Title

Presentation

PBF Energy Inc. misses on earnings expectations. Reported EPS is $-0.88 EPS, expectations were $-0.79.

Operator: Good day, everyone, and welcome to the PBF Energy First Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions] Please note that this conference is being recorded. It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir, you may begin.

Colin Murray: Thank you, Anjali. Good morning, and welcome to today’s call. With me today are Matt Lucey, our President and CEO; Mike Bukowski, our Senior Vice President and Head of Refining; Joe Marino, our CFO; and several other members of our management team. Copies of today’s earnings release and our 10-Q filing, including supplemental information, are available on our website. Before getting started, I’d like to direct your attention to the safe harbor statement contained in today’s press release. Statements that express the company’s or management’s expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions under federal securities laws. Consistent with our prior periods, we’ll discuss our results excluding special items, which are described in today’s press release.

Also included in the press release is forward-looking guidance information. For any questions on these items or other follow-up questions, please contact Investor Relations after today’s call. I’ll now turn the call over to Matt Lucey.

Matthew Lucey: Thanks, Colin. Good morning, everyone, and thank you for joining the call. Indeed, today is a moment. With the disruption in the Middle East, the world is in greater need of the products we produce and therein lies the momentous opportunity for our company to perform and reward our shareholders for owning such critical infrastructure. Within PBF, the spotlight is squarely on Martinez. We are bringing Martinez back online and will shortly be supplying the California market with our full capabilities. This could not be coming at a better time for the West Coast and California markets. There are 3 main areas of focus in terms of the restart of Martinez, the cat feed hydrotreater, the alkylation unit and the FCC. The cat feed hydrotreater and alky are up and both are running.

With the FCC, we expect to be making finished products this weekend. While the rebuild effort was completed in February, there is no question the restart took longer than expected. It was critical for us to ensure that all the work accomplished at Martinez over the last 14 months was capped off with a safe restart. Moving on to the broader environment. The events in the Middle East have caused the largest disruption ever in the oil markets and the effects are indeed dramatic and constructive for PBF. Initially, approximately 15 million barrels per day of crude and 5 million barrels per day of product were trapped inside the Straits of Hormuz. The loss of crude barrels was most acutely felt in Asia, but the shortages have cascaded to other markets.

80% of the crude flowing through the straits was destined for Asian refineries, and those refineries in turn, supplied products to many markets, including the U.S. West Coast. As refining runs in Asia have been rationing due to lack of inputs, the loss of products has affected every market. Compounding this impact, the products stranded in the Arabian Gulf have tightened markets in Europe and subsequently, the Atlantic Basin. In the near-term, the markets will continue to adjust in real time to demand signals for both crude and products. Global pricing will dictate trade patterns. Increasingly, markets are calling for both U.S. crude and U.S. products to meet demand. While the U.S. has been somewhat insulated, there are signs that demand is being impacted globally by both pricing and supply issues.

It has never been more evident that U.S. refining is critical infrastructure, and this is most apparent in regions like the West Coast and the East Coast that are short refining capacity and rely on imports from unstable sources to meet demand. It will take some time for trade patterns to normalize both during and post the conflict in the Middle East. Refining fundamentals should remain strong throughout, supported by tight refining balances, coupled with low product inventories around the world. Prior to this event, refining balances looked constructive and the inevitable restocking should provide a favorable backdrop for quarters to come. PBF remains focused on controlling the aspects of our business that we can control. To be successful and enhance value for our investors, we must operate safely, reliably and responsibly, and we must do it as efficiently as possible.

And with that, I’ll turn the call over to Mike Bukowski.

Michael A. Bukowski: Thank you, Matt. Good morning, everyone. Before updating on the progress of our refining business improvement program, I’ll provide a few comments on first quarter operations and our Martinez refinery status. Outside of the West Coast, our refining system ran reasonably well. All of our refineries navigated record cold temperatures with minimal disruptions. On the West Coast, as Matt mentioned, Martinez is in the final stages of its phased restart. The process to restart it has been methodical and required many levels of safety and process checks to ensure that all equipment was correctly manufactured and installed before we introduced hydrocarbons. The cat feed hydrotreater and alkylation unit have been operating and producing finished products as well as the intermediates required for the start-up of the fluid catalytic cracking unit this weekend.

