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News

PBF Energy Reports First Quarter 2017 Results, Declares Dividend of $0.30 Per Share

May 04, 2017

PARSIPPANY, N.J., May 4, 2017 /PRNewswire/ -- PBF Energy Inc. (NYSE: PBF) today reported first quarter 2017 income from operations of $0.7 million as compared to a net loss from operations of $5.4 million for the first quarter of 2016. Excluding special items, first quarter 2017 income from operations was $16.7 million as compared to a loss from operations of $64.5 million for the first quarter of 2016. Special items in the first quarter 2017 results include a net, non-cash, after-tax loss of $9.7 million, or $0.09 per share, lower-of-cost-or-market ("LCM") inventory adjustment which decreased operating income.

The company reported a first quarter 2017 net loss of $20.0 million, and a net loss attributable to PBF Energy Inc. of $31.1 million or $0.29 per share. This compares to a net loss of $23.3 million, and a net loss attributable to PBF Energy Inc. of $29.4 million or $0.30 per share for the first quarter 2016. Adjusted fully-converted net loss for the first quarter 2017, excluding special items, was $22.7 million, or $0.20 per share on a fully-exchanged, fully-diluted basis, as described below, compared to an adjusted fully-converted net loss of $66.5 million, or $0.65 per share, for the first quarter 2016. PBF Energy's financial results reflect the consolidation of PBF Logistics LP (NYSE: PBFX), a master limited partnership of which PBF indirectly owns the general partner and approximately 44.2% of the limited partner interests as of quarter-end.

Tom Nimbley, PBF Energy's Chairman and CEO, said, "Operationally, we successfully executed PBF's first turnaround at Chalmette during the first quarter. In April, we finished our turnaround at Delaware City and commenced the Torrance turnarounds, which are scheduled for completion by the end of June. We are making significant investments in our refining system which should result in improved operating performance and reliability and this was demonstrated by Chalmette's first quarter results."

PBF Energy Inc. Declares Dividend
The company announced today that it will pay a quarterly dividend of $0.30 per share of Class A common stock on May 31, 2017, to holders of record as of May 16, 2017.

Outlook
For the second quarter 2017, we expect East Coast total throughput to average 320,000 to 340,000 barrels per day; Mid-Continent total throughput is expected to average 150,000 to 160,000 barrels per day; Gulf Coast total throughput is expected to average 175,000 to 185,000 barrels per day and West Coast total throughput is expected to average 110,000 to 120,000 barrels per day.

For the full-year 2017, we expect East Coast total throughput to average 325,000 to 345,000 barrels per day; Mid-Continent total throughput is expected to average 145,000 to 155,000 barrels per day; Gulf Coast total throughput is expected to average 170,000 to 180,000 barrels per day and West Coast total throughput is expected to average 140,000 to 150,000 barrels per day.

Adjusted Fully-Converted Results
Adjusted fully-converted results assume the exchange of all PBF Energy Company LLC Series A Units and dilutive securities into shares of PBF Energy Inc. Class A common stock on a one-for-one basis, resulting in the elimination of the noncontrolling interest and a corresponding adjustment to the company's tax provision.

Non-GAAP Measures
This earnings release, and the discussion during the management conference call, may include references to non-GAAP (Generally Accepted Accounting Principles) measures including Adjusted Fully-Converted Net Income (Loss), Adjusted Fully-Converted Net Income (Loss) per fully-exchanged, fully-diluted share, gross refining margin, gross refining margin per barrel of throughput, EBITDA (Earnings before Interest, Income Taxes, Depreciation and Amortization), Adjusted EBITDA and projected EBITDA related to the refinery acquisitions. PBF believes that non-GAAP financial measures provide useful information about its operating performance and financial results. However, these measures have important limitations as analytical tools and should not be viewed in isolation or considered as alternatives for, or superior to, comparable GAAP financial measures. PBF's non-GAAP financial measures may also differ from similarly named measures used by other companies. See the accompanying tables and footnotes in this release for additional information on the non-GAAP measures used in this release and reconciliations to the most directly comparable GAAP measures.

