Good day everyone and welcome to the PBF Energy fourth quarter and year-end 2024 earnings conference call and webcast. At this time all participants have been placed in a listen-only mode and the floor will be open for questions following management's prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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.

Thank you, Brittany. Good morning and welcome to today's call. With me today are Matt Lucey, our President and CEO, Mike Bukowski, our Senior Vice President and Head of Refining, Karen Davis, our CFO, and several other members of our management team. Copies of today's earnings release and our 10K 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 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. Consistent with our prior periods, we'll discuss our results excluding special items which are described in today's press release. Also included in the press release is forward-looking guidance information. For any questions on these items or other follow-up or conciliations of any non-GAAP measures mentioned on today's call, please refer to the supplemental tables provided. Now I'll turn the call over to Matt Lucey.

Thanks, Colin. Good morning, everyone, and thank you for joining the call. I would like to address the fire that we experienced at the Martinez Refinery on February 1st. We are still early in the recovery process. It is limited until the completion of ongoing investigations. We are in the process of assessing the extent of the damage and we have experienced personnel set up to determine the necessary next steps. Looking ahead, while we don't have all the answers for the people of California. While California is a difficult regulatory environment, the California market, with its unique specifications, is short refined products and thus relies on imports. the situation is set to compound itself with the announced shutdown of la basin while the full impact from this incident is not yet known it's important to note that pbf is properly results reflect the challenging markets faced by refiners comprised mainly of a weak margin environment and poor crew differentials which is a continuation of the conditions that dominated the second half of 2024. We successfully executed the dedication and focus of our outstanding employees who work 24-7 in all market conditions to supply the refined products that are still very much in demand. The weak margins and market conditions reflect our longer-term view that global refining supply and product demand remain tightly balanced. We believe this provides a constructive backdrop for refiners, as demand for our product continues to grow globally. Indeed, forward cracks look constructive. We expect to see a balancing of the disproportionate capacity additions we saw in 2024. 2025 net capacity additions demand growth in the 750,000 barrels per day range. Narrow, light-heavy, sweet-sour spreads have been a headwind to our capture rate. Plexi assets in the near term. That said, we like our predominantly coastal and feedstocks that it provides. As a global crew and sour barrels, that will benefit, and PBF is focused. One of PBF's strengths is our financial position. In this current market cycle, PBF's balance sheet provides us with flexibility to weather challenging markets and look ahead to the next market cycle. To be successful and enhance value for our investors, we must operate safely, reliably, and responsibly, and we must do it efficiently. With that in mind, our team has been developing a business improvement initiative across our refunding. We'll now turn the call over to the Cost Savings Program.

Thank you, Matt. Good morning, everyone. As Matt mentioned, we have a number of initiatives ongoing at PBF that we are collectively calling our Refining Business Improvement Program, or RBI for short. Achieving our targeted cash expenditure savings will be a corporate-wide effort that focuses on improving our current standards of fiscal discipline and operational excellence. We are committed to improving what are already excellent programs. We have identified several opportunity areas within the refining business. We have established teams to systematically capture these opportunities and effectively institutionalize the improvements to ensure the durability of these savings year over year into the future. We have launched five separate efforts led by different subject matter experts targeting over $200 million in run rate cost savings to be implemented by the end of 2025. As a basic framework for the program, we've identified energy usage and turnarounds as the largest opportunity, representing approximately, beyond those areas, 15% each of our targeted savings. And I've identified...

In 49, included in our results is a 4.8 million loss related to PBF's equity investment in St. Bernard Renewables. SBR produced an average of 17,000 barrels per day of renewable diesel in the fourth quarter. First quarter RD production is expected to be 10,000 to 12,000 barrels per day as a result of a planned catalyst change in March. Cash flow used in operations for the quarter was approximately 330 million which includes a working capital headwind of approximately 83 million. Consolidated capex for the fourth quarter was approximately 237 million which includes refining corporate and logistics full year 2024 capex was approximately 1 billion dollars as mentioned on our third quarter call this amount includes approximately 145 million of cash outflows related to our 2023 capital program for work completed at the end of 2023 you should note that our capex guidance is on an incurred basis but our cash flow statement will reflect what we actually spend for the capital expenditures and turnarounds in the through share repurchases and our dividend we returned approximately 60 million to shareholders in the fourth quarter since our repurchase program was introduced in december of 2022 through the end of the fourth quarter we completed approximately 1 billion in share repurchases this represents over 17 of our outstanding shares at the beginning of the program. Additionally, our Board of Directors approved a regular quarterly dividend of 27.5 cents per share. We ended the quarter with approximately $536 million in cash and approximately $921 million of net debt. Maintaining our firm financial footing and strong balance sheet remained priorities. Our ability to fund operations and continuously invest in our assets will always be of paramount importance. We entered last year with the strongest balance sheet we have ever had. Our under-levered balance sheet enabled us to increase net debt during the weak market conditions of 2024. As the market rebalances off the 2024 lows, we expect to use periods of strength to focus on de-levering and preserving the balance sheet. After prioritizing our balance sheet and operations, we'll look at all capital allocation opportunities to determine which promotes the greatest long-term value. Operator, we've completed our opening remarks and we'd be pleased to take questions.