The Martinez team and the supporting cash too numerous to mention worked tirelessly to get us to this point. My thanks to all involved in the project. Additionally, while Martinez operations were being restored, Torrance underwent a turnaround early in the first quarter and with that event complete has a clean runway for the remainder of 2026. I’m happy to report that we’re seeing progress from our RBI program. We achieved our 2025 target of $230 million of annualized run rate savings. This goal includes approximately $160 million of OpEx reductions against our 2024 benchmark and is incorporated in our full 2026 budget. While the ongoing Martinez process is causing some noise within the first quarter results, we are very comfortable in meeting or even exceeding our stated targets.

While we are improving our maintenance and operational efficiency and reducing energy consumption, our main priority will always be to the focus on safe, reliable and responsible operations across our system. With that, I’ll now turn the call over to Joe Marino for our financial overview.

Joseph Marino: Thanks, Mike. For the first quarter, excluding special items, we reported adjusted net loss of $0.88 per share and adjusted EBITDA of $68.7 million. Our discussion of first quarter results excludes the net effect of special items, including $11.5 million in incremental OpEx related to the Martinez refinery incident, a $106.5 million gain on insurance recoveries, a $313 million LCM inventory adjustment, a $9.4 million gain relating to PBF’s 50% share of SBR’s LCM adjustment for the quarter and approximately $9.4 million of charges associated with the RBI initiative, as well as other items detailed in the reconciling tables in today’s press release. PBF’s results reflect several unfavorable conditions that manifested in the first quarter, both operationally and commercially.

Capture rates for the quarter were negatively impacted by West Coast operations, the higher flat price environment, increasing the headwind of low-value products, higher RINs expense and derivative losses recognized in the quarter. These capture headwinds more than offset benefits from improving jet and diesel spreads and certain crude dips. Operationally, our Torrance refinery was in planned turnaround during January and February, while our Martinez refinery restart was delayed. We built up inventory levels in the first quarter, primarily in anticipation of the planned restart of Martinez. This occurred as global pricing for hydrocarbons surged on the back of the conflict in the Middle East, resulting in losses in our typical hedge program.

Our results for the quarter reflect an aggregate derivative loss of a little over $200 million. Approximately half of this loss related to unrealized amounts expected to be mostly offset in the second quarter as the physical barrels run through our refining system. The $106.5 million gain on insurance recoveries related to the Martinez fire is a result of the fourth unallocated payment agreed to and received in the first quarter. This brings our total insurance recoveries to $1 billion, net of our deductibles and retention, including the amounts received in 2025. Important to note, while the bulk of the spending related to Martinez is behind us, the claim is ongoing, and we expect to recover incremental funds as we continue to work with our insurance providers towards potential additional interim payment and finalization of the claim in an expeditious manner.

Shifting back to our normal quarterly results discussion, also included in our results is an approximate $8 million EBITDA benefit, excluding LTM impacts related to PBF’s equity investment in St. Bernard Renewables. FCR produced an average of 16,700 barrels per day of renewable diesel in the first quarter. FCR’s production was as expected, but results reflect the impact of improving market condition in the renewable fuel space with the finalization of the RVO in March. With the setting of the 2026, ’27 RVO, the market is now the ability to stabilize and should result in favorable margins. PBF’s cash used in operations for the quarter was $324 million, which includes a working capital draw of approximately $340 million, mainly due to movements in inventory and the impact on our net payable position as a result of rapidly moving commodity prices.

On our last call, we mentioned our expectations for elevated first quarter CapEx and working capital outflows, primarily related to Martinez restart and normal seasonal inventory patterns. The capital spending for the Martinez rebuild is essentially behind us, and we expect working capital to normalize as operations restart in full. Cash invested in consolidated CapEx for the quarter was $320 million, which includes refining, corporate and logistics. This amount excludes first quarter capital of approximately $189 million related to the Martinez incident. On the surface, the Q1 figure might be slightly higher than expected, and this is because it includes approximately $100 million of net carryover from 2025 that had not been cash settled at year-end.

The balance is our normal quarterly incurred amount, including the turnaround at Torrance. Given that and the noise related to Martinez rebuild, it would be helpful to more broadly consider the 2025 and 2026 capital programs over a 2-year period. We ended the quarter with $542 million in cash and approximately $2.3 billion of net debt. At quarter end, our net debt to cap was 36%, and our current liquidity is approximately $2.4 billion based on current commodity prices, cash and borrowing capacity under our ABL. Our net debt increased in the first quarter due to planned capital expenditures, continued spend on the Martinez restart and working capital outflows primarily related to a build in inventory. Going forward, inventory should normalize as operations ramp up, and we should see a resulting tailwind in working capital cash flows.