Conference Call Information
PBF Energy's senior management will host a conference call and webcast regarding quarterly results and other business matters on Thursday, May 4, 2017, at 8:30 a.m. ET.  The webcast is available through PBF Energy's website, http://www.pbfenergy.com, and the call is accessible by dialing (888) 632-3385 or (785) 424-1674, conference ID: PBFQ117. The audio replay will be available two hours after the end of the call through May 22, 2017, by dialing (800) 839-0866 or (402) 220-0662.

Forward-Looking Statements
Statements in this press release relating to future plans, results, performance, expectations, achievements and the like are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which may be beyond the company's control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors and uncertainties that may cause actual results to differ include but are not limited to the risks disclosed in the company's filings with the SEC, as well as the risks disclosed in PBF Logistics LP's SEC filings and any impact PBF Logistics LP may have on the company's credit rating, cost of funds, employees, customer and vendors; risk relating to the securities markets generally; and the impact of adverse market conditions affecting the company, unanticipated developments, regulatory approvals, changes in laws and other events that negatively impact the company. All forward-looking statements speak only as of the date hereof. The company undertakes no obligation to revise or update any forward-looking statements except as may be required by applicable law.

About PBF Energy Inc.
PBF Energy Inc. (NYSE:PBF) is one of the largest independent refiners in North America, operating, through its subsidiaries, oil refineries and related facilities in California, Delaware, Louisiana, New Jersey and  Ohio. Our mission is to operate our facilities in a safe, reliable and environmentally responsible manner, provide employees with a safe and rewarding workplace, become a positive influence in the communities where we do business, and provide superior returns to our investors.

PBF Energy Inc. also currently indirectly owns the general partner and approximately 44.1% of the limited partnership interest of PBF Logistics LP (NYSE: PBFX).

 

 

PBF ENERGY INC. AND  SUBSIDIARIES

EARNINGS RELEASE TABLES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share data)








Three Months Ended



March 31,



2017


2016

Revenues


$

4,754,473



$

2,800,185







Costs and expenses:






Cost of sales, excluding depreciation


4,196,767



2,412,095



Operating expenses, excluding depreciation


451,367



299,999



General and administrative expenses


43,830



37,582



Loss on sale of assets


883





Depreciation and amortization expense


60,932



55,933





4,753,779



2,805,609








Income (loss) from operations


694



(5,424)








Other (expenses) income:






Change in fair value of catalyst leases


(2,588)



(2,885)



Interest expense, net


(37,183)



(37,527)


Income (loss) before income taxes


(39,077)



(45,836)


Income tax expense (benefit)


(19,047)



(22,500)


Net income (loss)


(20,030)



(23,336)



Less: net income attributable to noncontrolling interests


11,047



6,052


Net income (loss) attributable to PBF Energy Inc. stockholders


$

(31,077)



$

(29,388)








Net income (loss) available to Class A common stock per share:







Basic


$

(0.29)



$

(0.30)




Diluted


$

(0.29)



$

(0.30)




Weighted-average shares outstanding-basic


108,760,374



97,809,384




Weighted-average shares outstanding-diluted


108,760,374



97,809,384








Dividends per common share


$

0.30



$

0.30








Adjusted fully-converted net income (loss) and adjusted fully-converted net income (loss) per fully exchanged, fully diluted shares outstanding (Note 1):







Adjusted fully-converted net income (loss)


$

(32,473)



$

(30,862)




Adjusted fully-converted net income (loss) per fully exchanged, fully diluted share


$

(0.29)



$

(0.30)




Adjusted fully-converted shares outstanding - diluted


112,603,580



102,765,801








See Footnotes to Earnings Release Tables

 

 

PBF ENERGY INC. AND SUBSIDIARIES

RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP

(Unaudited, in thousands, except share and per share data)







Three Months Ended

RECONCILIATION OF NET INCOME (LOSS) TO


March 31,

ADJUSTED FULLY-CONVERTED NET INCOME (LOSS) (Note 1)


