PBF Holding Company LLC

11/06/2024 | Press release | Distributed by Public on 11/06/2024 11:35

Quarterly Report for Quarter Ending September 30, 2024 (Form 10-Q)

pbf-20240930
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 333-186007
Commission File Number: 333-186007-07
PBF HOLDING COMPANY LLC
PBF FINANCE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
27-2198168
Delaware
45-2685067
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
One Sylvan Way, Second Floor
Parsippany New Jersey 07054
(Address of principal executive offices) (Zip Code)
(973) 455-7500
(Registrants' telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act.
Title of each class Trading Symbol Name of each exchange on which registered
N/A N/A N/A
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
PBF Holding Company LLC Yes
☐
No ☒
PBF Finance Corporation Yes
☐
No ☒
(Note: The registrant is a voluntary filer of reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 and has filed during the preceding 12 months all reports it would have been required to file by Section 13 or 15(d) of the Securities Exchange Act of 1934 if the registrant had been subject to one of such Sections.)
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
PBF Holding Company LLC Yes
☒
No ☐
PBF Finance Corporation
Yes
☒
No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated
filer 		Accelerated filer Non-accelerated filer Smaller reporting
company 		Emerging growth company
PBF Holding Company LLC ☐ ☐ ☒ ☐ ☐
PBF Finance Corporation ☐ ☐ ☒ ☐ ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
PBF Holding Company LLC Yes
☐
No ☐
PBF Finance Corporation Yes
☐
No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
PBF Holding Company LLC Yes
☐
No ☒
PBF Finance Corporation Yes
☐
No ☒
PBF Holding Company LLC has no common stock outstanding. As of November 1, 2024, 100% of the membership interests of PBF Holding Company LLC were owned by PBF Energy Company LLC, and PBF Finance Corporation had 100 shares of common stock outstanding, all of which were held by PBF Holding Company LLC.
PBF Finance Corporation meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.
PBF HOLDING COMPANY LLC
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
3
PART I - FINANCIAL INFORMATION
ITEM 1.
Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023
5
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023
6
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023
7
Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2024 and 2023
8
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023
10
Notes to Condensed Consolidated Financial Statements
12
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
28
ITEM 3.
Quantitative and Qualitative Disclosures about Market Risk
50
ITEM 4.
Controls and Procedures
52
PART II - OTHER INFORMATION
ITEM 1.
Legal Proceedings
53
ITEM 6.
Exhibits
57
SIGNATURES
58
EXPLANATORY NOTE
This combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 (this "Form 10-Q") is filed by PBF Holding Company LLC ("PBF Holding") and PBF Finance Corporation ("PBF Finance"). PBF Holding is a wholly-owned subsidiary of PBF Energy Company LLC ("PBF LLC") and is the parent company for PBF LLC's refinery operating subsidiaries. PBF Finance is a wholly-owned subsidiary of PBF Holding. PBF Holding is an indirect subsidiary of PBF Energy Inc. ("PBF Energy"), which is the sole managing member of, and owner of an equity interest representing approximately 99.3% of the outstanding economic interests in PBF LLC as of September 30, 2024. PBF Energy operates and controls all of the business and affairs and consolidates the financial results of PBF LLC and its subsidiaries. PBF Logistics GP LLC ("PBFX GP") is a wholly-owned subsidiary of PBF LLC and the general partner of PBF Logistics LP ("PBFX"), which is an affiliate of PBF Holding. PBF Holding, together with its consolidated subsidiaries, owns and operates oil refineries and related facilities in North America.
2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This combined Quarterly Report on Form 10-Q contains certain "forward-looking statements" of expected future developments that involve risks and uncertainties. You can identify forward-looking statements because they contain words such as "believes," "expects," "may," "should," "seeks," "approximately," "intends," "plans," "estimates," "anticipates" or similar expressions that relate to our strategy, plans, or intentions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our strategies, objectives, intentions, resources, and expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results.
Important factors that could cause actual results to differ materially from our expectations, which we refer to as "cautionary statements," are disclosed under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Form 10-Q, the Annual Report on Form 10-K for the year ended December 31, 2023 of PBF Holding and PBF Finance, which we refer to as our 2023 Annual Report on Form 10-K, and in our other filings with the U.S. Securities and Exchange Commission ("SEC"). All forward-looking information in this Quarterly Report on Form 10-Q and subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include:
•supply, demand, prices and other market conditions for our products or crude oil, including volatility in commodity prices or constraints arising from federal, state, or local governmental actions or environmental and/or social activists that reduce crude oil production or availability in the regions in which we operate our pipelines and facilities;
•rate of inflation and its impact on supply and demand, pricing, and supply chain disruption;
•the effects related to, or resulting from, geopolitical conflict around the world, including Russia's military action in Ukraine, ongoing armed hostilities in the middle east and disruptions in international shipping, resulting from ongoing attacks by armed groups on cargo ships in the Red Sea, including the imposition of additional sanctions and export controls, the potential expansion of such conflicts to other nations or regions, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environment;
•the effectiveness of our crude oil sourcing strategies, including our crude by rail strategy and related commitments;
•our obligation to buy Renewable Identification Numbers ("RINs") and market risks related to the volatility in the price of RINs required to comply with the Renewable Fuel Standard ("RFS") and greenhouse gas ("GHG") emission credits required to comply with various GHG emission programs, such as California Assembly Bill 32 ("AB 32");
•our ability to operate our businesses efficiently, manage capital expenditures and costs (including general and administrative expenses) and generate earnings and cash flow;
•our expectations with respect to our capital spending and turnaround projects;
3
•the impact of current and future laws, rulings, and governmental regulations, including restrictions on the exploration and/or production of crude oil in the state of California, the implementation of rules and regulations regarding transportation of crude oil by rail or in response to the potential impacts of climate change, decarbonization and future energy transition and public policy in opposition to recent refining industry profits;
•adverse impacts related to legislation by the federal government lifting the restrictions on exporting U.S. crude oil or subjecting us to trade and sanctions laws, which change frequently as a result of foreign policy developments, and which may necessitate changes to our crude oil acquisition activities;
•our ability to manage our costs and expenses;
•political pressure and influence of environmental groups and other stakeholders on decisions and policies related to the refining, processing and storage of crude oil and refined products, and the related adverse impacts from changes in our regulatory environment, such as the effects of compliance with AB 32 and/or California Assembly Bill ABX2-1, or from actions taken by environmental interest groups;
•the risk of cyber-attacks;
•our increased dependence on technology;
•the effects of competition in our markets;
•our ability to make acquisitions or investments, including in renewable diesel production, and to realize the benefits from such acquisitions or investments;
•liabilities arising from recent acquisitions or investments, that are unforeseen or exceed our expectations;
•our expectations and timing with respect to our acquisition and investment activity;
•adverse developments in our relationship with both our key employees and unionized employees;
•our indebtedness, including the impact of potential downgrades to our corporate credit rating and/or unsecured notes;
•changes in currency exchange rates, interest rates and capital costs;
•restrictive covenants in our indebtedness that may adversely affect our operational flexibility;
•counterparty credit and performance risk exposure related to our supply and inventory intermediation arrangements, if any;
•our assumptions regarding payments arising under PBF Energy's tax receivable agreement entered with the PBF LLC Series A and PBF LLC Series B unitholders and other arrangements relating to PBF Energy;
•the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions related to PBFX or with third-party logistics infrastructure or operations, including pipeline, marine and rail transportation; and
•any decisions we continue to make with respect to our energy-related logistics assets that may be transferred to PBFX.
We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q may not in fact occur. Accordingly, investors should not place undue reliance on those statements.
Our forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, including the securities laws of the United States, we do not intend to update or revise any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PBF HOLDING COMPANY LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions)
September 30,
2024 		December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents $ 959.6 $ 1,760.8
Accounts receivable 1,222.2 1,336.1
Accounts receivable - affiliate 25.6 27.3
Inventories 2,605.7 3,183.1
Prepaid and other current assets 173.8 173.0
Total current assets 4,986.9 6,480.3
Property, plant and equipment (net of accumulated depreciation of $1,767.6 and $1,609.1, respectively)
4,208.5 4,145.5
Lease right of use assets - third party 805.7 788.2
Lease right of use assets - affiliate 347.5 380.8
Deferred charges and other assets, net 1,313.6 1,129.3
Total assets $ 11,662.2 $ 12,924.1
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 949.3 $ 952.9
Accounts payable - affiliate 74.6 72.0
Accrued expenses 2,474.4 2,968.0
Current operating lease liabilities - third party 171.0 131.1
Current operating lease liabilities - affiliate 111.1 108.7
Deferred revenue 40.0 63.6
Total current liabilities 3,820.4 4,296.3
Long-term debt 1,254.4 1,245.9
Deferred tax liabilities 24.8 24.8
Long-term operating lease liabilities - third party 597.2 607.9
Long-term operating lease liabilities - affiliate 236.4 272.1
Long-term financing lease liabilities - third party 37.7 46.1
Other long-term liabilities 265.1 269.2
Total liabilities 6,236.0 6,762.3
Commitments and contingencies (Note 6)
Equity:
PBF Holding Company LLC equity
Member's equity 3,495.6 3,298.7
Retained earnings 1,934.9 2,868.8
Accumulated other comprehensive loss (17.3) (18.8)
Total PBF Holding Company LLC equity 5,413.2 6,148.7
Noncontrolling interest 13.0 13.1
Total equity 5,426.2 6,161.8
Total liabilities and equity $ 11,662.2 $ 12,924.1
See notes to condensed consolidated financial statements.
5
PBF HOLDING COMPANY LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions)
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Revenues $ 8,372.8 $ 10,725.3 $ 25,735.8 $ 29,159.2
Cost and expenses:
Cost of products and other 7,943.2 8,802.2 23,666.8 24,670.1
Operating expenses (excluding depreciation and amortization expense as reflected below) 621.4 615.8 1,858.0 1,936.2
Depreciation and amortization expense 149.5 131.2 427.6 397.1
Cost of sales 8,714.1 9,549.2 25,952.4 27,003.4
General and administrative expenses (excluding depreciation and amortization expense as reflected below) 63.2 90.2 186.3 248.1
Depreciation and amortization expense 1.8 2.3 5.3 6.5
Change in fair value of contingent consideration, net - 65.3 (3.3) 32.4
Loss (gain) on sale of assets - 0.1 0.7 (1.3)
Total cost and expenses 8,779.1 9,707.1 26,141.4 27,289.1
Income (loss) from operations (406.3) 1,018.2 (405.6) 1,870.1
Other income (expense):
Interest expense (net of interest income of $10.8 million, $21.2 million, $41.8 million, and $50.2 million, respectively)
(19.0) (23.9) (47.9) (53.9)
Change in fair value of catalyst obligations - (0.1) - 1.1
Loss on extinguishment of debt - (5.7) - (5.7)
Other non-service components of net periodic benefit cost 0.5 0.1 1.7 0.5
Income (loss) before income taxes (424.8) 988.6 (451.8) 1,812.1
Income tax expense (benefit) 2.9 (6.4) 0.3 (7.0)
Net income (loss) (427.7) 995.0 (452.1) 1,819.1
Less: net income (loss) attributable to noncontrolling interest (0.1) 0.1 (0.1) 0.5
Net income (loss) attributable to PBF Holding Company LLC $ (427.6) $ 994.9 $ (452.0) $ 1,818.6
See notes to condensed consolidated financial statements.
6
PBF HOLDING COMPANY LLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in millions)
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Net income (loss) $ (427.7) $ 995.0 $ (452.1) $ 1,819.1
Other comprehensive income (loss):
Unrealized gain (loss) on available for sale securities 0.8 (0.6) 0.8 (0.7)
Net gain on pension and other post-retirement benefits 0.2 - 0.7 0.1
Total other comprehensive income (loss) 1.0 (0.6) 1.5 (0.6)
Comprehensive income (loss) (426.7) 994.4 (450.6) 1,818.5
Less: comprehensive income (loss) attributable to noncontrolling interest (0.1) 0.1 (0.1) 0.5
Comprehensive income (loss) attributable to PBF Holding Company LLC $ (426.6) $ 994.3 $ (450.5) $ 1,818.0
See notes to condensed consolidated financial statements.
7
PBF HOLDING COMPANY LLC
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, in millions)
Member's Equity Accumulated
Other
Comprehensive
Loss 		Retained Earnings Noncontrolling
Interest 		Total
Equity
Balance, June 30, 2024 $ 3,439.8 $ (18.3) $ 2,500.9 $ 13.1 $ 5,935.5
Member distributions - - (138.4) - (138.4)
Capital contributions from PBF LLC 50.0 - - - 50.0
Stock-based compensation expense 5.8 - - - 5.8
Comprehensive income (loss) - 1.0 (427.6) (0.1) (426.7)
Balance, September 30, 2024 $ 3,495.6 $ (17.3) $ 1,934.9 $ 13.0 $ 5,426.2
Balance, June 30, 2023 $ 2,764.3 $ (4.4) $ 2,374.3 $ 12.6 $ 5,146.8
Member distributions - - (221.4) - (221.4)
Capital contributions from PBF LLC 474.5 - - - 474.5
Distribution of assets to PBF LLC (0.7) - - - (0.7)
Stock-based compensation expense 6.1 - - - 6.1
Comprehensive income (loss) - (0.6) 994.9 0.1 994.4
Balance, September 30, 2023 $ 3,244.2 $ (5.0) $ 3,147.8 $ 12.7 $ 6,399.7
See notes to condensed consolidated financial statements.
8
PBF HOLDING COMPANY LLC
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (continued)
(unaudited, in millions)
Member's Equity Accumulated
Other
Comprehensive
Loss 		Retained Earnings Noncontrolling
Interest 		Total
Equity
Balance, December 31, 2023
$ 3,298.7 $ (18.8) $ 2,868.8 $ 13.1 $ 6,161.8
Member distributions - - (481.9) - (481.9)
Capital contributions from PBF LLC 185.0 - - - 185.0
Distribution of assets to PBF LLC (8.8) - - - (8.8)
Stock-based compensation expense 20.7 - - - 20.7
Comprehensive income (loss) - 1.5 (452.0) (0.1) (450.6)
Balance, September 30, 2024
$ 3,495.6 $ (17.3) $ 1,934.9 $ 13.0 $ 5,426.2
Balance, December 31, 2022
$ 2,959.7 $ (4.4) $ 2,649.6 $ 12.2 $ 5,617.1
Member distributions - - (1,320.4) - (1,320.4)
Capital contributions from PBF LLC 1,109.5 - - - 1,109.5
Distribution of assets to PBF LLC (844.8) - - - (844.8)
Stock-based compensation expense 19.8 - - - 19.8
Comprehensive income (loss) - (0.6) 1,818.6 0.5 1,818.5
Balance, September 30, 2023
$ 3,244.2 $ (5.0) $ 3,147.8 $ 12.7 $ 6,399.7
See notes to condensed consolidated financial statements.
