UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark one)
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2020
or
For the transition period from
to
Commission File Number: 001-35764
Commission File Number: 333-206728-02
PBF ENERGY INC.
PBF ENERGY COMPANY LLC
(Exact name of registrant as specified in its charter)
Delaware
Delaware
(State or other jurisdiction of incorporation
or organization)
One Sylvan Way, Second Floor
Parsippany New Jersey
(Address of principal executive offices)
45-3763855
61-1622166
(I.R.S. Employer Identification No.)
07054
(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
Class A Common Stock, par value $.001
Trading
Symbol
PBF
Name of Each Exchange
on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
È Yes ‘ No
PBF Energy Inc.
PBF Energy Company LLC ‘ Yes È No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
‘ Yes È No
PBF Energy Inc.
PBF Energy Company LLC ‘ Yes È No
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.
È Yes ‘ No
PBF Energy Inc.
PBF Energy Company LLC È Yes ‘ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 and post such files).
È Yes ‘ No
PBF Energy Inc.
PBF Energy Company LLC È 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.
PBF Energy Inc.
PBF Energy Company LLC
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 Energy Inc.
PBF Energy Company LLC ‘
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
È
PBF Energy Inc.
PBF Energy Company LLC È
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
‘ Yes È No
PBF Energy Inc.
PBF Energy Company LLC ‘ Yes È No
The aggregate market value of the Common Stock of PBF Energy Inc. held by non-affiliates as of June 30, 2020 was approximately $1.2 billion based upon the New York Stock Exchange
Composite Transaction closing price.
As of February 12, 2021, PBF Energy Inc. had outstanding 120,103,360 shares of Class A common stock and 16 shares of Class B common stock. PBF Energy Inc. is the sole managing
member of, and owner of an equity interest representing approximately 99.2% of the outstanding economic interest in PBF Energy Company LLC as of December 31, 2020. There is no
trading in the membership interest of PBF Energy Company LLC and therefore an aggregate market value based on such is not determinable. PBF Energy Company LLC has no common
stock outstanding.
Large accelerated filer È Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ Emerging growth company ‘
Large accelerated filer ‘ Accelerated filer ‘ Non-accelerated filer È Smaller reporting company ‘ Emerging growth company ‘
PBF Energy Inc. intends to file with the Securities and Exchange Commission a definitive Proxy Statement for its Annual Meeting of Stockholders within 120 days after December 31,
2020. Portions of the Proxy Statement are incorporated by reference in Part III of this Form 10-K to the extent stated herein.
DOCUMENTS INCORPORATED BY REFERENCE
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
TABLE OF CONTENTS
PART I
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Properties
Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 12.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
PART IV
SIGNATURES
8
30
56
56
57
61
62
66
117
119
119
119
120
121
121
121
121
121
122
2
[THIS PAGE INTENTIONALLY LEFT BLANK]
GLOSSARY OF SELECTED TERMS
Unless otherwise noted or indicated by context, the following terms used in this Annual Report on Form 10-K
have the following meanings:
“AB32” refers to the greenhouse gas emission control regulations in the state of California to comply
with Assembly Bill 32.
“ASCI” referff s to the Argus Sour Crude Index, a pricing index used to approximate market prices for
sour, heavy crude
oil.
r
“Bakken” refers to both a crude oil production region generally covering North Dakota, Montana and
Western Canada, and the crude oil that is produced in that region.
“barrel” refers to a common unit of measure in the oil industry, which equates to 42 gallons.
“blendstocks” refers to various compounds that are combined with gasoline or diesel from the crude oil
refining process to make finished gasoline and diesel; these may include natural gasoline, FCC unit
gasoline, ethanol, reformate or butane, among others.
“bpd” refers to an abbreviation for barrels per day.
“CAA” refers to the Clean Air Act.
“CAM Pipeline” or “CAM Connection Pipeline” refers to the Clovelly-Alliance-Meraux pipeline in
Louisiana.
“CARB” refers to the California
Californi
ff
required by other states.
ff
Air Resources Board; gasoline and diesel fuel sold in the state of
a are regulated by CARB and require stricter quality and emissions reduction performance than
“catalyst” refers to a substanc
produced as a product of the refining process.
u
e that alters, accelerates, or instigates chemical changes, but is not
“coke” referff s to a coal-like substance that is produced from heavier crude oil fractions during the
refining process.
“complexity” referff s to the number, type and capac
ity of processing units at a refinery, measured by the
Nelson Complexity Index, which is often used as a measure of a refinery’s ability to process lower
quality crude in an economic manner.
a
“COVID-19” refers to the 2019 outbrea
t
k of the novel coronavirus pandemic.
“crack spread” refers to a simplifiedff
calculation that measures the difference between the price for light
products and crude oil. For example, we reference (a) the 2-1-1 crack spread, which is a general industry
standard utilized by our Delaware City,t
Paulsboro and Chalmette refineries that approximates the per
barrel refining margin resulting from processing two barrels of crude oil to produce one barrel of gasoline
and one barrel of heating oil or ULSD, (b) the 4-3-1 crack spread, which is a benchmark utilized by our
Toledo and Torrance refineries that approximates the per barrel refining margin resulting from
processing four barrels of crude oil to produce three barrels of gasoline and one-half barrel of jet fuel and
one-half barrel of ULSD and (c) the 3-2-1 crack spread, which is a benchmark utilized by our Martinez
refinery that approximates the per barrel refining margin resulting from processing three barrels of crude
oil to produce two barrels of gasoline and three-quarters of a barrel jet fuel and one-quarter of a barrel
ULSD.
3
“Dated Brent” refers to Brent blend oil, a light, sweet North Sea crude oil, characterized by an
American Petroleum Institute (“API”) gravity of 38° and a sulfur content of approximately 0.4 weight
oils.
percent that is used as a benchmark for other crude
r
“distillates” refers primarily to diesel, heating oil, kerosene and jet fuel.
“DNREC” refers to the Delaware Department of Natural
t
Resources and Environmental Control.
“downstream” referff s to the downstream sector of the energy industry generally describing oil refineries,
marketing and distribution companies that refine crude oil and sell and distribute refined products. The
opposite of the downstream sector is the upstream sector, which refers to exploration and production
companies that search for and/or produce crude oil and natural
gas underground or through drilling or
exploratory wells.
t
“EPA” refers to the United States Environmental Protection Agency.
“ethanol” refers to a clear, colorless, flammable oxygenated liquid. Ethanol is typically produced
chemically from ethylene, or biologically from fermentation of various sugars from carbohydrates found
in agricultural
crops. It is used in the United States as a gasoline octane enhancer and oxygenate.
t
“Ethanol Permit” refers to the Coastal Zone Act permit for ethanol issued to our Delaware Cityt
refinery.
“FASB” refers to the Financial Accounting Standards Board which develops U.S. generally accepted
accounting principles.
“FCC” refers to fluid catalytic cracking.
“feedstocks” refers to crude
into refined products.
r
oil and partially refined petroleum products that are processed and blended
“FERC” refers to the Federal Energy Regulatory Commission.
“GAAP” refers
nongovernmental entities.
to U.S. generally accepted accounting principles developed by FASB for
“GHG” refers to greenhouse gas.
“Group I base oils or lubricants” referff s to conventionally refined products characterized by sulfur
content less than 0.03% with a viscosity index between 80 and 120. Typically, these products are used in
a variety of automotive and industrial applications.
“heavy crude oil” referff s to a relatively inexpensive crude oil with a low API gravity characterized by
high relative density and viscosity. Heavy crude oils require greater levels of processing to produce high
value products such as gasoline and diesel.
“IDRs” refers to incentive distribution rights.
“IMO” refers to the International Maritime Organization.
“IPO” referff s to the initial public offering of PBF Energy Class A common stock which closed on
December 18, 2012.
“J. Aron” refers to J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc.
“KV” refers to Kilovolts.
4
“LCM” refers to a GAAP requirement for inventory to be valued at the lower of cost or market.
“light crude oil” referff s to a relatively expensive crude oil with a high API gravity characterized by low
relative density and viscosity. Light crude oils require lower levels of processing to produce high value
products such as gasoline and diesel.
“light-heavy differential” refers to the price difference between light crude oil and heavy crude
r
oil.
“light products” refers to the group of refined products with lower boiling temperatures,
gasoline and distillates.
t
including
“LLS” refers to Light Louisiana Sweet benchmark for crude oil reflective of Gulf coast economics for
light sweet domestic and foreign crudes. It is characterized by an API gravity of between 35° and 40° and
a sulfur content of approximately .35 weight percent.
“LPG” refers to liquefied petroleum gas.
oil, a heavy, sour crude oil characterized by an API gravity of
“Maya” referff s to Maya crude
approximately 22° and a sulfur content of approximately 3.3 weight percent that is used as a benchmark
for other heavy crude oils.
rr
“MLP” refers to the master limited partnership.
“MMBTU” refers to million British thermal units.
“MOEM Pipeline” refers to a pipeline that originates at a terminal in Empire, Louisiana approximately
30 miles north of the mouth of the Mississippi River. The MOEM Pipeline is 14 inches in diameter, 54
miles long and transports crude from South Louisiana to the Chalmette refinery and transports Heavy
Louisiana Sweet (HLS) and South Louisiana Intermediate (SLI) crude.
r
“MW” refers to Megawatt.
“Nelson Complexity Index” refers to the complexity of an oil refinery as measured by the Nelson
Complexity Index, which is calculated on an annual basis by the Oil and Gas Journal. The Nelson
Complexity Index assigns a complexity factor to each majora
piece of refinery equipment based on its
complexity and cost in comparison to crude distillation, which is assigned a complexity factor of 1.0. The
complexity of each piece of refinery equipment is then calculated by multiplying its complexity factor by
its throughput ratio as a percentage of crude distillation capac
ity. Adding up the complexity values
assigned to each piece of equipment, including crude distillation, determines a refinery’s complexity on
the Nelson Complexity Index. A refinery with a complexity of 10.0 on the Nelson Complexity Index is
considered ten times more complex than crude distillation for the same amount of throughput.
a
“NYH” refers to the New York Harbor market value of petroleum products.
“NYMEX” refers to the New York Mercantile Exchange.
“PADD” refers to Petroleum Administration for Defense Districts.
“Platts” refers to Platts, a division of The McGraw-Hill Companies.
“PPM” refers to parts per million.
“refined products” refers to petroleum products, such as gasoline, diesel and jet fuel, that are produced
by a refinery.
5
“Renewable Fuel Standard” refers to the Renewable Fuel Standard issued pursuant to the Energy
Independence and Security Act of 2007 implementing mandates to blend renewablea
fuels into petroleum
fuels produced and sold in the United States.
“RINs” refers to renewable fuel credits required for compliance with the Renewablea
Fuel Standard.
“Saudi Aramco” refers to Saudi Arabian Oil Company.
“SEC” refers to the United States Securities and Exchange Commission.
“sour crude oil” refers to a crude
processing to remove the sulfur. Sour crude
oil that is relatively high in sulfur content, requiring additional
r
oil is typically less expensive than sweet crude oil.
r
“Sunoco” refers to Sunoco, LLC.
“sweet crude oil” referff s to a crude
remove the sulfur than sour crude oil. Sweet crude oil is typically more expensive than sour crude oil.
oil that is relatively low in sulfur content, requiring less processing to
rr
“Syncrude” refers to a blend of Canadian synthetic oil, a light, sweet crude oil, typically characterized
by API gravity between 30° and 32° and a sulfur content of approximately 0.1-0.2 weight percent.
“TCJA” refers to the U.S. government comprehensive tax legislation enacted on December 22, 2017 and
commonly referred to as the Tax Cuts and Jobs Act.
“throughput” refers to the volume processed through a unit or refinery.
“turnaround” refers to a periodically required shutdown and comprehensive maintenance event to
refurbish and maintain a refinery unit or units that involves the cleaning, repair, and inspection of such
units and occurs generally on a periodic cycle.
“ULSD” refers to ultra-low-sulfur diesel.
“WCS” refers to Western Canadian Select, a heavy, sour crude oil blend typically characterized by API
gravity between 20° and 22° and a sulfur content of approximately 3.5 weight percent that is used as a
benchmark for heavy Western Canadian crude oil.
“WTI” refers to West Texas Intermediate crude
oil, a light, sweet crude oil, typically characterized by
API gravity between 38° and 40° and a sulfur content of approximately 0.3 weight percent that is used as
a benchmark for other crude
oils.
rr
r
“WTS” refers to West Texas Sour crude oil, a sour crude oil characterized by API gravity between 30°
and 33° and a sulfur content of approximately 1.28 weight percent that is used as a benchmark for other
sour crude oils.
“yield” refers to the percentage of refined products that is produced from crude oil and other feedstocks.
6
Explanatory Note
This Annual Report on Form 10-K is filed by PBF Energy Inc. (“PBF Energy”) and PBF Energy
Company LLC (“PBF LLC”). Each Registrant hereto is filing on its own behalf all of the information contained
in this report that relates to such Registrant. Each Registrant hereto is not filing any information that does not
relate to such Registrant, and therefore makes no representation as to any such information. PBF Energy is a
holding company whose primary asset is an equity interest in PBF LLC. PBF Energy is the sole managing
member of, and owner of an equity interest representing approximately 99.2% of the outstanding economic
interests in PBF LLC as of December 31, 2020. PBF Energy operates and controls all of the business and affairs
and consolidates the financial results of PBF LLC and its subsidiaries. PBF LLC is a holding company for the
companies that directly and indirectly own and operate the business. As of December 31, 2020, PBF LLC also
holds a 48.0% limited partner interest and a non-economic general partner interest in PBF Logistics LP
(“PBFX”), a publicly-traded MLP.
PART I
This Annual Report on Form 10-K is filed by PBF Energy and PBF LLC. Discussions or areas of this
report that either apply only to PBF Energy or PBF LLC are clearly noted in such sections. Unless the context
indicates otherwise, the terms “Company”, “we,” “us,” and “our” refer to both PBF Energy and PBF LLC and
its consolidated subsidiaries, including PBF Holding Company LLC (“PBF Holding”), PBF Investments LLC
(“PBF Investments”), Toledo Refining Company LLC, Paulsboro Refining Company LLC (“Paulsboro
Refining” or “PRC”), Delaware City Refining Company LLC (“DCR”), Chalmette Refining, L.L.C.
(“Chalmette Refining”), PBF Energy Western Region LLC (“PBF Western Region”), Torrance Refining
Company LLC (“Torrance Refining”), Torrance Logistics Company LLC, Martinez Refining Company LLC
(“Martinez Refining”), PBF Logistics GP LLC (“PBF GP”) and PBFX.
In this Annual Report on Form 10-K, we make certain forward-looking statements, including statements
regarding our plans, strategies, objectives, expectations, intentions, and resources, under the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 to the extent such statements relate to the
operations of an entity that is not a limited liability company or a partnership. You should read our forward-
looking statements together with our disclosures under the heading: “Cautionary Statement for the Purpose of
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.” When considering forward-
looking statements, you should keep in mind the risk factors and other cautionary statements set forth in this
Annual Report on Form 10-K under “Risk Factors” in Item 1A.
7
ITEM. 1 BUSINESS
Overview and Corporate Structure
ff
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
in 2008 to pursue acquisitions of crude oil refineries and downstream assets in
destinations. We were formed
North America. As of December 31, 2020, we own and operate six domestic oil refineries and related assets,
which we acquired in 2010, 2011, 2015, 2016 and 2020. Based on the current configuration (as disclosed in
“Recent Developments - East Coast Refining Reconfiguration”) our refineries have a combined processing
ity, known as throughput, of approximately 1,000,000 bpd, and a weighted-average Nelson Complexity
a
capac
Index of 13.2 based on current operating conditions. The complexity and throughput capaa
city 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. We operate in two reportablea
business segments: Refining and Logistics.
PBF Energy was formed on November 7, 2011 and is a holding company whose primary asset is a
controlling equity interest in PBF LLC. We are the sole managing member of PBF LLC and operate and control
all of the business and affairs of PBF LLC. We consolidate the financial results of PBF LLC and its subsidiaries
and record a noncontrolling interest in our consolidated financial statements representing the economic interests
of the members of PBF LLC other than PBF Energy. PBF LLC is a holding company for the companies that
directly or indirectly own and operate our business. PBF Holding is a wholly-owned subsidiary of PBF LLC
and is the parent company for our refining operations. PBF Energy, through its ownership of PBF LLC, also
consolidates the financial results of PBFX and records a noncontrolling interest for the economic interests in
PBFX held by the public common unitholders of PBFX.
As of December 31, 2020, PBF Energy held 120,122,872 PBF LLC Series C Units and our current and
former executive officers and directors and certain employees and others held 970,647 PBF LLC Series A Units
(we refer to all of the holders of the PBF LLC Series A Units as “the members of PBF LLC other than PBF
Energy”). As a result, the holders of PBF Energy’s issued and outstanding shares of its Class A common stock
have approximately 99.2% of the voting power in PBF Energy, and the members of PBF LLC other than PBF
Energy through their holdings of Class B common stock have approximately 0.8% of the voting power in PBF
Energy.
On May 14, 2014, PBFX completed its initial public offering. As of December 31, 2020, PBF LLC held a
48.0% limited partner interest (consisting of 29,953,631 common units) in PBFX, with the remaining 52.0%
limited partner interest held by the public unitholders. PBF LLC also indirectly owns a non-economic general
partner interest in PBFX through its wholly-owned subsidia
ry, PBF GP, the general partner of PBFX.
u
8
The following mapa details the locations of our refineries and the location of PBFX’s assets as of
December 31, 2020 (each as defined below):
9
Refinff
ing
Our six refineries are located in Delaware City, Delaware, Paulsboro, New Jersey, Toledo, Ohio,
. In 2020, we reconfigured our Delaware
ff
Chalmette, Louisiana, Torrance, California
and Paulsboro refineries, temporarily idling certain of our majora
processing units at the Paulsboro refinery, in
order to operate the two refineries as one functional unit that we refer to as the “East Coast Refining System”.
