The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the audited financial statements
of PBF Energy and PBF LLC included in the Annual Report on Form 10-K for the
year ended December 31, 2019 and the unaudited financial statements and related
notes included in 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."

    PBF Energy is the sole managing member of, and owner of an equity interest
representing approximately 99.2% of the outstanding economic interests in PBF
LLC as of March 31, 2020. PBF LLC is a holding company for the companies that
directly and indirectly own and operate our business. PBF Holding is a
wholly-owned subsidiary of PBF LLC and PBF Finance is a wholly-owned subsidiary
of PBF Holding. As of March 31, 2020, PBF LLC also holds a 48.2% limited partner
interest and a non-economic general partner interest in PBFX, a publicly-traded
MLP.
Unless the context indicates otherwise, the terms "we," "us," and "our" refer to
PBF Energy and its consolidated subsidiaries, including PBF LLC, PBF Holding and
its subsidiaries and PBFX and its subsidiaries. Discussions on areas that either
apply only to PBF Energy or PBF LLC are clearly noted in such sections.

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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 West Coast of the
United States, as well as in other regions of the United States, Canada and
Mexico and are able to ship products to other international destinations. As of
March 31, 2020, we own and operate six domestic oil refineries and related
assets with a combined processing capacity, known as throughput, of
approximately 1,050,000 barrels per day ("bpd"), and a weighted-average Nelson
Complexity Index of 12.8. 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 are aggregated
into the Refining segment. PBFX operates certain logistics assets such as crude
oil and refined petroleum products terminals, pipelines, and storage facilities,
which are aggregated into the Logistics segment.
Our six refineries are located in Delaware City, Delaware, Paulsboro, New
Jersey, Toledo, Ohio, Chalmette, Louisiana, Torrance, California and Martinez,
California. Each refinery is briefly described in the table below:
                                         Nelson Complexity  Throughput Capacity (in
Refinery           Region                Index              bpd)                      PADD      Crude Processed (1)          Source (1)
                                                                                                light sweet through heavy
Delaware City      East Coast            11.3               190,000                   1         sour                         water, rail
                                                                                                light sweet through heavy
Paulsboro          East Coast            13.2               180,000                   1         sour                         water
                                                                                                                             pipeline, truck,
Toledo             Mid-Continent         9.2                170,000                   2         light sweet                  rail
                                                                                                light sweet through heavy
Chalmette          Gulf Coast            12.7               189,000                   3         sour                         water, pipeline
                                                                                                                             pipeline, water,
Torrance           West Coast            14.9               155,000                   5         medium and heavy             truck
Martinez           West Coast            16.1               157,000                   5         medium and heavy             pipeline and water


