment from $250.0 million to $150.0 million, and reduce the commitment fee on the unused portion of the Rail Facility. At any time prior to maturity PBF Rail may repay and re-borrow any advances without premium or penalty. On the first anniversary of the closing of the amendment, the advance rate adjusts automatically to 65%.
PBFX Debt and Credit Facilities
On May 14, 2014, in connectionconjunction with the closingrevaluation of the PBFX Offering, PBFX entered into a five-year, $275.0 million revolving credit facility (the "PBFX Revolving Credit Facility") and a three-year, $300.0 million term loan (the "PBFX Term Loan"). The PBFX Revolving Credit Facilitydeferred tax assets. As of September 30, 2021, there was increased from $275.0 million to $325.0 million in December 2014. The PBFX Revolving Credit Facility is available to fund working capital, acquisitions, distributions and capital expenditures and for other general partnership purposes and is guaranteed by a guaranty of collection from PBF LLC. PBFX also has the ability to increase the maximum amount of the PBFX Revolving Credit Facility by an aggregate amount of up to $275.0 million, to a total facility size of $600.0 million, subject to receiving increased commitments from lenders or other financial institutions and satisfaction of certain conditions. The PBFX Revolving Credit Facility includes a $25.0 million sublimit for standby letters of credit and a $25.0 million sublimit for swingline loans. The PBFX Term Loan was used to fund distributions to PBF LLC and is guaranteed by a guaranty of collection from PBF LLC and secured at all times by cash, U.S. Treasury or other investment grade securities in an amount equal to or greater than the outstanding principal amount of the PBFX Term Loan.
On May 12, 2015, PBFX entered into an Indenture among the Partnership, PBF Logistics Finance Corporation, a Delaware corporation and wholly-owned subsidiary of PBFX ("PBF Logistics Finance," and together with PBFX, the "Issuers"), the Guarantors named therein (certain subsidiaries of PBFX) and Deutsche Bank Trust Company Americas, as Trustee, under which the Issuers issued $350.0 million in aggregate principal amount of 6.875% Senior Notes due 2023 (the "PBFX Senior Notes"). PBF LLC has provided a limited guarantee of collection of the principal amount of the PBFX Senior Notes, but is not otherwise subjectzero liability recognized related to the covenants of the Indenture. Of the $350.0 million aggregate PBFX Senior Notes, $19.9 million were purchased by certain of PBF Energy’s officers and directors and their affiliates pursuant to a separate private placement transaction. After deducting offering expenses, PBFX received net proceeds of approximately $343.0 million from the PBFX Senior Notes offering.Tax Receivable Agreement.
J. Aron Intermediation AgreementsOn May 29, 2015, PBF Holding entered into amended and restated inventory intermediation agreements (the "A&R Intermediation Agreements") with J. Aron & Company ("J. Aron") pursuant to which certain terms of the existing inventory intermediation agreements were amended, including, among other things, pricing and an extension of the term for a period of two years from the original expiry date of July 1, 2015, subject to certain
early termination rights. In addition, the A&R Intermediation Agreements include one-year renewal clauses by mutual consent of both parties.
Pursuant to each A&R Intermediation Agreement, J. Aron will continue to purchase and hold title to certain of the intermediate and finished products (the "Products") produced by the Paulsboro and Delaware City refineries (the "Refineries"), respectively, and delivered into tanks at the Refineries. Furthermore, J. Aron agrees to sell the Products back to Paulsboro refinery and Delaware City refinery as the Products are discharged out of the Refineries' tanks. J. Aron has the right to store the Products purchased in tanks under the A&R Intermediation Agreements and will retain these storage rights for the term of the agreements. PBF Holding will continue to market and sell the Products independently to third parties.
Crude Oil Acquisition Agreement Termination
Effective July 31, 2014, PBF Holding terminated the Amended and Restated Crude Oil Acquisition Agreement, dated as of March 1, 2012 as amended (the "Toledo Crude Oil Acquisition Agreement") with Morgan Stanley Capital Group, Inc. ("MSCG"). Under the terms of the Toledo Crude Oil Acquisition Agreement, we previously acquired substantially all of our crude oil for our subsidiary's Toledo refinery from MSCG through delivery at various interstate pipeline locations. No early termination penalties were incurred by us as a result of the termination. We began sourcing our own crude oil needs for Toledo upon termination.
Results of Operations
The tables below reflect our consolidated financial and operating highlights for the three and nine months ended September 30, 20152022 and 20142021 (amounts in thousands)millions, except per share data). Differences between the results of operations of PBF Energy and PBF LLC primarily pertain to income taxes, interest expense and noncontrolling interest as shown below. Earnings per share information applies only to the financial results of PBF Energy. We operate in two reportable business segments: Refining and Logistics. Our three oil refineries, excluding the assets owned by PBFX, are all engaged in the refining of crude oil and other feedstocks into petroleum products, and are aggregated into the Refining segment. PBFX is a publicly traded master limited partnershippublicly-traded MLP that operates logisticalcertain logistics assets such as crude oil and refined petroleum products terminals, pipelines and storage facilities. PBFX'sPBFX’s operations are aggregated into the Logistics segment. Prior to the PBFX Offering, DCR West Rack acquisition, Toledo Tank Farm acquisition and the Delaware City Products Pipeline and Truck Rack acquisition, PBFX's assets were operated within the refining operations of our Delaware City and Toledo refineries and wereWe do not considered to be a separate reportable segment. We did not analyzeseparately discuss our results by individual segmentsegments as, apart from PBFX’s third-party acquisitions, our Logistics segment doesdid not have any third party revenuesignificant third-party revenues and substantially alla significant portion of its operating results eliminateare eliminated in consolidation. Additionally, third party expenses attributable directly to the Logistics segment are immaterial relative to our consolidated operating results.
|
| | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| Revenue | $ | 3,217,640 |
| | $ | 5,260,003 |
| | $ | 9,763,440 |
| | $ | 15,308,155 |
|
| Cost of sales, excluding depreciation | 2,822,444 |
| | 4,670,908 |
| | 8,319,404 |
| | 13,754,048 |
|
| 395,196 |
| | 589,095 |
| | 1,444,036 |
| | 1,554,107 |
|
| Operating expenses, excluding depreciation | 203,860 |
| | 202,625 |
| | 635,948 |
| | 682,246 |
|
| General and administrative expenses | 50,808 |
| | 37,307 |
| | 125,431 |
| | 106,947 |
|
| (Gain) loss on sale of assets | (142 | ) | | 18 |
| | (1,133 | ) | | (162 | ) |
| Depreciation and amortization expense | 48,133 |
| | 68,010 |
| | 144,401 |
| | 135,887 |
|
| Income from operations | 92,537 |
| | 281,135 |
| | 539,389 |
| | 629,189 |
|
| Change in fair value of catalyst leases | 4,994 |
| | 5,543 |
| | 8,982 |
| | 1,204 |
|
| Interest expense, net | (29,360 | ) | | (24,855 | ) | | (80,183 | ) | | (76,728 | ) |
| Net income | 68,171 |
| | 261,823 |
| | 468,188 |
| | 553,665 |
|
| Less: net income attributable to noncontrolling interests | 9,381 |
| | 4,637 |
| | 26,608 |
| | 7,328 |
|
| Net income attributable to PBF LLC | $ | 58,790 |
| | $ | 257,186 |
| | $ | 441,580 |
| | $ | 546,337 |
|
| | | | | | | | |
| Gross margin | $ | 150,815 |
| | $ | 322,084 |
| | $ | 686,401 |
| | $ | 746,567 |
|
| | | | | | | | |
| Gross refining margin (1) | $ | 359,231 |
| | $ | 574,351 |
| | $ | 1,349,017 |
| | $ | 1,531,581 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| PBF Energy | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Revenues | $ | 12,764.6 | | | $ | 7,186.7 | | | $ | 35,984.0 | | | $ | 19,009.4 | |
| Cost and expenses: | | | | | | | |
| Cost of products and other | 10,417.3 | | | 6,374.7 | | | 30,004.0 | | | 16,666.4 | |
| Operating expenses (excluding depreciation and amortization expense as reflected below) | 646.0 | | | 530.5 | | | 1,904.0 | | | 1,495.6 | |
| Depreciation and amortization expense | 128.1 | | | 112.8 | | | 366.5 | | | 338.5 | |
| Cost of sales | 11,191.4 | | | 7,018.0 | | | 32,274.5 | | | 18,500.5 | |
| General and administrative expenses (excluding depreciation and amortization expense as reflected below) | 168.2 | | | 64.1 | | | 374.9 | | | 166.9 | |
| Depreciation and amortization expense | 2.0 | | | 3.4 | | | 5.8 | | | 10.1 | |
| Change in fair value of contingent consideration | 3.0 | | | 0.1 | | | 130.9 | | | 26.2 | |
| | | | | | | |
| Loss (gain) on sale of assets | — | | | 0.2 | | | 0.3 | | | (0.4) | |
| Total cost and expenses | 11,364.6 | | | 7,085.8 | | | 32,786.4 | | | 18,703.3 | |
| Income from operations | 1,400.0 | | | 100.9 | | | 3,197.6 | | | 306.1 | |
| Other income (expense): | | | | | | | |
| Interest expense, net | (52.7) | | | (82.0) | | | (216.6) | | | (243.1) | |
| Change in Tax Receivable Agreement liability | (1.7) | | | — | | | (288.2) | | | — | |
| Change in fair value of catalyst obligations | (2.6) | | | 17.8 | | | (0.3) | | | 13.6 | |
| (Loss) gain on extinguishment of debt | (69.9) | | | 60.3 | | | (66.1) | | | 60.3 | |
| Other non-service components of net periodic benefit cost | 2.2 | | | 2.0 | | | 6.6 | | | 5.9 | |
| Income before income taxes | 1,275.3 | | | 99.0 | | | 2,633.0 | | | 142.8 | |
| Income tax expense | 191.1 | | | 20.3 | | | 316.3 | | | 16.4 | |
| Net income | 1,084.2 | | | 78.7 | | | 2,316.7 | | | 126.4 | |
| Less: net income attributable to noncontrolling interests | 27.8 | | | 19.6 | | | 77.7 | | | 60.7 | |
| Net income attributable to PBF Energy Inc. stockholders | $ | 1,056.4 | | | $ | 59.1 | | | $ | 2,239.0 | | | $ | 65.7 | |
| Consolidated gross margin | $ | 1,573.2 | | | $ | 168.7 | | | $ | 3,709.5 | | | $ | 508.9 | |
Gross refining margin (1) | $ | 2,262.1 | | | $ | 727.5 | | | $ | 5,721.0 | | | $ | 2,089.0 | |
| Net income available to Class A common stock per share: | | | | | | | |
| Basic | $ | 8.65 | | | $ | 0.49 | | | $ | 18.46 | | | $ | 0.55 | |
| Diluted | $ | 8.40 | | | $ | 0.49 | | | $ | 18.03 | | | $ | 0.54 | |
| | |
(1) | See Non-GAAP Financial Measures below. |
(1) See Non-GAAP Financial Measures.
Operating Highlights | | | | | | | | | | | | | | | | | | | | | | | |
| PBF LLC | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Revenues | $ | 12,764.6 | | | $ | 7,186.7 | | | $ | 35,984.0 | | | $ | 19,009.4 | |
| Cost and expenses: | | | | | | | |
| Cost of products and other | 10,417.3 | | | 6,374.7 | | | 30,004.0 | | | 16,666.4 | |
| Operating expenses (excluding depreciation and amortization expense as reflected below) | 646.0 | | | 530.5 | | | 1,904.0 | | | 1,495.6 | |
| Depreciation and amortization expense | 128.1 | | | 112.8 | | | 366.5 | | | 338.5 | |
| Cost of sales | 11,191.4 | | | 7,018.0 | | | 32,274.5 | | | 18,500.5 | |
| General and administrative expenses (excluding depreciation and amortization expense as reflected below) | 167.3 | | | 63.7 | | | 373.2 | | | 165.3 | |
| Depreciation and amortization expense | 2.0 | | | 3.4 | | | 5.8 | | | 10.1 | |
| Change in fair value of contingent consideration | 3.0 | | | 0.1 | | | 130.9 | | | 26.2 | |
| | | | | | | |
| Loss (gain) on sale of assets | — | | | 0.2 | | | 0.3 | | | (0.4) | |
| Total cost and expenses | 11,363.7 | | | 7,085.4 | | | 32,784.7 | | | 18,701.7 | |
| Income from operations | 1,400.9 | | | 101.3 | | | 3,199.3 | | | 307.7 | |
| Other income (expense): | | | | | | | |
| Interest expense, net | (55.7) | | | (84.8) | | | (224.9) | | | (250.9) | |
| Change in fair value of catalyst obligations | (2.6) | | | 17.8 | | | (0.3) | | | 13.6 | |
| (Loss) gain on extinguishment of debt | (69.9) | | | 60.3 | | | (66.1) | | | 60.3 | |
| Other non-service components of net periodic benefit cost | 2.2 | | | 2.0 | | | 6.6 | | | 5.9 | |
| Income before income taxes | 1,274.9 | | | 96.6 | | | 2,914.6 | | | 136.6 | |
| Income tax expense (benefit) | 10.4 | | | (2.0) | | | 1.1 | | | (16.9) | |
| Net income | 1,264.5 | | | 98.6 | | | 2,913.5 | | | 153.5 | |
| Less: net income attributable to noncontrolling interests | 18.5 | | | 18.9 | | | 56.2 | | | 60.0 | |
| Net income attributable to PBF Energy Company LLC | $ | 1,246.0 | | | $ | 79.7 | | | $ | 2,857.3 | | | $ | 93.5 | |
| | | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| Operating Highlights | | Operating Highlights | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2015 | | 2014 | | 2015 | | 2014 | | 2022 | | 2021 | | 2022 | | 2021 |
| Key Operating Information | | | | | | | | Key Operating Information | | | | | | | |
| Production (bpd in thousands) | 473.2 |
| | 496.8 |
| | 473.4 |
| | 465.3 |
| Production (bpd in thousands) | 996.7 | | | 867.7 | | | 933.7 | | | 839.7 | |
| Crude oil and feedstocks throughput (bpd in thousands) | 475.4 |
| | 495.5 |
| | 478.1 |
| | 465.9 |
| Crude oil and feedstocks throughput (bpd in thousands) | 984.7 | | | 848.3 | | | 920.4 | | | 823.2 | |
| Total crude oil and feedstocks throughput (millions of barrels) | 43.7 |
| | 45.6 |
| | 130.5 |
| | 127.2 |
| Total crude oil and feedstocks throughput (millions of barrels) | 90.6 | | | 78.0 | | | 251.3 | | | 224.7 | |
| Consolidated gross margin per barrel of throughput | | Consolidated gross margin per barrel of throughput | $ | 17.36 | | | $ | 2.16 | | | $ | 14.76 | | | $ | 2.26 | |
| Gross refining margin, excluding special items, per barrel of throughput (1) | $ | 12.97 |
| | $ | 12.60 |
| | $ | 10.95 |
| | $ | 12.04 |
| Gross refining margin, excluding special items, per barrel of throughput (1) | $ | 24.96 | | | $ | 9.32 | | | $ | 22.77 | | | $ | 6.32 | |
| Refinery operating expenses, excluding depreciation, per barrel of throughput | $ | 4.57 |
| | $ | 4.41 |
| | $ | 4.79 |
| | $ | 5.34 |
| |
| Refinery operating expense, per barrel of throughput | | Refinery operating expense, per barrel of throughput | $ | 6.84 | | | $ | 6.50 | | | $ | 7.28 | | | $ | 6.36 | |
| | | | | | | | | |
Crude and feedstocks (% of total throughput) (2): | | | | | | | | |
| Heavy crude | 9 | % | | 12 | % | | 12 | % | | 13 | % | |
| Medium crude | 54 | % | | 43 | % | | 50 | % | | 44 | % | |
| Light crude | 26 | % | | 34 | % | | 27 | % | | 34 | % | |
Crude and feedstocks (% of total throughput) (2) | | Crude and feedstocks (% of total throughput) (2) | |
| Heavy | | Heavy | 31 | % | | 32 | % | | 32 | % | | 34 | % |
| Medium | | Medium | 39 | % | | 32 | % | | 35 | % | | 29 | % |
| Light | | Light | 17 | % | | 19 | % | | 19 | % | | 20 | % |
| Other feedstocks and blends | 11 | % | | 11 | % | | 11 | % | | 9 | % | Other feedstocks and blends | 13 | % | | 17 | % | | 14 | % | | 17 | % |
| Total throughput | | Total throughput | 100 | % | | 100 | % | | 100 | % | | 100 | % |
| | | | | | | | | | | | | | | | |
Yield (% of total throughput): | | | | | | | | |
| Yield (% of total throughput) | | Yield (% of total throughput) | |
| Gasoline and gasoline blendstocks | 48 | % | | 46 | % | | 47 | % | | 47 | % | Gasoline and gasoline blendstocks | 47 | % | | 52 | % | | 47 | % | | 53 | % |
| Distillates and distillate blendstocks | 34 | % | | 36 | % | | 35 | % | | 36 | % | Distillates and distillate blendstocks | 35 | % | | 29 | % | | 35 | % | | 30 | % |
| Lubes | 1 | % | | 2 | % | | 2 | % | | 2 | % | Lubes | 1 | % | | 1 | % | | 1 | % | | 1 | % |
| Chemicals | 3 | % | | 3 | % | | 3 | % | | 3 | % | Chemicals | 1 | % | | 2 | % | | 2 | % | | 2 | % |
| Other | 14 | % | | 13 | % | | 13 | % | | 12 | % | Other | 17 | % | | 18 | % | | 16 | % | | 16 | % |
| Total yield | | Total yield | 101 | % | | 102 | % | | 101 | % | | 102 | % |
| | | | | | | | | |
| | |
(1) | See Non-GAAP Financial Measures below. |
| |
(2) | We define heavy crude oil as crude oil with an American Petroleum Institute (API) gravity less than 24 degrees. We define medium crude oil as crude oil with an API gravity between 24 and 35 degrees. We define light crude oil as crude oil with an API gravity higher than 35 degrees. |
(1) See Non-GAAP Financial Measures.
(2) We define heavy crude oil as crude oil with American Petroleum Institute (“API”) gravity less than 24 degrees. We define medium crude oil as crude oil with API gravity between 24 and 35 degrees. We define light crude oil as crude oil with API gravity higher than 35 degrees.