9
PBF HOLDING COMPANY LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
Nine Months Ended September 30,
2024 2023
Cash flows from operating activities:
Net income (loss) $ (452.1) $ 1,819.1
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 444.3 418.8
Stock-based compensation 30.1 27.7
Change in fair value of catalyst obligations - (1.1)
Deferred income taxes - (5.9)
Non-cash change in inventory repurchase obligations - 25.1
Non-cash lower of cost or market inventory adjustment 154.5 -
Change in fair value of contingent consideration, net (3.3) 32.4
Loss on extinguishment of debt - 5.7
Pension and other post-retirement benefit costs 38.9 35.9
Loss (gain) on sale of assets 0.7 (1.3)
Changes in operating assets and liabilities:
Accounts receivable 113.9 (102.4)
Due to/from affiliates 4.3 1.9
Inventories 422.9 (331.9)
Prepaid and other current assets (0.8) (128.7)
Accounts payable 26.6 411.9
Accrued expenses (459.0) (1,035.7)
Deferred revenue (23.6) 41.6
Other assets and liabilities (41.9) (60.8)
Net cash provided by operating activities $ 255.5 $ 1,152.3
Cash flows from investing activities:
Expenditures for property, plant, and equipment (292.3) (569.5)
Expenditures for deferred turnaround costs (447.7) (322.9)
Expenditures for other assets (28.3) (39.5)
Proceeds from sale of assets - 4.4
Net cash used in investing activities $ (768.3) $ (927.5)
See notes to condensed consolidated financial statements.
10
PBF HOLDING COMPANY LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(unaudited, in millions)
Nine Months Ended September 30,
2024 2023
Cash flows from financing activities:
Contributions from PBF LLC $ 185.0 $ 1,109.6
Distributions to members (481.9) (1,320.5)
Proceeds from 2030 7.875% Senior Notes - 496.6
Redemption of 2025 7.25% Senior Notes - (666.2)
Payment of contingent consideration - (80.1)
Settlement of precious metal catalyst obligations - (3.1)
Payments on financing leases (9.1) (11.1)
Proceeds from insurance premium financing 17.7 8.7
Deferred financing costs and other, net (0.1) (35.7)
Net cash used in financing activities $ (288.4) $ (501.8)
Net change in cash and cash equivalents (801.2) (277.0)
Cash and cash equivalents, beginning of period 1,760.8 2,153.9
Cash and cash equivalents, end of period $ 959.6 $ 1,876.9
Supplemental cash flow disclosures
Non-cash activities:
Distribution of assets to PBF Energy Company LLC $ (8.8) $ 844.8
Accrued and unpaid capital expenditures 52.8 64.5
Assets acquired or remeasured under operating and financing leases 238.7 231.2
Cash paid during the period for:
Interest (net of capitalized interest of $13.4 million and $32.9 million in 2024 and 2023, respectively)
$ 93.4 $ 98.0
Income taxes 0.7 1.5
See notes to condensed consolidated financial statements.
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PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
Description of the Business
PBF Holding Company LLC ("PBF Holding"), a Delaware limited liability company, and PBF Finance Corporation ("PBF Finance"), a wholly-owned subsidiary of PBF Holding, together with the Company's consolidated subsidiaries, owns and operates oil refineries and related facilities in North America. PBF Holding is a wholly-owned subsidiary of PBF Energy Company LLC ("PBF LLC"). PBF Energy Inc. ("PBF Energy") is the sole managing member of, and owner of, an equity interest representing approximately 99.3% of the outstanding economic interest in PBF LLC as of September 30, 2024. PBF Investments LLC, Toledo Refining Company LLC, Paulsboro Refining Company LLC, Delaware City Refining Company LLC, Chalmette Refining, L.L.C. ("Chalmette Refining"), PBF Energy Western Region LLC, Torrance Refining Company LLC, Torrance Logistics Company LLC, and Martinez Refining Company LLC ("MRC") are PBF LLC's principal operating subsidiaries and are all wholly-owned subsidiaries of PBF Holding. Collectively, PBF Holding and its consolidated subsidiaries are referred to hereinafter as the "Company" unless the context otherwise requires.
PBF Logistics GP LLC ("PBFX GP") serves as the general partner of PBF Logistics LP ("PBFX"). PBFX GP is wholly-owned by PBF LLC. St. Bernard Renewables LLC ("SBR"), is a jointly held investment between PBF LLC and Eni Sustainable Mobility US Inc., a controlled subsidiary of Eni S.p.A. In a series of transactions, PBF Holding has distributed certain assets to PBF LLC, which in turn contributed those assets to PBFX and SBR.
Basis of Presentation
The unaudited condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, considered necessary for a fair presentation of the financial position and the results of operations and cash flows of the Company for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim Condensed Consolidated Financial Statements should be read in conjunction with the PBF Holding and PBF Finance financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year.
12
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. INVENTORIES
Inventories consisted of the following:
(in millions) September 30, 2024 December 31, 2023
Refined products and blendstocks $ 1,319.6 $ 1,536.5
Crude oil and feedstocks 1,278.7 1,495.4
Warehouse stock and other 161.9 151.2
2,760.2 3,183.1
Lower of cost or market adjustment (154.5) -
Total inventories $ 2,605.7 $ 3,183.1
During both the three and nine months ended September 30, 2024 the Company recorded an adjustment to value its inventories to the lower of cost or market ("LCM") which decreased income from operations by $154.5 million, reflecting an increase in the LCM inventory reserve of $154.5 million.
At December 31, 2023 the replacement value of inventories exceeded the last-in, first-out carrying value by approximately $49.9 million, reflecting no LCM inventory reserve.
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PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. ACCRUED EXPENSES
Accrued expenses consisted of the following:
(in millions) September 30, 2024 December 31, 2023
Inventory-related accruals $ 1,399.9 $ 1,716.2
Renewable energy credit and emissions obligations (a) 473.7 429.8
Accrued transportation costs 184.1 170.5
Excise and sales tax payable
135.8 137.3
Accrued salaries and benefits 71.7 185.5
Accrued refinery maintenance and support costs 59.3 60.2
Accrued utilities 56.9 71.0
Accrued capital expenditures 24.0 84.5
Environmental liabilities 12.0 15.7
Current finance lease liabilities 11.4 12.2
Accrued interest 7.6 32.4
Contingent consideration - 21.6
Other 38.0 31.1
Total accrued expenses $ 2,474.4 $ 2,968.0
__________________________
(a) The Company is subject to obligations to purchase Renewable Identification Numbers ("RINs") required to comply with the Renewable Fuel Standard. The Company's overall RINs obligation is based on a percentage of domestic shipments of on-road fuels as established by the Environmental Protection Agency ("EPA"). To the degree the Company is unable to blend the required amount of biofuels to satisfy its RINs obligation, RINs must be purchased on the open market to avoid penalties and fines. The Company records its RINs obligation on a net basis in Accrued expenses when its RINs liability is greater than the amount of RINs earned and purchased in a given period and in Prepaid and other current assets when the amount of RINs earned and purchased is greater than the RINs liability. In addition, the Company is subject to obligations to comply with federal and state legislative and regulatory measures, including regulations in the state of California pursuant to Assembly Bill 32 ("AB 32"), to address environmental compliance and greenhouse gas and other emissions. These requirements include incremental costs to operate and maintain the Company's facilities as well as to implement and manage new emission controls and programs. Renewable energy credit and emissions obligations fluctuate with the volume of applicable product sales and timing of credit purchases. From time to time, the Company enters into forward purchase commitments in order to acquire its renewable energy and emissions credits at fixed prices. As of September 30, 2024, the Company had forward purchase commitments in excess of total current accrued renewable energy and emissions obligations. The Company's RIN obligations will be settled in accordance with established regulatory deadlines. The Company's current AB 32 liability is part of an ongoing triennial period program which will next be settled in the fourth quarter of 2024.
14
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. CREDIT FACILITIES AND DEBT
Debt outstanding consisted of the following:
(in millions) September 30, 2024 December 31, 2023
6.00% senior unsecured notes due 2028 ("2028 Senior Notes")
$ 801.6 $ 801.6
7.875% senior unsecured notes due 2030 ("2030 Senior Notes")
500.0 500.0
Revolving Credit Facility - -
1,301.6 1,301.6
Unamortized discount (2.9) (3.2)
Unamortized deferred financing costs (44.3) (52.5)
Long-term debt $ 1,254.4 $ 1,245.9
As of September 30, 2024, the Company is in compliance with all covenants, including financial covenants, in all its debt agreements.
5. RELATED PARTY TRANSACTIONS
Transactions and agreements with PBFX
The Company entered into agreements with PBFX that establish fees for certain general and administrative services, and operational and maintenance services provided by the Company to PBFX. In addition, the Company executed terminal, pipeline, and storage services agreements with PBFX under which PBFX provides commercial transportation, terminaling, storage and pipeline services to the Company. These agreements with PBFX include:
Commercial Agreements
The Company has entered into long-term, fee-based commercial agreements with PBFX relating to assets associated with the contribution agreements, which PBF LLC entered into with PBFX, the majority of which include a minimum volume commitment and are supported by contractual fee escalations for inflation adjustments and certain increases in operating costs. Under these agreements, PBFX provides various pipeline, rail, and truck terminaling and storage services to the Company and the Company has committed to provide PBFX with minimum fees based on minimum monthly throughput volumes. There were no agreements entered into during the three and nine months ended September 30, 2024.
Other Agreements
In addition to the commercial agreements described above, the Company has entered into an omnibus agreement with PBFX, PBFX GP and PBF LLC, which has been amended and restated in connection with certain of the Contribution Agreements (as amended, the "Omnibus Agreement"). The Omnibus Agreement addresses the payment of an annual fee for the provision of various general and administrative services and reimbursement of salary and benefit costs for certain PBF Energy employees.
Additionally, the Company and certain of its subsidiaries have entered into an operation and management services and secondment agreement with PBFX (as amended, the "Services Agreement"), pursuant to which the Company and its subsidiaries provide PBFX with the personnel necessary for PBFX to perform its obligations under its commercial agreements. PBFX reimburses the Company for the use of such employees and the provision of certain infrastructure-related services to the extent applicable to its operations, including storm water discharge and waste water treatment, steam, potable water, access to certain roads and grounds, sanitary sewer access, electrical power, emergency response, filter press, fuel gas, API solids treatment, fire water and compressed air. The Services Agreement will terminate upon the termination of the Omnibus Agreement, provided that PBFX may terminate any service on 30-days' notice.
15
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Affiliate Lease Agreements
In the normal course of business, the Company enters into certain affiliate lease arrangements with PBFX for the use of certain storage, terminaling and pipeline assets. The terms for these affiliate leases generally range from sevento fifteen years. These leases are recorded on the Company's Balance Sheets within Lease right of use assets-affiliate, Current operating lease liabilities-affiliate and Long-term operating lease liabilities-affiliate.
Refer to the Company's 2023 Annual Report on Form 10-K ("Note 9 - Related Party Transactions" and "Note 11 - Leases" of the Notes to Consolidated Financial Statements) for a more complete description of the agreements with PBFX.
Summary of Transactions with PBFX
A summary of the Company's affiliate transactions with PBFX is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2024 2023 2024 2023
Reimbursements under affiliate agreements:
Services Agreement $ 2.2 $ 2.2 $ 6.5 $ 6.5
Omnibus Agreement 1.5 2.0 4.4 5.9
Total expenses under affiliate agreements (85.0) (86.6) (261.0) (260.4)
Total reimbursements under the Omnibus Agreement are included in general and administrative expenses and reimbursements under the Services Agreement and expenses under affiliate agreements are included in Cost of products and other in the Company's Condensed Consolidated Statements of Operations.
Additionally, the Condensed Consolidated Balance Sheets include $4.7 million and $37.9 million recorded within Accounts receivable - affiliate and Accounts payable - affiliate, respectively, related to transactions with PBFX as of September 30, 2024 ($5.2 million and $43.7 million, respectively, as of December 31, 2023).
Transactions and agreements with SBR
The Company and its subsidiaries have entered into various agreements with SBR, related to the sale and purchase of environmental credits and hydrocarbon products.
Commercial Agreements
PBF Holding has entered into commercial agreements with SBR for the purchase and sale of RINs and Low Carbon Fuel Standard ("LCFS") credits.
The Agreement for the Sale and Purchase of Renewable Identification Numbers was initiated on June 1, 2023, and the Leadership for Energy Automated Processing Master Agreement for Purchasing and Selling of LCFS credits was initiated on August 1, 2023. Both agreements had initial terms of three months. Upon the expiration of the initial terms, both agreements have been, and may continue to be, automatically renewed for successive three-month periods, unless earlier terminated by the Company or SBR via written notice at least two months in advance of expiration.
16
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Operating Agreement
The Company entered into an operation and management services and secondment agreement (the "Operating Agreement") with SBR in June 2023, pursuant to which the Company provides SBR with the personnel necessary for SBR to operate so that it may perform its obligations under the commercial agreements. The Company charges SBR a fixed operating fee under the agreement and SBR reimburses the Company for the use of employees and the provision of certain infrastructure-related services to the extent applicable to its operations.
Other Agreements
In addition to the agreements described above, the Company entered into an omnibus agreement with SBR for the provision of executive management services and support for accounting and finance, legal, human resources, information technology, environmental, health and safety, and other administrative functions (the "SBR Omnibus Agreement"). Pursuant to the SBR Omnibus Agreement, the Company charges SBR a fixed administrative fee and SBR reimburses the Company for the services utilized. Furthermore, the Company entered into a common asset use and servitude agreement (the "CAUSA") with SBR, pursuant to which the Company provides Chalmette Refining and SBR certain services with certain common use assets utilized. The cost of operations and maintenance for the common use assets is allocated between Chalmette Refining and SBR. Additionally, from time to time, the Company enters into short-term lease agreements for the use of marine vessels currently leased by SBR. Since these lease terms are less than one year, they are not recorded on the Company's Consolidated Balance Sheet.
Summary of Transactions with SBR
A summary of the Company's related party transactions with SBR is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2024 2023 2024 2023
Transactions under commercial agreements:
Sales $ 12.6 $ 6.4 $ 25.8 $ 6.4
Purchases (69.6) (151.3) (234.1) (151.3)
Reimbursements under related party agreements:
Operating Agreement 66.7 27.1 133.5 27.1
SBR Omnibus Agreement 0.9 0.9 3.1 0.9
CAUSA 1.5 1.3 5.0 1.3
Total lease expense under related party agreements (2.4) - (4.1) -
Total sales, consisting of refined product sales, and purchases, primarily related to environmental credit and hydrocarbon purchases, under the commercial agreements with SBR are included within Revenues and Cost of products and other, respectively, on the Company's Condensed Consolidated Statements of Operations.
