UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
(Mark one)
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x☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: September 30, 2015March 31, 2023
Or
or |
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¨☐ | 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)
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| 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.)
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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 [ ] No [x]
(Note: PBF Energy Company LLC is a voluntary filer of reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 and has filed during the preceding 12 months all reports it would have been required to file by Section 13 or 15(d) of the Securities Exchange Act of 1934 if the registrant had been subject to one of such Sections.)
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.
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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 April 28, 2023, PBF Energy Inc. had 126,097,058 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 March 31, 2023. 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, 2015MARCH 31, 2023
TABLE OF CONTENTS
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| CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS | |
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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS | |
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| | ITEM 1A.6. | | |
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EXPLANATORY NOTE
This combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (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 March 31, 2023. 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 is the parent company for our refining operations. PBF LLC also holdsFinance Corporation (“PBF Finance”) is a 53.7% limited partner interest, a non-economic general partner interest and allwholly-owned subsidiary of the incentive distribution rights inPBF Holding. PBF Logistics LP ("PBFX" or the "Partnership"(“PBFX”), a publicly traded master limited partnership. is an indirect wholly-owned subsidiary of PBF Energy and PBF LLC through its ownership of the general partner of PBFX, consolidates the financial results of PBFXthat owns and its subsidiaries and records a noncontrolling interest in its consolidated financial statements representing the economic interests of PBFX's unit holders other than PBF LLC.operates logistics assets that support our refining operations. 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, 2022 of PBF Energy and PBF LLC, which we refer to as our 2022 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;
•rate of inflation and its impacts on supply and demand, pricing, and supply chain disruption;
•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 (“RFS”) 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 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 possibility that we might reduce or not pay dividends in the future;
•the inability of our subsidiaries to freely make distributions to us;
•our ability to make acquisitions or investments, including in renewable diesel production, such as our pending 50-50 joint venture, St. Bernard Renewables LLC (“SBR”), which will own the renewable diesel facility that is currently under construction at our Chalmette refinery, with Eni Sustainable Mobility, a subsidiary of Eni SpA (“Eni”), on any announced time frame or at all, and to realize the benefits from such acquisitions or investments;
•our ability to successfully manage SBR’s operations together with our joint venture partner, Eni, upon consummation of our pending joint venture transaction;
•the possibility that the expected synergies and value creation from the Merger Transaction (as defined in “Factors Affecting Comparability Between Periods”) will not be realized, or will not be realized within the expected time period;
•liabilities arising from recent acquisitions or investments, that are unforeseen or exceed our expectations;
•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/or 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 due 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;
•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) | | | | | | | | | | | |
| March 31,
2023 | | December 31,
2022 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 1,616.1 | | | $ | 2,203.6 | |
| Accounts receivable | 1,184.1 | | | 1,456.3 | |
| Inventories | 2,854.9 | | | 2,763.6 | |
| Prepaid and other current assets | 211.6 | | | 122.8 | |
| Total current assets | 5,866.7 | | | 6,546.3 | |
| Property, plant and equipment, net | 5,516.8 | | | 5,361.0 | |
| | | |
| Lease right of use assets | 703.4 | | | 679.1 | |
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| Deferred charges and other assets, net | 1,052.2 | | | 962.7 | |
| Total assets | $ | 13,139.1 | | | $ | 13,549.1 | |
| LIABILITIES AND EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 750.2 | | | $ | 854.6 | |
| Accrued expenses | 3,637.2 | | | 3,720.8 | |
| Payable pursuant to Tax Receivable Agreement | 61.1 | | | — | |
| | | |
| Deferred revenue | 74.1 | | | 40.6 | |
| | | |
| Current operating lease liabilities | 74.2 | | | 60.5 | |
| | | |
| Current debt | — | | | 524.2 | |
| Total current liabilities | 4,596.8 | | | 5,200.7 | |
| | | |
| Long-term debt | 1,438.0 | | | 1,434.9 | |
| Payable pursuant to Tax Receivable Agreement | 277.5 | | | 338.6 | |
| Deferred tax liabilities | 577.8 | | | 535.4 | |
| Long-term operating lease liabilities | 566.4 | | | 552.7 | |
| Long-term financing lease liabilities | 55.0 | | | 57.9 | |
| Other long-term liabilities | 359.3 | | | 372.9 | |
| Total liabilities | 7,870.8 | | | 8,493.1 | |
| Commitments and contingencies (Note 7) | | | |
| Equity: | | | |
| PBF Energy Inc. equity | | | |
| Class A common stock, $0.001 par value, 1,000,000,000 shares authorized, 126,543,857 shares outstanding at March 31, 2023, 129,639,307 shares outstanding at December 31, 2022 | 0.1 | | | 0.1 | |
| Class B common stock, $0.001 par value, 1,000,000 shares authorized, 13 shares outstanding at March 31, 2023, 13 shares outstanding at December 31, 2022 | — | | | — | |
| Preferred stock, $0.001 par value, 100,000,000 shares authorized, no shares outstanding at March 31, 2023 and December 31, 2022 | — | | | — | |
| Treasury stock, at cost, 15,000,026 shares outstanding at March 31, 2023 and 10,937,916 shares outstanding at December 31, 2022 | (496.4) | | | (327.0) | |
| Additional paid in capital | 3,223.2 | | | 3,201.6 | |
| Retained earnings | 2,412.1 | | | 2,056.0 | |
| Accumulated other comprehensive loss | (1.1) | | | (1.5) | |
| Total PBF Energy Inc. equity | 5,137.9 | | | 4,929.2 | |
| Noncontrolling interest | 130.4 | | | 126.8 | |
| Total equity | 5,268.3 | | | 5,056.0 | |
| Total liabilities and equity | $ | 13,139.1 | | | $ | 13,549.1 | |
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 March 31, |
| | | | | 2023 | | 2022 |
| Revenues | | | | | $ | 9,295.0 | | | $ | 9,141.7 | |
| Cost and expenses: | | | | | | | |
| Cost of products and other | | | | | 7,795.3 | | | 8,206.2 | |
| Operating expenses (excluding depreciation and amortization expense as reflected below) | | | | | 781.4 | | | 620.4 | |
| Depreciation and amortization expense | | | | | 141.9 | | | 118.3 | |
| Cost of sales | | | | | 8,718.6 | | | 8,944.9 | |
| General and administrative expenses (excluding depreciation and amortization expense as reflected below) | | | | | 60.0 | | | 53.5 | |
| Depreciation and amortization expense | | | | | 1.9 | | | 1.9 | |
| Change in fair value of contingent consideration, net | | | | | (16.3) | | | 50.3 | |
| | | | | | | |
| (Gain) loss on sale of assets | | | | | (1.6) | | | 0.1 | |
| Total cost and expenses | | | | | 8,762.6 | | | 9,050.7 | |
| Income from operations | | | | | 532.4 | | | 91.0 | |
| Other income (expense): | | | | | | | |
| Interest expense, net | | | | | (18.7) | | | (78.4) | |
| Change in Tax Receivable Agreement liability | | | | | — | | | (19.3) | |
| Change in fair value of catalyst obligations | | | | | 0.7 | | | (4.9) | |
| | | | | | | |
| Other non-service components of net periodic benefit cost | | | | | 0.3 | | | 2.2 | |
| Other income (expense) | | | | | (2.3) | | | — | |
| Income (loss) before income taxes | | | | | 512.4 | | | (9.4) | |
| Income tax expense (benefit) | | | | | 126.5 | | | (6.1) | |
| Net income (loss) | | | | | 385.9 | | | (3.3) | |
| Less: net income attributable to noncontrolling interests | | | | | 3.8 | | | 17.8 | |
| Net income (loss) attributable to PBF Energy Inc. stockholders | | | | | $ | 382.1 | | | $ | (21.1) | |
| | | | | | | |
| Weighted-average shares of Class A common stock outstanding | | | | | | | |
| Basic | | | | | 128,787,779 | | | 120,339,041 | |
| Diluted | | | | | 134,499,277 | | | 120,339,041 | |
| Net income (loss) available to Class A common stock per share: | | | | | | | |
| Basic | | | | | $ | 2.97 | | | $ | (0.18) | |
| Diluted | | | | | $ | 2.86 | | | $ | (0.18) | |
See notes to condensed consolidated financial statements.
8
PBF ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in millions)
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2023 | | 2022 |
| Net income (loss) | | | | | $ | 385.9 | | | $ | (3.3) | |
| Other comprehensive income (loss): | | | | | | | |
| Unrealized gain (loss) on available for sale securities | | | | | 0.4 | | | (1.1) | |
| | | | | | | |
| Net gain on pension and other post-retirement benefits | | | | | — | | | 0.1 | |
| Total other comprehensive income (loss) | | | | | 0.4 | | | (1.0) | |
| Comprehensive income (loss) | | | | | 386.3 | | | (4.3) | |
| Less: comprehensive income attributable to noncontrolling interests | | | | | 3.8 | | | 17.8 | |
| Comprehensive income (loss) attributable to PBF Energy Inc. stockholders | | | | | $ | 382.5 | | | $ | (22.1) | |
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, December 31, 2022 | 129,639,307 | | $ | 0.1 | | 13 | | $ | — | | $ | 3,201.6 | | $ | 2,056.0 | | $ | (1.5) | | 10,937,916 | | $ | (327.0) | | $ | 126.8 | | $ | 5,056.0 | |
| Comprehensive income | — | | — | | — | | — | | — | | 382.1 | | 0.4 | | — | | — | | 3.8 | | 386.3 | |
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| Dividends ($0.20 per common share) | — | | — | | — | | — | | — | | (26.0) | | — | | — | | — | | (0.2) | | (26.2) | |
| Stock-based compensation expense | — | | — | | — | | — | | 6.5 | | — | | — | | — | | — | | — | | 6.5 | |
| Transactions in connection with stock-based compensation plans | 966,660 | | — | | — | | — | | 14.4 | | — | | — | | — | | — | | — | | 14.4 | |
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| | | | | | | | | | | |
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| Treasury stock purchases | (4,062,110) | | — | | — | | — | | 0.6 | | — | | — | | 4,062,110 | | (169.4) | | — | | (168.8) | |
| Other | — | | — | | — | | — | | 0.1 | | — | | — | | — | | — | | — | | 0.1 | |
| Balance, March 31, 2023 | 126,543,857 | | 0.1 | | 13 | | — | | 3,223.2 | | 2,412.1 | | (1.1) | | 15,000,026 | | (496.4) | | 130.4 | | 5,268.3 | |
| | | | | | | | | | | |
| 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) | — | | — | | — | | — | | — | | (21.1) | | (1.0) | | — | | — | | 17.8 | | (4.3) | |
| | | | | | | | | | | |
| Distributions to PBF Logistics LP public unitholders | — | | — | | — | | — | | — | | — | | — | | — | | — | | (10.0) | | (10.0) | |
| Stock-based compensation expense | — | | — | | — | | — | | 6.6 | | — | | — | | — | | — | | 0.7 | | 7.3 | |
| Transactions in connection with stock-based compensation plans | 341,765 | | — | | — | | — | | 0.6 | | — | | — | | — | | — | | — | | 0.6 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Effects of exchanges of PBF LLC Series A Units on deferred tax assets and liabilities and tax receivable agreement obligation | — | | — | | — | | — | | (0.3) | | — | | — | | — | | — | | — | | (0.3) | |
| Exchange of PBF Energy Company LLC Series A Units for PBF Energy Class A common stock | 11,244 | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | |
| Treasury stock purchases | (54,938) | | — | | — | | — | | 1.1 | | — | | — | | 54,938 | | (1.1) | | — | | — | |
| | | | | | | | | | | |
| Balance, March 31, 2022 | 120,617,648 | | $ | 0.1 | | 15 | | $ | — | | $ | 2,882.0 | | $ | (817.2) | | $ | 16.3 | | 6,731,747 | | $ | (170.2) | | $ | 615.1 | | $ | 2,526.1 | |
See notes to condensed consolidated financial statements.
10
PBF ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
| Cash flows from operating activities: | | | |
| Net income (loss) | $ | 385.9 | | | $ | (3.3) | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
| Depreciation and amortization | 150.1 | | | 124.6 | |
| | | |
| Stock-based compensation | 9.2 | | | 7.7 | |
| Change in fair value of catalyst obligations | (0.7) | | | 4.9 | |
| Deferred income taxes | 42.4 | | | (6.1) | |
| Change in Tax Receivable Agreement liability | — | | | 19.3 | |
| Non-cash change in inventory repurchase obligations | (4.2) | | | (40.7) | |
| | | |
| | | |
| Change in fair value of contingent consideration, net | (16.3) | | | 50.3 | |
| | | |
| Pension and other post-retirement benefit costs | 12.0 | | | 11.9 | |
| (Gain) loss on sale of assets | (1.6) | | | 0.1 | |
| | | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | 272.3 | | | (537.5) | |
| Inventories | (91.3) | | | (388.4) | |
| Prepaid and other current assets | (93.8) | | | (161.1) | |
| Accounts payable | (102.4) | | | 683.8 | |
| Accrued expenses | (149.1) | | | 545.7 | |
| Deferred revenue | 33.5 | | | 13.2 | |
| | | |
| Other assets and liabilities | (8.4) | | | (12.1) | |
| Net cash provided by operating activities | $ | 437.6 | | | $ | 312.3 | |
| | | |
| Cash flows from investing activities: | | | |
| Expenditures for property, plant and equipment | (239.8) | | | (118.3) | |
| Expenditures for deferred turnaround costs | (127.7) | | | (82.2) | |
| Expenditures for other assets | (15.6) | | | (25.0) | |
| Proceeds from sale of assets | 4.4 | | | — | |
| Net cash used in investing activities | $ | (378.7) | | | $ | (225.5) | |
See notes to condensed consolidated financial statements.
11
PBF ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(unaudited, in millions)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
| Cash flows from financing activities: | | | |
| | | |
| | | |
| Dividend payments | $ | (25.8) | | | $ | — | |
| Distributions to PBFX public unitholders | — | | | (9.8) | |
| Distributions to PBF Energy Company LLC members other than PBF Energy | (0.2) | | | — | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Repayments of PBFX revolver borrowings | — | | | (25.0) | |
| Redemption of PBFX 2023 Senior Notes | (525.0) | | | — | |
| | | |
| | | |
| Payments on financing leases | (2.9) | | | (3.0) | |
| Proceeds from insurance premium financing | 61.2 | | | 47.3 | |
| | | |
| Payments of contingent consideration | — | | | (2.6) | |
| Transactions in connection with stock-based compensation plans, net | 14.4 | | | — | |
| Purchase of treasury stock | (167.6) | | | — | |
| Deferred financing costs and other, net | (0.5) | | | (0.6) | |
| Net cash (used in) provided by financing activities | $ | (646.4) | | | $ | 6.3 | |
| | | |
| Net change in cash and cash equivalents | (587.5) | | | 93.1 | |
| Cash and cash equivalents, beginning of period | 2,203.6 | | | 1,341.5 | |
| Cash and cash equivalents, end of period | $ | 1,616.1 | | | $ | 1,434.6 | |
| | | |
| Supplemental cash flow disclosures | | | |
| Non-cash activities: | | | |
| Accrued and unpaid capital expenditures | $ | 171.2 | | | $ | 120.6 | |
| Assets acquired or remeasured under operating and financing leases | 51.4 | | | (24.5) | |
| | | |
| Cash paid during the period for: | | | |
| Interest (net of capitalized interest of $12.7 million and $4.2 million in 2023 and 2022, respectively) | $ | 32.0 | | | $ | 34.6 | |
| Income taxes | 3.5 | | | 0.1 | |
See notes to condensed consolidated financial statements.
12
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 | | March 31,
2023 | | December 31,
2022 |
| ASSETS | | | | ASSETS | | | |
| Current assets: | | | | Current assets: | |
| Cash and cash equivalents | $ | 471,582 |
| | $ | 367,780 |
| Cash and cash equivalents | $ | 1,615.8 | | | $ | 2,201.8 | |
| Accounts receivable | 395,624 |
| | 551,269 |
| Accounts receivable | 1,180.3 | | | 1,456.3 | |
| Inventories | 1,101,182 |
| | 1,102,261 |
| Inventories | 2,854.9 | | | 2,763.6 | |
| Prepaid expense and other current assets | 71,398 |
| | 32,452 |
| |
| | Prepaid and other current assets | | Prepaid and other current assets | 211.6 | | | 122.8 | |
| Total current assets | 2,039,786 |
| | 2,053,762 |
| Total current assets | 5,862.6 | | | 6,544.5 | |
| Property, plant and equipment, net | | Property, plant and equipment, net | 5,516.8 | | | 5,361.0 | |
| Lease right of use assets | | Lease right of use assets | 703.4 | | | 679.1 | |
| | | | | |
| 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 | 1,052.2 | | | 962.7 | |
| Total assets | $ | 4,545,604 |
| | $ | 4,558,200 |
| Total assets | $ | 13,135.0 | | | $ | 13,547.3 | |
| | | | | |
| LIABILITIES AND EQUITY | | | | LIABILITIES AND EQUITY | | | |
| Current liabilities: | | | | Current liabilities: | |
| Accounts payable | $ | 212,772 |
| | $ | 335,268 |
| Accounts payable | $ | 750.2 | | | $ | 853.4 | |
| Accrued expenses | 908,498 |
| | 1,130,905 |
| Accrued expenses | 3,604.6 | | | 3,768.3 | |
| Deferred revenue | 4,174 |
| | 1,227 |
| Deferred revenue | 74.1 | | | 40.6 | |
| | Current operating lease liabilities | | Current operating lease liabilities | 74.2 | | | 60.5 | |
| | Current debt | | Current debt | — | | | 524.2 | |
| Total current liabilities | 1,125,444 |
| | 1,467,400 |
| Total current liabilities | 4,503.1 | | | 5,247.0 | |
| | | | | |
| Delaware Economic Development Authority loan | 8,000 |
| | 8,000 |
| |
| Long-term debt | 1,373,122 |
| | 1,252,349 |
| Long-term debt | 1,438.0 | | | 1,434.9 | |
| Intercompany note payable | 134,358 |
| | 109,754 |
| |
| Affiliate note payable | | Affiliate note payable | 1,463.4 | | | 1,445.7 | |
| Deferred tax liabilities | | Deferred tax liabilities | 21.3 | | | 21.0 | |
| Long-term operating lease liabilities | | Long-term operating lease liabilities | 566.4 | | | 552.7 | |
| Long-term financing lease liabilities | | Long-term financing lease liabilities | 55.0 | | | 57.9 | |
| Other long-term liabilities | 63,119 |
| | 62,750 |
| Other long-term liabilities | 359.3 | | | 372.9 | |
| Total liabilities | 2,704,043 |
| | 2,900,253 |
| Total liabilities | 8,406.5 | | | 9,132.1 | |
| | | | | |
| Commitments and contingencies (Note 9) |
| |
| |
| | | | | |
| Commitments and contingencies (Note 7) | | Commitments and contingencies (Note 7) | |
| 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 |
| |
| PBF Energy Company LLC equity: | | PBF Energy Company LLC equity: | |
| Series A Units, 910,457 and 910,457 issued and outstanding at March 31, 2023 and December 31, 2022, no par or stated value | | Series A Units, 910,457 and 910,457 issued and outstanding at March 31, 2023 and December 31, 2022, no par or stated value | 17.4 | | | 17.4 | |
| Series C Units, 126,565,088 and 129,660,538 issued and outstanding at March 31, 2023 and December 31, 2022, no par or stated value | | Series C Units, 126,565,088 and 129,660,538 issued and outstanding at March 31, 2023 and December 31, 2022, no par or stated value | 2,497.5 | | | 2,491.9 | |
| Treasury stock, at cost | | Treasury stock, at cost | (496.4) | | | (327.0) | |
| Retained earnings | | Retained earnings | 2,696.4 | | | 2,220.0 | |
| Accumulated other comprehensive loss | (25,561 | ) | | (26,876 | ) | Accumulated other comprehensive loss | (4.0) | | | (4.4) | |
| Total PBF Energy Company LLC equity | 1,499,518 |
| | 1,316,468 |
| Total PBF Energy Company LLC equity | 4,710.9 | | | 4,397.9 | |
| Noncontrolling interest in PBFX | 336,933 |
| | 336,369 |
| |
| Noncontrolling interest | | Noncontrolling interest | 12.5 | | | 12.2 | |
| Total equity | 1,836,451 |
| | 1,652,837 |
| Total equity | 4,723.4 | | | 4,410.1 | |
| Total liabilities, Series B units and equity | $ | 4,545,604 |
| | $ | 4,558,200 |
| Total liabilities, Series B units and equity | $ | 13,135.0 | | | $ | 13,547.3 | |
See notes to condensed consolidated financial statements.