Additionally, with our capital spend for the Martinez rebuild predominantly behind us, we expect to further progress our Martinez insurance claim and receive additional payments. Once realized, these factors alone should principally offset the increase in net debt experienced in Q1. Maintaining our firm financial footing and a resilient balance sheet remain priorities. As we look ahead, we expect these periods of strength to focus on reducing both our gross and net debt. Operator, we completed our opening remarks, and we’d be pleased to take any questions.

Receive real-time insider trading and news alerts

Operator: [Operator Instructions] The first question comes from Manav Gupta with UBS.

Manav Gupta: I want to start a little bit on the global macro side. The way we are seeing things, Matt, is 2Q and 3Q are a tale of 2 halves, those who have the crude and who can run and those who don’t have crude, and they may have the best kit out there, but they don’t have crude. And you are in this category where you have the crude and you can run. So, can you help us understand, given relatively low U.S. nat gas price and availability of crude, does that mean that U.S. refining has an advantage over most of their global peers at this point of time?

Matthew Lucey: Manav, I don’t think there’s any question on that. I think the outlook for the second quarter and the third quarter look extraordinary only because the world is going to be in desperate need of our products. And as you say, we’re insulated from a natural gas perspective, heck we’re insulated from a physical security perspective. We have the best steel globally with a very stable workforce. And indeed, we have access to crude. Obviously, the pricing on crude is determined on a global basis. But when you stack up the U.S. industry compared to the rest of the world, it stands out. And then when you look within the U.S., I think particularly PBF’s coastal complexity is incredibly well positioned within that.

Manav Gupta: Perfect. And a quick follow-up here and this is a question we have pretty much got all morning. What gives you the confidence that this time, Martinez will be able to restart within probably a week or so and there will not be any further delays?

Matthew Lucey: I’ll turn that over to Mike.

Michael A. Bukowski: So, the delays that we saw over the past couple of months were primarily focused on the process to verify the equipment to make sure it was constructed, installed properly. And now we’re at the point now with 2 units up in operations. We always had a phase start-up. It’s always going to be the cat feed hydrotreater. It’s always going to be the alkylation unit. Those 2 units started up without incident. They — we got up safely. And we’re essentially — if you make the analogy of a football game, we’re in the fourth quarter on the process on the FCC. The unit is heating up and we’re a day or so away from putting feed in the unit. So, it’s very close. We’ve got all the checks that we’ve done. We’ve had a lot of the major hurdles that you typically go through in an FCC start-up. So, that gives us the confidence.

Matthew Lucey: The frustration on the duration is certainly understandable. But the alternative simply wasn’t considered in terms of rushing through anything. And so, all the steps that we’re taking were done in the name of caution and safety and reliability. It obviously was an extraordinarily large disruption. And as such, it took a bit longer. That being said, we’re here on the precipice of this whole incident being behind us.

Operator: The next question comes from Alexa Petrick with Goldman Sachs.

Alexa Petrick: We wanted to ask on the East Coast dynamics. But that region looks tight from a product perspective, but there’s also a lot of moving pieces around crude access, freight rates. So, can you just talk about the exposure there and how you’re seeing capture rates shake out?

Matthew Lucey: Yes. It was in my comments. I mean, whether you’re talking about the East Coast or West Coast, you’re relying on imports and so how critical our infrastructure is within those pads. It’s highlighted. It gets highlighted every couple of years, whether it’s through hurricanes or other events, whether when Colonial went down clearly in this event now with the global market completely disrupted. But our assets are running well. They — like I said, they have access to crude. And so, I think we’ll be rewarded handsomely for operating them reliably over the coming quarters. Tom?

Tom Nimbley: Yes. I mean I would just add in terms of what we’ve seen, particularly over the last several reporting weeks, right, where we’re seeing draws across the country. And you’re at a situation also where even in the past couple of — in the past month or so, right, where in terms of the U.S. has been exporting product, not just off of the Gulf Coast, but out of the East Coast as well. So, we’re at a situation where inventories have been depleted and obviously depends upon how long the disruption in the Straits of Hormuz continues, right? But the longer it goes, obviously, we stay in a very point of friction. But on the flip side of it is that when we would look at it in terms of resolution in terms of the conflict, you then potentially also have OPEC in a fractured state with the announcement of UAE looking to depart the organization.