Additionally, the Condensed Consolidated Balance Sheets include $20.9 million and $36.7 million recorded within Accounts receivable - affiliate and Accounts payable - affiliate, respectively, related to transactions with SBR as of September 30, 2024 ($22.1 million and $28.3 million, respectively, as of December 31, 2023).
17
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. COMMITMENTS AND CONTINGENCIES
In the ordinary conduct of the Company's business, the Company is from time to time subject to lawsuits, investigations, and claims, including class action proceedings, mass tort actions, tort actions, environmental claims, and employee-related matters. The outcome of these matters cannot always be predicted accurately, but the Company accrues liabilities for these matters if the Company has determined that it is probable a loss has been incurred and the loss can be reasonably estimated. For such ongoing matters for which the Company has not recorded a liability but losses are reasonably possible, the Company is unable to estimate a range of possible losses at this time due to various reasons that may include but are not limited to, matters being in an early stage and not fully developed through pleadings, discovery or court proceedings, number of potential claimants being unknown or uncertainty regarding a number of different factors underlying the potential claims. However, the ultimate resolution of one or more of these contingencies could result in an adverse outcome that may have a material effect on the Company's financial position, results of operations or cash flows.
Environmental Matters
The Company's refineries, pipelines and related operations are subject to extensive and frequently changing federal, state and local laws and regulations, including, but not limited to, those relating to the discharge of materials into the environment or that otherwise relate to the protection of the environment (including in response to the potential impacts of climate change), waste management and the characteristics and the compositions of fuels. Compliance with existing and anticipated laws and regulations can increase the overall cost of operating the refineries, including remediation, operating costs, and capital costs to construct, maintain and upgrade equipment and facilities.
These laws and permits raise potential exposure to future claims and lawsuits involving environmental and safety matters which could include soil and water contamination, air pollution, personal injury and property damage allegedly caused by substances which the Company manufactured, handled, used, released, or disposed of, transported, or that relate to pre-existing conditions for which the Company has assumed responsibility. The Company believes that its current operations are in compliance with existing environmental and safety requirements. However, there have been and will continue to be ongoing discussions about environmental and safety matters between the Company and federal and state authorities, including notices of violations ("NOVs"), citations, and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures. While it is often difficult to quantify future environmental or safety related expenditures, the Company anticipates that continuing capital investments and changes in operating procedures will be required for the foreseeable future to comply with existing and new requirements, as well as evolving interpretations and more strict enforcement of existing laws and regulations.
In connection with the acquisition of the Torrance refinery and related logistics assets, the Company assumed certain pre-existing environmental liabilities. The estimated costs related to these remediation obligations totaled $107.8 million as of September 30, 2024 ($114.9 million as of December 31, 2023) and related primarily to remediation obligations to address existing soil and groundwater contamination and the related monitoring and clean-up activities. Costs related to these obligations are reassessed periodically or when changes to the Company's remediation approach are identified. The current portion of the environmental liability is recorded in Accrued expenses and the non-current portion is recorded in Other long-term liabilities.
The aggregate environmental liability reflected on the Company's Condensed Consolidated Balance Sheets was $149.0 million and $155.8 million at September 30, 2024 and December 31, 2023, respectively, of which $137.0 million and $140.1 million, respectively, were classified as Other long-term liabilities. These liabilities include remediation and monitoring costs expected to be incurred over an extended period of time. Estimated liabilities could increase in the future when the results of ongoing investigations become known, are considered probable and can be reasonably estimated.
18
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Legal Matters
On November 24, 2022, the Martinez refinery, owned and operated by MRC, experienced a spent catalyst release that is currently being investigated by the Bay Area Air Quality Management District ("BAAQMD"), Contra Costa County ("CCC"), the Department of Justice and EPA, and the California Department of Fish and Game ("DFG"). To date, the BAAQMD has issued 35 NOVs, the CCC has issued two NOVs, and the DFG has made findings relating to the spent catalyst incident. On July 11, 2023 and October 6, 2023, the Martinez refinery experienced unintentional releases of petroleum coke dust and received inquiries or notices of investigation from the BAAQMD, the California Department of Industrial Relations, Division of Occupational Safety and Health ("CalOSHA"), the CCC, and the EPA. The BAAQMD also issued an NOV relating to the July 11, 2023 coke dust incident and an NOV relating to the October 6, 2023 coke dust incident. On December 15, 2023, the Martinez refinery experienced an unexpected flaring incident, and subsequently on December 18, 2023 a brush fire incident, and has received inquiries or notices of investigation from the BAAQMD, CalOSHA, and the CCC. The BAAQMD additionally issued an NOV relating to the December 15, 2023 flaring incident and four NOVs relating to the December 18, 2023 brush fire incident. The DFG, the CCC, and the BAAQMD have referred their findings and/or NOVs to the CCC District Attorney for the spent catalyst incident and various other incidents. On November 16, 2023, the CCC District Attorney and the BAAQMD announced a joint civil enforcement action against MRC that will include enforcement of the BAAQMD's, the CCC's, and the DFG's claims from the spent catalyst incident, as well as additional enforcement claims from various incidents. For the spent catalyst, coke dust, flaring, brush fire, and other incidents, no penalties have been assessed to date by the various agencies, but it is reasonable to expect that penalties may be assessed; however, they are not currently estimable.
19
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. REVENUES
The following table provides information relating to the Company's revenues from external customers for each product or group of similar products for the periods presented:
Three Months Ended September 30,
(in millions) 2024 2023
Gasoline and distillates $ 7,295.3 $ 9,623.1
Feedstocks and other 393.7 489.0
Asphalt and blackoils 379.0 388.1
Chemicals 199.9 158.7
Lubricants 104.9 66.4
Total Revenues $ 8,372.8 $ 10,725.3
Nine Months Ended September 30,
(in millions) 2024 2023
Gasoline and distillates $ 22,337.2 $ 25,997.8
Asphalt and blackoils 1,520.0 1,176.3
Feedstocks and other 1,077.5 1,256.6
Chemicals 519.6 473.1
Lubricants 281.5 255.4
Total Revenues $ 25,735.8 $ 29,159.2
The Company's revenues are generated from the sale of refined products. These revenues are largely based on the current spot (market) prices of the products sold, which represent consideration specifically allocable to the products being sold on a given day, and the Company recognizes those revenues upon delivery and transfer of title to the products to the Company's customers. The time at which delivery and transfer of title occurs is the point when the Company's control of the products is transferred to the Company's customers and when its performance obligation to its customers is fulfilled. Delivery and transfer of title are specifically agreed to between the Company and customers within the contracts. The Company also has contracts which contain fixed pricing, tiered pricing, minimum volume features with makeup periods, or other factors that have not materially been affected by Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers.
Deferred Revenue
The Company records deferred revenue when cash payments are received or are due in advance of performance, including amounts which are refundable. Deferred revenue was $40.0 million and $63.6 million as of September 30, 2024 and December 31, 2023, respectively. Fluctuations in the deferred revenue balance are primarily driven by the timing and extent of cash payments received or due in advance of satisfying the Company's performance obligations.
The Company's payment terms vary by type and location of customers and the products offered. The period between invoicing and when payment is due is not significant (i.e. generally within two months). For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer.
20
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8. INCOME TAXES
PBF Holding is a limited liability company treated as a "flow-through" entity for income tax purposes. Accordingly, there is generally no benefit or expense for federal or state income tax in the PBF Holding financial statements apart from the income tax attributable to the two subsidiaries acquired in connection with the acquisition of Chalmette Refining and the Company's wholly-owned Canadian subsidiary, PBF Energy Limited, which are treated as C-Corporations for income tax purposes, with the tax provision calculated based on the effective tax rate for the periods presented.
The income tax provision in the PBF Holding Condensed Consolidated Statements of Operations consists of the following:
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2024 2023 2024 2023
Current income tax expense (benefit) $ 0.2 $ (0.4) $ 0.3 $ (1.1)
Deferred income tax expense (benefit) 2.7 (6.0) - (5.9)
Total income tax expense (benefit) $ 2.9 $ (6.4) $ 0.3 $ (7.0)
21
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9. FAIR VALUE MEASUREMENTS
The tables below present information about the Company's financial assets and liabilities measured and recorded at fair value on a recurring basis and indicate the fair value hierarchy of the inputs utilized to determine the fair values as of September 30, 2024 and December 31, 2023.
The Company has elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty; however, fair value amounts by hierarchy level are presented on a gross basis in the tables below. The Company may be required to post margin collateral or reclaim cash collateral from derivative counterparties based on contractual terms. At September 30, 2024 and December 31, 2023, the Company had the obligation to return cash collateral posted against its derivative obligations of $11.5 million and $23.7 million, respectively. Cash collateral related to derivative contracts is recorded net in the Condensed Consolidated Balance Sheets. The Company has no derivative contracts that are subject to master netting arrangements that are reflected gross on the Condensed Consolidated Balance Sheets.
As of September 30, 2024
Fair Value Hierarchy Total Gross Fair Value Effect of Counter-party Netting Net Carrying Value on Balance Sheet
(in millions) Level 1 Level 2 Level 3
Assets:
Money market funds $ 37.6 $ - $ - $ 37.6 N/A $ 37.6
Commodity contracts 61.6 2.6 - 64.2 (64.2) -
Liabilities:
Commodity contracts 65.3 2.1 - 67.4 (64.2) 3.2
Renewable energy credit and emissions obligations - 473.7 - 473.7 - 473.7
As of December 31, 2023
Fair Value Hierarchy Total Gross Fair Value Effect of Counter-party Netting Net Carrying Value on Balance Sheet
(in millions) Level 1 Level 2 Level 3
Assets:
Money market funds $ 130.3 $ - $ - $ 130.3 N/A $ 130.3
Commodity contracts 80.1 - - 80.1 (46.9) 33.2
Liabilities:
Commodity contracts 46.9 - - 46.9 (46.9) -
Renewable energy credit and emissions obligations - 429.8 - 429.8 - 429.8
Contingent consideration obligation - - 21.6 21.6 - 21.6
22
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The valuation methods used to measure financial instruments at fair value are as follows:
•Money market funds categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted market prices and included within Cash and cash equivalents.
•The commodity contracts categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted prices in an active market. The commodity contracts categorized in Level 2 of the fair value hierarchy are measured at fair value using a market approach based upon future commodity prices for similar instruments quoted in active markets.
•Renewable energy credit and emissions obligations primarily represent the Company's liability for the purchase of (i) biofuel credits (primarily RINs in the U.S.) needed to satisfy its obligation to blend biofuels into the products the Company produces and (ii) emission credits under the AB 32 and similar programs (collectively, the cap-and-trade systems). To the degree the Company is unable to blend biofuels (such as ethanol and biodiesel) at percentages required under the biofuel programs, it must purchase biofuel credits to comply with these programs. Under the cap-and-trade systems, it must purchase emission credits to comply with these systems. The liability for environmental credits is in part based on the Company's deficit for such credits as of the balance sheet date, if any, after considering any credits acquired, and is equal to the product of the credits deficit and the market price of these credits as of the balance sheet date. To the extent that the Company has a better estimate of the cost at which it settles its obligation, such as agreements to purchase RINs at prices other than the current spot price, the Company considers those costs in valuing the remaining obligation. The environmental credit obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based on quoted prices from an independent pricing service.
•When applicable, commodity contracts categorized in Level 3 of the fair value hierarchy consist of commodity price swap contracts that relate to forecasted purchases of crude oil for which quoted forward market prices are not readily available due to market illiquidity. The forward prices used to value these swaps are derived using broker quotes, prices from other third-party sources and other available market based data.
•The contingent consideration obligation at December 31, 2023 is categorized in Level 3 of the fair value hierarchy and was estimated using discounted cash flow models based on management's estimate of the future cash flows related to the earn-out periods. Our final earn-out payment of $18.8 million was paid in full during the second quarter of 2024.
Non-qualified pension plan assets are measured at fair value using a market approach based on published net asset values of mutual funds as a practical expedient. As of September 30, 2024 and December 31, 2023, $20.3 million and $18.8 million, respectively, were included within Deferred charges and other assets, net for these non-qualified pension plan assets.
23
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The table below summarizes the changes in fair value measurements categorized in Level 3 of the fair value hierarchy, which primarily includes the prior year change in estimated future earnings related to the earn-out obligation associated with the acquisition of the Martinez refinery and logistics assets:
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2024 2023 2024 2023
Balance at beginning of period $ - $ 17.5 $ 21.6 $ 150.5
Settlements - 2.5 (18.8) (81.1)
Unrealized loss (gain) included in earnings - 71.0 (2.8) 21.6
Balance at end of period $ - $ 91.0 $ - $ 91.0
There were no transfers between levels during the three and nine months ended September 30, 2024 or the three and nine months ended September 30, 2023.
Fair value of debt
The table below summarizes the carrying value and fair value of debt as of September 30, 2024 and December 31, 2023.
September 30, 2024 December 31, 2023
(in millions) Carrying
value 		Fair
value 		Carrying
value 		Fair
value
2028 Senior Notes (a) $ 801.6 $ 790.7 $ 801.6 $ 779.3
2030 Senior Notes (a) 500.0 515.3 500.0 514.8
1,301.6 1,306.0 1,301.6 1,294.1
Unamortized discount (2.9) n/a (3.2) n/a
Less - Unamortized deferred financing costs (44.3) n/a (52.5) n/a
Long-term debt $ 1,254.4 $ 1,306.0 $ 1,245.9 $ 1,294.1
______________________
(a) The estimated fair value, categorized as a Level 2 measurement, was calculated based on the present value of future expected payments utilizing implied current market interest rates based on quoted prices of the outstanding senior notes.
24
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10. DERIVATIVES
The Company uses derivative instruments to mitigate certain exposures to commodity price risk. On July 31, 2023, the Company terminated the third amended and restated inventory intermediation agreement (the "Third Inventory Intermediation Agreement"). Prior to its termination, the Third Inventory Intermediation Agreement contained purchase obligations for certain volumes of crude oil, intermediates, and refined products. The purchase obligations related to crude oil, intermediates and refined products under this agreement were derivative instruments designated as fair value hedges in order to hedge the commodity price volatility of certain refinery inventory. The fair value of these purchase obligation derivatives was based on market prices of the underlying crude oil, intermediates, and refined products. The level of activity for these derivatives was based on the level of operating inventories.
The Company also enters into economic hedges primarily consisting of commodity derivative contracts that are not designated as hedges and are used to manage price volatility in certain crude oil and feedstock inventories as well as crude oil, feedstock, and refined product sales or purchases. The objective in entering into economic hedges is consistent with the objectives discussed above for fair value hedges. As of September 30, 2024, there were 40,804,000 barrels of crude oil and 4,449,000 barrels of refined products (23,774,000 and 5,351,000, respectively, as of December 31, 2023), outstanding under short and long term commodity derivative contracts not designated as hedges representing the notional value of the contracts.
