- Fourth quarter income from operations of $955.6 million (excluding special items, fourth quarter income from operations of $873.0 million)
- Year-ending consolidated cash balance of approximately $2.2 billion
- Reduced consolidated debt in 2022 by more than $2.3 billion
- Repurchased over 5 million shares for approximately $189 million to date
- Completed purchase of remaining public stake in PBF Logistics LP
- Announces partnership with Eni Sustainable Mobility for St. Bernard Renewables Project
According to the company’s website news release on February 16, 2023, PBF Energy Inc. (NYSE: PBF) reported fourth quarter 2022 income from operations of $955.6 million as compared to income from operations of $291.1 million for the fourth quarter of 2021. Excluding special items, fourth quarter 2022 income from operations was $873.0 million as compared to income from operations of $294.5 million for the fourth quarter of 2021.
The company reported fourth quarter 2022 net income of $656.1 million and net income attributable to PBF Energy Inc. of $637.8 million or $4.86 per share. This compares to net income of $189.1 million, and net income attributable to PBF Energy Inc. of $165.3 million or $1.36 per share for the fourth quarter of 2021. Special items in the fourth quarter 2022 results, which increased net income by a net, after-tax benefit of $59.7 million, or $0.45 per share, primarily consisted of net changes in the fair value of contingent consideration, slightly offset by charges related to a change in the Tax Receivable Agreement liability. Adjusted fully-converted net income for the fourth quarter 2022, excluding special items, was $582.9 million, or $4.41 per share on a fully-exchanged, fully-diluted basis, as described below, compared to adjusted fully-converted net income of $156.8 million or $1.28 per share, for the fourth quarter 2021. The fourth quarter 2022 effective tax rate of approximately 29 percent was impacted by numerous factors, including the purchase of the remaining public stake of PBF Logistics LP, and is expected to return to more normalized levels of approximately 26 percent for 2023.
Tom Nimbley, PBF Energy's Chairman and CEO, said, "2022 was a transformative year for PBF. The resurgence of demand for our products and our reliable operations allowed PBF to end 2022 in the strongest financial position in our ten-year history as a public company. During 2022, PBF eliminated over $2.3 billion in debt, effectively finishing the year with zero net debt. Our operations provided the financial resources to continually invest in our base business, expand into the renewable fuels space and increase shareholders returns." Mr. Nimbley continued, "The effort to strengthen our financial position is ongoing. In 2023, we further reduced leverage by redeeming $525 million of debt."
Mr. Nimbley concluded, "Looking ahead, we have a lot of work to complete in 2023. We ran our assets hard in response to demand last year. Consequently, we are focused on investing in and maintaining our assets to ensure our operations remain safe, reliable and available to supply the market. We expect that the market in 2023 will continue to support strong financial results for PBF and provide the opportunity for increased shareholder returns."
Income from operations was $4,153.2 million for the year ended December 31, 2022 as compared to income from operations of $597.2 million for the year ended December 31, 2021. Excluding special items, income from operations was $4,201.5 million for the year ended December 31, 2022 as compared to a loss from operations of $42.8 million for the year ended December 31, 2021. Adjusted fully-converted net income for the year ended December 31, 2022, excluding special items, was $2,963.5 million, or $23.36 per share on a fully-exchanged, fully-diluted basis, as compared to an adjusted fully-converted net loss, excluding special items, of $302.3 million, or $(2.50) per share, for the year ended December 31, 2021.
PBF Energy Inc. Declares Dividend
The company announced today that it will pay a quarterly dividend of $0.20 per share of Class A Common stock on March 16, 2023, to shareholders of record at the close of business on March 1, 2023.
St. Bernard Renewables Joint Venture
As announced earlier, February 16, 2023, PBF and Eni Sustainable Mobility ("Eni") have entered into definitive agreements to partner in a 50-50 joint venture, St. Bernard Renewables LLC ("SBR"), which will own the renewable diesel project currently under construction co-located with PBF's Chalmette refinery in Louisiana. Upon consummation of the transaction, which is subject to customary closing conditions, including regulatory approvals, Eni will contribute capital totaling $835 million, excluding working capital, plus up to an additional $50 million that is subject to the achievement of project milestones. PBF will continue to manage project execution and will serve as the operator once construction is complete.