So, I think that all sort of fits within the sort of constructive outlook and the situation where in terms of markets that are deficit products, it is going to be challenging in the short term to find that resupply from any other region, because it certainly would appear at this point that Asia is buying the minimum amount of crude that they can purchase to basically satisfy their local demand or the region’s demand, and there’s no expectation that they’re going to be continuing to pull crude from the Atlantic Basin to then resupply just in terms of the sheer amount of time that takes and the uncertainty in terms of what could happen during that 60, 90, 120-day supply line.

Matthew Lucey: And importantly, also for the East Coast and the West Coast, with the Jones Act being put on the shelf for a period of time, we’re actually able to run non-traditional crudes to the East Coast. Indeed, we’ll be running some WTI and some other U.S. barrels on the East Coast during the second quarter. So, we’ll have access to the crude. At the end of the day, as we said in the comments and Tom highlighted, the world is going to be desperate for our finished products.

Alexa Petrick: Okay. That’s helpful. And then our follow-up is just on capital allocation. Any more color you could provide on the optimal capital structure with Martinez back on and elevated margins, how should we just think about that cash flow generation being used?

Matthew Lucey: I’ll hand it over to Joe, but just one overriding sort of 10,000-foot comment I would make, consistent with all the comments that we’ve made for the last number of years. When there are periods of excess cash flow generation, we will look to our balance sheet first as just the core business model of how we run our business in terms of driving to a very conservative balance sheet. Obviously, it’s a cyclical business, capital-intensive business. And during periods where the cycle is against us, we have that balance sheet to lean into. But that’s requisite on times where we are generating excess cash where we return the balance sheet to our expectation. Joe, any other?

Joseph Marino: Yes. No, I would reiterate that we do maintain — always look at our capital allocation framework comprised of the 3 pillars of invest in the business, invest in the balance sheet and shareholder returns. But as Matt indicated, our current market conditions persist, we’ll have an opportunity here to accelerate delevering as a means of transferring value from debt to equity, which would be a priority in the near-term. We did lean into the balance sheet in the last 12, 24 months, and I think we’d be looking to get back to levels we had come into 2025.

Operator: The next question comes from Joe Laetsch with Morgan Stanley.

Joseph Laetsch: So, I wanted to ask on the West Coast. Can you just talk about what you’re seeing from a local crude pricing and availability standpoint here? Are these barrels pricing off of ANS right now? And then is there any competition that you’re seeing from Asia pulling barrels away?

Matthew Lucey: I’ll make a comment and hand it over to Paul. You have to appreciate our position on the West Coast. And we’ve talked about this a fair amount in regards to — and we’ve spent a lot of time talking about products and 300,000 barrels a day of gasoline and jet that needs to be imported to meet demand. And to the degree you bring in those products, those products — you have to be able to attract those products from the rest of the world and the logistics to get there are significant. But on the crude side, we talked about it less. We’ve seen an increase on California production with some production coming on over the last quarter. And importantly, PBF has its own pipeline infrastructure with our M70 pipeline delivering to Torrance.

So, the crude pricing in California is particularly interesting because if you look at pricing of crude around the world, the California production coming out of Valley, some of the most attractively priced crude in the world. And we have our own proprietary line that will be bringing that is bringing it to our refinery in Torrance. So, we feel like that’s going to be a real competitive advantage for us going forward. Any other comments, Paul?

Paul Davis: I mean on the indigenous crude, it prices against ICE. That’s the format that it trades on. It trades at a discount because of the quality. It is a very heavy sweet barrel, high TAM material, somewhat captured because it can’t go offshore. So, it trades at a pretty good discount to ICE, which is obviously a pretty good discount to ANS. As far as the pull on the — from Asia, the Asian program did pull a lot of ANS away from the West Coast in the current trade periods and the next trade period. So, it’s a good supplement to some of the air grades that have been lost for those guys. So, yes, we’re seeing a pretty good pull.

Joseph Laetsch: Great. That’s helpful. And then on the refining business improvement program, can you just talk about how that’s progressing? So, I understand the $230 million was achieved in 2025. Can you just talk a bit more about the path to the $350 million by year-end ’26?