________
(1) Reflects the typical crude and feedstocks and related sources utilized under
normal operating conditions and prevailing market environments.
As of March 31, 2020, PBF Energy owned 120,007,835 PBF LLC Series C Units and
our current and former executive officers and directors and certain employees
and others held 1,019,916 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 our issued and outstanding shares of our
PBF Energy Class A common stock have approximately 99.2% 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 0.8% of the voting power in us (99.0%
and 1.0% as of December 31, 2019, respectively).
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Business Developments
Recent significant business developments affecting us are discussed below.
COVID-19
The recent outbreak of the COVID-19 pandemic and certain developments in the
global oil markets are negatively impacting worldwide economic and commercial
activity and financial markets, as well as global demand for petroleum and
petrochemical products. The COVID-19 pandemic and related governmental responses
have also resulted in significant business and operational disruptions,
including business closures, supply chain disruptions, travel restrictions,
stay-at-home orders and limitations on the availability of workforces and has
resulted in significantly lower demand for refined petroleum products. We
believe, but cannot guarantee, that demand for refined petroleum products will
ultimately rebound as governmental restrictions are lifted. However, the
ultimate significance of the COVID-19 pandemic on our business will be dictated
by its currently unknowable duration and the rate at which people are willing
and able to resume activities even after governmental restrictions are lifted.
In addition, recent global geopolitical and macroeconomic events have further
contributed to the decline in crude oil prices and the overall volatility in
crude oil and refined product prices.
The price of refined products we sell and the crude oil we purchase impacts our
revenues, income from operations, net income and cash flows. In addition, a
decline in the market prices for products and feedstocks held in our inventories
below the carrying value of our inventory may result in the adjustment of the
value of our inventories to the lower market price and a corresponding loss on
the value of our inventories, and any such adjustment is likely to be material.
We are actively responding to the impacts from these matters on our business. In
late March and through early April 2020, we started reducing the amount of crude
oil processed at our refineries in response to the decreased demand for our
products and we temporarily idled various units at certain of our refineries to
optimize our production in light of prevailing market conditions.
We have adjusted our operational plans to the evolving market conditions and
previously announced steps to lower our 2020 operating expenses budget through
significant reductions in discretionary activities and third party services. In
March 2020, we estimated that these efforts would result in a reduction in our
operating expenses budget of approximately $125.0 million. We have subsequently
identified additional reductions and currently estimate an aggregate reduction
of approximately $140.0 million in our 2020 operating expenses budget. In
addition, we are currently operating our refineries at minimum rates and expect
near-term throughput to be in the 650,000 to 700,000 barrel per range for our
refining system. As the market conditions develop and the demand outlook becomes
clearer, we will continue to adjust our operations in response.
In addition to the steps above with respect to our operations, we are also
addressing our liquidity. We are taking the following measures, some of which
were previously announced in March 2020:
•Raised net proceeds of approximately $987.5 million through the May 13, 2020
issuance of $1.0 billion in aggregate principal amount of 9.25% senior secured
notes due 2025 (the "2025 Senior Secured Notes");
•Closed on the sale of five hydrogen plants for gross cash proceeds of
$530.0 million on April 17, 2020;
•Reduced 2020 planned capital expenditures by approximately $240.0 million. We
subsequently identified additional reductions in capital expenditures and
currently estimate an aggregate reduction of approximately $357.0 million in
2020 planned capital expenditures, an approximate 49% reduction to our previous
2020 budget. We intend to satisfy all required safety, environmental and
regulatory capital commitments, while continuing to explore further
opportunities to minimize our near-term capital expenditure requirements;
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•Established a company wide COVID-19 Response Team and increased precautions to
keep our employees healthy and safe, including social distancing, additional
personal protective equipment and enhanced facility cleanings. We have not had
to temporarily close any of our refineries due to a COVID-19 outbreak;
•Reduced corporate overhead expenses by over $20.0 million on an annual basis
primarily through salary reductions. Specifically, the Board of Directors of PBF
Energy and management have reduced their compensation by 50%, while Chairman and
CEO Thomas Nimbley's salary has been reduced by 67%. In addition, more than 50%
of our corporate and non-represented employees have also reduced their salaries;
•Suspended PBF Energy's quarterly dividend of $0.30 per share, anticipated to
preserve approximately $35.0 million of cash each quarter; and
•Evaluating various other liquidity and cash flow optimization options.
Many uncertainties remain with respect to the COVID-19 pandemic, including the
extent to which the COVID-19 pandemic will continue to impact our business and
operations, the effectiveness of the actions undertaken by national, regional,
state and local governments and health officials to contain the virus or treat
its effects, and how quickly and to what extent economic conditions improve and
normal business and operating conditions resume. We are unable to predict the
ultimate economic impacts from the COVID-19 pandemic, however, we have been and
will likely continue to be adversely impacted. We believe, to the extent
possible, we have proactively addressed many of the known impacts of the
COVID-19 pandemic and will strive to continue to do so, but there can be no
guarantee that these measures will be effective.
Refer to "Liquidity" and "Part II - Other Information - Item 1A. Risk Factors"
for further information.
Sale of Hydrogen Plants
On April 17, 2020, we closed on the sale of five hydrogen plants to Air Products
and Chemicals, Inc. for gross cash proceeds of $530.0 million. In connection
with the sale we have agreed to enter into long-term off-take arrangements
covering hydrogen produced at each of the five plants on terms in line with
similar arrangements in place elsewhere in our refining system.
Receivables Purchase Agreement
On February 18, 2020, in connection with the entry into a $300.0 million
uncommitted receivables purchase facility (the "Receivables Facility"), we
amended the asset-based revolving credit agreement ("Revolving Credit Facility")
and entered into a related intercreditor agreement to allow us to sell certain
Eligible Receivables (as defined in the agreement governing the Revolving Credit
Facility (the "Revolving Credit Agreement") derived from the sale of refined
product over truck racks. Under the Receivables Facility, we sell such
receivables to a bank subject to bank approval and certain conditions. The sales
of receivables under the Receivables Facility are absolute and irrevocable but
subject to certain repurchase obligations under certain circumstances.

