Good day, everyone, and welcome to the PBF Energy Second Quarter 2025 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, Mike. Good morning and welcome to today's call. With me today are Matt Lusky, our President and CEO, Mike Lukowski, our Senior Vice President and Head of Refining, Karen Davis, our CFO, and several other members of our Management Copies of today's earnings release and our 10Q 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 questions, please contact Investor Relations. For reconciliations of any non-GAAP measures mentioned on today's call, please refer to the supplemental tables provided in the press release. I'll now turn the call over to Matt Lucey.

Thanks, Colin. Good morning, everyone. and thank you for joining our call. PBF's second quarter was a marked improvement over the prior few quarters. We definitively see constructive tailwinds ahead, specifically on the cruise side. With much better discovery, we're working towards a full restart by the end of this year. The work our team in Martinez is doing is commendable. They continue to work diligently to maintain safe operations and produce much needed products for the California market, while at the same time, managing the significant project to restore full operations. Our refining system and second quarter product margins were supported by strong demand, while the light-heavy crude differentials continued to be a significant challenge. Two million barrels of medium and heavy crude were taken off the market between 2022 and 2023 time frame. Announcements to date and projecting forward, we should see between two and two and a half million barrels per day coming back by this autumn, which will coincide with seasonal refinery maintenance. With this, we expect to see light-heavy spreads wind out as we move deeper into the third and fourth quarter. The product markets are looking attractive. Distillate in particular looks quite strong. Global distillate supply and demand balances remain in deficit. Tracks should remain supportive. For a high refinery utilization, it will be difficult for distillates to restock with continuing strong demand. to see incremental product demand growth exceeding net refining capacity additions. Research indicated only approximately 500,000 barrels a day of net refinery capacity additions in 2025. This does not keep up with growing global demand, and as we have seen, capacity rationalization can happen quickly and unexpectedly. We are seeing more rationalizations than expected in 2025 and 2026, with fewer new additions as we look further out. Europe recently lost 113,000 barrel a day, Lindsay refinery in the UK, and we still have the pending shutdowns of Philly. PBF remains focused on controlling the aspects of our business that we can control. I'm very pleased with our progress on the business improvement initiatives that we've initiated. This effort will result in improved efficiency and reliability across our system, which should, in turn, to be successful and enhance value for our investors, we must operate safely, must operate reliably, and responsibly, but we must do it as efficiently as possible. With that, I'll turn the call over to Mike McCaus.

Good morning, everyone. Before updating on the progress we've made on a refining business improvement program, RBI for short, I'll provide a few comments on second quarter operations. On the West Coast, we continue to progress with the full repair and restart of Martinez. We are managing a number of work streams, including running the available elements of the refinery and building the damaged areas. At this point, we've completed the demolition of the damaged areas. As we progress through the demolition and deeper into those areas, we identified additional elements that need to be addressed in the rebuild process, which has expanded our previous scope of work and adjusted the timeline to reflect an expected restart by year end. Torrance is currently conducting a hydrocracker turnaround, and we expect it to be complete by the beginning of September. Aside from a few minor issues, the rest of our system operated reasonably well in the quarter, and we have no major turnaround work for the remainder of the year. Shifting topics to RBI, we announced that we expected to recognize $230 million of annualized run rate savings by the end of 2025 and $350 million of run rate savings by the end of 2026. We are currently on track to exceed those stated targets. We currently have over $125 million of run rate savings implemented so far. The savings will materialize as we implement the programs in refining operating expenses, capital and turnaround budgets, and general and administrative expenses. As a reminder, we will realize the full value of these savings in 2026 and a prorated portion in 2025 as we move through implementation. We started the process with the East Coast, Torrance, Procurement, and our top-to-bottom organizational review from headquarters. This is a continuous improvement effort. In addition to the ongoing work streams, we are now working at Martinez and Chalmette to generate additional actionable IDs that will translate to real cost savings.