The table below summarizes certain market indicators relating to our operating results as reported by Platts.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars per barrel, except as noted) |
| Dated Brent crude oil | $ | 100.49 | | | $ | 73.45 | | | $ | 105.34 | | | $ | 67.93 | |
| West Texas Intermediate (WTI) crude oil | $ | 91.63 | | | $ | 70.54 | | | $ | 98.46 | | | $ | 65.06 | |
| Light Louisiana Sweet (LLS) crude oil | $ | 94.03 | | | $ | 71.46 | | | $ | 100.55 | | | $ | 66.68 | |
| Alaska North Slope (ANS) crude oil | $ | 98.84 | | | $ | 72.66 | | | $ | 102.34 | | | $ | 67.53 | |
| Crack Spreads | | | | | | | |
| Dated Brent (NYH) 2-1-1 | $ | 37.51 | | | $ | 18.66 | | | $ | 38.14 | | | $ | 16.09 | |
| WTI (Chicago) 4-3-1 | $ | 35.35 | | | $ | 19.60 | | | $ | 32.63 | | | $ | 16.73 | |
| LLS (Gulf Coast) 2-1-1 | $ | 38.75 | | | $ | 18.13 | | | $ | 37.77 | | | $ | 15.40 | |
| ANS (West Coast-LA) 4-3-1 | $ | 46.87 | | | $ | 21.54 | | | $ | 44.45 | | | $ | 19.58 | |
| ANS (West Coast-SF) 3-2-1 | $ | 47.97 | | | $ | 23.27 | | | $ | 44.54 | | | $ | 19.22 | |
| Crude Oil Differentials | | | | | | | |
| Dated Brent (foreign) less WTI | $ | 8.86 | | | $ | 2.91 | | | $ | 6.87 | | | $ | 2.87 | |
| Dated Brent less Maya (heavy, sour) | $ | 16.10 | | | $ | 7.26 | | | $ | 12.81 | | | $ | 5.93 | |
| Dated Brent less WTS (sour) | $ | 8.26 | | | $ | 2.91 | | | $ | 6.89 | | | $ | 2.53 | |
| Dated Brent less ASCI (sour) | $ | 11.22 | | | $ | 4.79 | | | $ | 9.55 | | | $ | 3.58 | |
| WTI less WCS (heavy, sour) | $ | 22.61 | | | $ | 13.59 | | | $ | 18.74 | | | $ | 13.00 | |
| WTI less Bakken (light, sweet) | $ | (4.77) | | | $ | (0.48) | | | $ | (4.08) | | | $ | 0.07 | |
| WTI less Syncrude (light, sweet) | $ | (6.30) | | | $ | 2.47 | | | $ | (3.54) | | | $ | 1.66 | |
| WTI less LLS (light, sweet) | $ | (2.40) | | | $ | (0.92) | | | $ | (2.08) | | | $ | (1.63) | |
| WTI less ANS (light, sweet) | $ | (7.21) | | | $ | (2.12) | | | $ | (3.88) | | | $ | (2.48) | |
| Natural gas (dollars per MMBTU) | $ | 7.95 | | | $ | 4.32 | | | $ | 6.69 | | | $ | 3.35 | |
|
| | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| | (dollars per barrel, except as noted) |
| Dated Brent Crude | $ | 50.36 |
| | $ | 101.93 |
| | $ | 55.54 |
| | $ | 106.52 |
|
| West Texas Intermediate (WTI) crude oil | $ | 46.45 |
| | $ | 97.56 |
| | $ | 50.93 |
| | $ | 99.77 |
|
| Crack Spreads | | | | | | | |
| Dated Brent (NYH) 2-1-1 | $ | 17.60 |
| | $ | 13.91 |
| | $ | 17.75 |
| | $ | 13.07 |
|
| WTI (Chicago) 4-3-1 | $ | 24.03 |
| | $ | 16.63 |
| | $ | 20.09 |
| | $ | 17.40 |
|
| Crude Oil Differentials | | | | | | | |
| Dated Brent (foreign) less WTI | $ | 3.91 |
| | $ | 4.36 |
| | $ | 4.61 |
| | $ | 6.75 |
|
| Dated Brent less Maya (heavy, sour) | $ | 7.60 |
| | $ | 11.06 |
| | $ | 8.12 |
| | $ | 14.52 |
|
| Dated Brent less WTS (sour) | $ | 2.29 |
| | $ | 13.14 |
| | $ | 4.14 |
| | $ | 13.95 |
|
| Dated Brent less ASCI (sour) | $ | 5.08 |
| | $ | 5.02 |
| | $ | 4.43 |
| | $ | 7.39 |
|
| WTI less WCS (heavy, sour) | $ | 14.52 |
| | $ | 20.06 |
| | $ | 11.58 |
| | $ | 20.70 |
|
| WTI less Bakken (light, sweet) | $ | 3.26 |
| | $ | 6.43 |
| | $ | 3.49 |
| | $ | 4.98 |
|
| WTI less Syncrude (light, sweet) | $ | 1.02 |
| | $ | 4.12 |
| | $ | (1.19 | ) | | $ | 1.97 |
|
| Natural gas (dollars per MMBTU) | $ | 2.73 |
| | $ | 3.95 |
| | $ | 2.76 |
| | $ | 4.41 |
|
Three Months Ended September 30, 20152022 Compared to the Three Months Ended September 30, 20142021
Overview— Net PBF Energy net income was $68.2 million for the three months ended September 30, 2015 compared to net income of $261.8 million for the three months ended September 30, 2014. Net income attributable to PBF LLC was $58.8 million for the three months ended September 30, 2015 compared to net income attributable to PBF LLC of $257.2$1,084.2 million for the three months ended September 30, 2014.2022 compared to a net income of $78.7 million for the three months ended September 30, 2021. PBF LLC net income was $1,264.5 million for the three months ended September 30, 2022 compared to a net income of $98.6 million for the three months ended September 30, 2021. Net income attributable to PBF Energy was $1,056.4 million, or $8.40 per diluted share, for the three months ended September 30, 2022 ($8.40 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or $7.96 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income excluding special items, as described below in Non-GAAP Financial Measures) compared to net income attributable to PBF Energy of $59.1 million, or $0.49 per diluted share, for the three months ended September 30, 2021 ($0.49 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or $0.12 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income excluding special items, as described below in Non-GAAP Financial Measures). The net income or loss attributable to PBF LLC includesEnergy represents PBF LLC’sEnergy’s equity interest in its operating subsidiaries' net income.PBF LLC’s pre-tax income, less applicable income tax expense. PBF Energy’s weighted-average equity interest in PBF LLC was 99.3% and 99.2% for the three months ended September 30, 2022 and September 30, 2021, respectively.
Our results for the three months ended September 30, 20152022 were negatively impacted by a non-cash special itemitems consisting of a non-cash inventory lowerpre-tax loss on extinguishment of costdebt associated with the redemption of our 2025 Senior Secured Notes of $69.9 million, or market ("LCM") adjustment$51.8 million net of approximately $208.3 million ontax, a net basis, which includes the reversalchange in fair value of the LCM charge recordedcontingent consideration of $3.0 million, or $2.2 million net of tax, primarily related to our earn-out obligation associated with the acquisition of the Martinez refinery and logistic assets (the “Martinez Contingent Consideration”), and pre-tax charges associated with the change in the second quarterTax Receivable Agreement liability of 2015. The LCM adjustment is a result$1.7 million, or $1.3 million net of the changing crude oil and refined product prices from the second quarter of 2015 to the end of the third quarter of 2015. During this period the prices have remained below historical costs. Excluding the impact of the net change in LCM reserve of $208.3 million, our results were positively impacted by higher crack spreads in the East Coast and Mid-Continenttax, partially offset by unfavorable movements in crude oil differentials anda $110.4 million tax benefit associated with the impactremeasurement of the unplanned downtime at our Delaware City refinery in August 2015 and planned turnaround at our Delaware City refinery in September 2015 which reduced throughput and increased operating expenses.
Revenues— Revenues totaled $3.2 billioncertain deferred tax assets. Our results for the three months ended September 30, 2015 compared2021 were positively impacted by a pre-tax gain on the extinguishment of debt associated with the repurchase of a portion of our 2028 Senior Notes and our 2025 Senior Notes of $60.3 million, or $44.3 million net of tax and a $1.4 million tax benefit associated with the remeasurement of certain deferred tax assets, partially offset by a change in the fair value of the Martinez Contingent Consideration and contingent consideration related to $5.3the PBFX CPI Operations LLC acquisition (the “PBFX Contingent Consideration”) of $0.1 million, or $0.1 million net of tax.
Excluding the impact of these special items, when comparing our results to the three months ended September 30, 2021, we experienced an increase in the demand for our refined products, evidenced by higher throughput volumes and barrels sold at all of our refineries, as well as overall stronger refining margins due to favorable movements in crack spreads and crude oil differentials. These improving metrics have positively impacted our revenues, gross margin and operating income.
Revenues— Revenues totaled $12.8 billion for the three months ended September 30, 2014, a decrease2022 compared to $7.2 billion for the three months ended September 30, 2021, an increase of approximately $2.0$5.6 billion,, or 38.8%77.8%. Revenues per barrel were $126.56 and $83.44 for the three months ended September 30, 2022 and 2021, respectively, an increase of 51.7% directly related to higher hydrocarbon commodity prices. For the three months ended September 30, 2015, the total throughput rates in the East Coast and Mid-Continent refineries averaged approximately 301,800 bpd and 173,600 bpd, respectively. For the three months ended September 30, 2014,2022, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and Mid-ContinentWest Coast refineries averaged approximately 344,100318,900 bpd, 159,300 bpd, 192,500 bpd and 151,400314,000 bpd, respectively. The decline in throughput rates at our East Coast refineries in 2015 compared to 2014 is primarily due to unplanned downtime at our Delaware City refinery in August 2015 and a planned turnaround in September 2015 at our Delaware City refinery. The increase in throughput rates at our Mid-Continent refinery in 2015 compared to 2014 was primarily attributable to favorable market conditions at our Toledo refinery in the third quarter of 2015. For the three months ended September 30, 2015,2021, the
total barrels soldthroughput rates at our East Coast, Mid-Continent, Gulf Coast and Mid-ContinentWest Coast refineries averaged approximately 355,400259,800 bpd, 146,000 bpd, 145,300 bpd and 179,700297,200 bpd, respectively. For the three months ended September 30, 2014,2022, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and Mid-ContinentWest Coast refineries averaged approximately 365,200372,000 bpd, 168,000 bpd, 198,900 bpd and 154,400357,400 bpd, respectively. For the three months ended September 30, 2021, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately 299,300 bpd, 152,800 bpd, 152,000 bpd and 332,100 bpd, respectively.
The throughput rates at our refineries were higher in the three months ended September 30, 2022 compared to the same period in 2021. We plan to continue operating our refineries based on demand and current market conditions. Total refined product barrels sold were higher than throughput rates, reflecting sales from inventory as well as sales and purchases of refined products outside the refinery.our refineries.
Consolidated Gross Margin— Consolidated gross margin totaled $1,573.2 million for the three months ended September 30, 2022 compared to $168.7 million for the three months ended September 30, 2021, an increase of approximately $1,404.5 million. Gross refining margin (as described below in Non-GAAP Financial Measures) and gross refining margin excluding special items totaled $359.2$2,262.1 million, or $8.21 per barrel of throughput ($567.5 million or $12.97 per barrel of throughput excluding the impact of special items), for the three months ended September 30, 2015 compared to $574.4 million, or $12.60 per barrel of throughput during the three months ended September 30, 2014, a decrease of $215.2 million. Gross margin, including refinery operating expenses and depreciation, totaled $150.8 million, or $3.45 per barrel of throughput, for the three months ended September 30, 2015 compared to $322.1 million, or $7.10$24.96 per barrel of throughput for the three months ended September 30, 2014, a decrease2022 compared to $727.5 million, or $9.32 per barrel of $171.3throughput for the three months ended September 30, 2021, an increase of approximately $1,534.6 million. Excluding
During the impact ofthree months ended September 30, 2022 and September 30, 2021, our margin calculations were not impacted by special items,items. Consolidated gross margin and gross refining margin increased due to improvedfavorable movements in certain crack spreads in the East Coast and the Mid-Continent partially offset by unfavorable movements in crude oil differentials in both the East Coast and the Mid-Continenthigher throughput volumes and lower throughput ratesbarrels sold at all of our East Coast refineries. In addition, gross margin and gross refining margin were negatively
Additionally, our results continue to be impacted by a non-cash LCM adjustment of approximately $208.3significant costs to comply with the Renewable Fuel Standard. Total Renewable Fuel Standard compliance costs were $297.6 million on a net basis resulting fromfor the changethree months ended September 30, 2022 in crude oil and refined product prices from the end of the second quarter of 2015comparison to the end of the third quarter of 2015, which remained below historical costs.$73.1 million for three months ended months ended September 30, 2021.
Average industry refining margins in the Mid-Continent were strongerfavorable during the three months ended September 30, 2015 as compared2022 in comparison to the same period in 2014. The WTI (Chicago) 4-3-1 industry crack spread was approximately $24.03 per barrel or 44.5%2021, primarily due to increases in regional demand and favorable movements in refining margins as a result of global supply disruptions.
Favorable movements in benchmark crude differentials typically result in lower crude costs and positively impact our earnings while reductions in these benchmark crude differentials typically result in higher incrude costs and negatively impact our earnings.
On the three months ended September 30, 2015 as compared to $16.63 per barrel inEast Coast, the same period in 2014. However, our margins were negatively impacted from our refinery specific crude slate in the Mid-Continent which was impacted by a declining WTI/Syncrude differential, which averaged approximately $1.02 per barrel in the third quarter of 2015 as compared to $4.12 per barrel in the third quarter of 2014.
The Dated Brent (NYH) 2-1-1 industry crack spread was approximately $17.60$37.51 per barrel, or 26.5%101.0% higher, in the three months ended September 30, 20152022, as compared to $13.91$18.66 per barrel in the same period in 2014. The WTI/Dated Brent differential and2021. Our margins were positively impacted from our refinery specific slate on the East Coast by strengthening Dated Brent/Maya differential, which increased by $8.84 per barrel, partially offset by weakened WTI/Bakken differentials, were $0.45 and $3.46 lower, respectively,which decreased by $4.29 per barrel in comparison to the same period in 2021. The WTI/WCS differential increased to $22.61 per barrel in the three months ended September 30, 2015 as2022 compared to $13.59 in the same period in 2014. In addition,2021, which favorably impacted our cost of heavy Canadian crude.
Across the WTI/Bakken differentialMid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was approximately $3.17$35.35 per barrel, less favorableor 80.4% higher, in the three months ended September 30, 20152022 as compared to $19.60 per barrel in the same period in 2014.2021. Our margins were negatively impacted from our refinery specific slate in the Mid-Continent by a decreasing WTI/Bakken differential, which averaged a premium of $4.77 per barrel in the three months ended September 30, 2022, as compared to a premium of $0.48 per barrel in the same period in 2021. Additionally, the WTI/Syncrude differential averaged a premium $6.30 per barrel during the three months ended September 30, 2022 as compared to a discount of $2.47 per barrel in the same period of 2021.
On the Gulf Coast, the LLS (Gulf Coast) 2-1-1 industry crack spread was $38.75 per barrel, or 113.7% higher, in the three months ended September 30, 2022 as compared to $18.13 per barrel in the same period in 2021. Margins on the Gulf Coast were negatively impacted from our refinery specific slate by a weakened WTI/LLS differential, which averaged a premium of $2.40 per barrel during the three months ended September 30, 2022 as compared to a premium of $0.92 per barrel in the same period of 2021.
On the West Coast the ANS (West Coast) 4-3-1 industry crack spread was $46.87 per barrel, or 117.6% higher, in the three months ended September 30, 2022 as compared to $21.54 per barrel in the same period in 2021. Additionally, the ANS (West Coast) 3-2-1 industry crack spread was $47.97 per barrel, or 106.1% higher, in the three months ended September 30, 2022 as compared to $23.27 per barrel in the same period in 2021. Our margins on the West Coast were negatively impacted from our refinery specific slate by weakened WTI/ANS differential, which averaged a premium of $7.21 per barrel during the three months ended September 30, 2022 as compared to a premium of $2.12 per barrel in the same period of 2021.
Operating Expenses— Operating expenses totaled $203.9$646.0 million for the three months ended September 30, 20152022 compared to $202.6$530.5 million for the three months ended September 30, 2014,2021, an increase of $1.3$115.5 million, or 0.6%21.8%. Of the total $203.9$646.0 million of operating expenses for the three months ended September 30, 2015, $200.02022, $620.1 million, or $4.57$6.84 per barrel of throughput, related to expenses incurred by the Refining segment, while the remaining $3.8$25.9 million related to expenses incurred by the Logistics segment.segment ($507.6 million, or $6.50 per barrel, and $22.9 million of operating expenses for the three months ended September 30, 2021 related to the Refining and Logistics segments, respectively). The increase in operating expenses was mainly attributable to $11.9 millionincreases in natural gas volumes and price across our refineries when compared to the same period in 2021. Additionally, we experienced higher outside services, maintenance and repairoperational costs due to increased production. Operating expenses related to the unplanned downtime at our Delaware City refinery and $2.5 million of higher employee wage and benefits expenses which were predominantly offset by a decrease of $13.0 million in energy related costs due to lower natural gas and electricity prices. Our operating expenses principally consist of salaries and employee benefits, maintenance, energy and catalyst and chemicals costs at our refineries. The operating expenses related to the Logistics segment consistsalso increased as a result of costs related to the operation andincreased maintenance of PBFX's assets subsequent to the PBFX Offering.activity.
General and Administrative Expenses— General and administrative expenses totaled $50.8 million for the three months ended September 30, 2015 compared to $37.3$168.2 million for the three months ended September 30, 2014,2022 compared to $64.1 million for the three months ended September 30, 2021, an increase of $13.5approximately $104.1 million or 36.2%162.4%. The increase in general and administrative expenses for the three months ended September 30, 2022 in comparison to the three months ended September 30, 2021 is primarily relatesrelated to higher employeeemployee-related expenses, including the recognition of incentive compensation costs and administrative expenses related to PBFX.for our non-executive employees. Our general and administrative expenses are comprised of the personnel, facilities and other infrastructure costs necessary to support our refineries.refineries and related logistics assets.
GainLoss on Sale of Assets— GainThere was no gain or loss on the sale of assets for the three months ended September 30, 20152022. There was $0.1 million related toa loss on the sale of railcars which were subsequently leased back.
Depreciation and Amortization Expense— Depreciation and amortization expense totaled $48.1assets of $0.2 million for the three months ended September 30, 2015 compared2021, related to $68.0the sale of non-operating refinery assets.
Depreciation and Amortization Expense— Depreciation and amortization expense totaled $130.1 million for the three months ended September 30, 2014, a decrease2022 (including $128.1 million recorded within Cost of $19.9sales) compared to $116.2 million for the three months ended September 30, 2021 (including $112.8 million recorded within Cost of sales), an increase of $13.9 million. The decreaseincrease was primarily a result of an impairment charge of $28.5 million incurred ina general increase to our fixed asset base due to capital projects and turnarounds completed since the third quarter of 2014 partially offset by capital projects2021.
Change in Fair Value of Contingent Consideration— Change in fair value of contingent consideration represented a loss of $3.0 million for the three months ended September 30, 2022 in comparison to a loss of $0.1 million for the three months ended September 30, 2021. These losses were primarily related to turnarounds completedthe changes in 2014, the completed expansionestimated fair value of the crude rail unloading facility at the Delaware City refinery in 2014 and refinery optimization projects at Toledo.Martinez Contingent Consideration.