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Factors Affecting Comparability Between Periods
Our results have been affected by the following events, the understanding of
which will aid in assessing the comparability of our period to period financial
performance and financial condition.
COVID-19
The impact of the unprecedented global health and economic crisis sparked by the
COVID-19 pandemic was amplified late in the quarter ended March 31, 2020 due to
movements made by the world's largest oil producers to increase market share in
the current environment. This created simultaneous shocks in oil supply and
demand resulting in an economic challenge to our industry which has not occurred
since our formation. This combination has resulted in significant demand
reduction for our refined products and abnormal volatility in oil commodity
prices, which may continue for the foreseeable future. Our results for the
quarter ending March 31, 2020 were impacted by the decreased demand for refined
products and the significant decline in the price of crude oil, both of which
negatively impacted our revenues, cost of products sold and operating income
towards the end of the quarter and lowered our liquidity. Throughput rates
across our refining system also decreased, most significantly towards the end of
the quarter, and we are currently operating our refineries at minimum rates.
Refer to "Item 1A. Risk Factors" included in "Part II - Other Information" of
this Form 10-Q for further information.
Debt and Credit Facilities
Senior Notes
On January 24, 2020, we issued $1.0 billion in aggregate principal amount of
6.00% senior unsecured notes due 2028 (the "2028 Senior Notes"). The net
proceeds from this offering were approximately $987.0 million after deducting
the initial purchasers' discount and estimated offering expenses. We used the
proceeds primarily to fully redeem our 7.00% senior notes due 2023 (the "2023
Senior Notes") and to fund a portion of the cash consideration for the Martinez
Acquisition (as defined below).
On February 14, 2020, we exercised our rights under the indenture governing the
2023 Senior Notes to redeem all of the outstanding 2023 Senior Notes at a price
of 103.5% of the aggregate principal amount thereof plus accrued and unpaid
interest. The aggregate redemption price for all 2023 Senior Notes approximated
$517.5 million plus accrued and unpaid interest. The difference between the
carrying value of the 2023 Senior Notes on the date they were redeemed and the
amount for which they were redeemed was $22.2 million and has been classified as
Debt extinguishment costs in the Condensed Consolidated Statement of Operations
as of March 31, 2020.
Refer to "Note 7 - Debt" of our Notes to Condensed Consolidated Financial
Statements, for further information.
Revolving Credit Facility
During the three months ended March 31, 2020, we used advances under our
Revolving Credit Facility to fund a portion of the Martinez Acquisition (as
defined below) and other general corporate purposes. The outstanding borrowings
under the Revolving Credit Facility as of March 31, 2020 were $900.0 million.
There were no outstanding borrowings under the Revolving Credit Facility as of
December 31, 2019.
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Martinez Acquisition
On February 1, 2020, we acquired from Equilon Enterprises LLC d/b/a Shell Oil
Products US (the "Seller"), the Martinez refinery and related logistics assets
(collectively, the "Martinez Acquisition"), pursuant to a sale and purchase
agreement dated June 11, 2019 (the "Sale and Purchase Agreement"). The Martinez
refinery is located on an 860-acre site in the City of Martinez, 30 miles
northeast of San Francisco, California. The refinery is a high-conversion
157,000 bpd, dual-coking facility with a Nelson Complexity Index of 16.1, making
it one of the most complex refineries in the United States. The facility is
strategically positioned in Northern California and provides for operating and
commercial synergies with the Torrance refinery located in Southern California.
The Martinez Acquisition further increased our total throughput capacity to over
1,000,000 bpd.
In addition to refining assets, the Martinez Acquisition includes a number of
high-quality onsite logistics assets including a deep-water marine facility,
product distribution terminals and refinery crude and product storage facilities
with approximately 8.8 million barrels of shell capacity.
The aggregate purchase price for the Martinez Acquisition was $1,253.4 million,
including final working capital of $216.1 million and the obligation to make
post-closing earn-out payments to the Seller based on certain earnings
thresholds of the Martinez refinery (as set forth in the Sale and Purchase
Agreement), for a period of up to four years following the closing date (the
"Martinez Contingent Consideration"). The transaction was financed through a
combination of cash on hand, including proceeds from the 2028 Senior Notes, and
borrowings under the Revolving Credit Facility.
Inventory Intermediation Agreements
On August 29, 2019, we and our subsidiaries, Delaware City Refining Company LLC
("DCR") and Paulsboro Refining Company LLC ("PRC"), entered into amended and
restated inventory intermediation agreements with J. Aron (as amended from time
to time, the "Inventory Intermediation Agreements"), pursuant to which certain
terms of the Inventory Intermediation Agreements were amended and restated,
including, among other things, the maturity date. The Inventory Intermediation
Agreement by and among J. Aron, PBF Holding and PRC was extended to December 31,
2021, which term may be further extended by mutual consent of the parties to
December 31, 2022 and the Inventory Intermediation Agreement by and among J.
Aron, PBF Holding and DCR was extended to June 30, 2021, which term may be
further extended by mutual consent of the parties to June 30, 2022.
Pursuant to each Inventory Intermediation Agreement, J. Aron continues to
purchase and hold title to the J. Aron Products, produced by the East Coast
Refineries, and delivered into our J. Aron Storage Tanks. Furthermore, J. Aron
agrees to sell the J. Aron Products back to the East Coast Refineries as the J.
Aron Products are discharged out of our J. Aron Storage Tanks. J. Aron has the
right to store the J. Aron Products purchased in tanks under the Inventory
Intermediation Agreements and will retain these storage rights for the term of
the agreements. PBF Holding continues to market and sell the J. Aron Products
independently to third parties.
PBFX Equity Offering
On April 24, 2019, PBFX entered into subscription agreements to sell an
aggregate of 6,585,500 common units to certain institutional investors in a
registered direct public offering (the "2019 Registered Direct Offering") for
gross proceeds of approximately $135.0 million. The 2019 Registered Direct
Offering closed on April 29, 2019.
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PBFX Assets and Transactions
PBFX's assets consist of various logistics assets. Apart from business
associated with certain third-party acquisitions, PBFX's revenues are derived
from long-term, fee-based commercial agreements with subsidiaries of PBF
Holding, which include minimum volume commitments, for receiving, handling,
transferring and storing crude oil, refined products and natural gas. These
transactions are eliminated by PBF Energy and PBF LLC in consolidation.
Since the inception of PBFX in 2014, PBF LLC and PBFX have entered into a series
of drop-down transactions. Such transactions and third-party acquisitions made
by PBFX in the current or prior periods are discussed below.
TVPC Acquisition
On April 24, 2019, PBFX entered into a contribution agreement with PBF LLC,
pursuant to which PBF LLC contributed to PBFX all of the issued and outstanding
limited liability company interests of TVP Holding Company LLC ("TVP Holding")
for total consideration of $200.0 million (the "TVPC Acquisition"). Prior to the
TVPC Acquisition, TVP Holding owned a 50% membership interest in Torrance Valley
Pipeline Company LLC ("TVPC"). Subsequent to the closing of the TVPC Acquisition
on May 31, 2019, PBFX owns 100% of the membership interests in TVPC. The
transaction was financed through a combination of proceeds from the 2019
Registered Direct Offering and borrowings under the PBFX five-year, $500.0
million amended and restated revolving credit facility (the "PBFX Revolving
Credit Facility").
PBFX IDR Restructuring
On February 28, 2019, PBFX closed on the transaction contemplated by the Equity
Restructuring Agreement with PBF LLC and PBF GP, pursuant to which PBFX's
incentive distribution rights (the "IDRs") held by PBF LLC were canceled and
converted into 10,000,000 newly issued PBFX common units (the "IDR
Restructuring"). Subsequent to the closing of the IDR Restructuring, no
distributions were made to PBF LLC with respect to the IDRs and the newly issued
PBFX common units are entitled to normal distributions by PBFX.