In a moment, we will open the call for questions. All callers limit each turn to one question and one follow-up. You may rejoin the queue with additional questions. If you would like to ask a question, please press the star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. And we will take our first question from Roger Red with Wells Fargo.

Your line is now open. hey good morning everybody um i don't think i changed my name but i'll roll with it here um anyway quick question for you on you know just focusing on martinez here uh recognizing regulatory environment in california is you know is what it is what's the timeline you believe that we will get greater clarity on, you know, what the damage is, what it'll take to fix it, and, you know, when you'll be allowed to do the work? What's kind of a broad guideline we should consider here?

Thanks. Thanks, Mr. Redd. Look, the reality is the sort of ground zero where the ignition took place. That's actually still cordoned off. We expected, quite frankly, to have access to it already, but we don't. So again, I'm getting dangerously close to speculating. I suspect that we will get access to that area shortly. And as I said, collaboratively, different stakeholders. And so once we get full access to the site, and we have to appreciate, We were commencing a turnaround in damage from assessed, so I suspect we'll be getting access to that cordoned-off area very soon. And then we already have work they can do now, but we should be able to, you know, over the next, that was in front of that, but over the next week or so, I think we'll have a much better view. And all I can promise to you and to our shareholders is to communicate openly and transparently.

Understood. Yeah, timing is everything, right? The second part or the second question I have also ties in with this. Given that it is premature to know exactly how long it's down and what the costs are, If we look at, you know, kind of Q4 results, which consume some cash, Q1, which, you know, let's just say it's neutral or a little bit of a negative impact based on where things are tracking so far. What are some of the levers you can pull on in 2025 to ensure that the company, you know, is in a sufficient position liquidity-wise to operate with one of the units down to do whatever repairs are necessary? You know, are there referrals or CapEx or, you know, I'll leave some of the bigger kind of topics out there for you to answer rather than putting words in your mouth. but what should we be watching? Maybe that's more of a question for you, Karen. I'm not really sure, but just with the uncertainty, how should we think about what you'll do from a cash position standpoint?

I'll make a couple comments and then turn it over to Karen. You know, in regards to our financial strength, Karen, I think, mentioned in her position, our history in our industry, even where we see the 24 market condition. If you go back to what we need today, even though is well below. When you look at 2020, without everything is predicated on your view of the market, that view in combination with the 2020 for a major turnaround. This will impact that schedule, but our ability to generate cash as a company will not hinder on, but we always have the capability to the degree our outlook changes or the market changes to to manage our business and the and the capital and the work that we do you know I just would add this again on reducing leverage is a top priority the it is a

core tenet how we're running this business we intend to and that gives us the we'll take our next question from Ryan Todd with Piper Sandler your line is open thanks um maybe a a follow-up one follow-up on marketing as you mentioned uh the insurance that you have that should offset some of the impact of this can can you maybe um help us walk through how the insurance offset works what what sort of the impact it might offset if it or if it's too early to say at this point um and then as a second question on on renewable diesel if we switch gears over there. Can you maybe provide an update? There's a lot of moving pieces here into the early part of 2025. Maybe an update on your view of the market and how you might approach, how you think you might approach 45-seat credits in the first quarter, if you think you'll be able to book or not book in any of those dynamics. Thanks.

Sure. So, in regards to insurance, and I can get into absolute specifics of it, shoring in depth we began. It's a very good relationship with the insurance community, and we've worked very close with them every year. And the coverage is with the proper providers, and we'll be working with them as we assess what happens, and it's truly to speculate on that. So I feel very, very comfortable and pleased. Insurance is a funny thing. You hate paying for it when you don't need it, and you hate the fact that you need it, but you're happy that's there, you know, in a time like this. So in regards to RD, nothing is static, obviously. I think the developments over 25 are going to be interesting to watch. The previous in this blunders tax, in regards to accounting for unclear 45s a year.

Some of our peers have announced we will on the guidelines that are available right now.

Great. Thank you.

Thank you. We'll take our next question from Minav Gupta with UBS. Your line is open.

Good morning. I have more of a theoretical question, but let's say we do go down the line of peace between Ukraine and Russia. It will have multiple impacts for refiners. Obviously, more product can come in, but what can also happen is more heavier crudes come to the market, BGO comes to the market. Do you think in that scenario, if we do have a complete peace between UK and Russia, you could see a wider quality discounts, heavy light widening, which could help PVF out?