This strategic partnership will leverage the experience and expertise of Eni Sustainable Mobility and PBF. Together with Ecofining™ technology, Eni brings its experience in biorefining that led to the world's first conversion of a refinery into a biorefinery in Porto Marghera (Venice) in 2014, and to the second converted biorefinery that has been working in Gela (Sicily) since 2019. The company also provides its worldwide knowledge in supplying sustainable feedstock sourcing for HVO, mainly based on oily waste and residues, and raw materials that do not compete with the food chain, coupled with access to international markets beyond PBF's footprint in the United States. PBF brings experience in large capital project execution and fuels manufacturing as well as access to the California renewables market through its existing logistics assets. The joint venture reflects both partners' commitment to deliver more sustainable transportation fuels using low carbon intensity feedstocks.
Commenting on the announced partnership with Eni Sustainable Mobility, PBF President Matthew Lucey said, "We're excited to enter this strategic partnership with Eni Sustainable Mobility, a global leader in biorefining. The St. Bernard Renewables project will benefit greatly from PBF and Eni's complementary strengths and expertise. The project will utilize existing processing infrastructure and diverse inbound and outbound logistics and is ideally situated to support growing demand for low-carbon fuels." Mr. Lucey continued, "Our partnership with Eni signals a major milestone for PBF and demonstrates our commitment to contributing diversified sources of energy to the global mix while lowering the carbon intensity of our operations and the products we manufacture."
Strategic Update and Outlook
PBF's operational and financial performance in 2022 allowed the company to reestablish a firm foundation upon which we can build a sustainable and diversified future. At year-end, we had approximately $2.2 billion of cash. Including our recent repayment of the $525 million PBF Logistics LP notes, we reduced consolidated debt by over $2.8 billion since the start of 2022. Our unsecured debt is now below pre-pandemic levels and our net debt to capitalization was effectively zero at year-end 2022. We simplified the corporate structure with the consolidation of PBF Logistics LP in December of 2022. We reinstated a $0.20 per share quarterly dividend and implemented a $500 million share repurchase program, of which we have executed approximately $188.9 million, including $32.5 million in 2023. We believe these measures have generated significant value for our investors in the near-term and, more importantly, demonstrate our commitment to fiscal discipline, long-term value and shareholder returns.
As always, the safety and reliability of our core operations are paramount. We continue investing in all our assets and expect full-year 2023 refining capital expenditures, excluding capital expenditures related to the SBR project ("St. Bernard Renewables"), to be in the $700 to $750 million range.
The SBR project remains under construction and is expected to be producing renewable diesel, and other products, in the first half of 2023. Total projected capital costs for the SBR facility and related project infrastructure are expected to be in the $600 to $650 million range. Total project spend is approximately $450 million through the end of 2022.
In 2023, PBF is committed to conducting extensive maintenance and multiple turnarounds across our refining system. Our goal is to sustain safe, reliable and environmentally responsible operations to supply the markets with our vital products. The bulk of our planned maintenance is scheduled to be completed in the first half of 2023. Our current turnaround schedule is as follows, subject to change:
- East Coast - Delaware Coker and Hydrocracker (Spring)
- Mid-Continent - FCC (Q1 Winter), Hydrocracker (Fall)
- Gulf Coast - FCC (Q1 Winter)
- West Coast - Martinez Crude/Coker (Q1 Winter), Torrance Hydrocracker (Spring), Torrance FCC/Alky (Fall)
Timing and throughput ranges provided reflect current expectations and are subject to change based on market conditions and other factors. PBF's total refining system throughput for full-year 2023 is expected to be approximately 935,000 to 995,000 barrels per day.
Additional annual guidance information for full-year 2023, includes the following expectations:
- Average refining system operating expenses of $8.00 to $8.50 per barrel;
- General and administrative expenses in the $200 to $250 million range (excludes incentive and equity compensation);
- Total depreciation and amortization expense in the $500 to $550 million range; and
- Approximate effective tax rate of 26 percent.
Guidance provided constitutes forward-looking information and is based on current PBF Energy operating plans, company assumptions and company configuration. All figures and timelines are subject to change based on a variety of factors, including market and macroeconomic factors, as well as company strategic decision-making and overall company performance.
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) excluding special items, Adjusted Fully-Converted Net Income (Loss) per fully-exchanged, fully-diluted share, Income (Loss) from operations excluding special items, gross refining margin, gross refining margin excluding special items, gross refining margin per barrel of throughput, EBITDA (Earnings before Interest, Income Taxes, Depreciation and Amortization), EBITDA excluding special items, Adjusted EBITDA and net debt to capitalization. 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, February 16, 2023, at 8:30 a.m. ET. The call is being webcast and can be accessed at PBF Energy's website, http://www.pbfenergy.com. The call can also be accessed by dialing (877) 869-3847 or (201) 689-8261. The audio replay will be available approximately two hours after the end of the call and will be available through the company's website.