Results of Operations
The tables below reflect our consolidated financial and operating highlights for
the three months ended March 31, 2020 and 2019 (amounts in 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 oil refineries, excluding the assets owned by PBFX,
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 MLP that operates certain logistics assets such as crude oil and
refined petroleum products terminals, pipelines and storage facilities. PBFX's
operations are aggregated into the Logistics segment. We do not separately
discuss our results by individual segments as, apart from PBFX's third-party
acquisitions, our Logistics segment did not have any significant third-party
revenues and a significant portion of its operating results eliminate in
consolidation.

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PBF Energy

Three Months Ended March 31,


                                                                                       2020                  2019
Revenues                                                                        $      5,277.5           $ 5,216.2

Cost and expenses:
Cost of products and other                                                             5,963.3             4,209.2

Operating expenses (excluding depreciation and amortization expense as reflected below)

                                                                      531.7               479.0
Depreciation and amortization expense                                                    116.7               103.0
Cost of sales                                                                          6,611.7             4,791.2

General and administrative expenses (excluding depreciation and amortization expense as reflected below)

                                                  82.5                57.6
Depreciation and amortization expense                                                      2.9                 2.8
Change in fair value of contingent consideration                                         (52.8)                  -

Total cost and expenses                                                                6,644.3             4,851.6

Income (loss) from operations                                                         (1,366.8)              364.6
Other income (expense):
Interest expense, net                                                                    (49.2)              (39.5)
Change in Tax Receivable Agreement liability                                             (11.6)                  -
Change in fair value of catalyst obligations                                              11.7                (3.1)
Debt extinguishment costs                                                                (22.2)                  -
Other non-service components of net periodic benefit cost                                  1.0                (0.1)
Income (loss) before income taxes                                                     (1,437.1)              321.9
Income tax (benefit) expense                                                            (374.6)               80.5
Net income (loss)                                                                     (1,062.5)              241.4
Less: net income attributable to noncontrolling interests                                  3.4                12.2
Net income (loss) attributable to PBF Energy Inc. stockholders                  $     (1,065.9)          $   229.2

Consolidated gross margin                                                       $     (1,334.2)          $   425.0

Gross refining margin (1)                                                       $       (773.4)          $   932.5

Net income (loss) available to Class A common stock per share:
Basic                                                                           $        (8.93)          $    1.91
Diluted                                                                         $        (8.93)          $    1.89

(1) See Non-GAAP Financial Measures.


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PBF LLC

Three Months Ended March 31,


                                                                                       2020                  2019
Revenues                                                                        $      5,277.5           $ 5,216.2

Cost and expenses:
Cost of products and other                                                             5,963.3             4,209.2

Operating expenses (excluding depreciation and amortization expense as reflected below)

                                                                      531.7               479.0
Depreciation and amortization expense                                                    116.7               103.0
Cost of sales                                                                          6,611.7             4,791.2

General and administrative expenses (excluding depreciation and amortization expense as reflected below)

                                                  82.5                57.3
Depreciation and amortization expense                                                      2.9                 2.8
Change in fair value of contingent consideration                                         (52.8)                  -

Total cost and expenses                                                                6,644.3             4,851.3

Income (loss) from operations                                                         (1,366.8)              364.9

Other income (expense):
Interest expense, net                                                                    (51.7)              (41.5)
Change in fair value of catalyst obligations                                              11.7                (3.1)
Debt extinguishment costs                                                                (22.2)                  -
Other non-service components of net periodic benefit cost                                  1.0                (0.1)
Income (loss) before income taxes                                                     (1,428.0)              320.2
Income tax expense (benefit)                                                              14.2                (7.2)
Net income (loss)                                                                     (1,442.2)              327.4
Less: net income attributable to noncontrolling interests                                 18.0                 9.0
Net income (loss) attributable to PBF Energy Company LLC                        $     (1,460.2)          $   318.4




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Operating Highlights

Three Months Ended March 31,


                                                                                      2020                   2019
Key Operating Information
Production (bpd in thousands)                                                            867.0               737.7
Crude oil and feedstocks throughput (bpd in thousands)                                   852.9               743.1
Total crude oil and feedstocks throughput (millions of barrels)                           77.6                66.9
Consolidated gross margin per barrel of throughput

$ (17.19) $ 6.35 Gross refining margin, excluding special items, per barrel of throughput (1)

                                                                 $          6.60           $    6.38
Refinery operating expense, per barrel of throughput                           $          6.54           $    6.78

Crude and feedstocks (% of total throughput) (2)
Heavy                                                                                       44   %              32  %
Medium                                                                                      23   %              32  %
Light                                                                                       19   %              24  %
Other feedstocks and blends                                                                 14   %              12  %
Total throughput                                                                           100   %             100  %

Yield (% of total throughput)
Gasoline and gasoline blendstocks                                                           51   %              46  %
Distillates and distillate blendstocks                                                      32   %              32  %
Lubes                                                                                        1   %               1  %
Chemicals                                                                                    1   %               2  %
Other                                                                                       17   %              18  %
Total yield                                                                                102   %              99  %






(1) See Non-GAAP Financial Measures.
(2) 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.
                                       62
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The table below summarizes certain market indicators relating to our operating results as reported by Platts.