Matthew Lucey: Sure. I’m just happy to report we’re on path. But Mike, why don’t you give?

Michael A. Bukowski: Sure. Yes. So, the way we structured the program is we took the savings that we — the run rate savings that we had achieved last year. That was $230 million that included capital. So, just from an OpEx perspective, it was $160 million. We put that into our budget. And then in the first quarter, we are right on that plan right now. And you’ll see as the quarters go by, an increase in savings from quarter-to-quarter as other savings initiatives are implemented as well. So that by the year-end, we would expect to achieve those savings.

Operator: The next question comes from Paul Sankey with Sankey Research.

Paul Sankey: Can you hear me, okay?

Matthew Lucey: Hearing, Paul.

Paul Sankey: Can you — you’ve talked a lot around these questions. So, if I could just sort of keep digging a bit here, please. Matt, did you say — can you just say when Martinez is going to be completely up and running all units, best guess. Did you say that’s happening? And then can we talk a little bit — you said some interesting stuff about how the crude slate is changing. For example, you mentioned the Jones Act allowing you to take WTI. I was wondering, for example, is that WTI price at Cushing? And can we dig a little bit into how your crude slate is changing given the whole new situation? And again, you’ve addressed this, but are there major issues where for example, jet fuel, how are you dealing with that? And is that getting exported?

Can we kind of go through what the next 2 months will look like? Because I think the current market is guaranteed to be here for the next 2 months. And then if Hormuz starts opening up, I assume that all of that will reverse, but any longer-term comments would be helpful as well.

Matthew Lucey: Okay. There’s a lot. So, just in regards to Martinez, as we said, essentially, we expect literally over the next couple of days. And so, we’ll be very, very pleased to get there. But as soon as this weekend, we should be up with sort of all our units up and running, which is good news. Again, frustrating on the duration, but very, very good news looking forward. In regards to running nontraditional crews, everything has been disrupted and the size and scale of this disruption is sort of hard to imagine. I just keep coming back to — at the end of the day, there’s a lot of interesting conversations about crude. But at the end of the day, the only thing that matters is products. The disruption to the product market is extreme, and we’re best positioned to capitalize that throughout the country, but particularly our coastal markets.

When you look at our based operations and sort of the daily impacts, the U.S. East Coast is probably impacted the most in terms of what crudes it’s running. Paulsboro historically ran Aramco barrels, and we’ve been able to make adjustments there. But to a great degree, Chalmette, Toledo certainly and the West Coast is running what it traditionally ran. I don’t think we’re going to give you quite the detail you’re looking for in terms of exactly how to pricing, but I commend you for trying. But yes, I mean, at the end of the day, like I said, I just go back to products, products, products. And to the degree that we can reliably produce them, we will be handsomely rewarded because they’re in desperate need.

Paul Sankey: Fair enough, Matt. It was very good say.

Tom Nimbley: Paul, it’s Tom. I would just jump in. I mean, I think certainly for us in terms of — I mean your comment, maybe the next 2 weeks, 2 months or certainty, right? I mean is that I think as we look at the sort of acute problems that the market has been doing or going through, it really depends upon just really how far you are from the Straits of Hormuz, right? So, Asia felt all these pinch points soonest, then it cascaded more so into the European product markets. And then it’s now filtered into the U.S. market or the Americas, and we’re certainly seeing that on products and particularly in terms of what gasoline has done over the last several weeks in terms of catching up because initially, this was just a crude problem and a distillate problem and a jet problem, right?

Now in terms of the balances, now it’s a gasoline problem. And then therefore, also if Straits of Hormuz opens, right, then it’s going to be a situation where the recovery is going to happen soonest in terms of how far are you from Straits of Hormuz, right? And obviously, the Americas are the furthest away from the Straits of Hormuz in terms of that. That’s the sort of commentary relating around sort of months, quarters, et cetera, in terms of the recovery time.

Paul Sankey: Yes. It’s interesting that the Jones Act is helping you lack of it.

Operator: The next question comes from Doug Leggate with Wolfe Research.