Refer to “Recent Developments” below for additional information. Each refinery is briefly described in the tablea
below:
and Martinez, California
ff
Refinery
Delaware City East Coast
Region
Nelson
Complexity
Index (1)
13.6
Throughput
((
Capacity (in barrels
per day) (1)
180,000
Paulsboro
East Coast
10.4(3)
105,000(3)
Toledo
Mid-Continent
11.0
180,000
Chalmette
Gulf Coast
Torrance
West Coast
Martinez
West Coast
13.0
13.8
16.1
185,000
166,000
157,000
________
1
2
3
5
5
PADD Crude Processed (2)
1
light sweet through
heavy sour
light sweet through
heavy sour
light sweet
light sweet through
heavy sour
medium and heavy
medium and heavy
Source (2)
water, rail
water
pipeline,
rail
r
truck,
water,
pipeline
pipeline,
water, truck
pipeline and
water
a
(1) Reflects operating conditions at each refinery as of the date of this filff ing. Changes in complexity and
throughput capac
the result of current market conditions such as our East Coast Refining
Reconfigura
tion (defined below), in addition to investments made to improve our facilities and maintain
ff
compliance with environmental and governmental regulations. Configurations at each of our refineries are
evaluated and updated accordingly.
ff
eflect
t
ity r
(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
the Paulsboro refinery would be 13.1 and 180,000, respectively. As a result of the east
throughput capac
coast refining reconfiguration described below (the “East Coast Refinff
ing Reconfiguration”), our Nelson
Complexity Index and throughput capaa
city were reduced.
t
ity f
orff
a
s
Logistic
ii
t
PBFX is a feeff
-based, growth-oriented, publicly-traded Delaware MLP formed by PBF Energy to own or
lease, operate, develop and acquire crude oil and refined petroleum 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. As of December 31,
-based commercial agreements
2020, a substantial majority of PBFX’s revenues are derived from long-term, feeff
with PBF Holding, which include minimum volume commitments, for receiving, handling, storing and
transferring crude oil, refinff ed products and natural
gas. PBF Energy also has agreements with PBFX that
establia
certain general and administrative services and operational and maintenance services provided
by PBF Holding to PBFX. These transactions, other than those with third parties, are eliminated by us in
consolidation.
sh fees forff
t
10
See “Item 1A. Risk Factors” and “Item 13. Certain Relationships and Related Transactions, and Director
Independence.”
Recent Developments
II
COVID-19
The outbreak of the COVID-19 pandemic and certain developments in the global oil markets negatively
impacted worldwide economic and commercial activity and financial markets in 2020 and is expected to
continue in 2021. The COVID-19 pandemic and the related governmental and consumer responses resulted in
including business and school closures, supply chain
significant business and operational disrupti
r
disruptions, travel restrictions, stay-at-home orders and limitations on the availabila
ity of workforces and has
resulted in significantly lower global demand for refined petroleum and petrochemical products. We believe, but
cannot guarantee,
that demand for refined petroleum products will ultimately rebound as governmental
restrictions are lifted. However, the continued negative impact of the COVID-19 pandemic and these market
developments on our business and operations will depend on the ongoing severity, location and duration of the
effects and spread of COVID-19, the effectiveness of the vaccine programs and the other actions undertaken by
national, regional and local governments and health officials to contain the virus or treat its effeff cts, and how
and normal business and operating conditions resume.
quickly and to what extent economic conditions improve
ons,
m
We are actively responding to the impacts from these matters on our business. Starting in late March
through the end of 2020, we reduced the amount of crude oil processed at our refineries in response to the
decreased demand for our products and we temporarily idled various units at certain of our refineries to
optimize our production in light of prevailing market conditions. As of the date of this filing, our refineries are
still operating at reduced throughput levels and we expect them to continue to do so until market conditions
substantially improve. Despite the measures we have taken, we have been, and likely will continue to be,
adversely impacted by the COVID-19 pandemic. We are unable to predict the ultimate outcome of the
economic impact and can provide no assurance that measures taken to mitigate the impact of the COVID-19
pandemic will be effective.
d
Over the course of 2020 we adjuste
d our operational plans to the evolving market conditions and executed
our plan to lower our 2020 operating expenses through significant reductions in discretionary activities and third
party services. We successfully reduced our 2020 operating expenses by $235.0 million, excluding energy
savings, and exceeded our full-year goal of $140.0 million in total operating expense reductions. Including
energy expenses, our full-year operating expenses reductions for 2020 totaled approximately $325.0 million.
We expect to continue to target and execute these expense reduction measures in 2021. We expect operating
expenses on a system-wide basis for 2021 to be reduced by $200.0 million to $225.0 million annually as a result
of our efforts versus historic levels, including the East Coast reconfiguration. We operated our refineries at
reduced rates during the year ended December 31, 2020 and, based on current market conditions, we plan on
continuing to operate our refineries at lower utilization until such time that sustained product demand justifies
higher production. We expect near-term throughput to be in the 675,000 to 725,000 barrel per day range for our
refining system.
11
East Coast Refie ninii
gn Reconfiguration
The East Coast Refining Reconfiguration was announced on October 29, 2020 and completed on
December 31, 2020. It is expected to provide us with crude optionality and increased flexibility to respond to
a
evolving market conditions. Our East Coast Refining System throughput capac
ity is approximately 285,000
barrels per day, reflecting the new configuration and idling of certain majora
processing units. Annual operating
and capita
al expenditures savings are expected to be approximately $100.0 million and $50.0 million,
respectively, relative to average historic levels.
Available Information
Our website address is www.pbfenergy.com. Information contained on our website is not part of this
Annual Report on Form 10-K. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and any other materials filed with (or furnished to) the SEC by us are availablea
on our
website (under “Investors”) free of charge, soon after we file or furnish such material. In this same location, we
also post our corporate governance guidelines, code of business conduct and ethics, and the charters of the
free of charge in print to any stockholder
committees of our board of directors. These documents are availablea
that makes a written request to the Secretary,rr PBF Energy Inc., One Sylvan Way, Second Floor, Parsippany,
New Jersey 07054.
12
The diagram below depicts our organizational structure as of December 31, 2020:
13
Operating Segments
We operate in two reportable business segments: Refining and Logistics. Our six oil refineries, including
certain related logistics assets that are not owned by PBFX, are engaged in the refining of crude oil and other
feedstocks into petroleum products, and are aggregated into the Refining segment. PBFX operates certain
logistics assets such as crude oil and refined petroleum products terminals, pipelines and storage facilities.
Certain of PBFX’s assets were previously operated and owned by various subsidiaries of PBF Holding and were
acquired by PBFX in a series of transactions since its inception. PBFX is reported in the Logistics segment. A
substantial majori
ty of PBFX’s revenues are derived from long-term, fee-based commercial agreements with
PBF Holding and its subsidiaries and these intersegment related revenues are eliminated in consolidation. See
“Note 22 - Segment Information” of our Notes to Consolidated Financial Statements, for detailed information
on our operating results by business segment.
a
Refie niii ngii
gg
Sege men
t
We own and operate six refineries (two of which are operated as a single unit) that provide us with
and market diversity. We produce a variety of products at each of our refineries, including gasoline,
a
geographic
ULSD, heating oil, jet fuel, lubricants, petrochemicals and asphalt. 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.
Our refinery assets as of December 31, 2020 are described below.
East Coast Refining System (Delaware City Refinery and Paulsboro Refineff
ry)
r
refinery is a fully integrated operation that receives crude via rail at crude
Overview. The Delaware City refinery is located on an approximately 5,000-acre site, with access to
waterborne cargoes and an extensive distribution network of pipelines, barges and tankers, truck and rail. The
Delaware Cityt
unloading facilities
owned by PBFX, or via ship or barge at the docks owned by the Delaware City refinery located on the Delaware
River. The crude
and other feedstocks are stored in an extensive tank farm prior to processing. In addition, there
ity truck loading rack (the “DCR Truck Rack”) located adjacent to the refinery
is a 15-lane, 76,000 bpd capac
and a 23-mile interstate pipeline (the “DCR Products Pipeline”) that are used to distribute clean products. The
DCR Products Pipeline and DCR Truck Rack were sold to PBFX in May 2015 and PBFX owns additional
assets that support the Delaware City refinff ery.rr The Paulsboro refinery is located on approximately 950 acres on
the Delaware River in Paulsboro, New Jersey, near Philadelphia and approximately 30 miles away from
Delaware City. Paulsboro receives crude and feedstocks via its marine terminal on the Delaware River.
a
r
As a result of its configuration and process units, Delaware Cityt has the capabi
lity of processing a slate
of heavy crudes with a high concentration of high sulfur crudes, as well as other high sulfur feedstock when
economically viablea
, and is one of the largest and most complex refineries on the East Coast. The Delaware Cityt
refinery is one of two heavy crude processing refineries, the other being our Paulsboro refinery, on the East
city.
a
Coast of the United States. The Delaware City coking capac
ity is equal to approximately 25% of crude
capaa
a
r
The Delaware City refinff eryrr primarily processes a variety of medium to heavy, sour crude oils, but can
ity with its 82,000 bpd FCC unit,
run light, sweet crude oils as well. The refinery has large conversion capac
54,500 bpd fluid coking unit and 24,000 bpd hydrocracking unit.
a
14
The folff
lowing table approxi
a
mates the East Coast Refining System’s current majora
process unit capac
a
ities.
Unit capaa
cities are shown in barrels per stream day.
Delaware Refinery Units
Crude Distillation Unit
Vacuum Distillation Unit
Fluid Catalytic Cracking Unit
Hydrotreating Units
Hydrocracking Unit
Catalytic Reforming Unit
Benzene / Toluene Extraction Unit
Butane Isomerization Unit
Alkylation Unit
Polymerization Unit
Fluid Coking Unit
Paulsboro Refinery Units
Crude Distillation Units (1)
Vacuum Distillation Units (1)
Fluid Catalytic Cracking Unit (1)
Hydrotreating Units (1)
Catalytic Reforming Unit (1)
Alkylation Unit (1)
Lube Oil Processing Unit
Delayed Coking Unit (1)
Propane Deasphalting Unit
__________________________
Nameplate
Capacity
180,000
105,000
82,000
180,000
24,000
43,000
15,000
6,000
12,500
16,000
54,500
Nameplate
Capacity
105,000
50,000
Idled
61,000
Idled
Idled
12,000
Idled
11,000
(1) Current Nameplate Capac
a
ing Reconfiguration.
Coast Refinff
ity wt
as fully or partially reduced to reflect the idled units as part of the East
Feedstocks and Supply Arrangements. We source our crude oil needs for Delaware City pt
rimarily
through short-term and spot market agreements. We have a contract with Saudi Aramco pursuant to which we
have purchased up to approximately 100,000 bpd of crude oil from Saudi Aramco that is processed at
Paulsboro. The crude purchased under this contract is priced off the ASCI.
tt
Refie ned Product Yield and Distributi
efinery predominantly produces gasoline, jet
on. The Delaware City r
fuel, ULSD and ultra-low sulfur heating oil as well as certain other products. Products produced at the Delaware
City refinery are transferred to customers through pipelines, barges or at its truckr
rack. We market and sell all of
our refined products independently to a variety of customers on the spot market or through term agreements.
.
The Paulsboro refinery predominantly manufactures Group I base oils or lubricants and asphalt and jet fuel
Products produced at the Paulsboro refinery are transferred to customers primarily through pipelines, barges, or
at its truck rack. We market and sell all of our refined products independently to a variety of customers on the
spot market or through term agreements.
ff
t
15
Inventory Intermediation Agreement. On August 29, 2019, we entered into amended and restated
inventory intermediation agreements with J. Aron,
the “Inventory
Intermediation Agreements”), to support the operations of the Delaware City and Paulsboro refineries. The
Inventory Intermediation Agreement by and among J. Aron, PBF Holding and DCR expires on June 30, 2021,
which term may be further extended by mutual
consent of the parties to June 30, 2022. The Inventory
Intermediation Agreement by and among J. Aron, PBF Holding and PRC expires on December 31, 2021, which
term may be further extended by mutual
consent of the parties to December 31, 2022.
(as amended from time to time,
t
t
Pursuant to each Inventory Intermediation Agreement, J. Aron purchases and holds title to certain
inventory, including crude oil, intermediate and certain finished products (the “J. Aron Products”), produced by
the refinery and delivered into our storage tanks at the Delaware City and Paulsboro refineries and at PBFX’s
assets acquired from Crown Point International, LLC (“Crown Point”) in October 2018 (the “East Coast Storage
Assets” and together with our storage tanks at the Delaware City and Paulsboro refineries, the “J. Aron Storage
Tanks”). The J. Aron Products are sold back to us as the J. Aron Products are discharged out of our J. Aron
Storage Tanks. At expiration or termination of each of the Inventory Intermediation Agreements, we will have
to repurchase the inventories outstanding under the Inventory Intermediation Agreement at that time.
Tankage Capacity.tt The Delaware City refinery has total storage capac
a
ity of approximately 10.0 million
barrels. Of the total, approximately 3.6 million barrels of storage capac
ity are dedicated to crude oil and other
feedstock storage with the remaining 6.4 million barrels allocated to finished products, intermediates and other
ity of approximately 7.5 million barrels. Of the total,
products. The Paulsboro refinery has total storage capac
approximately 2.1 million barrels are dedicated to crude oil storage with the remaining 5.4 million barrels
allocated to finished products, intermediates and other products.
a
a
t
a
u
gas suppli
ity of approximately 140 MW and four turbo generators with combined nameplate capac
Energy and Other Utilities. Under normal operating conditions, the Delaware City refinff eryrr
consumes
ed via pipeline from third parties. The Delaware
approximately 75,000 MMBTU per day of natural
gas-fueled turbines with
City refinff eryrr has a 280 MW power plant located on site that consists of two natural
ity of
combined capac
approximately 140 MW. Collectively, this power plant produces electricity in excess of Delaware City’s
t
refinery load of approximately 90 MW. Excess electricity is sold into the Pennsylvania-New Jersey-Maryland,
or PJM, grid. Steam is primarily produced by a combination of three dedicated boilers, two heat recovery steam
generators on the gas turbines, and is supplemented by secondary boilers at the FCC and Coker. Hydrogen is
currently provided via the refinery’s steam methane reformer and continuous catalytic reformer.
a
t
t
Under projected normal operating conditions for the reconfiguration, the Paulsboro refinery will consume
approximately 38,000 MMBTU per day of natural
ed via pipeline from third parties. The Paulsboro
u
gas suppli
refinery will be mostly self-sufficient for electrical power through a mix of gas and steam turbine generators.
The Paulsboro refinery generation is projected to supply all of the 20MW total refinery load. There are
circumstances where availablea
generation is greater than the total refinery load, and the Paulsboro refinery can
export up to about 40MW of power to the utility grid if warranted. If necessary, supplemental electrical power
is availablea
on a guaranteed basis from the local utility. The Paulsboro refinery is connected to the grid via three
separate 69KV aerial feeders and has the ability to run entirely on imported power. Steam is produced in three
boilers and a heat recovery steam generator fed by the exhaust from the gas turbine. In addition, there are a
number of waste heat boilers and furnace stack economizers throughout the refinery that supplement the steam
generation capac
ity. The Paulsboro refinery’s hydrogen needs will be met by the steam methane reformer as the
catalytic reformer will be idled.
a
l
Hydrogen Plant
Project. During 2018, we signed an agreement with a third-party for an additional
supply of 25.0 million standard cubic feet per day of hydrogen from a new hydrogen generation facility
constructed on the Delaware City site, which was completed in the second quarter of 2020. This additional
hydrogen provides additional complex crude and feedstock processing capabi
lities.
a
16
Toledo Refinery
Overview. The Toledo refinery primarily processes a slate of light, sweet crudes from Canada, the Mid-
Continent, the Bakken region and the U.S. Gulf Coast. The Toledo refinery is located on a 282-acre site near
Toledo, Ohio, approximately 60 miles fromff
Detroit. Crude is delivered to the Toledo refinery through three
primary pipelines: (1) Enbridge from the north, (2) Patoka from the west and (3) Mid-Valley from the south.
Crude is also delivered to a nearby terminal by rail and from local sources by truck to a truck unloading facility
within the refinery.
The following tablea
ities are shown in barrels per stream day.
a
capac
approximates the Toledo refinery’s current majora
process unit capac
a
ities. Unit
Refinery Units
Crude Distillation Unit
Fluid Catalytic Cracking Unit
Hydrotreating Units
Hydrocracking Unit
Catalytic Reforming Units
Alkylation Unit
Polymerization Unit
UDEX Unit
Nameplate
Capacity
180,000
82,000
95,000
52,000
52,000
11,000
7,000
16,300
Feedstocks and Supply Arrangements. We source our crude oil needs for Toledo primarily through short-
term and spot market agreements.
Refie ned Product YieYY ld and Distribution. Toledo produces fini
shed products, including gasoline, jet and
ULSD, in addition to a variety of high-value petrochemicals including benzene, toluene, xylene, nonene and
tetramer. Toledo is connected, via pipelines, to an extensive distribution network throughout Ohio, Illinois,
Indiana, Kentucky, Michigan, Pennsylvania and West Virginia. The finished products are transported on
pipelines owned by Sunoco Logistics Partners L.P. and Buckeye Partners L.P. In addition, we have proprietary
connections to a variety of smaller pipelines and spurs that help us optimize our clean products distribution. A
significant portion of Toledo’s gasoline and ULSD are distributed through various terminals in this network.
ff
We have an agreement with Sunoco whereby Sunoco purchases gasoline and distillate products
representing approximately one-third of the Toledo refinery’s gasoline and distillates production. The
agreement had an initial three-year term, subject to certain early termination rights. In March 2019, the
a three-year term. We sell the bulk of the petrochemicals produced at
agreement was renewed and extended forff
the Toledo refinery through short-term contracts or on the spot market and the majora
ity of the petrochemical
distribution is done via rail.
Tankage Capacity. The Toledo refinery has total storage capac
mately 4.5 million barrels.
The Toledo refinery receives its crude through pipeline connections and a truck rack. Of the total,
approximately 1.3 million barrels are dedicated to crude oil storage with the remaining 3.2 million barrels
ity dedicated to crude oil and finished
allocated to intermediates and products. A portion of storage capac
products was sold to PBFX in conjunction with its acquisition of a tank farmff
, which included a
ff
related facility
propane storage and loading facility (the “Toledo Storage Facility”) in December 2014.
a
ity of approxi
a
a
Energy and Other Utilities. Under normal operating conditions,
the Toledo refinery consumes
approximately 25,000 MMBTU per day of natural
ed via pipeline from third parties. The Toledo
refinery purchases its electricity from the PJM grid and has a long-term contract to purchase hydrogen and
steam fromff
a local third-party supplier. In addition to the third-party steam supplier, Toledo consumes a portion
of the steam that is generated by its various process units.
u
gas suppli
t
17
Chalmette Refineff
ry
a
Overview. The Chalmette refinery is located on a 400-acre site near New Orleans, Louisiana. It is a duald
-
e of processing both light and heavy crude oil through its 185,000 bpd crude
train coking refinery and is capabl
units and downstream units. Chalmette Refining owns 100% of the MOEM Pipeline, providing access to the
Empire Terminal, as well as the CAM Connection Pipeline, providing access to the Louisiana Offshore Oil Port
facility through a third-party pipeline. Chalmette Refining also owns 80% of each of the Collins Pipeline
Company (“Collins”) and T&M Terminal Company (“T&M”), both located in Collins, Mississippi, which
provide a clean products outlet for the refinery to the Plantation and Colonial Pipelines. In addition, there is also
a marine terminal capable of importing waterborne feedstocks and loading or unloading finished products.
There is also a clean products truck rack that provides access to local markets and crude storage that are owned
by PBFX.
The following tablea
approximates the Chalmette refinery’s current majora
capacities are shown in barrels per stream day.