2017


2016

Net income (loss) attributable to PBF Energy Inc. stockholders


$

(31,077)



$

(29,388)



Income (loss) allocated to participating securities


(271)




Income (loss) available to PBF Energy Inc. stockholders - basic


(31,348)



(29,388)



Add:

Net income (loss) attributable to noncontrolling interest (Note 2)


(1,856)



(2,441)



Less:

Income tax benefit (expense) (Note 3)


731



967


Adjusted fully-converted net income (loss)


$

(32,473)



$

(30,862)



Special Items (Note 4):






Add:

Net non-cash LCM inventory adjustment (Note 5)


16,039



(59,063)



Add:

Recomputed income taxes on special items (Note 5)


(6,313)



23,389


Adjusted fully-converted net income (loss) excluding special items (Note 4)


$

(22,747)



$

(66,536)












Weighted-average shares outstanding of PBF Energy Inc.


108,760,374



97,809,384


Conversion of PBF LLC Series A Units (Note 6)


3,843,206



4,956,417


Common stock equivalents (Note 7)





Adjusted fully-converted shares outstanding - diluted


112,603,580



102,765,801











Adjusted fully-converted net income (loss) (per fully exchanged, fully diluted
shares outstanding)


$

(0.29)



$

(0.30)



Adjusted fully-converted net income (loss) excluding special items (per fully
exchanged, fully diluted shares outstanding) (Note 4)


$

(0.20)



$

(0.65)
















Three Months Ended

RECONCILIATION OF INCOME FROM OPERATIONS


March 31,

TO INCOME FROM OPERATIONS EXCLUDING SPECIAL ITEMS


2017


2016

Income (loss) from operations


$

694



$

(5,424)



Special Items (Note 4):






Add:

Net non-cash LCM inventory adjustment (Note 5)


16,039



(59,063)


Income (loss) from operations excluding special items (Note 4)


$

16,733



$

(64,487)



See Footnotes to Earnings Release Tables

 

 

PBF ENERGY INC. AND SUBSIDIARIES

RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP

EBITDA RECONCILIATIONS (Note 8)

(Unaudited, in thousands)






Three Months Ended



March 31,

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA


2017


2016

Net income (loss)


$

(20,030)



$

(23,336)


Add:

Depreciation and amortization expense


60,932



55,933


Add:

Interest expense, net


37,183



37,527


Add:

Income tax expense (benefit)


(19,047)



(22,500)


EBITDA


$

59,038



$

47,624


Special Items (Note 4):





Add:

Net non-cash LCM inventory adjustment (Note 5)


16,039



(59,063)


EBITDA excluding special items (Note 4)


$

75,077



$

(11,439)







RECONCILIATION OF EBITDA TO ADJUSTED EBITDA





EBITDA


$

59,038



$

47,624


Add:

Stock based compensation


6,025



3,350


Add:

Net non-cash change in fair value of catalyst leases


2,588



2,885


Add:

Non-cash LCM inventory adjustment (Note 5)


16,039



(59,063)


Adjusted EBITDA


$

83,690



$

(5,204)



See Footnotes to Earnings Release Tables

 

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(Unaudited, in thousands)






March 31,


December 31,


2017


2016

Balance Sheet Data:






Cash, cash equivalents and marketable securities

$

346,145



$

786,298



Inventories

2,085,958



1,863,560



Total assets

7,512,237



7,621,927



Total debt

2,112,113



2,148,234



Total equity

2,512,223



2,570,684







Total equity excluding special items (Note 16)

$

2,863,640



$

2,912,375







Total debt to capitalization ratio (Note 16)

46

%


46

%


Total debt to capitalization ratio, excluding special items (Note 16)

42

%


42

%


Net debt to capitalization ratio (Note 16)

41

%


35

%


Net debt to capitalization ratio, excluding special items (Note 16)

38

%


32

%





SUMMARIZED STATEMENT OF CASH FLOW DATA

(Unaudited, in thousands)






Three Months Ended March 31,


2017


2016

Cash flows used in operations

$

(165,364)