The Company also uses derivative instruments to mitigate the risk associated with the price of credits needed to comply with various governmental and regulatory environmental compliance programs. For such contracts that represent derivatives, the Company elects the normal purchase normal sale exception under ASC 815, Derivatives and Hedging, and therefore does not record them at fair value.
The following tables provide information regarding the fair values of derivative instruments as of September 30, 2024 and December 31, 2023, and the line items in the Condensed Consolidated Balance Sheets in which fair values are reflected.
Description

Balance Sheet Location 		Fair Value
Asset/(Liability)
(in millions)
Derivatives not designated as hedging instruments:
September 30, 2024:
Commodity contracts Accounts receivable $ (3.2)
December 31, 2023:
Commodity contracts Accounts receivable $ 33.2
25
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table provides information regarding gains or losses recognized in income on derivative instruments and the line items in the Condensed Consolidated Statements of Operations in which such gains and losses are reflected.
Description
Location of Gain or (Loss) Recognized in
Income on Derivatives
Gain or (Loss)
Recognized in
Income on Derivatives
(in millions)
Derivatives designated as hedging instruments:
For the three months ended September 30, 2024:
Derivatives included within the inventory intermediation agreement obligations Cost of products and other $ -
For the three months ended September 30, 2023:
Derivatives included within the inventory intermediation agreement obligations Cost of products and other $ (16.6)
For the nine months ended September 30, 2024:
Derivatives included within the inventory intermediation agreement obligations Cost of products and other $ -
For the nine months ended September 30, 2023:
Derivatives included within the inventory intermediation agreement obligations Cost of products and other $ (25.1)
Derivatives not designated as hedging instruments:
For the three months ended September 30, 2024:
Commodity contracts Cost of products and other $ 9.8
For the three months ended September 30, 2023:
Commodity contracts Cost of products and other $ (28.5)
For the nine months ended September 30, 2024:
Commodity contracts Cost of products and other $ 12.3
For the nine months ended September 30, 2023:
Commodity contracts Cost of products and other $ 9.7
Hedged items designated in fair value hedges:
For the three months ended September 30, 2024:
Crude oil, intermediate and refined product inventory Cost of products and other $ -
For the three months ended September 30, 2023:
Crude oil, intermediate and refined product inventory Cost of products and other $ 16.6
For the nine months ended September 30, 2024:
Crude oil, intermediate and refined product inventory Cost of products and other $ -
For the nine months ended September 30, 2023:
Crude oil, intermediate and refined product inventory Cost of products and other $ 25.1
The Company had no ineffectiveness related to the fair value hedges for the three and nine months ended September 30, 2024 or the three and nine months ended September 30, 2023.
26
PBF HOLDING COMPANY LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11. SUBSEQUENT EVENTS
Dividend Declared
On October 31, 2024, PBF Energy, PBF Holding's indirect parent, announced a dividend of $0.275 per share on its outstanding Class A common stock. The dividend is payable on November 27, 2024 to PBF Energy Class A common stockholders of record at the close of business on November 13, 2024. The Company may need to make cash distributions to PBF LLC to the extent necessary for PBF Energy to pay this dividend.
27
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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 Holding included in the Annual Report on Form 10-K for the year ended December 31, 2023 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."
Unless the context indicates otherwise, the terms "we," "us," and "our" refer to PBF Holding and its consolidated subsidiaries.
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. We own and operate six domestic oil refineries and related assets. Our refineries have a combined processing capacity, known as throughput, of approximately 1,000,000 barrels per day ("bpd"), and a weighted-average Nelson Complexity Index of 12.7 based on current operating conditions. The complexity and throughput capacity of our refineries are subject to change dependent upon configuration changes we make to respond to market conditions, as well as a result of investments made to improve our facilities and maintain compliance with environmental and governmental regulations. Our six oil refineries are aggregated into one reportable 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:
Refinery Region
Nelson Complexity Index (1)
Throughput Capacity (in bpd) (1)
PADD
Crude Processed (2)
Source (2)
Delaware City East Coast 13.6 180,000 1 light sweet through heavy sour water, rail
Paulsboro East Coast
8.8 (3)
155,000 (3)
1 light sweet through heavy sour water
Toledo Mid-Continent 11.0 180,000 2 light sweet pipeline, truck, rail
Chalmette Gulf Coast 13.0 185,000 3 light sweet through heavy sour water, pipeline
Torrance West Coast 13.8 166,000 5 medium and heavy pipeline, water, truck
Martinez West Coast 16.1 157,000 5 medium and heavy pipeline and water
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(1) Reflects operating conditions at each refinery as of the date of this filing. Changes in complexity and throughput capacity reflect the result of current market conditions, in addition to investments made to improve our facilities and maintain compliance with environmental and governmental regulations. Configurations at each of our refineries are evaluated periodically and updated accordingly.
(2)Reflects the typical crude and feedstocks and related sources utilized under normal operating conditions and prevailing market environments.
(3) Under normal operating conditions and prevailing market environments, our Nelson Complexity Index and throughput capacity for the Paulsboro refinery would be 13.1 and 180,000, respectively. As a result of the reconfiguration of our East Coast refineries in 2020, and subsequent restart of several idled processing units at the Paulsboro refinery in 2022, our Nelson Complexity Index and throughput capacity were adjusted.
We are a wholly-owned subsidiary of PBF LLC and an indirect subsidiary of PBF Energy. PBF Finance is a wholly-owned subsidiary of PBF Holding. We are the parent company for PBF LLC's refinery operating subsidiaries.
PBF Logistics LP Transactions
PBFX GP serves as the general partner of PBFX. PBFX is an affiliate of ours. PBFX, an indirect wholly-owned subsidiary of PBF Energy and PBF LLC, owns or leases, operates, develops, and acquires crude oil and refined products terminals, pipelines, storage facilities and similar logistics assets. PBFX engages in the receiving, handling, storage and transferring of crude oil, refined products, natural gas, and intermediates from sources located throughout the United States and Canada for PBF Energy in support of its refineries, as well as for third-party customers. The majority of PBFX's revenues are derived from long-term, fee-based commercial agreements with us, which include minimum volume commitments, for receiving, handling, storing, and transferring crude oil, refined products, and natural gas. PBF Energy also has agreements with PBFX that establish fees for certain general and administrative services and operational and maintenance services provided by us to PBFX. From time to time, we have distributed to PBF LLC, which in turn contributed to PBFX, certain assets.
St. Bernard Renewables LLC Transactions
On June 27, 2023, PBF Energy and Eni Sustainable Mobility US Inc., a subsidiary of Eni SpA ("Eni"), consummated the closing of the equity method investment transaction and the capitalization of St. Bernard Renewables LLC ("SBR"), a jointly held investee designed to own, develop, and operate the renewable diesel facility co-located with our Chalmette refinery in Louisiana (the "Renewable Diesel Facility"). In connection with this transaction, we distributed to PBF LLC, which in turn contributed to SBR, certain assets. We have no interest in SBR.
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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.
Debt and Credit Facilities
Revolving Credit Facility
On August 23, 2023, we entered into an amendment and restatement of our existing asset-based revolving credit agreement (the "Revolving Credit Agreement"). The Revolving Credit Agreement amended and restated the previously existing revolving credit agreement dated as of May 2, 2018 (as amended from time to time, the "Prior Credit Agreement"). Among other things, the Revolving Credit Agreement extended our asset-based revolving credit facility (the "Revolving Credit Facility") through August 2028 and increased the maximum commitment to $3.5 billion from $2.85 billion. The commitment fees on the unused portion, the interest rate on advances and the fees for letters of credit are generally consistent with the Prior Credit Agreement.
Senior Notes
On August 21, 2023, we issued $500.0 million in aggregate principal amount of 7.875% senior unsecured notes due 2030 (the "2030 Senior Notes"). The net proceeds from this offering were approximately $488.8 million after deducting the initial purchasers' discount and estimated offering expenses. We used the net proceeds, together with cash on hand, to fully redeem the outstanding 7.25% senior unsecured notes due 2025 (the "2025 Senior Notes"), including accrued and unpaid interest, on September 13, 2023 for approximately $664.5 million.
Catalyst Financing Obligations
During 2023, we settled our last remaining precious metal financing arrangement, which represented a reduction of debt of approximately $3.1 million.
Inventory Intermediation Agreement
Prior to 2023, PBF Holding and its subsidiaries, Delaware City Refining Company LLC ("DCR"), Paulsboro Refining Company LLC ("PRC"), and Chalmette Refining LLC ("Chalmette Refining") (collectively, the "PBF Entities"), entered into the third amended and restated inventory intermediation agreement (the "Third Inventory Intermediation Agreement") with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc. ("J. Aron"). Pursuant to the Third Inventory Intermediation Agreement, J. Aron purchased and held title to certain crude oil, intermediates, and finished products (the "J. Aron Products") purchased or produced by the Paulsboro and Delaware City refineries (and at the election of the PBF Entities, the Chalmette refinery) (the "Refineries") and delivered into the storage tanks at the Refineries (the "Storage Tanks"). The J. Aron Products were sold back to us as the J. Aron Products were discharged out of the Storage Tanks.
On June 28, 2023, the PBF Entities entered into a second amendment to the Third Inventory Intermediation Agreement to amend certain provisions in order to allow for the early termination of the Third Inventory Intermediation Agreement effective as of July 31, 2023. In conjunction with this early termination, we made a payment of $268.0 million for the inventory previously held by J. Aron, inclusive of $13.5 million of related costs associated with exiting the agreement.
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Transactions with SBR
We and our subsidiaries have entered into various agreements with SBR, primarily related to the sale and purchase of environmental credits and hydrocarbon products. Refer to "Note 5 - Related Party Transactions" of our Notes to Condensed Consolidated Financial Statements for transactions with SBR.
Distribution of Assets
On June 27, 2023, we distributed to PBF LLC, which in turn contributed to SBR, approximately $739.8 million in assets related to the Renewable Diesel Facility. We have no interest in SBR, which is jointly owned by a subsidiary of PBF LLC and its partner, Eni. Additionally, we distributed to PBF LLC, which in turn contributed to one of its subsidiaries, Chalmette Refining Service Company LLC ("CRSC"), approximately $103.8 million in assets. The Company has no interest in CRSC, which is owned by PBF LLC.
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Results of Operations
The following tables reflect our financial and operating highlights for the three and nine months ended September 30, 2024 and 2023 (amounts in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Revenues $ 8,372.8 $ 10,725.3 $ 25,735.8 $ 29,159.2
Cost and expenses:
Cost of products and other 7,943.2 8,802.2 23,666.8 24,670.1
Operating expenses (excluding depreciation and amortization expense as reflected below) 621.4 615.8 1,858.0 1,936.2
Depreciation and amortization expense 149.5 131.2 427.6 397.1
Cost of sales 8,714.1 9,549.2 25,952.4 27,003.4
General and administrative expenses (excluding depreciation and amortization expense as reflected below) 63.2 90.2 186.3 248.1
Depreciation and amortization expense 1.8 2.3 5.3 6.5
Change in fair value of contingent consideration, net - 65.3 (3.3) 32.4
Loss (gain) on sale of assets - 0.1 0.7 (1.3)
Total cost and expenses 8,779.1 9,707.1 26,141.4 27,289.1
Income (loss) from operations (406.3) 1,018.2 (405.6) 1,870.1
Other income (expense):
Interest expense (net of interest income of $10.8 million, $21.2 million, $41.8 million, and $50.2 million, respectively)
(19.0) (23.9) (47.9) (53.9)
Change in fair value of catalyst obligations - (0.1) - 1.1
Loss on extinguishment of debt - (5.7) - (5.7)
Other non-service components of net periodic benefit cost 0.5 0.1 1.7 0.5
Income (loss) before income taxes (424.8) 988.6 (451.8) 1,812.1
Income tax expense (benefit) 2.9 (6.4) 0.3 (7.0)
Net income (loss) (427.7) 995.0 (452.1) 1,819.1
Less: net income (loss) attributable to noncontrolling interest (0.1) 0.1 (0.1) 0.5
Net income (loss) attributable to PBF Holding Company LLC $ (427.6) $ 994.9 $ (452.0) $ 1,818.6
Consolidated gross margin $ (341.3) $ 1,176.1 $ (216.6) $ 2,155.8
Gross refining margin (1)
$ 429.6 $ 1,923.1 $ 2,069.0 $ 4,489.1
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(1) See Non-GAAP Financial Measures.
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Operating Highlights
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Key Operating Information
Production (bpd in thousands) 945.4 952.7 927.2 919.6
Crude oil and feedstocks throughput (bpd in thousands) 935.6 939.7 918.2 909.2
Total crude oil and feedstocks throughput (millions of barrels) 86.1 86.4 251.6 248.2
Consolidated gross margin per barrel of throughput $ (3.96) $ 13.60 $ (0.86) $ 8.69
Gross refining margin, excluding special items, per barrel of throughput (1)
$ 6.79 $ 22.24 $ 8.84 $ 18.09
Refining operating expense, per barrel of throughput $ 7.22 $ 7.12 $ 7.39 $ 7.80
Crude and feedstocks (% of total throughput) (2)
Heavy 31 % 27 % 30 % 27 %
Medium 38 % 33 % 39 % 34 %
Light 17 % 21 % 17 % 21 %
Other feedstocks and blends 14 % 19 % 14 % 18 %
Total throughput 100 % 100 % 100 % 100 %
Yield (% of total throughput)
Gasoline and gasoline blendstocks 49 % 48 % 47 % 48 %
Distillates and distillate blendstocks 33 % 34 % 33 % 34 %
Lubes 1 % 1 % 1 % 1 %
Chemicals 1 % 1 % 1 % 1 %
Other 17 % 17 % 19 % 17 %
Total yield 101 % 101 % 101 % 101 %
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(1) See Non-GAAP Financial Measures.
(2) We define heavy crude oil as crude oil with American Petroleum Institute ("API") gravity of less than 24 degrees. We define medium crude oil as crude oil with an API gravity between 24 and 35 degrees. We define light crude oil as crude oil with an API gravity higher than 35 degrees.
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The table below summarizes certain market indicators relating to our operating results as reported by Platts, a division of The McGraw-Hill Companies. Effective RIN basket price is recalculated based on information as reported by Argus.