Refinery Units
Crude Distillation Units
Vacuum Distillation Unit
Fluid Catalytic Cracking Unit
Hydrotreating Units
Delayed Coking Unit
Catalytic Reforming Unit
Alkylation Unit
Aromatics Extraction Unit
process unit capac
a
ities. Unit
Nameplate
Capacity
185,000
114,000
75,000
189,000
42,000
42,000
17,000
17,000
Feedstocks and Supply Arrangements. We source our crude oil and feedstock needs for Chalmette
through connections to the CAM Pipeline and MOEM Pipeline as well as our marine terminal. On November 1,
2015, we entered into a market-based crude supply agreement with Petróleos de Venezuela S.A. (“PDVSA”)
that has a ten-year term with a renewal option for an additional five years, subject to certain early termination
on a quarterly basis by both parties.
rights. The pricing for the crude supply is market based and is agreed upon
to the
We have not sourced crude oil under this agreement since 2017 as PDVSA has suspended deliveries dued
parties’ inabila
payment terms and because of U.S. government sanctions
against PDVSA.
ity to agree to mutual
ly acceptablea
u
t
tt
Refie ned Product Yield and Distributi
on. The Chalmette refinery predominantly produces gasoline and
diesel fuels and also manufactures high-value petrochemicals including benzene and xylene. Products produced
at the Chalmette refinery are transferred to customers through pipelines, the marine terminal and truck rack. The
majori
ty of our clean products are delivered to customers via pipelines. Our ownership of the Collins pipeline
a
and T&M terminal provides Chalmette with strategic access to Southeast and East Coast markets through third-
party logistics.
Tankage Capacity. Chalmette has a total tankage capac
total, approxi
a
allocated to intermediates and products.
mately 8.1 million barrels. Of this
mately 2.6 million barrels are allocated to crude oil storage with the remaining 5.5 million barrels
a
ity of approxi
a
Energy and Other Utilities. Under normal operating conditions,
the Chalmette refinery consumes
approximately 25,000 MMBTU per day of natural
ed via pipeline from third parties. The Chalmette
u
gas suppli
refinery purchases its electricity from a local utility and has a long-term contract to purchase hydrogen from a
third-party supplier.
t
18
Torrance Refinery
a
Overview. The Torrance refinery is located on 750 acres in Torrance, California
. It is a high-conversion
e of processing both heavy and medium crude oils through its crude unit
crude, delayed-coking refinery capabl
and downstream units. In addition to refining assets, the Torrance refinery acquisition included a number of
high-quality logistics assets including a sophisticated network of crude and products pipelines, product
distribution terminals and refinery crude and product storage facilities. The most significant logistics asset is a
crude gathering and transportation system which delivers San Joaquin Valley crude oils directly frff om the field
to the refinery, which is now owned by PBFX. Additionally, there are several pipelines serving the refinery that
provide access to sources of waterborne crude oils including the Ports of Long Beach and Los Angeles, as well
as clean product outlets with a direct pipeline that suppli
l to the Los Angeles airport that are held by
affiliates of the refinery.
es jet fueff
u
ff
The following tablea
approximates the Torrance refinery’s current majora
capacities are shown in barrels per stream day.
Refinery Units
Crude Distillation Unit
Vacuum Distillation Unit
Fluid Catalytic Cracking Unit
Hydrotreating Units
Hydrocracking Unit
Alkylation Unit
Delayed Coking Unit
process unit capac
a
ities. Unit
Nameplate
Capacity
166,000
102,000
90,000
155,500
25,000
25,500
58,000
Feedstocks and Supply Arrangements. The Torrance refinery primarily processes a variety of medium
and heavy crude oils. On July 1, 2016, we entered into a crude supply agreement with Exxon Mobil Oil
Corporation (“ExxonMobil”) for approximately 60,000 bpd of crude oil that can be processed at our Torrance
refinery. This crude supply agreement has a five-ye
ture unless either party
gives thirty-six months written notice of its intent to terminate the agreement. Additionally, we obtain crude and
racks.
feedstocks from other sources through connections to third-party pipelines as well as ship docks and truckr
ar term with an automatic renewal feaff
ff
Refie ned Product Yield and Distributi
on. The Torrance refinery predominantly produces gasoline, jet fuel
and diesel fuels. Products produced at the Torrance refinery are transferred to customers through pipelines, the
marine terminal and truck rack. The majora
ity of clean products are delivered to customers via pipelines. We
currently market and sell all of our refined products independently to a variety of customers either on the spot
market or through term agreements.
ff
tt
Tankage Capacity. Torrance has a total tankage capac
total, approxi
a
allocated to intermediates and products.
mately 8.6 million barrels. Of this
mately 2.1 million barrels are allocated to crude oil storage with the remaining 6.5 million barrels
f approxi
ity ot
a
a
Energy and Other Utilities. Under normal operating conditions,
the Torrance refinery consumes
approximately 47,000 MMBTU per day of natural
ed via pipeline from third parties. The Torrance
refinery generates some power internally using a combination of steam and gas turbines and purchases any
additional needed power from the local utility. The Torrance refinery has a long-term contract to purchase
hydrogen from a third-party supplier.
u
gas suppli
t
19
Martinez Refinff ery
We acquired the Martinez refinery and related logistics assets from Equilon Enterprises LLC d/b/a Shell
Oil Products US (“Shell Oil Products”) on February 1, 2020 for an aggregate purchase price of $1,253.4
million, including final working capita
al of $216.1 million and the obligation to make certain post-closing earn-
out payments to Shell Oil Products based on certain earnings thresholds of the Martinez refinery for a period of
up to four years (the “Martinez Acquisition”).
Overview. The Martinez refinery is located on an 860-acre site in the City of Martinez, 30 miles northeast
of San Francisco, California. The refinery is a high-conversion, dual-coking facility with a Nelson Complexity
Index of 16.1, making it one of the most complex refineries in the United States. The facility is strategically
positioned in Northern California and provides forff
operating and commercial synergies with the Torrance
refinery located in Southern California. In addition to refining assets, the Martinez Acquisition includes a
number of high-quality onsite logistics assets including a deep-water marine facility, product distribution
terminals and refinery crude and product storage facilities with approximately 8.8 million barrels of shell
a
capac
ity.
The following tablea
approximates the Martinez refinery’s current majora
capacities are shown in barrels per stream day.
Refinery Units
Crude Distillation Unit
Vacuum Distillation Unit
Fluid Catalytic Cracking Unit
Hydrotreating Units
Hydrocracking Unit
Alkylation Unit
Delayed Coking Unit
Flexi Coking Unit
Isomerization Unit
process unit capac
a
ities. Unit
Nameplate
Capacity
157,000
102,000
72,000
268,000
42,900
12,500
25,500
22,500
15,000
Feedstocks and Supply Arrangements. We have entered into various five-year crude supply agreements
with Shell Oil Products forff
approximately 150,000 bpd, in the aggregate, to support our West Coast and Mid-
Continent refinery operations. Additionally, we obtain crude and feedstocks from other sources through
connections to third-party pipelines as well as ship docks.
Refie ned Product Yield and Distributi
our West Coast
system with Shell Oil Products for clean products with varying terms up to 15 years. We currently market and
sell all of our refined products independently to a variety of customers either on the spot market or through term
agreements.
on. We entered into certain offtake agreements forff
tt
Tankage Capacity.tt Martinez has a total tankage capac
total, approxi
a
allocated to intermediates and products.
mately 8.8 million barrels. Of this
mately 2.5 million barrels are allocated to crude oil storage with the remaining 6.3 million barrels
f approxi
ity ot
a
a
Energy and Other UtiUU lities. Under normal operating conditions,
the Martinez refinery consumes
approximately 80,000 MMBTU per day of natural
gas consumed in hydrogen production)
supplied via pipeline from third parties. The Martinez refinery generates some power internally using a
combination of steam and gas turbines and purchases any additional needed power from the local utility. The
Martinez refinery has a long-term contract to purchase hydrogen from a third-party supplier.
gas (including natural
t
t
20
o
Logist
ictt s SegSS megg
nt
t
We formed PBFX, a publicly-traded MLP, to own or lease, operate, develop and acquire crude oil and
refined petroleum products terminals, pipelines, storage facilities and similar logistics assets. PBFX’s operations
are aggregated into the Logistics segment. PBFX engages in the receiving, handling, storage and transferring of
crude oil, refinff ed 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. A substantial majority
-based commercial agreements with PBF Holding, which
of PBFX’s revenues is derived from long-term, feeff
include minimum volume commitments forff
receiving, handling, storing and transferring crude oil, refinff ed
gas. PBFX’s third-party revenue is primarily derived from its third-party acquisitions. PBF
products and natural
Energy also has agreements with PBFX that establish fees forff
certain general and administrative services and
operational and maintenance services provided by PBF Holding to PBFX. These transactions, other than those
with third parties, are eliminated by PBF Energy and PBF LLC in consolidation.
t
As of December 31, 2020, PBFX’s assets consist of the folff
lowing:
Asset
Capacity
Products Handled
PBF Location Supported
Transportation and Terminaling
DCR Rail Facility (a)(b)
various throughput capacity (a)
Crude
East Coast Refining System
Toledo Truck Terminal (b)
22,500 bpd unloading capacity
Toledo Storage Facility -
propane loading facility (b)
11,000 bpd throughput capacity
Crude
Propane
Toledo Refinery
Toledo Refinery
DCR Products Pipeline (b)
125,000 bpd pipeline capacity
Refined products
Delaware City Refinery
DCR Truck Rack (b)
76,000 bpd throughput capacity
East Coast Terminals
Torrance Valley Pipeline (b)
Paulsboro Natural Gas Pipeline
(b)
Toledo Products Terminal
various throughput capacity and
approximately 4.2 million barrel
aggregate shell capacity
110,000 bpd pipeline capacity and
approximately 700,000 barrel aggregate
shell capacity (c)
60,000 dth/d pipeline capacity
Gasoline, distillates and
LPGs
Delaware City Refinery
Refined products
East Coast Refining System
rr
Crude
Torrance Refinery
Natural gas
Paulsboro Refinery
various throughput capacity and
110,000 barrel aggregate shell capacity
Refined producd ts
Toledo Refinery
Knoxville Terminals
various throughput capacity and
520,000 barrel aggregate shell capacity
Gasoline, distillates and
LPGs
Chalmette Refinery
Toledo Rail Products Facility
(b)(d)
16,000 bpd loading capacity
Crude, LPGs, gasoline
and distillates
Toledo Refinery
Chalmette Truck Rack (b)(d)
Chalmette Rosin Yard (b)(d)
20,000 bpd loading capacity
17,000 bpd unloading capacity
Gasoline and distillates Chalmette Refinery
Chalmette Refinery
LPGs
Paulsboro Lubeu Oil Terminal
(b)(d)
various throughput capacity and
229,000 barrel aggregate shell capacity
Lubes
Delaware Ethanol Storage
Facility (b)(d)
various throughput capacity and
100,000 barrel aggregate shell capacity
Ethanol
Paulsboro Refinery
Delaware City Refinery
Storage
Toledo Storage Facility (b)
approximately 3.9 million barrel
aggregate shell capacity (e)
Crude, refined products
and intermediates
Toledo Refinery
Chalmette Storage Tank
625,000 barrel shell capacity
Crude
Chalmette Refinery
East Coast Storage Assets
approximately 4.0 million barrel
aggregate shell capacity (f) and various
throughput capacity
Crude, feedstock,
asphalt and refined
products
East Coast Refining System
___________________
21
(a)
Included within the DCR Rail Facility are the DCR Rail Terminal, a rail unloading terminal with an
unloading capac
ity of 130,000 bpd, and the DCR West Rack, an unloading facility with an unloading
a
capac
ity of 40,000 bpd.
a
Includes storage capac
(b) These assets represent the assets that PBFX acquired from PBF LLC.
(c)
(d) These assets are collectively referred to as the “Development Assets”.
(e) Of the approximately 3.9 million barrel aggregate shell capaa
ity at the PBFX Midway, Emidio and Belridge stations.
a
city, approximately 1.3 million barrels are
dedicated to crude and approximately 2.6 million barrels are allocated to refined products and
intermediates.
(f) Of the approximately 4.0 million barrel aggregate shell capaa
city, approximately 3.0 million barrels are
dedicated to crude
r
and feedstocks and approximately 1.0 million barrels are allocated to asphalt.
Transactions with PBFX
Since the inception of PBFX in 2014, PBF LLC and PBFX have entered into a series of drop-down
transactions. Such transactions occurring in the three years ended December 31, 2020 are discussed below.
On April 24, 2019, PBFX entered into a contribution agreement with PBF LLC (the “TVPC Contribution
Agreement”), pursuant to which PBF LLC contributed to PBFX all of the issued and outstanding limited
liability company interests of TVP Holding Company LLC (“TVP Holding”) for total consideration of $200.0
to the TVPC Acquisition, TVP Holding owned
million in cash (the “TVPC Acquisition”). Prior
a 50% membership interest in Torrance Valley Pipeline Company LLC (“TVPC”) . Subsequent
to the closing of
u
the TVPC Acquisition on May 31, 2019, PBFX owns 100% of the membership interests in TVPC. The
transaction was financed through a combination of proceeds from the 2019 Registered Direct Offering (as
defined in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”)
and borrowings under the $500.0 million amended and restated revolving credit facility (as amended, the
“PBFX Revolving Credit Facility”).
On July 16, 2018, PBFX entered into four contribution agreements with PBF LLC, pursuant to which
PBF LLC contributed all of the issued and outstanding limited liability company interests of the Development
Assets to PBFX effective July 31, 2018 (the “Development Assets Contribution Agreements”). In consideration
for the Development Assets limited liability company interests, PBFX delivered to PBF LLC total consideration
of $31.6 million consisting of 1,494,134 common units of PBFX.
In connection with the foregoing transactions and other transactions with PBFX, PBF Holding entered
into commercial agreements with PBFX entities for the provision of services which require minimum monthly
throughput volumes. Subsequent to the transactions described above, as of December 31, 2020, PBF LLC holds
a 48.0% limited partner interest in PBFX consisting of 29,953,631 common units.
PBFX IDR Restructuring Agreement
On February 28, 2019, PBFX closed on the transaction contemplated by the equity restructuring
agreement (the “IDR Restructuring Agreement”) with PBF GP, pursuant to which the IDRs held by PBF LLC
were canceled and converted into 10,000,000 newly issued PBFX common units. Subsequent to the closing of
the IDR Restructuring, no distributions were made to PBF LLC with respect to the IDRs and the newly issued
PBFX common units are entitled to normal distributions by PBFX.
Principal Products
Our refineries make various grades of gasoline, distillates (including diesel fuel, jet fuel and ULSD) and
other products from crude oil, other feedstocks, and blending components. We sell these products through our
oil companies. For the years ended December 31, 2020, 2019 and
commercial accounts, and sales with majora
2018, gasoline and distillates accounted for 84.7%, 86.8% and 84.7% of our revenues, respectively.
22
Customers
We sell a variety of refined products to a diverse customer base. The majoa rity of our refined products are
primarily sold through short-term contracts or on the spot market. However, we do have product offtake
arrangements for a portion of our clean products. For the year ended December 31, 2020, only one customer,
Royal Dutch Shell, accounted for 10% or more of our revenues (approxim
ately 13%). For the years ended
December 31, 2019 and 2018, no single customer accounted for 10% or more of our revenues. As of
December 31, 2020, only one customer, Royal Dutch Shell, accounted for 10% or more of our total trade
accounts receivable (approximately 16.0%). No single customer accounted for 10% or more of our total trade
accounts receivablea
as of December 31, 2019.
a
Seasonality
Traditionally, demand for gasoline and diesel is generally higher during the summer months than during
the winter months due to seasonal increases in highway traffic and construction work. Decreased demand
during the winter months can lower gasoline and diesel prices. However, during 2020, due to the COVID-19
pandemic and related governmental responses, the effects of seasonality on our operating results were skewed.
Our operating results have been negatively impacted by the ongoing COVID-19 pandemic which has caused a
significant decline in the demand for our refined products and a decrease in the prices for crude oil and refined
products.
Competition
The refining business is very competitive. We compete directly with various other refining companies on
the East, Gulf and West Coasts and in the Mid-Continent, with integrated oil companies, with foreign refiners
that import products into the United States and with producers and marketers in other industries supplying
alternative forms of energy and fuels to satisfy the requirements of industrial, commercial and individual
consumers. Some of our competitors have expanded the capaa
city of their refineries and internationally new
refineries are coming on line which could also affect our competitive position.
r
Profitabila
ity in the refining industry depends largely on refined product margins, which can fluctuate
oil prices and differentials between the prices of different grades of crude oil,
significantly, as well as crude
operating efficiency and reliabila
ity, product mix and costs of product distribution and transportation. Certain of
our competitors that have larger and more complex refineries may be able to realize lower per-barrel costs or
higher margins per barrel of throughput. Several of our principal competitors are integrated national or
international oil companies that are larger and have substantially greater resources. Because of their integrated
operations and larger capita
alization, these companies may be more flexible in responding to volatile industry or
market conditions, such as shortages of feedstocks or intense price fluctuations. Refining margins are frequently
impacted by sharp changes in crude
oil costs, which may not be immediately reflected in product prices.
r
The refining industry is highly competitive with respect to feedstock supply.
Unlike certain of our
competitors that have access to proprietary controlled sources of crude oil production available for use at their
own refineries, we obtain all of our crude oil and substantially all other feedstocks from unaffiliated sources.
The availabila
ity and cost of crude oil and feedstock are affected by global supply and demand. We have no
crude oil reserves and are not engaged in the exploration or production of crude oil. We believe, however, that
we will be able to obtain adequate crude oil and other feedstocks at generally competitive prices for the
foreseeable future.
u
t
Pursuant to its Renewable Fuel Standard, the EPA has implemented mandates to blend renewable fuels
into the petroleum fuels produced and sold in the United States. However, unlike certain of our competitors, we
currently do not produce renewable fuels, and increasing the volume of renewable fuels that must be blended
into our products displaces an increasing volume of our refinery’s product pool, potentially resulting in lower
earnings and profitability. In addition, in order to meet certain of these and future EPA requirements, we may be
required to continue to purchase RINs, which historically had, and we expect to have, fluctuating costs based on
market conditions. The price of RINS has increased in 2020 and could increase further in 2021.
23
Corporate Officff
es
We currently lease approximately 63,000 square feet for our principal corporate offices in Parsippany,
New Jersey. The lease for our principal corporate offices expires in 2022. Functions performed in the
Parsippany office include overall corporate management, refinery and health, safety and environmental
contract
management, planning and strategy,
administration, marketing,
information
technology, legal and human resources support functions.
investor relations, governmental affairs, accounting,
commercial operations,
corporate
logistics,
treasury,
finance,
tax,
a
We lease approxim
ately 4,000 square feet for our regional corporate office in Long Beach, California.
The lease for our Long Beach office expires in 2021. Functions performed in the Long Beach office include
overall regional corporate management, planning and strategy, commercial operations, logistics, contract
administration, marketing and governmental affai
rs.
ff
We lease approximately 5,000 square feet for our regional corporate office in The Woodlands, Texas.