Change in Fair Value of Catalyst LeasesObligations— Change in the fair value of catalyst leasesobligations represented a gainloss of $5.0$2.6 million for the three months ended September 30, 20152022 compared to a gain of $5.5$17.8 million for the three months ended September 30, 2014.2021. These losses and gains relate to the change in value of the precious metals underlying the sale and leaseback of our refineries’ precious metals catalyst,metal catalysts, which we are obligated to repurchase at fair market value upon lease termination.
(Loss) Gain on Extinguishment of Debt— Loss on the lease termination dates.extinguishment of debt of $69.9 million incurred in the three months ended September 30, 2022 relates to the redemption of the outstanding 2025 Senior Secured Notes. There was a gain on extinguishment of debt of $60.3 million related to the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes in the same period of 2021.
Change in Tax Receivable Agreement Liability— Change in the Tax Receivable Agreement liability for the three months ended September 30, 2022 represented a charge of $1.7 million. There was no change in the Tax Receivable Agreement liability for the three months ended September 30, 2021. This charge was primarily the result of the payments made or expected to be made in connection with the Tax Receivable Agreement liability.
Interest Expense, net— InterestPBF Energy interest expense totaled $29.4$52.7 million for the three months ended September 30, 20152022 compared to $24.9$82.0 million for the three months ended September 30, 2014, an increase2021, a decrease of $4.5approximately $29.3 million. This increaseThe net decrease is mainly attributableattributed to the issuanceredemption of the PBFX2025 Senior Secured Notes andduring the related amortizationthird quarter of deferred financing fees. This increase was offset by decreases in interest expense related to the termination2022, as well as a lower outstanding balance on our revolving credit facilities as of our crude and feedstock supply agreement with MSCG, effective July 31, 2014.September 30, 2022. Interest expense includes interest on long-term debt including the PBFX credit facilities, costs related to the sale and leaseback of our precious metals catalyst, interest expense incurred in connection with our crude and feedstock supply agreement with Statoil,metal catalysts, financing costs associated with the Third Inventory Intermediation AgreementsAgreement with J. Aron, letter of credit fees associated with the purchase of certain crude oils and the amortization of deferred financing costs. PBF LLC interest expense totaled $55.7 million and $84.8 million for the three months ended September 30, 2022 and September 30, 2021, respectively (inclusive of $3.0 million and $2.8 million, respectively, of incremental interest expense on the affiliate note payable with PBF Energy that eliminates in consolidation at the PBF Energy level).
Income Tax Expense— PBF LLC is organized as a limited liability company and PBFX is an MLP, both of which are treated as “flow-through” entities for federal income tax purposes and therefore are not subject to income tax. However, two subsidiaries of Chalmette Refining L.L.C (“Chalmette Refining”) and our Canadian subsidiary, PBF Energy Limited (“PBF Ltd.”) are treated as C-Corporations for income tax purposes and may incur income taxes with respect to their earnings, as applicable. The members of PBF LLC are required to include their proportionate share of PBF LLC’s taxable income or loss, which includes PBF LLC’s allocable share of PBFX’s pre-tax income or loss, on their respective tax returns. PBF LLC generally makes distributions to its members, per the terms of PBF LLC’s amended and restated limited liability company agreement, related to such taxes on a pro-rata basis. PBF Energy recognizes an income tax expense or benefit in our Condensed Consolidated Financial Statements based on PBF Energy’s allocable share of PBF LLC’s pre-tax income or loss, which was approximately 99.3% and 99.2%, on a weighted-average basis for the three months ended September 30, 2022 and September 30, 2021, respectively. PBF Energy’s Condensed Consolidated Financial Statements do not reflect any benefit or provision for income taxes on the pre-tax income or loss attributable to the noncontrolling interests in PBF LLC or PBFX (although, as described above, PBF LLC must make tax distributions to all its members on a pro-rata basis). PBF Energy’s effective tax rate, excluding the impact of noncontrolling interests, for the three months ended September 30, 2022 and September 30, 2021 was 15.3% and 25.6%, respectively.
Noncontrolling Interest— PBF Energy is the sole managing member of, and has a controlling interest in, PBF LLC. As a resultthe sole managing member of PBF LLC, PBF Energy operates and controls all of the initial public offeringbusiness and affairs of PBF LLC and its subsidiaries. PBF Energy consolidates the financial results of PBF LLC and its subsidiaries, including PBFX. With respect to the consolidation of PBF LLC, the Company records a noncontrolling interest for the economic interest in PBF LLC held by members other than PBF Energy, and with respect to the consolidation of PBFX, the Company records a noncontrolling interest for the economic interests in PBFX held by the public unit holdersunitholders of PBFX.PBFX, and with respect to the consolidation of PBF Holding, the Company records a 20% noncontrolling interest for the ownership interests in two subsidiaries of Chalmette Refining held by a third party. The total noncontrolling interest on the consolidated statementCondensed Consolidated Statements of operationsOperations represents the portion of the Company’s earnings or loss attributable to the economic interests held by members of PBF LLC other than PBF Energy, by the public common unit holdersunitholders of PBFX.PBFX and by the third-party stockholders of certain of Chalmette Refining’s subsidiaries. The total noncontrolling interest on the balance sheetCondensed Consolidated Balance Sheets represents the portion of the Company’s net assets attributable to the economic interests held by the members of PBF LLC other than PBF Energy, by the public common unit holdersunitholders of PBFX.PBFX and by the third-party stockholders of the two Chalmette Refining subsidiaries. PBF Energy’s weighted-average equity noncontrolling interest ownership percentage in PBF LLC for the three months ended September 30, 2022 and September 30, 2021 was approximately 0.7% and 0.8%, respectively. The carrying amount of the noncontrolling interest on our Condensed Consolidated Balance Sheets attributable to the noncontrolling interest is not equal to the noncontrolling interest ownership percentage due to the effect of income taxes and related agreements that pertain solely to PBF Energy.
Nine Months Ended September 30, 20152022 Compared to the Nine Months Ended September 30, 20142021
Overview— Net PBF Energy net income was $468.2$2,316.7 million for the nine months ended September 30, 20152022 compared to net income of $553.7$126.4 million for the nine months ended September 30, 2014. Net income attributable to2021. PBF LLC net income was $441.6$2,913.5 million for the nine months ended September 30, 20152022 compared to net income attributable to PBF LLC of $546.3$153.5 million for the nine months ended September 30, 2014.2021. Net income attributable to PBF Energy stockholders was $2,239.0 million, or $18.03 per diluted share, for the nine months ended September 30, 2022 ($18.03 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or $19.03 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income excluding special items, as described below in Non-GAAP Financial Measures), compared to net income attributable to PBF Energy stockholders of $65.7 million, or $0.54 per diluted share, for the nine months ended September 30, 2021 ($0.54 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or $(3.75) per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net loss excluding special items, as described below in Non-GAAP Financial Measures). The net income or loss attributable to PBF LLC includesEnergy stockholders represents PBF LLC’sEnergy’s equity interest in its operating subsidiaries' net income.PBF LLC’s pre-tax income, less applicable income tax expense. PBF Energy’s weighted-average equity interest in PBF LLC was 99.2% for the nine months ended September 30, 2022 and 2021.
Our results for the nine months ended September 30, 20152022 were negatively impacted by special items consisting of pre-tax charges associated with the change in the Tax Receivable Agreement liability of $288.2 million, or $213.6 million net of tax, a non-cashchange in fair value of contingent consideration of $130.9 million, or $97.0 million net of tax, primarily related to the Martinez Acquisition, and a net loss on the extinguishment of debt mainly associated with the redemption of our 2025 Senior Secured Notes of $66.1 million, or $49.0 million net of tax, partially offset by a $233.8 million tax benefit associated with the remeasurement of certain deferred tax assets. Our results for the nine months ended September 30, 2021 were positively impacted by special itemitems consisting of a non-cash, pre-tax LCM inventory lower of cost or market ("LCM") adjustment of approximately $81.1$669.6 million, or $491.5 million net of tax, a pre-tax gain on the extinguishment of debt associated with the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes of $60.3 million, or $44.3 million net basis, which includesof tax, and a $3.8 million tax benefit associated with the reversalremeasurement of certain deferred tax assets, offset by a change in the fair value of the LCM charge recorded in the fourth quarterMartinez Contingent Consideration of 2014. The LCM adjustment is a result$26.2 million, or $19.2 million net of the changing crude oil and refined product prices from the year ended 2014 to the end of the third quarter of 2015. During this period the prices have remained below historical costs. tax.
Excluding the impact of the net change in LCM reserve of $81.1 million,these special items, when comparing our results were negatively impactedto the nine months ended September 30, 2021, we experienced an increase in the demand for our refined products, evidenced by unfavorablehigher throughput volumes and barrels sold at all of our refineries, as well as overall stronger refining margins due to favorable movements in certaincrack spreads and crude oil differentialsdifferentials. These improving metrics have positively impacted our revenues, gross margin and the impact of the unplanned downtime at our Toledo refinery and Delaware City refinery in June and August 2015, respectively, which increased operating expenses and reduced throughput, partially offset by higher crack spreads on the East Coast and Mid-Continent.income.
Revenues—Revenues totaled $9.8$36.0 billion for the nine months ended September 30, 20152022 compared to $15.3$19.0 billion for the nine months ended September 30, 2014, a decrease2021, an increase of approximately $5.5$17.0 billion, or 36.2%89.5%. Revenues per barrel were $127.56 and $76.95 for the nine months ended September 30, 2022 and 2021, respectively, an increase of 65.8% directly related to higher hydrocarbon commodity prices. For the nine months ended September 30, 2015,2022, the total throughput rates in theat our East Coast, Mid-Continent, Gulf Coast and Mid-ContinentWest Coast refineries averaged approximately 325,400291,600 bpd, 152,600 bpd, 185,200 bpd and 152,700291,000 bpd, respectively. For the nine months ended September 30, 2014,2021, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and Mid-ContinentWest Coast refineries averaged approximately 320,400
250,900 bpd, 138,000 bpd, 158,000 bpd and 145,500 bpd, respectively. The increase in throughput rates at our East Coast refineries in 2015 compared to 2014 is primarily due to favorable market conditions, partially offset by unplanned down time at our Delaware City refinery in August 2015 and a planned turnaround in September 2015. The increase in throughput rates at our Mid-Continent refinery is due to favorable market conditions at our Toledo refinery in the third quarter of 2015, partially offset by an unplanned downtime in the second quarter of 2015. For the nine months ended September 30, 2015, the total barrels sold at our East Coast and Mid-Continent refineries averaged approximately 363,400 bpd and 163,000276,300 bpd, respectively. For the nine months ended September 30, 2014, the2022, total barrels sold at our East Coast, Mid-Continent, Gulf Coast and Mid-ContinentWest Coast refineries averaged approximately 341,600343,600 bpd, 158,500 bpd, 196,300 bpd and 152,700334,900 bpd, respectively. For the nine months ended September 30, 2021, total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately 285,700 bpd, 144,100 bpd, 165,800 bpd and 309,400 bpd, respectively.
Overall the throughput rates were higher in the nine months ended September 30, 2022 compared to the same period in 2021, despite turnaround activity at several refineries during the nine months ended September 30, 2022. We plan to continue operating our refineries based on demand and current market conditions. Total refined product barrels sold were higher than throughput rates, reflecting sales from inventory as well as sales and purchases of refined products outside the refinery.our refineries.
Consolidated Gross Margin— Consolidated gross margin totaled $3,709.5 million for the nine months ended September 30, 2022, compared to $508.9 million for the nine months ended September 30, 2021, an increase of approximately $3,200.6 million. Gross refining margin (as described below in Non-GAAP Financial Measures) totaled $1,349.0$5,721.0 million, or $10.33 per barrel of throughput ($1,430.2 million or $10.95 per barrel of throughput excluding the impact of special items), for the nine months ended September 30, 2015 compared to $1,531.6 million, or $12.04 per barrel of throughput during the nine months ended September 30, 2014, a decrease of $182.6 million. Gross margin, including refinery operating expenses and depreciation, totaled $686.4 million, or $5.26$22.77 per barrel of throughput for the nine months ended September 30, 20152022 compared to $746.6$2,089.0 million, or $5.89$9.30 per barrel of throughput for the nine months ended September 30, 2014, a decrease2021, an increase of $60.2approximately $3,632.0 million. ExcludingGross refining margin excluding special items totaled $5,721.0 million or $22.77 per barrel of throughput for the impactnine months ended September 30, 2022 compared to $1,419.4 million or $6.32 per barrel of throughput for the nine months ended September 30, 2021, an increase of $4,301.6 million.
During the nine months ended September 30, 2022, our margin calculations were not impacted by special items,items. Consolidated gross margin and gross refining margin decreasedincreased due to unfavorablefavorable movements in crude differentials partially offset by improvedcertain crack spreads in the East Coast and the Mid-Continentcrude oil differentials and higher throughput rates. In addition, grossvolumes and barrels sold at all of our refineries. For the nine months ended September 30, 2021, special items impacting our margin and gross refining margin were negatively impacted bycalculations included a non-cash LCM adjustmentinventory benefit of approximately $81.1$669.6 million on a net basis, resulting from the changean increase in crude oil and refined product prices from the year ended 20142020 to the end of the third quarter of 2015, which remained below historical costs.2021.
Additionally, our results continue to be impacted by significant costs to comply with the Renewable Fuel Standard. Total Renewable Fuel Standard compliance costs were $924.7 million for the nine months ended September 30, 2022 in comparison to $653.8 million for the nine months ended September 30, 2021.
Average industry refining margins in the Mid-Continent were strongerfavorable during the nine months ended September 30, 2015 as compared2022 in comparison to the same period in 2014. The WTI (Chicago) 4-3-12021, primarily due to varying timing and extent of the impacts of the COVID-19 pandemic on regional demand and commodity prices, in addition to increased refining margins as a result of global supply disruptions.
Favorable movements in these benchmark crude differentials typically result in lower crude costs and positively impact our earnings while reductions in these benchmark crude differentials typically result in higher crude costs and negatively impact our earnings.
On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately $20.09$38.14 per barrel, or 15.5%137.0% higher, in the nine months ended September 30, 20152022, as compared to $17.40$16.09 per barrel in the same period in 2014. Alternatively,2021. Our margins were impacted from our refinery specific slate on the East Coast by strengthened Dated Brent/Maya differentials, which increased by $6.88 per barrel, slightly offset by weakened WTI/Bakken differentials, which decreased by $4.15 per barrel, in comparison to the same period in 2021. The WTI/WCS differential increased to $18.74 per barrel in the nine months ended September 30, 2022 compared to $13.00 in the same period in 2021, which favorably impacted our cost of heavy Canadian crude.
Across the Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was $32.63 per barrel, or 95.0% higher, in the nine months ended September 30, 2022 as compared to $16.73 per barrel in the same period in 2021. Our margins were negatively impacted from our refinery specific crude slate in the Mid-Continent which was impacted by a decliningdecreasing WTI/Bakken differential and WTI/Syncrude differential, which decreased by $4.15 per barrel and $5.20 per barrel, respectively.
On the Gulf Coast, the LLS (Gulf Coast) 2-1-1 industry crack spread was $37.77 per barrel, or 145.3% higher, in the nine months ended September 30, 2022 as compared to $15.40 per barrel in the same period in 2021. Margins on the Gulf Coast were negatively impacted from our refinery specific slate by a weakened WTI/LLS differential, which averaged a premium of $1.19$2.08 per barrel during the nine months ended September 30, 20152022 as compared to a discountpremium of $1.97$1.63 per barrel in the same period of 2014.2021.
The Dated Brent (NYH) 2-1-1On the West Coast, the ANS (West Coast) 4-3-1 industry crack spread was approximately $17.75$44.45 per barrel, or 35.8%127.0% higher, in the nine months ended September 30, 20152022 as compared to $13.07$19.58 per barrel in the same period in 2014. The WTI/Dated Brent differential and Dated Brent/Maya differential were $2.14 and $6.40 lower, respectively,2021. Additionally (West Coast) 3-2-1 industry crack spread was $44.54 per barrel, or 131.7% higher, in the nine months ended September 30, 20152022 as compared to $19.22 per barrel in the same period in 2014. In addition,2021. Our margins on the West Coast were negatively impacted from our refinery specific slate by a weakening WTI/BakkenANS differential, was approximately $1.49which averaged a premium of $3.88 per barrel less favorable induring the nine months ended September 30, 20152022 as compared to a premium of $2.48 per barrel in the same period in 2014.of 2021.
Operating Expenses— Operating expenses totaled $635.9$1,904.0 million for the nine months ended September 30, 20152022 compared to $682.2$1,495.6 million for the nine months ended September 30, 2014, a decrease2021, an increase of $46.3approximately $408.4 million, or 6.8%27.3%. Of the total $635.9$1,904.0 million of operating expenses for the nine months ended September 30, 2015, $625.52022, $1,829.5 million or $4.79$7.28 per barrel of throughput, related to expenses incurred by the Refining segment, while the remaining $10.4$74.5 million related to expenses incurred by the Logistics segment.segment ($1,430.1 million or $6.36 per barrel of throughput, and $65.5 million of operating expenses for the nine months ended September 30, 2021 related to the Refining and Logistics segments, respectively). The decreaseincrease in operating expenses was mainly attributable to a decrease of $64.8 millionincreases in energy related costs primarily attributable to lower natural gas volumes and electricity prices. The decrease was partially offset by an increase of $12.8 millionprice across our refineries when compared to the same period in 2021. Additionally, we experienced higher outside services, maintenance and repair expenses directly attributableoperational costs due to the unplanned downtime at our Delaware City and Toledo refineries and $3.9 million in chemical and catalyst related expenses. Our operating expenses principally consist of salaries and employee benefits, maintenance, energy and catalyst and chemicals costs at our refineries. The operating expenses related to the Logistics segment consists of costs related to the operation and maintenance of PBFX's assets subsequent to the PBFX Offering.increased production.
General and Administrative Expenses— General and administrative expenses totaled $125.4$374.9 million for the nine months ended September 30, 20152022 compared to $106.9$166.9 million for the nine months ended September 30, 2014,2021, an increase of approximately $18.4$208.0 million or 17.3%124.6%. The increase in general and administrative expenses
for the nine months ended September 30, 2022 in comparison to the nine months ended September 30, 2021 primarily relatesrelated to higher employee-related expenses, incurred associated with PBFX and employeecertain of which includes the recognition of incentive compensation costs.for our non-executive employees. Our general and administrative expenses are comprised of the personnel, facilities and other infrastructure costs necessary to support our refineries.refineries and related logistics assets.
GainLoss (Gain) on Sale of Assets— Gain on saleThere was a loss of assets for the nine months ended September 30, 2015 was $1.1$0.3 million as compared to $0.2and a gain of $0.4 million for the nine months ended September 30, 20142022 and September 30, 2021, respectively, related primarily to the sale of railcars which were subsequently leased back.non-operating refinery assets.
Depreciation and Amortization Expense— Depreciation and amortization expense totaled $144.4$372.3 million for the nine months ended September 30, 20152022 (including $366.5 million recorded within Cost of sales) compared to $135.9$348.6 million for the nine months ended September 30, 2014,2021 (including $338.5 million recorded within Cost of sales), an increase of $8.5approximately $23.7 million. The increase was primarily a result of a general increase in our fixed asset base due to capital projects related toand turnarounds completed in 2014,since the completed expansionthird quarter of the crude rail unloading facility at the Delaware City refinery in 2014 and refinery optimization projects at Toledo, partially offset by an impairment charge of $28.5 million in 2014.2021.