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 include, but are not limited to, the statements regarding the SBR joint venture transaction in whole, part or at all. These forward-looking statements include, without limitation, the company's expectations with respect to timing of the completion of the proposed transaction; the potential joint venture's post-transaction plans, objectives, expectations and intentions with respect to future earnings and operations of SBR; and the conditions to the closing of the proposed transaction and the possibility that the proposed transaction will not close. 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, our ability to operate safely, reliably, sustainably and in an environmentally responsible manner; our ability to successfully diversify our operations; the risk that our expansion into the renewable fuels space, including renewable diesel production, may not occur on expected timeframes or at all, and we may not realize expected benefits from any such projects; our expectations with respect to our capital spending and turnaround projects; risks associated with our obligation to buy Renewable Identification Numbers and related market risks related to the price volatility thereof; the possibility that we might reduce or not pay further dividends in the future; certain developments in the global oil markets and their impact on the global macroeconomic conditions; risks relating to the securities markets generally; the impact of changes in inflation, interest rates and capital costs; and the impact of market conditions, 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.
Change in Fair Value of Contingent Consideration, net - During the three months and year ended December 31, 2022, we recorded net changes in fair value of contingent consideration related to the earn-out liability associated with the acquisition the of the Martinez refinery, offset by the recognition of contingent assets associated with this acquisition. These changes in estimate increased income from operations by $82.6 million ($61.2 million, net of tax) for the three months ended December 31, 2022 and decreased income from operations by $48.3 million ($35.8 million, net of tax) for the year ended December 31, 2022. Change in fair value of contingent consideration during the three months and year ended December 31, 2021 decreased income from operations by $6.2 million and $32.4 million ($4.6 million and $24.0 million, net of tax), respectively.
Loss (Gain) on Extinguishment of Debt - During the year ended December 31, 2022, we recorded a net pre-tax loss on the extinguishment of debt related to the redemption of our 9.25% senior secured notes due 2025 (the "2025 Senior Secured Notes"), partially offset by the gain recognized on the repurchase of a portion of the 6.00% senior unsecured notes due 2028 (the "2028 Senior Notes") and the 7.25% senior unsecured notes due 2025 (the "2025 Senior Notes"). These nonrecurring charges decreased income before taxes by $66.1 million ($49.0 million, net of tax). During the three months and year ended December 31, 2021, we recorded a pre-tax gain on the extinguishment of debt related to repurchases of the 2028 Senior Notes and 2025 Senior Notes of $19.6 million and $79.9 million ($14.5 million and $59.2 million, net of tax, respectively). There were no such gains or losses in any other periods presented.
Gain on Land Sales - During the three months and year ended December 31, 2021, we recorded a gain on the sale of PBFX real-property at the East Coast Terminals. The gain increased income from operations and net income by $2.8 million and $2.1 million, respectively. There were no such gains in all other periods presented.
Change in Tax Receivable Agreement liability - During the three months ended December 31, 2022, we recorded a change in the Tax Receivable Agreement liability that decreased income before taxes and net income by $2.1 million and $1.6 million, respectively. During the year ended December 31, 2022, we recorded a change in the Tax Receivable Agreement liability that decreased income before taxes and net income by $290.3 million and $215.1 million, respectively. During the three months and year ended December 31, 2021, we recorded a change in the Tax Receivable Agreement liability that decreased income before taxes by $48.3 million ($35.8 million, net of tax). 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, inclusive of 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.
Net Tax Benefit on Remeasurement of Deferred Tax Assets - During the year ended December 31, 2022, we recorded a decrease to our deferred tax valuation allowance of $308.5 million (reducing our deferred tax valuation allowance to zero), in accordance with ASC 740, of which $233.8 million related to a tax benefit with respect to the remeasurement of deferred tax assets and the balance related to our net changes in the Tax Receivable Agreement liability. During the three months ended December 31, 2021, we recorded a decrease to the deferred tax valuation allowance of $46.1 million, which includes a tax benefit of approximately $12.5 million related to our net change in the Tax Receivable Agreement liability and a net tax benefit of $33.6 million related primarily to the remeasurement of deferred tax assets. During the year ended December 31, 2021, we recorded a decrease to the deferred tax valuation allowance of $49.9 million, which includes a tax benefit of approximately $12.5 million related to our net change in the Tax Receivable Agreement liability and net tax benefit of $37.4 million related primarily to the remeasurement of deferred tax assets. The deferred tax valuation allowance is recorded in accordance with ASC 740, Income Taxes. There were no such benefits or expenses in all other periods presented.
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.