$

(20,597)


Cash flows used in investing activities

(188,974)



(145,879)


Cash flows used in financing activities

(85,845)



(37,523)


Net decrease in cash and cash equivalents

(440,183)



(203,999)


Cash and cash equivalents, beginning of period

746,274



944,320


Cash and cash equivalents, end of period

306,091



740,321


  Marketable securities

40,054



234,408


Net cash, cash equivalents and marketable securities

$

346,145



$

974,729




See Footnotes to Earnings Release Tables

 

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

CONSOLIDATING FINANCIAL INFORMATION (Note 9)

(Unaudited, in thousands)












Three Months Ended March 31, 2017


Refining


Logistics


Corporate


 Eliminations


Consolidated
Total

Revenues

$

4,750,197



$

60,477



$



$

(56,201)



$

4,754,473


Depreciation and amortization

53,817



5,352



1,763





60,932


Income (loss) from operations (Note 17)

10,530



36,041



(42,278)



(3,599)



694


Interest expense, net

918



7,984



28,281





37,183


Capital expenditures

167,216



19,467



2,261





188,944













Three Months Ended March 31, 2016


Refining


Logistics


Corporate


 Eliminations


Consolidated
Total

Revenues

$

2,800,185



$

36,549



$



$

(36,549)



$

2,800,185


Depreciation and amortization

52,389



1,847



1,697





55,933


Income (loss) from operations

5,246



26,044



(36,714)





(5,424)


Interest expense, net

972



7,229



29,326





37,527


Capital expenditures (Note 15)

138,913



1,126



5,700





145,739















Balance at March 31, 2017


Refining


Logistics


Corporate


 Eliminations


Consolidated
Total

Total Assets (Note 18)

$

6,295,641



$

749,696



$

496,903



$

(30,003)



$

7,512,237

























Balance at December 31, 2016


Refining


Logistics


Corporate


 Eliminations


Consolidated
Total

Total Assets (Note 18)

$

6,419,950



$

756,861



$

482,979



$

(37,863)



$

7,621,927












See Footnotes to Earnings Release Tables

 

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

MARKET INDICATORS AND KEY OPERATING INFORMATION

(Unaudited, amounts in thousands except as indicated)








Three Months Ended



March 31,

Market Indicators (dollars per barrel) (Note 10)


2017


2016

Dated Brent Crude


$

53.57



$

34.24


West Texas Intermediate (WTI) crude oil


$

51.70



$

33.45


Light Louisiana Sweet (LLS) crude oil


$

53.39



$

35.34


Alaska North Slope (ANS) crude oil


$

53.82



$

33.98


Crack Spreads:






Dated Brent (NYH) 2-1-1


$

11.58



$

11.18



WTI (Chicago) 4-3-1


$

11.19



$

8.83



LLS (Gulf Coast) 2-1-1


$

12.03



$

8.71



ANS (West Coast) 4-3-1


$

16.52



$

17.46


Crude Oil Differentials:






Dated Brent (foreign) less WTI


$

1.87



$

0.79



Dated Brent less Maya (heavy, sour)


$

8.95



$

8.04



Dated Brent less WTS (sour)


$

3.31



$

0.94



Dated Brent less ASCI (sour)


$

4.08



$

4.27



WTI less WCS (heavy, sour)


$

12.93



$

11.34



WTI less Bakken (light, sweet)


$

0.92



$

1.56



WTI less Syncrude (light, sweet)


$

(2.20)



$

(4.44)



WTI less ANS (light, sweet)


$

(2.12)



$

(0.53)


Natural gas (dollars per MMBTU)


$

3.06



$

1.98







Key Operating Information





Production (barrels per day ("bpd") in thousands)


742.7



655.9


Crude oil and feedstocks throughput (bpd in thousands)


738.0



650.1


Total crude oil and feedstocks throughput (millions of barrels)


66.4



59.2


Gross margin per barrel of throughput


$

1.01



$

0.66


Gross refining margin, excluding special items, per barrel of throughput (Note 4,
Note 11)