The lease forff The Woodlands office expires in 2022. Functions performed in The Woodlands include pipeline
control center operations and logistics operations, engineering and regulatory support functions.
Employees and Human Capital
Safety
We believe our responsibility to our employees, neighbors, shareholders and the environment is only
fulfilled through our commitment to safetyt and reliabila
ity. Through rigorous training, sharing of expertise across
our sites, continuous monitoring and through promoting a culture of excellence in operations, we continuously
strive to keep our people, the communities in which we operate in and the environment safe.
Our focus on safetyt
is also evident in our response to the COVID-19 pandemic. We continue to utilize
our COVID-19 response team to implement additional social distancing measures across the workplace in
addition to the continued enhancement of personal protective equipment and the cleanliness of our facilities.
Through the guidance of our COVID-19 response team, we have started to bring back a portion of our
workforce to their primary locations on a phased in approach, and we will continue to rely on our team and the
evolution of the COVID-19 pandemic as we evaluate the appropriate time and way in which we will phase in
the returnt
of the rest of our workforce.
a
(“OSHA”) and comparablea
We are subject to the requirements of the Occupational Safetyt and Health Administration of the U.S.
state statutes that regulate the protection of the health and
Department of Labor
safetyt
of workers. In addition, the OSHA Hazard Communication Standard requires that information be
maintained about hazardous materials used or produced in operations and that this information be provided to
employees, state and local government authorities and citizens. We believe that our operations are in
compliance with OSHA requirements, including general industry standards, record keeping requirements and
monitoring of occupational exposure to regulated substances.
Development and Retenti
tt
on
The development, attraction and retention of employees is a critical success factor for our Company. To
support
the advancement of our employees, we offer rigorous training and development programs and
encourage the sharing of expertise across our sites. We actively promote inclusion and diversity in our
workforce at each of our locations and provide our employees with opportunities to give back through
engagement in our local communities through supportive educational programs, philanthropic and volunteer
activities.
24
We believe that a combination of competitive compensation and career growth and development
opportunities help increase employee morale and reduce voluntary turnover. Our comprehensive benefit
packages are competitive in the marketplat
ce and we believe in recognizing and rewarding talent through our
various cash and equity compensation programs.
Headcount
As of December 31, 2020, we had approximately 3,729 employees, of which 1,964 are covered by
collective bargaining agreements. Our hourly employees are covered by collective bargaining agreements
through the United Steel Workers (“USW”), the Independent Oil Workers (“IOW”) and the International
Brotherhood of Electrical Workers (“IBEW”). We consider our relations with the represented employees to be
satisfactory.
Number of
employees
Employees covered by
collective bargaining
agreements
Collective bargaining agreements
Expiration date
Location
Headquarters
Delaware City refinery
Paulsboro refinery
Toledo refinery
Chalmette refinery
Torrance refinery
Torrance logistics
Martinez refinery
397
518
442
483
543
564
106
585
PBFX
Total employees
yy
91
3,729
—
358
260
313
307
297
12
42
4
314
24
23
10
1,964
N/A
USW
IOW
USW
USW
USW
IBEW
USW
USW
USW
IBEW
USW-East Coast Storage Assets
USW- East Coast Terminals
N/A
January 2022
March 2022
rr
February
2022
January 2022
January 2022
January 2022
April 2021
January 2022
February 2022
February 2022
January 2022
April 2024
25
Information About Our Executive Officers
The following is a list of our executive officers as of February
rr
18, 2021:
Name
Thomas J. Nimbley
Matthew C. Lucey
Erik Young
Paul Davis
Thomas L. O’Connor
Herman Seedorf
Trecia Canty
Age (as of
December 31,
2020)
Position
69
47
43
58
48
69
51
Chief Executive Officff er and Chairman of the Board of Directors
President
Senior Vice President, Chief Financial Officer
President, Western Region
Senior Vice President, Commercial
Senior Vice President, Refining
Senior Vice President, General Counsel & Corporate Secretary
March 2010 through June 2010. In his capac
Thomas J. Nimbley has served as our Chief Executive Officer since June 2010 and on our Board of
Directors since October 2014. He has served as the Chairman of our Board since July 2016. He was our
Executive Vice President, Chief Operating Officer fromff
ity as our
Chief Executive Officer, Mr. Nimbley also serves as a director and the Chief Executive Officer of certain of our
subsidiaries and our affiliates, including Chairman of the Board of PBF GP. Prior to joining us, Mr. Nimbley
June 2005 to March 2010, where he provided
served as a Principal forff Nimbley Consultants LLC fromff
consulting services and assisted on the acquisition of two refineries. He previously served as Senior Vice
President and head of Refining for Phillips Petroleum Company (“Phillips”) and subsequently Senior Vice
President and head of Refining for ConocoPhillips (“ConocoPhillips”) domestic refining system (13 locations)
following the merger of Phillips and Conoco Inc. Before joining Phillips at the time of its acquisition of Tosco
Corporation (“Tosco”) in September 2001, Mr. Nimbley served in various positions with Tosco and its
subsidiaries starting in April 1993.
a
Matthewtt
C. Lucey has served as our President since January 2015 and was our Executive Vice President
from April 2014 to December 2014. Mr. Lucey served as our Senior Vice President, Chief Financial Officer
from April 2010 to March 2014. Mr. Lucey joined us as our Vice President, Finance in April 2008. Mr. Lucey is
also a director of certain of our subsidiaries, including PBF GP. Prior thereto, Mr. Lucey served as a Managing
specializing in several sectors of the
Director of M.E. Zukerman & Co., a New York-based private equity firmff
broader energy industry, from 2001 to 2008. Before joining M.E. Zukerman & Co., Mr. Lucey spent six years in
the banking industry.
Erik Young has served as our Senior Vice President and Chief Financial Officer since April 2014 after
joining us in December 2010 as Director, Strategic Planning where he was responsible for both corporate
development and capita
al markets initiatives. Mr. Young is also a director of certain of our subsidiaries,
including PBF GP. Prior to joining the Company, Mr. Young spent eleven years in corporate finance, strategic
planning and mergers and acquisitions roles across a variety of industries. He began his career in investment
banking before joining J.F. Lehman & Company, a private equity investment firm, in 2001.
Paul Davisii has served as our President, PBF Western Region since September 2017. Mr. Davis joined us
in April of 2012 and held various executive roles in our commercial operations, including Co-Head of
Commercial, prior to serving as Senior Vice President, Western Region Commercial Operations from
September 2015 to September 2017. Previously, Mr. Davis was responsible for managing the U.S. clean
products commercial operations for Hess Energy Trading Company from 2006 to 2012. Prior to that, Mr. Davis
was responsible for Premcor’s U.S. Midwest clean products disposition group. Mr. Davis has over 29 years of
experience in commercial operations in crude oil and refined products, including 16 years with the ExxonMobil
Corporation in various operational and commercial positions, including sourcing refinery feedstocks and crude
oil and the disposition of refined petroleum products, as well as optimization roles within refineries.
26
CC
Thomas L. O’Connor
has served as our Senior Vice President, Commercial since September 2015. Mr.
O’Connor joined us as Senior Vice President in September 2014 with responsibility for business development
and growing the business of PBFX, and from January to September 2015, served as our Co-Head of commercial
activities. Prior to joining us, Mr. O’Connor worked at Morgan Stanley since 2000 in various positions, most
recently as a Managing Director and Global Head of Crude Oil Trading and Global Co-Head of Oil Flow
Trading. Prior to joining Morgan Stanley, Mr. O’Connor worked for Tosco from 1995 to 2000 in the Atlantic
Basin Fuel Oil and Feedstocks group.
Herman Seedorf has served as our Senior Vice President of Refining since May 2014. Mr. Seedorf
originally joined us in February of 2011 as the Delaware Cityt Refinery Plant Manager and served as Senior
Vice President, Eastern Region Refining, from September 2013 to May 2014. Prior to 2011, Mr. Seedorf served
as the refinery manager of the Wood River Refinery in Roxana, Illinois, and also as an officer of the joint
between ConocoPhillips and Cenovus Energy Inc. Mr. Seedorf’s oversight responsibilities included the
venturet
development and execution of the multi-billion dollar upgrade project which enablea
d the expanded processing
of Canadian crude oils. He also served as the refinery manager of the Bayway Refinery in Linden, New Jersey
for four years during the time period that it was an asset of Tosco. Mr. Seedorf began his career in the petroleum
industry with Exxon Corporation in 1980.
Trecia Canty has served as our Senior Vice President, General Counsel and Corporate Secretary since
September 2015. In her role, Ms. Cantyt
is responsible for the legal department and outside counsel, which
provide a broad range of support for the Company’s business activities, including corporate governance,
compliance, litigations and mergers and acquisitions. Previously, Ms. Cantyt was named Vice President, Senior
in October 2014 and led our commercial and finance legal
Deputy General Counsel and Assistant Secretaryrr
is also a director of certain of our subsidiaries. Prior
operations since joining us in November 2012. Ms. Cantyt
of
to joining us, Ms. Cantyt
Southwestern Energy Company, where her responsibilities included finance and mergers and acquisitions,
securities and corporate compliance and corporate governance. She also provided legal support to the midstream
marketing and logistics businesses. Prior to joining Southwestern Energy Company in 2004, she was an
associate with Cleary, Gottlieb, Steen & Hamilton.
served as Associate General Counsel, Corporate and Assistant Secretaryrr
27
Environmental, Health and Safety Matters
Our 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, 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 capita
al costs to
construct, maintain and upgrade equipment and facilities. Permits are also required under these laws for the
operation of our refineries, pipelines and related operations and these permits are subject to revocation,
environmental laws, regulations and permits will
modification and renewal. Compliance with applicablea
continue to have an impact on our operations, results of operations and capita
al requirements. We believe that
our current operations are in substantial compliance with existing environmental laws, regulations and permits.
We incorporate by reference into this Item the environmental disclosures contained in the following
sections of this report:
•
Item 1A. “Risk Factors”
We may incur signifg
◦
environmental and health and safety regulations, which are complem xee and change frequently;
under, or costs and capital expex nditures to comply with,
liabilitytt
icff ant
Environmental clean-up and remediation costs of our sites and environmental litigation couldll
◦
decrease our net cash flow,w reduce our results of operations and impair our financial condition;
◦ We may have capital needs for which our internallyll generated cash flows and other sources of
liquidity may not be adequate;
◦ We are subject to strict laws and regulations regarding
comply with these lawsww and regulations could have a material adverse effect
financial condition and profitability;
e
ff
employee and process safety,tt
and failure to
on our results of operations,
CC
◦ Changes
significff antlyll
in lawsww or standards affecff
m
impact
our operations, and as a result cause our costs to increase.
ting the transportation of Northtt American crude oil by rail could
◦ We could incur substantial costs or disruptions in our business if we cannot obtain or maintain
necessary permits and authorizations or otherwise comply with health, safety,
environmental and other
lawsww and regulat
ions.
a
e
•
•
Item 3. “Legal Proceedings”,
Item 8. “Financial Statements and Supplementary Data”
◦ Note 9 - Accruedr
Expenses,
◦ Note 12 - Other Long-Term Liabilities and
◦ Note 14 - Commitments and Contingencies
28
Applipp
cablell Federal and Statett Regulat
e
orytt
Requirementstt
As is the case with all companies engaged in industries similar to ours, we face potential exposure to
future claims and lawsuits involving environmental and safetyt matters. These matters include soil and water
contamination, air pollution, personal injury and property damage allegedly caused by substances which we
manufactured, handled, used, released or disposed of.
Current and future environmental regulations are expected to require additional expenditures, including
for investigation and remediation, which may be significant, at our refineries and at our other
expenditures
t
facilities. To the extent that future expenditures for these purposes are material and can be reasonably
determined, these costs are disclosed and accrued.
r
Our operations are also subjeu
We maintain safetyff
applicable laws and regulations. Compliance with applicablea
and continues to require substantial expenditures.
ct to various laws and regulations relating to occupational health and safety.t
training and maintenance programs as part of our ongoing efforts to ensure compliance with
laws and regulations has required
health and safetyt
We cannot predict what additional health, safetyt
and environmental legislation or regulations will be
enacted or become effective in the future or how existing or future laws or regulations will be administered or
interpreted with respect to our operations. Compliance with more stringent laws or regulations or adverse
changes in the interpretation of existing requirements or discovery of new information such as unknown
contamination could have an adverse effect on the financial position and the results of our operations and could
require substantial expenditures
for the installation and operation of systems and equipment that we do not
currently possess.
t
We incorporate by reference into this Item the federal and state regulatory requirements disclosures
contained in the following sections of this report:
•
Item 8. “Financial Statements and Supplementary Data”
◦ Note 14 - Commitments and Contingencies
29
ITEM 1A. RISK FACTORS
Summary of Risk Factors
tt
Investing in our common stock involves a high degree of risk. These risks are discussed more fully below and
include, but are not limited to, the following, any of which could have a material adverse effect on our financial
condition, results of operations and cash flows:
Risks Related to the COVID-19 Pandemic
•
The COVID-19 pandemic and its effects on our liquidity, business, financial condition and results of
operations.
Risks Relating to Our Business and Industry
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
t
al markets.
terms or at all.
e substantially.
fuels mandates and the cost of RINs.
al needs for which our internally generated cash flows and other sources of liquidity
The price volatility of crude oil, other feedstocks, blendstocks, refined products and fuel and utility
services.
Volatility in commodity prices and refined product demand.
Crude oil differentials and related factors, which fluctuat
Renewablea
Existence of capita
may not be adequate.
Volatility and uncertainty in the credit and capita
Ability to obtain financing on acceptablea
Significant interruptions or casualty losses at any of our refineries and related assets or logistics
terminals, pipelines or other facilities.
Interruptions of supply and distribution at our refineries.
Regulation of emissions of greenhouse gases and other environmental and health and safetyt
regulations.
Integration of the recently acquired Martinez Refinery into our business.
A cyber-attack on, or other failure of, our technology infrastructure.
Competition from companies who have not been adversely impacted as much as we have been by the
COVID-19 pandemic.
Labor disruptiu
Any political instability, military strikes, sustained military campaigns, terrorist activity, changes in
foreign policy, or other catastrophic events.
Discontinuation of employment of any of our senior executives or other key employees.
Product liability and operational liability claims and litigation.
Changes in our credit profile.
ons that would interfere with our operations.
Risks Related to Our Indebtedness
•
•
•
•
•
Our substantial levels of indebtedness.
Changes in our credit ratings.
Limitations on our operations arising out of restrictive covenants in our debt instruments.
Anti-takeover provisions in our indentures.
The discontinuation of LIBOR, and the adoption of an alternative reference rate.
30
Risks Related to Our Organizational Structure and PBF Energy Class A Common Stock
•
•
•
•
•
PBF Energy’s dependence upon distributions from PBF LLC and its subsidiaries to pay taxes and meet
its other obligations.
The rights of other members of PBF LLC may conflict with the interests of PBF Energy Class A
common stockholders.
Obligations under the Tax Receivablea
Suspension of quarterly dividend.
Potential dilution of our current stockholders.
Agreement.
Risks Related to Our Ownership of PBFX
•
•
Obligations for minimum volume commitments in our commercial agreements with PBFX.
Treatment of PBFX for U.S. federal income tax purposes.
31
Risk Factors
You should carefully read the risks and uncertainties described below. The risks and uncertainties
described below are not the only ones facing our company. Additional risks and uncertainties may also impair
our business operations. If any of the following risks actually occur, our business, financial condition, results of
operations or cash flows would likely suffer. In that case, the trading price of PBF Energy Class A common
stock could fall.
Risks Related to the COVID-19 Pandemic
VV
pandemic significi
business,
y,tt
antly affected our liquidit
ii
The outbreak of the COVID-19
all
and resultsll of operations in 2020 and caused our market value to substanti
ii
yll decline,
i
financiali
do so thereafter. There can be no assurance that our liquidi
tyii
operations or the price of our shares willii
revert to pre-2020 levels once the impactm
cease.
ii
,yy business,
financial condition
and may continue to
of
pandemic
and resultsll
conditiontt
II
stt of COVID-19
ii
tt
ii
The outbreak of the COVID-19 pandemic and certain developments in the global oil markets negatively
impacted worldwide economic and commercial activity and financial markets, as well as global demand for
petroleum and petrochemical products in 2020 and is expected to continue in 2021. The COVID-19 pandemic
and related governmental responses resulted in significant business and operational disrurr ptiu
ons, including
business closures, supply chain disruptions, travel restrictions, stay-at-home orders and limitations on the
availability of workforces. Largely, as a result of decreased demand for our products, our business results and
cash flows were significantly adversely impacted by the COVID-19 pandemic. Specifically, PBF Energy’s
earnings and cash flow from operations decreased from $375.2 million and $933.5 million in 2019 to $(1,333.3)
million and $(631.6) million in 2020, respectively. We have also experienced a substantial decline in the price
of our shares of Class A common stock.
In addition, the impact of the COVID-19 pandemic has created simultaneous shocks in oil supply and
demand resulting in an economic challenge to our industry which has not occurred since our formation. We
expect the combination of significant demand reduction for our refined products and abnormal volatility in oil
commodity prices to continue for the foreseeable future. The duration of the impact of the COVID-19 pandemic
and these market developments is unknown. The continued negative impact of the COVID-19 pandemic and
these market developments on our business and operations will depend on the ongoing severity, location and
duration of the effects and spread of COVID-19, the effectiveness of the vaccine programs and the other actions
undertaken by national, regional and local governments and health officials to contain the virus or treat its
effeff cts, and how quickly and to what extent economic conditions improve and normal business and operating
conditions resume in 2021 or thereafter.