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
(dollars per barrel, except as noted)
Dated Brent crude oil $ 79.99 $ 87.02 $ 82.71 $ 82.11
West Texas Intermediate (WTI) crude oil $ 75.28 $ 82.54 $ 77.71 $ 77.36
Light Louisiana Sweet (LLS) crude oil $ 77.38 $ 84.93 $ 80.26 $ 79.82
Alaska North Slope (ANS) crude oil $ 78.95 $ 87.95 $ 82.24 $ 81.74
Crack Spreads
Dated Brent (NYH) 2-1-1 $ 16.22 $ 35.49 $ 19.56 $ 31.89
WTI (Chicago) 4-3-1 $ 17.47 $ 26.12 $ 18.04 $ 27.67
LLS (Gulf Coast) 2-1-1 $ 16.02 $ 36.19 $ 19.60 $ 32.24
ANS (West Coast-LA) 4-3-1 $ 19.27 $ 50.22 $ 25.19 $ 40.80
ANS (West Coast-SF) 3-2-1 $ 22.94 $ 48.88 $ 26.92 $ 40.53
Crude Oil Differentials
Dated Brent (foreign) less WTI $ 4.71 $ 4.48 $ 5.00 $ 4.75
Dated Brent less Maya (heavy, sour) $ 13.09 $ 14.59 $ 12.60 $ 14.24
Dated Brent less WTS (sour) $ 4.81 $ 3.80 $ 4.89 $ 4.72
Dated Brent less ASCI (sour) $ 5.99 $ 4.23 $ 5.36 $ 5.60
WTI less WCS (heavy, sour) $ 15.31 $ 17.13 $ 15.46 $ 16.66
WTI less Bakken (light, sweet) $ 0.88 $ (1.97) $ 1.47 $ (2.20)
WTI less Syncrude (light, sweet) $ (0.32) $ (2.31) $ 0.65 $ (2.76)
WTI less LLS (light, sweet) $ (2.10) $ (2.38) $ (2.55) $ (2.46)
WTI less ANS (light, sweet) $ (3.67) $ (5.41) $ (4.53) $ (4.38)
Effective RIN basket price $ 3.89 $ 7.42 $ 3.65 $ 7.76
Natural gas (dollars per MMBTU) $ 2.23 $ 2.66 $ 2.22 $ 2.58
Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023
Overview-Net loss was $427.7 million for the three months ended September 30, 2024 compared to net income of $995.0 million for the three months ended September 30, 2023.
Our results for the three months ended September 30, 2024 were negatively impacted by a special item consisting of a non-cash, pre-tax lower of cost or market ("LCM") inventory adjustment of approximately $154.5 million. Our results for the three months ended September 30, 2023 were negatively impacted by special items consisting of a change in fair value of our earn-out obligation associated with the acquisition of the Martinez refinery and logistics assets (the "Martinez Contingent Consideration") of $65.3 million, a loss on extinguishment of debt related to the redemption of the 2025 Senior Notes and the amendment and restatement of the Revolving Credit Facility of $5.7 million, and exit costs associated with the early termination of the Third Inventory Intermediation Agreement of $13.5 million.
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Excluding the impact of these special items, when comparing our results to the three months ended September 30, 2023, we experienced an overall decrease in our refining margins due to unfavorable movements in crack spreads and certain crude oil differentials and lower throughput volumes and barrels sold. These decreasing metrics have negatively impacted our revenues, gross margin, and operating income in comparison to the same period in 2023.
Revenues-Revenues totaled $8.4 billion for the three months ended September 30, 2024 compared to $10.7 billion for the three months ended September 30, 2023, a decrease of approximately $2.3 billion, or 21.5%. Revenues per barrel were $89.09 and $111.61 for the three months ended September 30, 2024 and 2023, respectively, a decrease of 20.2% directly related to lower hydrocarbon commodity prices. For the three months ended September 30, 2024, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast, and West Coast refineries averaged approximately 307,200 bpd, 160,000 bpd, 164,600 bpd and 303,800 bpd, respectively. For the three months ended September 30, 2023, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast, and West Coast refineries averaged approximately 318,600 bpd, 152,600 bpd, 184,300 bpd and 284,200 bpd, respectively. For the three months ended September 30, 2024, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast, and West Coast refineries averaged approximately 342,200 bpd, 163,000 bpd, 160,100 bpd and 356,200 bpd, respectively. For the three months ended September 30, 2023, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast, and West Coast refineries averaged approximately 346,700 bpd, 160,000 bpd, 193,700 bpd and 344,100 bpd, respectively.
Overall average throughput rates at our refineries remained consistent in the three months ended September 30, 2024 when compared to the same period in 2023. We plan to continue operating our refineries based on demand and current market conditions. 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.
Consolidated gross margin- Consolidated gross margin totaled $(341.3) million for the three months ended September 30, 2024 compared to $1,176.1 million for the three months ended September 30, 2023, a decrease of approximately $1,517.4 million. Gross refining margin totaled $429.6 million, or $5.00 per barrel of throughput for the three months ended September 30, 2024 compared to $1,923.1 million, or $22.24 per barrel of throughput for the three months ended September 30, 2023, a decrease of approximately $1,493.5 million. Gross refining margin excluding special items totaled $584.1 million, or $6.79 per barrel of throughput for the three months ended September 30, 2024 compared to $1,923.1 million, or $22.24 per barrel of throughput for the three months ended September 30, 2023, a decrease of $1,339.0 million.
Consolidated gross margin and gross refining margin for the three months ended September 30, 2024, were negatively impacted by a non-cash LCM adjustment of approximately $154.5 million resulting from the decrease in crude oil and refined product prices from the second quarter of 2024 to the end of the third quarter of 2024. Gross refining margin excluding special items decreased due to unfavorable movements in crack spreads and certain crude oil differentials and barrels sold at the majority of our refineries. Consolidated gross margin and gross refining margin were not impacted by special items during the three months ended September 30, 2023.
Additionally, our results continue to be impacted by significant costs to comply with the RFS. Total RFS compliance costs were $128.8 million for the three months ended September 30, 2024 compared to $167.5 million for the three months ended September 30, 2023.
Average industry margins were unfavorable during the three months ended September 30, 2024 compared to the same period in 2023, primarily due to decreased refining margins as a result of unfavorable supply and demand dynamics that impacted crack spreads.
Favorable movements in 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.
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On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately $16.22 per barrel, or 54.3% lower, in the three months ended September 30, 2024, as compared to $35.49 per barrel in the same period in 2023. Our margins were positively impacted from our refinery specific slate on the East Coast by strengthened WTI/Bakken differential, which increased by $2.85 per barrel, partially offset by a weakened Dated Brent/Maya differential, which decreased by $1.50 per barrel in comparison to the same period in 2023. The WTI/WCS differential decreased to $15.31 per barrel in the three months ended September 30, 2024 compared to $17.13 in the same period in 2023, which unfavorably impacted our cost of heavy Canadian crude.
Across the Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was $17.47 per barrel, or 33.1% lower, in the three months ended September 30, 2024 as compared to $26.12 per barrel in the same period in 2023. Our margins were positively impacted from our refinery specific slate in the Mid-Continent by strengthened WTI/Bakken and WTI/Syncrude differentials, which increased by $2.85 and $1.99 per barrel, respectively, in comparison to the same period in 2023.
On the Gulf Coast, the LLS (Gulf Coast) 2-1-1 industry crack spread was $16.02 per barrel, or 55.7% lower, in the three months ended September 30, 2024 as compared to $36.19 per barrel in the same period in 2023. Margins on the Gulf Coast were positively impacted from our refinery specific slate by a strengthened WTI/LLS differential, which averaged a premium of $2.10 per barrel for the three months ended September 30, 2024 as compared to a premium of $2.38 per barrel in the same period of 2023.
On the West Coast the ANS (West Coast) 4-3-1 industry crack spread was $19.27 per barrel, or 61.6% lower, in the three months ended September 30, 2024 as compared to $50.22 per barrel in the same period in 2023. Additionally, the ANS (West Coast) 3-2-1 industry crack spread was $22.94 per barrel, or 53.1% lower, in the three months ended September 30, 2024 as compared to $48.88 per barrel in the same period in 2023. Our margins on the West Coast were positively impacted from our refinery specific slate by strengthened WTI/ANS differential, which averaged a premium of $3.67 per barrel for the three months ended September 30, 2024 as compared to a premium of $5.41 per barrel in the same period of 2023.
Operating expenses- Operating expenses totaled $621.4 million, or $7.22 per barrel of throughput, for the three months ended September 30, 2024 compared to $615.8 million, or $7.12 per barrel of throughput, for the three months ended September 30, 2023, an increase of $5.6 million, or 0.9%. The increase in operating expenses when compared to the same period in 2023 was mainly attributable to higher maintenance costs and outside service costs across our refineries, partially offset by lower energy costs due to an overall decrease in natural gas prices.
General and administrative expenses- General and administrative expenses totaled $63.2 million for the three months ended September 30, 2024 compared to $90.2 million for the three months ended September 30, 2023, a decrease of approximately $27.0 million or 29.9%. The decrease in general and administrative expenses for the three months ended September 30, 2024 in comparison to the three months ended September 30, 2023 is primarily related to lower employee-related expenses, including incentive compensation. Our general and administrative expenses are comprised of personnel, facilities, and other infrastructure costs necessary to support our refineries.
Loss on sale of assets- There was a loss of $0.1 million for the three months ended September 30, 2023 related primarily to the sale of non-operating refinery assets. There was no such gain or loss for the three months ended September 30, 2024.
Depreciation and amortization expense- Depreciation and amortization expense totaled $151.3 million for the three months ended September 30, 2024 (including $149.5 million recorded within Cost of sales) compared to $133.5 million for the three months ended September 30, 2023 (including $131.2 million recorded within Cost of sales), an increase of $17.8 million. The increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed since the third quarter of 2023.
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Change in fair value of contingent consideration- Change in fair value of contingent consideration represented a loss of $65.3 million for the three months ended September 30, 2023 related to changes in the estimated fair value of the Martinez Contingent Consideration. Our final earn-out payment of $18.8 million was paid in full during the second quarter of 2024.
Change in fair value of catalyst obligations- Change in fair value of catalyst obligations represented a loss of $0.1 million for the three months ended September 30, 2023. This loss related to the change in fair value of the precious metals underlying the sale and leaseback of our refineries' precious metal catalysts, which we were obligated to repurchase at fair market value upon lease termination. During September 2023, we settled our remaining outstanding precious metal financing arrangement.
Loss on extinguishment of debt- There was a loss on the extinguishment of debt of $5.7 million in the three months ended September 30, 2023, related to the redemption of the 2025 Senior Notes and the amendment and restatement of the Revolving Credit Agreement. There was no such loss for the three months ended September 30, 2024.
Interest expense, net- Interest expense, net totaled $19.0 million for the three months ended September 30, 2024 compared to $23.9 million for the three months ended September 30, 2023, a decrease of approximately $4.9 million. For the three months ended September 30, 2024, interest expense includes interest on long-term debt, letter of credit fees associated with the purchase of certain crude oils and the amortization of deferred financing costs.
Income tax expense (benefit) - As PBF Holding is a limited liability company treated as a "flow-through" entity for income tax purposes, our Condensed Consolidated Financial Statements generally do not include a benefit or expense for income taxes for the three months ended September 30, 2024 and September 30, 2023, respectively, apart from the income tax attributable to two subsidiaries acquired in connection with the Chalmette refinery in the fourth quarter of 2015 and PBF Energy Limited ("PBF Ltd."). These subsidiaries are treated as C-Corporations for income tax purposes. An income tax expense of $2.9 million was recorded for the three months ended September 30, 2024 in comparison to an income tax benefit of $6.4 million recorded for the three months ended September 30, 2023.
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Overview-Net loss was $452.1 million for the nine months ended September 30, 2024 compared to net income of $1,819.1 million for the nine months ended September 30, 2023.
Our results for the nine months ended September 30, 2024 were negatively impacted by special items consisting of a non-cash, pre-tax LCM inventory adjustment of approximately $154.5 million and a change in fair value of the Martinez Contingent Consideration of $3.3 million. Our results for the nine months ended September 30, 2023 were negatively impacted by special items consisting of a change in fair value of the Martinez Contingent Consideration of $32.4 million, a $5.7 million loss on extinguishment of debt related to the redemption of the 2025 Senior Notes and the amendment and restatement of the Revolving Credit Facility, and exit costs associated with the early termination of the Third Inventory Intermediation Agreement of $13.5 million, partially offset by a gain on the sale of a parcel of land at our Torrance refinery of $1.7 million.
Excluding the impact of these special items, when comparing our results to the nine months ended September 30, 2023, we experienced an overall decrease in our refining margins due to unfavorable movements in crack spreads and crude oil differentials and lower barrels sold at the majority of our refineries. In addition, the planned and unplanned maintenance experienced at our West Coast refineries during the fourth quarter of 2023 extended into the first half of 2024. These decreasing metrics combined with the timing of our maintenance activities have negatively impacted our revenues, gross margin, and operating income in comparison to the same period in 2023. During the same period in 2023, despite heavy turnaround activity at our refineries, the stronger cracks resulted in overall higher margins.
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Revenues-Revenues totaled $25.7 billion for the nine months ended September 30, 2024 compared to $29.2 billion for the nine months ended September 30, 2023, a decrease of approximately $3.5 billion, or 12.0%. Revenues per barrel were $93.10 and $103.04 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of 9.6% directly related to lower hydrocarbon commodity prices. For the nine months ended September 30, 2024, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast, and West Coast refineries averaged approximately 313,200 bpd, 137,400 bpd, 166,900 bpd and 300,700 bpd, respectively. For the nine months ended September 30, 2023, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast, and West Coast refineries averaged approximately 316,300 bpd, 135,000 bpd, 174,300 bpd and 283,600 bpd, respectively. For the nine months ended September 30, 2024, total barrels sold at our East Coast, Mid-Continent, Gulf Coast, and West Coast refineries averaged approximately 354,000 bpd, 145,500 bpd, 160,500 bpd and 348,900 bpd, respectively. For the nine months ended September 30, 2023, total barrels sold at our East Coast, Mid-Continent, Gulf Coast, and West Coast refineries averaged approximately 358,900 bpd, 146,400 bpd, 183,500 bpd and 347,900 bpd, respectively.
Overall average throughput rates at our refineries were higher in the nine months ended September 30, 2024 due to decreased maintenance activity when compared to the same period in 2023. We plan to continue operating our refineries based on demand and current market conditions. 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.
Consolidated gross margin- Consolidated gross margin totaled $(216.6) million for the nine months ended September 30, 2024, compared to $2,155.8 million for the nine months ended September 30, 2023, a decrease of approximately $2,372.4 million. Gross refining margin totaled $2,069.0 million, or $8.23 per barrel of throughput for the nine months ended September 30, 2024 compared to $4,489.1 million, or $18.09 per barrel of throughput for the nine months ended September 30, 2023, a decrease of approximately $2,420.1 million. Gross refining margin excluding special items totaled $2,223.5 million, or $8.84 per barrel of throughput for the nine months ended September 30, 2024 compared to $4,489.1 million, or $18.09 per barrel of throughput for the nine months ended September 30, 2023, a decrease of $2,265.6 million.
Consolidated gross margin and gross refining margin for the nine months ended September 30, 2024 were negatively impacted by a non-cash LCM adjustment of approximately $154.5 million resulting from the decrease in crude oil and refined product prices from the year ended 2023 to the end of the third quarter of 2024. Gross refining margin excluding special items decreased due to unfavorable movements in crack spreads and crude oil differentials and lower barrels sold at the majority of our refineries, coupled with the timing of our maintenance activity. Consolidated gross margin and gross refining margin were not impacted by special items during the nine months ended September 30, 2023.