$

7.75



$

4.99


Refinery operating expense per barrel of throughput (Note 12)


$

6.58



$

5.01


Crude and feedstocks (% of total throughput) (Note 13)






Heavy


40

%


14

%


Medium


29

%


50

%


Light


16

%


23

%


Other feedstocks and blends


15

%


13

%



Total throughput


100

%


100

%

Yield (% of total throughput):






Gasoline and gasoline blendstocks


52

%


48

%


Distillates and distillate blendstocks


29

%


31

%


Lubes


1

%


1

%


Chemicals


2

%


4

%


Other


16

%


16

%



Total yield


100

%


100

%






See Footnotes to Earnings Release Tables

 

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

 SUPPLEMENTAL OPERATING INFORMATION

(Unaudited, amounts in thousands except as indicated)











Three Months Ended



March 31,



2017


2016

Supplemental Operating Information - East Coast (Delaware City and
Paulsboro)





Production (bpd in thousands)


317.0



312.2


Crude oil and feedstocks throughput (bpd in thousands)


320.3



316.2


Total crude oil and feedstocks throughput (millions of barrels)


28.8



28.8


Gross margin per barrel of throughput


$

(0.09)



$

(2.00)


Gross refining margin, excluding special items, per barrel of throughput (Note 4,
Note 11)


$

5.96



$

4.26


Refinery operating expense per barrel of throughput (Note 12)


$

5.18



$

5.18


Crude and feedstocks (% of total throughput) (Note 13):






Heavy


37

%


9

%


Medium


36

%


66

%


Light


10

%


10

%


Other feedstocks and blends


17

%


15

%



Total throughput


100

%


100

%

Yield (% of total throughput):






Gasoline and gasoline blendstocks


47

%


47

%


Distillates and distillate blendstocks


30

%


26

%


Lubes


2

%


3

%


Chemicals


1

%


2

%


Other


19

%


21

%



Total yield


99

%


99

%










Supplemental Operating Information - Mid-Continent (Toledo)





Production (bpd in thousands)


126.5



160.1


Crude oil and feedstocks throughput (bpd in thousands)


123.8



157.7


Total crude oil and feedstocks throughput (millions of barrels)


11.1



14.4


Gross margin per barrel of throughput


$

(1.67)



$

0.32


Gross refining margin, excluding special items, per barrel of throughput (Note 4,
Note 11)


$

7.65



$

4.12


Refinery operating expense per barrel of throughput (Note 12)


$

6.53



$

4.93


Crude and feedstocks (% of total throughput) (Note 13):






Medium


46

%


40

%


Light


53

%


57

%


Other feedstocks and blends


1

%


3

%



Total throughput


100

%


100

%

Yield (% of total throughput):






Gasoline and gasoline blendstocks


54

%


52

%


Distillates and distillate blendstocks


35

%


37

%


Chemicals


7

%


6

%


Other


6

%


7

%



Total yield


102

%


102

%










See Footnotes to Earnings Release Tables

 

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

 SUPPLEMENTAL OPERATING INFORMATION

(Unaudited, amounts in thousands except as indicated)








Three Months Ended



March 31,



2017


2016

Supplemental Operating Information - Gulf Coast (Chalmette)





Production (bpd in thousands)


162.7



183.6


Crude oil and feedstocks throughput (bpd in thousands)


155.6



176.2


Total crude oil and feedstocks throughput (millions of barrels)


14.0



16.0


Gross margin per barrel of throughput


$

1.72



$

3.60


Gross refining margin, excluding special items, per barrel of throughput (Note 4,
Note 11)


$

9.20



$

7.07


Refinery operating expense per barrel of throughput (Note 12)


$

6.23



$

4.80


Crude and feedstocks (% of total throughput) (Note 13):






Heavy


41

%


37

%


Medium


24

%


29

%


Light


13

%


17

%


Other feedstocks and blends


22

%


17

%



Total throughput


100

%


100

%

Yield (% of total throughput):