We continue to work with federal, state and local health authorities to respond to COVID-19 cases in the
regions we operate and are taking or supporting measures to try to limit the spread of the virus and to mitigate
the burden on the healthcare system. Many of these measures will continue to have an adverse impact on our
business and financial results that we are not currently able to fully quantify. For example, we are continuing to
phase back employees to their respective work locations and we are carefully evaluating projects at our
refineries and limiting or postponing projects and other non-essential work. Based on market conditions, our
refineries operated at reduced rates in 2020 and we expect them to continue to do so until market conditions
substantially improve. We significantly reduced our capita
al
al expenditures we believe
program for 2021 as compared to historic levels. We have planned a level of capita
will allow us to satisfy and comply with all required safety,t
al
commitments and other regulatory requirements, although there are no assurances that we will be able to
continue to do so. Non-compliance with applicablea
requirements, including as a result
of reduced staff due to an outbreak at one of our refineries, may impair our operations, may subject us to fines
or penalties assessed by governmental authorities and/or may result in an environmental or safetyt
incident. We
may also be subject to liability as a result of claims against us by impacted workers or third parties.
al expenditures in 2020 and have lowered our capita
environmental and planned regulatory capita
environmental and safetyt
32
The East Coast Refinff
ing Reconfiguration was announced on October 29, 2020 and completed on
December 31, 2020. It is expected to provide us with crude optionality and increased flexibility to respond to
a
evolving market conditions. Our East Coast Refining System throughput capac
ity is approximately 285,000
processing units. Annual operating
barrels per day, reflecff
and capita
al expenditures savings are expected to be approximately $100.0 million and $50.0 million,
respectively, relative to average historic levels. There is no certainty that we will be able to achieve these cost
savings measures as part of our new configuration.
ting the new configuration and idling of certain majora
The persistenii
raiseii
tt
additional
capita
altt
to meet our obligations
tt
VV
and operate our business.
to the COVID-19
ii
ce or worsening or market conditions relatedtt
pandemic may require us to
In 2020, low crude oil prices and deteriorating market conditions reduced our borrowing capac
ity under
PBF Holding’s asset-based revolving credit agreement (the “Revolving Credit Facility”) and our borrowing
capac
ity is expected to be similarly affected in 2021. Our borrowing base availability under the Revolving
a
Credit Facility was $2,759.2 million as of December 31, 2020. In 2020, we required additional capia tal and
issuances and approximately
raised approximately $1.8 billion through $1.3 billion of secured debt
were accompanied by payment and/or
Certain of these asset divestitures
$550.0 million of asset divestitures.
purchase obligations that will impact our liquidity in 2021 and beyond. If current market conditions persist or
al to meet these obligations as well as to operate our business, and
worsen, we may require additional capita
terms or at all. Broad economic factors
additional financing and/or assets sales may not be possible on favorablea
ially
resulting from the current COVID-19 pandemic,
reduced travel and reduced business and consumer spending, also affect our business.
including increasing unemployment rates, substant
u
a
t
t
Demand for our refined products has significi
2021.
antly declined and we expect reduced demand to continue
ii
into
Business closings and layoffs in the markets we operate has adversely affected demand for our refined
products. Sustained deterioration of general economic conditions or weak demand levels persisting in 2021
could require additional actions on our part to lower our operating costs, including temporarily or permanently
ceasing to operate units at our facilities, as occurred in 2020 in the case of the East Coast Refining
Reconfiguration. There may be significant incremental costs associated with such actions. Continued or further
deterioration of economic conditions may harm our liquidity and ability to repay our outstanding debt and the
trading price of PBF Energy’s Class A common stock, which has already significantly declined in 2020, could
decline further.
We recorded an impairme
tt
additional
ii
impaim rmen
m
t charges.
nt charge duringii
the year ended December 31, 2020 and may be required to record
We recorded impairment expense totaling $98.8 million for the year ended December 31, 2020,
associated with the write-down of certain assets as a result of the East Coast Refining Reconfiguration, other
refinery wide project abandonments and the write-down of certain PBFX long-lived assets. In addition, as a
result of the significant decrease in PBF Energy’s stock price in 2020, enduring throughput reductions across
our refineries and noticeable decrease in demand for our products, we determined that an impairment triggering
event had occurred. Therefore, we performed
an impairment assessment on certain long-lived assets as of
December 31, 2020. As a result of the impairment test, we determined that our long-lived assets were not
impaired when comparing the carrying
value of the long-lived assets to the estimated undiscounted future cash
flows expected to result from use of the assets over their remaining estimated useful life. If adverse market
conditions persist or there is further deterioration in the general economic environment due to the COVID-19
pandemic, there could be additional indicators that our assets are impaired requiring evaluation that may result
in future impairment charges to earnings. Any impairment could have a material adverse effect on our
Consolidated Financial Statements.
rr
ff
33
In addition, our results and financial condition may be adversely affected by federal or state laws,
regulations, orders, or other governmental or regulatory actions addressing the current COVID-19 pandemic or
the U.S. refining industry, which, if adopted, could result in direct or indirect restrictions to our business,
financial condition, results of operations and cash flow.
Furthermore, the current COVID-19 pandemic has caused disruption in the financial markets and the
businesses of financial instituti
ons. These factors have caused a slowdown in the decision-making of these
institutions, which may affect the timing on which we may obtain any additional funding. There can be no
assurance that we will be able to raise additional funds on terms acceptable to us, if at all.
t
The foregoing and other continued disruptions to our business as a result of the COVID-19 pandemic
could result in a material adverse effect on our business, result of operations, financial condition, cash flows and
our ability to service our indebtedness and other obligations. There can also be no assurance that our liquidity,
business, financial condition and results of operations will revert to pre-2020 levels once the impacts of
COVID-19 pandemic cease.
To the extent the COVID-19 pandemic continues to adversely affect our business, financial condition,
results of operations and liquidity, it may also have the effeff ct of heightening many of the other risks associated
with our company, our business and our industry, as those risk factors are amended or supplemented by reports
and documents we file with the SEC after the date of this Form 10-K.
Risks Relating to Our Business and Industry
The price volatiltt itll ytt of crude oil,ii other
may have a material adverse effect on our revenues, profitabi
feedstodd
tt
ii
liii tyii
,yy cash flows
ll
i
and liquidi
.yy
tyii
cks,kk blell ndstocks,s refined products and fuel and utilitll ytt services
t
Our revenues, profitability, cash flows and liquidity from operations depend primarily on the margin
above operating expenses (including the cost of refinery feedstocks, such as crude oil, intermediate partially
refined petroleum products, and natural
gas liquids that are processed and blended into refined products) at
which we are able to sell refined products. Refining is primarily a margin-based business and, to increase
profitability, it is important to maximize the yields of high value finished products while minimizing the costs
of feedstock and operating expenses. When the margin between refined product prices and crude oil and other
feedstock costs contracts, as occurred in 2020, our earnings, profitability and cash flows are negatively affecff
ted.
While the COVID-19 pandemic was the primary driver of the impact to our earnings, profitability and cash
flows in 2020, historically, refining margins have been volatile, and are likely to continue to be volatile, as a
result of a variety of factors, including fluctuations in the prices of crude oil, other feedstocks, refined products
and fuel and utility services. An increase or decrease in the price of crude oil will likely result in a similar
increase or decrease in prices for refined products; however, there may be a time lag in the realization, or no
such realization, of the similar increase or decrease in prices for refined products. The effect of changes in crude
oil prices on our refining margins therefore depends in part on how quickly and how fully refined product prices
adjust to reflect these changes.
Although we reduced our crude oil, feedstock and refined product inventories in 2020 to strengthen our
financial position in response to the COVID-19 pandemic, historically the nature of our business has required us
to maintain substantial crude oil, feedstock and refined product inventories. Because crude oil, feedstock and
refined products are commodities, we have no control over the changing market value of these inventories. Our
crude oil, feedstock and refined product inventories are valued at the lower of cost or market value under the
last-in-first-out (“LIFO”) inventory valuation methodology. If the market value of our crude oil, feedstock and
refined product inventory declines to an amount less than our LIFO cost, we would record a write-down of
inventory and a non-cash impact
to cost of products and other. For example, during the year ended
December 31, 2020, we recorded an adjustment to value our inventories to the lower of cost or market which
decreased income from operations and net income by $268.0 million and $196.7 million, respectively, reflecting
the net change in the LCM inventory reserve from $401.6 million at December 31, 2019 to $669.6 million at
December 31, 2020.
34
Prices of crude oil, other feedstocks, blendstocks, and refined products depend on numerous factors
beyond our control, including the supply of and demand for crude oil, other feedstocks, gasoline, diesel,
ethanol, asphalt and other refined products. Such supply and demand are affected by a variety of economic,
market, environmental and political conditions.
a
Our direct operating expense structuret
also impacts our profitability. Our majora
direct operating expenses
include employee and contract labor,
maintenance and energy. Our predominant variable direct operating cost is
energy, which is comprised primarily of fuel and other utility services. The volatility in costs of fuel, principally
natural
gas, and other utility services, principally electricity, used by our refineries and other operations affect
t
our operating costs. Fuel and utility prices have been, and will continue to be, affected by factors outside our
control, such as supply and demand for fuel and utility services in both local and regional markets. Natural gas
prices have historically been volatile and, typically, electricity prices fluctuate with natural
gas prices. Future
increases in fuel and utility prices may have a negative effect on our refining margins, profitability and cash
flows.
t
Our workingii
e
and refined
product demand.
ii
capital
,ll cash flowsw and liquidit
ytt can be signifgg
icaff
ii
ntlyll
impactedtt
by volati
liii tyii
ll
in commodityii
prices
Payment terms for our crude oil purchases are typically longer than those terms we extend to our
customers for sales of refined products. Additionally, reductions in crude oil purchases tend to lag demand
decreases for our refined products. As a result of this timing differential, the payabla es for our crude oil
purchases are generally proportionally larger than the receivables for our refined product sales. As we are
normally in a net payabla es position, a decrease in commodity prices generally results in a use of working
capita
t our working capia tal,
cash flows and liquidity, all of which were, and continue to be, adversely affected by the COVID-19 pandemic.
al. Given we process a significant volume of crude oil, the impact can materially affecff
Our profitabi
liii tyii
ii
is affected by crude oil differential
sll and relatedtt
tt
factors, which fluctuate substantial
.yy
lyll
tt
ff
A significant portion of our profitability is derived from the ability to purchase and process crude oil
feedstocks that historically have been less expensive than benchmark crude oils, such as the heavy, sour crude
oils processed at our Delaware City,t Paulsboro, Chalmette, Torrance and Martinez refineries. For our Toledo
refinery, aside from recent crude differential volatility, purchased crude prices have historically been slightly
above the WTI benchmark, however, such crude slate typically results in favorablea
refinery production yield.
als can vary significantly from quarter to quarter depending on overall
For all locations, these crude oil differenti
economic conditions and trends and conditions within the markets for crude oil and refined products. Any
change in these crude oil differenti
als may have an impact on our earnings. Our rail investment and strategy to
acquire cost advantaged Mid-Continent and Canadian crude, which are priced based on WTI, could be
adversely affected when the WTI/Dated Brent or related differentials narrow. A narrowing of the WTI/Dated
Brent differential may result in our Toledo refinery losing a portion of its crude oil price advantage over certain
of our competitors, which negatively impacts our profitability. In addition, efforts in Canada to control the
ity to export crude may continue to result in price volatility and the
imbalance between its production and capac
narrowing of the WTI/WCS differenti
between light U.S. and heavy
Canadian crude oil, and may reduce our refining margins and adversely affect our profitability and earnings.
of changes to these crude differentials in
Divergent views have been expressed as to the expected magnitude
future periods. Any continued or further narrowing of these differenti
als could have a material adverse effect on
our business and profitability.
a
al, which is a proxy for the difference
ff
ff
ff
ff
t
Additionally, governmental and regulatory actions, including continued resolutions by the Organization
of the Petroleum Exporting Countries to restrict crude oil production levels and executive actions by the current
U.S. presidential administration to advance certain energy infrastructuret
projects such as the Keystone XL
pipeline, may continue to impact crude oil prices and crude oil differentials. Any increase in crude oil prices or
unfavorablea movements in crude oil differentials due to such actions or changing regulatory environment may
negatively impact our ability to acquire crude oil at economical prices and could have a material adverse effect
on our business and profitability.
35
ruptiontt
cant intertt
or other faciliii tiii es could reduce our production, particularly
A signifi
i
pipelines
ii
Failur
ii
and adversely affect our future cash flows,s operatingtt
ll
e by one or more insurers to honor itstt coverage commitmett
loss at any of our refine
or casualtytt
e
ries and relatell
d assets or logisti
,s
cs terminals
if not fullyll covered by our insurance.
iallyll
nts for an insured event could matertt
ii
ii
results and financial conditiii on.
t
Our business currently consists of owning and operating six refineries and related assets, as well as
logistics terminals, pipelines and other facilities. As a result, our operations could be subject to significant
interruption if any of our refineries or other facilities were to experience a majoa r accident, be damaged by
disaster, or otherwise be forced to shut down or curtail production due to
severe weather or other natural
unforeseen events, such as acts of God, nature,
orders of governmental authorities, supply chain disruptions
impacting our crude rail facilities or other logistics assets, power outages, acts of terrorism, fires, toxic
emissions and maritime hazards. Any such shutdown or disruption would reduce the production from that
refinery. There is also risk of mechanical failure and equipment shutdowns both in general and following
unforeseen events. Further, in such situations, undamaged refinery processing units may be dependent on or
interact with damaged sections of our refineries and, accordingly, are also subject to being shut down. In the
event any of our refineries is forced to shut down for a significant period of time, it would have a material
adverse effecff
t on our earnings, our other results of operations and our financial condition as a whole.
t
As protection against these hazards, we maintain insurance coverage against some, but not all, such
potential losses and liabilities, including claims against us by third parties relating to our operations and
products. We may not be able to maintain or obtain insurance of the type and amount we desire at reasonable
rates. As a result of market conditions, premiums and deductibles for certain of our insurance policies may
increase substant
ially. In some instances, certain insurance could become unavailable or available only for
reduced amounts of coverage. For example, coverage for hurricane damage can be limited, and coverage for
terrorism risks can include broad exclusions. If we were to incur a significant liability for which we were not
fully insured, it could have a material adverse effecff
t on our financial position.
u
Our insurance program includes a number of insurance carriers. Significant disrupti
t
ons in financial
markets could lead to a deterioration in the financial condition of many financial instituti
ons, including
insurance companies and, therefore, we may not be able to obtain the full amount of our insurance coverage for
insured events. Even where we have insurance in place, there can be no assurance that the carriers will honor
their obligations under the policies.
r
Our refineries are subject to interruptions
and railroads for transportati
tt
tt
on of crude oil and refined
e
products.
of supplyll and distribution as a resultll of our reliance
ii
on pipelines
ii
Our Toledo, Chalmette, Torrance and Martinez refineries receive a significant portion of their crude oil
through our owned, as well as third party, pipelines. These pipelines include the Enbridge system, Capline and
Mid-Valley pipelines for supplying crude to our Toledo refinery, the MOEM Pipeline (which is owned by our
subsidiary) and CAM Pipeline for supplying crude to our Chalmette refinery and the San Joaquin Pipeline, San
Pablo Bay Pipeline, San Ardo and Coastal Pipeline systems for supplying crude to our Torrance and Martinez
refineries. Additionally, our Toledo, Chalmette, Torrance and Martinez refineries deliver a significant portion of
the refined products through pipelines. These pipelines include pipelines such as the Sunoco Logistics Partners
L.P. and Buckeye Partners L.P. pipelines at Toledo, the Collins pipeline (which is owned by our subsidiary) at
our Chalmette refinery, the Jet Pipeline to the Los Angeles International Airport, the Product Pipeline to Vernon
and the Product Pipeline to Atwood at our Torrance refinery and the KinderMorgan SFPP North Pipeline at our
Martinez refinery. We could experience an interruption of supply or delivery, or an increased cost of receiving
crude oil and delivering refined products to market, if the ability of these pipelines to transport crude oil or
refined products is disrupted because of accidents, weather interruptions, governmental regulation, terrorism,
other third-party action or casualtyt or other events.
36
The Delaware City rail unloading facilities and the East Coast Storage Assets, allow our East Coast
Refining System to source WTI-based crudes from Western Canada and the Mid-Continent, which may provide
significant cost advantages versus traditional Brent-based international crudes in certain market environments.
Any disruptions or restrictions to our supply of crude by rail due to problems with third-party logistics
infrastructuret
or operations or as a result of increased regulations, could increase our crude costs and negatively
impact our results of operations and cash flows.
In addition, due to the common carrier regulatory obligation applicable to interstate oil pipelines,
ity.
capac
ity allocation among shippers can become contentious in the event demand is in excess of capac
a
Therefore, nominations by new shippers or increased nominations by existing shippers may reduce the capac
ity
available to us. Any prolonged interruption in the operation or curtailment of available capac
ity of the pipelines
that we rely upon for transportation of crude oil and refined products could have a further material adverse
effect on our business, financial condition, results of operations and cash flows.
a
a
a
lationtt
Regue
and couldll have a material adverse effect on our resultsll of operations and financial condition.
of emissions of greenhouse gases could force us to incur increased capital
and operatingii
tt
ii
costs
Both houses of Congress have actively considered legislation to reduce emissions of GHGs, such as
carbon dioxide and methane, including proposals to: (i) establia
sh a capa and trade system, (ii) create a federal
renewable energy or “clean” energy standard requiring electric utilities to provide a certain percentage of power
from such sources, and (iii) create enhanced incentives for use of renewable energy and increased efficiency in
energy supply and use. In addition, EPA is taking steps to regulate GHGs under the existing federal CAA. EPA
has already adopted regulations limiting emissions of GHGs from motor vehicles, addressing the permitting of
GHG emissions from stationary sources, and requiring the reporting of GHG emissions from specified large
GHG emission sources, including refineries. These and similar regulations could require us to incur costs to
monitor and report GHG emissions or reduce emissions of GHGs associated with our operations. In addition,
various states, individually as well as in some cases on a regional basis, have taken steps to control GHG
emissions, including adoption of GHG reporting requirements, capa and trade systems and renewable portfolio
standards (such as AB32). On Sep
dorder
requiringring zero-
i
effectiivelyly b
emiissiion medidium to hhea yvy dutyduty
requires state
gage
rging i finfrastructure. It is not possible at this time to predict
the ultimate form, timing or extent of federal or state regulation. In addition, it is currently uncertain how the
current presidential administration or future administrations will address GHG emissions. In the event we do
incur increased costs as a result of increased efforts to control GHG emissions, we may not be able to pass on
any of these costs to our customers. Regulatory requirements also could adversely affect demand for the refined
petroleum products that we produce. Any increased costs or reduced demand could materially and adversely
affect our business and results of operations.
b
banni gng hthe salle of new ggasoliline-powe dred passe gnger cars
i
dand truckks byby 2035
hThe exec iutive
hivehi lcles byby 2045 everywhe
hivehi lcle hcharging
tember 23, 2020 hthe Governor of Calilif
fornia iissuedd an executiive
incies to b ilbuildd out
rywhere fea ibl
dand
dorder
suffi icient
lelectriic
sible.
ffi
i
i
ff
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. For example, in September
2016, the state of California
enacted Senate Bill 32 which further reduces greenhouse gas emissions targets to
40 percent below 1990 levels by 2030. Two regulations implemented to achieve these goals are Cap-a and-Trade
and the Low Carbon Fuel Standard (“LCFS”). In 2012, CARB implemented Cap-and-Trade. This program
currently places a capa on GHGs and we are required to acquire a sufficient number of credits to cover emissions
from our refineries and our in-state sales of gasoline and diesel. In 2009, CARB adopted the LCFS, which
required a 10% reduction in the carbon intensityt of gasoline and diesel by 2020. In 2018, CARB amended the
LCFS to require a 20% reduction by 2030. Compliance is achieved through blending lower carbon intensityt
biofuels into gasoline and diesel or by purchasing credits. Compliance with each of these programs is facilitated
through a market-based credit system. If sufficient credits are unavailable for purchase or we are unable to pass
through costs to our customers, we have to pay a higher price for credits or if we are otherwise unable to meet
our compliance obligations, our financial condition and results of operations could be adversely affected.