We have a number of positive initiatives going on across our organizations but our main priority will always be to focus on safe reliable and responsible operations across our systems i'll turn the call over to karen davis for our financial overview thanks mike for the second quarter we reported an adjusted net loss of a dollar and three cents per share an adjusted ebitda of 61.8 million our discussion of second quarter results excludes the net effect of four special items, including $30.4 million in incremental OPEX related to the Martinez refinery incident, a $189 million gain on insurance recoveries, an $8 million gain related to PBF's 50% share of SBR's lower of cost market adjustment for the quarter and approximately 13.6 million of severance and other charges associated with the RBI initiative. The 189 million gain on insurance recoveries related to the Martinez fire is a result of the initial unallocated payment of 250 million that we received from our insurance underwriters in the second quarter. 61 million of the total proceeds was applied to the insurance receivable that was recorded in q1 and the remaining 180 million was recorded as a gain on insurance recovery for the quarter we expect that we will negotiate additional interim payments however the timing and amount of any agreed upon future payments will be dependent on the amount of covered expenditures that we actually incur plus calculated business interruption losses. Our Q2 P&L reflects incremental OpEx at Martinez of $30.4 million that we are reflecting as a special item because it relates to construction of temporary equipment to restart undamaged units, costs incurred to address impacts to fire on the units that were being prepared for turnaround and other fire-related impacts. We anticipate recovering a portion of this amount through insurance, but the specific amount of the recovery will be determined as we progress further into the claims process. Generally speaking, any insurance proceeds that we receive in future periods will be reflected as gain on insurance recoveries on our income statement and reported as a special item. Shifting back to our normal quarterly results discussion, also included in our results is a $4.3 million loss related to PBF's equity investment in St. Bernard Renewables. SBR produced an average of 14,200 barrels per day of renewable diesel in the second quarter after completing a planned catalyst change that began in March and ended in April. Third quarter renewable diesel production is expected to be 16,000 to 18,000 barrels per day. Cash flow from operations for the quarter was $191.1 million, which includes a working capital benefit of approximately $79 million, primarily related to an approximately 2 million barrel reduction in inventory during the quarter as compared to March 31st levels when inventories were elevated as a result of the Martinez fire. This benefit was partially offset by a decrease in our payables position. Also included in our operating cash flow is 118 million of the 250 million in total insurance proceeds received in the quarter. Cash invested in consolidated capex for the quarter was $154.7 million, which includes refining, corporate, and logistics. This amount excludes second quarter capital expenses of approximately $104 million related to the Martinez incident. Year-to-date rebuild capital expenses at Martinez are approximately one hundred and thirty two million additionally our board of directors approved a regular quarterly dividend of twenty seven and a half cents per share we ended the quarter with approximately five hundred and ninety point seven million in cash and approximately 1.8 billion of net debt maintaining our firm financial footing in a resilient balance sheet remain priorities. At quarter end, our net debt cap was 30% and our current liability, current liquidity is approximately $2.3 billion based on cash balances of approximately $590 million and borrowing capacity under our ABL. Our liquidity position is ample. The anticipated receipt of a $70 million tax refund, plus the receipt of the proceeds from the pending sale of the Knoxville and Philadelphia terminals that we reported last quarter should bolster our liquidity position further this quarter. As we look ahead, we expect to use periods of strength to focus on deleveraging and preserving the balance sheet. Operator, we've completed our opening remarks, and we'd be pleased to take questions.

We will open the call to questions. The company requests that all callers limit each turn to one question and one follow-up. You may rejoin the QE with additional questions. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question QE. 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, please, while we poll for questions. Your first question comes from Doug Legate from Wolf Research. Please go ahead.

Thanks. Good morning, guys. I appreciate you taking my questions. Matt, the cost-cutting targets are obviously gathering pace. I wonder if you could help us understand how to track those in terms of where it's going to show up, whether it be capital, operating cost, capture rate. Because obviously, $350 million run rate, I guess it's about 75 cents a barrel, putting it to you if it's sustainable.

You broke up the last second. is it going to be sustainable yeah i'm basically saying i'm trying to understand how we track it how do we model it how do we break it into what we think is a go forward part of your valuation i'll pass it over to mike briefly but just so just so we're clear uh we are taking extensive steps that everything that might be forensically difficult to meet where it all resides you know It will be, but also reduction.