Gasoline and gasoline blendstocks


50

%


48

%


Distillates and distillate blendstocks


29

%


32

%


Chemicals


2

%


6

%


Other


19

%


15

%



Total yield


100

%


101

%






Supplemental Operating Information - West Coast (Torrance) (Note 14)





Production (bpd in thousands)


136.5



N/A


Crude oil and feedstocks throughput (bpd in thousands)


138.3



N/A


Total crude oil and feedstocks throughput (millions of barrels)


12.5



N/A


Gross margin per barrel of throughput


$

0.39



N/A


Gross refining margin, excluding special items, per barrel of throughput (Note 4,
Note 11)


$

10.33



N/A


Refinery operating expense per barrel of throughput (Note 12)


$

10.24



N/A


Crude and feedstocks (% of total throughput) (Note 13):







Heavy


83

%


N/A



Medium


1

%


N/A



Other feedstocks and blends


16

%


N/A




Total throughput


100

%


N/A


Yield (% of total throughput):







Gasoline and gasoline blendstocks


64

%


N/A



Distillates and distillate blendstocks


21

%


N/A



Other


14

%


N/A




Total yield


99

%


N/A






See Footnotes to Earnings Release Tables


 

 

PBF ENERGY INC. AND SUBSIDIARIES

RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP

GROSS REFINING MARGIN / GROSS REFINING MARGIN PER BARREL OF THROUGHPUT (Note 11)

(Unaudited, in thousands, except per barrel amounts)










Three Months Ended


Three Months Ended


March 31, 2017


March 31, 2016

RECONCILIATION OF GROSS MARGIN TO GROSS
REFINING MARGIN

$


per barrel of
throughput


$


per barrel of
throughput

Gross margin

$

66,926



$

1.01



$

38,855



$

0.66



Less:  Revenues of PBFX

(60,477)



(0.91)



(36,549)



(0.62)



Add:  Affiliate cost of sales of PBFX

1,215



0.02



2,661



0.05



Add:  Refinery operating expenses

436,853



6.58



296,639



5.01



Add:  Refinery depreciation

53,927



0.81



52,596



0.89


Gross refining margin

$

498,444



$

7.51



$

354,202



$

5.99


   Special Items (Note 4):









Add: Non-cash LCM inventory adjustment (Note 5)

16,039



0.24



(59,063)



(1.00)


Gross refining margin excluding special items (Note 4)

$

514,483



$

7.75



$

295,139



$

4.99










See Footnotes to Earnings Release Tables

 

 

PBF ENERGY INC. AND SUBSIDIARIES

EARNINGS RELEASE TABLES

FOOTNOTES TO EARNINGS RELEASE TABLES


(1) Adjusted fully-converted information is presented in this table as management believes that these Non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful to investors to compare the company's results across the periods presented and facilitates an understanding of the company's operating results. The company also uses these measures to evaluate its operating performance. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The differences between adjusted fully-converted and GAAP results are explained in footnotes 2 through 7.


(2)  Represents the elimination of the noncontrolling interest associated with the ownership by the members of PBF Energy Company LLC other than PBF Energy Inc., as if such members had fully exchanged their Series A Units for shares of PBF Energy's Class A common stock.


(3) Represents an adjustment to reflect the company's statutory corporate tax rate of approximately 39.4% and 39.6% for the 2017 and 2016 periods, respectively, applied to the net income (loss) attributable to the noncontrolling interest for all periods presented.  The adjustment assumes the full exchange of existing PBF Energy Company LLC Series A Units as described in footnote 2.


(4) The Non-GAAP measures presented include adjusted fully-converted net income excluding special items, income from continuing operations excluding special items, EBITDA excluding special items, and gross refining margin excluding special items. The special item for the periods presented relate to a lower of cost or market ("LCM") adjustment. LCM is a GAAP guideline related to inventory valuation that requires inventory to be stated at the lower of cost or market. Our inventories are stated at the lower of cost or market. Cost is determined using last-in, first-out ("LIFO") inventory valuation methodology, in which the most recently incurred costs are charged to cost of sales and inventories are valued at base layer acquisition costs. Market is determined based on an assessment of the current estimated replacement cost and net realizable selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may exceed market values. In such instances, we record an adjustment to write down the value of inventory to market value in accordance with GAAP. In subsequent periods, the value of inventory is reassessed and an LCM adjustment is recorded to reflect the net change in the LCM inventory reserve between the prior period and the current period. Although we believe that Non-GAAP financial measures excluding the impact of special items provide useful supplemental information to investors regarding the results and performance of our business and allow for useful period-over-period comparisons, such Non-GAAP measures should only be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP.


