PBF Energy Q2 Earnings Call Highlights

PBF Energy NYSE: PBF reported second-quarter adjusted net income of $6.22 per share and adjusted EBITDA of $1.24 billion, as management pointed to strong refined-product markets, low inventories and global supply disruptions as key drivers of the quarter. Chief Executive Officer Matt Lucey said disruptions tied to conflicts in the Middle East and Eastern Europe have reshaped crude and product markets. He said that, initially, roughly 15 million barrels per day of crude and 5 million barrels per day of refined products were effectively trapped inside the strait, although crude markets have shown flexibility through alternative routing, strategic-reserve supply and lower refining utilization in some regions.

Management said PBF’s refining footprint is positioned to benefit from its crude-slate flexibility and access to stable supply in the Americas. Lucey said the company has not experienced, and does not expect to experience, crude availability issues that would affect its operations. Product inventories will be slow to rebuild, Lucey said, adding that the eventual restocking of inventories should support refining margins in coming quarters. During the question-and-answer session, Lucey said the floor for refining margins has “unquestionably” risen in the current cycle, though he did not quantify a long-term margin outlook. Non-Executive Chairman Tom Nimbley said crude normalization could occur over “weeks to months,” while product-market normalization could take “months to quarters.” Paul Davis, senior vice president of supply, trading and optimization, said backwardated crude and product markets have encouraged hand-to-mouth inventory management. He said PBF is participating in Gulf Coast dock demand and East Coast export demand, while its commercial team is focused on keeping refineries supplied and moving products out daily.

Senior Vice President and Head of Refining Mike Bukowski said all PBF refineries are currently operating well. The company restarted fire-affected units at its Martinez refinery in May and has been producing its full product slate there since then. PBF plans to begin a hydrocracker turnaround at Martinez in the third quarter, with completion expected in October. The company also reached an agreement in July to repurchase two hydrogen plants that serve its Torrance refinery from Air Products.