                                                              Three Months Ended March 31,
                                                             2020                           2019
                                                          (dollars per barrel, except as noted)
Dated Brent crude oil                                 $         49.70                    $ 63.26
West Texas Intermediate (WTI) crude oil               $         45.56                    $ 54.87
Light Louisiana Sweet (LLS) crude oil                 $         47.81                    $ 62.38
Alaska North Slope (ANS) crude oil                    $         51.07                    $ 64.39
Crack Spreads
Dated Brent (NYH) 2-1-1                               $          9.96                    $  9.85
WTI (Chicago) 4-3-1                                   $          7.37                    $ 12.33
LLS (Gulf Coast) 2-1-1                                $         10.42                    $  9.89
ANS (West Coast-LA) 4-3-1                             $         13.36                    $ 13.54
ANS (West Coast-SF) 3-2-1                             $          9.65                    $ 11.14
Crude Oil Differentials
Dated Brent (foreign) less WTI                        $          4.14                    $  8.39
Dated Brent less Maya (heavy, sour)                   $          8.87                    $  4.50
Dated Brent less WTS (sour)                           $          4.70                    $  9.55
Dated Brent less ASCI (sour)                          $          4.29                    $  2.35
WTI less WCS (heavy, sour)                            $         16.85                    $  9.96
WTI less Bakken (light, sweet)                        $          3.46                    $ (0.25)
WTI less Syncrude (light, sweet)                      $          1.80                    $ (0.04)
WTI less LLS (light, sweet)                           $         (2.25)                   $ (7.51)
WTI less ANS (light, sweet)                           $         (5.51)                   $ (9.52)
Natural gas (dollars per MMBTU)                       $          1.87                    $  2.87


Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31,
2019
Overview- PBF Energy net loss was $1,062.5 million for the three months ended
March 31, 2020 compared to net income of $241.4 million for the three months
ended March 31, 2019. PBF LLC net loss was $1,442.2 million for the three months
ended March 31, 2020 compared to net income of $327.4 million for the three
months ended March 31, 2019. Net loss attributable to PBF Energy stockholders
was $1,065.9 million, or $(8.93) per diluted share, for the three months ended
March 31, 2020 ($8.93 per share on a fully-exchanged, fully-diluted basis based
on adjusted fully-converted net loss, or $(1.19) per share on a fully-exchanged,
fully-diluted basis based on adjusted fully-converted net loss excluding special
items, as described below in Non-GAAP Financial Measures) compared to net income
attributable to PBF Energy stockholders of $229.2 million, or $1.89 per diluted
share, for the three months ended March 31, 2019 ($1.89 per share on a
fully-exchanged, fully-diluted basis based on adjusted fully-converted net
income, or $(1.18) per share on a fully-exchanged, fully-diluted basis based on
adjusted fully-converted net loss excluding special items, as described below in
Non-GAAP Financial Measures). The net loss attributable to PBF Energy
stockholders represents PBF Energy's equity interest in PBF LLC's pre-tax loss,
less applicable income tax expense. PBF Energy's weighted-average equity
interest in PBF LLC was 99.0% and 99.0% for the three months ended March 31,
2020 and 2019, respectively.
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Our results for the three months ended March 31, 2020 were negatively impacted
by special items consisting of a non-cash, pre-tax lower of cost or market
("LCM") inventory adjustment of approximately $1,285.6 million, or $947.5
million net of tax, a pre-tax change in the Tax Receivable Agreement liability
of $11.6 million, or $8.5 million net of tax and pre-tax debt extinguishment
costs associated with the early redemption of our 2023 Senior Notes of $22.2
million, or $16.4 million net of tax. These unfavorable impacts were partially
offset by the change in the fair value of the contingent consideration primarily
related to the Martinez Acquisition of $52.8 million, or $38.9 million net of
tax. Our results for the three months ended March 31, 2019 were positively
impacted by a non-cash pre-tax LCM inventory adjustment of approximately $506.0
million, or $374.4 million net of tax. The LCM inventory adjustments were
recorded due to movements in the price of crude oil and refined products in the
periods presented.
Excluding the impact of these special items, our results were positively
impacted by favorable movements in certain crude differentials and overall
higher throughput volumes and barrels sold across our refineries, offset by
lower margins in certain regions. Refining margins for the three months ended
March 31, 2020 compared to the three months ended March 31, 2019 were mixed with
stronger margins on the East Coast and Gulf Coast offset by weaker margins in
the Mid-Continent and West Coast. Our results for the three months ended
March 31, 2020 were negatively impacted by higher general and administrative
expenses associated with higher employee-related compensation and transaction
costs and increased depreciation and amortization expense associated with our
continued investment in our refining assets. Additionally, during the quarter we
began to experience the negative impacts of the COVID-19 pandemic on our
business through a decline in the demand for our refined products and a
precipitous decrease in the prices for crude oil and refined products.
Revenues- Revenues totaled $5.3 billion for the three months ended March 31,
2020 compared to $5.2 billion for the three months ended March 31, 2019, an
increase of approximately $0.1 billion, or 1.9%. Revenues per barrel were $57.89
and $66.19 for the three months ended March 31, 2020 and 2019, respectively, a
decrease of 12.5% directly related to lower hydrocarbon commodity prices. For
the three months ended March 31, 2020, the total throughput rates at our East
Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged
approximately 329,300 bpd, 90,100 bpd, 174,500 bpd and 259,000 bpd,
respectively. For the three months ended March 31, 2019, the total throughput
rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries
averaged approximately 305,000 bpd, 148,000 bpd, 164,600 bpd and 125,500 bpd,
respectively. For three months ended March 31, 2020, the total barrels sold at
our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged
approximately 365,300 bpd, 131,300 bpd, 213,800 bpd and 291400 bpd,
respectively. For the three months ended March 31, 2019, the total barrels sold
at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged
approximately 349,200 bpd, 158,000 bpd, 215,600 bpd and 152,800 bpd,
respectively.
The throughput rates at the majority of our refineries were higher in the three
months ended March 31, 2020 compared to the same period in 2019 due to planned
downtime associated with turnarounds of the coker and associated units at our
Delaware City and Torrance refineries and unplanned downtime at our Delaware
City refinery in the first quarter of 2019. Throughput rates at our
Mid-Continent refinery were lower in the three months ended March 31, 2020
compared to the same period in 2019 due to a planned turnaround at our Toledo
refinery during the first quarter of 2020. Our Martinez refinery was not
acquired until the first quarter of 2020. Total refined product barrels sold
were higher than throughput rates, reflecting sales from inventory as well as
sales and purchases of refined products outside our refineries.
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Consolidated Gross Margin- Consolidated gross margin totaled $(1,334.2) million
for the three months ended March 31, 2020, compared to $425.0 million for the
three months ended March 31, 2019, a decrease of approximately $1,759.2 million.
Gross refining margin (as described below in Non-GAAP Financial Measures)
totaled $(773.4) million, or $(9.96) per barrel of throughput for the three
months ended March 31, 2020 compared to $932.5 million, or $13.94 per barrel of
throughput for the three months ended March 31, 2019, a decrease of
approximately $1,705.9 million. Gross refining margin excluding special items
totaled $512.2 million or $6.60 per barrel of throughput for the three months
ended March 31, 2020 compared to $426.5 million or $6.38 per barrel of
throughput for the three months ended March 31, 2019, an increase of $85.7
million.
Consolidated gross margin and gross refining margin were negatively impacted by
a non-cash LCM adjustment of approximately $1,285.6 million on a net basis
resulting from the decrease in crude oil and refined product prices from the
year ended 2019 to the end of the first quarter of 2020. Gross refining margin
excluding the impact of special items increased due to favorable movements in
certain crude differentials and refining margins and increased throughput rates
in the majority of our refineries, partially offset by lower throughput rates
and weaker crack spreads in the Mid-Continent and West Coast. For the three
months ended March 31, 2019, special items impacting our margin calculations
included a non-cash LCM inventory adjustment of approximately $506.0 million on
a net basis, resulting from an increase in crude oil and refined product prices.
Additionally, our results continue to be impacted by significant costs to comply
with the Renewable Fuel Standard ("RFS"). Total RFS costs were $36.8 million for
the three months ended March 31, 2020 in comparison to $29.5 million for the
three months ended March 31, 2019.
Average industry margins were mixed during the three months ended March 31, 2020
in comparison to the same period in 2019, primarily due to varying timing and
extent of the impacts of the COVID-19 pandemic on regional demand and commodity
prices. Crude oil differentials were generally favorable in comparison to the
same period in 2019. However, such differentials weakened towards the end of the
quarter, primarily due to the negative impact of the COVID-19 pandemic, combined
with the movements made by the world's largest oil producers to increase market
share in the current environment, creating simultaneous shocks in oil supply and
demand.
On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was
approximately $9.96 per barrel, or 1.1% higher, in the three months ended
March 31, 2020, as compared to $9.85 per barrel in the same period in 2019. Our
margins were positively impacted from our refinery specific slate on the East
Coast by stronger Dated Brent/Maya and WTI/Bakken differentials, which
increased by $4.37 per barrel and $3.71 per barrel, respectively, in comparison
to the same period in 2019. In addition, the WTI/WCS differential increased
significantly to $16.85 per barrel in 2020 compared to $9.96 in 2019, which
favorably impacted our cost of heavy Canadian crude.
Across the Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread
was $7.37 per barrel, or 40.2% lower, in the three months ended March 31, 2020
as compared to $12.33 per barrel in the same period in 2019. Our margins were
positively impacted from our refinery specific slate in the Mid-Continent by an
increasing WTI/Bakken differential, which averaged a discount of $3.46 per
barrel in the three months ended March 31, 2020, as compared to a premium of
$0.25 per barrel in the same period in 2019. Additionally, the WTI/Syncrude
differential averaged a discount of $1.80 per barrel during the three months
ended March 31, 2020 as compared to a premium of $0.04 per barrel in the same
period of 2019.
On the Gulf Coast, the LLS (Gulf Coast) 2-1-1 industry crack spread was $10.42
per barrel, or 5.4% higher, in the three months ended March 31, 2020 as compared
to $9.89 per barrel in the same period in 2019. Margins on the Gulf Coast were
positively impacted from our refinery specific slate by a strengthening WTI/LLS
differential, which averaged a premium of $2.25 per barrel during the three
months ended March 31, 2020 as compared to a premium of $7.51 per barrel in the
same period of 2019.