37
ff
On September 23, 2020, the California
Governor issued Executive Order N-79-20 (“N-79-20 Order”)
intended to further reduce GHGs within the state. The N-79-20 Order sets a 2035 goal of no sale of internal
combustion engines for passenger cars and pickup trucks within California, and a 2045 goal of no sale of
internal combustion engine medium- and heavy-duty trucks, and off-road vehicles and equipment. However, the
N-79-20 Order would still allow used internal combustion engine vehicles to be used and sold after these dates.
The N-79-20 Order encourages zero emissions technologies such as electric vehicles, and accelerated
deployment of affordablea
fueling and charging options. It is currently uncertain how the N-79-20 Order may be
ultimately implemented by various California regulatory agencies. In the event we do incur increased costs as a
result of increased efforts to control GHG emissions through future adopted regulatory requirements, we may
not be able to pass these costs to our customers. These future regulatory requirements also could adversely
affect demand for the refined petroleum products that we produce. Any increased costs or reduced demand
could materially and adversely affect our business and results of operations.
We may not be able to successfullyll
realizeii
the anticipate
ii
d benefitsii of this acquisition.
tt
integrate the recentlyll acquired Martinez
tt
ii
refie nery
intott our business,
ii
or
The integration of the recently acquired Martinez refinery into our operations has been impacted by the
COVID-19 pandemic and may continue to be a complex and time-consuming process that may not be
successful. Even if we successfully integrate this business into our operations, there can be no assurance that we
will realize the anticipated benefits and operating synergies. Our estimates regarding the earnings, operating
al expenditures and liabilities resulting from this acquisition may prove to be incorrect. This
cash flow, capita
acquisition involves risks, including:
•
•
•
•
•
u
es, customers and suppli
ers of the acquired operations;
unexpected losses of key employe
m
challenges in managing the increased scope, geographic
diversion of management time and attention from our existing business;
liability for known or unknown environmental conditions or other contingent liabilities and greater
than anticipated expenditures
required for compliance with environmental, safetyt or other regulatory
standards or for investments to improve
the incurrence of additional indebtedness to finance acquisitions or capita
acquired assets.
diversity and complexity of our operations;
al expenditures relating to
operating results; and
m
a
t
In connection with the Martinez Acquisition, we did not have access to the type of historical financial
information that we may require regarding the prior operation of the refinery. As a result, it may be difficult for
investors to evaluate the probable impact of this acquisition on our financial performance until we have operated
the acquired refinery for a substantial period of time.
A cyber-attacktt
have a material adverse effect on our financial condition,
on, or other failure of, our technology
tt
infrastruc
ture could affect our business
resultsll of operations and cash flows.
ll
tt
ii
and assets, and
technology infrastructuret
We are becoming increasingly dependent on our
and certain critical
information systems which process, transmit and store electronic information, including information we use to
safely and effectively operate our respective assets and businesses. These information systems include data
network and telecommunications, internet access, our websites, and various computer hardware equipment and
software applications, including those that are critical to the safe operation of our refineries and logistics assets.
We have invested, and expect to continue to invest, significant time, manpower and capita
al in our technology
and information systems. These information systems are subject to damage or interruption from a
infrastructuret
disasters, software viruses or other malware, power failures,
number of potential sources including natural
cybersecurity threats to gain unauthorized access to sensitive information, cyber-attacks, which may render data
systems unusable, and physical threats to the security of our facilities and infrastructure.
Additionally, our
business is highly dependent on financial, accounting and other data processing systems and other
communications and information systems, including our enterprise resource planning tools. We process a large
number of transactions on a daily basis and rely upon the proper functioning of computer systems. Furthermore,
we rely on information systems across our respective operations, including the management of supply chain and
t
t
38
various other processes and transactions. As a result, a disruption on any information systems at our refineries
or logistics assets, may cause disruptions to our collective operations.
The potential for such security threats or system failures has subjected our operations to increased risks
that could have a material adverse effect on our business. To the extent that these information systems are under
our control, we have implemented measures such as virus protection software, emergency recovery processes
and a formal disaster recovery plan to address the outlined risks. However, security measures for information
systems cannot be guaranteed to be failsafe, and our formal disaster recovery plan and other implemented
measures may not prevent delays or other complications that could arise from an information systems failure. If
a key system were hacked or otherwise interfered with by an unauthorized user, or were to fail or experience
unscheduled downtime for any reason, even if only for a short period, or any compromise of our data security or
our inabila
impact the
ity to use or access these information systems at critical points in time, it could unfavorablya
timely and efficient operation of our business, damage our reputation and subject us to additional costs and
liabilities. The implementation of social distancing measures and other limitations on our workforce in response
to the COVID-19 pandemic have necessitated portions of our workforce switching to remote work
arrangements. The increase in companies and individuals working remotely has increased the frequency and
scope of cyber-attacks and the risk of potential cybersecurity incidents, both deliberate attacks and unintentional
events. While, to date, we have not had a significant cybersecurity breach or attack that had a material impact on
our business or results of operations, if we were to be subjeu
ct to a material successful cyber intrusion, it could
result in remediation or service restoration costs, increased cyber protection costs, lost revenues, litigation or
regulatory actions by governmental authorities, increased insurance premiums, reputational damage and damage
to our competitiveness, financial condition, results of operations and cash flows.
Cyber-attacks against us or others in our industry could result in additional regulations, and U.S.
government warnings have indicated that infrastructuret
assets, including pipelines, may be specifically targeted
by certain groups. These attacks include, without limitation, malicious software, ransomware, attempts to gain
unauthorized access to data, and other electronic security breaches. These attacks may be perpetrated by state-
sponsored groups, “hacktivists”, criminal organizations or private individuals
(including employee
malfeasance). Current efforts by the federal government, such as the Strengthening the Cybersecurity of Federal
Networks and Critical Infrastructure executive order, and any potential future regulations could lead to
increased regulatory compliance costs, insurance coverage cost or capita
al expenditures. We cannot predict the
potential impact to our business or the energy industry resulting from additional regulations.
Further, our business interruption insurance may not compensate us adequately for losses that may occur.
We do not carry insurance specifically for cybersecurity events; however, certain of our insurance policies may
allow for coverage for a cyber-event resulting in ensuing property damage from an otherwise insured peril. If
we were to incur a significant liability for which we were not fully insured, it could have a material adverse
effect on our financial position, results of operations and cash flows. In addition, the proceeds of any such
insurance may not be paid in a timely manner and may be insufficient if such an event were to occur.
39
Our hedging activitiii es may limi
tii our potentiali
ii
ii
gains,
exacerbate potentiali
losses and involvell
tt
other
risks.
t
We may enter into commodity derivatives contracts to hedge our crude price risk or crack spread risk
with respect to a portion of our expected gasoline and distillate production on a rolling basis or to hedge our
gas, which is a significant component of our refinery operating expenses.
exposure to the price of natural
Consistent with that policy we may hedge some percentage of our future crude and natural
We may
enter into hedging arrangements with the intent to secure a minimum fixed cash flow stream on the volume of
products hedged during the hedge term and to protect against volatility in commodity prices. Our hedging
arrangements may fail to fully achieve these objectives for a variety of reasons, including our failure to have
adequate hedging arrangements, if any, in effect at any particular time and the failure of our hedging
arrangements to produce the anticipated results. We may not be able to procure adequate hedging arrangements
due to a variety of factors. Moreover, such transactions may limit our ability to benefit from favorablea
changes
gas prices. In addition, our hedging activities may expose us to the risk
t
in crude oil, refinff ed product and natural
of financial loss in certain circumstances, including instances in which:
u
gas supply.
t
•
•
•
•
•
t
gas or production of the applicablea
interruptions in feedstock transportation,
the volumes of our actual use of crude oil or natural
is less than the volumes subject to the hedging arrangement;
inclement weather or other events cause
accidents,
unscheduled shutdowns or otherwise adversely affect our refineries, or those of our suppliers or
customers;
changes in commodity prices have a material impact on collateral and margin requirements under our
hedging arrangements, resulting in us being subject to margin calls;
the counterparties to our derivative contracts fail to perform under the contracts; or
a sudden, unexpected event materially impacts the commodity or crack spread subject to the hedging
arrangement.
refined products
As a result, the effectiveness of our hedging strategy could have a material impact on our financial
results. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.”
In addition, these hedging activities involve basis risk. Basis risk in a hedging arrangement occurs when
the price of the commodity we hedge is more or less variable than the index upon which the hedged commodity
is based, thereby making the hedge less effective. For example, a NYMEX index used for hedging certain
volumes of our crude oil or refined products may have more or less variability than the actual cost or price we
realize for such crude oil or refined products. We may not hedge all the basis risk inherent in our hedging
arrangements and derivative contracts.
We may have capital
not be adequate.
ii
needs forff which our internallyll
generated cash flowsw and other sources of liquidit
ytt may
ii
Our cash flow from operations decreased from $933.5 million in 2019 to a loss of $631.6 million in
2020. If our cash flow from operations does not improve in 2021 or we cannot otherwise secure sufficient
liquidity to support our short-term and long-term capia tal requirements, we may not be able to meet our payment
obligations or our future debt obligations, comply with certain deadlines related to environmental regulations
and standards, or pursue our business strategies, including acquisitions, in which case our operations may not
perform as we currently expect. We have substant
al needs and may have substantial long-
term capita
al needs are primarily related to financing certain of our crude
oil and refined products inventory not covered by our various supply and Inventory Intermediation Agreements.
al needs. Our short-term working capita
ial short-term capita
u
u
If we cannot adequately handle our crude oil and feedstock requirements or if we are required to obtain
our crude oil supply
at our other refineries without the benefit of the existing supply arrangements or the
applicable counterparty defaults in its obligations, our crude oil pricing costs may increase as the number of
days between when we pay for the crude oil and when the crude oil is delivered to us increases. Termination of
our Inventory Intermediation Agreements with J. Aron, which are currently scheduled to expire in 2021, would
require us to finance the J. Aron Products covered by the agreements, which financing may not be available at
40
terms that are as favorable or at all. We are obligated to repurchase from J. Aron all volumes of the J. Aron
Products upon expiration or earlier termination of these agreements, which may have a material adverse impact
al and financial condition. Further, if we are not able to market and sell our
on our liquidity, working capita
ct to delays in the collection of our accounts
finished products to credit worthy customers, we may be subjeu
receivable and exposure to additional credit risk. Such increased exposure could negatively impact our liquidity
al needs as a result of the increase in the amount of crude oil inventory and
due to our increased working capita
accounts receivable we would have to carry on our balance sheet. Our long-term needs forff
cash include those to
al expenditures for equipment
repay our indebtedness and other contractual obligations, support ongoing capita
maintenance and upgrades, including during turnarounds at our refineries, and to complete our routine and
normally scheduled maintenance, regulatory and security expenditures.
In addition, from time to time, we are required to spend significant amounts for repairs when one or more
al to upgrade
processing units experiences temporary shutdowns. We continue to utilize significant capita
equipment, improve facilities, and reduce operational, safetyt and environmental risks. In connection with the
Paulsboro and Torrance acquisitions, we assumed certain significant environmental obligations, and may
similarly do so in future acquisitions. We will likely incur substantial compliance costs in connection with new
regulations. See “Item 7. Management’s Discussion and Analysis
or changing environmental, health and safetyt
of Financial Condition and Results of Operations.” Our liquidity and financial condition will affect our ability to
satisfy any and all of these needs or obligations.
We may not be able to obtainii
the credit and capitaltt markets. This may hinder or prevent us from meetingtt
on acceptable
fundingii
terms or at all because of volati
ll
our future capital
and uncertaintyii
ii
needs.
liii tyii
tt
in
In the past, global financial markets and economic conditions have been, and may again be, subject to
disruption and volatile due to a variety of factors, including uncertainty in the financial services sector, low
consumer confidence, falling commodity prices, geopolitical issues and generally weak economic conditions. In
addition, the fixed income markets have experienced periods of extreme volatility that have negatively impacted
market liquidity conditions, including as a result of the impact of the COVID-19 pandemic. As a result, the cost
of raising money in the debt and equity capita
ity
ity of
of funds from those markets diminished significantly. In particular, as a result of concerns about the stabila
financial markets generally, which may be subject to unforeseen disruptions, the cost of obtaining money from
the credit markets may increase as many lenders and institutional investors increase interest rates, enact tighter
lending standards, refuse to refinance existing debt on similar terms or at all and reduce or, in some cases, cease
to provide funding to borrowers. Due to these factors, we cannot be certain that new debt or equity financing
will be available on acceptablea
only on
unfavorablea
terms. If funding is not available when needed, or is availablea
al markets has increased substantially at times while the availabila
to meet our obligations as they come due.
terms, we may be unablea
PPBF Energygyr
eablell
forese bl
fore
fufuture.
hhas suspe d dnded iitstt quartertt
lyly didiviid
dend
d
dand ddoes not
ii
ianti icipate
hthat iit
iwilllliii ddecllare didividide dnds iin hthe
On March 30, 2020, PBF Energy announced that it has suspended its quarterly cash dividend of $0.30
per share on its Class A common stock, as part of its strategic plan to respond to the impact of the COVID-19
outbreak and related market activity. PBF Energy is not obligated under any applicable laws, its governing
documents or any contractual agreements with its existing and prior owners or otherwise to declare or pay any
dividends or other distributions (other than the obligations of PBF LLC to make tax distributions to its
members). Any future declaration, amount and payment of any dividends will be at the sole discretion of our
board of directors, however, because the impact of the COVID-19 outbreak and related market activity is
difficult to predict, we do not anticipate that our board of directors will determine to declare a dividend in the
foreseeable future. Our board of directors may take into account, among other things, general economic
conditions, our financial condition and operating results, our available cash and current and anticipated cash
al requirements, plans for expansion, including acquisitions, tax, legal, regulatory and contractual
needs, capita
restrictions and implications, including under our subsidiaries’ outstanding debt documents, and such other
factors as our board of directors may deem relevant in determining whether to declare or pay any dividend.
41
Because PBF Energy is a holding company with no material assets (other than the equity interests of its direct
subsidiary), its cash flow and ability to pay dividends is dependent upon the financial results and cash flows of
its indirect subsidiaries PBF Holding and PBFX and their respective operating subsidiaries and the distribution
or other payment of cash to it in the form of dividends or otherwise. The direct and indirect subsidiaries of PBF
Energy are separate and distinct legal entities and have no obligation to make any funds available to it other
than in the case of certain intercompany transactions. As a result, if PBF Energy does not declare or pay
dividends you may not receive any returnt
on an investment in PBF Energy Class A common stock unless you
sell PBF Energy Class A common stock for a price greater than that which you paid for it.
Our resultsll
mandatedd
of operations continue
ii
s. The market prices for RINsNN have been volati
to be impactm
edtt
ll
to complym
by significff ant coststt
ii
leii and may harm our profitabi
with renewable fuels
.yy
liii tyii
Pursuant to the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, EPA
has issued the Renewable Fuel Standard, implementing mandates to blend renewable fuels into the petroleum
fuels produced and sold in the United States. Under the Renewable Fuel Standard, the volume of renewable
fuels that obligated refineries must blend into their finished petroleum fuels increases annually over time until
2022. In addition, certain states have passed legislation that requires minimum biodiesel blending in finished
distillates. On October 13, 2010, EPA raised the maximum amount of ethanol allowed under federal law fromff
10% to 15% for cars and light trucks manufactured since 2007. The maximum amount allowed under federal
law currently remains at 10% ethanol for all other vehicles. Existing laws and regulations could change, and the
minimum volumes of renewable fuels that must be blended with refined petroleum fuels may increase. Because
we do not produce renewable fuels, increasing the volume of renewable fuels that must be blended into our
products displaces an increasing volume of our refinery’s product pool, potentially resulting in lower earnings
and profitability. In addition, in order to meet certain of these and future EPA requirements, we may be required
to purchase RINs, which may have fluctuating costs based on market conditions. The price of RINS has
increased in 2020 and could increase further in 2021. We incurred approximately $326.4 million in RINs costs
during the year ended December 31, 2020 as compared to $122.7 million and $143.9 million during the years
ended December 31, 2019 and 2018, respectively. The fluctuations in our RINs costs are due primarily to
volatility in prices for ethanol-linked RINs and increases in our production of on-road transportation fuels since
2012. Our RINs purchase obligation is dependent on our actual shipment of on-road transportation fuels
domestically and the amount of blending achieved which can cause variability in our profitability.
Compem titiii on from companies who have not been adversely impactm
II
COVID-19
fuels or have greater financial and other resources than we do could material
ii
business
pandemic, produce theirii own supplyll of fee
and resultsll of operations.
dstocks,s have extensi
edtt
tt
ff
as much as we have been by the
ve retail outlets, make alterll native
and adversely affect our
tt
lyll
Our refining operations compete with domestic refiners and marketers in regions of the United States in
which we operate, as well as with domestic refiners in other regions and foreign refiners that import products
into the United States. In addition, we compete with other refiners, producers and marketers in other industries
that supply their own renewable fuels or alternative forms of energy and fuels to satisfy the requirements of our
industrial, commercial and individual consumers. Many of our competitors have not been adversely impacted
by the COVID-19 pandemic as much as we have been impacted. Certain of our competitors have larger and
more complex refineries, and may be able to realize lower per-barrel costs or higher margins per barrel of
throughput. Several of our principal competitors are integrated national or international oil companies that are
larger and have substantially greater resources than we do and access to proprietary sources of controlled crude
oil production. Unlike these competitors, we obtain substantially all of our feedstocks from unaffiliated sources.