Douglas George Blyth Leggate: I can’t tell you how happy I am to hear you talk about translating value from debt to equity, but I’ll take that one offline. My 2 questions is, first of all, I’d like to maybe dig in a little bit on capture rate. At the simplest level, what we’re trying to — we’ve all been through these kind of spikes before, maybe not quite like this. But when you see extraordinary margins, the risk, I think, is that the market takes those extraordinary margins and assumes capture rate remains the same of those margins. You guys talked about headwinds. You talked about RINs. Obviously, you talked about crude slate. I wonder if you could just dumb it down and say, well, how do you anticipate your capture rate on these extraordinary margins to trend?

Will it be the same? Will it be higher? Will it be lower? That’s my first one. My second one is just real simple on business interruption. And maybe it’s just a balance sheet question. You haven’t really given us a lot of disclosure on how much of the current balance sheet is still a net positive that will go away. In other words, when you pay out the remainder of the repairs, net it against how much you actually still get in the growth of business interruption. And then the root of my question is, you’ve been offline during extraordinary margins in the West Coast. You were supposed to come back up in December. Do you still get business interruption in the first quarter? I’ll leave it there.

Matthew Lucey: Okay. Sure. So, capture rates in extraordinary periods of time, which we clearly are in, it will be very, very difficult for you, quite frankly, for the investment community to pinpoint capture rates as you have a lot. Obviously, flat price, RINs and massive, massive basis differentials that are swinging wildly on a daily basis. Indeed, jet on the West Coast today is trading over $1 NYMEX distillate mark. So, it will be very difficult task to bring precision to capture rates in these extraordinary periods. Capture rates by them self — by definition are rules of thumb. And in this period of time, rules of thumb don’t necessarily equate perfectly. We’ll try to be as helpful as we can in that regard navigating it through.

But there are obviously a lots of puts and tails. But at the end of the day, I keep coming back to products, products, products. And the fiscal price for our products will be evident as we go because of how short they are at the moment. And so yes, and on top of that, the last barrel in the plant may look expensive compared to historic sort of runs. But again, the product prices are going to carry that. In regards to BI, indeed, our coverage does extend into this year and we will continue sort of to work with the insurance companies who’ve been very, very good partners. I’ve said that, I think, on every single call. And I’ll turn some of the insurance stuff over to Joe. But indeed, it wasn’t your question. But again, the addressing the balance sheet and transferring that wealth from leverage into equity is a core principle of how we run this business.

So, let there be no confusion on that. Any other comment on the insurance side?

Joseph Marino: Yes. I would just say, given the fact that the claim is ongoing and the insurance proceeds we’ve received to date have not been allocated. I can’t really give you any more detail on the breakup between DI at this point. But we’ll say that importantly, the rebuild costs are substantially behind us at this point, and we do expect further progress payments on the insurance side through the end of the claim.

Douglas George Blyth Leggate: I understand there’s no precision here, but nevertheless, I appreciate the color.

Operator: The next question comes from Philip Jungwirth with BMO.

Phillip Jungwirth: The turnaround schedule for the year originally contemplated Martinez hydrocracker in 2Q. Is this at all impacted by the later restart? And or just what’s the status here? What would this turnaround entail or imply as far as crude throughput for the facility?

Matthew Lucey: Yes. We’ve been working that, obviously. That was originally like per our last call, we were talking about that in the second quarter. We’re working through that now. I would say there’s a high degree or a high probability that, that turnaround that we actually move that towards the end of the third quarter. That hasn’t been completely finalized yet. They have to go through a number of checks. And again, safety, reliability, responsibility, running responsibly is sort of the prerequisite for everything. And so, we’re working through that. But I expect that work will be pushed out towards the end of the third quarter.

Phillip Jungwirth: Okay. Great. And then can you talk a little bit about SBR and the outlook here? We don’t get a ton of detail on profitability, but clearly, the margin profile for RD has improved. Any color as we head into 2Q? And then separately, just how are you viewing your RIN exposure currently net of SBR?

Matthew Lucey: All right. So SBR, look, this is — it’s a happy moment. There’s no doubt the reason — one of the reasons we invested in the project in the first place. So, the prospects, the outlook for SBR is quite strong today. It’s quite honestly, the strongest it’s ever been since we’ve been up and operating. So, the first quarter had positive EBITDA, but the outlook going forward, and we just completed a catalyst change, the outlook going forward looks very, very constructive. And to some degree, it holds the story together for PBF as the hedge against RIN prices that we didn’t have 3 years ago. And so, we’re very pleased to have SBR in our portfolio. And indeed, I think on our next call, you’ll see sort of how helpful it is.