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On the West Coast, the ANS (West Coast) 4-3-1 industry crack spread was $13.36
per barrel, or 1.3% lower, in the three months ended March 31, 2020 as compared
to $13.54 per barrel in the same period in 2019. Additional, margins on the West
Coast were positively impacted from our refinery specific slate by a
strengthening WTI/ANS differential, which averaged a premium of $5.51 per barrel
during the three months ended March 31, 2020 as compared to a premium of $9.52
per barrel in the same period of 2019.
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 crude costs and
negatively impact our earnings.
Operating Expenses- Operating expenses totaled $531.7 million for the three
months ended March 31, 2020 compared to $479.0 million for the three months
ended March 31, 2019, an increase of approximately $52.7 million, or 11.0%. Of
the total $531.7 million of operating expenses for the three months ended
March 31, 2020, $507.5 million or $6.54 per barrel of throughput, related to
expenses incurred by the Refining segment, while the remaining $24.2 million
related to expenses incurred by the Logistics segment ($453.4 million or $6.78
per barrel of throughput, and $25.6 million of operating expenses for the three
months ended March 31, 2019 related to the Refining and Logistics segments,
respectively). Increases in operating expenses were mainly attributed to costs
associated with the Martinez refinery and related logistic assets which totaled
approximately $69.5 million for the three months ended March 31, 2020. Total
operating expenses for the three months ended March 31, 2020, excluding our
Martinez refinery, decreased slightly due to lower outside service costs
attributed to lower maintenance activity and the initiation of our cost
optimization measures. Operating expenses related to our Logistics segment
decreased when compared to the same period in 2019 due to decreased utility
expenses coinciding with lower throughput at certain PBFX assets and lower
environmental clean-up remediation costs.
General and Administrative Expenses- General and administrative expenses totaled
$82.5 million for the three months ended March 31, 2020 compared to $57.6
million for the three months ended March 31, 2019, an increase of approximately
$24.9 million or 43.2%. The increase in general and administrative expenses for
the three months ended March 31, 2020 in comparison to the three months ended
March 31, 2019 primarily related to higher employee-related expenses, including
incentive compensation and increased headcount. Additionally, we experienced
higher professional fees primarily related to information technology support and
transaction and integration costs pertaining to the Martinez Acquisition. Our
general and administrative expenses are comprised of personnel, facilities and
other infrastructure costs necessary to support our refineries and related
logistics assets.
Depreciation and Amortization Expense- Depreciation and amortization expense
totaled $119.6 million for the three months ended March 31, 2020 (including
$116.7 million recorded within Cost of sales) compared to $105.8 million for the
three months ended March 31, 2019 (including $103.0 million recorded within Cost
of sales), an increase of approximately $13.8 million. The increase was a result
of additional depreciation expense associated with the assets acquired in the
Martinez Acquisition and a general increase in our fixed asset base due to
capital projects and turnarounds completed since the first quarter of 2019.
Change in Fair Value of Contingent Consideration- Change in the fair value of
contingent consideration was a gain of $52.8 million for the three months ended
March 31, 2020. This change primarily represents the decrease in the estimated
fair value of the total Martinez Contingent Consideration we expect to pay in
connection with our acquisition of the Martinez refinery. There were no such
costs in the same period of 2019.
Change in Tax Receivable Agreement Liability- Change in Tax Receivable Agreement
liability for the three months ended March 31, 2020 represented a loss of $11.6
million. There was no change in the Tax Receivable Agreement liability for
the three months ended March 31, 2019.
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Change in Fair Value of Catalyst Obligations- Change in the fair value of
catalyst obligations represented a gain of $11.7 million for the three months
ended March 31, 2020 compared to a loss of $3.1 million for the three months
ended March 31, 2019. These gains and losses relate to the change in value of
the precious metals underlying the sale and leaseback of our refineries'
precious metal catalysts, which we are obligated to repurchase at fair market
value on the lease termination dates.
Debt Extinguishment Costs- Debt extinguishment costs of $22.2 million incurred
in the three months ended March 31, 2020 relate to early redemption of our 2023
Senior Notes. There were no such costs in the same period of 2019.
Interest Expense, net- PBF Energy interest expense totaled $49.2 million for the
three months ended March 31, 2020 compared to $39.5 million for the three months
ended March 31, 2019, an increase of approximately $9.7 million. This net
increase is mainly attributable to higher interest cost associated with the
issuance of the 2028 Senior Notes in February 2020 and the drawdown on our
Revolving Credit Facility to partially fund the Martinez Acquisition and other
general corporate purposes. Interest expense includes interest on long-term debt
including the PBFX credit facilities, costs related to the sale and leaseback of
our precious metal catalysts, 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. PBF LLC interest expense totaled $51.7 million and $41.5 million for the
three months ended March 31, 2020 and March 31, 2019, respectively (inclusive of
$2.5 million and $2.0 million, respectively, of incremental interest expense on
the affiliate note payable with PBF Energy that eliminates in consolidation at
the PBF Energy level).
Income Tax Expense- PBF LLC is organized as a limited liability company and PBFX
is an MLP, 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 and our Canadian subsidiary 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, which includes
PBF LLC's allocable share of PBFX's pre-tax 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 99.0% and 99.0%, on a weighted-average basis for the three months
ended March 31, 2020 and 2019, 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 or PBFX (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,
excluding the impact of noncontrolling interests, for the three months ended
March 31, 2020 and 2019 was 26.0% and 26.0%, respectively.
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Noncontrolling Interest- 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 consolidates the financial results of PBF LLC and its
subsidiaries, including PBFX. With respect to the consolidation of PBF LLC, the
Company records a noncontrolling interest for the economic interest in PBF LLC
held by members other than PBF Energy, and with respect to the consolidation of
PBFX, the Company records a noncontrolling interest for the economic interests
in PBFX held by the public unitholders of PBFX, and with respect to the
consolidation of PBF Holding, the Company records 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 Condensed Consolidated
Statements of Operations 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 unitholders of PBFX and by the third-party
stockholders of certain of Chalmette Refining's subsidiaries. The total
noncontrolling interest on the Condensed Consolidated Balance Sheets represents
the portion of the Company's net assets attributable to the economic interests
held by the members of PBF LLC other than PBF Energy, by the public common
unitholders of PBFX and by the third-party stockholders of the two Chalmette
Refining subsidiaries. PBF Energy's weighted-average equity noncontrolling
interest ownership percentage in PBF LLC for the three months ended March 31,
2020 and 2019 was approximately 1.0% and 1.0%, respectively. The carrying amount
of the noncontrolling interest on our Condensed Consolidated Balance Sheets
attributable to the noncontrolling interest is not equal to the noncontrolling
interest ownership percentage due to the effect of income taxes and related
agreements that pertain solely to PBF Energy.
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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 GAAP ("Non-GAAP"). These measures should not be considered a
substitute for, or superior to, measures of financial performance prepared in
accordance with 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-GAAP measures presented include Adjusted Fully-Converted Net Income
(Loss) excluding special items, EBITDA excluding special items and gross
refining margin excluding special items. Special items for the periods presented
relate to LCM inventory adjustments, changes in the Tax Receivable Agreement
liability, debt extinguishment costs and changes in the fair value of contingent
consideration. See "Notes to Non-GAAP Financial Measures" below for more details
on all special items disclosed. 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 helpful 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.
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 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.
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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, 2020 and 2019 (in millions, except share and per share amounts):
                                                                                          Three Months Ended March 31,
                                                                                          2020                     2019
Net income (loss) attributable to PBF Energy Inc. stockholders                     $      (1,065.9)          $       229.2
Less: Income allocated to participating securities                                             0.1                     0.1
Income (loss) available to PBF Energy Inc. stockholders - basic                           (1,066.0)                  229.1