513
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands)millions)
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2023 | | 2022 |
| Revenues | | | | | $ | 9,295.0 | | | $ | 9,141.7 | |
| Cost and expenses: | | | | | | | |
| Cost of products and other | | | | | 7,795.3 | | | 8,206.2 | |
| Operating expenses (excluding depreciation and amortization expense as reflected below) | | | | | 781.4 | | | 620.4 | |
| Depreciation and amortization expense | | | | | 141.9 | | | 118.3 | |
| Cost of sales | | | | | 8,718.6 | | | 8,944.9 | |
| General and administrative expenses (excluding depreciation and amortization expense as reflected below) | | | | | 59.7 | | | 53.1 | |
| Depreciation and amortization expense | | | | | 1.9 | | | 1.9 | |
| Change in fair value of contingent consideration, net | | | | | (16.3) | | | 50.3 | |
| | | | | | | |
| (Gain) loss on sale of assets | | | | | (1.6) | | | 0.1 | |
| Total cost and expenses | | | | | 8,762.3 | | | 9,050.3 | |
| Income from operations | | | | | 532.7 | | | 91.4 | |
| Other income (expense): | | | | | | | |
| Interest expense, net | | | | | (28.1) | | | (81.0) | |
| Change in fair value of catalyst obligations | | | | | 0.7 | | | (4.9) | |
| | | | | | | |
| Other non-service components of net periodic benefit cost | | | | | 0.3 | | | 2.2 | |
| Other income (expense) | | | | | (2.3) | | | — | |
| Income before income taxes | | | | | 503.3 | | | 7.7 | |
| Income tax expense (benefit) | | | | | 0.4 | | | (8.1) | |
| Net income | | | | | 502.9 | | | 15.8 | |
| Less: net income attributable to noncontrolling interests | | | | | 0.3 | | | 17.8 | |
| Net income (loss) attributable to PBF Energy Company LLC | | | | | $ | 502.6 | | | $ | (2.0) | |
|
| | | | | | | | | | | | | | | |
| | 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.
614
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands)millions)
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2023 | | 2022 |
| Net income | | | | | $ | 502.9 | | | $ | 15.8 | |
| Other comprehensive income (loss): | | | | | | | |
| Unrealized gain (loss) on available for sale securities | | | | | 0.4 | | | (1.1) | |
| Net gain on pension and other post-retirement benefits | | | | | — | | | 0.1 | |
| Total other comprehensive income (loss) | | | | | 0.4 | | | (1.0) | |
| Comprehensive income | | | | | 503.3 | | | 14.8 | |
| Less: comprehensive income attributable to noncontrolling interests | | | | | 0.3 | | | 17.8 | |
| Comprehensive income (loss) attributable to PBF Energy Company LLC | | | | | $ | 503.0 | | | $ | (3.0) | |
|
| | | | | | | | | | | | | | | |
| | 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.
715
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, 2022 | 910,457 | | $ | 17.4 | | 129,660,538 | | $ | 2,491.9 | | $ | (4.4) | | $ | 2,220.0 | | $ | 12.2 | | $ | (327.0) | | $ | 4,410.1 | |
| Comprehensive income | — | | — | | — | | — | | 0.4 | | 502.6 | | 0.3 | | — | | 503.3 | |
| | | | | | | | | |
| | | | | | | | | |
| Distribution to members | — | | — | | — | | — | | — | | (26.2) | | — | | — | | (26.2) | |
| | | | | | | | | |
| | | | | | | | | |
| Stock-based compensation expense | — | | — | | — | | 6.5 | | — | | — | | — | | — | | 6.5 | |
| Transactions in connection with stock-based compensation plans | — | | — | | 966,660 | | (1.5) | | — | | — | | — | | — | | (1.5) | |
| Treasury stock purchases | — | | — | | (4,062,110) | | 0.6 | | — | | — | | — | | (169.4) | | (168.8) | |
| | | | | | | | | |
| | | | | | | | | |
| Balance, March 31, 2023 | 910,457 | | $ | 17.4 | | 126,565,088 | | $ | 2,497.5 | | $ | (4.0) | | $ | 2,696.4 | | $ | 12.5 | | $ | (496.4) | | $ | 4,723.4 | |
| | | | | | | | | |
| 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) | — | | — | | — | | — | | (1.0) | | (2.0) | | 17.8 | | — | | 14.8 | |
| | | | | | | | | |
| Exchange of Series A units for PBF Energy Class A common stock | (11,244) | | — | | 11,244 | | — | | — | | — | | — | | — | | — | |
| Distribution to members | — | | — | | — | | — | | — | | — | | (10.0) | | — | | (10.0) | |
| | | | | | | | | |
| Stock-based compensation expense | — | | — | | — | | 6.6 | | — | | — | | 0.7 | | — | | 7.3 | |
| | | | | | | | | |
| Transactions in connection with stock-based compensation plans | 11,244 | | — | | 341,765 | | (1.3) | | — | | — | | — | | — | | (1.3) | |
| Treasury stock purchases | — | | — | | (54,938) | | 1.1 | | — | | — | | — | | (1.1) | | — | |
| | | | | | | | | |
| | | | | | | | | |
| Balance, March 31, 2022 | 927,990 | | $ | 17.6 | | 120,638,879 | | $ | 2,251.4 | | $ | 19.3 | | $ | (392.9) | | $ | 519.7 | | $ | (170.2) | | $ | 2,244.9 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | |
| | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
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See notes to condensed consolidated financial statements.
16
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 | ) |
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
| Cash flows from operating activities: | | | |
| Net income | $ | 502.9 | | | $ | 15.8 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 150.1 | | | 124.6 | |
| | | |
| Stock-based compensation | 9.2 | | | 7.7 | |
| Change in fair value of catalyst obligations | (0.7) | | | 4.9 | |
| Deferred income taxes | 0.3 | | | (8.1) | |
| Non-cash change in inventory repurchase obligations | (4.2) | | | (40.7) | |
| | | |
| Change in fair value of contingent consideration, net | (16.3) | | | 50.3 | |
| | | |
| Pension and other post-retirement benefit costs | 12.0 | | | 11.9 | |
| (Gain) loss on sale of assets | (1.6) | | | 0.1 | |
| | | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | 276.1 | | | (537.5) | |
| Inventories | (91.3) | | | (388.4) | |
| Prepaid and other current assets | (93.8) | | | (161.1) | |
| Accounts payable | (101.1) | | | 683.8 | |
| Accrued expenses | (228.1) | | | 547.0 | |
| Deferred revenue | 33.5 | | | 13.2 | |
| Other assets and liabilities | (8.5) | | | (12.1) | |
| Net cash provided by operating activities | $ | 438.5 | | | $ | 311.4 | |
| | | |
| Cash flows from investing activities: | | | |
| Expenditures for property, plant and equipment | (239.8) | | | (118.3) | |
| Expenditures for deferred turnaround costs | (127.7) | | | (82.2) | |
| Expenditures for other assets | (15.6) | | | (25.0) | |
| Proceeds from sale of assets | 4.4 | | | — | |
| Net cash used in investing activities | $ | (378.7) | | | $ | (225.5) | |
See notes to condensed consolidated financial statements.
817
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 |
|
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
| Cash flows from financing activities: | | | |
| | | |
| | | |
| Distributions to PBF Energy Company LLC members | $ | (26.0) | | | $ | — | |
| Distributions to PBFX public unitholders | — | | | (9.8) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Repayments of PBFX revolver borrowings | — | | | (25.0) | |
| | | |
| Payments of contingent consideration | — | | | (2.6) | |
| | | |
| Redemption of PBFX 2023 Senior Notes | (525.0) | | | — | |
| | | |
| | | |
| Payments on financing leases | (2.9) | | | (3.0) | |
| Proceeds from insurance premium financing | 61.2 | | | 47.3 | |
| Proceeds from Affiliate note payable with PBF Energy Inc. | 23.0 | | | 7.0 | |
| Payments of Affiliate note payable with PBF Energy Inc. | (6.5) | | | (2.5) | |
| Taxes paid for net settlement of stock-based compensation | (1.5) | | | — | |
| | | |
| Repurchase of treasury stock | (167.6) | | | — | |
| Deferred financing costs and other, net | (0.5) | | | (2.5) | |
| Net cash (used in) provided by financing activities | $ | (645.8) | | | $ | 8.9 | |
| | | |
| Net change in cash and cash equivalents | (586.0) | | | 94.8 | |
| Cash and cash equivalents, beginning of period | 2,201.8 | | | 1,339.8 | |
| Cash and cash equivalents, end of period | $ | 1,615.8 | | | $ | 1,434.6 | |
| | | |
| Supplemental cash flow disclosures | | | |
| Non-cash activities: | | | |
| Accrued and unpaid capital expenditures | $ | 171.2 | | | $ | 120.6 | |
| Assets acquired or remeasured under operating and financing leases | 51.4 | | | 24.5 | |
| Cash paid during the period for: | | | |
| Interest (net of capitalized interest of $12.7 million and $4.2 million in 2023 and 2022, respectively) | $ | 32.0 | | | $ | 34.6 | |
| Income taxes | 3.3 | | | 0.1 | |
See notes to condensed consolidated financial statements.
918
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”), with 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 8 - Equity”).
PBF Energy holds a 99.3% economic interest in PBF LLC as of March 31, 2023 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. In addition, 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.
Collectively, 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, PBF LLC also holds a 53.7% limited partner interest and all of the incentive distribution rights in PBF Logistics LP ("PBFX" or the "Partnership"), a publicly traded master limited partnership (refer to Note 2 "PBF Logistics LP" of our Notes to Condensed Consolidated Financial Statements). PBF Logistics GP LLC (“PBF GP”) owns the noneconomic general partner interest and serves as the general partner of PBFX and is wholly-owned by PBF LLC. Collectively, PBF LLC and its consolidated subsidiaries, including PBF Holding and PBFX are referred to hereinafter as the "Company"“Company” unless the context otherwise requires. Discussions or areas of the Notes to Condensed Consolidated Financial Statements that either apply only to PBF Energy or PBF LLC are clearly noted.
PBFX Merger Transaction
On February 6, 2015,November 30, 2022, PBF Energy, completedPBF LLC, PBFX Holdings Inc., a public offeringDelaware corporation and wholly-owned subsidiary of 3,804,653 sharesPBF LLC, Riverlands Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of Class A common stock inPBF LLC, PBF Logistics LP (“PBFX”), and PBF Logistics GP LLC closed on a secondary offering (the "February 2015 secondary offering"). Alldefinitive agreement, pursuant to which PBF Energy and PBF LLC acquired all of the sharespublicly held common units in PBFX representing limited partner interests in the February 2015 secondary offering were soldmaster liability partnership not already owned 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 stockcertain wholly-owned subsidiaries 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 officersits affiliates (the “Merger Transaction”). Subsequent to closing on the Merger Transaction, PBFX became an indirect wholly-owned subsidiary 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 Reserve 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.
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, 2022. The results of operations for the three and nine months ended September 30, 2015March 31, 2023 are not necessarily indicative of the results to be expected for the full year.
Reclassification
Recent Accounting Pronouncements
In April 2015, the FASB issued ASU No. 2015-03, "Interest - ImputationAs of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which requires debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deductionMarch 31, 2023, proceeds from the debt liability rather than as an asset. The standard is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.
In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferralpayments of the Effective Date” (“ASU 2015-14”), which defers the effective date of ASU 2014-09, “Revenue from ContractsPBF LLC Affiliate note payable 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 onlyPBF Energy, previously disclosed 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 periodnet, in the reporting period in which the adjustment amountsPBF LLC Condensed Consolidated Statement of Cash Flows, are determined, (ii) that the acquirer record, in the same period’s financial statements, the effect on earningsnow disclosed gross as separate line items. The prior year PBF LLC Condensed Consolidated Statement of changes in depreciation, amortization, or other income effects, if any, as a result of the changeCash Flows presentation was adjusted to conform 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.2023 presentation.
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)
During2. CURRENT EXPECTED CREDIT LOSSES
Credit Losses
The Company 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 subordination period (as set forthCompany 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 the partnership agreementform of PBFX) holdersletters of the subordinated unitscredit or cash payments in advance of product delivery for certain customers that are not entitled to receive any distributiondeemed higher risk.
The Company’s payment terms on its trade receivables are relatively short, generally 30 days or less for a substantial majority 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 engages in the receiving, handling and transferring of crude oil and the receipt, storage and delivery of crude oil, refined products and intermediates. All of PBFX’s revenue is derived from long-term, fee-based commercial agreements with PBF Holding, which include minimum volume commitments, for receiving, handling and transferring crude oil and refined products and storing crude oil andits refined products. PBF LLC also has agreements with PBFXAs a result, the Company’s collection risk is mitigated to a certain extent by the fact that establish feessales are collected in a relatively short period of time, allowing for certain general and administrative services and operational and maintenance services provided by PBF Holdingthe ability to PBFX. These transactionsreduce exposure on defaults if collection issues are eliminated by PBF LLC in consolidation.identified. Notwithstanding, the Company reviews each customer’s credit risk profile at least annually or more frequently if warranted.
PBFX’s initial assets consisted ofThe Company performs a light crude oil rail unloading terminal at the Delaware City refinery that also services the Paulsboro refinery (which is referredquarterly allowance for doubtful accounts analysis to as the “Delaware City Rail Terminal”), and a crude oil truck unloading terminal at the Toledo refinery (which is referredassess whether an allowance needs to as the “Toledo Truck Terminal”)be recorded for any outstanding trade receivables. In estimating credit losses, management reviews accounts 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"),past due, have known disputes or have experienced any negative credit events that may result in future collectability issues. There was no allowance 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 LLC. PBF LLC through its ownership of 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 AND PBFX
Noncontrolling Interest in PBFX
PBF LLC holds a 53.7% limited partner interest in PBFX and owns all of PBFX’s incentive distribution rights, with the remaining 46.3% limited partner interest owned by public common unit holdersdoubtful accounts recorded as of September 30, 2015. PBF LLC is also the sole member of PBF GP, the general partner of PBFX.
PBF LLC consolidates the financial results of PBFX, 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 incomeMarch 31, 2023 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:2022.
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 | % |
The following table summarizes the changes in equity for the controlling and noncontrolling interests of PBF LLC for the nine months ended September 30, 2015 and 2014:
|
| | | | | | | | | | | |
| | 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 COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT AND BARREL DATA)
4.3. INVENTORIES
Inventories consisted of the following:
| | | | | | | | | | | | | | | | | |
| March 31, 2023 |
| (in millions) | Titled Inventory | | Inventory Intermediation Agreement | | Total |
| Crude oil and feedstocks | $ | 1,189.0 | | | $ | 156.6 | | | $ | 1,345.6 | |
| | | | | |
| Refined products and blendstocks | 1,283.4 | | | 83.2 | | | 1,366.6 | |
| Warehouse stock and other | 142.7 | | | — | | | 142.7 | |
| $ | 2,615.1 | | | $ | 239.8 | | | $ | 2,854.9 | |
| Lower of cost or market adjustment | — | | | — | | | — | |
| Total inventories | $ | 2,615.1 | | | $ | 239.8 | | | $ | 2,854.9 | |
| | | September 30, 2015 | |
| | Titled Inventory | | Inventory Supply and Intermediation Arrangements | | Total | |
| December 31, 2022 | | December 31, 2022 |
| (in millions) | | (in millions) | Titled Inventory | | Inventory Intermediation Agreement | | Total |
| Crude oil and feedstocks | $ | 954,744 |
| | $ | 21,288 |
| | $ | 976,032 |
| Crude oil and feedstocks | $ | 1,195.2 | | | $ | 140.9 | | | $ | 1,336.1 | |
| Refined products and blendstocks | 545,279 |
| | 310,238 |
| | 855,517 |
| Refined products and blendstocks | 1,244.7 | | | 40.9 | | | 1,285.6 | |
| Warehouse stock and other | 40,890 |
| | — |
| | 40,890 |
| Warehouse stock and other | 141.9 | | | — | | | 141.9 | |
| | $ | 1,540,913 |
| | $ | 331,526 |
| | $ | 1,872,439 |
| | $ | 2,581.8 | | | $ | 181.8 | | | $ | 2,763.6 | |
| 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 | $ | 2,581.8 | | | $ | 181.8 | | | $ | 2,763.6 | |
|
| | | | | | | | | | | |
| 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 supplyPBF Holding Company LLC (“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 an inventory intermediation agreement (as amended and intermediates and light finished products soldrestated from time to counterparties in connection withtime, the 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 the“Third Inventory Intermediation AgreementsAgreement”) with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc. ("(“J. Aron"Aron”).
Pursuant to the Third Inventory Intermediation Agreement, J. Aron purchases and holds 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 remains atIntermediation 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.
As of March 31, 2023 and December 31, 2022 there was no lower of cost andor market adjustment recorded as the net cash receipts result in a liability.replacement value of inventories exceeded the last-in, first-out carrying value.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. ACCRUED EXPENSES
Accrued expenses consisted of the following:
| | | | | | | | | | | |
PBF Energy (in millions) | March 31, 2023 | | December 31, 2022 |
| Inventory-related accruals | $ | 1,543.2 | | | $ | 1,417.4 | |
| Renewable energy credit and emissions obligations (a) | 1,039.4 | | | 1,361.1 | |
| Inventory intermediation agreement (b) | 164.3 | | | 98.3 | |
| Accrued transportation costs | 142.4 | | | 127.3 | |
| Excise and sales tax payable | 128.8 | | | 123.6 | |
| Accrued income tax payable | 97.6 | | | 16.5 | |
| Accrued capital expenditures | 93.5 | | | 86.3 | |
| Accrued utilities | 83.3 | | | 105.4 | |
| Contingent consideration | 80.0 | | | 81.6 | |
| Accrued salaries and benefits | 79.0 | | | 173.1 | |
| Accrued refinery maintenance and support costs | 45.9 | | | 48.1 | |
| Accrued interest | 20.5 | | | 24.9 | |
| Environmental liabilities | 14.8 | | | 14.9 | |
| Current finance lease liabilities | 11.7 | | | 11.7 | |
| Other | 92.8 | | | 30.6 | |
| Total accrued expenses | $ | 3,637.2 | | | $ | 3,720.8 | |
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | |
PBF LLC (in millions) | March 31, 2023 | | December 31, 2022 |
| Inventory-related accruals | $ | 1,543.2 | | | $ | 1,417.4 | |
| Renewable energy credit and emissions obligations (a) | 1,039.4 | | | 1,361.1 | |
| Inventory intermediation agreement (b) | 164.3 | | | 98.3 | |
| Accrued transportation costs | 142.4 | | | 127.3 | |
| Excise and sales tax payable | 128.8 | | | 123.6 | |
| Accrued capital expenditures | 93.5 | | | 86.3 | |
| Accrued interest | 89.1 | | | 84.2 | |
| Accrued utilities | 83.3 | | | 105.4 | |
| Contingent consideration | 80.0 | | | 81.6 | |
| Accrued salaries and benefits | 79.0 | | | 173.1 | |
| Accrued refinery maintenance and support costs | 45.9 | | | 48.1 | |
| Environmental liabilities | 14.8 | | | 14.9 | |
| Current finance lease liabilities | 11.7 | | | 11.7 | |
| Accrued income tax payable | 2.1 | | | 5.2 | |
| Other | 87.1 | | | 30.1 | |
| Total accrued expenses | $ | 3,604.6 | | | $ | 3,768.3 | |
______________________
(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. From time to time, the Company enters into forward purchase commitments in order to acquire its renewable energy and emissions credits at fixed prices. As of March 31, 2023, 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 $638.7 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 an ongoing 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 Third Inventory Intermediation Agreement. As of March 31, 2023 and December 31, 2022, a liability is recognized based on the repurchase obligation under the Third Inventory Intermediation Agreement 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
5. 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) | | March 31, 2023 | | December 31, 2022 |
| 2028 Senior Notes | | $ | 801.6 | | | $ | 801.6 | |
| 2025 Senior Notes | | 664.5 | | | 664.5 | |
| | | | |
| PBFX 2023 Senior Notes | | — | | | 525.0 | |
| Revolving Credit Facility | | — | | | — | |
| PBFX Revolving Credit Facility | | — | | | — | |
| | | | |
| Catalyst financing arrangements | | 3.3 | | | 4.0 | |
| | 1,469.4 | | | 1,995.1 | |
| Less — Current debt | | — | | | (524.2) | |
| Unamortized premium | | — | | | 0.2 | |
| Unamortized deferred financing costs | | (31.4) | | | (36.2) | |
| Long-term debt | | $ | 1,438.0 | | | $ | 1,434.9 | |
|
| | | | | | | | | | | | | | | |
| 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
The U.S Treasury securities purchased byAs of March 31, 2023, the Company is in compliance with all covenants, including financial covenants, in all its debt agreements.