Change in Fair Value of Catalyst LeasesContingent Consideration— Change in the fair value of catalyst leasescontingent consideration represented a gainloss of $9.0$130.9 million and $26.2 million for the nine months ended September 30, 2015 compared2022 and September 30, 2021, respectively. These losses were primarily related to the changes in estimated fair value of the Martinez Contingent Consideration.
Change in Tax Receivable Agreement Liability— Change in the Tax Receivable Agreement liability for the nine months ended September 30, 2022 represented a gaincharge of $1.2$288.2 million. There was no change in the Tax Receivable Agreement liability for the nine months ended September 30, 2021. This charge was primarily the result of changes in the deferred tax asset valuation allowance recorded in accordance with ASC 740 related to the reduction of deferred tax assets associated with the payments made or expected to be made in connection with the Tax Receivable Agreement liability.
Change in Fair Value of Catalyst Obligations— Change in fair value of catalyst obligations represented a loss of $0.3 million for the nine months ended September 30, 2014.2022 compared to a gain of $13.6 million for the nine months ended September 30, 2021. These losses and gains relate to the change in value of the precious metals underlying the sale and leaseback of our refineries’ precious metals catalyst,metal catalysts, which we are obligated to repurchase at fair market value upon lease termination.
(Loss) Gain on Extinguishment of Debt— Loss on the lease termination dates.extinguishment of debt of $66.1 million incurred in the nine months ended September 30, 2022 relates to the redemption of all of the outstanding 2025 Senior Secured Notes, slightly offset by a gain related to the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes, compared to a gain on the extinguishment of debt of $60.3 million in the nine months ended September 30, 2021 related to the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes.
Interest Expense, net— InterestPBF Energy interest expense totaled $80.2$216.6 million for the nine months ended September 30, 20152022 compared to $76.7$243.1 million for the nine months ended September 30, 2014, an increase2021, a decrease of approximately $3.4$26.5 million. This increaseThe net decrease is mainly attributableattributed to higher interest costs associated with the issuanceredemption of the PBFX Revolving Credit Facility and2025 Senior Secured Notes during the PBFX Term Loan in connection with the PBFX Offeringthird quarter of 2022, as well as the issuancea lower outstanding balance on our revolving credit facilities as of the PBFX Senior Notes in May 2015 partially offset by the termination of our crude and feedstock supply agreement with MSCG, effective July 31, 2014.September 30, 2022. Interest expense includes interest on long-term debt including the PBFX credit facilities, costs related to the sale and leaseback of our precious metals catalyst, interest expense incurred in connection with our crude and feedstock supply agreement with Statoil,metal catalysts, financing costs associated with the Third Inventory Intermediation AgreementsAgreement with J. Aron, letter of credit fees associated with the purchase of certain crude oils and the amortization of deferred financing costs. PBF LLC interest expense totaled $224.9 million and $250.9 million for the nine months ended September 30, 2022 and 2021, respectively (inclusive of $8.3 million and $7.8 million, respectively, of incremental interest expense on the affiliate note payable with PBF Energy that eliminates in consolidation at the PBF Energy level).
Income Tax Expense— PBF LLC is organized as a limited liability company and PBFX is an MLP, both of which are treated as “flow-through” entities for federal income tax purposes and therefore are not subject to income tax. However, two subsidiaries of Chalmette Refining and our Canadian subsidiary, PBF Ltd., are treated as C-Corporations for income tax purposes and may incur income taxes with respect to their earnings, as applicable. The members of PBF LLC are required to include their proportionate share of PBF LLC’s taxable income or loss, which includes PBF LLC’s allocable share of PBFX’s pre-tax income or loss, on their respective tax returns. PBF LLC generally makes distributions to its members, per the terms of PBF LLC’s amended and restated limited liability company agreement, related to such taxes on a pro-rata basis. PBF Energy recognizes an income tax expense or benefit in our Condensed Consolidated Financial Statements based on PBF Energy’s allocable share of PBF LLC’s pre-tax income or loss, which was approximately 99.2%, on a weighted-average basis for both the nine months ended September 30, 2022 and September 30, 2021. PBF Energy’s Condensed Consolidated Financial Statements do not reflect any benefit or provision for income taxes on the pre-tax income or loss attributable to the noncontrolling interests in PBF LLC or PBFX (although, as described above, PBF LLC must make tax distributions to all its members on a pro-rata basis). PBF Energy’s effective tax rate, excluding the impact of noncontrolling interests, for the nine months ended September 30, 2022 and September 30, 2021 was 12.4% and 20.0%, respectively.
Noncontrolling Interest— PBF Energy is the sole managing member of, and has a controlling interest in, PBF LLC. As a resultthe sole managing member of PBF LLC, PBF Energy operates and controls all of the initial public offeringbusiness and affairs of PBF LLC and its subsidiaries. PBF Energy consolidates the financial results of PBF LLC and its subsidiaries, including PBFX. With respect to the consolidation of PBF LLC, the Company records a noncontrolling interest for the economic interest in PBF LLC held by members other than PBF Energy, and with respect to the consolidation of PBFX, the Company records a noncontrolling interest for the economic interests in PBFX held by the public unit holdersunitholders of PBFX.PBFX, and with respect to the consolidation of PBF Holding, the Company records a 20% noncontrolling interest for the ownership interests in two subsidiaries of Chalmette Refining held by a third-party. The total noncontrolling interest on the consolidated statementCondensed Consolidated Statements of operationsOperations represents the portion of the Company’s earnings or loss attributable to the economic interests held by members of PBF LLC other than PBF Energy, by the public common unit holdersunitholders of PBFX.PBFX and by the third-party stockholders of certain of Chalmette Refining’s subsidiaries. The total noncontrolling interest on the balance sheetCondensed Consolidated Balance Sheets represents the portion of the Company’s net assets attributable to the economic interests held by the members of PBF LLC other than PBF Energy, by the public common unit holdersunitholders of PBFX.PBFX and by the third-party stockholders of the two Chalmette Refining subsidiaries. PBF Energy’s weighted-average equity noncontrolling interest ownership percentage in PBF LLC for both the nine months ended September 30, 2022 and 2021 was approximately 0.8%. The carrying amount of the noncontrolling interest on our Condensed Consolidated Balance Sheets attributable to the noncontrolling interest is not equal to the noncontrolling interest ownership percentage due to the effect of income taxes and related agreements that pertain solely to PBF Energy.
Non-GAAP Financial Measures
Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with U.S. GAAP.GAAP (“Non-GAAP”). These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP,accounting principles generally accepted in the United States of America (“GAAP”), and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. Such Non-GAAP financial measures are presented only in the context of PBF Energy’s results and are not presented or discussed in respect to PBF LLC.
Special Items
The non-GAAPNon-GAAP measures presented include Adjusted Fully-Converted net income excluding special items, income from continuing operationsNet Income (Loss) excluding special items, EBITDA excluding special items and gross refining margin excluding special items. The specialSpecial items for the periods presented relate to LCM inventory adjustments, changes in fair value of contingent consideration, changes in the Tax Receivable Agreement liability, loss (gain) on extinguishment of debt, and net tax benefit on remeasurement of deferred tax assets. See “Notes to Non-GAAP Financial Measures” below for more details on all special items disclosed. Although we believe that Non-GAAP financial measures, excluding the impact of special items, provide useful supplemental information to investors regarding the results and performance of our business and allow for helpful period-over-period comparisons, such Non-GAAP measures should only be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP.
Adjusted Fully-Converted Net Income (Loss) and Adjusted Fully-Converted Net Income (Loss) Excluding Special Items
PBF Energy utilizes results presented on an Adjusted Fully-Converted basis that reflects an assumed exchange of all PBF LLC Series A Units for shares of PBF Energy Class A common stock. In addition, we present results on an Adjusted Fully-Converted basis excluding special items as described above. We believe that these Adjusted Fully-Converted measures, when presented in conjunction with comparable GAAP measures, are useful to investors to compare PBF Energy results across different periods and to facilitate an understanding of our operating results.
Neither Adjusted Fully-Converted Net Income (Loss) nor Adjusted Fully-Converted Net Income (Loss) excluding special items should be considered an alternative to net income (loss) presented in accordance with GAAP. Adjusted Fully-Converted Net Income (Loss) and Adjusted Fully-Converted Net Income (Loss) excluding special items presented by other companies may not be comparable to our presentation, since each company may define these terms differently. The differences between Adjusted Fully-Converted and GAAP results are as follows:
1. Assumed exchange of all PBF LLC Series A Units for shares of PBF Energy Class A common stock. As a result of the assumed exchange of all PBF LLC Series A Units, the noncontrolling interest related to these units is converted to controlling interest. Management believes that it is useful to provide the per-share effect associated with the assumed exchange of all PBF LLC Series A Units.
2. Income Taxes. Prior to PBF Energy’s initial public offering (“IPO”), PBF Energy was organized as a limited liability company treated as a “flow-through” entity for income tax purposes, and even after PBF Energy’s IPO, not all of its earnings are subject to corporate-level income taxes. Adjustments have been made to the Adjusted Fully-Converted tax provisions and earnings to assume that PBF Energy had adopted its post-IPO corporate tax structure for all periods presented and is taxed as a C-corporation in the U.S. at the prevailing corporate rates. These assumptions are consistent with the assumption in clause 1 above that all PBF LLC Series A Units are exchanged for shares of PBF Energy Class A common stock, as the assumed exchange would change the amount of PBF Energy’s earnings that are subject to corporate income tax.
The following table reconciles PBF Energy’s Adjusted Fully-Converted results with its results presented in accordance with GAAP for the three and nine months ended September 30, 2022 and 2021 (in millions, except share and per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Net income attributable to PBF Energy Inc. stockholders | $ | 1,056.4 | | | $ | 59.1 | | | $ | 2,239.0 | | | $ | 65.7 | |
| Less: Income allocated to participating securities | — | | | — | | | — | | | — | |
| Income available to PBF Energy Inc. stockholders - basic | 1,056.4 | | | 59.1 | | | 2,239.0 | | | 65.7 | |
Add: Net income attributable to noncontrolling interest (1) | 9.2 | | | 0.7 | | | 21.4 | | | 0.7 | |
Less: Income tax expense (2) | (2.3) | | | (0.2) | | | (5.5) | | | (0.2) | |
| Adjusted fully-converted net income | $ | 1,063.3 | | | $ | 59.6 | | | $ | 2,254.9 | | | $ | 66.2 | |
Special Items: (3) | | | | | | | |
| Add: Non-cash LCM inventory adjustment | — | | | — | | | — | | | (669.6) | |
| Add: Change in fair value of contingent consideration | 3.0 | | | 0.1 | | | 130.9 | | | 26.2 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Add: Loss (gain) on extinguishment of debt | 69.9 | | | (60.3) | | | 66.1 | | | (60.3) | |
| Add: Change in Tax Receivable Agreement liability | 1.7 | | | — | | | 288.2 | | | — | |
| | | | | | | |
| Add: Net tax benefit on remeasurement of deferred tax assets | (110.4) | | | (1.4) | | | (233.8) | | | (3.8) | |
| Add: Recomputed income tax on special items | (19.4) | | | 16.0 | | | (125.7) | | | 187.2 | |
| Adjusted fully-converted net income (loss) excluding special items | $ | 1,008.1 | | | $ | 14.0 | | | $ | 2,380.6 | | | $ | (454.1) | |
| Weighted-average shares outstanding of PBF Energy Inc. | 122,113,570 | | | 120,268,046 | | | 121,299,726 | | | 120,230,369 | |
Conversion of PBF LLC Series A Units (4) | 910,457 | | | 994,192 | | | 920,529 | | | 989,314 | |
Common stock equivalents (5) | 3,561,782 | | | 91,851 | | | 2,872,678 | | | 387,524 | |
| Fully-converted shares outstanding-diluted | 126,585,809 | | | 121,354,089 | | | 125,092,933 | | | 121,607,207 | |
| Diluted net income per share | $ | 8.40 | | | $ | 0.49 | | | $ | 18.03 | | | $ | 0.54 | |
Adjusted fully-converted net income per fully exchanged, fully diluted shares outstanding (5) | $ | 8.40 | | | $ | 0.49 | | | $ | 18.03 | | | $ | 0.54 | |
Adjusted fully-converted net income (loss) excluding special items per fully exchanged, fully diluted shares outstanding (3) (5) | $ | 7.96 | | | $ | 0.12 | | | $ | 19.03 | | | $ | (3.75) | |
——————————
See Notes to Non-GAAP Financial Measures.
Gross Refining Margin and Gross Refining Margin Excluding Special Items
Gross refining margin is defined as consolidated gross margin excluding refinery depreciation, refinery operating expense, and gross margin of PBFX. We believe both gross refining margin and gross refining margin excluding special items are important measures of operating performance and provide useful information to investors because they are helpful metric comparisons to the industry refining margin benchmarks, as the refining margin benchmarks do not include a charge for refinery operating expenses and depreciation. In order to assess our operating performance, we compare our gross refining margin (revenues less cost of products and other) to industry refining margin benchmarks and crude oil prices as defined in the table below.
Neither gross refining margin nor gross refining margin excluding special items should be considered an alternative to consolidated gross margin, income from operations, net cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Gross refining margin and gross refining margin excluding special items presented by other companies may not be comparable to our presentation, since each company may define these terms differently.
The following table presents our GAAP calculation of gross margin and a reconciliation of gross refining margin to the most directly comparable GAAP financial measure, consolidated gross margin, on a historical basis, as applicable, for each of the periods indicated (in millions, except per barrel amounts):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2022 | | 2021 |
| $ | | per barrel of throughput | | $ | | per barrel of throughput |
| Calculation of gross margin: | | | | | | | |
| Revenues | $ | 12,764.6 | | | $ | 140.90 | | | $ | 7,186.7 | | | $ | 92.09 | |
| Less: Cost of sales | 11,191.4 | | | 123.54 | | | 7,018.0 | | | 89.93 | |
| Consolidated gross margin | $ | 1,573.2 | | | $ | 17.36 | | | $ | 168.7 | | | $ | 2.16 | |
| Reconciliation of consolidated gross margin to gross refining margin: | | | | | | | |
| Consolidated gross margin | $ | 1,573.2 | | | $ | 17.36 | | | $ | 168.7 | | | $ | 2.16 | |
| Add: PBFX operating expense | 30.3 | | | 0.34 | | | 27.3 | | | 0.35 | |
| Add: PBFX depreciation expense | 9.0 | | | 0.10 | | | 9.8 | | | 0.13 | |
| Less: Revenues of PBFX | (89.6) | | | (0.99) | | | (88.9) | | | (1.14) | |
| Add: Refinery operating expense | 620.1 | | | 6.84 | | | 507.6 | | | 6.50 | |
| Add: Refinery depreciation expense | 119.1 | | | 1.31 | | | 103.0 | | | 1.32 | |
| Gross refining margin | $ | 2,262.1 | | | $ | 24.96 | | | $ | 727.5 | | | $ | 9.32 | |
Special items:(3) | | | | | | | |
| Add: Non-cash LCM inventory adjustment | — | | | — | | | — | | | — | |
| Gross refining margin excluding special items | $ | 2,262.1 | | | $ | 24.96 | | | $ | 727.5 | | | $ | 9.32 | |
| | | | | | | |
| Nine Months Ended September 30, |
| 2022 | | 2021 |
| $ | | per barrel of throughput | | $ | | per barrel of throughput |
| Calculation of consolidated gross margin: | | | | | | | |
| Revenues | $ | 35,984.0 | | | $ | 143.21 | | | $ | 19,009.4 | | | $ | 84.60 | |
| Less: Cost of sales | 32,274.5 | | | 128.45 | | | 18,500.5 | | | 82.34 | |
| Consolidated gross margin | $ | 3,709.5 | | | $ | 14.76 | | | $ | 508.9 | | | $ | 2.26 | |
| Reconciliation of consolidated gross margin to gross refining margin: | | | | | | | |
| Consolidated gross margin | $ | 3,709.5 | | | $ | 14.76 | | | $ | 508.9 | | | $ | 2.26 | |
| Add: PBFX operating expense | 87.9 | | | 0.35 | | | 77.7 | | | 0.35 | |
| Add: PBFX depreciation expense | 27.6 | | | 0.11 | | | 28.5 | | | 0.13 | |
| Less: Revenues of PBFX | (272.4) | | | (1.08) | | | (266.2) | | | (1.18) | |
| Add: Refinery operating expense | 1,829.5 | | | 7.28 | | | 1,430.1 | | | 6.36 | |
| Add: Refinery depreciation expense | 338.9 | | | 1.35 | | | 310.0 | | | 1.38 | |
| Gross refining margin | $ | 5,721.0 | | | $ | 22.77 | | | $ | 2,089.0 | | | $ | 9.30 | |
Special items:(3) | | | | | | | |
| Add: Non-cash LCM inventory adjustment | — | | | — | | | (669.6) | | | (2.98) | |
| | | | | | | |
| Gross refining margin excluding special items | $ | 5,721.0 | | | $ | 22.77 | | | $ | 1,419.4 | | | $ | 6.32 | |
——————————
See Notes to Non-GAAP Financial Measures.
EBITDA, EBITDA Excluding Special Items and Adjusted EBITDA
Our management uses EBITDA (earnings before interest, income taxes, depreciation and amortization), EBITDA excluding special items and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our Board of Directors, creditors, analysts and investors concerning our financial performance. Our outstanding indebtedness for borrowed money and other contractual obligations also include similar measures as a basis for certain covenants under those agreements which may differ from the Adjusted EBITDA definition described below.
EBITDA, EBITDA excluding special items and Adjusted EBITDA are not presentations made in accordance with GAAP and our computation of EBITDA, EBITDA excluding special items and Adjusted EBITDA may vary from others in our industry. In addition, Adjusted EBITDA contains some, but not all, adjustments that are taken into account in the calculation of the components of various covenants in the agreements governing our senior notes and other credit facilities. EBITDA, EBITDA excluding special items and Adjusted EBITDA should not be considered as alternatives to income from operations or net income as measures of operating performance. In addition, EBITDA, EBITDA excluding special items and Adjusted EBITDA are not presented as, and should not be considered, an alternative to cash flows from operations as a measure of liquidity. Adjusted EBITDA is defined as EBITDA before adjustments for items such as stock-based compensation expense, the non-cash change in the fair value of catalyst obligations, the write down of inventory to the LCM, adjustment.changes in the Tax Receivable Agreement liability due to factors out of PBF Energy’s control such as changes in tax rates, gain on extinguishment of debt, change in the fair value of contingent consideration and certain other non-cash items. Other companies, including other companies in our industry, may calculate EBITDA, EBITDA excluding special items and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. EBITDA, EBITDA excluding special items and Adjusted EBITDA also have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include that EBITDA, EBITDA excluding special items and Adjusted EBITDA:
•do not reflect depreciation expense or our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
•do not reflect changes in, or cash requirements for, our working capital needs;
•do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
•do not reflect realized and unrealized gains and losses from certain hedging activities, which may have a substantial impact on our cash flow;
•do not reflect certain other non-cash income and expenses; and
•exclude income taxes that may represent a reduction in available cash.
