PBF Energy Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed February 15, 2024. This is an annual filing, not a standalone fourth-quarter report, and the supplied text does not provide separate Q4 results. PBF operates six U.S. refineries with combined capacity of approximately 1.0 million barrels per day and a logistics business. It also owns 50% of St. Bernard Renewables LLC (SBR), which owns the renewable diesel facility at Chalmette.
Financial and operating performance
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $38.3 billion | $46.8 billion |
| Net income | $2.16 billion | $2.97 billion |
| Net income attributable to PBF Energy stockholders | $2.14 billion; diluted EPS $16.52 | $2.88 billion; diluted EPS $22.84 |
| Income from operations | $2.95 billion | $4.15 billion |
| Consolidated gross margin | $2.40 billion; $7.29 per throughput barrel | $4.68 billion; $13.85 per throughput barrel |
| Gross refining margin (non-GAAP) | $5.29 billion; $16.07 per throughput barrel | $7.43 billion; $22.00 per throughput barrel |
| Net cash from operating activities | $1.34 billion | $4.77 billion |
| Cash and cash equivalents at year-end | $1.78 billion | $2.20 billion |
| Total debt, face amount | $1.30 billion | $2.00 billion |
Revenue declined 18.2%, largely reflecting lower commodity prices. Refining margins were weaker as benchmark crack spreads and crude differentials narrowed; 2023 throughput averaged 909,400 barrels per day versus 925,100 in 2022, with maintenance and lower demand contributing to the decrease. Refinery operating expense was $7.85 per throughput barrel, up from $7.39. Net income included a $925.1 million gain on forming the SBR equity-method investment; consequently, reported earnings should be considered alongside operating margins and adjusted measures.
Adjusted EBITDA, a non-GAAP measure, was $2.64 billion versus $4.78 billion in 2022. Adjusted fully converted net income excluding special items was $1.48 billion, or $11.32 per fully exchanged, fully diluted share, versus $2.96 billion, or $23.36, in 2022. The filing cautions that non-GAAP measures are not substitutes for GAAP results and may not be comparable across companies.
Liquidity, debt and capital allocation
Year-end working capital was $2.38 billion, compared with $1.35 billion in 2022. Management reported operational liquidity of more than $4.6 billion, comprising $1.8 billion of cash and more than $2.8 billion of revolver availability. The $3.5 billion asset-based revolving credit facility had no borrowings outstanding and $55 million of letters of credit; it matures in August 2028. The company said it was in compliance with its debt covenants.
Debt consisted principally of $801.6 million of 6.00% notes due 2028 and $500 million of 7.875% notes due 2030. PBF issued the 2030 notes and used the proceeds, together with cash, to redeem its 2025 notes; it also redeemed $525 million of PBFX notes using cash. Operating cash flow fell substantially, including a $1.13 billion cash use from changes in operating assets and liabilities, primarily inventory purchases and accrued expenses. Investing cash flow included $659.6 million of capital expenditures and $473.5 million of turnaround spending, partly offset by $846 million of return of capital from SBR.
The company repurchased $532.5 million of Class A shares in 2023. Its board subsequently increased the repurchase authorization to $1.75 billion in February 2024. PBF stated it intended to continue quarterly dividends of approximately $0.25 per share, subject to board discretion and applicable restrictions.
Material changes, outlook and unusual items
- SBR transaction: PBF contributed the renewable diesel business to the 50/50 venture with Eni in June 2023. The facility has capacity of 20,000 barrels per day. PBF recognized a $925.1 million formation gain and held an $881 million SBR investment at year-end. PBF operates the facility but does not control SBR.
- Inventory funding: PBF ended its J. Aron inventory intermediation agreement in July 2023, paid $268 million to acquire the previously intermediated inventory, including $13.5 million of exit costs, and now funds those inventory purchases itself.
- Renewable fuel obligations: RIN compliance costs were $762.3 million in 2023, down from $1.23 billion in 2022. The amount remains exposed to credit prices, fuel shipments and blending levels.
- 2024 spending: Management expects approximately $800–$850 million for facility improvements, maintenance, turnarounds, and environmental, regulatory and safety requirements. The filing does not provide specific earnings or margin guidance.
- Environmental matters: Martinez refinery releases in 2022 and 2023 prompted investigations, notices of violation and a joint civil enforcement action; penalties had not been assessed for those incidents in the filing. Separately, a water-board assessment of $13.8 million was proposed to be reduced to approximately $4.5 million, with half designated for compliance or environmental projects; final board approval remained pending.
- Regulatory exposure: California legislation authorizes potential limits or penalties tied to refinery gross gasoline margins and gives regulators authority concerning turnaround timing. PBF says the ultimate effects are not yet predictable. Martinez’s alternative emissions monitoring system under the Rule 6-5 settlement must be validated.
- Other risk and contingency items: Recorded environmental liabilities totaled $157.8 million at year-end. The final Martinez acquisition earn-out liability was $21.6 million, expected to be paid in Q2 2024. The company also disclosed Martinez-related nuisance and spent-catalyst litigation and regulatory proceedings; it stated it did not expect pending matters, individually or collectively, to materially affect its financial position, results or cash flows.
Key investor verification points
- Reconcile reported 2023 earnings with the $925.1 million SBR formation gain and review the SBR venture’s operating performance, funding needs and distributions.
- Assess the sustainability of refining margins and throughput under lower crack spreads, maintenance requirements and changing crude differentials.
- Track working-capital needs after termination of the inventory intermediation agreement, including inventory levels and cash conversion.
- Monitor RIN and California emissions-credit costs, as well as the implementation and potential financial effects of California refinery-margin and turnaround rules.
- Review the outcome and financial exposure of the Martinez enforcement matters, lawsuits and water-board settlement, including required compliance spending.
- Evaluate planned 2024 capital and turnaround spending against operating cash flow, dividends and share repurchases; confirm actual revolver availability and covenant capacity.
- Consider debt maturities and interest costs, the $336.6 million Tax Receivable Agreement liability, and the possibility that future distributions or dividends may be restricted.