PBFX 2023 Senior Notes
On February 2, 2023, the proceeds fromCompany redeemed the $525.0 million in aggregate principal amount outstanding of its PBFX’s 6.875% senior notes (the “PBFX 2023 Senior Notes”), inclusive of unamortized premium and deferred financing costs of $0.7 million as of the redemption date. The PBFX 2023 Senior Notes were redeemed at a price of 100%, plus accrued and unpaid interest through the date of redemption. Deutsche Bank Trust Company Americas was the trustee for the PBFX Offering are used2023 Senior Notes and served as collateral to secure a three-year, $300,000 term loan facility entered into by PBFX (the "PBFX Term Loan"). PBFX anticipates holding the securitiespaying agent for the full redemption. The redemption was financed using cash on hand.
6. AFFILIATE NOTE PAYABLE - PBF LLC
As of March 31, 2023 and December 31, 2022, PBF LLC had an outstanding note payable with PBF Energy for an indefiniteaggregate principal amount of time (the securities will$1,463.4 million and $1,445.7 million, respectively. The note payable has a maturity date of April 2030, an annual interest rate of 2.5% and may be rolled over as they mature). As necessary andprepaid in whole or in part at any time, at the discretionoption of PBFX,PBF LLC without penalty or premium.
7. 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 securities are expected tomatters cannot always be liquidatedpredicted 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 proceeds usedloss 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 fund future capital expenditures. While PBFX does not routinely sell marketable securities prior to their scheduled maturity dates, someestimate a range 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 securities as they may occasionally be sold prior to their scheduled maturity datespossible 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 unexpected timingpotential claims. However, the ultimate resolution of cash needs. The carrying valueone or more of these marketable securities approximates fair value and are measured using Level 1 inputs.contingencies could result in an adverse outcome that may have a material effect on our financial position, results of operations or cash flows.
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 maturities of the marketable securities range from one to three months and are classified on the balance sheet in non-current assets.
As of September 30, 2015 and December 31, 2014, the Company held $234,249 and $234,930, respectively, in marketable securities. The gross unrecognized holding gains and losses as of September 30, 2015 and December 31, 2014 were not material. The net realized gains or losses from the sale of marketable securities were immaterial for the three and nine months ended September 30, 2015 and 2014.
9. COMMITMENTS AND CONTINGENCIES
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 $115.2 million as of September 30, 2015 ($10,476March 31, 2023 ($117.0 million as of December 31, 2014) represents2022), 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
The aggregate environmental liability reflected in the Company’s Condensed Consolidated Balance Sheets was $159.1 million and $157.7 million at March 31, 2023 and December 31, 2014, this liability is self-guaranteed by2022, respectively, of which $144.3 million and $142.8 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 in the Company.future when the results of ongoing investigations become known, are considered probable and can be reasonably estimated.
Contingent Consideration
In connection with the acquisition of the Delaware CityMartinez refinery and related logistics assets, Valero Energy Corporation ("Valero") remains responsiblethe sale and purchase agreement dated June 11, 2019 included an earn-out provision based on certain earnings thresholds of the Martinez refinery. Pursuant to the 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 certain pre-acquisition environmental obligationsa period of up to $20,000 andfour years following the predecessor to Valero in ownershipacquisition closing date (the “Martinez Contingent Consideration”). Upon acquisition of the refinery, retains other historical obligations.
In connection with the Company recorded the estimated acquisition date fair value of the Delaware City assets andearn-out provision as contingent consideration of $77.3 million within “Other long-term liabilities” within 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 statesCompany’s Condensed Consolidated Balance Sheets. Subsequent changes 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 mostfair value of the remaining Northeastern states (except for Pennsylvania and New Hampshire) will require heating oil with 15 PPM or less sulfur. AllMartinez Contingent Consideration are recorded in the Condensed Consolidated Statements of Operations. The fair value of the heating oilMartinez Contingent Consideration was estimated to be $126.0 million as of March 31, 2023 (of which $80.0 million is included within Accrued expenses and was paid in full in April 2023). The fair value of 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, resultsMartinez Contingent Consideration was estimated to be $147.3 million as of operations or cash flows.December 31, 2022 (of which $81.6 million was included within Accrued expenses).
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 requirements in the annual standards which, while below the volumes originally set by Congress, would increase renewable fuel use in the U.S. above historical levels and provide for steady growth over time. The EPA is also proposing to increase the required volume of biomass-based diesel in 2015, 2016, and 2017 while maintaining the opportunity for growth in other advanced biofuels. The EPA has solicited comments on 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 amendments to the New Source Performance Standards ("NSPS") for petroleum refineries, including standards for emissions of nitrogen oxides from process heaters and work practice standards and monitoring requirements for flares. The Company has evaluated the impact of the regulation and amended standards on its refinery operations and currently does not expect the cost to comply 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 which includes requirements for petroleum refineries. The purpose 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 impact of this regulation, and at this time does not anticipate it having a material impact on the Company’s financial position, 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. 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 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 from 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 interest 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.
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.
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% as ofboth March 31, 2023 and December 31, 2014).2022. 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 both March 31, 2023 and December 31, 2022, PBF Energy recognized a liability of $338.6 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 Financial Accounting Standard Board, Accounting Standard Codification (“ASC”) 740, Income Taxes. As of March 31, 2023, $61.1 million of the Tax Receivable Agreement obligation is recorded as a current liability and represents PBF Energy’s best estimate of payments to be made within a year. As future taxable income is recognized, increases in PBF Energy’s 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.
8. 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% as of both March 31, 2023 and December 31, 2022.
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.
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 DISTRIBUTIONS
With respect to dividends and distributions paid during the nine months ended September 30, 2015,The noncontrolling interest ownership percentages in PBF LLC made aggregate non-tax quarterly distributionsas of $81,954, or $0.90 per unit, to its members,December 31, 2022 and March 31, 2023 are calculated as follows:
| | | | | | | | | | | | | | | | | |
| Holders of PBF LLC Series A Units | | Outstanding Shares of PBF Energy Class A Common Stock | | Total * |
| December 31, 2022 | 910,457 | | 129,639,307 | | 130,549,764 |
| 0.7% | | 99.3% | | 100.0% |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| March 31, 2023 | 910,457 | | 126,543,857 | | 127,454,314 |
| 0.7% | | 99.3% | | 100.0% |
——————————
* Assumes all of which $77,287 was distributed prorata tothe holders of PBF Energy and the balance was distributed to its other members.LLC Series A Units exchange their PBF Energy used this $77,287 to pay quarterly cash dividendsLLC Series A Units for shares of $0.30 per share ofPBF Energy’s Class A common stock on a one-for-one basis.
Noncontrolling Interest in PBFX
PBF Energy, through its ownership of PBF LLC, consolidates the financial results of PBFX. Prior to the Merger Transaction which closed on November 30, 2022, 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 December 31, 2022, noncontrolling interest on the Consolidated Statements of Operations included 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) through November 30, 2022, and noncontrolling interest on the Consolidated Balance Sheets was eliminated. As of March 10, 2015, May 27, 201531, 2023, noncontrolling interest on the Condensed Consolidated Statements of Operations and August 10, 2015. noncontrolling interest on the Condensed Consolidated Balance Sheets were eliminated.
Noncontrolling Interest in PBF Holding
In addition, duringconnection with the nineacquisition of the Chalmette refinery, PBF Holding records noncontrolling interests in two subsidiaries of Chalmette Refining. PBF Holding, through Chalmette Refining, owns an 80% ownership interest in both Collins Pipeline Company and T&M Terminal Company. In the three months ended September 30, 2015,March 31, 2023 and March 31, 2022, the Company recorded noncontrolling interest in the earnings of these subsidiaries of $0.3 million and $(1.1) million, respectively.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 three months ended March 31, 2023 and 2022, respectively:
| | | | | | | | | | | | | | | | | | | | | | | | | |
PBF Energy (in millions) | PBF Energy Inc. Equity | | Noncontrolling
Interest in PBF LLC | | Noncontrolling
Interest in PBF Holding | | | | Total Equity |
| Balance at January 1, 2023 | $ | 4,929.2 | | | $ | 114.6 | | | $ | 12.2 | | | | | $ | 5,056.0 | |
| Comprehensive income | 382.5 | | | 3.5 | | | 0.3 | | | | | 386.3 | |
| Dividends and distributions | (26.0) | | | (0.2) | | | — | | | | | (26.2) | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Stock-based compensation expense | 6.5 | | | — | | | — | | | | | 6.5 | |
| Transactions in connection with stock-based compensation plans | 14.4 | | | — | | | — | | | | | 14.4 | |
| | | | | | | | | |
| Treasury stock purchases | (168.8) | | | — | | | — | | | | | (168.8) | |
| Other | 0.1 | | | — | | | — | | | | | 0.1 | |
| Balance at March 31, 2023 | $ | 5,137.9 | | | $ | 117.9 | | | $ | 12.5 | | | | | $ | 5,268.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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) | (22.1) | | | — | | | (1.1) | | | 18.9 | | | (4.3) | |
| Dividends and distributions | — | | | — | | | — | | | (10.0) | | | (10.0) | |
| | | | | | | | | |
| Stock-based compensation expense | 6.6 | | | — | | | — | | | 0.7 | | | 7.3 | |
| Transactions in connection with stock-based compensation plans | 0.6 | | | — | | | — | | | — | | | 0.6 | |
| | | | | | | | | |
| Effects of exchanges of PBF LLC Series A Units on deferred tax assets and liabilities and Tax Receivable Agreement obligation | (0.3) | | | — | | | — | | | — | | | (0.3) | |
| | | | | | | | | |
| | | | | | | | | |
| Balance at March 31, 2022 | $ | 1,911.0 | | | $ | 95.4 | | | $ | 11.1 | | | $ | 508.6 | | | $ | 2,526.1 | |
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following tables summarize the changes in equity for the controlling and noncontrolling interests of 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 duringfor the ninethree months ended September 30, 2015, PBFX paid a distribution on outstanding commonMarch 31, 2023 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.2022, respectively:
12. TREASURY UNITS | | | | | | | | | | | | | | | | | | | |
PBF LLC (in millions) | PBF Energy Company LLC Equity | | Noncontrolling Interest in PBF Holding | | | | Total Equity |
| Balance at January 1, 2023 | $ | 4,397.9 | | | $ | 12.2 | | | | | $ | 4,410.1 | |
| Comprehensive income | 503.0 | | | 0.3 | | | | | 503.3 | |
| Dividends and distributions | (26.2) | | | — | | | | | (26.2) | |
| | | | | | | |
| | | | | | | |
| Stock-based compensation expense | 6.5 | | | — | | | | | 6.5 | |
| Transactions in connection with stock-based compensation plans | (1.5) | | | — | | | | | (1.5) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Treasury stock purchases | (168.8) | | | — | | | | | (168.8) | |
| | | | | | | |
| Balance at March 31, 2023 | $ | 4,710.9 | | | $ | 12.5 | | | | | $ | 4,723.4 | |
| | | | | | | | | | | | | | | | | | | | | | | |
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) | (3.0) | | | (1.1) | | | 18.9 | | | 14.8 | |
| Dividends and distributions | — | | | — | | | (10.0) | | | (10.0) | |
| | | | | | | |
| | | | | | | |
| Stock-based compensation expense | 6.6 | | | — | | | 0.7 | | | 7.3 | |
| Transactions in connection with stock-based compensation plans | (1.3) | | | — | | | — | | | (1.3) | |
| | | | | | | |
| | | | | | | |
| Balance at March 31, 2022 | $ | 1,725.2 | | | $ | 11.1 | | | $ | 508.6 | | | $ | 2,244.9 | |
Treasury Stock
On August 19, 2014, PBF Energy'sDecember 12, 2022, the Company’s Board of Directors authorized the repurchase of up to $200,000 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 $100,000 increase to the existing Repurchase Program. As of September 30, 2015, the Company has purchased approximately 6.05$500.0 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. During the three and nine months ended September 30, 2015, the Company repurchased 142,487 and 284,771 of the Company's Series C Units, respectively, for $4,073 and $8,073, respectively through the purchase of PBF Energy’s Class A common stock in open market transactions. During both, the three and nine months ended September 30, 2014, the Company repurchased 1,354,943 of the Company's Series C Units for $32,593 through the purchase of PBF Energy’s Class A common stock in open market transactions.
The following table summarizes PBF Energy's Class A common stock (as amended from time to time, the “Repurchase Program”). During the first quarter of 2023, the Company purchased 4,047,286 shares for $167.6 million, inclusive of commissions paid. During the fourth quarter of 2022, the Company purchased 4,192,555 shares for $156.4 million, inclusive of commissions paid.
As noted in Noted 17 - Subsequent Events, on May 3, 2023, the Company's Board of Directors approved an increase in the repurchase activityauthorization amount under the Repurchase Program:
|
| | | | | | |
| 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 bewere 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 behave been effected through Rule 10b5-1 and Rule 10b-18 plans. The timing and number of shares repurchased will dependdepended on a variety of factors, including price, capital availability, legal requirements and economic and market conditions. PBF EnergyThe Company is not obligated to purchase any shares under the Repurchase Program, and repurchases maycould be suspended or discontinued at any time without prior notice.
As of September 30, 2015,The Company records PBF Energy has the ability to purchase an additional $149,196 in Class A common stock surrendered to cover income tax withholdings for certain directors and employees and others pursuant to the vesting of certain awards under the approved Repurchase Program.Company’s equity-based compensation plans as treasury shares.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT
9. DIVIDENDS AND BARREL DATA)DISTRIBUTIONS
With respect to dividends and distributions paid during the three months ended March 31, 2023, PBF LLC made an aggregate non-tax quarterly distribution of $26.0 million, or $0.20 per unit to its members, of which $25.8 million was distributed pro-rata to PBF Energy and the balance was distributed to its other members. PBF Energy used this $25.8 million to pay a quarterly cash dividend of $0.20 per share of Class A common stock on March 16, 2023.
13.
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 March 31, |
| Pension Benefits | | | | | 2023 | | 2022 |
| Components of net periodic benefit cost: | | | | | | | |
| Service cost | | | | | $ | 12.1 | | | $ | 13.9 | |
| Interest cost | | | | | 4.3 | | | 2.0 | |
| Expected return on plan assets | | | | | (4.8) | | | (4.4) | |
| | | | | | | |
| | | | | | | |
| Net periodic benefit cost | | | | | $ | 11.6 | | | $ | 11.5 | |
| | | | | | | | | | | | | | | |
| (in millions) | | | Three Months Ended March 31, |
| Post-Retirement Medical Plan | | | | | 2023 | | 2022 |
| Components of net periodic benefit cost: | | | | | | | |
| Service cost | | | | | $ | 0.2 | | | $ | 0.2 | |
| Interest cost | | | | | 0.2 | | | 0.1 | |
| Amortization of prior service cost and actuarial loss | | | | | — | | | 0.1 | |
| | | | | | | |
| Net periodic benefit cost | | | | | $ | 0.4 | | | $ | 0.4 | |
|
| | | | | | | | | | | | | | | | |
| | | 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 March 31, | |
| (in millions) | 2023 | | 2022 | |
| Refining Segment: | | | | |
| Gasoline and distillates | $ | 8,232.6 | | | $ | 8,037.7 | | |
| Feedstocks and other | 417.8 | | | 334.9 | | |
| Asphalt and blackoils | 403.2 | | | 458.9 | | |
| Chemicals | 140.2 | | | 207.0 | | |
| Lubricants | 91.7 | | | 89.7 | | |
| Total Refining Revenue | 9,285.5 | | | 9,128.2 | | |
| Logistics Segment: | | | | |
| Logistics Revenue | 98.5 | | | 89.4 | | |
| Total revenue prior to eliminations | 9,384.0 | | | 9,217.6 | | |
| Elimination of intercompany revenue | (89.0) | | | (75.9) | | |
| Total Revenues | $ | 9,295.0 | | | $ | 9,141.7 | | |
The majority of the Company’s revenues are generated from the sale of refined products. 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 Company 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.
The Company’s Logistics segment revenues are generated by charging fees for crude oil and refined products terminaling, storage and pipeline services based on the greater of contractual minimum volume commitments, as applicable, or the delivery of actual volumes based on contractual rates applied to throughput or storage volumes. A majority of the Company’s logistics revenues are generated by intercompany transactions and are eliminated in consolidation.
Deferred Revenue
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 $74.1 million and $40.6 million as of March 31, 2023 and December 31, 2022, 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.
|
| | | | | | | | | | | | | | | | |
| | | 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 |
|
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14.
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, which to-date has consisted primarily of its share of PBF LLC’s pre-tax income (approximately 99.3% as of both March 31, 2023 and December 31, 2022). PBF LLC is organized as a limited liability company and PBFX is a partnership, 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 there was no valuation allowance, as of March 31, 2023 and December 31, 2022, associated with deferred tax assets.
Inflation Reduction Act
On August 16, 2022, the Inflation Reduction Act (“IRA”) was enacted and signed into law in the United States. The IRA 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 incentives, and additional Internal Revenue Service funding. Based on the Company’s results over the past three fiscal years, the corporate alternative minimum tax is currently not applicable. The Company does not expect the other tax provisions of the IRA to have a material impact on its Condensed Consolidated Financial Statements.
The income tax provision in the PBF Energy Condensed Consolidated Statements of Operations consists of the following:
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| (in millions) | | | | | 2023 | | 2022 |
| Current income tax expense | | | | | $ | 84.1 | | | $ | — | |
| Deferred income tax expense (benefit) | | | | | 42.4 | | | (6.1) | |
| Total income tax expense (benefit) | | | | | $ | 126.5 | | | $ | (6.1) | |
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 months ended March 31, 2023 and March 31, 2022, was 24.9% and 22.4%, respectively.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PBF Energy’s effective income tax rate for the three months ended March 31, 2023, including the impact of income attributable to noncontrolling interests of $3.8 million, was 24.7%. PBF Energy’s effective income tax rate for the three months ended March 31, 2022, including the impact of income attributable to noncontrolling interests of $17.8 million, was 64.9%.
