Q2 2024 PBF Energy Inc Earnings Call

Uh huh.

Okay.

Speaker Change: Good day, everyone and welcome to the PBF Energy second quarter 2024 earnings conference call and webcast. At this time all participants have been placed on a listen only mode and the floor will be opened for your questions. Following management's prepared remarks.

Speaker Change: Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note that this conference is being recorded.

It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir you may begin.

Quarter, we reported an adjusted net loss of 54 cents per share and adjusted EBITDA of $94 8 million.

As Matt stated our results did not meet our expectations.

We estimate the impact of the extended turnaround activity to be in the $150 million range with approximately $100 million of the lost opportunity associated with operations and $50 million related to the sale of inventory builds into the weaker late quarter cash market.

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Earnings per share included a two cents per share impact related to an increase in our effective tax rate to approximately 28%.

Speaker Change: Merrily due to the tax deduction for employee compensation related to stock options exercised during the quarter.

We expect our effective tax rate to return to the normalized range of 24% to 26%.

The basis differentials.

Going into that trade so it's.

It's difficult trade to make but your product short.

And you need to draw imports.

Particularly weak Asian market will lower the bar for that what we've seen is that as the Asian markets have strengthened utilization has come off.

Speaker Change: To some degree there and so theres a higher bar and so we don't see the same imports coming in sort of on a forward basis that we saw on a on a look back over the second quarter, but to be clear the west coast is going to have to.

Speaker Change: Incent those.

Speaker Change: Imports.

The rest of country. So your perspective on east coast margins would be great.

I don't think anything's changed quite honestly, if someone pays attention to the board cracks every day I think the shortness of pad one as demonstrated with generally speaking the highest crack shortly when compared to the Gulf coast and mid Con.

Speaker Change: The mid con is higher today.

Speaker Change: Because some unplanned downtime that others are having.

Speaker Change: But I think over time, the structural shift in what's happened in pad one is bearing out crude yes, certainly impact are our business and you know over the quarter. If there was one overriding theme over this quarter was crude was tight.

Speaker Change: Utilization was very high and so you were able to build.

Speaker Change: Some product inventory.

Speaker Change: Will it continue to run in this environment.

Speaker Change: And my follow up is a kind of wonder if you could just clarify the working capital move in the quarter. Please.

Speaker Change: Yeah in regards to well, we don't comment necessarily on specific units per se I think there may be some fake news that you're referring to.

Paul's Boro: With Paul's Boro, but Paul's boroughs certainly running today.

Speaker Change: We have an E&P team.

Speaker Change: At each of the refineries, where we optimize.

Speaker Change: All of our assets on a daily basis to maximize.

Our business in each local market in which we operate.

Speaker Change: And with respect to working capital.

Speaker Change: Benefit of $300 million in the quarter and that related almost entirely to our hydrocarbon net payable position.

Speaker Change: Turning to a more normalized level.

Speaker Change: As you know in <unk>.

Stern: Stern, Canada.

Speaker Change: And then continued growth of what we're seeing across in different aspects, whether it's in the U S or whether it's a non OPEC, but there's just generally going to be a fair bit of crude available.

Speaker Change: For refiners to consume and that's already that's our base case assumptions looking forward into the fourth and first quarters.

Speaker Change: My follow up on Ryan's question.

Speaker Change: The clean London, and California is pretty harsh and amongst does seem to be talking about yard assets.

Speaker Change: If they continue down that path are there more refinery closures coming in the state of California, and then there's a school of thought process that maybe the company doesn't even want refineries there they just want imported gasoline.

Speaker Change: Would you I mean any thoughts on that tank.

Speaker Change: Such a.

Speaker Change: Such an endeavor and that would have dramatic impacts on People's lives in California.

Speaker Change: Thank you so much.

Speaker Change: Okay.

Speaker Change: Our next question will come from Matthew Blair with TBH. Please go ahead.

Matthew Blair: Thank you and good morning.

Matt: The refining side, Matt you mentioned some headwinds on the co products in the second quarter are there any numbers you can share in terms of the impact on your capture for Q2 and could you also talk about.