The following tables reconcile net income as reflected in PBF Energy’s results of operations to EBITDA, EBITDA excluding special items and Adjusted EBITDA for the periods presented (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | | |
| | | 2022 | | 2021 | | 2022 | | 2021 |
| Reconciliation of net income to EBITDA and EBITDA excluding special items: | | | | | | | |
| Net income | $ | 1,084.2 | | | $ | 78.7 | | | $ | 2,316.7 | | | $ | 126.4 | |
| Add: Depreciation and amortization expense | 130.1 | | | 116.2 | | | 372.3 | | | 348.6 | |
| Add: Interest expense, net | 52.7 | | | 82.0 | | | 216.6 | | | 243.1 | |
| Add: Income tax expense | 191.1 | | | 20.3 | | | 316.3 | | | 16.4 | |
| EBITDA | $ | 1,458.1 | | | $ | 297.2 | | | $ | 3,221.9 | | | $ | 734.5 | |
Special Items(3) | | | | | | | |
| Add: Non-cash LCM inventory adjustment | — | | | — | | | — | | | (669.6) | |
| Add: Change in fair value of contingent consideration | 3.0 | | | 0.1 | | | 130.9 | | | 26.2 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Add: Loss (gain) on extinguishment of debt | 69.9 | | | (60.3) | | | 66.1 | | | (60.3) | |
| Add: Change in Tax Receivable Agreement liability | 1.7 | | | — | | | 288.2 | | | — | |
| | | | | | | |
| EBITDA excluding special items | $ | 1,532.7 | | | $ | 237.0 | | | $ | 3,707.1 | | | $ | 30.8 | |
| | | | | | | | | |
| Reconciliation of EBITDA to Adjusted EBITDA: | | | | | | | |
| EBITDA | $ | 1,458.1 | | | $ | 297.2 | | | $ | 3,221.9 | | | $ | 734.5 | |
| Add: Stock-based compensation | 6.9 | | | 6.9 | | | 24.9 | | | 24.7 | |
| Add: Change in fair value of catalyst obligations | 2.6 | | | (17.8) | | | 0.3 | | | (13.6) | |
Add: Non-cash LCM inventory adjustment(3) | — | | | — | | | — | | | (669.6) | |
Add: Change in fair value of contingent consideration(3) | 3.0 | | | 0.1 | | | 130.9 | | | 26.2 | |
| | | | | | | |
| | | | | | | |
Add: Loss (gain) on extinguishment of debt(3) | 69.9 | | | (60.3) | | | 66.1 | | | (60.3) | |
Add: Change in Tax Receivable Agreement liability(3) | 1.7 | | | — | | | 288.2 | | | — | |
| | | | | | | |
| Adjusted EBITDA | $ | 1,542.2 | | | $ | 226.1 | | | $ | 3,732.3 | | | $ | 41.9 | |
——————————
See Notes to Non-GAAP Financial Measures.
Notes to Non-GAAP Financial Measures
The following notes are applicable to the Non-GAAP Financial Measures above:
(1)Represents the elimination of the noncontrolling interest associated with the ownership by the members of PBF LLC other than PBF Energy, as if such members had fully exchanged their PBF LLC Series A Units for shares of PBF Energy Class A common stock.
(2) Represents an adjustment to reflect PBF Energy’s estimated annualized statutory corporate tax rate of approximately 25.9% and 26.6% for the 2022 and 2021 periods, respectively, applied to the net income (loss) attributable to noncontrolling interest for all periods presented. The adjustment assumes the full exchange of existing PBF LLC Series A Units as described in (1) above.
(3) Special items:
LCM inventory adjustment - LCM is a GAAP guidelinerequirement related to inventory valuation that requiresmandates inventory to be stated at the lower of cost or market. Our inventories are stated at the lower of cost or market. Cost is determined using the last-in, first-out (LIFO)(“LIFO”) inventory valuation methodology, in which the most recently incurred costs are charged to cost of sales and inventories are valued at base layer acquisition costs. Market is determined based on an assessment of the current estimated replacement cost and net realizable selling price of the inventory. In periods where the market price of our inventory
declines substantially, cost values of inventory may exceed market values. In such instances, we record an adjustment to write down the value of inventory to market value in accordance with GAAP. In subsequent periods, the value of inventory is reassessed and aan LCM inventory adjustment is recorded to reflect the net change in the LCM inventory reserve between the prior period and the current period. Although we believe that non-GAAP financial measures excluding the impact of special items provide useful supplemental information to investors regarding the results and performance of our business and allow for more useful period-over-period comparisons, such non-GAAP measures should only be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP.
Gross Refining Margin
Gross refining margin is defined as gross margin excluding refinery depreciation, refinery operating expenses, and gross margin of PBFX. We believe gross refining margin is an important measure of operating performance and provides useful information to investors because it is a better metric comparison for the industry refining margin benchmarks, as the refining margin benchmarks do not include a charge for refinery operating expenses and depreciation. In order to assess our operating performance, we compare our gross refining margin (revenue less cost of sales) to industry refining margin benchmarks and crude oil prices as defined in the table below.
Gross refining margin should not be considered an alternative to gross margin, operating income, net cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Gross refining margin presented by other companies may not be comparable to our presentation, since each company may define this term differently. The following table presents a reconciliation of gross refining margin to the most directly comparable GAAP financial measure, gross margin, on a historical basis, as applicable, for each of the periods indicated:
|
| | | | | | | | | | | | | | | |
| | Three Months Ended September 30, |
| | 2015 | | 2014 |
| | $ | | per barrel of throughput | | $ | | per barrel of throughput |
| Reconciliation of gross margin to gross refining margin: | | | | | | | |
| Gross margin | $ | 150,815 |
| | $ | 3.45 |
| | $ | 322,084 |
| | $ | 7.10 |
|
| Less: Affiliate Revenues of PBFX | (37,082 | ) | | (0.85 | ) | | (14,744 | ) | | (0.32 | ) |
| Add: Affiliate Cost of sales of PBFX | 1,118 |
| | 0.03 |
| | — |
| | — |
|
| Add: Refinery operating expenses | 200,014 |
| | 4.57 |
| | 202,625 |
| | 4.41 |
|
| Add: Refinery depreciation expense | 44,366 |
| | 1.01 |
| | 64,386 |
| | 1.41 |
|
| Gross refining margin | $ | 359,231 |
| | $ | 8.21 |
| | $ | 574,351 |
| | $ | 12.60 |
|
| Special Items: | | | | | | | |
Add: Non-Cash LCM inventory adjustment (1) | 208,313 |
| | 4.76 |
| | — |
| | — |
|
| Gross refining margin excluding special items | $ | 567,544 |
| | $ | 12.97 |
| | $ | 574,351 |
| | $ | 12.60 |
|
——————————
(1) During the third quarter of 2015, the Company recorded an adjustment to value its inventories to the lower of cost or market which resulted in a net impact of $208.3 million reflecting the change in the lower of cost or market inventory reserve from $562.9 million at June 30, 2015 to $771.3 million at September 30, 2015. The net impact of these LCM inventory adjustments are included in the Refining segment's operatingsegment’s income from operations, but are excluded from the operating results presented, in the tableas applicable, in order to make such information comparable between periods.
The following table includes the LCM inventory reserve as of each date presented (in millions):
| | | | | | | | | | | |
| 2022 | | 2021 |
| January 1, | $ | — | | | $ | 669.6 | |
| | | |
| June 30, | — | | | — | |
| September 30, | — | | | — | |
The following table includes the corresponding impact of changes in the LCM inventory reserve on income from operations and net income for the periods presented (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| |
| 2022 | | 2021 | | 2022 | | 2021 |
| Net LCM inventory adjustment benefit in income from operations | $ | — | | | $ | — | | | $ | — | | | $ | 669.6 | |
| Net LCM inventory adjustment benefit in net income | — | | | — | | | — | | | 491.5 | |
|
| | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2015 | | 2014 |
| | $ | | per barrel of throughput | | $ | | per barrel of throughput |
| Reconciliation of gross margin to gross refining margin: | | | | | | | |
| Gross margin | $ | 686,401 |
| | $ | 5.26 |
| | $ | 746,567 |
| | $ | 5.89 |
|
| Less: Affiliate Revenues of PBFX | (101,413 | ) | | (0.78 | ) | | (22,526 | ) | | (0.18 | ) |
| Add: Affiliate Cost of sales of PBFX | 6,394 |
| | 0.05 |
| | — |
| | — |
|
| Add: Refinery operating expenses | 625,542 |
| | 4.79 |
| | 682,246 |
| | 5.34 |
|
| Add: Refinery depreciation expense | 132,093 |
| | 1.01 |
| | 125,294 |
| | 0.99 |
|
| Gross refining margin | $ | 1,349,017 |
| | $ | 10.33 |
| | $ | 1,531,581 |
| | $ | 12.04 |
|
| Special Items: | | | | | | | |
| Add: Non-Cash LCM inventory adjustment (1) | 81,147 |
| | 0.62 |
| | — |
| | — |
|
| Gross refining margin excluding special items | $ | 1,430,164 |
| | $ | 10.95 |
| | $ | 1,531,581 |
| | $ | 12.04 |
|
——————————
(1)Change in Fair Value of Contingent Consideration - During the three months ended September 30, 2022, we recorded a change in fair value of the contingent consideration primarily related to the Martinez Contingent Consideration which decreased income from operations and net income by $3.0 million and $2.2 million, respectively. During the nine months ended September 30, 2015, the Company2022, we recorded an adjustment to value its inventories to the lower of cost or market which resulted in a net impact of $81.1 million reflecting the change in the lower of cost or market inventory reserve from $690.1 million million at December 31, 2014 to $771.3 million at September 30, 2015. The net impact of these LCM inventory adjustments are included in the Refining segment's operating income, but are excluded from the operating results presented in the table in order to make such information comparable between periods.
EBITDA and Adjusted EBITDA
Our management uses EBITDA (earnings before interest, income taxes, depreciation and amortization) and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our board of directors, creditors, analysts and investors concerning our financial performance. Our outstanding indebtedness for borrowed money and other contractual obligations also include similar measures as a basis for certain covenants under those agreements which may differ from the Adjusted EBITDA definition described below.
EBITDA and Adjusted EBITDA are not presentations made in accordance with GAAP and our computation of EBITDA and Adjusted EBITDA may vary from others in our industry. In addition, Adjusted EBITDA contains some, but not all, adjustments that are taken into account in the calculationfair value of the components of various covenants in the agreements governing our senior secured notes and other credit facilities. EBITDA and Adjusted EBITDA should not be considered as alternatives to operating income or net income as measures of operating performance. In addition, EBITDA and Adjusted EBITDA are not presented as, and should not be considered, an alternative to cash flows from operations as a measure of liquidity. Adjusted EBITDA is defined as EBITDA before equity-based compensation expense, gains (losses) from certain derivative activities and contingent consideration and the non-cash change in the deferral of gross profitprimarily related to the saleMartinez Contingent Consideration, which decreased income from operations and net income by $130.9 million and $97.0 million, respectively. During the three months ended September 30, 2021, we recorded a change in fair value of certain finished productsthe contingent consideration related to both the Martinez Contingent Consideration and the write down of inventory to the LCM. Other companies, including other companies in our industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. Adjusted EBITDA also has limitations as an analytical toolPBFX Contingent Consideration, which decreased income from operations and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include that Adjusted EBITDA:
does not reflect depreciation expense or our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
does not reflect changes in, or cash requirements for, our working capital needs;
does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
does not reflect realized and unrealized gains and losses from hedging activities, which may have a substantial impact on our cash flow;
does not reflect certain other non-cash income and expenses; and
excludes income taxes that may represent a reduction in available cash.
The following tables reconcile net income as reflected in our results of operations to EBITDAby $0.1 million and Adjusted EBITDA for the periods presented:
|
| | | | | | | | | | | | | | | | | |
| | | | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | | | |
| | | | 2015 | | 2014 | | 2015 | | 2014 |
| | | | | | | | | | |
| Reconciliation of net income to EBITDA: | | | | | | | |
| Net income | $ | 68,171 |
| | $ | 261,823 |
| | $ | 468,188 |
| | $ | 553,665 |
|
| Add: Depreciation and amortization expense | 48,133 |
| | 68,010 |
| | 144,401 |
| | 135,887 |
|
| Add: Interest expense, net | 29,360 |
| | 24,855 |
| | 80,183 |
| | 76,728 |
|
| EBITDA | $ | 145,664 |
| | $ | 354,688 |
| | $ | 692,772 |
| | $ | 766,280 |
|
| Special Items: | | | | | | | |
| Add: Non-cash LCM inventory adjustment | 208,313 |
| | — |
| | 81,147 |
| | — |
|
| EBITDA excluding special items | $ | 353,977 |
| | $ | 354,688 |
| | $ | 773,919 |
| | $ | 766,280 |
|
| | | | | | | | | | |
| Reconciliation of EBITDA to Adjusted EBITDA: | | | | | | | |
| EBITDA | $ | 145,664 |
| | $ | 354,688 |
| | $ | 692,772 |
| | $ | 766,280 |
|
| Add: Stock based compensation | 3,363 |
| | 2,454 |
| | 8,757 |
| | 5,377 |
|
| Add: Non-cash change in fair value of catalyst lease obligations | (4,994 | ) | | (5,543 | ) | | (8,982 | ) | | (1,204 | ) |
| Add: Non-cash LCM inventory adjustment (1) | 208,313 |
| | — |
| | 81,147 |
| | — |
|
| Adjusted EBITDA | $ | 352,346 |
| | $ | 351,599 |
| | $ | 773,694 |
| | $ | 770,453 |
|
(1) During the third quarter of 2015, the Company recorded an adjustment to value its inventories to the lower of cost or market which resulted in a net impact of $208.3$0.1 million, reflecting the change in the lower of cost or market inventory reserve from $562.9 million at June 30, 2015 to $771.3 million at September 30, 2015.respectively. During the nine months ended September 30, 2015,2021, we recorded a change in fair value of the Companycontingent consideration primarily related to the Martinez Contingent Consideration which decreased income from operations and net income by $26.2 million and $19.2 million, respectively.
Loss (Gain) on Extinguishment of Debt - During the three months ended September 30, 2022, we recorded a pre-tax loss on extinguishment of debt related to the redemption of our 2025 Senior Secured Notes, which decreased income before income taxes and net income by $69.9 million and $51.8 million, respectively. During the nine months ended September 30, 2022, we recorded a pre-tax net loss on extinguishment of debt which decreased income before income taxes and net income by $66.1 million and $49.0 million, respectively, primarily related to the redemption of our 2025 Senior Secured Notes, partially offset by the repurchase of a portion of the 2028 Senior Notes and the 2025 Senior Notes. During the three and nine months ended September 30, 2021, we recorded a pre-tax gain on extinguishment of debt related to the repurchase of a portion of the 2028 Senior Notes and the 2025 Senior Notes, which increased income before income taxes and net income by $60.3 million and $44.3 million, respectively.
Change in Tax Receivable Agreement liability - During the three months ended September 30, 2022, we recorded a change in the Tax Receivable Agreement liability that decreased income before income taxes and net income by $1.7 million and $1.3 million, respectively. During the nine months ended September 30, 2022, we recorded a change in the Tax Receivable Agreement liability that decreased income before income taxes and net income by $288.2 million and $213.6 million, respectively. There was no change to the Tax Receivable Agreement liability during the three or nine months ended September 30, 2021. The changes in the Tax Receivable Agreement liability reflect charges or benefits attributable to changes in our obligation under the Tax Receivable Agreement due to factors out of our control such as changes in tax rates, as well as periodic adjustments to our liability based, in part, on an updated estimate of the amounts that we expect to pay, using assumptions consistent with those used in our concurrent estimate of the deferred tax asset valuation allowance.
Recomputed Income Tax on Special Items - The income tax impact on these special items, other than the net tax expense special item discussed below, is calculated using the tax rates shown in (2) above.
Net Tax Benefit on Remeasurement of Deferred Tax Assets - During the three and nine months ended September 30, 2022, we recorded a decrease to our deferred tax valuation allowance of $110.9 million and $308.5 million, respectively (reducing our deferred tax valuation allowance to zero), in accordance with ASC 740, of which $110.4 million and $233.8 million, respectively, related to a tax benefit with respect to the remeasurement of deferred tax assets and the balance related to our net changes in the Tax Receivable Agreement liability. During the three and nine months ended September 30, 2021, we recorded a decrease to our deferred tax valuation allowance related to the remeasurement of deferred tax assets of $1.4 million and $3.8 million, respectively, in accordance with ASC 740, related to the remeasurements of deferred tax assets.
(4) Represents an adjustment to value its inventoriesweighted-average diluted shares outstanding to assume the lowerfull exchange of cost or market which resultedexisting PBF LLC Series A Units as described in (1) above.
(5) Represents weighted-average diluted shares outstanding assuming the conversion of all common stock equivalents, including options and warrants for PBF LLC Series A Units and performance share units and options for shares of PBF Energy Class A common stock as calculated under the treasury stock method (to the extent the impact of such exchange would not be anti-dilutive) for the three and nine months ended September 30, 2022 and 2021, respectively. Common stock equivalents exclude the effects of performance share units and options and warrants to purchase 3,102,413 and 7,361,773 shares of PBF Energy Class A common stock and PBF LLC Series A units because they are anti-dilutive for the three and nine months ended September 30, 2022, respectively. Common stock equivalents exclude the effects of performance share units and options and warrants to purchase 11,113,779 and 11,041,279 shares of PBF Energy Class A common stock and PBF LLC Series A units because they are anti-dilutive for the three and nine months ended September 30, 2021, respectively. For periods showing a net impact of $81.1 million reflecting the change in the lower of cost or market inventory reserve from $690.1 million at December 31, 2014 to $771.3 million at September 30, 2015. The net impact of these LCM inventory adjustmentsloss, all common stock equivalents and unvested restricted stock are included in the Refining segment's operating income, but are excluded from the operating results presented in the table in order to make such information comparable between periods.considered anti-dilutive.
Liquidity and Capital Resources
Overview
Our primary sources of liquidity are our cash flows from operations, cash and cash equivalents and borrowing availability under our credit facilities, as more fully described below. We believe that our cash flows from operations and available capital resources will be sufficient to meet our and our subsidiaries'subsidiaries’ capital expenditure,expenditures, working capital needs, future dividend payments, debt service requirements, and share repurchase program requirementsPBF Energy’s obligations under the Tax Receivable Agreement, for the next twelve months. We expect to finance the planned Torrance Acquisition with a combination of cash on hand, debt, including the proceeds from the issuance of the 7.0% Senior Secured Notes due 2023, and proceeds contributed to us in connection with PBF Energy's October 2015 Equity Offering. However, our ability to generate sufficient cash flow from operations depends, in part, on petroleum oil market pricing and general economic, political and other factors beyond our control. WeAs of September 30, 2022, we are in compliance with all of the covenants, including financial covenants, forin all of our debt agreements.