Yeah, Doug, thanks for the question. At a high level, it's about 70% is going to be in OPEX, and about 30% is going to be on the capital side. And with regard to, you know, I'll expand a little bit more about the sustainability piece and the reliability piece. So we've called this the Refining Business Improvement Initiative, not just cost reduction. And so sustainability is just as important for us as the cost reductions, because that's also going to drive business improvement in all facets and operational excellence and our safety performance and our reliability. So, for instance, on the turnaround and capital side, there's extensive processes that we're putting in place that are helping us to optimize our scope when it comes to our sustaining capital, optimize our scope when it comes to turnarounds, improve our productivity when it comes to turnarounds, and optimize our intervals. And so, to making sure that where we spend our capital, we get the biggest bang for our buck with the highest return from a reliability perspective. Those things will drive sustainability. On the OPEC side, every initiative that's put in place has a sustainability plan. And so, in other words, it's a set of KPIs. We're using some technology to help get that information out into the refineries. And so those initiatives and those KPIs will be tracked on a routine basis. Some will be tracked on a daily basis, depending upon what they are. Some will be tracked on a monthly basis. But we will know where we are going forward and be able to keep our eye on the ball. And it also is a springboard for continuous improvement because we don't see this initiative really ever ending. It's just the start of a continuous improvement exercise. guys.

I appreciate it, guys. Thank you. So just to be clear, there's nothing in the capture rate. This is all OPEX and CAPEX.

This initiative so far is focused on OPEX and capital. Nothing in the capture rate.

Got it. Thank you. Matt, I wonder if I could also just ask you to follow up on your comments about the light heavy differential. Obviously, as you pointed out, There's supposedly a bunch of new barrels coming back onto the market. Chevron's back in Venezuela again. But the punchline is we haven't seen the physical barrels show up. Are you seeing evidence of light-heavy spreads widening on your feedstock opportunities or no?

I think we're just starting to see it now. I'd sort of just back up. When you think about light-heavy differential and sort of the disruptions to the market, whether they were voluntary or involved. The good news is take a look at the refining smoke demand. So I think the...

All right. Thanks for the detailed answers. I appreciate it.

Thanks, sir.

Your next questions come from Neil Mehta from Goldman Sachs. Please go ahead.

Yeah. Good morning, Matt and team. Thanks for all the color here. I just want to spend some time on the Martinez refinery, you got limited operations that were restored in the second quarter, but you talk a little bit about the path to restart different units, and so can you just go through the logistics between now and year-end? What are the gating items? What are the things that we, critical path items, that we as an investment community should be monitoring?

So, first of all, thanks, Neil, for the question. First of all, I just want to do a shout-out to the Martinez folks. I mean, they've done tremendous work to be able to recover, get the units back up safely, and then all through the work that we've done so far with the demolition and clearing and getting access to the area has been done extremely well. So I just want to share that. So that actually was the first milestone, was getting the demolition done, and we're finished with that. and it's given us a clear pathway to understand and finalize the scope. We have some additional scope items that we need to finish. Most of our – all of our long-lead procurement activities have been completed at this point. We actually finished that prior to demolition because we knew kind of immediately what they were. We are starting to see some pressure on some of those delivery timings, which is added to our concern and it has forced us to push that back start-up time towards the end of the year. But we continue to monitor that on a continuous basis. We started operations like the Civil Work and we actually started receiving some modules and equipment and we're getting close to being ready to install them. And so we're just in the mode right now, you know, this is not a normal project, as you can understand. We're doing things in parallel as much as possible. So I'd say that the next major milestone for us is the start of the major construction activities.

That's really helpful. And then just in terms of some of those gating items, I guess you talk about regulatory permitting and approvals. Can you just remind us again what those are and then the certain critical equipment and components? It sounds like, based on the comments that you just made, some of those are coming to the site, but again, remind us what those are as well.