Add: Net income (loss) attributable to noncontrolling interest (1) 

                  (14.6)                    3.1
Less: Income tax benefit (expense) (2)                                                         3.9                    (0.8)
Adjusted fully-converted net income (loss)                                         $      (1,076.7)          $       231.4
Special Items: (3)
Add: Non-cash LCM inventory adjustment                                                     1,285.6                  (506.0)
Add: Change in Tax Receivable Agreement liability                                             11.6                       -
Add: Debt extinguishment costs                                                                22.2                       -
Add: Change in fair value of contingent consideration                                        (52.8)                      -
Add: Recomputed income taxes on special items                                               (333.1)                  131.6

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

$ (143.2) $ (143.0)



Weighted-average shares outstanding of PBF Energy Inc.                                 119,380,210             119,880,915
Conversion of PBF LLC Series A Units (4)                                                 1,208,798               1,206,325
Common stock equivalents (5)                                                                     -               1,088,504
Fully-converted shares outstanding-diluted                                             120,589,008             122,175,744

Diluted net income (loss) per share

$ (8.93) $ 1.89 Adjusted fully-converted net income (loss) per fully exchanged, fully diluted shares outstanding (5)

$ (8.93) $ 1.89 Adjusted fully-converted net income (loss) excluding special items per fully exchanged, fully diluted shares outstanding (3) (5)

$ (1.19) $ (1.18)

----------

See Notes to Non-GAAP Financial Measures.


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Gross Refining Margin and Gross Refining Margin Excluding Special Items
Gross refining margin is defined as consolidated gross margin excluding refinery
depreciation, refinery operating expense, and gross margin of PBFX. We believe
both gross refining margin and gross refining margin excluding special items are
important measures of operating performance and provide useful information to
investors because they are helpful metric comparisons 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 (revenues less cost of
products and other) to industry refining margin benchmarks and crude oil prices
as defined in the table below.
Neither gross refining margin nor gross refining margin excluding special items
should be considered an alternative to consolidated gross margin, 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 these 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 (in millions,
except per barrel amounts):

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