Matt: Co products are trending so far in the third quarter.

Matt: I'll turn that over to Paul.

Paul: Bringing it back to the one of the main thesis of why we got into this business as an obligated party, we get the ancillary benefit of the Rins are manufactured there and so when.

Speaker Change: When we take a sort of stock on on.

Paul: The business I would say a couple of things we've been operating for well, let me back up before we get into operations. We brought in a partner and Eni I can say only good things about that partnership it's constructed in a way where the alignment of interests are well aligned and both parties are getting.

Matt: Benefits from each other.

Matt: Us being a local manufacturer.

Matt: Local expertise in these markets.

Eni: For Eni Eni, having a number of these plants in Europe.

Matt: I have no doubt over the long term.

Matt: Huge long term, putting aside the short term.

Matt: That.

Matt: The global markets.

Matt: Compensate.

Matt: Those manufacturing renewable diesel I E. The cost of the carbon.

Speaker Change: We will incentivize the manufacturing of renewable diesel specifically for the renewable diesel manufacturers that are advantaged and we feel like we have that with our location.

Matt: Our cost of natural gas, our location to feedstocks and our ability to distribute products.

Matt: And so looking ahead we.

Matt: We're still constructive it will be interesting to see how the market develops as those that are considering.

Matt: Converting to sustainable aviation fuel and those.

Matt: Remain in renewable diesel indeed.

Matt: And I think we'll be able to demonstrate that over time.

Matt: Our differentiating factor at Chalmette is obviously, having a.

Matt: Our renewable diesel business there.

Matt: But broadly speaking.

Matt: We as a company are more bullish.

Matt: Our coastal refining kit.

Matt: Boeing into this next cycle than the previous cycle, So I think over time.

Matt: Having access to waterborne crudes, having access to heavy and sour grades of crude.

Matt: We'll we'll be more advantaged.

Matt: Then it was the previous cycle previous cycle call. It from 10 to 19.

Matt: We are driving for efficiency and then in terms of how what that does to capital budgets.

Matt: Our expectation is that we'll be more efficient with turnarounds, which could free up that capital for reinvestment and in return opportunities wherever how we want to allocate that capital.

Matt: Want to allocate that.

Speaker Change: Alright. Thank you the second question that with the Tim equally it's up and running I think indifferent to the wet scope of what a quarter now.

Matt: Matt how that if any.

Matt: Impact on the way that that would be one.

Speaker Change: West Coast operation, how much additional Canadian heavy oil.

Speaker Change: May be kicking in in the system and that how does that impact.

Speaker Change: In terms of your U R.

Speaker Change: Or your Opex cost thank you.

Matt: So I would answer it this way Paul we're currently about 25000 barrels a day.

Matt: Going off of T M ex us that as Directionally positive.

Matt: Placing other cruise, which pushed back pressure on those crudes, obviously by the end of the year I would expect we'll double that yet again.

Paul: Well thank you.

Paul: Yeah, I mean, that's the theme right on it has been for some time.

Speaker Change: Demand you almost have to wait a couple of months to see what it is it's a bit disappointing.

Speaker Change: We've gotten ourselves into student loop from.

Speaker Change: D O. It is but it is what it is from our system.

Speaker Change: Like I said I.

Speaker Change: I'd say, it's okay, we haven't seen any degradation on our racks.

Speaker Change: And but it's it's nothing extraordinary I do expect.

Speaker Change: Demand to pick up and indeed.

Speaker Change: You know I think there's some green shoots in regards to what demand looks like so I wouldn't be surprised if the second half of the year was better than the first half of the year I described the first half of the years.

Matt: Okay as Matt.

Speaker Change: Sort of blah, blah, but we'll see where it goes from here, but we haven't seen it we look at Iraq every single day.

Speaker Change: And like I said, it looks okay wed like to see some growth not only in this country.

Speaker Change: Thank you very much for your time and attention today and your continued attention going forward and we look forward to speaking to you next.

Matt: Next quarter have a great day.

Speaker Change: Yeah.

Speaker Change: And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Speaker Change: Yeah.

Speaker Change: Uh-huh mhm.

Speaker Change: [music].