(5)  During the three months ended March 31, 2017, the company recorded an adjustment to value its inventories to the lower of cost or market which resulted in a net pre-tax charge of approximately $16.0 million reflecting the change in the lower of cost or market inventory reserve from $596.0 million at December 31, 2016 to $612.0 million at March 31, 2017. During the three months ended March 31, 2016, the company recorded an adjustment to value its inventories to the lower of cost or market which resulted in a net pre-tax benefit of approximately $59.1 million reflecting the change in the lower of cost or market inventory reserve from $1,117.3 million at December 31, 2015 to $1,058.3 million at March 31, 2016.

 

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. Income taxes related to the net LCM adjustment were recalculated using the company's statutory corporate tax rate of approximately 39.4% and 39.6% for the three months ended March 31, 2017 and 2016, respectively.


(6) Represents an adjustment to weighted-average diluted shares outstanding to assume the full exchange of existing PBF LLC Series A Units as described in footnote 2 above.


(7) Represents weighted-average diluted shares outstanding assuming the full exchange of common stock equivalents, including options and warrants for PBF LLC Series A 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 options and warrants to purchase 7,364,616 and 4,945,360 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, 2017 and 2016, respectively.


(8) EBITDA (Earnings before Interest, Income Taxes, Depreciation and Amortization) and Adjusted EBITDA are supplemental measures of performance that are not required by, or presented in accordance with GAAP.  We use these Non-GAAP financial measures as a supplement to our GAAP results in order to provide additional metrics on factors and trends affecting our business.  EBITDA and Adjusted EBITDA are measures of operating performance that are not defined by GAAP and should not be considered substitutes for net income as determined in accordance with GAAP.  In addition, because EBITDA and Adjusted EBITDA are not calculated in the same manner by all companies, they are not necessarily comparable to other similarly titled measures used by other companies.  EBITDA and Adjusted EBITDA have their limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.


(9) We operate in two reportable segments; Refining and Logistics.  Our operations that are not included in the Refining and Logistics segments are included in Corporate.  As of March 31, 2017, the Refining segment includes the operations of our oil refineries and related facilities in Delaware City, Delaware, Paulsboro, New Jersey, Toledo, Ohio, New Orleans, Louisiana and Torrance, California.  The Logistics segment includes the operations of PBF Logistics LP ("PBFX"), a growth-oriented master limited partnership which owns or leases, operates, develops and acquires crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets.  PBFX's assets consist of rail and truck terminals and unloading racks, tank farms and pipelines, a substantial portion of which were acquired from or contributed by PBF LLC and are located at, or nearby, the company's refineries. PBFX provides various rail, truck and marine terminaling services, pipeline transportation services and storage services to PBF Holding and/or its subsidiaries and third party customers through fee-based commercial agreements. In connection with the contribution by PBF LLC of the limited liability interests in PNGPC to PBFX in February 2017, the accompanying segment information has been retrospectively adjusted to include the historical results of PNGPC in the Logistics segment for all periods presented prior to such contribution.

 

PBFX currently does not generate significant third party revenue and intersegment related-party revenues are eliminated in consolidation. Prior to the PBFX initial public offering, PBFX was not considered to be a separate reportable segment. From a PBF Energy perspective, the company's chief operating decision maker evaluates the Logistics segment as a whole without regard to any of PBFX's individual segments.


(10)  As reported by Platts.