So, on the regulatory side, it's essentially a permit to operate, which is a typical permit for any project of this size. And we've maintained a real strong relationship with the Air District in the Bay Area, and they are working with us hand in glove to understand And we're understanding what their requirements are to give us a temporary approval to construct, and we're making sure that we meet those requirements. And so we expect to get that permit very soon, which will allow all major activities to start. And, again, our relationship has been really strong with that. In terms of the long lead items, I mean, it's like a handful of things, but they were driving the schedule. So, I mean, ultimately it comes down to some major process vessels and some major rotating equipment, pieces of rotating equipment. But like I said, we knew based on where the damage was, immediately where they were. And we got them on order real quick within about six weeks of the fire.

And then my follow-up is just around Delaware City. You guys have excess real estate. there's talk about potentially, given the power length there, is that a natural place to build data centers and so on? So just your perspective on that. Is that something that we as an investment community should be spending time on?

Thanks, Neil. Well, we've been talking about for a tremendous amount of length.

Thanks, Matt.

Thank you.

Your next question comes from Manav Gupta from UBS please go ahead hi guys so my first question is around the cash position in time to understand it looks like you did not bond any cash in 2q but going ahead 3q by the time you actually restart the refinery what could be the cash position and do you expect to be within your means in terms of not looking to raise more debt or any other form of financing and can you continue to work within the means by year end because most likely by year end once Martinez comes back you should be fine.

Thank you for the question Manav. You know we are always looking at ways to properly capitalize our company and the $800 million unsecured notes offering that we did earlier in the year, we think has positioned us well. We do believe that we have ample liquidity going forward. Our current net debt position is at 30%. I'm sorry, net debt to cap position. We target being under 35%. At the moment, our cash burn, as you saw in the first quarter was fairly neutral. So we believe we are well-positioned to weather what comes.

I'll just add that the relationship, the insurance market and providing any working...

Thank you. And going back a little, I think we missed this one, but there was a filing on Starwood Digital Ventures. Looks like they are looking to build a massive data center. And one of the companies they're working with is Newcastle Campus Development, which is an entity linked to you. So I'm just trying to understand this filing a little better, what opportunities it creates for you guys. And would you be only the land provider? Could you be also providing some electricity? How can you collaborate with Starwood to bring forward this project? Thank you.

You know, as I said, we're exploring ways in which we can maximize value for our shareholders. Subject matter experts, projects in the past, we don't have anything formal to announce, but we'll continue to, you know, develop opportunities at Delaware and do the best value for our shareholders. We're actively working that project, but we don't have anything definitive to report.

Thank you so much.

Thank you. Your next question comes from Ryan Todd from Piper Sandler. Please go ahead. Chris, thanks.

Maybe one on the West Coast. After a very strong second quarter, margins on the West Coast have stopped in a little bit of late. Can you maybe talk about what you're seeing in terms of market dynamics there on the western half of the U.S. and any outlook from there going forward? yeah again from a you know very high level actually looking at california you're going

to be short gasoline a you know upwards of 150 000 barrels a day san francisco and look at what

came for all the day of products that's about where the market's uh short currently with all the refinery activity that's going on but matt mentioned it right it comes in all at once and then it bleeds into the systems there's a tremendous amount of pricing volatility and closing based on that volatility. So just as an example, I take a look at August. We're going to have a very limited import market into the state. At the end of the day, the market's going to price itself to balance. We anticipate that. It costs a lot of money to bring products into that state from abroad. Molecules will show up. They will get there.

Thank you. And then maybe one question on the renewable diesel side. Can you talk about, during the second quarter, how much were you able to monetize in terms of credits from the PTC, and should we expect further tailwinds from that as we look into the second half of 2025, and maybe any broader thoughts on what you're seeing in terms of the macro and the near-term there on renewable diesel?

Hi, Ryan. We don't give details on specific credits. I will tell you that we did accrue 45Z revenue during both the first and the second quarters based on the preliminary treasury guidance and in conjunction with our qualifying sales of renewable diesel. What we did see in Q2, though, is with REN's pricing increasing, we did come close to offsetting the decline in revenue from BTC to P2.