Additionally, our results continue to be impacted by significant costs to comply with the RFS. Total RFS compliance costs were $374.5 million for the nine months ended September 30, 2024 compared to $637.7 million for the nine months ended September 30, 2023.
Average industry margins were unfavorable during the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to decreased refining margins as a result of unfavorable supply and demand dynamics that impacted crack spreads.
Favorable movements in 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.
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On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately $19.56 per barrel, or 38.7% lower, in the nine months ended September 30, 2024, as compared to $31.89 per barrel in the same period in 2023. Our margins were positively impacted from our refinery specific slate on the East Coast by strengthened WTI/Bakken differential which increased by $3.67 per barrel, partially offset by a weakened Dated Brent/Maya differential, which decreased by $1.64 per barrel, in comparison to the same period in 2023. The WTI/WCS differential decreased to $15.46 per barrel in the nine months ended September 30, 2024 compared to $16.66 in the same period in 2023, which unfavorably impacted our cost of heavy Canadian crude.
Across the Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was $18.04 per barrel, or 34.8% lower, in the nine months ended September 30, 2024 as compared to $27.67 per barrel in the same period in 2023. Our margins were positively impacted from our refinery specific slate in the Mid-Continent by strengthened WTI/Bakken and WTI/Syncrude differentials, which increased by $3.67 and $3.41 per barrel, respectively, in comparison to the same period in 2023.
On the Gulf Coast, the LLS (Gulf Coast) 2-1-1 industry crack spread was $19.60 per barrel, or 39.2% lower, in the nine months ended September 30, 2024 as compared to $32.24 per barrel in the same period in 2023. Margins on the Gulf Coast were negatively impacted from our refinery specific slate by a weakened WTI/LLS differential, which averaged a premium of $2.55 per barrel for the nine months ended September 30, 2024 as compared to a premium of $2.46 per barrel in the same period of 2023.
On the West Coast, the ANS (West Coast) 4-3-1 industry crack spread was $25.19 per barrel, or 38.3% lower, in the nine months ended September 30, 2024 as compared to $40.80 per barrel in the same period in 2023. Additionally, the ANS (West Coast) 3-2-1 industry crack spread was $26.92 per barrel, or 33.6% lower, in the nine months ended September 30, 2024 as compared to $40.53 per barrel in the same period in 2023. Our margins on the West Coast were negatively impacted from our refinery specific slate by a weakened WTI/ANS differential, which averaged a premium of $4.53 per barrel for the nine months ended September 30, 2024 as compared to a premium of $4.38 per barrel in the same period of 2023.
Operating expenses- Operating expenses totaled $1,858.0 million, or $7.39 per barrel of throughput, for the nine months ended September 30, 2024 compared to $1,936.2 million, or $7.80 per barrel of throughput, for the nine months ended September 30, 2023, a decrease of approximately $78.2 million, or 4.0%. The decrease in operating expenses in comparison to the same period in 2023 was mainly attributable to lower maintenance costs and lower energy costs due to a decrease in natural gas prices, partially offset by higher outside service costs.
General and administrative expenses- General and administrative expenses totaled $186.3 million for the nine months ended September 30, 2024 compared to $248.1 million for the nine months ended September 30, 2023, a decrease of approximately $61.8 million or 24.9%. The decrease in general and administrative expenses in comparison to the same period in 2023 was due to lower employee-related expenses, including incentive compensation. General and administrative expenses are comprised of personnel, facilities, and other infrastructure costs necessary to support our refineries and related logistics assets.
Loss (gain) on sale of assets- There was a net loss of $0.7 million for the nine months ended September 30, 2024 related primarily to the sale of non-operating refinery assets. There was a net gain of $1.3 million for the nine months ended September 30, 2023 related primarily to the sale of a parcel of land at our Torrance refinery.
Depreciation and amortization expense- Depreciation and amortization expense totaled $432.9 million for the nine months ended September 30, 2024 (including $427.6 million recorded within Cost of sales) compared to $403.6 million for the nine months ended September 30, 2023 (including $397.1 million recorded within Cost of sales), an increase of approximately $29.3 million. The increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed since the third quarter of 2023.
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Change in fair value of contingent consideration, net- Change in fair value of contingent consideration represented a gain of $3.3 million and a loss of $32.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. These gains and losses were related to changes in the estimated fair value of the Martinez Contingent Consideration. Our final earn-out payment of $18.8 million was paid in full during the second quarter of 2024.
Change in fair value of catalyst obligations- Change in fair value of catalyst obligations represented a gain of $1.1 million for the nine months ended September 30, 2023. This gain related to the change in fair value of the precious metals underlying the sale and leaseback of our refineries' precious metal catalysts, which we were obligated to repurchase at fair market value upon lease termination. During September 2023, we settled our remaining outstanding precious metal financing arrangement.
Loss on extinguishment of debt- There was a loss on the extinguishment of debt of $5.7 million in the nine months ended September 30, 2023, related to the redemption of the 2025 Senior Notes and the amendment and restatement of the Revolving Credit Agreement. There was no such loss for the nine months ended September 30, 2024.
Interest expense, net- Interest expense, net totaled $47.9 million for the nine months ended September 30, 2024 compared to $53.9 million for the nine months ended September 30, 2023, a decrease of approximately $6.0 million. The net decrease is mainly attributable to the redemption of the 2025 Senior Notes in the third quarter of 2023, and the issuance of our 2030 Senior Notes during the third quarter of 2023 at a reduced principal amount. Additionally, the early termination of the Third Inventory Intermediation Agreement in 2023 further reduced our interest expense. For the nine months ended September 30, 2024, interest expense includes interest on long-term debt, letter of credit fees associated with the purchase of certain crude oils and the amortization of deferred financing costs.
Income tax expense (benefit)- As PBF Holding is a limited liability company treated as a "flow-through" entity for income tax purposes, our Condensed Consolidated Financial Statements generally do not include a benefit or expense for income taxes for the nine months ended September 30, 2024 and September 30, 2023, respectively, apart from the income tax attributable to two subsidiaries acquired in connection with the acquisition of the Chalmette refinery in the fourth quarter of 2015 and our Canadian subsidiary, PBF Ltd. These subsidiaries are treated as C-Corporations for income tax purposes. An income tax expense of $0.3 million was recorded for the nine months ended September 30, 2024 in comparison to an income tax benefit of $7.0 million recorded for the nine months ended September 30, 2023.
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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.
Special Items
The Non-GAAP measures presented include EBITDA excluding special items and gross refining margin excluding special items. Special items for the periods presented relate to LCM inventory adjustments, net changes in fair value of contingent consideration, loss on extinguishment of debt, and gain on land sales. 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.
Gross Refining Margin and Gross Refining Margin Excluding Special Items
Gross refining margin is defined as consolidated gross margin excluding refining depreciation and operating expenses. 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 refining 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.
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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):
Three Months Ended September 30,
2024 2023
$ per barrel of throughput $ per barrel of throughput
Calculation of consolidated gross margin:
Revenues $ 8,372.8 $ 97.27 $ 10,725.3 $ 124.06
Less: Cost of sales 8,714.1 101.23 9,549.2 110.46
Consolidated gross margin $ (341.3) $ (3.96) $ 1,176.1 $ 13.60
Reconciliation of consolidated gross margin to gross refining margin and gross refining margin excluding special items:
Consolidated gross margin $ (341.3) $ (3.96) $ 1,176.1 $ 13.60
Add: Refining operating expense 621.4 7.22 615.8 7.12
Add: Refining depreciation expense 149.5 1.74 131.2 1.52
Gross refining margin $ 429.6 $ 5.00 $ 1,923.1 $ 22.24
Special items: (1)
Add: Non-cash LCM inventory adjustment 154.5 1.79 - -
Gross refining margin excluding special items $ 584.1 $ 6.79 $ 1,923.1 $ 22.24
Nine Months Ended September 30,
2024 2023
$ per barrel of throughput $ per barrel of throughput
Calculation of consolidated gross margin:
Revenues $ 25,735.8 $ 102.29 $ 29,159.2 $ 117.48
Less: Cost of sales 25,952.4 103.15 27,003.4 108.79
Consolidated gross margin $ (216.6) $ (0.86) $ 2,155.8 $ 8.69
Reconciliation of consolidated gross margin to gross refining margin and gross refining margin excluding special items:
Consolidated gross margin $ (216.6) $ (0.86) $ 2,155.8 $ 8.69
Add: Refining operating expense 1,858.0 7.39 1,936.2 7.80
Add: Refining depreciation expense 427.6 1.70 397.1 1.60
Gross refining margin $ 2,069.0 $ 8.23 $ 4,489.1 $ 18.09
Special items: (1)
Add: Non-cash LCM inventory adjustment 154.5 0.61 - -
Gross refining margin excluding special items $ 2,223.5 $ 8.84 $ 4,489.1 $ 18.09
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See Notes to Non-GAAP Financial Measures.
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EBITDA, EBITDA Excluding Special Items and Adjusted EBITDA
Our management uses earnings before interest, income taxes, depreciation and amortization ("EBITDA"), EBITDA excluding special items and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our Board of Directors, creditors, analysts and investors concerning our financial performance. Our outstanding indebtedness for borrowed money and other contractual obligations also include similar measures as a basis for certain covenants under those agreements which may differ from the Adjusted EBITDA definition described below.
EBITDA, EBITDA excluding special items and Adjusted EBITDA are not presentations made in accordance with GAAP and our computation of EBITDA, EBITDA excluding special items and Adjusted EBITDA may vary from others in our industry. In addition, Adjusted EBITDA contains some, but not all, adjustments that are taken into account in the calculation of the components of various covenants in the agreements governing our senior notes and other credit facilities. EBITDA, EBITDA excluding special items and Adjusted EBITDA should not be considered as alternatives to income from operations or net income as measures of operating performance. In addition, EBITDA, EBITDA excluding special items and Adjusted EBITDA are not presented as, and should not be considered, an alternative to cash flows from operations as a measure of liquidity. Adjusted EBITDA is defined as EBITDA before adjustments for items such as stock-based compensation expense, change in the fair value of catalyst obligations, LCM inventory adjustment, net change in the fair value of contingent consideration, loss on extinguishment of debt, gain on land sales, and certain other non-cash items. Other companies, including other companies in our industry, may calculate EBITDA, EBITDA excluding special items and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. EBITDA, EBITDA excluding special items and Adjusted EBITDA also have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include that EBITDA, EBITDA excluding special items and Adjusted EBITDA:
•do not reflect depreciation expense or our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
•do not reflect changes in, or cash requirements for, our working capital needs;
•do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
•do not reflect realized and unrealized gains and losses from certain hedging activities, which may have a substantial impact on our cash flow;
•do not reflect certain other non-cash income and expenses; and
•exclude income taxes that may represent a reduction in available cash.
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The following tables reconcile net income (loss) as reflected in our results of operations to EBITDA, EBITDA excluding special items and Adjusted EBITDA for the periods presented (in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Net income (loss) $ (427.7) $ 995.0 $ (452.1) $ 1,819.1
Add: Depreciation and amortization expense 151.3 133.5 432.9 403.6
Add: Interest expense, net 19.0 23.9 47.9 53.9
Add: Income tax expense (benefit) 2.9 (6.4) 0.3 (7.0)
EBITDA $ (254.5) $ 1,146.0 $ 29.0 $ 2,269.6
Special Items: (1)
Add: Non-cash LCM inventory adjustment 154.5 - 154.5 -
Add: Change in fair value of contingent consideration, net - 65.3 (3.3) 32.4
Add: Loss on extinguishment of debt - 5.7 - 5.7
Add: Gain on land sales - - - (1.7)
EBITDA excluding special items $ (100.0) $ 1,217.0 $ 180.2 $ 2,306.0
Reconciliation of EBITDA to Adjusted EBITDA:
EBITDA $ (254.5) $ 1,146.0 $ 29.0 $ 2,269.6
Add: Stock-based compensation 9.1 8.8 30.1 27.7
Add: Change in fair value of catalyst obligations - 0.1 - (1.1)
Add: Non-cash LCM inventory adjustment(1)
154.5 - 154.5 -
Add: Change in fair value of contingent consideration, net(1)
- 65.3 (3.3) 32.4
Add: Loss on extinguishment of debt (1)
- 5.7 - 5.7
Add: Gain on land sales (1)
- - - (1.7)
Adjusted EBITDA $ (90.9) $ 1,225.9 $ 210.3 $ 2,332.6
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See Notes to Non-GAAP Financial Measures.
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Notes to Non-GAAP Financial Measures
The following notes are applicable to the Non-GAAP Financial Measures above:
(1) Special items:
LCM inventory adjustment - LCM is a GAAP requirement related to inventory valuation that mandates inventory to be stated at the lower of cost or market. Our inventories are stated at the lower of cost or market. Cost is determined using the last-in, first-out ("LIFO") inventory valuation methodology, in which the most recently incurred costs are charged to cost of sales and inventories are valued at base layer acquisition costs. Market price is determined based on an assessment of the current estimated replacement cost and net realizable selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may exceed market values. In such instances, we record an adjustment to write down the value of inventory to market value in accordance with GAAP. In subsequent periods, the value of inventory is reassessed and an LCM inventory adjustment is recorded to reflect the net change in the LCM inventory reserve between the prior period and the current period. The net impact of these LCM inventory adjustments is included in the Refining segment's income from operations, but are excluded from the operating results presented, as applicable, in order to make such information comparable between periods.
During both the three and nine months ended September 30, 2024, we recorded an adjustment to value our inventories to the LCM which decreased both income from operations and net income by $154.5 million, reflecting an increase in the LCM inventory reserve of $154.5 million. There were no such adjustments in any other periods presented.
Change in fair value of contingent consideration, net- During the nine months ended September 30, 2024, we recorded a net change in fair value of the Martinez Contingent Consideration which increased both income from operations and net income by $3.3 million. During the three and nine months ended September 30, 2023, we recorded a change in fair value of the Martinez Contingent Consideration which decreased both income from operations and net income by $65.3 million and $32.4 million, respectively. There was no such change in the three months ended September 30, 2024.
Loss on extinguishment of debt- During the three and nine months ended September 30, 2023, we recorded a loss on extinguishment of debt related to the redemption of our 2025 Senior Notes and the amendment and restatement of the Revolving Credit Facility, which decreased both income before income taxes and net income by $5.7 million. There was no such loss in any other periods presented.
Gain on land sales - During the nine months ended September 30, 2023, we recorded a gain on the sale of a separate parcel of real property acquired as part of the Torrance refinery, but not part of the refinery itself, which increased both income from operations and net income by $1.7 million. There were no such gains in any other periods presented.
