PBF Energy Inc. (NYSE:PBF) Q3 2019 Earnings Conference Call - Final Transcript

Oct 31, 2019 • 08:30 am ET

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PBF Energy Inc. (NYSE:PBF) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day everyone and welcome to the PBF Energy's Third Quarter 2019 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 your questions following management's prepared remarks. [Operator Instructions]

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

Executive
Colin Murray

Thank you, Catherine. Good morning. Happy Halloween and welcome to today's call. With me today are Tom Nimbley, our CEO; Matt Lucey, our President; Erik Young, our CFO; and several other members of our management team.

A copy of today's earnings release, including supplemental information, is 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. In summary it outlines that statements contained in the press release and on this call, which 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 quarters, we will discuss our results, excluding special items. This is a net $10 million adjustment which includes an after-tax, non-cash, lower of cost or market adjustment, and a gain related to a land sale completed in the third quarter, which decreased our reported net income and earnings per share.

As noted in our press release, we'll be using certain non-GAAP measures while describing PBF's operating performance and financial results. For reconciliations of non-GAAP measures to the appropriate GAAP figure, please refer to the supplemental tables provided in today's press release.

I'll now turn the call over to Tom Nimbley.

Executive
Tom Nimbley

Thanks, Colin. Good morning everyone and thank you for joining our call today. Our third quarter results reflect solid operational performance in all of our regions. West Coast margins were very weak for the first couple of months of the quarter, but ended much stronger. East Coast margins were strong and with both Paulsboro and Delaware operating well, we were able to capture the benefit of those strong margins.

Narrow light heavy differentials continue to be a headwind during the quarter, but predictably we are starting to see that shift. IMO is starting to take hold. This started over the late summer with high-sulfur fuel oil cracks coming off. Asia has stopped calling for high-sulfur fuel oil and trade flows have been disrupted.

High-sulfur fuel oil has backed up into the Atlantic Basin and into Europe, and is seeking alternative disposition from its traditional home in the bunker market as the industry prepares for IMO. High-sulfur fuel oil is competing with sour crude in refiners' diet for raw materials. With the collapse in HSFO cracks, the simple refiners will need to make decisions to either sweeten slates or risk producing an uneconomic barrel that no longer has