Thank you. Your next question comes from Joe from Morgan Stanley. Please go ahead.

Hey, good morning, Matt and team. Thanks for taking my questions. So on the California landscape, can you talk to how recent discussions have been with the state? It seems like, at least from a headline perspective, government officials have begun to realize the importance of refined product and impact of upcoming refinery closures. Thank you.

Yeah, you could be more spot on in that regard. And then shifting gears a little bit, there's been some announced in Europe. could you give your perspective on the East Coast market here and implications that you're seeing on transatlantic flows thank you yeah it's it's a developing story to some degree but we've seen a real drop-off at imports from Europe historically had one and now say it's developed but yet it's we're seeing much less importance.

Thank you. Your next question comes from Paul Chang from Scotiabank. Please go ahead. Good morning.

Hey, Matt, on the RBI, if we look at trying to put you together and see how that is going to look like in your refining optics going forward, And so can you give us some idea that by the end of this year, what will be a reasonable refining optics we can assume using a $4 natural gas price and by the end of 2006, what that number may look like? That's the first question.

Well, I think Mike alluded to it before. You know, if you take what we're saying is run rate.

And that, but I mean, is there any other factor that offsetting, like the inflation and all the other factors that we should take into consideration? No. So you think that that would be a net saving on that?

Yes.

Okay. Second question, real quick. On SBR, it's a little bit surprised that you will be targeting at 16,000 to 18,000 bill per day run. Given the current market condition, I think a lot of your competitor is talking about reduced run. So, trying to understand that, what is the rationale behind and how the decision-making process on that?

It's no different than anything else we run. We run to maximize. You can't look at all...

Are you guys making money right now in SPR?

It's... I would characterize it as somewhat break-even.

I see. Okay. Thank you.

I mean, the market is... There's obviously a long... You know, you've had an unanswered question.

Thank you.

Thank you. Your next question comes from Connor Fitzpatrick from Bank of America. Please go ahead.

Hi, everybody. I wanted to follow up on the U.K. closures, specifically Rangemouth and now Lindsay. Between the two refineries, transatlantic capacity should be down about 57 KBPD of FCC capacity and 12 KBPD of alkylation, which are similar numbers to the capacity you have idling at Paulsboro. Do you think the option to restart those units has become more attractive? VGO feed cost was a barrier last time this possibility was discussed in, I think, 2022, but that cost has eased a bit since then. And are there other opportunities to take advantage of pad one tightness?

At the moment, we're not exploring a restart of units.

And what's your decision-making? What are the leading factors for not looking into that?

I didn't say we're not looking into it. I said that we don't have any plans to restart it at the moment. We always evaluate every option that we have, but we have no intention at the moment to restart those units. As markets evolve, their assets that we own, and to the degree that they can be optimized and create long-term value, we'll serve.

That's all I had.

Thank you. Your final question comes from Jason Gableman from TD Cowan. Please go ahead.

Yeah, hey, morning. Thanks for taking my question. I wanted to ask on the sequencing of insurance proceeds and just make sure I understand it correctly. It looks like on the cash flow from investing side, insurance is going to offset on a one-to-one basis, capital expenditures to fix Martinez. But then can you just kind of describe on the cash from operating side, the insurance proceeds that come in, how much has come in so far to cover the past quarter's lost profit opportunity? and then should we expect to see that roll in on kind of a one-quarter in arrears basis?

Yeah, I would answer it a couple different ways. So, one, we received $250 million in the second quarter. That essentially amounts to $280 million because we retained the first. It was Aaron to try to go through and forensically dissect, factorize our collection, the economic cost, the incident.

Fair to say in totality, they should kind of cover those two buckets, the lost profit and the capital component.

We're working with the insurance company. Obviously, we got a payment last quarter. There's not definitive guidelines in regards, you know, must pay dates with the insurance policy. But like I said, we've been working collaboratively with them in our payments as we did in the second.

Okay. That was it for me. Thanks.

Thank you.

Please go ahead.

Yeah, I think we were going to say the same thing, which is we've reached the end of the day. We look for bright days ahead.

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