Liquidity and Capital Resources
Overview
Our primary sources of liquidity are our cash flows from operations, cash and cash equivalents and borrowing availability under our credit facility, as described below. We believe that our cash flows from operations and available capital resources will be sufficient to meet our and our subsidiaries' capital expenditures, working capital needs, future distributions, and debt service requirements, for the next twelve months. However, our ability to generate sufficient cash flow from operations depends, in part, on petroleum oil market pricing and general economic, political, and other factors beyond our control. As of September 30, 2024, we are in compliance with all covenants, including financial covenants, in all our debt agreements.
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Cash Flow Analysis
Cash Flows from Operating Activities
Net cash provided by operating activities was $255.5 million for the nine months ended September 30, 2024 compared to net cash provided by operating activities of $1,152.3 million for the nine months ended September 30, 2023. Our operating cash flows for the nine months ended September 30, 2024 include our depreciation and amortization of $444.3 million, a net non-cash charge of $154.5 million relating to an LCM inventory adjustment, pension and other post-retirement benefits costs of $38.9 million, stock-based compensation of $30.1 million, and a loss on sale of assets of $0.7 million, partially offset by our net loss of $452.1 million and a net change in the fair value of the Martinez Contingent Consideration of $3.3 million. In addition, net changes in operating assets and liabilities reflected cash proceeds of $42.4 million, primarily driven by the timing of inventory purchases, accounts receivables, and payments to settle accounts payable. Our operating cash flows for the nine months ended September 30, 2023 included net income of $1,819.1 million, depreciation and amortization of $418.8 million, pension and other post-retirement benefits costs of $35.9 million, net change in the fair value of the Martinez Contingent Consideration of $32.4 million, stock-based compensation of $27.7 million, net non-cash charges related to changes in fair value of our inventory repurchase obligations of $25.1 million, and loss on extinguishment of debt primarily related to the redemption of our 2025 Senior Notes and the amendment and restatement of the Revolving Credit Facility of $5.7 million, partially offset by a deferred incomes tax benefit of $5.9 million, gain on sale of assets of $1.3 million, and a change in the fair value of our catalyst obligations of $1.1 million. In addition, net changes in operating assets and liabilities reflected uses of cash of $1,204.1 million, driven by the timing of inventory purchases, payments for accrued expenses, and collections of accounts receivable. The change in accrued expenses was due primarily to a decrease in renewable energy credit and emissions obligations, as a result of a decrease in our unfunded RINs obligation.
Cash Flows from Investing Activities
Net cash used in investing activities was $768.3 million for the nine months ended September 30, 2024 compared to net cash used in investing activities of $927.5 million for the nine months ended September 30, 2023. The net cash flows used in investing activities for the nine months ended September 30, 2024 was comprised of cash outflows of expenditures for refinery turnarounds of $447.7 million, capital expenditures totaling $292.3 million, and expenditures for other assets of $28.3 million. The net cash used in investing activities for the nine months ended September 30, 2023 was comprised of cash outflows of capital expenditures totaling $569.5 million, expenditures for refinery turnarounds of $322.9 million, and expenditures for other assets of $39.5 million, partially offset by proceeds from the sale of assets of $4.4 million.
Cash Flows from Financing Activities
Net cash used in financing activities was $288.4 million for the nine months ended September 30, 2024 compared to net cash used in financing activities of $501.8 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, net cash used in financing activities consisted primarily of distributions to members of $481.9 million, payments on finance leases of $9.1 million, and deferred financing costs and other of $0.1 million, partially offset by proceeds from contributions from PBF LLC of $185.0 million and proceeds from insurance premium financing of $17.7 million. For the nine months ended September 30, 2023, net cash used in financing activities consisted primarily of distributions to members of $1,320.5 million, redemption of our 2025 Senior Notes of $666.2 million, payments related to the Martinez Contingent Consideration of $80.1 million, deferred financing costs and other of $35.7 million, payments on finance leases of $11.1 million, and settlement of the final precious metal catalyst obligation of $3.1 million, partially offset by proceeds from contributions from PBF LLC of $1,109.6 million, cash proceeds of $496.6 million from the issuance of the 2030 Senior Notes, net of discount, and proceeds from insurance premium financing of $8.7 million.
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Liquidity
As of September 30, 2024, our operational liquidity was more than $3.4 billion (more than $4.6 billion as of December 31, 2023) which consists of $927.0 million of cash, and approximately $2.5 billion of borrowing availability under our Revolving Credit Facility, which includes our cash on hand.
As of September 30, 2024, outstanding letters of credit totaled approximately $62.5 million.
We may incur additional indebtedness in the future, including secured indebtedness, subject to the satisfaction of any debt incurrence and, if applicable, lien incurrence limitation covenants in our existing financing agreements.
Working Capital
Our working capital at September 30, 2024 was $1,166.5 million, consisting of $4,986.9 million in total current assets and $3,820.4 million in total current liabilities. Our working capital at December 31, 2023 was $2,184.0 million, consisting of $6,480.3 million in total current assets and $4,296.3 million in total current liabilities.
Capital Spending
Capital spending was $768.3 million for the nine months ended September 30, 2024 and was primarily comprised of annual maintenance and turnaround costs at our East Coast, Mid-Continent, and West Coast refineries. Capital spending also included costs associated with safety related enhancements and facility improvements at our refineries. We currently expect to spend an aggregate of approximately $850.0 million during full-year 2024 for facility improvements and refinery maintenance and turnarounds, as well as expenditures to meet environmental, regulatory and safety requirements.
Crude and Feedstock Supply Agreements
We currently purchase all of our crude and feedstock needs from various suppliers, primarily through short-term and spot market agreements. We also have a crude supply agreement with Saudi Aramco, the term of which is currently year to year, for up to approximately 100,000 bpd that is processed at the Paulsboro refinery and crude supply agreements with Shell Trading (US) Company (primarily serving our Martinez refinery) for up to approximately 65,000 bpd, through 2026.
Distributions
We make, from time to time, distributions to PBF LLC, if necessary, in order for PBF LLC to make pro rata distributions to its members, including PBF Energy, necessary to fund in excess of one year's cash dividend payments by PBF Energy.
On October 31, 2024, PBF Energy, our indirect parent, announced a dividend of $0.275 per share on its outstanding Class A common stock. The dividend is payable on November 27, 2024 to PBF Energy Class A common stockholders of record at the close of business on November 13, 2024. If necessary, we may need to make cash distributions to PBF LLC to the extent necessary for PBF Energy to pay this dividend. PBF Energy will then use this distribution to fund the dividend payments to the stockholders of PBF Energy.
In cases when there is sufficient cash and cash equivalents and borrowing capacity, we are permitted under our debt agreements to make these distributions; however, our ability to continue to comply with our debt covenants is, to a significant degree, subject to our operating results, which are dependent on a number of factors outside of our control.
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Supplemental Guarantor Financial Information
As of September 30, 2024, PBF Services, DCR, PBF Power Marketing LLC, PRC, Toledo Refining Company LLC, Chalmette Refining, PBF Energy Western Region LLC ("PBF Western Region"), Torrance Refining Company LLC ("Torrance Refining"), Martinez Refining Company LLC ("MRC"), PBF International Inc. and PBF Investments LLC are 100% owned subsidiaries of PBF Holding and serve as guarantors of the obligations under the 6.00% senior unsecured notes due 2028 (the "2028 Senior Notes") and 2030 Senior Notes. These guarantees are full and unconditional and joint and several. PBF Holding serves as the "Issuer". The indentures dated January 24, 2020 and August 21, 2023 among PBF Holding, PBF Finance, the guarantors party thereto, Wilmington Trust, National Association, as trustee and Deutsche Bank Trust Company Americas, as Paying Agent, Registrar, Transfer Agent, and Authenticating Agent, govern subsidiaries designated as "Guarantor Subsidiaries". PBF Ltd., PBF Transportation Company LLC, PBF Rail Logistics Company LLC, MOEM Pipeline LLC, Collins Pipeline Company, T&M Terminal Company, Torrance Basin Pipeline Company LLC, Torrance Logistics Company LLC, Torrance Pipeline Company LLC, Martinez Terminal Company LLC, Martinez Pipeline Company LLC and PBFWR Logistics Holdings LLC are consolidated subsidiaries of the Company that are not guarantors of the 2028 Senior Notes and 2030 Senior Notes. The 2028 Senior Notes and 2030 Senior Notes were co-issued by PBF Finance. For purposes of the following information, PBF Finance is referred to as "Co-Issuer." The Co-Issuer has no independent assets or operations.
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The following tables present summarized information for the Issuer and the Guarantor Subsidiaries on a combined basis after elimination of (i) intercompany transactions and balances among the Issuer and the Guarantor Subsidiaries and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor.
Summarized Balance Sheets (in millions) September 30,
2024 		December 31,
2023
ASSETS
Current assets (1)
$ 4,760.9 $ 6,263.0
Non-current assets 6,310.9 6,074.0
Due from non-guarantor subsidiaries 23,675.2 21,756.8
LIABILITIES AND EQUITY
Current liabilities (1)
$ 3,540.1 $ 4,078.1
Long-term liabilities 2,293.0 2,342.8
Due to non-guarantor subsidiaries 23,654.4 21,692.6
(1) Includes $25.6 million and $74.6 million of accounts receivable and accounts payable, respectively, related to transactions with PBFX and SBR as of September 30, 2024. Includes $27.3 million and $72.0 million of accounts receivable and accounts payable, respectively, related to transactions with PBFX and SBR as of December 31, 2023. Refer to "Note 5 - Related Party Transactions" of our Notes to Condensed Consolidated Financial Statements for further information.
Three Months Ended September 30, Nine Months Ended September 30,
Summarized Statements of Operations (in millions) 2024 2023 2024 2023
Revenues $ 8,260.8 $ 10,613.1 $ 25,523.4 $ 28,872.6
Cost of sales 7,849.6 8,868.3 23,850.0 25,165.7
Gross margin 411.2 1,744.8 1,673.4 3,706.9
Income from operations 347.8 1,581.8 1,487.6 3,417.0
Net income 335.5 1,490.1 1,429.1 3,292.4
Net income attributable to PBF Holding Company LLC 335.6 1,490.0 1,429.3 3,291.9
Non-guarantor intercompany sales with the Issuer and Guarantor subsidiaries
$ 768.9 $ 506.8 $ 1,902.6 $ 1,497.9
Non-guarantor intercompany cost of sales with the Issuer and Guarantor subsidiaries
(5.7) (11.7) (21.4) (24.6)
Affiliate revenues related to transactions with PBFX and SBR (1)
85.4 4.2 178.3 12.4
Affiliate expenses related to transactions with PBFX and SBR (1)
(157.0) (86.6) (499.2) (260.4)
(1) Refer to "Note 5 - Related Party Transactions" of our Notes to Condensed Consolidated Financial Statements for further information.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, including changes in commodity prices and interest rates. Our primary commodity price risk is associated with the difference between the prices we sell our refined products and the prices we pay for crude oil and other feedstocks. We may use derivative instruments to manage the risks from changes in the prices of crude oil and refined products, natural gas, interest rates, or to capture market opportunities.
Commodity Price Risk
Our earnings, cash flow and liquidity are significantly affected by a variety of factors beyond our control, including the supply of, and demand for, crude oil, other feedstocks, refined products, and natural gas. The supply of and demand for these commodities depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, planned and unplanned downtime in refineries, pipelines and production facilities, production levels, the availability of imports, the marketing of competitive and alternative fuels, and the extent of government regulation. As a result, the prices of these commodities can be volatile. Our revenues fluctuate significantly with movements in industry refined product prices, our cost of sales fluctuates significantly with movements in crude oil and feedstock prices and our operating expenses fluctuate with movements in the price of natural gas. We manage our exposure to these commodity price risks through our supply and offtake agreements as well as through the use of various commodity derivative instruments.
We may use non-trading derivative instruments to manage exposure to commodity price risks associated with the purchase or sale of crude oil and feedstocks, finished products and natural gas outside of our supply and offtake agreements. The derivative instruments we use include physical commodity contracts and exchange-traded and over-the-counter financial instruments. We mark-to-market our commodity derivative instruments and recognize the changes in their fair value in our statements of operations.
At September 30, 2024 and December 31, 2023, we had gross open commodity derivative contracts representing 45.3 million barrels and 29.1 million barrels, respectively, with an unrealized net loss of $3.2 million and net gain of $33.2 million, respectively. The open commodity derivative contracts as of September 30, 2024 expire at various times during 2024 and 2025.
We carry inventories of crude oil, intermediates, and refined products ("hydrocarbon inventories") on our Condensed Consolidated Balance Sheets, the values of which are subject to fluctuations in market prices. Our hydrocarbon inventories totaled approximately 30.7 million barrels and 36.2 million barrels at September 30, 2024 and December 31, 2023, respectively. The average cost of our hydrocarbon inventories was approximately $84.62 and $83.64 per barrel on a LIFO basis at September 30, 2024 and December 31, 2023, respectively. The average cost of our hydrocarbon inventories at September 30, 2024 excludes the net impact of an LCM inventory adjustment of approximately $154.5 million, whereas at December 31, 2023, the replacement value of inventory exceeded the LIFO carrying value. If market prices of our inventory decline to a level below our average cost, we may be required to write down the carrying value of our hydrocarbon inventories to market.
Our predominant variable operating cost is energy, which is comprised primarily of natural gas and electricity. We are therefore sensitive to movements in natural gas prices. Assuming normal operating conditions, we expect our annual consumption to range from 70 million to 90 million MMBTUs of natural gas amongst our six refineries. Accordingly, a $1.00 per MMBTU change in natural gas prices would increase or decrease our natural gas costs by approximately $70.0 million to $90.0 million.
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Compliance Program Price Risk
We are exposed to market risks related to our obligations to buy, and the volatility in the price of, credits needed to comply with various governmental and regulatory compliance programs, which include RINs, required to comply with the RFS. Our overall RINs obligation is based on a percentage of our domestic shipments of on-road fuels as established by Environmental Protection Agency. To the degree we are unable to blend the required amount of biofuels to satisfy our RINs obligation, we must purchase RINs on the open market. To mitigate the impact of the market risk relating to our obligations on our results of operations and cash flows, we may elect to purchase RINs or other environmental credits as part of our liability management strategy. We also have the ability to purchase RINs directly from SBR.
In addition, we are exposed to risks associated with complying with federal and state legislative and regulatory measures to address GHG and other emissions. Requirements to reduce emissions could result in increased costs to operate and maintain our facilities as well as implement and manage new emission controls and programs put in place. Compliance with such emission standards may require the purchase of emission credits or similar instruments.
Certain of these compliance contracts or instruments qualify as derivative instruments. For certain of these contracts, we elect the normal purchase normal sale exception under Accounting Standards Codification 815, Derivatives and Hedging,for such instruments, and therefore do not record these contracts at their fair value.