Cash Flow Analysis
48The below cash flow analysis includes details by cash flow activity based on the results of PBF Energy. Material changes that exist between the PBF Energy and PBF LLC cash flows are explained thereafter.
Cash Flows from Operating Activities
Net cash provided by operating activities was $304.9$3,648.9 million for the nine months ended September 30, 20152022 compared to net cash provided by operating activities of $400.9$325.7 million for the nine months ended September 30, 2014.2021. Our operating cash flows for the nine months ended September 30, 2015 included2022 include our net income of $468.2$2,316.7 million, plus net non-cash charges relating to the change in the fair value of our inventory repurchase obligations of $53.4 million, depreciation and amortization of $151.5 million, pension and other post retirement benefits costs of $19.3 million, net non-cash benefit of $81.1 million relating to a LCM inventory adjustment and equity-based compensation of $8.8 million, partially offset by a change in the fair value of our catalyst lease of $9.0 million and gain on sale of assets of $1.1 million. In addition, net changes in working capital reflected usesoperating assets and liabilities reflecting cash proceeds of cash of $467.3$252.5 million, driven by the timing of inventory purchases, payments for accrued expenses and accounts payablespayable, and collections of accounts receivables. Our operating cash flows for the nine months endedreceivable. Change in accrued expenses is due primarily to an increase in renewable energy credit and emissions obligations, as a result of an increase in our unfunded RINs obligation as of September 30, 20142022. Our overall increase in cash provided by operating activities also included our net income of $553.7 million, plus net non-cash charges relating to depreciation and amortization of $141.5$388.9 million, change in the Tax Receivable Agreement liability of $288.2 million, deferred income taxes of $165.5 million, change in the fair value of the contingent consideration of $130.9 million primarily associated with the Martinez Contingent Consideration, net loss on extinguishment of debt primarily related to the redemption of our 2025 Senior Secured Notes of $66.1 million, pension and other post retirementpost-retirement benefits costs of $16.5$35.7 million, stock-based compensation of $24.9 million, change in the fair value of our catalyst obligations of $0.3 million, and equity-based compensationloss on sale of $5.4assets of $0.3 million, partially offset by net non-cash charges related to the change in the fair value of our inventory repurchase obligations of $31.6$21.1 million. Our operating cash flows for the nine months ended September 30, 2021 included our net income of $126.4 million, net changes in operating assets and liabilities reflecting cash proceeds of $438.6 million, depreciation and amortization of $361.2 million, net non-cash charges related to the change in fair value of our inventory repurchase obligations of $46.0 million, pension and other post-retirement benefits costs of $38.0 million, change in the fair value of the contingent consideration of $26.2 million, stock-based compensation of $24.7 million, and deferred income taxes of $8.5 million, partially offset by a net non-cash benefit of $669.6 million relating to an LCM inventory adjustment, gain on extinguishment of debt related to the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes of $60.3 million, change in the fair value of our catalyst lease obligations of $1.2$13.6 million, and gain on sale of assets of $0.2$0.4 million. In addition, net changes in working capital reflected uses of cash of $283.1 million driven by the timing of inventory purchases and collections of accounts receivables.
Cash Flows from Investing Activities
Net cash used in investing activities was $166.9$683.7 million for the nine months ended September 30, 20152022 compared to net cash used in investing activities of $521.3$227.2 million for the nine months ended September 30, 2014.2021. The net cash flows used in investing activities for the nine months ended September 30, 20152022 was comprised of cash outflows of capital expenditures totaling $288.9$391.5 million, expenditures for refinery turnarounds of $39.7$240.3 million, and expenditures for other assets of $7.3 million, partially offset by $168.3 million in proceeds from the sale of railcars and $0.7 million of$51.9 million. The net maturities of marketable securities. Net cash used in investing activities for the nine months ended September 30, 20142021 was comprised of cash outflows of capital expenditures totaling $258.9$142.0 million, expenditures for refinery turnarounds of $58.4$64.6 million, and expenditures for other assets of $13.4 million, net purchases of marketable securities totaling $264.9 million as collateral for the PBFX Term Loan entered into in conjunction with the PBFX Offering, partially offset by $74.3 million in proceeds from the sale of railcars.$20.6 million.
Cash Flows from Financing Activities
Net cash used in financing activities was $34.2$2,398.1 million for the nine months ended September 30, 20152022 compared to net cash provided byused in financing activities of $520.8$235.5 million for the nine months ended September 30, 2014.2021. For the nine months ended September 30, 2015,2022, net cash provided byused in financing activities consisted primarily of proceeds from the issuance of the redemption of our 2025 Senior Secured notes of $1,307.4 million, net repayments on the Revolving Credit Facility of $900.0 million, net repayments on the PBFX Revolving Credit Facility of $100.0 million, settlement of precious metal catalyst obligations of $37.3 million, distributions and dividends of $29.5 million, $25.9 million related to the repurchase of the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, payments on finance leases of $350.0 million, net proceeds from the Rail Facility of $30.1$8.5 million, and net proceeds frompayments related to the intercompany loan from PBF EnergyPBFX Contingent Consideration of $24.6$2.7 million, partially offset by distributions and dividendsproceeds from insurance premium financing of $169.9 million, $251.3 million of net repayments of PBFX revolver and term loan borrowings, purchases of our Class A common stock of $8.1$10.5 million, and $9.6 million for deferred financing costs and other costs.of $2.7 million. Forthe nine months ended September 30, 2014,2021, net cash provided byused in financing activities consisted primarily of proceeds received from the PBFX Offering of $341.0 million, net borrowing under the PBFX Term Loan of $264.9 million, borrowing of $140.1 million underrepayments on the PBFX Revolving Credit Facility borrowing of $35.9$75.0 million, under$90.9 million related to the repurchase of the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, distributions and dividends of $30.0 million, net settlements of precious metal catalyst obligations of $18.5 million, PBFX Contingent Consideration payments of $12.2 million, payments on finance leases of $10.7 million, and principal amortization payments of the $35.0 million PBF Rail Facility and proceeds from the intercompanyterm loan from PBF Energy of $91.7$5.5 million, partially offset by distributionsproceeds from insurance premium financing of $7.0 million, and dividendsdeferred financing costs and other of $286.3$0.3 million.
The cash flow activity of PBF LLC for the period ended September 30, 2022 is materially consistent with that of PBF Energy discussed above, other than changes in deferred income taxes and certain working capital items, which are different from PBF Energy due to certain tax related items not applicable to PBF LLC. Additionally, the PBF LLC cash flows reflect activity of the affiliate note payable with PBF Energy of $23.5 million purchasesincluded in cash flows from financing activities, which eliminates in consolidation at PBF Energy.
The cash flow activity of PBF LLC for the period ended September 30, 2021 is materially consistent with that of PBF Energy discussed above, other than changes in deferred income taxes and certain working capital items, which are different from PBF Energy due to certain tax related items not applicable to PBF LLC. Additionally, the PBF LLC cash flows reflect activity of the affiliate note payable with PBF Energy of $1.0 million included in cash flows from financing activities, which eliminates in consolidation at PBF Energy.
Debt and Credit Facility
Long-Term Debt Related Transactions
The PBFX 2023 Senior Notes are due May 2023 and are classified as Current debt as of September 30, 2022 within our Condensed Consolidated Balance Sheet.
During the three and nine months ended September 30, 2022, we exercised our rights under the indenture governing the 2025 Senior Secured Notes to redeem all of the outstanding 2025 Senior Secured Notes at a price of 104.625% of the aggregate principal amount thereof plus accrued and unpaid interest. The aggregate redemption price for all 2025 Senior Secured Notes approximated $1.3 billion plus accrued and unpaid interest. The difference between the carrying value of the 2025 Senior Secured Notes on the date they were redeemed and the amount for which they were redeemed was $69.9 million and was recorded as a loss on extinguishment of debt in the Consolidated Statements of Operations.
During the nine months ended September 30, 2022, we made a number of open market repurchases of our Class A common stock2028 Senior Notes and 2025 Senior Notes that resulted in the extinguishment of $32.6$24.9 million $15.0 millionin principal of net repayments of revolver borrowings, PBFX Offering costs ofthe 2028 Senior Notes and $5.0 million in principal of the 2025 Senior Notes. Total cash consideration paid to repurchase the principal amount outstanding of the 2028 Senior Notes and $13.9the 2025 Senior Notes, excluding accrued interest, totaled $25.9 million for deferred financingand we recognized a $3.8 million gain on the extinguishment of debt during the nine months ended September 30, 2022.
PBF Holding Revolving Credit Facility
On May 25, 2022, we entered into an amendment of our Revolving Credit Agreement. Among other things, the Revolving Credit Agreement amended and extended the Revolving Credit Facility through January 2025 and increased the maximum commitment to $4.3 billion through May 2023 (currently set to adjust to $2.75 billion in May 2023 through January 2025). The amendments also redefine certain components of the Borrowing Base (as defined in the Revolving credit Agreement) to reflect the existence of the two tranches, Tranche A Commitments and Tranche B Commitments. The Tranche A Commitments total $1.55 billion and the Tranche B Commitments total $2.75 billion. The amendments also include changes to incorporate the adoption of SOFR as a replacement of LIBOR, changes to joint lead arrangers, bookrunners, syndication agents and other costs.titles, and other changes related to the foregoing. In addition, an accordion feature allows for additional Tranche B Commitments of up to an additional $500.0 million plus an amount equal to the Tranche A Commitments for existing Tranche A lenders.
Catalyst Financing Obligations
During the three months ended September 30, 2022, we settled certain of our precious metals financing arrangements, which represented a reduction of debt of approximately $37.3 million.
Liquidity
As of September 30, 2015, PBF LLC's total2022, our operational liquidity was approximately $1,198.4 million, compared to total liquiditymore than $4.4 billion, which consists of approximately $1,109.9 million as$1.8 billion of December 31, 2014. Total liquidity is the sumcash, excluding cash held at PBFX, and more than $2.6 billion of borrowing availability under our Revolving Credit Facility, which includes our cash and cash equivalents plus the amount of availability under the Third Amended and Restated Revolving Credit Agreement ("Revolving Loan"). Ason hand. In addition, as of September 30, 2015 and December 31, 2014,2022, PBFX had approximately $298.5$541.4 million of liquidity, including approximately $44.9 million in cash, and $49.9access to approximately $496.5 million respectively, of borrowing capacity under the PBFX Revolving Credit Facility which is available
to fund working capital, acquisitions, distributions and capital expenditures and for other general corporate purposes.Facility.
In addition, PBF LLC had borrowing capacity of $82.5 million and $212.7 million under the Rail Facility to fund the acquisition of Eligible Railcars as of September 30, 2015 and December 31, 2014, respectively.
Working Capital
Working capital for PBF LLC at September 30, 2015 was $914.3 million, consisting of $2,039.8 million in total current assets and $1,125.4 million in total current liabilities. Working capital at December 31, 2014 was $586.4 million, consisting of $2,053.8 million in total current assets and $1,467.4 million in total current liabilities.
Capital Spending
Net capital spending was $167.6 million for the nine months ended September 30, 2015, which primarily included turnaround costs, safety related enhancements and facility improvements at the refineries. We currently expect to spend an aggregate of approximately $200.0 million in net capital expenditures during 2015, excluding any potential capital expenditures related to the Chalmette Acquisition, for facility improvements and refinery maintenance and turnarounds.
As noted in "Business Developments", we entered into a Sale and Purchase Agreement to purchase the ownership interests of Chalmette Refining. The aggregate purchase price for the Chalmette Acquisition was $322.0 million in cash, plus inventory and working capital of $233.1 million, which is subject to final valuation within ninety days of closing. The Chalmette Acquisition closed on November 1, 2015. The transaction was financed through a combination of cash on hand and borrowings under our existing credit facility. A determination of the acquisition-date fair values of the assets acquired and the liabilities assumed and the working capital at closing calculation is pending the completion of an independent appraisal and other evaluations.
We also entered into a Sales and Purchase Agreement to Purchase the ownership interest of the Torrance refinery, and related logistic assets. The purchase price for the Torrance Acquisition is $537.5 million in cash, plus inventory and working capital to be valued at closing. The purchase price is also subject to other customary purchase price adjustments. The Torrance Acquisition is expected to close in the second quarter of 2016, subject to satisfaction of customary closing conditions. We expect to finance the transaction with a combination of cash on hand, debt, including the proceeds from the issuance of the 7.0% Senior Secured Notes due 2023, and proceeds contributed to us in connection with PBF Energy's October 2015 Equity Offering.
Share Repurchases
On August 19, 2014, PBF Energy's Board of Directors authorized the repurchase of up to $200.0 million of the Company's Series C Units, through the repurchase of PBF Energy’s Class A common stock (the "Repurchase Program"). On October 29, 2014, PBF Energy's Board of Directors approved an additional $100.0 million increase to the existing Repurchase Program. As of September 30, 2015,2022, outstanding letters of credit totaled approximately $819.4 million.
We have executed a plan to strengthen our balance sheet and increase our flexibility and responsiveness by incorporating certain adjustments to our corporate structure, operations and other cost saving measures. In an effort to preserve the Company has purchasedpositive recovery trends experienced since the beginning of 2021, we remain committed to our plan with notable events within the past twelve months highlighted below:
•July 2022 full redemption of our 2025 Senior Secured Notes using cash on hand as of June 30, 2022, resulting in annual interest savings of approximately 6.05$115.0 million;
•Extinguishment of $258.9 million of our 2028 Senior Notes and 2025 Senior Notes to date, resulting in annual cash interest savings of approximately $16.3 million;
•In May 2022, completed a multi-year extension of our Revolving Credit Facility, with an aggregate commitment of $4.3 billion; and
•In October 2021, executed the Company's Series C Units underThird Inventory Intermediation Agreement with J. Aron through 2024, covering certain crude oil, intermediate and finished products across our East Coast and Chalmette refineries.
We are actively responding to the Repurchase Program, for a totalongoing rebalancing in the global oil markets. We continue to adjust our operational plans to the evolving market conditions and continue to target and execute expense reduction measures. We also remain committed to assessing other opportunities that could improve our liquidity, including by further reducing debt and/or potential sales of $150.8 million through the purchase of PBF Energy’s Class A common stock in open market transactions. As of September 30, 2015, PBF Energy has the ability to purchase an additional $149.2 million in Class A common stock under the approved Repurchase Program.non-operating assets or other real property, although there can be no assurance that we will do so.
We may, be madeat any time and from time to time, seek to continue to repurchase or retire our outstanding debt securities through various methods, including open market transactions,cash purchases (and/or exchanges for equity or debt), in open-market purchases, block trades, accelerated share repurchases, privately negotiated transactions or otherwise, certainupon such terms and at such prices as we may determine. We will evaluate any such transactions in light of which may be effected through Rule 10b5-1then-existing market conditions, taking into account our current liquidity and Rule 10b-18 plans. The timingprospects for future access to capital, the trading prices of our debt securities, legal requirements and number of shares repurchased will depend on a variety of factors, including price, capital availability, legal requirementscontractual restrictions and economic and market conditions. PBF Energy isThe amounts involved in any such transactions, individually or in the aggregate, may be material. We are not obligated to purchaserepurchase any shares underof our debt securities other than as set forth in the Repurchase Program,applicable indentures, and repurchases may be made or suspended or discontinued at any time without prior notice.
Off-Balance Sheet Arrangements and Contractual Obligations and Commitments
We have no off-balance sheet arrangements as of September 30, 2015, other than outstanding letters of creditmay incur additional indebtedness in the amountfuture, including additional secured indebtedness, subject to the satisfaction of approximately $152.7 million.
In March 2015,any debt incurrence and, if applicable, lien incurrence limitation covenants in our existing financing agreements. Although we sold 515 of our owned crude railcars and concurrently entered into a lease agreement for the same railcars. The lease agreements for the railcars have varying terms from five to seven years. We received a cash payment for the railcars of approximately $77.6 million and expect to make payments totaling $44.9 million over the term of the lease for these railcars.
In June 2015, we sold 404 of our owned crude railcars and concurrently entered into lease agreements for the same railcars. The lease agreements for the railcars have varying terms from five to six years. We received aggregate cash payments for the railcars of approximately $60.5 million and expect to make payments totaling $36.0 million over the term of the lease for these railcars.
In July 2015, we sold 131 of our owned crude railcars and concurrently entered into lease agreements for the same railcars. The lease agreements for the railcars have six year terms. We received aggregate cash payments for the railcars of approximately $19.3 million and expect to make payments totaling $11.9 million over the term of the lease for these railcars.
In August 2015, we sold 72 of our owned crude railcars and concurrently entered into lease agreements for the same railcars. The lease agreements for the railcars have six year terms. We received aggregate cash payments for the railcars of approximately $10.8 million and expect to make payments totaling $6.6 million over the term of the lease for these railcars.
Duringwere in compliance with incurrence covenants during the nine months ended September 30, 2015,2022, to the extent that any of our activities triggered these covenants, there are no assurances that conditions could not change significantly, and that such changes could adversely impact our ability to meet some of these incurrence covenants at the time that we needed to. Failure to meet the incurrence covenants could impose certain incremental restrictions on, among other matters, our ability to incur new debt (including secured debt) and also may limit the extent to which we may pay future dividends, make new investments, repurchase our outstanding debt or stock or incur new liens.
As part of the potential Merger Transaction that is intended to close in the fourth quarter of 2022, PBF LLC will be required to compensate PBFX unitholders $9.25 in cash, without interest, per outstanding unit or, approximately $303.3 million, based on public units outstanding as of October 24, 2022, any dividends or other distributions to which the holder thereof becomes entitled to upon surrender of such outstanding common units held by an unaffiliated common unitholder in accordance with the Merger Agreement, and any cash in lieu of fractional shares of PBF Energy Class A common stock in accordance with the Merger Agreement, upon successful close of the transaction. We expect to fund these amounts with cash on hand and/or borrowings under the Revolving Credit Facility.
Working Capital
PBF Energy’s working capital at September 30, 2022 was $1,148.0 million, consisting of $6,571.9 million in total current assets and $5,423.9 million in total current liabilities. PBF Energy’s working capital at December 31, 2021 was $1,439.5 million, consisting of $5,199.2 million in total current assets and $3,759.7 million in total current liabilities. PBF LLC’s working capital at September 30, 2022 was $1,175.7 million, consisting of $6,569.0 million in total current assets and $5,393.3 million in total current liabilities. PBF LLC’s working capital at December 31, 2021 was $1,385.6 million, consisting of $5,197.5 million in total current assets and $3,811.9 million in total current liabilities.
Capital Spending
Capital spending was $683.7 million for the nine months ended September 30, 2022 and was primarily comprised of annual maintenance, turnaround costs at our Delaware City, Chalmette, Torrance and Martinez refineries and spending related to our Renewable Diesel Project at the Chalmette refinery. Capital spend also included costs associated with safety related enhancements and facility improvements at our refineries and approximately $4.6 million of capital expenditures related to PBFX. Excluding capital expenditures related to our Renewable Diesel Project, our full-year refining capital expenditures are expected to range from $550.0 million to $575.0 million, which includes advanced purchases of materials for future turnarounds. In addition, PBFX expects to spend an aggregate of approximately $4.0 million to $6.0 million in net capital expenditures for the remainder of 2022.