For the three months ended March 31, 2023, PBF Energy’s effective tax rate did not materially differ from the United States statutory rate, inclusive of state income taxes.
For the three months ended March 31, 2022, the difference between the United States statutory rate and PBF Energy’s effective tax rate was primarily attributable to 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 March 31, |
| (in millions) | | | | | 2023 | | 2022 |
| Current income tax expense | | | | | $ | 0.1 | | | $ | — | |
| Deferred income tax expense (benefit) | | | | | 0.3 | | | (8.1) | |
| Total income tax expense (benefit) | | | | | $ | 0.4 | | | $ | (8.1) | |
The Company has determined there are no material uncertain tax positions as of March 31, 2023. 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, 2015March 31, 2023 and December 31, 2014.2022.
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 March 31, 2023 |
| 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 | $ | 160.9 | | | $ | — | | | $ | — | | | $ | 160.9 | | | N/A | | $ | 160.9 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Commodity contracts | 38.4 | | | 51.2 | | | 2.6 | | | 92.2 | | | (63.8) | | | 28.4 | |
| Derivatives included within inventory intermediation agreement obligations | — | | | 29.3 | | | — | | | 29.3 | | | — | | | 29.3 | |
| | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | |
| Commodity contracts | 24.0 | | | 39.8 | | | — | | | 63.8 | | | (63.8) | | | — | |
| Catalyst obligations | — | | | 3.3 | | | — | | | 3.3 | | | — | | | 3.3 | |
| Renewable energy credit and emissions obligations | — | | | 1,039.4 | | | — | | | 1,039.4 | | | — | | | 1,039.4 | |
| Contingent consideration obligation | — | | | — | | | 126.0 | | | 126.0 | | | — | | | 126.0 | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, 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 | $ | 110.0 | | | $ | — | | | $ | — | | | $ | 110.0 | | | N/A | | $ | 110.0 | |
| | | | | | | | | | | |
| Commodity contracts | 33.8 | | | 15.7 | | | — | | | 49.5 | | | (35.6) | | | 13.9 | |
| Derivatives included within inventory intermediation agreement obligations | — | | | 25.1 | | | — | | | 25.1 | | | — | | | 25.1 | |
| | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | |
| Commodity contracts | 20.6 | | | 11.8 | | | 3.2 | | | 35.6 | | | (35.6) | | | — | |
| Catalyst obligations | — | | | 4.0 | | | — | | | 4.0 | | | — | | | 4.0 | |
| Renewable energy credit and emissions obligations | — | | | 1,361.1 | | | — | | | 1,361.1 | | | — | | | 1,361.1 | |
| Contingent consideration obligation | — | | | — | | | 147.3 | | | 147.3 | | | — | | | 147.3 | |
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 the Company’s liability for the purchase of (i) biofuel credits (primarily RINs in the U.S.) needed to satisfy its obligation to blend biofuels into the products the Company produces and (ii) emission credits under the AB 32 and similar programs (collectively, the cap-and-trade systems). To the degree the Company is unable to blend biofuels (such as ethanol and biodiesel) at percentages required under the biofuel programs, it must purchase biofuel credits to comply with these programs. Under the cap-and-trade systems, it must purchase emission credits to comply with these systems. The liability for environmental credits is in part based on the Company’s deficit for such credits as of the balance sheet date, if any, after considering any credits acquired, and is equal to the product of the credits deficit and the market price of these credits as of the balance sheet date. To the extent that the Company has a better estimate of the cost at which it settle its obligation, such as agreements to purchase RINs at prices other than the current spot price, the Company considers those costs in valuing the remaining obligation. The environmental credit obligations are categorized in Level 2 of the fair value hierarchy and the Company 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 arrangement obligations, derivatives included with inventory intermediation agreement obligationscontingent consideration obligation at March 31, 2023 and the catalyst lease obligations areDecember 31, 2022 is categorized in Level 23 of the fair value hierarchy and is 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 March 31, 2023 and December 31, 2022, $19.1 million and $18.6 million, respectively, were included within Deferred charges and other assets, net for similar instruments quoted in active markets.these non-qualified pension plan assets.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 the Martinez Contingent Consideration:
| | | | | | | | | | | | | | | |
| | | | | |
| | | Three Months Ended March 31, |
| (in millions) | | | | | 2023 | | 2022 |
| Balance at beginning of period | | | | | $ | 150.5 | | | $ | 32.3 | |
| Additions | | | | | — | | | — | |
| | | | | | | |
| Settlements | | | | | (5.4) | | | (2.6) | |
| Unrealized (gain) loss included in earnings | | | | | (21.7) | | | 50.3 | |
| | | | | | | |
| | | | | | | |
| Balance at end of period | | | | | $ | 123.4 | | | $ | 80.0 | |
|
| | | | | | | | | | | | | | | | |
| | | 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, 2015 and 2014, respectively.March 31, 2023 or the three months ended March 31, 2022.
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, 2015March 31, 2023 and December 31, 2014.2022.
|
| | | | | | | | | | | | | | | |
| | 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 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
| (in millions) | Carrying value | | Fair
value | | Carrying value | | Fair
value |
| 2028 Senior Notes (a) | $ | 801.6 | | | $ | 771.1 | | | $ | 801.6 | | | $ | 703.7 | |
| 2025 Senior Notes (a) | 664.5 | | | 663.6 | | | 664.5 | | | 656.0 | |
| | | | | | | |
| PBFX 2023 Senior Notes (a) | — | | | — | | | 525.0 | | | 525.1 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Catalyst financing arrangements (b) | 3.3 | | | 3.3 | | | 4.0 | | | 4.0 | |
| 1,469.4 | | | 1,438.0 | | | 1,995.1 | | | 1,888.8 | |
| Less - Current debt | — | | | — | | | (524.2) | | | (524.2) | |
| Unamortized premium | — | | | n/a | | 0.2 | | | n/a |
| Less - Unamortized deferred financing costs | (31.4) | | | n/a | | (36.2) | | | n/a |
| Long-term debt | $ | 1,438.0 | | | $ | 1,438.0 | | | $ | 1,434.9 | | | $ | 1,364.6 | |
(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.
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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.
As of September 30, 2015,March 31, 2023 and December 31, 2022, there were 238,3062,180,628 and 1,945,994 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,March 31, 2023, there were 3,130,7661,321,528 barrels of intermediates and refined products (3,106,325(780,734 barrels at December 31, 2014)2022) 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,March 31, 2023, there were 45,651,00018,941,000 barrels of crude oil and 2,277,00014,409,000 barrels of refined products (47,339,000(17,890,000 and 1,970,871,12,175,200, respectively, as of December 31, 2014)2022), 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, 2015March 31, 2023 and December 31, 20142022, 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: | | |
| March 31, 2023: | | |
| | |
| Derivatives included within the inventory intermediation agreement obligations | Accrued expenses | $ | 29.3 | |
| December 31, 2022: | | |
| | |
| Derivatives included within the inventory intermediation agreement obligations | Accrued expenses | $ | 25.1 | |
| | |
| Derivatives not designated as hedging instruments: | | |
| March 31, 2023: | | |
| Commodity contracts | Accounts receivable | $ | 28.4 | |
| | |
| December 31, 2022: | | |
| Commodity contracts | Accounts receivable | $ | 13.9 | |
|
| | | | |
| 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 March 31, 2023: | | |
| | |
| Derivatives included within the inventory intermediation agreement obligations | Cost of products and other | $ | 4.2 | |
| For the three months ended March 31, 2022: | | |
| | |
| Derivatives included within the inventory intermediation agreement obligations | Cost of products and other | $ | 40.7 | |
| | |
| Derivatives not designated as hedging instruments: | | |
| | |
| | |
| | |
| | |
| | |
| | |
| For the three months ended March 31, 2023: | | |
| Commodity contracts | Cost of products and other | $ | 14.8 | |
| For the three months ended March 31, 2022: | | |
| Commodity contracts | Cost of products and other | $ | (26.9) | |
| | |
| Hedged items designated in fair value hedges: | | |
| | |
| | |
| | |
| | |
| | |
| | |
| For the three months ended March 31, 2023: | | |
| | |
| Crude oil, intermediate and refined product inventory | Cost of products and other | $ | (4.2) | |
| For the three months ended March 31, 2022: | | |
| | |
| Crude oil, intermediate and refined product inventory | Cost of products and other | $ | (40.7) | |
The Company had no ineffectiveness related to the Company's fair value hedges for the three and nine months ended September 30, 2015 and 2014.March 31, 2023 or the three months ended March 31, 2022.
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, 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.
Disclosures regarding our reportable segments with reconciliations to consolidated totals for the three and nine months ended September 30, 2015 and September 30, 2014 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 contribution by PBF LLC of the DCR West Rack, the Toledo Storage Facility and the Delaware City Products Pipeline and Truck Rack, the accompanying segment information has been retrospectively adjusted to include the historical results of the DCR West Rack, Toledo Storage Facility and the Delaware City Products Pipeline and Truck Rack in the Logistics Segment for all periods presented prior to such contributions.
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT, PER UNIT 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 receivablesreceivable 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 ourthe Company’s refinery and logisticlogistics operations.
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| Three Months Ended September 30, 2015 |
| Refining |
| Logistics |
| Corporate | | Eliminations |
| Consolidated Total |
| Revenues | $ | 3,217,640 |
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| $ | 37,082 |
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| $ | — |
| | $ | (37,082 | ) |
| $ | 3,217,640 |
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| Depreciation and amortization expense | 44,366 |
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| 1,649 |
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| 2,118 |
| | — |
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| 48,133 |
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| Income (loss) from operations | 114,925 |
| | 27,463 |
| | (49,851 | ) | | — |
| | 92,537 |
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| Interest expense, net | 4,110 |
| | 7,180 |
| | 18,070 |
| | — |
| | 29,360 |
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| Capital expenditures | 81,969 |
| | 962 |
| | 573 |
| | — |
| | 83,504 |
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| | Three Months Ended September 30, 2014 |
| | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 5,260,003 |
| | $ | 17,060 |
| | $ | — |
| | $ | (17,060 | ) | | $ | 5,260,003 |
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| Depreciation and amortization expense | 63,532 |
| | 1,177 |
| | 3,301 |
| | — |
| | 68,010 |
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| Income (loss) from operations | 316,244 |
| | 5,942 |
| | (41,051 | ) | | — |
| | 281,135 |
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| Interest expense, net | 5,314 |
| | 827 |
| | 18,714 |
| | — |
| | 24,855 |
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| Capital expenditures | 110,340 |
| | 14,874 |
| | 32,642 |
| | — |
| | 157,856 |
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| | Nine Months Ended September 30, 2015 |
| | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 9,763,440 |
| | $ | 104,796 |
| | $ | — |
| | $ | (104,796 | ) | | $ | 9,763,440 |
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| Depreciation and amortization expense | 131,817 |
| | 4,919 |
| | 7,665 |
| | — |
| | 144,401 |
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| Income (loss) from operations | 591,005 |
| | 71,914 |
| | (123,530 | ) | | — |
| | 539,389 |
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| Interest expense, net | 13,387 |
| | 14,065 |
| | 52,731 |
| | — |
| | 80,183 |
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| Capital expenditures | 332,544 |
| | 1,182 |
| | 2,183 |
| | — |
| | 335,909 |
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| | Nine Months Ended September 30, 2014 |
| | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 15,308,155 |
| | $ | 29,409 |
| | $ | — |
| | $ | (29,409 | ) | | $ | 15,308,155 |
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| Depreciation and amortization expense | 122,858 |
| | 2,906 |
| | 10,123 |
| | — |
| | 135,887 |
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| Income (loss) from operations | 741,483 |
| | 4,491 |
| | (116,785 | ) | | — |
| | 629,189 |
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| Interest expense, net | 20,404 |
| | 1,183 |
| | 55,141 |
| | — |
| | 76,728 |
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| Capital expenditures | 250,701 |
| | 40,993 |
| | 39,050 |
| | — |
| | 330,744 |
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| | 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 |
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| | 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 |
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PBF ENERGY INC. AND PBF ENERGY COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT UNIT,
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| Three Months Ended March 31, 2023 |
PBF Energy - (in millions) | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 9,285.5 | | | $ | 98.5 | | | $ | — | | | $ | (89.0) | | | $ | 9,295.0 | |
| Depreciation and amortization expense | 132.9 | | | 9.0 | | | 1.9 | | | — | | | 143.8 | |
| Income (loss) from operations | 525.7 | | | 49.7 | | | (43.0) | | | — | | | 532.4 | |
| Interest (income) expense, net | (4.1) | | | 3.7 | | | 19.1 | | | — | | | 18.7 | |
| Capital expenditures | 379.2 | | | 2.7 | | | 1.2 | | | — | | | 383.1 | |
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| Three Months Ended March 31, 2022 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 9,128.2 | | | $ | 89.4 | | | $ | — | | | $ | (75.9) | | | $ | 9,141.7 | |
| Depreciation and amortization expense | 108.8 | | | 9.5 | | | 1.9 | | | — | | | 120.2 | |
| Income (loss) from operations | 146.1 | | | 46.4 | | | (101.5) | | | — | | | 91.0 | |
| Interest expense, net | 3.1 | | | 10.1 | | | 65.2 | | | — | | | 78.4 | |
| Capital expenditures | 223.1 | | | 1.4 | | | 1.0 | | | — | | | 225.5 | |
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| Balance at March 31, 2023 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Total assets | $ | 12,293.4 | | | $ | 827.4 | | | $ | 56.5 | | | $ | (38.2) | | | $ | 13,139.1 | |
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| Balance at December 31, 2022 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Total assets | $ | 12,587.9 | | | $ | 863.1 | | | $ | 136.3 | | | $ | (38.2) | | | $ | 13,549.1 | |
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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| Three Months Ended March 31, 2023 |
PBF LLC - (in millions) | Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 9,285.5 | | | $ | 98.5 | | | $ | — | | | $ | (89.0) | | | $ | 9,295.0 | |
| Depreciation and amortization expense | 132.9 | | | 9.0 | | | 1.9 | | | — | | | 143.8 | |
| Income (loss) from operations | 525.7 | | | 49.7 | | | (42.7) | | | — | | | 532.7 | |
| Interest (income) expense, net | (4.1) | | | 3.7 | | | 28.5 | | | — | | | 28.1 | |
| Capital expenditures | 379.2 | | | 2.7 | | | 1.2 | | | — | | | 383.1 | |
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| Three Months Ended March 31, 2022 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Revenues | $ | 9,128.2 | | | $ | 89.4 | | | $ | — | | | $ | (75.9) | | | $ | 9,141.7 | |
| Depreciation and amortization expense | 108.8 | | | 9.5 | | | 1.9 | | | — | | | 120.2 | |
| Income (loss) from operations | 146.1 | | | 46.4 | | | (101.1) | | | — | | | 91.4 | |
| Interest expense, net | 3.1 | | | 10.1 | | | 67.8 | | | — | | | 81.0 | |
| Capital expenditures | 223.1 | | | 1.4 | | | 1.0 | | | — | | | 225.5 | |
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| Balance at March 31, 2023 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Total assets | $ | 12,293.4 | | | $ | 827.4 | | | $ | 52.4 | | | $ | (38.2) | | | $ | 13,135.0 | |
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| Balance at December 31, 2022 |
| Refining | | Logistics | | Corporate | | Eliminations | | Consolidated Total |
| Total assets | $ | 12,587.9 | | | $ | 863.1 | | | $ | 134.5 | | | $ | (38.2) | | | $ | 13,547.3 | |
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 (loss) 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:
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| (in millions, except share and per share amounts) | | | Three Months Ended March 31, |
| Basic Earnings Per Share: | | | | | 2023 | | 2022 |
| Allocation of earnings: | | | | | | | |
| Net income (loss) attributable to PBF Energy Inc. stockholders | | | | | $ | 382.1 | | | $ | (21.1) | |
| Less: Income allocated to participating securities | | | | | — | | | — | |
| Income (loss) available to PBF Energy Inc. stockholders - basic | | | | | $ | 382.1 | | | $ | (21.1) | |
| Denominator for basic net income (loss) per Class A common share - weighted average shares | | | | | 128,787,779 | | | 120,339,041 | |
| Basic net income (loss) attributable to PBF Energy per Class A common share | | | | | $ | 2.97 | | | $ | (0.18) | |
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| Diluted Earnings Per Share: | | | | | | | |
| Numerator: | | | | | | | |
| Income (loss) available to PBF Energy Inc. stockholders - basic | | | | | $ | 382.1 | | | $ | (21.1) | |
Plus: Net income attributable to noncontrolling interest (1) | | | | | 3.5 | | | — | |
Less: Income tax expense on net income attributable to noncontrolling interest (1) | | | | | (0.9) | | | — | |
Numerator for diluted net income (loss) per PBF Energy Class A common share - net income (loss) attributable to PBF Energy Inc. stockholders (1) | | | | | $ | 384.7 | | | $ | (21.1) | |
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Denominator:(1) | | | | | | | |
| Denominator for basic net income (loss) per PBF Energy Class A common share-weighted average shares | | | | | 128,787,779 | | | 120,339,041 | |
Effect of dilutive securities:(2) | | | | | | | |
| Conversion of PBF LLC Series A Units | | | | | 910,457 | | | — | |
| Common stock equivalents | | | | | 4,801,041 | | | — | |
| Denominator for diluted net income (loss) per PBF Energy Class A common share-adjusted weighted average shares | | | | | 134,499,277 | | | 120,339,041 | |
| Diluted net income (loss) attributable to PBF Energy Inc. stockholders per PBF Energy Class A common share | | | | | $ | 2.86 | | | $ | (0.18) | |
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(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 (loss) attributable to PBF Energy used in the numerator of the diluted earnings per share calculation is adjusted to reflect the net income (loss), as well as the corresponding income tax expense (benefit) (based on a 26.0% and a 25.9% estimated annualized statutory corporate tax rate for the three months ended March 31, 2023 and March 31, 2022), attributable to the converted units.
PBF ENERGY INC. AND BARREL DATA)PBF ENERGY COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(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 29,500 and 14,804,565 shares of PBF Energy Class A common stock and PBF LLC Series A units because they are anti-dilutive for the three months ended March 31, 2023 and March 31, 2022, respectively. For periods showing a net loss, all common stock equivalents and unvested restricted stock are considered anti-dilutive.
17. SUBSEQUENT EVENTS
Cash DistributionDividend Declared
On October 29, 2015,May 5, 2023, 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, 2015May 31, 2023 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.May 17, 2023.
PBFX DistributionsShare Repurchases
On October 29, 2015,May 3, 2023, the Company's Board of Directors approved an increase in the repurchase authorization amount under the Repurchase Program from $500.0 million to $1.0 billion and extended the program expiration date to December 2025. 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. The Company is not obligated to purchase any shares under the Repurchase Program, and repurchases may be suspended or discontinued at any time without prior notice.
From April 1, 2023 through May 4, 2023, the Company purchased an additional 580,066 shares of PBF GP declared a distribution of $0.39 per unit on outstanding common and subordinated units of PBFX. The distribution of $13,751 was paid on November 30, 2015 to PBFX unit holders of record at the close of business on November 13, 2015.
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 ofEnergy’s 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.
Immediately following the October 2015 Equity Offering, PBF Energy owned 97,393,850 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 holders of PBF Energy's issued and outstanding shares of Class A common stock had 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 had the remaining 5.0% of the voting power in PBF Energy.
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.Repurchase Program for $21.9 million, inclusive of commissions paid.
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, 2022 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.March 31, 2023. 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 fora wholly-owned subsidiary of PBF Holding. PBFX is an indirect wholly-owned subsidiary of PBF Energy and PBF LLC that owns and operates logistics assets that support our refining operations.