We are not engaged in the petroleum exploration and production business and therefore do not produce any of
our crude oil feedstocks. We do not have a retail business and therefore are dependent upon others for outlets
for our refined products. Because of their integrated operations and larger capita
alization, these companies may
be more flexible in responding to volatile industry or market conditions, such as shortages of crude oil supply
and other feedstocks or intense price fluctuations and they may also be able to obtain more favorable trade
credit terms.
u
42
Newer or upgraded refineries will often be more efficient than our refineries, which may put us at a
competitive disadvantage. We have taken significant measures to maintain our refineries including the
installation of new equipment and redesigning older equipment to improve our operations. However, these
actions involve significant uncertainties, since upgraded equipment may not perform at expected throughput
levels, the yield and product quality of new equipment may differff
design specifications and modifications
may be needed to correct equipment that does not perform as expected. Any of these risks associated with new
equipment, redesigned older equipment or repaired equipment could lead to lower revenues or higher costs or
otherwise have an adverse effect on future results of operations and financial condition. Over time, our
refineries or certain refinery units may become obsolete, or be unable to compete, because of the construction of
new, more efficient facilities by our competitors.
fromff
A portion of our workforce is unionized, and we may face labor disruptions
operations.
tt
that wouldll
interfere with our
Most hourly employees at our refineries are covered by collective bargaining agreements through the
USW, the IOW and the IBEW. These agreements are scheduled to expire on various dates in 2021 and 2022
(See “Item 1. Business” - Employees). Future negotiations prior to the expiration of our collective agreements
may result in labor
unrest for which a strike or work stoppage is possible. Strikes and/or work stoppages could
negatively affect our operational and financial results and may increase operating expenses at the refineries.
a
tt
Any politiii cal instabil
policy,yy or other catastrophic events could have a material
tt
operations and financial condition.
itll y,tt miliii tary
tt
sustained
ii
miliii tary
ii
strikes,
ii
tt
campaigns,
m
terroristii
activtt
adverse effect on our business,
ii
ity,yy changes in foreigni
of
resultsll
Any political instabila
ity, military strikes, sustained military campaigns, terrorist activity, changes in
foreign policy in areas or regions of the world where we acquire crude oil and other raw materials or sell our
refined petroleum products may affect our business in unpredictable ways, including forcing us to increase
security measures and causing disruptions of supplies and distribution markets. We may also be subjeu
ct to
United States trade and economic sanctions laws, which change frequently as a result of foreign policy
developments, and which may necessitate changes to our crude oil acquisition activities. Further, like other
industrial companies, our facilities may be the target of terrorist activities or subject to catastrophic events such
disasters and pandemic illness. Any act of war, terrorism, or other catastrophic events that resulted in
as natural
t
damage to, or otherwise disrupts
the operating activities of, any of our refineries or third-party facilities upon
which we are dependent for our business operations could have a material adverse effect on our business, results
of operations and financial condition.
r
tt
We must make substantial
efficiency.yy If we are unablell
projects at their expecxx
if the market conditions assumed in our project economics deterior
operations or cash flows could be materiallyll and adversely affected.
capitaltt
to complem te capitaltt
expenditures on our operatingii
tt
faciliii tiii es to maintain
ii
ted costs and/or in a timely
ate,e our financial condition, resultsll
their reliabilitll ytt and
manner, or
of
ii
Delays or cost increases related to capita
al spending programs involving engineering, procurement and
construction of new facilities (or improvements and repairs to our existing facilities and equipment, including
and operating results.
turnarounds) could adversely affect our ability to achieve targeted internal rates of returnt
Such delays or cost increases may arise as a result of unpredictable factors in the marketplat
ce, many of which
are beyond our control, including:
•
•
•
•
ons in transportation of modular components and/or construction materials;
denial or delay in obtaining regulatory approvals and/or permits;
unplanned increases in the cost of construction materials or labor;
disrupti
r
severe adverse weather conditions, natural
t
explosions, fires or spills) affecting our facilities, or those of vendors and suppli
shortages of sufficiently skilled labor,
•
• market-related increases in a project’s debt or equity financing costs; and/or
a
or labor
u
a
a
ers;
disasters or other events (such as equipment malfunct
ff
ions,
disagreements resulting in unplanned work stoppages;
43
•
non-performance or force majeua
contractors involved with a project.
re by, or disputes with, vendors, suppliers, contractors or sub-
Our refineries contain many processing units, a number of which have been in operation for many years.
Equipment, even if properly maintained, may require significant capia tal expenditures and expenses to keep it
operating at optimum efficiency. One or more of the units may require unscheduled downtime for unanticipated
maintenance or repairs that are more frequent than our scheduled turnarounds for such units. Scheduled and
unscheduled maintenance could reduce our revenues during the period of time that the units are not operating.
Our forecasted internal rates of returnt
are also based upon our projections of future market fundamentals,
which are not within our control, including changes in general economic conditions, impact of new regulations,
available alternative supply and customer demand. Any one or more of these factors could have a significant
impact on our business. If we were unable to make up the delays associated with such factors or to recover the
related costs, or if market conditions change, it could materially and adversely affect our financial position,
results of operations or cash flows.
ii
Our business
withii
us to maintain
us. Furthermore, a shortage
.yy
labor productivityii
tt
ii
may suffer if any of our senior executives or other key emplm oyll
of skilledll
labor or disruptions
tt
ees discoii
in our labor force may make it diffi
es employm
icuff
ntinutt
ment
lt foff r
Our future success depends to a large extent on the services of our senior executives and other key
employees. Our business depends on our continuing ability to recruit,
train and retain highly qualified
employees in all areas of our operations, including engineering, accounting, business operations, finance and
other key back-office and mid-office personnel. Furthermore, our operations require skilled and experienced
employees with proficiency in multiple tasks. The competition for these employees is intense, and the loss of
these executives or employees could harm our business. If any of these executives or other key personnel
resigns or becomes unable to continue in his or her present role and is not adequately replaced, our business
operations could be materially adversely affecff
ted.
Our commoditytt derivativtt e activitiii es could result in period-to-period earnings
rr
volatiltt itll y.tt
We do not currently apply hedge accounting to any of our commodity derivative contracts and, as a
result, unrealized gains and losses will be charged to our earnings based on the increase or decrease in the
market value of such unsettled positions. These gains and losses may be reflected in our income statement in
periods that differ from when the settlement of the underlying hedged items are reflected in our income
statement. Such derivative gains or losses in earnings may produce significant period-to-period earnings
volatility that is not necessarily reflective of our underlying operational performance.
We may incur signific
healthtt and safety regulati
itll ytt under, or coststt and capita
ii
ant liabil
ons, which are complem xee and change frequently.yy
ll
xx
expendit
altt
i
ures to complym with,tt
environmental and
Our operations are subject to federal, state and local laws regulating, among other things, the use and/or
the emission and discharge of materials into the
handling of petroleum and other regulated materials,
environment, waste management, and remediation of discharges of petroleum and petroleum products,
characteristics and composition of gasoline and distillates and other matters otherwise relating to the protection
of the environment and the health and safetyt of the surrounding community. Our operations are also subjeu
ct to
extensive laws and regulations relating to occupational health and safety.t
We cannot predict what additional environmental, health and safetyt
legislation or regulations may be
adopted in the future, or how existing or future laws or regulations may be administered or interpreted with
respect to our operations. Many of these laws and regulations have become increasingly stringent over time, and
the cost of compliance with these requirements can be expected to increase over time.
44
Certain environmental laws impose strict, and in certain circumstances, joint and several, liability for
costs of investigation and cleanup of spills, discharges or releases on owners and operators of, as well as
persons who arrange for treatment or disposal of regulated materials at, contaminated sites. Under these laws,
we may incur liability or be required to pay penalties for past contamination, and third parties may assert claims
against us for damages allegedly arising out of any past or future contamination. The potential penalties and
clean-up costs for past or future spills, discharges or releases, the failure of prior owners of our facilities to
complete their clean-up obligations, the liabia lity to third parties for damage to their property, or the need to
address newly-discovered information or conditions that may require a response could be significant, and the
payment of these amounts could have a material adverse effect on our business, financial condition, cash flows
and results of operations.
Environi mental clean-up and remediationtt
net cash flow, reduce our resultsll of operations and impaim rii our financial condition.
coststt of our sites and environmii
ental litigii
tt
ation could decrease our
We are subject to liability for the investigation and clean-up of environmental contamination at each of the
properties that we own or operate and at off-site locations where we arrange for the treatment or disposal of
regulated materials. We may become involved in litigation or other proceedings related to the foregoing. If we
were to be held responsible for damages in any such litigation or proceedings, such costs may not be covered by
insurance and may be material. Historical soil and groundwater contamination has been identified at our
refineries. Currently, remediation projects for such contamination are underway in accordance with regulatory
requirements at our refineries. In connection with the acquisitions of certain of our refineries and logistics
assets, the prior owners have retained certain liabilities or indemnified us for certain liabilities, including those
relating to pre-acquisition soil and groundwater conditions, and in some instances we have assumed certain
liabilities and environmental obligations, including certain existing and potential remediation obligations. If the
prior owners fail to satisfy their obligations for any reason, or if significant liabilities arise in the areas in which
we assumed liability, we may become responsible for remediation expenses and other environmental liabilities,
which could have a material adverse effeff ct on our business, financial condition, results of operations and cash
flow. As a result,
al expenditures or incurring other costs to comply with
environmental laws, we also may be liable for significant environmental litigation or for investigation and
remediation costs and other liabilities arising from the ownership or operation of these assets by prior owners,
which could materially adversely affect our business, financial condition, results of operations and cash flow.
See “Item 1. Business—Environmental, Health and Safetyt Matters” and “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Contractual
Obligations and Commitments”.
in addition to making capita
t
We may also face liability arising from current or future claims alleging personal injury or property
damage due to exposure to chemicals or other regulated materials, such as various perfluorinated compounds,
including perfluorooctanoate, perfluorooctane sulfonate, perfluorohexane sulfonate, or other per-and
polyfluoroalkyl substances, asbestos, benzene, silica dust and petroleum hydrocarbons, at or from our facilities.
We may also face liability for personal injury, property damage, natural
resource damage or clean-up costs for
the alleged migration of contamination from our properties. A significant increase in the number or success of
these claims could materially adversely affect our business, financial condition, results of operations and cash
flow.
t
45
Product liabil
of operations.
i
itll ytt and operational liabil
itll ytt claimll
i
s and litiii gati
i
on couldll adversely affect our busines
ii
s and resultstt
Product liability and liability arising from our operations are significant risks. Substantial damage awards
have been made in certain jurisdictions against manufacturers and resellers of petroleum products based upon
claims for injuries and property damage caused by the use of or exposure to various products. Failure of our
products to meet required specifications or claims that a product is inherently defective could result in product
liability claims from our shippers and customers, and also arise from contaminated or off-specification product
in commingled pipelines and storage tanks and/or defective fuels. We may also be subjeu
ct to personal injury
claims arising from incidents that occur in connection with or relating to our operations. Product liability and
personal injury claims against us could have a material adverse effect on our business, financial condition or
results of operations.
alii
Potenti
ons relatedtt
tt
operations and adversely affect our facilitll iett s.
laws and regulati
tt
further
ll
to climll
ate change could have a material
tt
adverse impactm
on our
Some scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may
produce climate changes that have significant physical effects, such as increased frequency and severity of
storms, droughts, floods and other climatic events. We believe the issue of climate change will likely continue
to receive scientific and political attention, with the potential for further laws and regulations that could
materially adversely affecff
t our ongoing operations.
In addition, as many of our facilities are located near coastal areas, rising sea levels may disrupt our
ability to operate those facilities or transport crude oil and refined petroleum products. Extended periods of such
disruption could have an adverse effect on our results of operation. We could also incur substantial costs to
protect or repair these facilities.
Our pipelines
ii
of cash we generate.ee
are subject to federal and/or stattt ett regulati
ll
ons, which couldll reduce profitabiliii tyii and the amount
Our transportation activities are subject to regulation by multiple governmental agencies. The regulatory
burden on the industry increases the cost of doing business and affects profitability. Additional proposals and
proceedings that affect the oil industry are regularly considered by Congress, the states, the FERC, the United
States Department of Transportation, and the courts. We cannot predict when or whether any such proposals
may become effective or what impact such proposals may have. Projected operating costs related to our
pipelines reflect the recurring costs resulting from compliance with these regulations, and these costs may
increase due to future acquisitions, changes in regulation, changes in use, or discovery of existing but unknown
compliance issues.
ions
We are subject to strict laws and regulat
tt
withii
could have a matertt
conditiontt
these laws and regulat
tt
ions
.yy
and profitabiliii tyii
e
e
e
regardin
gn employm
ee and process safety,yy and failure to complym
ial adverse effect on our resultsll of operations, financial
We are subject to the requirements of the OSHA, and comparablea
state statutes that regulate the
protection of the health and safetyt of workers. In addition, OSHA requires that we maintain information about
hazardous materials used or produced in our operations and that we provide this information to employees, state
and local governmental authorities, and local residents. Failure to comply with OSHA requirements, including
general
standards and control of occupational exposure to regulated
substances, could result in claims against us that could have a material adverse effect on our results of
operations, financial condition and the cash flows of the business if we are subjected to significant fines or
compliance costs.
industry standards, process safetyt
46
Compliance withtt and changesn
in tax laws couldll adverserr
ly affect our performr
ance.
We are subject to extensive tax liabila
ities, including federal, state, local and foreign taxes such as income,
excise, sales/use, payroll, franchise, property, gross receipts, withholding and ad valorem taxes. New tax laws
and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed
that could result in increased expenditures
for tax liabilities in the future. These liabilities are subject to periodic
audits by the respective taxing authorities, which could increase our tax liabilities. Subsequent changes to our
tax liabilities as a result of these audits may also subject us to interest and penalties. There can be no certainty
that our federal, state, local or foreign taxes could be passed on to our customers.
t
Changes in our credit profile could adversely affect our business.
ii
Changes in our credit profile could affect the way crude oil and other suppliers view our ability to make
payments and induce them to shorten the payment terms for our purchases or require us to post security or
letters of credit prior to payment. Due to the large dollar amounts and volume of our crude oil and other
feedstock purchases, any imposition by these suppliers of more burdensome payment terms on us may have a
material adverse effect on our liquidity and our ability to make payments to our suppliers. This, in turn, could
cause us to be unablea
to operate one or more of our refineries at full capac
ity.
a
alii
and authorizations
We could incur substanti
permitsii
.
regulations
tt
tt
tt
costs or disruptions
or otherwise complym
tt
in our business
ii
if we cannot obtainii or maintain
necessary
health, safea ty, environmental and other laws and
ii
withii
Our operations require numerous permits and authorizations under various laws and regulations. These
authorizations and permits are subject to revocation, renewal or modification and can require operational changes
to limit impacts or potential impacts on the environment and/or health and safety. A violation of authorization or
permit conditions or other legal or regulatory requirements could result in substantial fines, criminal sanctions,
permit revocations, injunctions, and/or facility shutdowns. In addition, major modifications of our operations could
require modifications to our existing permits or upgrades to our existing pollution control equipment. Any or all of
these matters could have a negative effect on our business, results of operations and cash flows.
We may incur significant liabilities under, or costs and capital expenditures
to comply with, health, safety,
environmental and other laws and regulations, which are complex and change frequently. Our operations are
subject to federal, state and local laws regulating, among other things, the handling of petroleum and other
regulated materials, the emission and discharge of materials into the environment, waste management, and
remediation of discharges of petroleum and petroleum products, characteristics and composition of gasoline and
distillates and other matters otherwise relating to the protection of the environment. Our operations are also subject
to extensive laws and regulations relating to occupational health and safety, in addition to laws and regulations
affecting the transportation of crude oil by rail in North America.
t
We cannot predict what additional environmental, health and safety legislation or regulations may be
adopted in the future, or how existing or futuret
laws or regulations may be administered or interpreted with respect
to our operations. Many of these laws and regulations are becoming increasingly stringent, and the cost of
compliance with these requirements can be expected to increase over time.
Certain environmental laws impose strict, and in certain circumstances joint and several liability for, costs
of investigation and cleanup of such spills, discharges or releases on owners and operators of, as well as persons
who arrange for treatment or disposal of regulated materials at contaminated sites. Under these laws, we may incur
liability or be required to pay penalties for past contamination, and third parties may assert claims against us for
damages allegedly arising out of any past or futuret
contamination. The potential penalties and clean-up costs for
past or futuret
releases or spills, the failure of prior owners of our facilities to complete their clean-up obligations,
the liability to third parties for damage to their property, or the need to address newly-discovered information or
conditions that may require a response could be significant, and the payment of these amounts could have a
material adverse effect on our business, financial condition and results of operations.
47
Risks Related to Our Indebtedness
Our substanti
ali
our obligations
tt
tt
indebtedness could adversely affect our financialii
under our indebtedne
ss.
tt
conditiii on and prevent us from fulfillill ngii
iSenior Notes”))
iSenior Notes )”), hthe proce deds of
Our indebtedness may significantly affect our financial flexibility in the future. As of December 31,
2020, we have total debt of $4,712.1 million, excluding unamortized deferred debt issuance costs of $51.1
million and our PBF LLC Affiliate note payabla e with PBF Energy that eliminates in consolidation at the PBF
Energy level, and we could incur additional borrowings under our credit facilities. As disclosed in this Annual
Report on Form 10-K, on May 13, 2020, we issued $1.0 billion in aggregate principal amount of 9.25% senior
secured notes due 2025 (the “initial 2025 Senior Secured Notes”), and on December 21, 2020, we issued $250.0
million in aggregate principal amount of 9.25% senior secured notes due 2025 (the “additional 2025 Senior
Secured Notes” and together with the initial 2025 Senior Secured Notes, the “2025 Senior Secured Notes”), and
on January 24, 2020, we issued $1.0 billion in aggregate principal amount of 6.00% senior unsecured notes ddue
fullyy
hiwhichh were
2028 ( h(the “2028
dredeem hthe 7.00% se inior
iprim iarilyly to f ll
considdera ition for hthe Martiinez
notes ddue 2023 ( h(the “2023
i
fund a
d
volvi gng
l i
Additi
ddi i
Acq i iuisi ition.
Credidit Facilityility to f
hThe
iwithh hthe Martiinez Acq i iuisitiion
amounts set f
rnings hthresh ldholds of
to hthe sellller ifif certaiin
iowi gng
hthe Martiinez refifi
lonal sec
hthe lclosinging ddat )e). We mayy iincur ddi
dured i dindebbteddness,
imita ition covenants iin our
subje
subject to hthe sa itisfa iction of
iexi
during hthe yyear
itriggggeredd hthese covenants, hthere are no
ended Dece bmber 31, 2020, to hthe extent hthat
could dadverselyly iimpact our
assurances hthat
biabilili yty to meet some of hthese iincurrence covenants at hthe itime hthat we need dded to.
iFaillure to meet hthe iincurrence
hother matters, our biabilili yty to iincur new d bdebt
covenants
l
(i
hi hwhich we mayy payy future didi ividde dnds, makke new
uding securedd d bdebt))
l
(including
iinvestments,
during hthe yyear
portion of hthe Martiinez Acq i iuisi ition
yany post-cl
condi itions are met, iin lcluding
ynery ((as set forthh iin hthe salle andd
lonal i d b
yany d bdebt iincurrence
addi iti
uding ddi
l
l
appliic blable, lilien iincurrence lili
lmpliiance
forth babove ddo not iincl dlude
di
couldd iimpose certaiin iincrementall res itrictiions on, am gong
dand for
ypayments iin connectiion
i
losi gng
uding earn-out
h
repurchase our stockk or iincur new liliens.
ypayments bbas ded on certaiin earnings
iwi hth iincurrence covenants during
hother ggene lral corporate purposes.
lonally,ly, during
fund a
d
ended Dece bmber 31, 2020, we
foll
iperi dod of up to four yyears f ll
indebt dedness iin hthe future i
purchase gagreement, for a
couldd not hcha gnge signi
isti gng fifina
d d
dand hthat suchh hcha gnges
hough we were iin co
yany of our ac iti ivitiies
portion of hthe ca hsh
inci gng gagreements.
dand to f
d d
imit hthe extent to
dand lalso mayy lili
dused dadvances
dunder our Re
signifificantly,ly,
condi itions
di
dused
i
lAlthough
including
dand, ifif
addi iti
ld
h
h
l
i
that:
•
•
•
•
The level of our indebtedness has several important consequences for our future operations, including
for other purposes;
a portion of our cash flow from operations will be dedicated to the payment of principal of, and interest
on, our indebtedness and will not be availablea
under certain circumstances, covenants contained in our existing debt arrangements limit our ability to
borrow additional funds, dispose of assets and make certain investments;
in certain circumstances these covenants also require us to meet or maintain certain financial tests,
which may affecff
t our flexibility in planning for, and reacting to, changes in our industry, such as being
able to take advantage of acquisition opportunit
our ability to obtain additional financing for working capita
corporate and other purposes may be limited; and
ies when they arise;
al, capita
al expenditures, acquisitions, general
t
• we may be at a competitive disadvantage to those of our competitors that are less leveraged; and we
may be more vulnerablea
to adverse economic and industry conditions.