(11)  Gross refining margin and gross refining margin per barrel of throughput are Non-GAAP measures because they exclude refinery operating expenses, refinery depreciation and amortization and gross margin of PBFX. Gross refining margin per barrel is gross refining margin, divided by total crude and feedstocks throughput. We believe they are important measures of operating performance and they provide useful information to investors because gross refining margin per barrel is a helpful metric comparison to the industry refining margin benchmarks shown in the Market Indicators Tables, as the industry benchmarks do not include a charge for refinery operating expenses and depreciation. Other companies in our industry may not calculate gross refining margin and gross refining margin per barrel in the same manner. Gross refining margin and gross refining margin per barrel of throughput have their limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.


(12)  Represents refinery operating expenses, excluding depreciation and amortization, divided by total crude oil and feedstocks throughput.


(13)  We define heavy crude oil as crude oil with American Petroleum Institute ("API") gravity less than 24 degrees.  We define medium crude oil as crude oil with API gravity between 24 and 35 degrees.  We define light crude oil as crude oil with API gravity higher than 35 degrees.


(14)  Includes activity for the Torrance refinery subsequent to its acquisition on July 1, 2016.


(15)  The Refining segment includes capital expenditures of $2.7 million for the working capital settlement related to the acquisition of the Chalmette refinery that was finalized in the first quarter of 2016.


(16) 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 which is presented in our annual and interim filings and management believes this ratio 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 and marketable securities 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. Marketable securities included in net debt fully collateralize PBFX's Term Loan. Additionally, as described in footnote 4 above, we have also presented the total debt to capitalization and net debt to capitalization ratios excluding the cumulative effects of special items on equity.


 





March 31,


December 31,





2017


2016

Total debt

$

2,112,113



$

2,148,234


Total equity

2,512,223



2,570,684


Total capitalization

$

4,624,336



$

4,718,918






Total debt

$

2,112,113



$

2,148,234


Total equity excluding special items

2,863,640



2,912,375


Total capitalization excluding special items

$

4,975,753



$

5,060,609






Total equity

$

2,512,223



$

2,570,684


  Special Items (Note 4)




    Add: Non-cash LCM inventory adjustment (Note 5)

612,027



595,988


    Add: Change in tax receivable agreement liability

(25,508)



(25,508)


    Less: Recomputed income taxes on special items (Note 5)

(235,102)



(228,789)


       Net impact of special items to equity

351,417



341,691


Total equity excluding special items (Note 4)

$

2,863,640



$

2,912,375









Total debt

$

2,112,113



$

2,148,234


    Less: Cash, cash equivalents and marketable securities

346,145



786,298


Net debt




$

1,765,968



$

1,361,936









Total debt to capitalization ratio

46

%


46

%

Total debt to capitalization ratio, excluding special items

42

%


42

%

Net debt to capitalization ratio

41

%


35

%

Net debt to capitalization ratio, excluding special items

38

%


32

%

 

(17) The Logistics segment includes 100% of the income from operations of the Torrance Valley Pipeline Company LLC ("TVPC"), as TVPC is consolidated by PBFX. PBFX records net income attributable to noncontrolling interest for the 50% equity interest in TVPC held by PBF Holding. PBF Holding (included in the Refining segment) records equity income in investee related to its 50% noncontrolling ownership interest in TVPC. For the purposes of the consolidated PBF Energy financial statements, PBF Holding's equity income in investee and PBFX's net income attributable to noncontrolling interest eliminate in consolidation. As the acquisition of PBFX's 50% interest in TVPC was completed in the third quarter of 2016, there was no impact on comparative March 31, 2016 disclosures.


(18) The Logistics segment includes 100% of the assets of TVPC as TVPC is consolidated by PBFX. PBFX records a noncontrolling interest for the 50% equity interest in TVPC held by PBF Holding. PBF Holding (included in the Refining segment) records an equity investment in TVPC reflecting its noncontrolling ownership interest. For the purposes of the consolidated PBF Energy financial statements, PBFX's noncontrolling interest in TVPC and PBF Holding's equity investment in TVPC eliminate in consolidation.

 

 

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SOURCE PBF Energy Inc.