Unless the context indicates otherwise, the terms “we,” “us,” and “our” refer to PBF Energy and its consolidated subsidiaries, including PBF LLC, consolidates the financial results ofPBF 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 refineriesown and downstream assets in North America. As of September 30, 2015 we owned and operated threeoperate six domestic oil refineries and related assets, which we acquired in 2010 and 2011.assets. 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, 201512.7 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 represent the ownership interests of Chalmette Refining L.L.C. ("Chalmette Refining"). See Business Developments for additional information.segment. PBFX operates certain logistical assets such as crude oil and refined products terminals, pipelines, and storage facilities, which represent the Logistics segment.
As of September 30, 2015, our threeOur six refineries are located in Toledo, Ohio, Delaware City, Delaware, and Paulsboro, New Jersey. Our Mid-ContinentJersey, Toledo, Ohio, Chalmette, Louisiana, Torrance, California and Martinez, California. 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 | 8.8(3) | 155,000(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 |
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(1) Reflects operating conditions at Toledo processes light, sweet crude, has aeach refinery as of the date of this filing. Changes in complexity and throughput capacity reflect the result of 170,000 bpdcurrent market conditions, in addition to investments made to improve our facilities and amaintain compliance with environmental and governmental regulations. Configurations at each of our refineries are evaluated periodically 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 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 flexibilitythroughput capacity for the Paulsboro refinery would be 13.1 and enables Toledo to run180,000, respectively. As 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 acquisitionresult of the Delaware City refinery, we expanded and upgraded the existing on-site railroad infrastructure, including the expansionreconfiguration 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 Canadain 2020, and subsequent restart of several idled processing units at the Mid-Continent, which we believe at times may provide cost advantages versus traditional Brent based international crudes.Paulsboro refinery in 2022, our Nelson Complexity Index and throughput capacity were adjusted.
As of September 30, 2015,March 31, 2023, PBF Energy owned 85,893,850126,565,088 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 (99.3% and 0.7% as of December 31, 2022, respectively).
Business Developments
Recent significant business developments affecting the Companyus are discussed below.
Chalmette AcquisitionRenewable Diesel Facility
On November 1, 2015,February 16, 2023 we announced that we entered into a definitive agreement with Eni, to partner in a 50-50 joint venture, SBR, that will own 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 therenewable diesel facility that is currently under construction at our Chalmette refinery and related logistics assets (collectively, the "Chalmette Acquisition"(the “Renewable Diesel Facility”). The ChalmetteRenewable Diesel Facility will incorporate certain existing idled assets at the refinery, located outside of New Orleans, Louisiana, is a 189,000 barrel per day, dual-train coking refineryincluding an idle hydrocracker, along with a Nelson Complexity of 12.7 and is capable of processing both light and heavy crude oil.
Chalmette Refining owns 100%newly-constructed pre-treatment unit to establish a 20,000 bpd renewable diesel production facility. Upon consummation 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,joint venture transaction, which is subject to final valuation within ninety dayscustomary closing conditions, including regulatory approvals, Eni will contribute capital totaling $835.0 million, excluding working capital, plus up to an additional $50.0 million that is subject to the achievement of closing. The transaction was financed through a combination of cash on handproject milestones. As stipulated in the pending agreements with Eni, we will continue to manage project execution and borrowings underserve as the Company’s existing revolving credit line. A determinationoperator of the acquisition-date fair valuesfacility once construction is complete. Closing of the assets acquired and the liabilities assumed and the working capital at closing calculationjoint venture transaction 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 threecurrently estimated 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 presencebe consummated in the attractive Petroleum Administration for Defense Districts ("PADD") 3 market.
Pending Torrance Acquisition
On September 29, 2015, PBF Holding entered into a definitive Salesecond or third quarter of 2023. The Renewable Diesel Facility remains under construction and Purchase Agreement (the “Torrance Sale and Purchase Agreement”) with ExxonMobil Oil Corporation and its subsidiary, Mobil Pacific Pipeline Company (together, the "Torrance Sellers"), to purchase the Torrance refinery, and related logistics assets (collectively, the "Torrance Acquisition"). 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 closebe producing renewable diesel, and other products, in the second quarterfirst half of 2016, subject to satisfaction of customary closing conditions. Additionally, as a condition of closing, the Torrance refinery is to be restored to full working order with respect to the event that occurred on February 18, 2015 resulting in damage to the electrostatic precipitator and related systems, and shall have operated 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 12.2.2023.
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 holders 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.
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.
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.
Initial Public Offering of PBFXMerger Transaction
On May 14, 2014, PBFX completed its initial public offering (the “PBFX Offering”) 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 SeptemberNovember 30, 2014,2022, PBF Energy, 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 $135.0 million of cash and $15.0 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 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")Holdings Inc., 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.
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), with the remaining 46.3% limited partner interest held by the public unit holders. PBF LLC also owns all 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”), the general partner of PBFX. 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 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 consist 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 Reserve 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. In addition, 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 connection with the closing 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 Facility 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 PBF LLC (“PBFX ("Holdings”), Riverlands Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of PBF LLC, PBFX, and 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 2023GP LLC closed on a definitive agreement (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 $350.0 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.
J. Aron Intermediation Agreements
On May 29, 2015, PBF Holding entered into amended and restated inventory intermediation agreements (the "A&R Intermediation Agreements") with J. Aron & Company ("J. Aron"“Merger Agreement”) pursuant to which certain termsPBF Energy and PBF LLC acquired all of the existing inventory intermediation agreements were amended, including, among other things, pricingpublicly held common units in PBFX representing limited partner interests in the master liability project not already owned by certain wholly-owned subsidiaries of PBF Energy 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 productsits affiliates (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"“Merger Transaction”). UnderSubsequent to closing on the Merger Transaction, PBFX became an indirect wholly-owned subsidiary of PBF Energy and PBF LLC.
At the Effective Time, pursuant to the terms of the Toledo Crude Oil AcquisitionMerger Agreement, each PBFX Public Common Unit was converted into the right to receive: (i) 0.270 of a share of Class A Common Stock, par value $0.001 per share, of PBF Energy, (ii) $9.25 in cash, without interest and (iii) any cash in lieu of fractional shares of PBF Energy Common Stock to which the holder thereof became entitled upon surrender of such PBFX Public Common Units in accordance with the Merger Agreement. Such Merger Agreement consideration totaled $303.7 million in cash and resulted in the issuance of 8,864,684 shares of PBF Energy Class A common stock. The PBFX Common Units owned by PBF LLC and PBFX Holdings and the non-economic general partner interest remained outstanding and were unaffected by the Merger Transaction. There was no change in ownership of the non-economic general partner interest.
The Merger Transaction was accounted for in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 810, Consolidation. Because we previously acquired substantiallycontrolled PBFX both before and after the Merger Transaction, the change in our ownership interest in PBFX resulting from the Merger Transaction was accounted for as an equity transaction, and no gain or loss was recognized in our Condensed Consolidated Statements of Operations. In addition, the tax effects of the Merger Transaction were recorded as adjustments to other assets, deferred income taxes and additional paid-in capital consistent with ASC 740, Income Taxes (“ASC 740”).
Share Repurchase Program
On December 12, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of PBF Energy's Class A common stock (as amended from time to time, the “Repurchase Program”). On May 3, 2023, our Board of Directors approved an increase in the repurchase authorization amount under the Repurchase Program from $500.0 million to $1.0 billion and extended the program expiration date to December 2025. During the three months ended March 31, 2023, we purchased 4,047,286 shares for $167.6 million, inclusive of commissions paid.
These repurchases were 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 plans. The timing and number of shares repurchased depended on a variety of factors, including price, capital availability, legal requirements and economic and market conditions. We are not obligated to purchase any shares under the Repurchase Program, and repurchases could be suspended or discontinued at any time without prior notice.
Debt and Credit Facilities
Senior Notes
On February 2, 2023, we exercised our rights under the indenture governing PBFX’s 6.875% senior notes (the “PBFX 2023 Senior Notes”) to redeem all of our crude oilthe outstanding PBFX 2023 Senior Notes at a price of 100% of the aggregate principal, plus accrued and unpaid interest through the date of redemption. The aggregate redemption price for our subsidiary's Toledo refinery from MSCG through delivery at various interstate pipeline locations. No early termination penalties were incurred by usthe PBFX 2023 Senior Notes approximated $525.0 million, inclusive of unamortized premium and deferred financing costs of $0.7 million. The redemption was financed using cash on hand.
Tax Receivable Agreement
As of both March 31, 2023 and December 31, 2022, PBF Energy recognized a liability for the Tax Receivable Agreement of $338.6 million, reflecting the estimate of the undiscounted amounts that PBF Energy expected to pay under the agreement, net of any impacts of a deferred tax asset valuation allowance recognized in accordance with ASC 740. As of March 31, 2023, $61.1 million of the Tax Receivable Agreement obligation is recorded as a resultcurrent liability and represents PBF Energy’s best estimate of payments to be made within a year. As future taxable income is recognized, increases in PBF Energy’s Tax Receivable Agreement liability may be necessary in conjunction with the termination. We began sourcing our own crude oil needs for Toledo upon termination.revaluation of deferred tax assets.
Results of Operations
The tables below reflect our consolidated financial and operating highlights for the three and nine months ended September 30, 2015March 31, 2023 and 20142022 (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 operated by PBFX, are all engaged in the refining of crude oil and other feedstocks into petroleum products, and are aggregated intorepresent the Refining segment. PBFX is a publicly traded master limited partnershipan indirect wholly-owned subsidiary of PBF Energy and PBF LLC that operates logisticalcertain logistics assets such as crude oil and refined petroleum products terminals, pipelines and storage facilities. PBFX'sPBFX’s operations are aggregated intorepresent 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 March 31, |
| | | | | 2023 | | 2022 |
| Revenues | | | | | $ | 9,295.0 | | | $ | 9,141.7 | |
| Cost and expenses: | | | | | | | |
| Cost of products and other | | | | | 7,795.3 | | | 8,206.2 | |
| Operating expenses (excluding depreciation and amortization expense as reflected below) | | | | | 781.4 | | | 620.4 | |
| Depreciation and amortization expense | | | | | 141.9 | | | 118.3 | |
| Cost of sales | | | | | 8,718.6 | | | 8,944.9 | |
| General and administrative expenses (excluding depreciation and amortization expense as reflected below) | | | | | 60.0 | | | 53.5 | |
| Depreciation and amortization expense | | | | | 1.9 | | | 1.9 | |
| Change in fair value of contingent consideration, net | | | | | (16.3) | | | 50.3 | |
| | | | | | | |
| (Gain) loss on sale of assets | | | | | (1.6) | | | 0.1 | |
| Total cost and expenses | | | | | 8,762.6 | | | 9,050.7 | |
| Income from operations | | | | | 532.4 | | | 91.0 | |
| Other income (expense): | | | | | | | |
| Interest expense, net | | | | | (18.7) | | | (78.4) | |
| Change in Tax Receivable Agreement liability | | | | | — | | | (19.3) | |
| Change in fair value of catalyst obligations | | | | | 0.7 | | | (4.9) | |
| | | | | | | |
| Other non-service components of net periodic benefit cost | | | | | 0.3 | | | 2.2 | |
| Other income (expense) | | | | | (2.3) | | | — | |
| Income (loss) before income taxes | | | | | 512.4 | | | (9.4) | |
| Income tax expense (benefit) | | | | | 126.5 | | | (6.1) | |
| Net income (loss) | | | | | 385.9 | | | (3.3) | |
| Less: net income attributable to noncontrolling interests | | | | | 3.8 | | | 17.8 | |
| Net income (loss) attributable to PBF Energy Inc. stockholders | | | | | $ | 382.1 | | | $ | (21.1) | |
| Consolidated gross margin | | | | | $ | 576.4 | | | $ | 196.8 | |
Gross refining margin (1) | | | | | $ | 1,405.8 | | | $ | 850.7 | |
| Net income (loss) available to Class A common stock per share: | | | | | | | |
| Basic | | | | | $ | 2.97 | | | $ | (0.18) | |
| Diluted | | | | | $ | 2.86 | | | $ | (0.18) | |
| | |
(1) | See Non-GAAP Financial Measures below. |
(1) See Non-GAAP Financial Measures.
Operating Highlights | | | | | | | | | | | | | | | |
| PBF LLC | | | Three Months Ended March 31, |
| | | | | 2023 | | 2022 |
| Revenues | | | | | $ | 9,295.0 | | | $ | 9,141.7 | |
| Cost and expenses: | | | | | | | |
| Cost of products and other | | | | | 7,795.3 | | | 8,206.2 | |
| Operating expenses (excluding depreciation and amortization expense as reflected below) | | | | | 781.4 | | | 620.4 | |
| Depreciation and amortization expense | | | | | 141.9 | | | 118.3 | |
| Cost of sales | | | | | 8,718.6 | | | 8,944.9 | |
| General and administrative expenses (excluding depreciation and amortization expense as reflected below) | | | | | 59.7 | | | 53.1 | |
| Depreciation and amortization expense | | | | | 1.9 | | | 1.9 | |
| Change in fair value of contingent consideration, net | | | | | (16.3) | | | 50.3 | |
| | | | | | | |
| (Gain) loss on sale of assets | | | | | (1.6) | | | 0.1 | |
| Total cost and expenses | | | | | 8,762.3 | | | 9,050.3 | |
| Income from operations | | | | | 532.7 | | | 91.4 | |
| Other income (expense): | | | | | | | |
| Interest expense, net | | | | | (28.1) | | | (81.0) | |
| Change in fair value of catalyst obligations | | | | | 0.7 | | | (4.9) | |
| | | | | | | |
| Other non-service components of net periodic benefit cost | | | | | 0.3 | | | 2.2 | |
| Other income (expense) | | | | | (2.3) | | | — | |
| Income before income taxes | | | | | 503.3 | | | 7.7 | |
| Income tax expense (benefit) | | | | | 0.4 | | | (8.1) | |
| Net income | | | | | 502.9 | | | 15.8 | |
| Less: net income attributable to noncontrolling interests | | | | | 0.3 | | | 17.8 | |
| Net income (loss) attributable to PBF Energy Company LLC | | | | | $ | 502.6 | | | $ | (2.0) | |
| | | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| Operating Highlights | | Operating Highlights | | Three Months Ended March 31, |
| | 2015 | | 2014 | | 2015 | | 2014 | | | 2023 | | 2022 |
| Key Operating Information | | | | | | | | Key Operating Information | | | | |
| Production (bpd in thousands) | 473.2 |
| | 496.8 |
| | 473.4 |
| | 465.3 |
| Production (bpd in thousands) | | 859.2 | | | 844.3 | |
| Crude oil and feedstocks throughput (bpd in thousands) | 475.4 |
| | 495.5 |
| | 478.1 |
| | 465.9 |
| Crude oil and feedstocks throughput (bpd in thousands) | | 851.2 | | | 832.6 | |
| 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) | | 76.6 | | | 74.9 | |
| Consolidated gross margin per barrel of throughput | | Consolidated gross margin per barrel of throughput | | $ | 7.53 | | | $ | 2.63 | |
| 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) | | $ | 18.35 | | | $ | 11.36 | |
| 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 | | $ | 9.78 | | | $ | 7.95 | |
| | | | | | | | | | | |
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 | | 28 | % | | 34 | % |
| Medium | | Medium | | 33 | % | | 32 | % |
| Light | | Light | | 21 | % | | 18 | % |
| Other feedstocks and blends | 11 | % | | 11 | % | | 11 | % | | 9 | % | Other feedstocks and blends | | 18 | % | | 16 | % |
| Total throughput | | Total throughput | | 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 | % | | 48 | % |
| Distillates and distillate blendstocks | 34 | % | | 36 | % | | 35 | % | | 36 | % | Distillates and distillate blendstocks | | 34 | % | | 34 | % |
| Lubes | 1 | % | | 2 | % | | 2 | % | | 2 | % | Lubes | | 1 | % | | 1 | % |
| Chemicals | 3 | % | | 3 | % | | 3 | % | | 3 | % | Chemicals | | 1 | % | | 2 | % |
| Other | 14 | % | | 13 | % | | 13 | % | | 12 | % | Other | | 18 | % | | 16 | % |
| Total yield | | Total yield | | 101 | % | | 101 | % |
| | | | | | | | | |
| | |
(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 of 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.
The table below summarizes certain market indicators relating to our operating results as reported by Platts.Platts, a division of The McGraw-Hill Companies. Effective RIN basket price is recalculated based on information as reported by Argus.
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2023 | | 2022 |
| | | | | (dollars per barrel, except as noted) |
| Dated Brent crude oil | | | | | $ | 81.09 | | | $ | 101.75 | |
| West Texas Intermediate (WTI) crude oil | | | | | $ | 75.97 | | | $ | 95.22 | |
| Light Louisiana Sweet (LLS) crude oil | | | | | $ | 78.90 | | | $ | 97.50 | |
| Alaska North Slope (ANS) crude oil | | | | | $ | 79.01 | | | $ | 96.13 | |
| Crack Spreads | | | | | | | |
| Dated Brent (NYH) 2-1-1 | | | | | $ | 31.53 | | | $ | 21.69 | |
| WTI (Chicago) 4-3-1 | | | | | $ | 29.07 | | | $ | 17.94 | |
| LLS (Gulf Coast) 2-1-1 | | | | | $ | 34.12 | | | $ | 24.14 | |
| ANS (West Coast-LA) 4-3-1 | | | | | $ | 38.45 | | | $ | 32.84 | |
| ANS (West Coast-SF) 3-2-1 | | | | | $ | 39.16 | | | $ | 29.39 | |
| Crude Oil Differentials | | | | | | | |
| Dated Brent (foreign) less WTI | | | | | $ | 5.12 | | | $ | 6.54 | |
| Dated Brent less Maya (heavy, sour) | | | | | $ | 18.42 | | | $ | 12.24 | |
| Dated Brent less WTS (sour) | | | | | $ | 5.61 | | | $ | 6.74 | |
| Dated Brent less ASCI (sour) | | | | | $ | 7.39 | | | $ | 8.63 | |
| WTI less WCS (heavy, sour) | | | | | $ | 19.30 | | | $ | 15.31 | |
| WTI less Bakken (light, sweet) | | | | | $ | (2.90) | | | $ | (3.49) | |
| WTI less Syncrude (light, sweet) | | | | | $ | (3.04) | | | $ | 0.18 | |
| WTI less LLS (light, sweet) | | | | | $ | (2.93) | | | $ | (2.28) | |
| WTI less ANS (light, sweet) | | | | | $ | (3.04) | | | $ | (0.92) | |
| Effective RIN basket price | | | | | $ | 8.19 | | | $ | 6.28 | |
| Natural gas (dollars per MMBTU) | | | | | $ | 2.74 | | | $ | 4.59 | |
|
| | | | | | | | | | | | | | | |
| | 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, 2015March 31, 2023 Compared to the Three Months Ended September 30, 2014March 31, 2022
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$385.9 million for the three months ended September 30, 2014. TheMarch 31, 2023 compared to net loss of $3.3 million for the three months ended March 31, 2022. PBF LLC net income was $502.9 million for the three months ended March 31, 2023 compared to net income of $15.8 million for the three months ended March 31, 2022. Net income attributable to PBF Energy stockholders was $382.1 million, or $2.86 per diluted share, for the three months ended March 31, 2023 ($2.86 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or $2.76 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 loss attributable to PBF LLC includesEnergy stockholders of $21.1 million, or $(0.18) per diluted share, for the three months ended March 31, 2022 ($(0.18) per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net loss, or $0.35 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 (loss) attributable to PBF LLC’sEnergy stockholders represents PBF Energy’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 March 31, 2023 and 2022, respectively.