Interest Rate Risk
The maximum commitment under our Revolving Credit Facility is $3.5 billion. Borrowings under the Revolving Credit Facility bear interest either at the Alternative Base Rate plus the Applicable Margin or at the Term SOFR plus the Applicable Margin, all as defined in the Revolving Credit Agreement. At September 30, 2024, we had no outstanding balance in variable interest debt. If this facility were fully drawn, a 1.0% change in the interest rate would increase or decrease our interest expense by approximately $23.6 million annually.
Credit Risk
We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties. We continue to closely monitor the creditworthiness of customers to whom we grant credit and establish credit limits in accordance with our credit policy.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We conducted evaluations, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 as amended (the "Exchange Act")) as of September 30, 2024. Based upon these evaluations, as required by Exchange Act Rule 13a-15(b), the principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective as of September 30, 2024.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal controls over financial reporting during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In connection with the acquisition of the Torrance refinery and related logistics assets, we assumed certain pre-existing environmental liabilities related to certain environmental remediation obligations to address existing soil and groundwater contamination and monitoring activities, which reflect the estimated cost of the remediation obligations. In addition, in connection with the acquisition of the Torrance refinery and related logistics assets, we purchased a ten-year, $100.0 million environmental insurance policy to insure against unknown environmental liabilities.
We currently have multiple outstanding notices of violation ("NOVs") issued by regulatory authorities for various alleged regulation and permit violations at our refineries. It is not possible to predict the outcome of any of these NOVs or the amount of the penalties that will be assessed in connection with any NOV. If any one or more of them were decided against us, we believe that there would be no material effect on our financial position, results of operations, or liquidity. SEC regulations require us to disclose certain information about proceedings arising under federal, state, or local provisions regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment, if a governmental authority is a party to such proceeding and such proceeding involves potential monetary sanctions, exclusive of interest and costs, that exceeds a specified threshold. We use a threshold of $1 million for such determination because we believe that such threshold is reasonably designed to result in disclosure of any such proceeding that is material to the business or financial condition.
On November 24, 2022, the Martinez refinery, owned and operated by MRC experienced a spent catalyst release that is currently being investigated by the Bay Area Air Quality Management District ("BAAQMD"), Contra Costa County ("CCC"), the Department of Justice and the Environmental Protection Agency ("EPA"), and the California Department of Fish and Game ("DFG"). To date, the BAAQMD has issued 35 NOVs, the CCC has issued two NOVs, and the DFG has made findings relating to the spent catalyst incident. On July 11, 2023 and October 6, 2023, the Martinez refinery experienced unintentional releases of petroleum coke dust and received inquiries or notices of investigation from the BAAQMD, the California Department of Industrial Relations, Division of Occupational Safety and Health ("CalOSHA"), the CCC, and the EPA. The BAAQMD also issued an NOV relating to the July 11, 2023 coke dust incident and an NOV relating to the October 6, 2023 coke dust incident. On December 15, 2023, the Martinez refinery experienced an unexpected flaring incident, and subsequently on December 18, 2023 a brush fire incident, and has received inquiries or notices of investigation from the BAAQMD, CalOSHA, and the CCC. The BAAQMD additionally issued an NOV relating to the December 15, 2023 flaring incident and four NOVs relating to the December 18, 2023 brush fire incident. The DFG, the CCC, and the BAAQMD have referred their findings and/or NOVs to the CCC District Attorney for the spent catalyst incident and various other incidents. On November 16, 2023, the CCC District Attorney and the BAAQMD announced a joint civil enforcement action against MRC that will include enforcement of the BAAQMD's, the CCC's, and the DFG's claims from the spent catalyst incident, as well as additional enforcement claims from various incidents. For the spent catalyst, coke dust, flaring, brush fire, and other incidents, no penalties have been assessed to date by the various agencies. We presently believe the outcomes will not have a material impact on our financial position, results of operations, or cash flows.
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On September 27, 2023, MRC received from the San Francisco Bay Regional Water Quality Control Board ("RWQCB") an Administrative Civil Liability ("ACL") assessment in the amount of $13.8 million for allegedly: (1) exceeding its effluent limitations and discharging to the Carquinez Strait without authorization in October 2022, January 2023, and June 2023; and (2) failing to submit Climate Change Adaptation information. On January 12, 2024, MRC met with the RWQCB to discuss its response to their ACL assessment. Based on the discussions and the information provided by MRC, the RWQCB proposed reducing the ACL assessment to approximately $4.5 million and noted that for any settlement 50% of the penalty could be in the form of Enhanced Compliance Actions ("ECAs"), Supplemental Environmental Projects ("SEPs"), or a combination of the two. On January 19, 2024, MRC agreed to accept the reduced ACL, with 50% of the approximately $4.5 million dedicated to ECAs or SEPs. MRC subsequently agreed to fund only SEPs relating to marsh restoration, regional water quality monitoring, and water quality classroom education in the Martinez, California area. The parties are finalizing the settlement agreement and stipulation for entry of the administrative civil liability order. Once it is finalized, it will be subject to a 30-day comment period before approval by the RWQCB's Executive Officer.
On February 17, 2017, in Arnold Goldstein, et al. v. Exxon Mobil Corporation, et al., PBF Energy Inc., PBF LLC, and our subsidiaries, PBF Western Region and Torrance Refining and the manager of our Torrance refinery along with ExxonMobil were named as defendants in a class action and representative action complaint. The complaint was filed in the Superior Court of the State of California, County of Los Angeles and alleges negligence, strict liability, ultra-hazardous activity, a continuing private nuisance, a permanent private nuisance, a continuing public nuisance, a permanent public nuisance and trespass resulting from the February 18, 2015 electrostatic precipitator ("ESP") explosion at the Torrance refinery which was then owned and operated by ExxonMobil. The operation of the Torrance refinery by the PBF entities subsequent to our acquisition in July 2016 is also referenced in the complaint. To the extent that plaintiffs' claims relate to the ESP explosion, ExxonMobil retained responsibility for any liabilities that would arise from the lawsuit pursuant to the agreement relating to the acquisition of the Torrance refinery. On July 2, 2018, the Court granted leave to plaintiffs to file a Second Amended Complaint alleging groundwater contamination. With the filing of the Second Amended Complaint, plaintiffs added an additional plaintiff, Hany Youssef. On October 15, 2019, the judge granted certification to two limited classes of property owners with Youssef as the sole class representative and named plaintiff, rejecting two other proposed subclasses based on negligence and on strict liability for ultrahazardous activities. The certified subclasses relate to trespass claims for ground contamination and nuisance for air emissions. On May 5, 2021, the Court granted plaintiffs leave to amend their complaint for the third time to substitute Navarro for Youssef. On July 5, 2022, the Court issued a final order ruling that plaintiffs' Motion to Substitute Navarro as Class Representative was denied and decertifying both of plaintiffs' proposed Air and Ground Subclasses. The order provided that the case will proceed with Navarro as the sole plaintiff. On September 22, 2022, the Ninth Circuit Court of Appeals affirmed. On February 27, 2023, the Court issued an order granting our motion for judgment on the pleadings and dismissed plaintiff's trespass claim with prejudice and granted plaintiff leave to amend his nuisance claims in conformity with the order if he can do so consistent with Rule 11 of the Federal Rules of Civil Procedures. On March 27, 2023, plaintiff filed a Fourth Amended Complaint relating to the remaining nuisance claims. On May 23, 2023, the Court denied our motion to dismiss on the pleadings for plaintiff's failure to establish standing to bring the nuisance claims. After completing further discovery, on August 28, 2023, we filed a Motion for Summary Judgment. On October 18, 2023, the Court issued an order granting our motion, adjudged that plaintiff take nothing, and that the action be dismissed with prejudice. The order also allows us to recover the costs of suit pursuant to a bill of costs. On October 30, 2023, plaintiff filed a notice of appeal to the Ninth Circuit regarding the Court's order granting summary judgment. The Court has granted plaintiff extensions of approximately 90 days to file their opening brief, which they filed on May 27, 2024. After being granted a similar 90-day extension, we filed our answering brief on September 25, 2024. Plaintiff's reply brief is due January 24, 2025. We presently believe the outcome of this litigation will not have a material impact on our financial position, results of operations, or cash flows.
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On August 16, 2023, in Joseph Piscitelli and Lara Zanzucchi v. Martinez Refining Company LLC, our subsidiary MRC was named as a defendant in a class action and representative action complaint which contains allegations of public and private nuisance, trespass, and negligence arising from MRC's operations. MRC filed its answer to the complaint on October 31, 2023. The initial Court hearing to discuss discovery issues was held on January 2, 2024. At the hearing, the Court raised the issue of mediation and directed the parties to meet and confer and agree to stipulate to a mediation deadline. On January 9, 2024, the parties filed a stipulation agreeing to consider private mediation by September 20, 2024. On January 17, 2024, the Court issued a scheduling order setting the class certification hearing for April 10, 2025. On April 4, 2024, the Court granted plaintiffs' motion for leave to file a First Amendment Complaint (the "Piscitelli FAC") to add plaintiff Malan and dismiss plaintiff Zanzucchi, which plaintiffs filed on April 10, 2024. On the same day, the Court granted plaintiffs' motion. MRC filed its answer to the Piscitelli FAC on April 23, 2024. On May 3, 2024, the Court denied MRC's motion to relate this case and the Cruz case (discussed below). On June 17, 2024, the Court granted plaintiffs' motion to dismiss plaintiff Piscitelli. The parties are currently engaged in discovery. The class certification hearing is currently scheduled for April 10, 2025. We presently believe the outcome will not have a material impact on our financial position, results of operations, or cash flows.
On December 15, 2023, in Alena Cruz and Shannon Payne vs. PBF Energy Inc., et. al, we and our subsidiaries PBF Western Region and MRC were named as defendants in a class action and representative action complaint filed by Alena Cruz and Shannon Payne, and on behalf of all others similarly situated. The complaint contains allegations of Clean Air Act ("CAA") violations, claims for medical and environmental monitoring, liability for ultrahazardous activities, negligence, and public and private nuisance from MRC's operations. The proposed class is all individuals who reside and/or work in the City of Martinez, including the surrounding communities of Alhambra Valley and Franklin Canyon, as well as El Sobrante, Hercules, Benicia, and Richmond, who have allegedly been exposed to elevated levels of spent catalyst discharged from MRC's operations during the period November 24, 2022 to the present. On December 21, 2023, plaintiffs granted an extension until February 5, 2024 for MRC to respond to the initial complaint. On February 5, 2024, MRC filed a motion to dismiss on the pleadings. In response, on February 16, 2024, plaintiffs filed a First Amendment Complaint (the "Cruz FAC"). On February 29, 2024, MRC filed a motion to dismiss the Cruz FAC on the pleadings. Plaintiffs' opposition was filed on March 14, 2024. MRC filed its reply to plaintiffs' opposition on March 21, 2024. At the motion hearing on April 4, 2024, the Court granted MRC's request to dismiss all wrongly named PBF entities and plaintiffs' CAA and Medical Monitoring causes of action. At the following Status Conference on April 4, 2024, the Court agreed that the Cruz and Piscitelli cases should now be related. The Court ordered the Cruz and Piscitelli plaintiffs to meet and confer on a joint discovery schedule and report back to the Court by the end of April 2024. On May 3, 2024, the Piscitelli Court denied MRC's motion to relate this case and the Piscitelli case (discussed above). On May 17, 2024, MRC filed its answer to the Cruz FAC. On June 5, 2024, the Court stayed the case, pending the outcome of the class property damage claim in the Piscitelli case. We presently believe the outcome will not have a material impact on our financial position, results of operations, or cash flows.
On July 31, 2024, in Jennifer Frye, et al. v. Martinez Refining Company LLC, MRC was named as a defendant in a complaint filed by 18 individuals which contains allegations of negligence, public and private nuisance, premise liability, trespass, and strict liability ultrahazardous activities. On October 7, 2024, MRC filed a motion to dismiss the complaint. Also on October 7, 2024, plaintiffs filed a motion to relate the Frye case to the Piscitelli and Cruz cases. The Piscitelli Court subsequently denied the motion to relate the three cases. The motion to relate Frye to the Cruz case is currently pending with the Cruz Court. Currently, Plaintiffs' opposition brief to MRC's motion to dismiss is due November 11, 2024, MRC's reply brief is due November 22, 2024, and the motion hearing is currently scheduled for December 20, 2024.
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On December 21, 2023, EPA Region 5 issued a Finding of Violation ("FOV") alleging violations of the CAA, 42 U.S.C. §§ 7411, 7412, and regulations promulgated under those sections, of the National Emission Standard for Benzene Waste Operations at 40 C.F.R. Part 61, Subpart FF, of the New Source Performance Standards for Volatile Organic Compounds from Petroleum Wastewater Systems at 40 C.F.R. Part 60, Subpart QQQ, and of our CAA Title V operating permit for the Wastewater Treatment Unit at our Toledo refinery. This FOV followed an EPA compliance inspection at the Toledo refinery conducted in September 2023. We have recently been engaged in discussions with EPA to resolve these matters, but we cannot currently estimate the timing of the resolution or the amount of any potential civil penalties. We presently believe the outcome will not have a material impact on our financial position, results of operations, or cash flows.
The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), also known as "Superfund," imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons who are considered to be responsible for the release of a "hazardous substance" into the environment. These persons include the current or former owner or operator of the disposal site or sites where the release occurred and companies that disposed of or arranged for the disposal of the hazardous substances. Under CERCLA, such persons may be subject to joint and several liability for investigation and the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies. As discussed more fully above, certain of our sites are subject to these laws and we may be held liable for investigation and remediation costs or claims for natural resource damages. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment. Analogous state laws impose similar responsibilities and liabilities on responsible parties. In our current normal operations, we have generated waste, some of which falls within the statutory definition of a "hazardous substance" and some of which may have been disposed of at sites that may require cleanup under Superfund.
As the ultimate outcomes of the pending matters discussed above are uncertain, we cannot currently estimate the final amount or timing of their resolution, but any such amount is not expected to have a material impact on our financial position, results of operations, or cash flows, individually or in the aggregate.
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Item 6. Exhibits
The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this report and such Exhibit Index is incorporated herein by reference.
EXHIBIT INDEX
Exhibit
Number 		Description
22.1*
List of Guarantor Subsidiaries.
31.1*
Certification of Matthew C. Lucey, Chief Executive Officer of PBF Holding Company LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Karen B. Davis, Chief Financial Officer of PBF Holding Company LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*(1)
Certification of Matthew C. Lucey, Chief Executive Officer of PBF Holding Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*(1)
Certification of Karen B. Davis, Chief Financial Officer of PBF Holding Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS Inline XBRL Instance Document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
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* Filed herewith.
(1)
This exhibit should not be deemed to be "filed" for purposes of Section 18 of the Exchange Act.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PBF Holding Company LLC
Date: November 6, 2024 By: /s/ Karen B. Davis
Karen B. Davis
Senior Vice President, Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
PBF Finance Corporation
Date: November 6, 2024 By: /s/ Karen B. Davis
Karen B. Davis
Senior Vice President, Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
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