Yahoo Finance PBF Energy Inc. (NYSE:PBF) Q1 2024 Earnings Call Transcript
PBF Energy Inc. (NYSE:PBF) Q1 2024 Earnings Call Transcript May 2, 2024
PBF Energy Inc. beats earnings expectations. Reported EPS is $0.85, expectations were $0.66. PBF Energy Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, everyone and welcome to the PBF Energy First Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] Please note 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.
Colin Murray: Thank you, Abby. Good morning and welcome to today’s call. With me today are Matt Lucey, our President and CEO; Karen Davis, our CFO and several other members of our management team. Copies of today’s earnings release and our 10-Q filing, including supplemental information, are available on our website. Before getting started, I’d like to direct your attention to the Safe Harbor statement contained in today’s press release. Statements in our press release and those made on this call that express the company’s or management’s expectations or predictions of the future are forward-looking statements intended to be covered by the Safe Harbor provisions under federal securities laws. There are many factors that could cause actual results to differ from our expectations, including those we describe in our filings with the SEC.
Consistent with our prior periods, we will discuss our results today, excluding special items. In today’s press release, we described the non-cash special items included in our quarterly results. The cumulative impact of these items increased fourth quarter results by an after-tax amount of approximately $900,000 or $0.01 per share, primarily related to a change in the fair value of contingent consideration associated with the Martinez acquisition and our share of St. Bernard Renewables LLC lower cost of market inventory adjustment, which were partially offset by an adjustment to the gain on the formation of SBR. Also included in today’s press release is further guidance information related to our expectations for the second quarter throughput.
For any questions on these items or follow-up questions, please contact Investor Relations after the call. For reconciliations of any non-GAAP measures mentioned on today’s call, please refer to the supplemental tables provided in today’s press release. I’ll now turn the call over to Matt Lucey.
Matt Lucey: Thank you, Colin. Good morning, everyone and thank you for joining our call. While the markets early in the quarter reflected somewhat typical seasonal weakness, industry maintenance and increasing consumer demand through the quarter helps strengthen the markets as we progress from the mild winter into spring. With that backdrop, Toledo and Delaware city refineries underwent significant turnarounds beginning in late February and in early March. We completed Toledo turnaround in mid-April. The Delaware City FCC is in the midst of startup today. Despite the impact of the turnaround in Toledo, we did benefit from attractive Syncrude pricing, which improved our capture rate in the quarter. That said, Syncrude differentials have now normalized.
Operations at Chalmette were as planned with no significant issues during the quarter. We do have a turnaround plan for the fourth quarter at Chalmette. Our West Coast refining system was impacted by the carryover of issues from Q4. Capture rates were negatively impacted by higher price inputs flowing through the system. Turnaround work has begun at Martinez on the hydrocracker and other associated units. We expect to complete this work in the second quarter and should have a clear operational runway for the remainder of the year for the West Coast. We continue to see strength in demand for our products across all operating regions and inventories remain tight. We ended the quarter and net cash position. The completion of our balance sheet transformation in 2023 provides PBF with the ability to deliver shareholder returns across market cycles and the flexibility to take advantage of market opportunities should they appear.
We continued to demonstrate our commitment to return cash to shareholders with approximately $125 million of share repurchases in the first quarter. In addition, our Board of Directors approved the payment of our regular quarterly dividend of $0.25 per share. Longer term, we continue to be constructive on global refining market, global capacity, including new additions, and refined product demand remain tightly balanced. New capacity additions are needed to keep pace with growing global demand and offset capacity shutdowns and conversions. Geopolitics and the associated disruptions in historic trade flows continue to create tension in the market does accruing to the U.S. refiners, specifically coastal U.S. refiners such as PBF. In this environment, PBF should continue generating strong earnings, free cash flow and promoting long term value for our shareholders.
Before turning the call over to Karen, I’d like to take an opportunity to publicly introduce and welcome our new Head of Refining, Mike Bukowski. Our previous Head of Refining, Steve Steach, is set to enjoy a well deserved retirement after a long and successful career. Mike joins us with over 30 years of refining experience. And we are excited that he is bringing his deep expertise and new perspectives to PBF operations. Our focus remains on the safe and reliable operations of all our assets and we believe Mike will help us to elevate our performance across the system. With that, I’ll turn it over to Karen.
Karen Davis: Thank you, Matt and good morning. For the first quarter, we reported adjusted net income of $0.85 per share and adjusted EBITDA of $301.5 million. Earnings per share included a benefit of $0.04 per share related to a reduction in our effective tax rate to approximately 21% due to the exercise of employee stock options during the quarter. We expect our effective tax rate to return to the normalized range of 24% to 26%. Also, included in the PBF results is an $800,000 loss related to our equity investment in St. Bernard Renewables. Standalone EBITDA for SBR after backing out a lower of cost or market adjustment was approximately $4 million. We completed a catalyst change and some optimization work in Q4, allowing us to produce an average of 18,000 barrels per day of renewable diesel in the first quarter.
We expect similar production levels in the second quarter. Cash flow from operations for the quarter was approximately $293 million, excluding a working capital headwind of approximately $278 million. The main drivers of the working capital headwind relate to cash outflows of approximately $100 million due to the tightening of our hydrocarbon net payable position, which was magnified by the impacts of our turnaround activities during the quarter. There was also a payout of accruals related to employee compensation of $110 million, a payment under the tax receivable agreement of $45 million, and approximately $25 million of other items in the aggregate. Consolidated CapEx for the first quarter was approximately $285 million, which includes refining, corporate and logistics.
Full year 2024 guidance remains in the $800 million to $850 million range, which includes about $50 million at discretionary strategic CapEx. We continue to demonstrate our commitment to shareholder returns by returning approximately $155 million to shareholders in the first quarter, which included dividends and share repurchases. Since the repurchase program was introduced in December of 2022, through the end of the first quarter, we have completed approximately $814 million in share buybacks. This represents over 14% of our outstanding shares at the beginning of the program. We have reduced our total share count to approximately 119 million shares as of March 31, 2024. We ended the quarter with over $1.4 billion in cash and approximately $1.2 billion of debt.
Also of note, the final payment of the Martinez earn-out now stands at approximately $19 million and we expect this payment will be made in the second quarter. Maintaining our firm financial footing and strong balance sheet remain priority. To the extent, our operations continue to generate cash beyond the needs of the business and the requirement to continuously invest in our assets, a greater percentage of that cash should be available for shareholder returns. Sustainable dividends and share repurchases are important components of our overall long-term capital allocation and shareholder return objectives. As always, we will look at all opportunities to allocate capital through the lens that directs cash to the option that generates the greatest long-term value for our shareholders.
Operator, we’ve completed our opening remarks, and we’d be pleased to take questions.
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