Our results for the three months ended September 30, 2015 were negatively impacted by a non-cash special item consisting of a non-cash inventory lower of cost or market ("LCM") adjustment of approximately $208.3 million on a net basis, which includes the reversal of the LCM charge recorded in the second quarter of 2015. The LCM adjustment is a result 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 resultsMarch 31, 2023 were positively impacted by higher crack spreadsspecial items consisting of a change in fair value of contingent consideration of $16.3 million, or $12.1 million net of tax, related to the changes in the East Coast and Mid-Continent partially offset by unfavorable movements in crude oil differentials and the impactestimated fair value of the unplanned downtimeearn-out liability associated with the acquisition of the Martinez refinery (the “Martinez Contingent Consideration”), and a gain on the sale of a parcel of land at our Delaware CityTorrance 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 billionof $1.7 million, or $1.3 million net of tax. Our results for the three months ended September 30, 2015 comparedMarch 31, 2022 were negatively impacted by special items consisting of a change in the fair value of the contingent consideration of $50.3 million, or $37.3 million net of tax, a $12.8 million tax expense associated with the remeasurement of certain deferred tax assets, and pre-tax charges associated with the change in the Tax Receivable Agreement liability of $19.3 million, or $14.3 million net of tax.
Excluding the impact of these special items, when comparing our results to $5.3the three months ended March 31, 2022, we experienced an increase in the demand for our refined products, evidenced by higher average throughput volumes and barrels sold at the majority 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 $9.3 billion for the three months ended September 30, 2014, a decreaseMarch 31, 2023 compared to $9.1 billion for the three months ended March 31, 2022, an increase of approximately $2.0$0.2 billion,, or 38.8%2.2%. Revenues per barrel were $101.97 and $107.58 for the three months ended March 31, 2023 and 2022, respectively, a decrease of 5.2% directly related to lower 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,March 31, 2023, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and Mid-ContinentWest Coast refineries averaged approximately 344,100326,400 bpd, 93,200 bpd, 169,100 bpd and 151,400262,500 bpd, respectively. The decline inFor the three months ended March 31, 2022, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries in 2015 compared to 2014 is primarily due to unplanned downtime at our Delaware City refinery in August 2015averaged approximately 263,100 bpd, 136,700 bpd, 163,100 bpd 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 2015.269,700 bpd, respectively. For the three months ended September 30, 2015, the
March 31, 2023, total barrels sold at our East Coast, Mid-Continent, Gulf Coast and Mid-ContinentWest Coast refineries averaged approximately 355,400381,900 bpd, 115,700 bpd, 178,600 bpd and 179,700336,700 bpd, respectively. For the three months ended September 30, 2014, theMarch 31, 2022, total barrels sold at our East Coast, Mid-Continent, Gulf Coast and Mid-ContinentWest Coast refineries averaged approximately 365,200318,700 bpd, 139,800 bpd, 175,700 bpd and 154,400310,000 bpd, respectively.
Overall average throughput rates were higher in the three months ended March 31, 2023 compared to the same period in 2022, despite turnaround activity at several refineries during the three months ended March 31, 2023. 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 $576.4 million for the three months ended March 31, 2023, compared to $196.8 million for the three months ended March 31, 2022, an increase of approximately $379.6 million. Gross refining margin (as described below in Non-GAAP Financial Measures) totaled $359.2$1,405.8 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$18.35 per barrel of throughput for the three months ended September 30, 2015March 31, 2023 compared to $322.1$850.7 million, or $7.10$11.36 per barrel of throughput for the three months ended September 30, 2014, a decreaseMarch 31, 2022, an increase of $171.3approximately $555.1 million. Excluding the impact of special items,Consolidated gross margin and gross refining margin increased due to improvedfavorable movements in certain crack spreads inand crude oil differentials and higher throughput volumes and barrels sold at the East Coastmajority of our refineries. During the three months ended March 31, 2023 and the Mid-Continent partially offset by unfavorable movements in crude differentials in both the East Coast and the Mid-Continent and lower throughput rates atMarch 31, 2022, our East Coast refineries. In addition, gross margin and gross refining margincalculations were negativelynot impacted by a non-cash LCM adjustment of approximately $208.3special items.
Additionally, our results continue to be impacted by significant costs to comply with the RFS. Total RFS compliance costs were $181.1 million on a net basis resulting fromfor the change in crude oil and refined product prices fromthree months ended March 31, 2023 compared to $194.4 million for the end of the second quarter of 2015 to the end of the third quarter of 2015, which remained below historical costs.three months ended March 31, 2022.
Average industry refining margins in the Mid-Continent were strongerfavorable during the three months ended September 30, 2015 asMarch 31, 2023 compared to the same period in 2014. The WTI (Chicago) 4-3-1 industry crack spread was approximately $24.03 per barrel or 44.5%2022, primarily due to increased refining margins as a result of sustained demand and 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 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$31.53 per barrel, or 26.5%45.4% higher, in the three months ended September 30, 2015March 31, 2023, as compared to $13.91$21.69 per barrel in the same period in 2014. The WTI/Dated Brent differential and2022. Our margins were impacted from our refinery specific slate on the East Coast by strengthened Dated Brent/Maya and WTI/Bakken differentials, were $0.45which increased by $6.18 per barrel and $3.46 lower,$0.59 per barrel, respectively, in comparison to the same period in 2022. The WTI/WCS differential increased to $19.30 per barrel in the three months ended September 30, 2015March 31, 2023 compared to $15.31 in the same period in 2022, which favorably impacted our cost of heavy Canadian crude.
Across the Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was $29.07 per barrel, or 62.0% higher, in the three months ended March 31, 2023 as compared to $17.94 per barrel in the same period in 2022. Our margins were negatively impacted from our refinery specific slate in the Mid-Continent by a weakened WTI/Syncrude differential, which decreased by $3.22 per barrel, slightly offset by a strengthened WTI/Bakken differential, which increased by $0.59 per barrel, in comparison to the same period in 2014. In addition,2022.
On the WTI/Bakken differentialGulf Coast, the LLS (Gulf Coast) 2-1-1 industry crack spread was approximately $3.17$34.12 per barrel, less favorableor 41.3% higher, in the three months ended September 30, 2015March 31, 2023 as compared to $24.14 per barrel in the same period in 2014.2022. Margins on the Gulf Coast were negatively impacted from our refinery specific slate by a weakened WTI/LLS differential, which averaged a premium of $2.93 per barrel for the three months ended March 31, 2023 as compared to a premium of $2.28 per barrel in the same period of 2022.
On the West Coast, the ANS (West Coast) 4-3-1 industry crack spread was $38.45 per barrel, or 17.1% higher, in the three months ended March 31, 2023 as compared to $32.84 per barrel in the same period in 2022. Additionally (West Coast) 3-2-1 industry crack spread was $39.16 per barrel, or 33.2% higher, in the three months ended March 31, 2023 as compared to $29.39 per barrel in the same period in 2022. Our margins on the West Coast were negatively impacted from our refinery specific slate by a weakening WTI/ANS differential, which averaged a premium of $3.04 per barrel for the three months ended March 31, 2023 as compared to a premium of $0.92 per barrel in the same period of 2022.
Operating Expenses— Operating expenses totaled $203.9$781.4 million for the three months ended September 30, 2015March 31, 2023 compared to $202.6$620.4 million for the three months ended September 30, 2014,March 31, 2022, an increase of $1.3approximately $161.0 million, or 0.6%26.0%. Of the total $203.9$781.4 million ofin operating expenses, for the three months ended September 30, 2015, $200.0$749.0 million or $4.57$9.78 per barrel of throughput, related to expenses incurred by the Refining segment, while the remaining $3.8$32.4 million related to expenses incurred by the Logistics segment.segment ($595.6 million or $7.95 per barrel of throughput, and $24.8 million of operating expenses for the three months ended March 31, 2022 related to the Refining and Logistics segments, respectively). The increase in operating expenses was mainly attributable to $11.9 millionoverall increases in natural gas volume and price across our refineries when compared to the same period in 2022. Additionally, we experienced higher maintenance and repair 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 relatedoperational costs due to lower natural gasscheduled turnarounds 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 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 $50.8 million for the three months ended September 30, 2015 compared to $37.3$60.0 million for the three months ended September 30, 2014,March 31, 2023 compared to $53.5 million for the three months ended March 31, 2022, an increase of $13.5approximately $6.5 million or 36.2%12.1%. The increase in general and administrative expenses primarily relates to higher employee compensation costs and administrative expenses related to PBFX. Our general and administrative expenses were higher in comparison to the prior year due to an increase in information technology costs and outside service costs in support of integration related activities. General and administrative costs are comprised of the personnel, facilities and other infrastructure costs necessary to support our refineries.refineries and related logistics assets.
Gain(Gain) Loss on Sale of Assets— Gain on saleThere was a net gain of assets$1.6 million for the three months ended September 30, 2015 was $0.1 millionMarch 31, 2023 related primarily to the sale of railcars which were subsequently leased back.a parcel of land at our Torrance refinery. There was a loss of $0.1 million for the three months ended March 31, 2022 related primarily to the sale of non-operating refinery assets.
Depreciation and Amortization Expense— Depreciation and amortization expense totaled $48.1$143.8 million for the three months ended September 30, 2015March 31, 2023 (including $141.9 million recorded within Cost of sales) compared to $68.0$120.2 million for the three months ended September 30, 2014, a decreaseMarch 31, 2022 (including $118.3 million recorded within Cost of $19.9sales), an increase of approximately $23.6 million. The decreaseincrease was primarily a result of an impairmenta general increase in our fixed asset base due to capital projects and turnarounds completed since the first quarter of 2022.
Change in Fair Value of Contingent Consideration, net— Change in fair value of contingent consideration represented a gain of $16.3 million and a loss of $50.3 million for the three months ended March 31, 2023 and March 31, 2022, respectively. These gains and losses were primarily related to changes in the estimated fair value of the Martinez Contingent Consideration.
Change in Tax Receivable Agreement Liability— There were no changes in the Tax Receivable Agreement liability for the three months ended March 31, 2023. Changes in the Tax Receivable Agreement liability for the three months ended March 31, 2022 represented a charge of $28.5 million incurred$19.3 million. This charge was primarily the result of changes in the third quarter of 2014 partially offset by capital projectsdeferred tax asset valuation allowance recorded in accordance with ASC 740 related to turnarounds completedthe revaluation of deferred tax assets associated with the payments made or expected to be made in 2014,connection with the completed expansion of the crude rail unloading facility at the Delaware City refinery in 2014 and refinery optimization projects at Toledo.Tax Receivable Agreement liability.
Change in Fair Value of Catalyst LeasesObligations— Change in the fair value of catalyst leasesobligations represented a gain of $5.0$0.7 million for the three months ended September 30, 2015March 31, 2023 compared to a gainloss of $5.5$4.9 million for the three months ended September 30, 2014.March 31, 2022. These gains and losses relate to the change in fair 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 on theupon lease termination dates.termination.
Interest Expense, net— InterestPBF Energy interest expense totaled $29.4$18.7 million for the three months ended September 30, 2015March 31, 2023 compared to $24.9$78.4 million for the three months ended September 30, 2014, an increaseMarch 31, 2022, a decrease of $4.5approximately $59.7 million. This increaseThe net decrease is mainly attributable to the issuanceredemption of the 9.25% senior secured notes due 2025 during the third quarter of 2022 and the redemption of the PBFX 2023 Senior Notes andduring the related amortizationfirst quarter of deferred financing fees. This2023, as well as no outstanding balances on our revolving credit facilities as of March 31, 2023. Additionally, there was a $16.9 million increase was offset by decreases in interest expense relatedincome earned during the three months ended March 31, 2023 driven by an increase in cash and higher interest rates in comparison to the termination of our crude and feedstock supply agreement with MSCG, effective July 31, 2014.prior year. 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 $28.1 million and $81.0 million for the three months ended March 31, 2023 and 2022, respectively (inclusive of $9.4 million and $2.6 million, respectively, of incremental interest expense on the affiliate note payable with PBF Energy that eliminates in consolidation in the PBF Energy level).
Income Tax Expense— PBF LLC is organized as a limited liability company and PBFX is a partnership, 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, 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, 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 March 31, 2023 and March 31, 2022, 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 (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, including the impact of noncontrolling interests, for the three months ended March 31, 2023 and March 31, 2022 was 24.9% and 22.4%, 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, we record a noncontrolling interest for the economic interest in PBF LLC held by members other than PBF Energy, with respect to the consolidation of PBFX, the Company recordswe recorded a noncontrolling interest for the economic interests in PBFX held by the public unit holdersunitholders of PBFX.PBFX prior to the close of the Merger Transaction, and with respect to the consolidation of PBF Holding, we record 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 prior to the close of the Merger Transaction 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 public common unit holdersmembers of PBFX.
Nine Months Ended September 30, 2015 Compared toPBF LLC other than PBF Energy and by the Nine Months Ended September 30, 2014
Overview— Net income was $468.2 millionthird-party stockholders of the two Chalmette Refining subsidiaries. PBF Energy’s weighted-average equity noncontrolling interest ownership percentage in PBF LLC for the ninethree months ended September 30, 2015 compared to net income of $553.7 million for the nine months ended September 30, 2014. Net income attributable to PBF LLCMarch 31, 2023 and 2022 was $441.6 million for the nine months ended September 30, 2015 compared to net income attributable to PBF LLC of $546.3 million for the nine months ended September 30, 2014.approximately 0.7% and 0.8%, respectively. The net income or loss attributable to PBF LLC includes PBF LLC’s equity interest in its operating subsidiaries' net income.
Our results for the nine months ended September 30, 2015 were negatively impacted by a non-cash special item consisting of a non-cash inventory lower of cost or market ("LCM") adjustment of approximately $81.1 million on a net basis, which includes the reversalcarrying amount of the LCM charge recorded in the fourth quarter of 2014. The LCM adjustment is a result 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. Excluding the impact of the net change in LCM reserve of $81.1 million,noncontrolling interest on our results were negatively impacted by unfavorable movements in certain crude oil differentials 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.
Revenues— Revenues totaled $9.8 billion for the nine months ended September 30, 2015 compared to $15.3 billion for the nine months ended September 30, 2014, a decrease of approximately $5.5 billion, or 36.2%. For the nine months ended September 30, 2015, the total throughput rates in the East Coast and Mid-Continent refineries averaged approximately 325,400 bpd and 152,700 bpd, respectively. For the nine months ended September 30, 2014, the total throughput rates at our East Coast and Mid-Continent refineries averaged approximately 320,400
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 163,000 bpd, respectively. For the nine months ended September 30, 2014, the total barrels sold at our East Coast and Mid-Continent refineries averaged approximately 341,600 bpd and 152,700 bpd, respectively. 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.
Gross Margin— Gross refining margin (as described below in Non-GAAP Financial Measures) totaled $1,349.0 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 per barrel of throughput, for the nine months ended September 30, 2015 compared to $746.6 million, or $5.89 per barrel of throughput, for the nine months ended September 30, 2014, a decrease of $60.2 million. Excluding the impact of special items, gross margin and gross refining margin decreased due to unfavorable movements in crude differentials partially offset by improved crack spreads in the East Coast and the Mid-Continent and higher throughput rates. In addition, gross margin and gross refining margin were negatively impacted by a non-cash LCM adjustment of approximately $81.1 million on a net basis resulting from the change in crude oil and refined product prices from the year ended 2014 to the end of the third quarter of 2015, which remained below historical costs.
Average industry refining margins in the Mid-Continent were stronger during the nine months ended September 30, 2015 as compared to the same period in 2014. The WTI (Chicago) 4-3-1 industry crack spread was approximately $20.09 per barrel or 15.5% higher in the nine months ended September 30, 2015 as compared to $17.40 per barrel in the same period in 2014. Alternatively, 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 a premium of $1.19 per barrel during the nine months ended September 30, 2015 as compared to a discount of $1.97 per barrel in the same period of 2014.
The Dated Brent (NYH) 2-1-1 industry crack spread was approximately $17.75 per barrel, or 35.8% higher in the nine months ended September 30, 2015 as compared to $13.07 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, in the nine months ended September 30, 2015 as compared to the same period in 2014. In addition, the WTI/Bakken differential was approximately $1.49 per barrel less favorable in the nine months ended September 30, 2015 as compared to the same period in 2014.
Operating Expenses— Operating expenses totaled $635.9 million for the nine months ended September 30, 2015 compared to $682.2 million for the nine months ended September 30, 2014, a decrease of $46.3 million, or 6.8%. Of the total $635.9 million of operating expenses for the nine months ended September 30, 2015, $625.5 million, or $4.79 per barrel of throughput, related to expenses incurred by the Refining segment, while the remaining $10.4 million related to expenses incurred by the Logistics segment. The decrease in operating expenses was mainly attributable to a decrease of $64.8 million in energy related costs primarily attributable to lower natural gas and electricity prices. The decrease was partially offset by an increase of $12.8 million in maintenance and repair expenses directlyCondensed Consolidated Balance Sheets attributable 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 relatednoncontrolling interest is not equal to the Logistics segment consists of costs relatednoncontrolling interest ownership percentage due to the operationeffect of income taxes and maintenance of PBFX's assets subsequentrelated agreements that pertain solely to the PBFX Offering.PBF Energy.
General and Administrative Expenses— General and administrative expenses totaled $125.4 million for the nine months ended September 30, 2015 compared to $106.9 million for the nine months ended September 30, 2014, an increase of approximately $18.4 million or 17.3%. The increase in general and administrative expenses
primarily relates to expenses incurred associated with PBFX and employee compensation costs. Our general and administrative expenses are comprised of the personnel, facilities and other infrastructure costs necessary to support our refineries.
Gain on Sale of Assets— Gain on sale of assets for the nine months ended September 30, 2015 was $1.1 million as compared to $0.2 million for the nine months ended September 30, 2014 related to the sale of railcars which were subsequently leased back.
Depreciation and Amortization Expense— Depreciation and amortization expense totaled $144.4 million for the nine months ended September 30, 2015 compared to $135.9 million for the nine months ended September 30, 2014, an increase of $8.5 million. The increase was primarily a result of capital projects related to turnarounds completed in 2014, the completed expansion 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.
Change in Fair Value of Catalyst Leases— Change in the fair value of catalyst leases represented a gain of $9.0 million for the nine months ended September 30, 2015 compared to a gain of $1.2 million for the nine months ended September 30, 2014. These gains relate to the change in value of the precious metals underlying the sale and leaseback of our refineries’ precious metals catalyst, which we are obligated to repurchase at fair market value on the lease termination dates.
Interest Expense, net— Interest expense totaled $80.2 million for the nine months ended September 30, 2015 compared to $76.7 million for the nine months ended September 30, 2014, an increase of approximately $3.4 million. This increase is mainly attributable to higher interest costs associated with the issuance of the PBFX Revolving Credit Facility and the PBFX Term Loan in connection with the PBFX Offering as well as the issuance 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. 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, financing costs associated with the Inventory Intermediation Agreements with J. Aron, letter of credit fees associated with the purchase of certain crude oils, and the amortization of deferred financing costs.
Noncontrolling Interest— As a result of the initial public offering of PBFX, the Company records a noncontrolling interest for the economic interests in PBFX held by the public unit holders of PBFX. The total noncontrolling interest on the consolidated statement of operations represents the portion of the Company’s earnings or loss attributable to the economic interests held by the public common unit holders of PBFX. The total noncontrolling interest on the balance sheet represents the portion of the Company’s net assets attributable to the economic interests held by the public common unit holders of PBFX.