In regards to RINs, they seem to be on a one-way freight train going up. RINs are upwards of getting close to $13 a barrel. I’ve described the program for over a decade as being broken, which is true, maybe nothing is more true than that, but it actually very well may break literally where there’s not sufficient RIN generation because, of course, high RIN prices, low RIN prices, you still blend the same amount of ethanol. There is an ethanol blend wall. So, it relies on RD production and bioproduction. And if that doesn’t meet the RVO, you could get into a situation where not only is RINs dramatically in pricing the price of gasoline, where it’s actually constricting supply because if you can’t — if you import, so if you go to the coast and you need to attract imports, that importer has to buy a RIN.

So, the price that he’s looking at deducts the RIN price. So, that sort of speaks to the requirement on the coast to be able to attract those products. But if the RIN is unavailable and he can’t be compliant, the product won’t come. And so, will we get there this year? I don’t know. To a great degree, it will depend on bioproduction and renewable diesel production around the world, I guess, to some degree. The RVL, as I said, is the highest it’s ever been and completely stupid in regards to impacting the price of gasoline. The easiest lever the administration has to lower the price of gasoline today would be to address the blend wall, and there is countless ways they could do that. But it is what it is. And as I said, we’re very, very pleased to have SBR.

We think it’s going to be contributing nicely.

Operator: The next and final question that’s Jason Gabelman with TD Cowen.

Jason Gabelman: You discussed the Martinez hydrocracker turnaround and potential to push that out. But can you talk more broadly about the opportunity to push out maintenance later this year into next year and just how maintenance looks over the next couple of years, given we could be in a period where margins are higher for a decent amount of time here?

Matthew Lucey: Yes, higher for longer. Yes. I’ll just say in the short, short term. We obviously — just looking at the next couple of quarters, we have a very, very clean runway. And so, the opportunity is certainly extraordinary in the near term. Mike, why don’t you make some comments?

Michael A. Bukowski: Yes. The second and third quarter are pretty clean. We do have some things coming up in the fourth quarter. We always evaluate right around this time, actually moving some things around. There are some things that we may be able to do. There are some things that are kind of locked in. I’m not going to get into specific turnarounds and the likelihood of moving them at this point. I will say that this year was probably one of our heavier turnaround years in terms of our major turnarounds. We consider a major turnaround, whether it’s a conversion unit or a crude unit combined together. So, this is one of our heavy years in recent history in terms of the scope. But the next couple of years, we tail off a bit and we’re a little bit later in ’27 and ’28. So, specifically, I’m not going to mention any turnarounds can be moved, but we are — we do those evaluations right around this time.

Jason Gabelman: My other question is on the results for the quarter. You mentioned derivative losses impacting 1Q, I believe. You didn’t quantify it. Can you talk about what that looked like for 1Q and what that maybe will look like for 2Q or how we should think about that going forward, just given in the current environment, I think some of these derivative losses could be a bit outsized.

Joseph Marino: Yes. So, we recognized a little over $200 million of mark-to-market on derivative losses during the quarter. At the end of the quarter, there was about $100 million of unrealized. So, there’s still some offsetting physical barrels that will flow through to offset that and likely be a benefit in Q2. And then as far as Q2 actual derivative impact will depend on where prices go from here.

Matthew Lucey: The derivative program, just so everyone understands is a risk-reducing program in that we will hedge inventory that is above and beyond our normal baseline. And with the disruption we had on the West Coast at — when we are entering the February 28 or March — early March, we had approximately 6 million barrels above and beyond what we normally have in our portfolio. And as such, we were managing the price of that. Anecdotally, I think the company did an exceptional job of sort of navigating the unprecedented volatility that we saw in managing those barrels. But as our inventory works down, the need for that hedging exercise is eliminated. And so, I suspect by the end of the second quarter, you’re not going to see similar callouts.

But again, it’s a situation where at the end of the first quarter, you’re marking those derivatives to market even though you still have the inventory that you’re then going to realize the physical side during the second quarter.

Operator: We have reached the end of the question-and-answer session. And I will now turn the call over to Matt Lucey, CEO, for closing remarks. Please go ahead.

Matthew Lucey: Thanks again for your time and attention this morning, and we look forward to speaking with you in July. Have a good day.

Operator: Thank you. This concludes today’s conference, and you may now disconnect your lines at this time. Thank you for your participation.

Receive real-time insider trading and news alerts