During the third quarter of 2022, we also invested approximately $103.0 million in capital to progress and incubate our Renewable Diesel Project with the goal of being in production in the first half of 2023.
Crude and Feedstock Supply Agreements
Certain of our purchases of crude oil under our agreements with foreign national oil companies require that we post letters of credit, if open terms are exceeded, and arrange for shipment. We pay for the crude when invoiced, at which time any applicable letters of credit are lifted. We have a contract with Saudi Arabian Oil Company (“Saudi Aramco”) pursuant to which we have been purchasing up to approximately 100,000 bpd of crude oil from Saudi Aramco that is processed at our Paulsboro refinery. In connection with the acquisition of the Chalmette refinery we entered into additional railcar leasesa contract with Petróleos de Venezuela S.A. (“PDVSA”) for the supply of 40,000 to 60,000 bpd of crude oil that can be processed at any of our East or Gulf Coast refineries. We have not sourced crude oil under this agreement since 2017 when PDVSA suspended deliveries due to the parties’ inability to agree to mutually acceptable payment terms and because of U.S. government sanctions against PDVSA. Notwithstanding the suspension, the U.S. government sanctions imposed against PDVSA and Venezuela prevented us from purchasing crude oil under this agreement. In connection with the closing of the acquisition of the Torrance refinery, we entered into a crude supply agreement with Exxon Mobil Oil Corporation (“ExxonMobil”) for approximately 60,000 bpd of crude oil that can be processed at our Torrance refinery. We currently purchase all of our crude and feedstock needs independently from a variety of suppliers on the spot market or through term agreements for our Delaware City and Toledo refineries.
We currently have various crude supply agreements with terms ofthrough 2025 with Shell plc for approximately 145,000 bpd, in the aggregate, to support our West Coast and Mid-Continent refinery operations. In addition, we have certain offtake agreements for our West Coast system with the same counterparty for clean products with varying terms up to 715 years.
Inventory Intermediation Agreement
On October 25, 2021, PBF Holding and its subsidiaries, Delaware City Refining Company (“DCR”), Paulsboro Refining Company (“PRC”) and Chalmette Refining, entered into the Third Inventory Intermediation Agreement with J. Aron, pursuant to which the terms of the previous inventory intermediation agreements were amended and restated in their entirety, including, among other things, pricing and an extension of terms. The Third Inventory Intermediation Agreement extends the term to December 31, 2024, which term may be further extended by mutual consent of the parties to December 31, 2025. If not extended or replaced, at expiration, we will be required to repurchase the inventories outstanding under the Third Inventory Intermediation Agreement at that time. On May 25, 2022, the PBF Entities entered into an amendment of the Third Inventory Intermediation Agreement to amend certain provisions thereof that related to and were impacted by amendments made on May 25, 2022 to the Revolving Credit Agreement.
At September 30, 2022, the LIFO value of the J. Aron Products included within Inventory in our Condensed Consolidated Balance Sheets was $384.1 million. We expect to make lease payments of $38.7 million over the remaining term of these additional agreements.accrue a corresponding liability for such crude oil, intermediates and finished products.
Tax Receivable Agreement ObligationsObligation
PBF Energy usedhas recognized, as of September 30, 2022 and December 31, 2021, a portionliability for the Tax Receivable Agreement of $336.4 million and $48.3 million, respectively, reflecting the proceeds from its initial public offering to purchase PBF LLC Series A Units from the members of PBF LLC other than PBF Energy. In addition, the members of PBF LLC other than PBF Energy may (subject to the terms of the exchange agreement) exchange their PBF LLC Series A Units for shares of Class A common stock of PBF Energy on a one-for-one basis. As a result of both the purchase of PBF LLC Series A Units and subsequent secondary offerings and exchanges, PBF Energy is entitled to a proportionate share of the existing tax basis of the assets of PBF LLC. Such transactions have resulted in increases in the tax basis of the assets of PBF LLC that otherwise would not have been available. Both this proportionate share and these increases in tax basis may reduce the amount of taxestimated undiscounted amounts that PBF Energy would otherwise be requiredexpects to pay under the agreement, net of any deferred tax asset valuation allowance recognized in the future. Theseaccordance with ASC 740. As future taxable income is recorded, increases in our Tax Receivable Agreement liability may be necessary in conjunction with the revaluation of deferred tax basis have reduced the amount of the tax thatassets. If PBF Energy woulddoes not have otherwise been required to pay and may also decrease gains (or increase losses) on the future disposition of certain capital assets to the extent the tax basis is allocated to those capital assets.taxable income, PBF Energy entered intogenerally is not required (absent a tax receivable agreement with the current and former memberschange of PBF LLC other than PBF Energy that provides for the payment by PBF Energycontrol or circumstances requiring an early termination payment) to such members of 85% of the amount of the benefits, if any, that PBF Energy is deemed to realize as a result of (i) these increases in tax basis and (ii) certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable tomake payments under the Tax Receivable Agreement for that taxable year because no benefit will have been actually realized. However, any tax receivable agreement. benefits that do not result in realized benefits in a given tax year will likely generate tax attributes that may be utilized to generate benefits in previous or future tax years. The utilization of such tax attributes will result in payments under the Tax Receivable Agreement.
These payment obligations, if any, are obligations of PBF Energy and not of PBF LLC or any of its subsidiaries.
subsidiaries including PBF Holding or PBFX. However, because PBF Energy expects to obtain funding for these payments by causingis a holding company with no operations of its subsidiaries to make cash distributions to PBF LLC, which, in turn, will distribute such amounts, generally as tax distributions, on a pro-rata basis to its owners, which as of September 30, 2015 include the members of PBF LLC other than PBF Energy holding a 5.6% interest and PBF Energy holding a 94.4% interest. The members of PBF LLC other than PBF Energy may continue to reduce their ownership in PBF LLC by exchanging their PBF LLC Series A Units for shares of PBF Energy Class A common stock. Such exchanges may result in additional increases in the tax basis ofown, PBF Energy’s investment in PBF LLC and require PBF Energyability to make increased payments under the tax receivable agreement. Required paymentsTax Receivable Agreement is dependent upon a number of factors, including its subsidiaries’ ability to make distributions for the benefit of PBF LLC’s members, including PBF Energy, its ability, if necessary, to finance its obligations under the tax receivable agreement alsoTax Receivable Agreement and existing indebtedness which may limit PBF Energy’s subsidiaries’ ability to make distributions.
The foregoing are merely estimates - the actual payments could differ materially. It is possible that future transactions or events could increase or become accelerated in certain circumstances, including certain changes of control.decrease the actual tax benefits realized and the corresponding Tax Receivable Agreement payments.
DividendDividends and Distribution PolicyDistributions
PBF Energy
With respect to dividends and distributions paid during the nine months ended September 30, 2015, PBF LLC made aggregate non-tax quarterly distributions of $82.0 million, or $0.90, per unit to its members, of which $77.3 million was distributed pro rata toOn October 27, 2022, PBF Energy and the balance was distributed to its other members. PBF Energy used this $77.3 million to pay quarterly cash dividends of $0.30 per share of Class A common stock on March 10, 2015, May 27, 2015 and August 10, 2015. In addition, during the nine months ended September 30, 2015, PBF LLC made aggregate tax distributions to its members of $186.1 million, of which $175.6 million was distributed to PBF Energy.
On October 29, 2015, the Board of Directors of PBF Energy declaredannounced a dividend of $0.30$0.20 per share on outstanding PBF Energy Class A common stock. The dividend is payable on November 24, 201529, 2022 to PBF Energy Class A common stockholders of record at the close of business on November 9, 2015. PBF Holding intends, if necessary, to make a distribution of $30.8 million to14, 2022. PBF LLC which in turn willintends to make pro-rata distributions of $0.30approximately $24.60 million, or $0.20 per unit to its members, including PBF Energy. PBF Energy, will thenwhich in turn, intends to use this distribution to fund the dividend payments to the shareholders of PBF Energy.
PBF Energy currently intends to continue to pay quarterly cash dividends on its Class A common stock. However, the declaration, amount and payment of any future dividends on shares of PBF Energy Class A common stock will be at the sole discretion of PBF Energy’s Board of Directors, and we are not obligated under any applicable laws, our governing documents or any contractual agreements with our existing owners or otherwise to declare or pay any dividends or other distributions (other than the obligations of PBF LLC to make tax distributions to its members).
PBF LLC
In October 2022, PBF LLC made a total of $1,130.1 million of tax distributions to its members, of which $1,121.8 million was distributed to PBF Energy and the remaining balance was distributed to PBF LLC’s other members. The tax distribution made to PBF Energy increased the PBF LLC Affiliate note payable with PBF Energy that eliminates in consolidation at the PBF Energy level.
PBF Logistics LP
PBFX intends to continue to pay at least the minimum quarterly distribution of $0.30per unit per quarter, or $1.20 per unit on an annualized basis, which aggregates to approximately $19.1 million per quarter or approximately $76.4 million on an annualized basis, based on the number of common units outstanding as of September 30, 2022, to the extent PBFX has sufficient cash from operations after the establishment of cash reserves and the payment of costs and expenses, including reimbursements of expenses to PBFX’s general partner. However, there is no guarantee that PBFX will pay the minimum quarterly distribution or any amount on the units it owns in any quarter. Even if PBFX’s cash distribution policy is not modified or revoked, the amount of distributions paid under the policy and the decision to make any distribution is determined by its general partner, taking into consideration the terms of PBFX’s partnership agreement and debt facilities.
During the nine months ended September 30, 2022, PBFX made quarterly cash distributions totaling $56.4 million of which $27.0 million was distributed to PBF LLC and the balance was distributed to its public unitholders.
On October 27, 2022, the Board of Directors of PBFX’s general partner, PBF Logistics GP LLC, announced a distribution of $0.30 per unit on outstanding common units of PBFX. The distribution is payable on November 18, 2022 to PBFX common unitholders of record at the close of business on November 7, 2022.
As of September 30, 2015, PBF LLC2022, PBFX had $1,096.2$3.5 million outstanding letters of unused borrowing availability, which includes PBF Holding'scredit, $496.5 million available under the PBFX Revolving Credit Facility and cash and cash equivalents of $369.4$44.9 million under the Revolving Loan to fund its operations, if necessary. Accordingly, as of September 30, 2015,2022, there was sufficient cash and cash equivalents and borrowing capacity under its credit facilities available to make distributions to PBF LLC, in order for PBF LLC to make pro rata distributions to its members, including PBF Energy, necessary to fund in excess of one year’s cash dividend payments by PBF Energy.
Since, as described above, there was sufficient cash and cash equivalents and borrowing capacity as of September 30, 2015, PBF Holding would have been permitted under our debt agreements to make these distributions; however, our ability to continue to comply with our debt covenants is, to a significant degree, subject to our operating results, which are dependent on a number of factors outside of our control. We believe our and our subsidiaries' available cash and cash equivalents, other sources of liquidity to operate our business and operating performance provides us with a reasonable basis for our assessment that we can support PBF Energy's intended distribution policy.
PBF Logistics LP
PBFX intends to pay a minimum quarterly distribution of at least $0.30per unit per quarter, or $1.20 per unit on an annualized basis, which aggregates to approximately $10.4 million per quarter and approximately $41.6 million per year based on the number of common and subordinated units outstanding as of September 30, 2015. During the nine months ended September 30, 2015, PBFX made quarterly cash distributions totaling $35.8 million of which $18.7 million was distributed to PBF LLC and the balance was distributed to its public unit holders.
On October 29, 2015, the Board of Directors of PBFX's general partner, PBF GP, declared a distribution of $0.39 per unit on outstanding common and subordinated units of PBFX. The distribution was paid on November 30, 2015 to PBFX common and subordinated unit holders of record at the close of business on November 13, 2015.
As of September 30, 2015, PBFX had $298.5 million of unused borrowing availability under the PBFX Revolving Credit Facility and cash and cash equivalents of $18.2 million to fund its operations, if necessary. Accordingly, as of September 30, 2015, there was sufficient cash and cash equivalents and borrowing capacity under our credit facilities available to PBFX to make distributions to unit holders.unitholders.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, including changes in commodity prices and interest rates. Our primary commodity price risk is associated with the difference between the prices we sell our refined products for and the prices we pay for crude oil and other feedstocks. We may use derivative instruments to manage the risks from changes in the prices of crude oil and refined products, natural gas, interest rates, or to capture market opportunities.
Commodity Price Risk
Our earnings, cash flow and liquidity are significantly affected by a variety of factors beyond our control, including the supply of, and demand for, crude oil, other feedstocks, refined products and natural gas. The supply of and demand for these commodities depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, planned and unplanned downtime in refineries, pipelines and production facilities, production levels, the availability of imports, the marketing of competitive and alternative fuels, and the extent of government regulation. As a result, the prices of these commodities can be volatile. Our revenues fluctuate significantly with movements in industry refined product prices, our cost of sales fluctuates significantly with movements in crude oil and feedstock prices and our operating expenses fluctuate with movements in the price of natural gas. We manage our exposure to these commodity price risks through our supply and inventory intermediationofftake agreements as well as through the use of various commodity derivative instruments.
Certain of our agreements reduce the time we are exposed to market price fluctuations. For example, our crude and feedstock supply agreement with Statoil allows us to take title to and price our crude oil at locations in close proximity to our refineries, as opposed to the crude oil origination point. The crude supply agreement with MSCG for our Toledo refinery, which terminated on July 31, 2014, allowed us to price and pay for our crude oil as it is processed at that refinery.
We may use non-trading derivative instruments to manage exposure to commodity price risks associated with the purchase or sale of crude oil and feedstocks, finished products and natural gas outside of theour supply and offtake agreements. The derivative instruments we use include physical commodity contracts and exchange-traded and over-the-counter financial instruments. We mark-to-market our commodity derivative instruments and recognize the changes in their fair value in our statements of operations.
At September 30, 20152022 and December 31, 2014,2021, we had gross open commodity derivative contracts representing 47.970.0 million barrels and 49.342.1 million barrels, respectively, with an unrealized net gain of $22.8$20.2 million and $31.2unrealized net loss of $12.0 million, respectively. The open commodity derivative contracts as of September 30, 20152022 expire at various times during 20152022 and 2016.2023.
We carry inventories of crude oil, intermediates and refined products (“hydrocarbon inventories”) on our balance sheet,Condensed Consolidated Balance Sheets, the values of which are subject to fluctuations in market prices. Our hydrocarbon inventories totaled approximately 19.332.4 million barrels and 18.630.2 million barrels at September 30, 20152022 and December 31, 2014,2021, respectively. The average cost of our hydrocarbon inventories was approximately $95.09$78.56 and $94.29$78.29 per barrel on a LIFO basis at September 30, 20152022 and December 31, 2014, respectively, excluding2021, respectively. At September 30, 2022 and December 31, 2021, the net impactreplacement value of LCM adjustments of approximately $771.3 million and $690.1 million, respectively.inventory exceeded the LIFO carrying value. If market prices of our inventory decline to a level below theour average cost, we may be required to further write down the carrying value of our hydrocarbon inventories to market.
Our predominant variable operating cost is energy, which is comprised primarily of natural gas and electricity. We are therefore sensitive to movements in natural gas prices. Assuming normal operating conditions, we annually consume a total of approximately 37expect our annual consumption to range from 75 million to 95 million MMBTUs of natural gas amongst our threesix refineries. Accordingly, a $1.00 per MMBTU change in natural gas prices would increase or decrease our natural gas costs by approximately $37$75.0 million to $95.0 million.
Compliance Program Price Risk
We are exposed to market risks related to our obligations to buy and the volatility in the price of Renewable Identification Numbers ("RINs")credits needed to comply with various governmental and regulatory compliance programs, which includes RINs, required to comply with the Renewable Fuel Standard. Our overall RINs obligation is based on a percentage of our domestic shipments of on-road fuels as established by the EPA.Environmental Protection Agency. To the degree we are unable to blend the required amount of biofuels to satisfy our RINs obligation, we must purchase RINs on the open market. To mitigate the impact of thisthe market risk relating to our obligations on our results of operations and cash flows, we may elect to purchase RINs whenor other environmental credits as part of our liability management strategy.
In addition, we are exposed to risks associated with complying with federal and state legislative and regulatory measures to address greenhouse gas and other emissions. Requirements to reduce emissions could result in increased costs to operate and maintain our facilities as well as implement and manage new emission controls and programs put in place. For example, in September 2016, the pricestate of California extended AB 32, to reduce greenhouse gas emission targets to 40% below 1990 levels by 2030. Compliance with such emission standards may require the purchase of emission credits or similar instruments.
Certain of these compliance contracts or instruments is deemed favorable.
qualify as derivative instruments. For certain of these contracts, we elect the normal purchase normal sale exception under ASC 815, Derivatives and Hedging, for such instruments, and therefore do not record these contracts at their fair value.
Interest Rate Risk
The maximum commitment under our Revolving Credit Facility is $4.3 billion. Borrowings under the Revolving LoanCredit Facility bear interest either at the Alternative Base Rate plus the Applicable Margin or at the Adjusted LIBORTerm SOFR Rate plus the Applicable Margin, all as defined in the agreement. The Applicable Margin ranges from 1.50% to 2.25% for Adjusted LIBOR Rate Loans and from 0.50% to 1.25% for Alternative Base Rate Loans, depending on the Company's debt rating.Revolving Credit Agreement. At September 30, 2022, we had no outstanding balance in variable interest debt. If this facility werewas fully drawn, a one percent1.0% change in the interest rate would increase or decrease our interest expense by $26.0approximately $24.0 million annually.
The PBFX Revolving Credit Facility, andwith a maximum commitment of $500.0 million, bears interest either at the Alternative Base Rate plus the Applicable Margin or at Adjusted LIBOR plus the Applicable Margin, all as defined in the PBFX Term Loan bearRevolving Credit Agreement. At September 30, 2022, PBFX had no outstanding variable interest atdebt. If this facility was fully drawn, a variable rate and exposes us to interest rate risk. A 1.0% change in the interest rate associated with the borrowings outstanding under these facilities would result in a $4.5 million change inincrease or decrease our interest expense assuming we were to borrow all $325.0by approximately $3.7 million under our PBFX Revolving Credit Facility and the outstanding balance of our PBFX Term Loan was $234.2 million.
The Rail Facility bears interest at a variable rate and exposes us to interest rate risk. A 1.0% change in the interest rate associated with the borrowings outstanding under this facility would result in a $1.5 million change in our interest expense, assuming the $150.0 million available under the Rail Facility were fully drawn.annually.
We also have interest rate exposure in connection with our Statoil crude oil agreement and J. AronThird Inventory Intermediation AgreementsAgreement under which we pay a time value of money charge based on LIBOR.
Credit Risk
We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties. We will continue to closely monitor the creditworthiness of customers to whom we grant credit and establish credit limits in accordance with our credit policy.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
PBF Energy and PBF LLC maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that information which is required to be disclosed is accumulated and communicated to management in a timely manner. Underconducted separate evaluations, under the supervision and with the participation of oureach company’s management, including PBF LLC'sthe principal executive officer and the principal financial officer, we have evaluatedof the effectiveness of our system ofthe disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)) as of September 30, 2022. Based upon these evaluations, as required by Exchange Act Rule 13a-15(b) as of September 30, 2015. Based on that evaluation, PBF LLC's, the principal executive officer and the principal financial officer, havein each case, concluded that PBF LLC'sthe disclosure controls and procedures are effective at the reasonable assurance level.as of September 30, 2022.