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 incomeNet Income (Loss) excluding special items, income from continuing operationsgross refining margin excluding special items, EBITDA excluding special items, and gross refining marginnet debt to capitalization excluding special items. The specialSpecial items for the periods presented relate to a LCM adjustment. LCM is a GAAP guideline related to inventory valuation that requires inventory to be stated atnet changes in fair value of contingent consideration, changes in the lower of cost or market. Our inventories are stated at the lower of cost or market. Cost is determined using last-in, first-out (LIFO) inventory valuation methodology, in which the most recently incurred costs are charged to cost ofTax Receivable Agreement liability, gain on land sales, and inventories are valued at base layer acquisition costs. Market is determined basednet tax expense on an assessmentremeasurement 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 adjustmentdeferred tax assets. See “Notes to write down the value of inventory to market value in accordance with GAAP. In subsequent periods, the value of inventory is reassessed and a LCM adjustment is recorded to reflect the net change in the LCM inventory reserve between the prior period and the current period.Non-GAAP Financial Measures” below for more details on all special items disclosed. Although we believe that non-GAAPNon-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 usefulhelpful period-over-period comparisons, such non-GAAPNon-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 months ended March 31, 2023 and 2022 (in millions, except share and per share amounts):
| | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | | | 2023 | | 2022 |
| Net income (loss) attributable to PBF Energy Inc. stockholders | | | | | $ | 382.1 | | | $ | (21.1) | |
| Less: Income allocated to participating securities | | | | | — | | | — | |
| Income (loss) available to PBF Energy Inc. stockholders - basic | | | | | 382.1 | | | (21.1) | |
Add: Net income (loss) attributable to noncontrolling interest (1) | | | | | 3.5 | | | (0.1) | |
Less: Income tax (expense) benefit (2) | | | | | (0.9) | | | 0.1 | |
| Adjusted fully-converted net income (loss) | | | | | $ | 384.7 | | | $ | (21.1) | |
Special Items: (3) | | | | | | | |
| | | | | | | |
| Add: Change in fair value of contingent consideration, net | | | | | (16.3) | | | 50.3 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Add: Change in Tax Receivable Agreement liability | | | | | — | | | 19.3 | |
| Add: Gain on land sales | | | | | (1.7) | | | — | |
| Add: Net tax expense on remeasurement of deferred tax assets | | | | | — | | | 12.8 | |
| Add: Recomputed income tax on special items | | | | | 4.7 | | | (18.0) | |
| Adjusted fully-converted net income excluding special items | | | | | $ | 371.4 | | | $ | 43.3 | |
| Weighted-average shares outstanding of PBF Energy Inc. | | | | | 128,787,779 | | | 120,339,041 | |
Conversion of PBF LLC Series A Units (4) | | | | | 910,457 | | | 927,990 | |
Common stock equivalents (5) | | | | | 4,801,041 | | | 2,282,174 | |
| Fully-converted shares outstanding-diluted | | | | | 134,499,277 | | | 123,549,205 | |
| Diluted net income (loss) per share | | | | | $ | 2.86 | | | $ | (0.18) | |
Adjusted fully-converted net income (loss) per fully exchanged, fully diluted shares outstanding (5) | | | | | $ | 2.86 | | | $ | (0.18) | |
Adjusted fully-converted net income excluding special items per fully exchanged, fully diluted shares outstanding (3) (5) | | | | | $ | 2.76 | | | $ | 0.35 | |
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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 expenses, and gross margin of PBFX. We believe both gross refining margin is anand gross refining margin excluding special items are important measuremeasures of operating performance and providesprovide useful information to investors because it is a betterthey are helpful metric comparison forcomparisons 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 (revenue(revenues less cost of sales)products and other) to industry refining margin benchmarks and crude oil prices as defined in the table below.
GrossNeither gross refining margin nor gross refining margin excluding special items should not be considered an alternative to consolidated gross margin, operating 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 this termthese 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:indicated (in millions, except per barrel amounts):
|
| | | | | | | | | | | | | | | |
| | 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 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
| RECONCILIATION OF CONSOLIDATED GROSS MARGIN TO GROSS REFINING MARGIN AND GROSS REFINING MARGIN EXCLUDING SPECIAL ITEMS | $ | | per barrel of throughput | | $ | | per barrel of throughput |
| Calculation of consolidated gross margin: | | | | | | | |
| Revenues | $ | 9,295.0 | | | $ | 121.34 | | | $ | 9,141.7 | | | $ | 122.00 | |
| Less: Cost of sales | 8,718.6 | | | 113.81 | | | 8,944.9 | | | 119.37 | |
| Consolidated gross margin | $ | 576.4 | | | $ | 7.53 | | | $ | 196.8 | | | $ | 2.63 | |
| Reconciliation of consolidated gross margin to gross refining margin: | | | | | | | |
| Consolidated gross margin | $ | 576.4 | | | $ | 7.53 | | | $ | 196.8 | | | $ | 2.63 | |
| Add: PBFX operating expense | 37.0 | | | 0.48 | | | 29.3 | | | 0.39 | |
| Add: PBFX depreciation expense | 9.0 | | | 0.12 | | | 9.5 | | | 0.13 | |
| Less: Revenues of PBFX | (98.5) | | | (1.29) | | | (89.4) | | | (1.19) | |
| Add: Refinery operating expense | 749.0 | | | 9.78 | | | 595.6 | | | 7.95 | |
| Add: Refinery depreciation expense | 132.9 | | | 1.73 | | | 108.9 | | | 1.45 | |
| Gross refining margin | $ | 1,405.8 | | | $ | 18.35 | | | $ | 850.7 | | | $ | 11.36 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Gross refining margin excluding special items | $ | 1,405.8 | | | $ | 18.35 | | | $ | 850.7 | | | $ | 11.36 | |
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(1) During the third quarter of 2015, the Company recorded an adjustmentSee Notes 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 operating income, but are excluded from the operating results presented in the table in order to make such information comparable between periods.Non-GAAP Financial Measures.
|
| | | | | | | | | | | | | | | |
| | 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 |
|
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(1) 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 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, 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 boardBoard of directors,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 secured notes and other credit facilities. EBITDA, EBITDA excluding special items and Adjusted EBITDA should not be considered as alternatives to operating 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 equity-basedadjustments for items such as stock-based compensation expense, gains (losses) from certain derivative activities andchange in the fair value of catalyst obligations, changes in the Tax Receivable Agreement liability due to factors out of PBF Energy’s control such as changes in tax rates, net change in the fair value of contingent consideration and thecertain other non-cash change in the deferral of gross profit related to the sale of certain finished products and the write down of inventory to the LCM.items. Other companies, including other companies in our industry, may calculate EBITDA, EBITDA excluding special items and Adjusted EBITDA differently than we do, limiting itstheir usefulness as a comparative measure.measures. EBITDA, EBITDA excluding special items and Adjusted EBITDA also hashave limitations as an analytical tooltools 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:
does•do not reflect depreciation expense or our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
does•do not reflect changes in, or cash requirements for, our working capital needs;
does•do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
does•do not reflect realized and unrealized gains and losses from certain hedging activities, which may have a substantial impact on our cash flow;
does•do not reflect certain other non-cash income and expenses; and
excludes•exclude income taxes that may represent a reduction in available cash.
The following tables reconcile net income (loss) as reflected in ourPBF Energy’s results of operations to EBITDA, EBITDA excluding special items and Adjusted EBITDA for the periods presented:presented (in millions):
| | | | | | | | | | | | | | | | | | | | | |
| | | | | Three Months Ended March 31, |
| | | |
| | | | | | | 2023 | | 2022 |
| Reconciliation of net income (loss) to EBITDA and EBITDA excluding special items: | | | | | | | |
| Net income (loss) | | | | | $ | 385.9 | | | $ | (3.3) | |
| Add: Depreciation and amortization expense | | | | | 143.8 | | | 120.2 | |
| Add: Interest expense, net | | | | | 18.7 | | | 78.4 | |
| Add: Income tax expense (benefit) | | | | | 126.5 | | | (6.1) | |
| EBITDA | | | | | $ | 674.9 | | | $ | 189.2 | |
Special Items(3) | | | | | | | |
| | | | | | | |
| Add: Change in fair value of contingent consideration, net | | | | | (16.3) | | | 50.3 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Add: Change in Tax Receivable Agreement liability | | | | | — | | | 19.3 | |
| Add: Gain on land sales | | | | | (1.7) | | | — | |
| EBITDA excluding special items | | | | | $ | 656.9 | | | $ | 258.8 | |
| | | | | | | | | |
| Reconciliation of EBITDA to Adjusted EBITDA: | | | | | | | |
| EBITDA | | | | | $ | 674.9 | | | $ | 189.2 | |
| Add: Stock-based compensation | | | | | 9.2 | | | 7.7 | |
| Add: Change in fair value of catalyst obligations | | | | | (0.7) | | | 4.9 | |
| | | | | | | |
Add: Change in fair value of contingent consideration, net(3) | | | | | (16.3) | | | 50.3 | |
Add: Gain on land sales(3) | | | | | (1.7) | | | — | |
| | | | | | | |
| | | | | | | |
Add: Change in Tax Receivable Agreement liability(3) | | | | | — | | | 19.3 | |
| | | | | | | |
| Adjusted EBITDA | | | | | $ | 665.4 | | | $ | 271.4 | |
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See Notes to Non-GAAP Financial Measures.
|
| | | | | | | | | | | | | | | | | |
| | | | 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 |
|
The total debt to capitalization ratio is calculated by dividing total debt by the sum of total debt and total equity. This ratio is a measurement that management believes is useful to investors in analyzing our leverage. Net debt and the net debt to capitalization ratio are Non-GAAP measures. Net debt is calculated by subtracting cash and cash equivalents from total debt. We believe these measurements are also useful to investors since we have the ability to and may decide to use a portion of our cash and cash equivalents to retire or pay down our debt. Additionally, we have also presented the total debt to capitalization and net debt to capitalization ratios excluding the cumulative effects of special items on equity.
(1) During | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | March 31, | | December 31, |
| | | | | 2023 | | 2022 |
| Balance Sheet Data: | | | | |
| Cash and cash equivalents | $ | 1,616.1 | | | $ | 2,203.6 | |
| Inventories | 2,854.9 | | | 2,763.6 | |
| Total assets | 13,139.1 | | | 13,549.1 | |
| Total debt | 1,438.0 | | | 1,959.1 | |
| | | | |
| Total equity | 5,268.3 | | | 5,056.0 | |
| Total equity excluding special items (6) | $ | 4,859.5 | | | $ | 4,660.5 | |
| | | | | | | |
| Total debt to capitalization ratio | 21 | % | | 28 | % |
| Total debt to capitalization ratio, excluding special items (6) | 23 | % | | 30 | % |
| Net debt to capitalization ratio* | (3) | % | | (5) | % |
| Net debt to capitalization ratio, excluding special items* (6) | (4) | % | | (6) | % |
| | | | | | | |
| * Negative ratio exists as of 3/31/2023 and 12/31/2022 as cash is in excess of debt. |
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See Notes to Non-GAAP Financial Measures.
Notes to Non-GAAP Financial Measures
The following notes are applicable to the third quarterNon-GAAP Financial Measures above:
(1)Represents the elimination of 2015, the Company recordednoncontrolling 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 value its inventoriesreflect PBF Energy’s estimated annualized statutory corporate tax rate of approximately 26.0% and 25.9% for the 2023 and 2022 periods, respectively, applied to the lowernet income (loss) attributable to noncontrolling interest for all periods presented. The adjustment assumes the full exchange of cost or market whichexisting PBF LLC Series A Units as described in (1) above.
(3) Special items:
Change in Fair Value of Contingent Consideration, net - During the three months ended March 31, 2023, we recorded a net change in fair value of the Martinez Contingent Consideration. This change resulted in an increase to income from operations and net income by $16.3 million and $12.1 million, respectively. During the three months ended March 31, 2022, we recorded a change in fair value of the Martinez Contingent Consideration which decreased income from operations and net impactincome by $50.3 million and $37.3 million, respectively.
Gain on Land Sales - During the three months ended March 31, 2023, we recorded a gain on the sale of $208.3a separate parcel of real property acquired as part of the Torrance refinery, but not part of the refinery itself, which increased income from operations and net income by $1.7 million reflectingand $1.3 million, respectively. There were no such gains in the three months ended March 31, 2022.
Change in Tax Receivable Agreement liability - During the three months ended March 31, 2023, there was no 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.Tax Receivable Agreement liability. During the ninethree months ended September 30, 2015,March 31, 2022, we recorded a change in the CompanyTax Receivable Agreement liability that decreased income before income taxes and net income by $19.3 million and $14.3 million, respectively. The changes in the Tax Receivable Agreement liability reflect charges or benefits attributable to changes in PBF Energy’s 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 Expense on Remeasurement of Deferred Tax Assets - The deferred tax valuation allowance was reduced to zero as of December 31, 2022, therefore, there was no impact to our financial statements related to the remeasurement of deferred tax assets as of March 31, 2023. During the three months ended March 31, 2022, we recorded a deferred tax valuation allowance of $316.3 million in accordance with ASC 740 (an increase of $7.8 million when compared to December 31, 2021, which includes a tax benefit of approximately $5.0 million related to our net change in the Tax Receivable Agreement liability and a net tax expense of $12.8 million related to the remeasurement 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 months ended March 31, 2023 and 2022, respectively. Common stock equivalents exclude the effects of performance share units and options and warrants to purchase 29,500 and 14,804,565 shares of PBF Energy Class A common stock and PBF LLC Series A units because they are anti-dilutive for the three months ended March 31, 2023 and March 31, 2022, 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 presentedconsidered anti-dilutive.
(6) Total Equity excluding special items is calculated in the table below:
| | | | | | | | | | | | | | | | | | | | |
| | | | March 31, | | December 31, |
| | | | 2023 | | 2022 |
| | | | (in millions) |
| Total equity | $ | 5,268.3 | | | $ | 5,056.0 | |
| Special Items (Note 3) | | | |
| | | |
| Add: Change in fair value of contingent consideration, net | (29.3) | | | (13.0) | |
| Add: Gain on land sales | (89.5) | | | (87.8) | |
| | | |
| Add: Cumulative historical equity adjustments (a) | (421.6) | | | (421.6) | |
| Less: Recomputed income tax on special items | 131.6 | | | 126.9 | |
| Net impact of special items | (408.8) | | | (395.5) | |
| Total equity excluding special items | $ | 4,859.5 | | | $ | 4,660.5 | |
(a) Refer to the Company’s 2022 Annual Report on Form 10-K (“Notes to Non-GAAP Financial Measures” within Management’s Discussion and Analysis of Financial Condition and Results of Operations) for a listing of special items included in ordercumulative historical equity adjustments prior to make such information comparable between periods.2023.
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, dividend payments, debt service, andshare repurchases under our share repurchase program, requirementsas well as PBF 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 March 31, 2023, 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$437.6 million for the ninethree months ended September 30, 2015March 31, 2023 compared to net cash provided by operating activities of $400.9$312.3 million for the ninethree months ended September 30, 2014.March 31, 2022. Our operating cash flows for the ninethree months ended September 30, 2015 includedMarch 31, 2023 include our net income of $468.2$385.9 million, plusdepreciation and amortization of $150.1 million, deferred income taxes of $42.4 million, pension and other post-retirement benefits costs of $12.0 million and stock-based compensation of $9.2 million, partially offset by a net change in the fair value of the Martinez Contingent Consideration of $16.3 million, net non-cash charges relatingrelated to the change in the fair value of our inventory repurchase obligations of $53.4$4.2 million, depreciationgain on sale of assets of $1.6 million, 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 leaseobligations of $9.0 million and gain on sale of assets of $1.1$0.7 million. In addition, net changes in working capitaloperating assets and liabilities reflected uses of cash of $467.3$139.2 million driven by the timing of inventory purchases, payments for accrued expenses and accounts payablespayable and collections of accounts receivables.receivable. The change in accrued expenses was due primarily to a decrease in renewable energy credit and emissions obligations, as a result of a decrease in our unfunded RINs obligation. Our overall increase in cash provided by operating activities for the three months ended March 31, 2022 was primarily driven by the net changes in operating assets and liabilities reflecting cash proceeds of $143.6 million, driven by the timing of inventory purchases, payments for accrued expenses and accounts payable, and collections of accounts receivable. Change in accrued expenses was due primarily to an increase in renewable energy credit and emissions obligations, as a result of an increase in our unfunded RINs obligation. Our operating cash flows for the ninethree months ended September 30, 2014March 31, 2022 also included our net incomeloss of $553.7$3.3 million, plus net non-cash charges relating to depreciation and amortization of $141.5$124.6 million, pension and other post retirement benefits costs of $16.5 million, and equity-based compensation of $5.4 million, partially offset by the change in the fair value of our inventory repurchase obligationsthe contingent consideration of $31.6$50.3 million primarily associated with the Martinez Contingent Consideration, change in the Tax Receivable Agreement liability of $19.3 million, pension and other post-retirement benefits costs of $11.9 million, stock-based compensation of $7.7 million, change in the fair value of our catalyst lease obligations of $1.2$4.9 million, and gain on sale of assets of $0.2$0.1 million, partially offset by net non-cash charges related to the change in fair value of our inventory repurchase obligations of $40.7 million and deferred income taxes of $6.1 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$378.7 million for the ninethree months ended September 30, 2015March 31, 2023 compared to net cash used in investing activities of $521.3$225.5 million for the ninethree months ended September 30, 2014.March 31, 2022. The net cash flows used in investing activities for the ninethree months ended September 30, 2015March 31, 2023 was comprised of cash outflows of capital expenditures totaling $288.9$239.8 million, expenditures for refinery turnarounds of $39.7$127.7 million, and expenditures for other assets of $7.3$15.6 million, partially offset by $168.3 million in proceeds from the sale of railcars and $0.7 millionassets of $4.4 million. The net maturities of marketable securities. Net cash used in investing activities for the ninethree months ended September 30, 2014March 31, 2022 was comprised of cash outflows of capital expenditures totaling $258.9$118.3 million, expenditures for refinery turnarounds of $58.4$82.2 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.$25.0 million.
Cash Flows from Financing Activities
Net cash used in financing activities was $34.2$646.4 million for the ninethree months ended September 30, 2015March 31, 2023 compared to net cash provided by financing activities of $520.8$6.3 million for the ninethree months ended September 30, 2014.March 31, 2022. For the ninethree months ended September 30, 2015,March 31, 2023, net cash used in financing activities consisted of the redemption of the PBFX 2023 Senior Notes of $525.0 million, the share repurchase of PBF Energy’s Class A Common stock of $167.6 million, distributions and dividends of $26.0 million, payments on finance leases of $2.9 million and deferred financing costs and other of $0.5 million, partially offset by proceeds from insurance premium financing of $61.2 million and transactions made in connection with stock-based compensation plans of $14.4 million. Forthe three months ended March 31, 2022, net cash provided by financing activities consisted primarily of proceeds from the issuanceinsurance premium financing of the PBFX Senior Notes of $350.0 million, net proceeds from the Rail Facility of $30.1 million, and net proceeds from the intercompany loan from PBF Energy of $24.6$47.3 million, partially offset by net repayments on the PBFX amended and restated revolving credit facility (the “PBFX Revolving Credit Facility”) of $25.0 million, distributions and dividends of $169.9$9.8 million, $251.3payments on finance leases of $3.0 million, payments related to the earn-out liability associated with the PBFX acquisition of CPI Operations LLC of $2.6 million, and deferred financing costs and other of $0.6 million.
The cash flow activity of PBF LLC for the period ended March 31, 2023 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 $16.5 million included in cash flows from financing activities, which eliminates in consolidation at PBF Energy.
The cash flow activity of PBF LLC for the period ended March 31, 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 $4.5 million included in cash flows from financing activities, which eliminates in consolidation at PBF Energy.
Debt and Credit Facility
Long-Term Debt Related Transactions
Senior Notes
On February 2, 2023, we exercised our rights under the indenture governing the PBFX 2023 Senior Notes to redeem all of the outstanding PBFX 2023 Senior Notes at a price of 100% of the aggregate principal, plus accrued and unpaid interest through the date of redemption. The aggregate redemption price for the PBFX 2023 Senior Notes approximated $525.0 million plus accrued and unpaid interest, inclusive of unamortized premium and deferred financing costs of $0.7 million. The redemption was financed using cash on hand.