I do, but that's Tom.

Yeah, thanks, Manav. You know, in regards to the question, I mean, I think it's probably really what are the terms of the peace, but, you know, broadly speaking in the way that you presented it, in terms of peace at that point certainly should be, I think we really need to walk but in a vacuum you know perfect uh my my quick follow-up which i wanted

to ask you was when you did buy martinus one of the thought processes was if one of the assets on the west coast does go down you wanted a couple of assets there to benefit from it in this scenario when martinus is down can you run torrents hard at nameplate capacity or maybe even over to actually benefit from a spike in the west coast margins?

The torrent refinery is running and will maximize, as we do at all of our facilities, to the market that exists as producing products which are desperately needed in California.

Thank you.

Thank you. We'll take our next question from Neil Medda with Goldman Sachs. Your line is open.

Yeah, Stan, on the macro, obviously a very dynamic environment around tariffs, and you guys do import some barrels, including some crude from Canada, but also some waterborne So just your perspective of how this potentially could ripple through the system and any frameworks that you're using to evaluate a very dynamic situation. dynamic it is um look the the canadian mexican tariffs seem to be different than you know broader

geopolitical issue and so the duration it does seem to but these canada and mexico are a bit different uh i sort of chuckled to myself canada is more of a mexican standoff because much less in terms of if they don't sell it to the U.S., it's going to stay in the ground. I do think it's important.

In terms of, I mean, Matt gave a very indicator as to how the market would respond. Waterborne crude, cash markets in certain areas didn't have time to sort of respond. I think it does get to the point where when you look at the market today, I do think that the likelihood of tariffs, the market is saying you're in the maintenance period, You've got low runs, a situation where crude is building, coming off of basically the low of the five-year and is now moving closer. And products have been drawn. I mean, so, I mean, if we get back specifically to the effects of...

The only thing else I would add is, as I look at it...

That's great. And the follow-up is, maybe this is for you, Matt, maybe for Karen, but you pointed to, you know, net debt to cap, kind of at that 16% range. and therefore the priority, even though that's a pretty good balance sheet, is to delever a bit before you return capital to shareholders in the form of buybacks. What's the framework, is that decision point of a certain leverage level, either on that metric or net debt to EBITDA that we should be looking for when you say you want to flip from deleveraging back to buybacks?

I think it would be impossible for us to give you one metric. I think it's a combination of the current market we're in, the outlook going forward in the short term to medium term. You have a lot of sort of different equations, but what we intend to do is as best we can for our investors on balance sheet, and it also includes returning cash to shareholders, and we'll balance that to the best of our ability.

Is there a target through the cycle net debt number, maybe, is a better way of asking it?

You know, I would say maybe I'll answer the question with what we could see as the maximum, and that would be our goal has always been to maintain investment grade level credit metrics, which we think could be as high as, you know, currently we're at 16%. It's our goal to be very conservative.

Thanks, Karen. Thank you.

Thank you. Our next question will come from John Royal with J.P. Morgan. Your line is open.

Thanks for taking my question. So, my first question is on 4Q cash flows. We noticed cash for months, even ex-working capital came in a little late relative to earnings. It looks like there's $100 million plus of deferred tax as one of the drivers. I'm just hoping for some color on the deferred tax and any other major items to call out before QCF.

Yeah. I think you hit on one of the drivers. The other one was just an overall, and this is the main one, is an overall decline in our net payable related to inventory. Looking forward into Q1, working capital is going to be driven primarily by hydrocarbon pricing. But I would also point out that we did make a TRA payment of $130 million in January, which will provide a headwind.

Thank you, Karen. And then my follow-up is on the business improvement plan. You gave a little bit of color in the opener and mentioned the key piece being around energy usage and turnaround. And I think next quarter maybe some more detail. But how do you expect the $200 million to phase in this year? How should we think about kind of first half versus second half? And does the outage of Martinez impact the plan in any way?

I'll make a couple comments and then turn it over to Mike. In regards to the $200 million, what we said last quarter and what the $200 million is pointing to, it's run rate savings as of January 1, 2020 set. Each of our refineries and coming beginning to exit the pledge that we made was as of the beginning of next year. There will be something in 2025. And no, I don't believe the events at Martinez will impact this initiative.

Yeah, well said, Matt. I think as we develop the detailed implementation plans prior to the end of the first quarter, we'll have a really good line of study to how much exactly we're going to hit in 2025. But we will be adjusting, every time we do an initiative, we'll be adjusting our budget targets so that those savings, operating KPIs, as well as the financial KPIs, but operating KPIs.

Very clear. Thank you.

Thank you. We'll take our next question from Jason Gableman with TD Cowan. Your line is open.