Changes in Internal Control Over Financial Reporting
ManagementThere has not identified any changesbeen no change in PBF LLC'sEnergy’s or PBF LLC’s internal controlcontrols over financial reporting that occurred during the three monthsquarter ended September 30, 20152022 that havehas materially affected, or areis reasonably likely to materially affect, itsPBF Energy’s or PBF LLC’s internal controlcontrols over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Delaware City Rail Terminal andOn September 27, 2021, DCR West Rack are collocated with the Delaware City refinery, and are located in Delaware's coastal zone where certain activities are regulated under the Delaware Coastal Zone act. On June 14, 2013, two administrative appeals were filed by the Sierra Club and Delaware Audubon (collectively the "Appellants") regarding an air permit Delaware City Refining Company LLC ("Delaware City Refining" or "DCR") obtained to allow loading of crude oil onto barges. The appeals allege that both the loading of crude oil onto barges and the operation of the Delaware City Rail Terminal violate Delaware’s Coastal Zone Act. The first appeal is Number 2013-1 before the State Coastal Zone Industrial Control Board (the “CZ Board”), and the second appeal is before the Environmental Appeals Board (the "EAB") and appeals Secretary’s Order No. 2013-A-0020. The CZ Board held a hearing on the first appeal on July 16, 2013, and ruled in favor of Delaware City Refining and the State of Delaware and dismissed the Appellants’ appeal for lack of standing. The Appellants appealed that decision to the Delaware Superior Court, New Castle County, Case No. N13A-09-001 ALR, and Delaware City Refining and the State of Delaware filed cross-appeals. A hearing on the second appeal before the EAB, case no. 2013-06, was held on January 13, 2014, and the EAB ruled in favor of DCR and the State and dismissed the appeal for lack of jurisdiction. The Appellants also filedreceived a Notice of Appeal with the Superior Court appealing the EAB’s decision. On March 31, 2015 the Superior Court affirmed the decisions by both the CZ BoardAdministrative Penalty Assessment and the EAB stating they both lacked jurisdiction to rule on the Appellants' appeal. The Appellants appealed to the Delaware Supreme Court, and, on November 5, 2015, the Supreme Court affirmed the Superior Court decision.
On July 24, 2013,Secretary’s Order from the Delaware Department of Natural Resources and Environmental Control, ("DNREC"seeking to impose penalties in the amount of $285,000 related to alleged Title V permit violations occurring in 2019 and 2020. On October 15, 2021, DCR filed a Notice of Appeal before Delaware’s Environmental Appeals Board, contesting the Secretary’s findings and requesting a hearing. On November 2, 2021, the Environmental Appeals Board scheduled a Pre-Hearing Conference for April 8, 2022 and Hearing Date for April 26, 2022. On March 17, 2022, the parties entered into a settlement agreement, pursuant to which DCR did not admit to any of the allegations and denied any liability. DCR has paid an administrative penalty of $250,000 and its appeal has been withdrawn.
In connection with the acquisition of the Torrance refinery and related logistics assets, we assumed certain pre-existing environmental liabilities related to certain environmental remediation obligations to address existing soil and groundwater contamination and monitoring activities, which reflect the estimated cost of the remediation obligations. In addition, in connection with the acquisition of the Torrance refinery and related logistics assets, we purchased a ten-year, $100.0 million environmental insurance policy to insure against unknown environmental liabilities.
On April 17, 2019, we received a Notice of Violation (“NOV”) from the South Coast Air Quality Management District (“SCAQMD”) relating to Title V deviations alleged to have occurred in second half of 2018 self-reported Title V deviations. In May 2022, the SCAQMD requested that we present a settlement proposal to resolve the NOV. On June 16, 2022, we presented a settlement offer of $456,820 to settle the NOV. On July 22, 2022, the SCAQMD presented a counter proposal of $1.2 million. On August 25, 2022, we presented a counter proposal of $736,845. We are awaiting a response from the SCAQMD.
On December 4, 2020, the Pennsylvania Department of Environmental Protection (“PaDEP”) issued a Noticedraft Consent Order and Agreement (“CAO”) to PBF Logistics Products Terminals LLC (“PLPT”) with respect to two alleged violations at the Philadelphia terminal for failure to: (i) test and inspect regulated piping as required in accordance with industry standards; and (ii) have a professional engineering certification that all above ground storage tanks meet the applicable performance standards and requirements as a result of Administrativean alleged release of oil on January 10, 2020 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 $800,000. On December 15, 2021, we entered into a final CAO and agreed to pay the $800,000 penalty. Under the final CAO, we capped our future liability at $250,000 if PaDEP brought a subsequent enforcement action under the Pennsylvania Clean Streams Law (“CSL”) for environmental damage allegedly caused by the release of oil from PLPT’s operational violations. Under the final CAO, we also reserved our rights to challenge any subsequent enforcement action brought by PaDEP under the CSL. On January 13, 2022, we received from PaDEP, a Consent Assessment of Civil Penalty Assessmentalleging violations under the CSL of over $1.0 million. However, because of the CAO cap, the PaDEP’s penalty demand to settle these alleged violations is $250,000. On April 13, 2022, PLPT entered into the final CAO and Secretary’s Orderagreed to Delaware City Refining for alleged air emission violationspay the $250,000 penalty.
In connection with self-reported flaring events that occurred duringat the re-start ofPaulsboro Refinery between 2016 and 2020, in October 2021, the refinery in 2011 and subsequent to the re-start. The penalty assessment seeks $460,200 in penalties and $69,030 in cost recovery for DNREC’s expenses associated with investigation of the incidents. We dispute the amount of the penalty assessment and allegations made in the order, and are in discussions with DNREC to resolve the assessment.
As of November 1, 2015, the Company acquired Chalmette Refining, which is in discussions with the LouisianaNew Jersey Department of Environmental Quality ("LDEQ"Protection (“NJDEP”) initiated discussions with PRC regarding potential penalties for alleged violations related to resolvethe self-reported deviations fromflaring events. Although a formal NOV was not issued, NJDEP issued a calculation sheet of potential penalties, totaling approximately $1.6 million. The refinery operations relating tochallenged certain Clean Air Act Title V permit conditions, limitsof those potential penalties, and other requirements that occurred prior to acquisition byeffective September 26, 2022, the Company. LDEQ commenced an enforcement action against Chalmette Refining on November 14, 2014 by issuingparties executed a Consolidated Compliance Order and Noticesettlement agreement for a total civil penalty of Potential Penalty ("CCO/NOPP") covering deviations from 2009 and 2010. Chalmette Refining and LDEQ subsequently entered$1.0 million, fifty percent of which was paid into a dispute resolution agreement, which suspends enforcementgeneric NJDEP Supplemental Environmental Project.
As the ultimate outcomes of the CCO/NOPP while negotiationsmatters discussed above are ongoing. It is possible that LDEQ will assess an administrative penalty against Chalmette Refining,uncertain, we cannot currently estimate the final amount or timing of their resolution but any such amount is not expected to behave a material impact on our financial position, results of operations, or cash flows, individually or in the aggregate.
On February 17, 2017, in Arnold Goldstein, et al. v. Exxon Mobil Corporation, et al., we and PBF LLC, and our subsidiaries, PBF Western Region LLC and Torrance Refining Company LLC and the manager of our Torrance refinery along with ExxonMobil were named as defendants in a class action and representative action complaint filed on behalf of Arnold Goldstein, John Covas, Gisela Janette La Bella and others similarly situated. The complaint was filed in the Superior Court of the State of California, County of Los Angeles and alleges negligence, strict liability, ultra-hazardous activity, a continuing private nuisance, a permanent private nuisance, a continuing public nuisance, a permanent public nuisance and trespass resulting from the February 18, 2015 electrostatic precipitator (“ESP”) explosion at the Torrance refinery which was then owned and operated by ExxonMobil. The operation of the Torrance refinery by the PBF entities subsequent to our acquisition in July 2016 is also referenced in the complaint. To the extent that plaintiffs’ claims relate to the Company.ESP explosion, ExxonMobil retained responsibility for any liabilities that would arise from the lawsuit pursuant to the agreement relating to the acquisition of the Torrance refinery. On July 2, 2018, the court granted leave to plaintiffs to file a Second Amended Complaint alleging groundwater contamination. With the filing of the Second Amended Complaint, plaintiffs added an additional plaintiff, Hany Youssef. On October 15, 2019, the judge granted certification to two limited classes of property owners with Youssef as the sole class representative and named plaintiff, rejecting two other proposed subclasses based on negligence and on strict liability for ultrahazardous activities. The certified subclasses relate to trespass claims for ground contamination and nuisance for air emissions. On February 5, 2021, our motion for Limited Extension of Discovery Cut-Off and a Motion by plaintiffs for Leave to File Third Amended Complaint were heard by the court. On May 5, 2021, the Court granted plaintiffs leave to amend their complaint for the third time to substitute Navarro for Youssef. On May 12, 2021, plaintiffs filed their Third Amended Complaint (“TAC”) that contained significant changes and new claims, including individual claims, that were not included in the motion for leave to amend plaintiffs presented to the Court. On June 9, 2021, we filed a Motion to Dismiss/Strike the TAC. On June 23, 2021, plaintiffs filed their opposition to our Motion to Dismiss/Strike, to which we filed our reply on July 2, 2021. A hearing on the Motion to Dismiss/Strike the TAC was held on August 2, 2021 and the court ordered that the TAC be struck and that the parties meet and confer with respect to the complaint. After meeting and conferring, plaintiffs agreed to submit a corrected TAC with changes reflecting the removal of Youssef and the substitution of Navarro as the named Plaintiff. On August 23, 2021, the Court approved the parties’ stipulation to take Navarro’s deposition on September 23, 2021. Also, on August 23, 2021, the Court approved the parties’ stipulation to continue the pretrial dates with the new deadlines. On October 8, 2021, plaintiffs filed their Motion to Appoint Navarro as Class Representative. On October 29, 2021, we filed our opposition to this motion. On November 15, 2021, plaintiffs filed their reply. On February 8, 2022, the Court held a hearing on plaintiff’s Motion to Appoint Navarro as Class Representative but did not act on the motion. Instead, the court ordered the parties to submit draft orders for the Court’s consideration. After considering the parties’ proposed orders, on July 5, 2022, the Court issued a final order ruling that Plaintiffs’ Motion to Substitute José Navarro as Class Representative was denied and decertifying both of Plaintiffs’ proposed Air and Ground Subclasses. The order provided that the case will proceed with Navarro as the sole plaintiff and required the parties to meet and confer and propose a schedule for the remaining pretrial dates and a trial date. On July 19, 2022, Plaintiff filed a petition with the Ninth Circuit Court of Appeals seeking permission to appeal the District Court’s decertification order finding that Navarro is an inadequate class representative. Our answer to the petition was filed on July 29, 2022. On September 22, 2022, the Ninth Circuit issued an order denying Plaintiffs’ petition for permission to file an interlocutory appeal, confirming that the case will proceed with Navarro as the sole plaintiff. On September 27, 2022, the Plaintiff filed a schedule of pretrial and trial dates with a trial date of July 18, 2023, which was approved by the Court. We presently believe the outcome of this litigation will not have a material impact on our financial position, results of operations, or cash flows.
Item 1A. Risk Factors
ThereOn September 7, 2021, Martinez Refining Company LLC (“MRC”) filed a Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief against the Bay Area Air Quality Management District (“BAAQMD”) requesting the Court to declare as invalid, unenforceable, and ultra vires the BAAMQD’s July 21, 2021, adoption of Rule 6-5 Amendment. MRC is also seeking a writ of mandate ordering the BAAQMD to vacate and rescind the adoption of the Rule 6-5 Amendment, as well as appropriate declaratory relief, injunctive relief, and reasonable costs incurred by MRC to bring this Petition/Complaint. In the Petition/Complaint MRC alleges that: its feasible alternative Particulate Matter (“PM”) reduction proposal that would achieve significant PM reductions while avoiding the significant costs and environmental impacts of the BAAQMD’s adopted PM limit, was improperly removed from consideration and not presented to the BAAQMD Board when the Rule 6-5 Amendment was adopted with the current PM standard; when adopting the Rule 6-5 Amendment, the BAAQMD flagrantly ignored numerous mandatory requirements of the California Environmental Quality Act and the California Health and Safety Code; the BAAQMD’s adoption of the Rule 6-5 Amendment also violated California common law; and these failings render the Rule 6-5 Amendment ultra vires, illegal, and unenforceable. We held mandatory settlement conferences with the BAAQMD on October 27, 2021 and December 15, 2021. We expect another mandatory settlement conference to be held in 2022. The parties are currently compiling the administrative record for completeness and certification. We presently believe the outcome will not have a material impact on our financial position, results of operations, or cash flows.
The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), also known as “Superfund,” imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons who are considered to be responsible for the release of a “hazardous substance” into the environment. These persons include the current or former owner or operator of the disposal site or sites where the release occurred and companies that disposed of or arranged for the disposal of the hazardous substances. Under CERCLA, such persons may be subject to joint and several liability for investigation and the costs of cleaning up the hazardous substances that have been no material changes fromreleased into the risk factors disclosed inenvironment, for damages to natural resources and for the section entitled "Risk Factors" in the Prospectus.
Item 2. Unregistered Salescosts of Equity Securities and Use of Proceeds
Exchange of the Company's Series A Units for PBF Energy Class A common stock
In the three months ended September 30, 2015, a total of 85,025 of the Company's Series A Units were exchanged for 85,025 shares of PBF Energy Class A common stock in transactions exempt from registration under Section 4(2) of the Securities Act. We received no other consideration in connection with these exchanges. No exchanges were made by anycertain health studies. As discussed more fully above, certain of our directorssites are subject to these laws and we may be held liable for investigation and remediation costs or claims for natural resource damages. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment. Analogous state laws impose similar responsibilities and liabilities on responsible parties. In our current executive officers.normal operations, we have generated waste, some of which falls within the statutory definition of a “hazardous substance” and some of which may have been disposed of at sites that may require cleanup under Superfund.
Share Repurchase Program
The Company has repurchased its Series C Units through the repurchase of PBF Energy’s Class A common stock in open market transactions. The following table summarizes PBF Energy Class A common stock repurchase activity during the three months ended September 30, 2015:
|
| | | | | | | | | | | | | |
| | Total number of shares purchased (1) | | Average price paid per share (2) | | Total number of share purchased as part of publicly announced plans or programs | | Maximum approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands) |
| July 1-31, 2015 | 142,487 |
| | $ | 28.58 |
| | 142,487 |
| | 149,196 |
|
| August 1-31, 2015 | — |
| | — |
| | — |
| | 149,196 |
|
| September 1-30, 2015 | — |
| | — |
| | — |
| | 149,196 |
|
| Total | 142,487 |
| | $ | 28.58 |
| | 142,487 |
| | $ | 149,196 |
|
(1) The shares purchased include only those shares that have settled as of the period end date.
(2) Average price per share excludes transaction commissions.
Item 6. Exhibits
The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this report and such Exhibit Index is incorporated herein by reference.
EXHIBIT INDEX
| | | | | | | | |
Exhibit
Number | | Description |
| | |
Exhibit
| | Description |
| | |
2.1** | | SaleAgreement and Purchase AgreementPlan of Merger, dated July 27, 2022 by and betweenamong PBF HoldingEnergy Inc., PBF Energy Company LLC, PBFX Holdings Inc., Riverlands Merger Sub LLC, PBF Logistics LP and ExxonMobil Oil Corporation and its subsidiary, Mobil Pacific Pipeline Company as of September 29, 2015.(IncorporatedPBF Logistics GP LLC (incorporated by reference to Exhibit 2.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated October 1, 2015July 27, 2022 (File No. 001-35764)). |
| | |
10.1(2) | | Third AmendedVoting and Restated EmploymentSupport Agreement, between PBF Investments LLCdated July 27, 2022, by and Thomas D. O'Malley, Executive Chairman of the Board of Directors ofamong PBF Energy Inc. as of September 8, 2015. (Incorporated, PBF Energy Company LLC and PBF Logistics LP (incorporated by reference to Exhibit 10.1 filedfile with PBF Energy Inc.’s Current Report on Form 8-K dated September 11, 2015July 27,2022 (File No. 001-35764)). |
| | |
| | Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Energy Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
| | Certification of Erik Young, Chief Financial Officer of PBF Energy Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
| | Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Energy Company LLC 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 Energy Company LLC 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 Energy Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
| | Certification of Erik Young, Chief Financial Officer of PBF Energy Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
| | Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Energy Company LLC 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 Energy Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
| 101.INS | | Inline XBRL Instance Document. |
| | |
| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document. |
| | |
| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| | |
| 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| | |
| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| | |
| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| | |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| | | | | |
| * | Filed herewith. |
| |
*(1) | Filed herewith.This exhibit should not be deemed to be “filed” for purposes of Section 18 of the Exchange Act. |
| ** | SchedulesCertain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally aA copy of theany omitted schedulesschedule will be furnished supplementally to the SEC upon request. |
(1) | This exhibit should not be deemed to be "filed" for purposes of Section 18 of the Exchange Act. |
(2) | Indicates management compensatory plan or arrangement. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, theeach registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | | | | |
| | PBF Energy Inc. |
| | | | |
| Date: | October 27, 2022 | PBF Energy Company LLC |
| By: | | | |
Date | December 8, 2015 | | By: | /s/ Erik Young |
| | | | Erik Young
Senior Vice President, Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
|
| | | | |
EXHIBIT INDEX
| | | | | | | | | | | | | | |
| | |
Exhibit
Number
| | Description |
| | |
2.1** | | Sale and Purchase Agreement by and between PBF HoldingEnergy Company LLC and ExxonMobil Oil Corporation and its subsidiary, Mobil Pacific Pipeline Company as of September 29, 2015.(Incorporated by reference to Exhibit 2.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated October 1, 2015 (File No. 001-35764)) |
| | |
10.1(2) | | Third Amended and Restated Employment Agreement between PBF Investments LLC and Thomas D. O'Malley, Executive Chairman of the Board of Directors of PBF Energy Inc. as of September 8, 2015. (Incorporated by reference to Exhibit 10.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated September 11, 2015 (File No. 001-35764)) |
| | |
31.1* | | Certification of Thomas J. Nimbley, Chief Executive Officer of PBF LLC 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 LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
32.1* (1) | | Certification of Thomas J. Nimbley, Chief Executive Officer of PBF LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
32.2* (1) | | Certification of Erik Young, Chief Financial Officer of PBF LLC 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. |
|
| |
* | Filed herewith. | |
**Date: | Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of the omitted schedules to the SEC upon request.October 27, 2022 | | By: | /s/ Erik Young |
(1) | This exhibit should not be deemed to be "filed" for purposes of Section 18 of the Exchange Act. | | | Erik Young
Senior Vice President, Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer) |
(2) | Indicates management compensatory plan or arrangement. | | | |