Liquidity
As of March 31, 2023, our operational liquidity was more than $4.6 billion (more than $4.9 billion as of December 31, 2022), which consists of $1.6 billion of cash, excluding cash held at PBFX, and more than $3.0 billion of borrowing availability under our Revolving Credit Facility, which includes our cash on hand. In addition, as of March 31, 2023, PBFX had approximately $516.8 million of net repayments of PBFX revolverliquidity, including approximately $20.3 million in cash, and term loan borrowings, purchases of our Class A common stock of $8.1 million and $9.6 million for deferred financing and other costs. For the nine months ended September 30, 2014, net cash provided by 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 $140.1access to approximately $496.5 million under the PBFX Revolving Credit Facility, borrowing of $35.9 million under the Rail Facility and proceeds from the intercompany loan from PBF Energy of $91.7 million, partially offset by distributions and dividends of $286.3 million, purchases of our Class A common stock of $32.6 million, $15.0 million of net repayments of revolver borrowings, PBFX Offering costs of $5.0 million, and $13.9 million for deferred financing and other costs.
LiquidityFacility.
As of September 30, 2015,March 31, 2023, outstanding letters of credit totaled approximately $278.3 million.
On May 25, 2022, PBF LLC's total liquidity was approximately $1,198.4 million, compared to total liquidityHolding and certain of approximately $1,109.9 millionits wholly-owned subsidiaries, as borrowers or subsidiary guarantors, entered into an amendment of December 31, 2014. Total liquidity isits 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 sum of our cash and cash equivalents plus the amount of availability under the Third Amended and Restated Revolving Credit Agreement ("amended and extended the 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 $2.85 billion in May 2023 through January 2025). The amendments also redefine certain components of the Borrowing Base (as defined in the Revolving Loan"). AsCredit Agreement) to reflect the existence of September 30, 2015two tranches, tranche A which is comprised of existing lenders who have not elected to extend and December 31, 2014, PBFX had approximately $298.5 and $49.9 million, respectively, of borrowing capacitywhose commitments retain the existing maturity date under the PBFX Revolving Credit Facilityexisting revolving credit agreement of May 2, 2023 (the “Tranche A Commitments”) and tranche B, which is availablecomprised 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 $1.45 billion and the Tranche B Commitments total $2.85 billion.
The $500.0 million PBFX senior secured revolving credit facility has a maturity date of July 30, 2023.
49
We are actively monitoring the ongoing volatility in the global oil markets and we continue to fund workingadjust our operational plans to evolving market conditions.
We may, at any time and from time to time, seek to continue to repurchase or retire our outstanding debt securities through cash purchases (and/or exchanges for equity or debt), in open-market purchases, block trades, privately negotiated transactions or otherwise, upon such terms and at such prices as we may determine. We will evaluate any such transactions in light of then-existing market conditions, taking into account our current liquidity and prospects for future access to capital, acquisitions, distributionsthe trading prices of our debt securities, legal requirements and capital expenditurescontractual restrictions and foreconomic and market conditions. The amounts involved in any such transactions, individually or in the aggregate, may be material. We are not obligated to repurchase any of our debt securities other general corporate purposes.than as set forth in the applicable indentures, and repurchases may be made, or if made, discontinued at any time without prior notice.
In addition, PBF LLC had borrowing capacity of $82.5 million and $212.7 million underWe may incur additional indebtedness in 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 relatedfuture, including secured indebtedness, subject to the Chalmette Acquisition, for facility improvementssatisfaction of any debt incurrence and, refinery maintenance and turnarounds.
As notedif applicable, lien incurrence limitation covenants 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.
financing agreements.
Share Repurchases
On August 19, 2014, PBF Energy'sDecember 12, 2022, our Board of Directors authorized the repurchase of up to $200.0$500.0 million of the Company's Series C Units, through the repurchase of PBF Energy’sEnergy's Class A common stock (the "Repurchase Program").stock. On October 29, 2014, PBF Energy'sMay 3, 2023, our Board of Directors approved an additional $100.0 million increase toin the existing Repurchase Program. As of September 30, 2015, the Company has purchased approximately 6.05 million of the Company's Series C Unitsrepurchase authorization amount under the Repurchase Program for a total of $150.8from $500.0 million throughto $1.0 billion and extended the purchaseprogram expiration date to December 2025. To date, we have purchased approximately 8,819,907 shares 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 inEnergy's Class A common stock under the approved Repurchase Program.
These repurchases may be made from time to timeProgram for $345.8 million, inclusive of commissions paid, through various methods, including open market transactions, block trades, acceleratedtransactions. We may make additional 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 isin the future but we are not obligated to purchase any shares under the Repurchase Program, and repurchases maycould be suspended or discontinued at any time without prior notice.
Working Capital
Off-Balance Sheet ArrangementsPBF Energy’s working capital at March 31, 2023 was $1,269.9 million, consisting of $5,866.7 million in total current assets and Contractual Obligations$4,596.8 million in total current liabilities. PBF Energy’s working capital at December 31, 2022 was $1,345.6 million, consisting of $6,546.3 million in total current assets and Commitments$5,200.7 million in total current liabilities. PBF LLC’s working capital at March 31, 2023 was $1,359.5 million, consisting of $5,862.6 million in total current assets and $4,503.1 million in total current liabilities. PBF LLC’s working capital at December 31, 2022 was $1,297.5 million, consisting of $6,544.5 million in total current assets and $5,247.0 million in total current liabilities.
Capital Spending
Capital spending was $383.1 million for the three months ended March 31, 2023 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 Facility at the Chalmette refinery. Capital spending also included costs associated with safety related enhancements and facility improvements at our refineries and logistics assets. Excluding capital expenditures related to our Renewable Diesel Facility, we currently expect to spend an aggregate of approximately $700.0 million to $750.0 million during full-year 2023 for facility improvements and refinery maintenance and turnarounds, as well as expenditures to meet environmental, regulatory and safety requirements.
The Renewable Diesel Facility remains under construction and is expected to be producing renewable diesel, and other products, in the first half of 2023. During the first quarter of 2023, we invested approximately $157.9 million in capital related to the project. We have no off-balance sheet arrangements ascurrently anticipate remaining capital expenditures to complete the project to range from $100.0 million to $150.0 million.
Crude and Feedstock Supply Agreements
Certain of September 30, 2015, other than outstandingour purchases of crude oil under our agreements with foreign national oil companies require that we post letters of credit, inif open terms are exceeded, and arrange for shipment. We pay for the amountcrude 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 $152.7 million.
100,000 bpd of crude oil from Saudi Aramco that is processed at our Paulsboro refinery. In March 2015,connection with the acquisition of the Chalmette refinery we sold 515 of our owned crude railcars and concurrently entered into a lease agreementcontract with Petróleos de Venezuela S.A. (“PDVSA”) for the same railcars. The lease agreements forsupply 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 railcars have varyingparties’ 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 five to seven years. We received a cash payment forpurchasing crude oil under this agreement. In connection with the railcars of approximately $77.6 million and expect to make payments totaling $44.9 million over the termclosing 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 termacquisition 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.
During the nine months ended September 30, 2015,Torrance refinery, we entered into additional railcar leasesa crude supply agreement with Exxon Mobil Oil Corporation (“ExxonMobil”) for up to approximately 60,000 bpd of crude oil that can be processed at our Torrance refinery. In February 2023, ExxonMobil assigned its interest in this crude supply agreement to Green Gate San Ardo LLC. 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 Oil Products 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 LLC, Paulsboro Refining Company LLC and Chalmette Refining (collectively, the “PBF Entities”), 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 March 31, 2023, the last-in, first-out (“LIFO”) carrying value of the J. Aron Products included within Inventories in our Condensed Consolidated Balance Sheets was $239.8 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 March 31, 2023 and December 31, 2022, a portionliability for the Tax Receivable Agreement of $338.6 million, 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 accordance with ASC 740. As of March 31, 2023, $61.1 million of the future. TheseTax Receivable Agreement obligation is recorded as a current liability and represents PBF Energy’s best estimate of payments to be made within a year. As future taxable income is recorded, increases in PBF Energy’s 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 May 5, 2023, 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, 2015May 31, 2023 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 toMay 17, 2023. PBF LLC which in turn willintends to make pro-rata distributions of $0.30approximately $25.4 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.
AsPBF Energy currently intends to continue to pay quarterly cash dividends on its Class A common stock. However, the declaration, amount and payment of September 30, 2015,any future dividends on shares of PBF LLC had $1,096.2 millionEnergy Class A common stock will be at the sole discretion of unused borrowing availability, which includes PBF Holding's cashEnergy’s Board of Directors, and cash equivalentswe 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 $369.4 million, under the Revolving Loan to fund its operations, if necessary. Accordingly, as of September 30, 2015, 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 ratatax distributions to its members, including PBF Energy, necessary to fund in excess of one year’s cash dividend payments by PBF Energy.members).
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.
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, 2015March 31, 2023 and December 31, 2014,2022, we had gross open commodity derivative contracts representing 47.933.4 million barrels and 49.330.1 million barrels, respectively, with an unrealized net gain of $22.8$28.4 million and $31.2unrealized net loss of $13.9 million, respectively. The open commodity derivative contracts as of September 30, 2015March 31, 2023 expire at various times during 20152023 and 2016.2024.
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 19.333.9 million barrels and 18.632.8 million barrels at September 30, 2015March 31, 2023 and December 31, 2014,2022, respectively. The average cost of our hydrocarbon inventories was approximately $95.09
$80.09 and $94.29$80.04 per barrel on a LIFO basis at September 30, 2015March 31, 2023 and December 31, 2014, respectively, excluding2022, respectively. At March 31, 2023 and December 31, 2022, 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.RFS. 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 GHG 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. Compliance with such emission standards may require the pricepurchase 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
Currently, the maximum commitment under our Revolving Credit Facility is $2.85 billion. Borrowings under the Revolving LoanCredit Facility bear interest either at the Alternative Base Rate plus the Applicable Margin or at the Adjusted LIBOR RateTerm SOFR 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 March 31, 2023, 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 $17.7 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 agreement governing the PBFX Term Loan bearRevolving Credit Facility. At March 31, 2023, 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 March 31, 2023. 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 March 31, 2023.
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, 2015March 31, 2023 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 and DCR West Rack are collocatedIn connection with the Delaware Cityacquisition of the Torrance refinery and are locatedrelated 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 Delaware's coastal zone where certain activities are regulated underconnection with the Delaware Coastal Zone act.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. In May 2022, the SCAQMD requested that we present a settlement proposal to resolve the NOV. On June 14, 2013, two administrative appeals were filed by16, 2022, we presented a settlement offer of $456,820 to settle the Sierra ClubNOV. 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. On December 15, 2022, the SCAQMD accepted our counter proposal. On March 13, 2023, the parties executed the settlement agreement.
On February 17, 2017, in Arnold Goldstein, et al. v. Exxon Mobil Corporation, et al., we and Delaware Audubon (collectively the "Appellants") regarding an air permit Delaware CityPBF LLC, and our subsidiaries, PBF Western Region LLC and Torrance 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 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 Delaware City Rail Terminal violate Delaware’s Coastal Zone Act.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 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 first appeal is Number 2013-1 beforecertified 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 State Coastal Zone Industrial Control Board (the “CZ Board”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 second appeal is beforeCourt ordered that the Environmental Appeals Board (the "EAB")TAC be struck and appeals Secretary’s Order No. 2013-A-0020. The CZ Boardthat 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 first appealmotion. Instead, the Court ordered the parties to submit draft orders for the Court’s consideration. After considering the parties’ proposed orders, on July 16, 2013,5, 2022, the Court issued a final order ruling that Plaintiffs’ Motion to Substitute Navarro as
Class Representative was denied and ruled in favordecertifying both of Delaware City RefiningPlaintiffs’ proposed Air and Ground Subclasses. The order provided that the Statecase 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 DelawareAppeals 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. On January 13, 2023, the Defendants filed a motion for judgment on the pleadings. On January 23, 2023, the Plaintiff filed its opposition to the Defendants’ motion. Defendants’ reply to Plaintiff’s opposition was filed on January 30, 2023. Defendants’ motion was scheduled to be heard by the Court on February 13, 2023. On February 27, 2023, the Court issued an order granting our motion for judgment on the pleadings and dismissed Plaintiff’s trespass claim with prejudice and granted Plaintiff leave to amend his nuisance claims in conformity with the Appellants’ appeal for lackorder if he can do so consistent with Rule 11 of standing. The Appellants appealed that decisionthe Federal Rules of Civil Procedures. On March 27, 2023, Plaintiff filed a Fourth Amended Complaint (“FAC”) relating to the Delaware Superior Court, New Castle County, Case No. N13A-09-001 ALR, and Delaware City Refining andremaining nuisance claims. On April 7, 2023, we responded to the State of DelawareFAC by filing a motion to dismiss for Plaintiff’s failure to establish standing to bring the nuisance claims. On April 17, 2023, Plaintiff filed cross-appeals.its opposition to our motion. On April 24, 2023, we filed our reply to Plaintiff’s opposition. A hearing on our motion was scheduled for May 8, 2023 but, on May 2, 2023, the second appeal beforeCourt took the EAB, case no. 2013-06,hearing on the motion off calendar. The Court may set a new hearing date if it decides that oral arguments are necessary. We presently believe the outcome of this litigation will not have a material impact on our financial position, results of operations, or cash flows.
On 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 amendments to Regulation 6-5: Particulate Emissions from Refinery Fluidized Catalytic Cracking Units - 2021 Amendment (“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 (“CEQA”) 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. On December 9, 2022, we filed a Motion to Augment/Correct the Administrative Record regarding various documents that the BAAQMD is currently withholding and do not plan to include in the administrative record. On December 30, 2022, the BAAQMD filed its opposition to our motion. On January 12, 2023, we filed our reply to the BAAQMD’s opposition. The hearing on our motion was held on January 13, 2014,February 2, 2023. At the hearing, although the Court partially denied our motion concerning documents where the BAAQMD asserted the attorney client privilege, the Court held that CEQA places a heavy burden on the BAAQMD in justifying withholding documents based on the deliberative privilege. At the Court’s request, the parties agreed to a process whereby they jointly identified approximately 50 of the withheld/redacted documents for the Court to review. The Court ruled on those documents on February 22, 2023, ordering full disclosure of two types of documents related to the BAAQMD’s cost-estimates for the rule. In compliance with the Court’s order, in March 2023, the BAAQMD produced additional or less-redacted versions of previously produced documents. On March 27, 2023, the Court entered a stipulation establishing the schedule going forward with the bench trial currently scheduled for
September 20, 2023. 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 EAB ruled in favorcosts of DCRcleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the Statecosts of certain health studies. As discussed more fully above, certain of our sites are subject to these laws and dismissedwe 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 appeal for lackenvironment. Analogous state laws impose similar responsibilities and liabilities on responsible parties. In our current normal operations, we have generated waste, some of jurisdiction. The Appellants also filedwhich falls within the statutory definition of a Notice“hazardous substance” and some of Appeal withwhich may have been disposed of at sites that may require cleanup under Superfund.
As 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 Supreme Court affirmed the Superior Court decision.
On July 24, 2013, the Delaware Department of Natural Resources and Environmental Control ("DNREC") issued a Notice of Administrative Penalty Assessment and Secretary’s Order to Delaware City Refining for alleged air emission violations that occurred during the re-startultimate outcomes of the refinery in 2011 and subsequent topending matters discussed above are uncertain, we cannot currently estimate the re-start. The penalty assessment seeks $460,200 in penalties and $69,030 in cost recovery for DNREC’s expenses associated with investigationfinal amount or timing 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 Louisiana Department of Environmental Quality ("LDEQ") to resolve self-reported deviations from refinery operations relating to certain Clean Air Act Title V permit conditions, limits and other requirements that occurred prior to acquisition by the Company. LDEQ commenced an enforcement action against Chalmette Refining on November 14, 2014 by issuing a Consolidated Compliance Order and Notice of Potential Penalty ("CCO/NOPP") covering deviations from 2009 and 2010. Chalmette Refining and LDEQ subsequently entered into a disputetheir resolution agreement, which suspends enforcement of the CCO/NOPP while negotiations are ongoing. It is possible that LDEQ will assess an administrative penalty against Chalmette Refining, but any such amount is not expected to behave a material to the Company.
Item 1A. Risk Factors
There have been no material changes from the risk factors disclosedimpact on our financial position, results of operations, or cash flows, individually or in the section entitled "Risk Factors" in the Prospectus.aggregate.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Exchange of the Company'sPBF LLC Series A Units forto PBF Energy Class A common stockCommon Stock
In the three months ended September 30, 2015, a totalMarch 31, 2023, there were no exchanges of 85,025 of the Company'sPBF LLC 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)4(a)(2) of the Securities Act. We received no other consideration in connection with these exchanges. No exchanges were made by any of our directors or current executive officers.
Share Repurchase Program
The Company has repurchased its Series C Units through the repurchase offollowing table summarizes PBF Energy’s Class A common stock in open market transactions. The following table summarizes PBF Energy Class A common stockshare repurchase activity during the three months ended September 30, 2015:first quarter of 2023:
|
| | | | | | | | | | | | | |
| | 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 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | | Total Number of Shares Purchased (1) | | Average Price Paid per Share (2) | | Total Number of Shares Purchased as Part of Publicly Announced Plan | | Approximately Dollar Value of Shares that May Yet Be Purchased Under Plan (in millions) (3) |
| January 1-31, 2023 | | 852,923 | | | $ | 38.10 | | | 852,923 | | | $ | 811.1 | |
| February 1-28, 2023 | | — | | | — | | | — | | | — | |
| March 1-31, 2023 | | 3,194,363 | | | 42.26 | | | 3,194,363 | | | 676.0 | |
| Total | | 4,047,286 | | | $ | 41.39 | | | 4,047,286 | | | $ | 676.0 | |
(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.
(3) On December 12, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of PBF Energy’s Class A common stock. On May 3, 2023, our Board of Directors approved an increase in the repurchase authorization amount under the Repurchase Program from $500.0 million to $1.0 billion and extended the program expiration date to December 2025. 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 have been effected through Rule 10b5-1 plans. The timing and number of shares repurchased depended on a variety of factors, including price, capital availability, legal requirements and economic and market conditions. We were not obligated to purchase any shares under the Repurchase Program, and repurchases could be suspended or discontinued at any time without prior notice.
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** | | Sale and PurchaseSubscription Agreement by and between PBF HoldingEnergy Company LLC and ExxonMobil Oil Corporation and its subsidiary, Mobil Pacific Pipeline CompanyEni Sustainable Mobility S.p.A, dated as of September 29, 2015.(IncorporatedFebruary 16, 2023. (incorporated by reference to Exhibit 2.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated October 1, 2015February 23, 2023 (File No. 001-35764)). |
| | |
10.1(2) | | Third Amended and Restated Employment Agreement dated as of February 20, 2023 between Karen B. Davis and 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(incorporated by reference to Exhibit 10.1 filed with PBF Energy Inc.’s Current Report's current report on Formform 8-K dated September 11, 2015February 15, 2023 (File No. 001-35764)). |
| | |
31.1* | | Form of 2023 Executive Restricted Stock Agreement (incorporated by reference to Exhibit 10.2 filed with PBF Energy Inc.'s current report on form 8-K dated February 15, 2023 (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 Karen B. Davis, 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,Karen B. Davis, 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 Karen B. Davis, 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,Karen B. Davis, 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. |
**† | 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.Indicates management compensatory plan or arrangement. |
| (1) | This exhibit should not be deemed to be "filed"“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: | May 5, 2023 | PBF Energy Company LLC | By: | /s/ Karen B. Davis |
| | | | |
Date | December 8, 2015 | | By: | /s/ Erik Young |
| | | | Erik Young
Karen B. Davis
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.May 5, 2023 | | By: | /s/ Karen B. Davis |
(1) | This exhibit should not be deemed to be "filed" for purposes of Section 18 of the Exchange Act. | | | Karen B. Davis
Senior Vice President, Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer) |
(2) | Indicates management compensatory plan or arrangement. | | | |