Yeah. Hey, morning. Thanks for taking my questions. I wanted to go back to the Martinez incident, if I could. and it's not completely clear. Is the entire facility shut down right now, or is it just a unit that shut down? Can you give us any more color as to what unit was impacted? And as you think about your contractual obligations, do you need to source product from third parties in order to meet those while the asset's down?

So specifically in regards to, you know, the units, we were in the midst of commencing with the CAC-D hydrotreater. As a result of the fire, we did take down, is down. You have the turret.

And in terms of commitments with customers and needing to source product from third parties. Oh, yeah, I'm sorry.

Yeah. From a commercial standpoint, we don't have anything to report. We'll be able to manage through nothing to highlight.

And then just a quick accounting one. I noticed in your full year 25 guidance that Jan 1 share count was actually up versus 4Q. I think it was guided to 121 million versus 115 in 4Q. was that just related to incentive comp or was there something else that drove that thanks i think that's going to be related to um dilution potential dilution from incentive comp okay great thanks for the answers your next question comes from matthew blair with tph your line is now open uh great thank you um i wanted to circle back to the rbi program so the 200 million of run rate cost savings.

I think that comes out to about $0.60 a barrel. Could you talk about how we can measure that? Does that all come through refining OPEX or would it also come through corporate GNA? And then just looking at your published OPEX in 2024 versus like 2018, 2019 levels, it's about $2 a barrel higher. So is this $0.60, should this be thought of as a pretty conservative figure, and there might be more wood to chop after that. Thanks.

So, first of all, in terms of the accounting, most of it, it's going to come through refining OPEX, but the capital projects and the turnarounds will come through our capital program. I would think about it that way. On the 60 cents per barrel versus previous years, I would consider this a start. We think there's more opportunity beyond 2025. This is a program which is not going to end. This is going to be a new way of life for us in terms of driving continuous improvement, not only in how we manage costs, but how we innovate to drive the fish out. We will let that stew in terms of managing our business, including how we manage our reliability and how we manage our health. I would look at the 16-year-old Mike just said.

That's good. And then you also mentioned that refining capacity additions should match up pretty well with incremental demand growth this year. I think there's also a comment that the forward cracks look constructive. Do you think at the strip that PBF would be free cash flow positive this year?

Yes.

Great. I'll leave it there. Thanks.

Thank you. Your final question will come from Paul Chang with Scotiabank. Your line is open.

Hey, guys. Good morning. Matt, when I'm And looking at your first quarter throughput guidance, East Coast seems low, given that you only have the hydrocracker turned around there, which is a pretty small unit. Is there anything we should be aware why that the guidance is relatively low, and how that impact on your full year expectation for that region? That's the first question. Second question that is somewhat related to TELIC, but I'm not going to ask what you think about TELIC, but instead, for Tonito, you run a lot of the SYNC COO. If you repay SYNC COO with domestic light oil, how does that impact your refinery yield, throughput, and optics? Just trying to get some better understanding on that. Thank you.

Yeah. Okay. So your first question was in regard to East Coast throughput. I think the throughput that is down is a bit on the back of the market that has existed. The market in which we're operating, and when it's a weaker market, throughput can come down. So there's certainly nothing struck. And if the market, in regards to Toledo, there is some element i refer to it as a mexican state you do not have the ability nor does have the ability to simply replace all by tariffs could manufacturing fuel that is an economic to run so

matt if the domestic light oil is available uh for toneto and indeed that you're going to replace sink, cool, and run it, how that impacts your product yield and full-put if that is available and you make that decision. So I'm trying to understand what technically is available, is the capability that you can do in that particular case. And also that on my first question on the East Coast, if the first quarter end up, that will be the one rate.

So we assume full year your runway will be lower than the previous full year guidance thank you no as I said you have to make a market assumption to drive what you think through puts are but we're not limited by any stretch on the East Coast in regards to the fear I think your question is theoretical if you are able to deliver all US domestic light sweet crude what would be the yield impact to Toledo. Toledo, not unlike any other refiner, would have a yield impact. We run a significant slate of synthetic crude out of Canada, which has the extent you change that crude slate for Toledo or for any other refinery in Chicago or throughout the pad, there will be yield impact to get into the specifics of exactly what happened.

By the way, that's not the degree you're not running your optimized crude, Matt, since I'm the last caller here, can I sneak in a third question?

All just for you.

Thank you. Really appreciate it. On the insurance, I assume that you have the business interruption insurance also in here. And can you tell us that what's the deductible?

Look, I don't want to get into specifics on insurance. We have a manageable deductible. And as I said before.

Okay, we do.

Thank you. We have reached the end of our question and answer session. And we'll turn it over to Matt Lucey for closing remarks.

We greatly appreciate your participation today and look forward to communicating with each of you in the future. Thank you very much.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.