Our indebtedness increases the risk that we may default on our debt obligations, certain of which contain
cross-default and/or cross-acceleration provisions. Our, and our subsidiaries’, ability to meet future principal
obligations will be dependent upon our future performanc
ct to general economic
conditions, industry cycles and financial, business and other factors affecting our operations, many of which are
beyond our control. Our business may not continue to generate sufficient cash flow from operations to repay our
indebtedness. If we are unable to generate sufficient cash flow from operations, we may be required to sell
e, which in turn will be subjeu
ff
48
assets, to refinance all or a portion of our indebtedness or to obtain additional financing. Refinancing may not
be possible and additional financing may not be available on commercially acceptablea
terms, or at all.
Despite our substanti
debt,tt which could exacerbate the risks
ali
ii
tt
describedii
above.
level of indebtedness, we and our subsidiaries may be able to incur substantial
lyll more
tt
We and our subsidiaries may be able to incur additional indebtedness in the future including additional
secured or unsecured debt. Although our debt instruments and financing arrangements contain restrictions on
the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and
exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. To the
extent new debt is added to our current debt levels, the leverage risks described above would increase. Also,
these restrictions do not prevent us from incurring obligations that do not constitutet
indebtedness.
Our future credit ratings
creditii in the future.ee
ii
could adversely affect the cost of our borrowing as wellll as our abilitll ytt
to obtainii
i
strengthhen our lili
On Ja
bsubsequentlyly
conditiion
di
inci lal
y
dredeem our outst di
dand b ibusiness, to
nuary 24, 2020, we iissuedd hthe 2028
andi gng 2023
g
iSenior Notes. hThe proce deds from hithis ff
offeri gng were usedd iin part
iSenior Notes. In response to hthe iimpact of COVID-19 on our
to
fifina
quidity,ty on May 13, 2020, we issued the initial 2025 Senior
idi
Secured Notes and then, on December 21, 2020, we issued the additional 2025 Senior Secured Notes in a tack-
on offering. The 2028 Senior Notes and the 2025 Senior Notes are rated B3 by Moody’s, B+ by S&P, and B+
uring hthe
by Fitch. The 2025 Senior Secured Notes are rated Ba3 by Moody’s, BB by S&P, and BB by Fitch. During
ratingg as wellll as our
f
fourth quarter of 2020, ea hch of our credidit ra itingg gage
h
downgraddes, hthe
unsecuredd
iwi hth hthe gagreement governi
cost of b
governi gng
conditiions persiist or
di
hthe Re
dand
credit ratinging
credit ratinging gage
ddet
ieriorate, we expect hthat hthe
hthe ra itinggs of our unsecuredd
lvelyy
gnega iti
dand securedd notes.
hFurther
iimpact hthe terms of credidit we receiive from our
further
h
dadverse ac itions takken byby hthe ra itingg gage
iincrease our cost of b
all markkets or hhave an
unfavorablblea
couldd iim ipair our biabilili yty to ggrow our
business, iincrease our lili
busine
di
changes iin our credidit ra itinggs mayy lalso
dand
ings,
dand securedd notes ratings,
ings on
volvi gng Credidit Facilityility iincreas ded iin ac
l i
borrowi gngs
volvi gng Credidit Facilityility ( h(the “Rev l iolvi gng Credidit
incies downgra
downgrad dded our corporate familymily
gnega itive
l
suppliers,
li
distrib ibutions to our hshareh ldholders.
require us to prepayy or post
di
credit ratinging or hthe ra itingg of our notes mayy f
di
dand makke ca hsh di
dAdverse change
suppliers
li
borrowi gngs or hi dhinder our biabilili yty to
loutl kook. As a res lult of hthe downgra
gAgreement”)). If hthe current ma krket
credit terms we hhave wi hith our
iraise fifinanciingg iin hthe ca ipita
incies on our corporate
lvaluate our corporate
iwillll co intinue to re-e
iwithh lalll ratings
iimpact on hthe
dunder our Re
llcollaterall.
dcordance
iquididityy
hiwhichh
incies
l i
di
i
i
i
i
i
Provisions in our indentures and other agreementstt couldll discii ourage an acquisitiii on of us by a third-part
ii
y.tt
Certain provisions of our indentures could make it more difficult or more expensive for a third-party to
acquire us. Upon the occurrence of certain transactions constituting a “change of control” as described in the
indentures governing the 7.25% senior unsecured notes due 2025 (the “2025 Senior Notes”), the 2025 Senior
Secured Notes, the 2028 Senior Notes and the 6.875% Senior Notes due 2023 (the “PBFX 2023 Senior Notes),
holders of our notes could require us to repurchase all outstanding notes at 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, at the date of repurchase. Certain other significant agreements
of ours such as our Revolving Credit Agreement, Tax Receivable Agreement, as defined below, and
Intermediation Agreements with J. Aron also contain provisions related to a change in control that could make it
more difficult or expensive for a third-party to acquire us.
49
includingii
to undertake certain types of transactions, which could adversely affect our business,
our notes, may limit
ii
the indentures governingii
Restrictive covenants in our debt instrumtt
abilitll ytt
tt
condition,
resultsll ofo operations and our abiliii tyii
to service our indebtednes
ii
our
financiali
ents,tt
s.
tt
t
t
Various covenants in our current and future debt instruments and other financing arrangements, including
governing our notes, may restrict our and our subsidiaries’ financial flexibility in a number of
the indentures
ways. Our current indebtedness and the indentures
that govern our notes subject us to significant financial and
other restrictive covenants, including restrictions on our ability to incur additional indebtedness, place liens
upon assets, pay dividends or make certain other restricted payments and investments, consummate certain asset
sales or asset swaps,a
conduct businesses other than our current businesses, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of our assets. Some of our debt instruments also require our
subsidiaries to satisfy or maintain certain financial condition tests in certain circumstances. Our ability to meet
these financial condition tests can be affected by events beyond our control and we may not meet such tests. In
addition, a failure to comply with the provisions of our existing debt could result in an event of default that
our lenders, subject to the terms and conditions of such debt, to declare the outstanding principal,
could enablea
together with accrued interest, to be immediately due and payablea
. Events beyond our control, including the
impact of the COVID-19 pandemic and related governmental responses and developments in the global oil
markets, may affect our ability to comply with our covenants. If we were unable to repay the accelerated
amounts, our lenders could proceed against the collateral granted to them to secure such debt. If the payment of
our debt is accelerated, defaults under our other debt instruments, if any, may be triggered, and our assets may
be insufficient to repay such debt in full.
If we incur indebtedness provided or guaranteed by the U.S. Government, including pursuant to the
Coronavirus Aid, Relief and Economic Security Act, signed into law on March 27, 2020, we may become
including limitations on employee headcount and
subjeu
compensation reductions and other cost reduction activities that could adversely affecff
to additional restrictions on our operations,
t us.
ct
The discontinuat
adverse impactm
ii
iontt
of LIBOR,R and the adoption of an alternat
tt
ivtt e reference rate,e may have a material
on our floatingii
ratett
indebtedness and financ
ii
ing costs.
We are subject to interest rate risk on floating interest rate borrowings under our Revolving Credit
Facility, the PBFX Revolving Credit Facility and the $35.0 million term loan (the “PBF Rail Term Loan”).
These borrowings have the optionality to use London Interbank Offering Rate (“LIBOR”) as a benchmark for
shing the interest rate. On November 30, 2020, the ICE Benchmark Administration (“IBA”) announced
establia
that it intends to continue publishing LIBOR until the end of June 2023, beyond the previously announced 2021
cessation date. The IBA announcement was supported by announcements from the United Kingdom’s Financial
Conduct Authority (“FCA”), which regulates LIBOR, and the Board of Governors of the Federal Reserve
System, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency (the “U.S.
Regulators”). However, both the FCA and U.S. Regulators in their announcements also advised banks to cease
entering into new contracts referencing LIBOR after December 2021. These announcements indicate that the
continuation of LIBOR on the current basis may not be assured after 2021 and will not be assured beyond 2023.
In light of these recent announcements, the future of LIBOR at this time is uncertain and any changes in the
methods by which LIBOR is determined, or regulatory activity related to LIBOR’s phaseout, could cause
LIBOR to perform differently than in the past or cease to exist.
In the United States,
the Alternative Reference Rates Committee (the working group formed to
recommend an alternative rate to LIBOR) has identified the Secured Overnight Financing Rate (“SOFR”) as its
preferred alternative rate for LIBOR. There can be no guarantee that SOFR will become a widely accepted
benchmark in place of LIBOR or what its adoption as a replacement rate would have on us. Although the full
impact of the transition away from LIBOR, including the discontinuance of LIBOR publication and the
adoption of SOFR as the replacement rate forff LIBOR, remains unclear, these changes may have an adverse
impact on our floating rate indebtedness and financing costs.
50
Risks Related to Our Organizational Structure and PBF Energy Class A Common Stock
is the managingn member of PBF LLC and itstt only material asset is itstt
PBF Energyr
Accordindd gly,yy PBF Energy depends upon distributi
meet itstt other obligations
and/or pay dividends in thett
tt
ii
future.
ons from PBF LLC and itstt subsidiaries to pay itstt
intertt est in PBF LLC.
taxes,
PBF Energy is a holding company and all of its operations are conducted through subsidiaries of PBF
LLC. PBF Energy has no independent means of generating revenue and no material assets other than its
ownership interest in PBF LLC. We depend on the earnings and cash flow of our subsidiaries to meet our
obligations, including our indebtedness, tax liabilities and obligations to make payments under a tax receivable
agreement entered into with PBF LLC Series A and PBF LLC Series B unitholders (the “Tax Receivable
Agreement”). If we do not receive such cash distributions, dividends or other payments from our subsidiaries,
we may be unablea
to meet our obligations and/or pay dividends.
PBF Energy, as the sole managing partner of PBF LLC, may cause PBF LLC to make distributions to its
members in an amount sufficient to enablea
PBF Energy to cover all applicable taxes at assumed tax rates, to
make payments owed by PBF Energy under the Tax Receivable Agreement, and to pay other obligations and
dividends, if any, declared by PBF Energy. To the extent we need funds and any of our subsidiaries is restricted
from making such distributions under applicable law or regulation or under the terms of our financing or other
contractual arrangements, or is otherwise unable to provide such funds, such restrictions could materially
adversely affecff
t our liquidity and financial condition.
The Revolving Credit Facility, the 2028 Senior Notes, the 2025 Senior Notes, the 2025 Senior Secured
Notes and certain of our other outstanding debt arrangements include a restricted payment covenant, which
restricts the ability of PBF Holding to make distributions to us, and we anticipate our future debt will contain a
similar restriction. PBFX Revolving Credit Facility and PBFX’s indenture governing its PBFX 2023 Senior
Notes also contain covenants that limit or restrict PBFX’s ability and the ability of its restricted subsidiaries to
make distributions and other restricted payments and restrict PBFX’s ability to incur liens and enter into
burdensome agreements. In addition, there may be restrictions on payments by our subsidiaries under applicable
al and to make payments to
laws, including laws that require companies to maintain minimum amounts of capita
stockholders only from profits. For example, PBF Holding is generally prohibited under Delaware law from
making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the
distribution, liabilities of the limited liability company (with certain exceptions) exceed the fair value of its
assets, and PBFX is subject to a similar prohibition. As a result, we may be unable to obtain that cash to satisfy
our obligations and make payments to PBF Energy stockholders, if any.
The rightstt of other members of PBF LLC maya conflict
stockholders.
ff
with the interes
tt
ts of PBF Energy Class
ll
A common
ff
The interests of the other members of PBF LLC, which include current and former directors and officers,
may not in all cases be aligned with PBF Energy Class A common stockholders’ interests. For example, these
members may have different
tax positions which could influence their positions, including regarding whether
and when we dispose of assets and whether and when we incur new or refinance existing indebtedness,
especially in light of the existence of the Tax Receivable Agreement. In addition, the structuring
of future
transactions may take into consideration these tax or other considerations even where no similar benefit would
accrue to PBF Energy Class A common stockholders or us. See “Certain Relationships and Related
Transactions—IPO Related Agreements” in our 2021 Proxy Statement incorporated herein by reference.
t
51
Under the Tax Receivable Agreement,tt PBF Energyr
LLC Series A Unitsii and PBF LLC Series B Unitsii
may claimll
arising in connection withii
shares of itstt Class
allowll
i
obligati
PBF LLC, under certainii
on under the Tax Receivablell Agreement.
A common stock and relatedtt
is required to pay the former and current holders of PBF
d or assumed tax benefite stt PBF Energy
for certainii
for
prior offerings and future exchangesn
the senior notes
to pay itstt
transactions. The indentures governingii
tions sufficient for PBF Energyr
of PBF LLC Series A Unitsii
realizell
circii umstances,s to make distii ritt bui
ll
PBF Energy is party to a Tax Receivablea
Agreement that provides for the payment from time to time by
PBF Energy to the current and former holders of PBF LLC Series A Units and PBF LLC Series B Units of 85%
of the benefits, if any, that PBF Energy is deemed to realize as a result of (i) the increases in tax basis resulting
from its acquisitions of PBF LLC Series A Units, including such acquisitions in connection with its prior
offerings or in the future and (ii) certain other tax benefits related to its entering into the Tax Receivable
to payments under the Tax Receivable Agreement. See “Item 13.
Agreement, including tax benefits attributablea
Certain Relationships and Related Transactions, and Director Independence.”
As a result of the impact of a deferred tax asset valuation allowance recognized in accordance with ASC
d to zero as of
740, Income Taxes, PBF Energy’s liability for the Tax Receivable Agreement was reduced
December 31, 2020. As future taxable income is recorded, increases in our Tax Receivable Agreement liabila
ity
may be necessary in conjunction with the revaluation of deferred tax assets. If PBF Energy does not have
taxable income, PBF Energy generally is not required (absent a change of control or circumstances requiring an
early termination payment) to make payments under the Tax Receivable Agreement for that taxable year
because no benefit will have been actually realized. However, any tax benefits that do not result in realized
benefits in a given tax year will likely generate tax attributes that may be utilized to generate benefits in
previous or future tax years. The utilization of such tax attributes will result in payments under the Tax
Receivable Agreement. The foregoing are merely estimates based on assumptim ons that are subject to change due
to various factors, including, among other factors, the timing of exchanges of PBF LLC Series A Units for
shares of PBF Energy Class A common stock as contemplated by the Tax Receivable Agreement, the price of
PBF Energy Class A common stock at the time of such exchanges, the extent to which such exchanges are
taxable, and the amount and timing of PBF Energy’s income. The actual payments under the Tax Receivable
Agreement could differ materially. It is possible that future transactions or events could increase the actual tax
benefits realized and the corresponding Tax Receivable Agreement payments. There may be a material negative
effect on our liquidity if, as a result of timing discrepancies or otherwise, (i) the payments under the Tax
Receivable Agreement exceed the actual benefits PBF Energy realizes in respect of the tax attributes subject to
the Tax Receivable Agreement, and/or (ii) distributions to PBF Energy by PBF LLC are not sufficient to permit
PBF Energy, after it has paid its taxes and other obligations, to make payments under the Tax Receivable
Agreement. The payments under the Tax Receivable Agreement are not conditioned upon any recipient’s
continued ownership of us.
In certain cases, payments by PBF Energyr
significi
t of the tax attribut
Agreement.tt These provisiii ons maya deter a change in control of the Company.
under the Tax Receivablell Agreement may be accelerate
tt
d and/or
ll
subject to the Tax Receivablell
antly exceed the actual benefitstt
it realizes in respec
estt
s
The Tax Receivable Agreement provides that upon certain changes of control, or if, at any time, PBF
Energy elects an early termination of the Tax Receivable Agreement, PBF Energy’s (or its successor’s)
obligations with respect to exchanged or acquired PBF LLC Series A Units (whether exchanged or acquired
before or after such transaction) would be based on certain assumptim ons, including (i) that PBF Energy would
have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax
basis and other benefits related to entering into the Tax Receivable Agreement and (ii) that the subsidiaries of
PBF LLC will sell certain nonamortizablea
assets (and realize certain related tax benefits) no later than a
specified date. Moreover, in each of these instances, PBF Energy would be required to make an immediate
payment equal to the present value (at a discount rate equal to LIBOR plus 100 basis points) of the anticipated
future tax benefits (based on the foregoing assumptim ons). Accordingly, payments under the Tax Receivable
Agreement may be made years in advance of the actual realization, if any, of the anticipated future tax benefits
52
and may be significantly greater than the actual benefits PBF Energy realizes in respect of the tax attributes
subject to the Tax Receivable Agreement. In these situat
ions, PBF Energy’s obligations under the Tax
Receivable Agreement could have a substantial negative impact on our liquidity. PBF Energy may not be able
to finance its obligations under the Tax Receivable Agreement and its existing indebtedness may limit its
subsidiaries’ ability to make distributions to PBF Energy to pay these obligations. These provisions may deter a
potential sale of our Company to a third-party and may otherwise make it less likely that a third-party would
enter into a change of control transaction with us.
t
Moreover, payments under the Tax Receivable Agreement will be based on the tax reporting positions
that PBF Energy determines in accordance with the Tax Receivable Agreement. PBF Energy will not be
reimbursed for any payments previously made under the Tax Receivable Agreement if the Internal Revenue
Service subsequently disallows part or all of the tax benefits that gave rise to such prior payments. As a result,
in certain circumstances, payments could be made under the Tax Receivable Agreement that are significantly in
excess of the benefits that PBF Energy actually realized in respect of (i) the increases in tax basis resulting from
our purchases or exchanges of PBF LLC Series A Units and (ii) certain other tax benefits related to PBF Energy
entering into the Tax Receivable Agreement, including tax benefits attributablea
to payments under the Tax
Receivable Agreement.
Anti-tii akeov
er and certain other
tt
may discourage or delay a change in control.
tt
provisions in our certificatett of incorporation
rr
and bylaws
ll
and Delaware law
Our certificate of incorporation and bylaws contain provisions which could make it more difficult for
stockholders to effecff
t certain corporate actions. Among other things, these provisions:
•
•
•
•
•
authorize the issuance of undesignated preferred stock, the terms of which may be establia
shares of which may be issued without stockholder approval;
prohibit stockholder action by written consent;
restrict certain business combinations with stockholders who obtain beneficial ownership of a certain
percentage of our outstanding common stock;
provide that special meetings of stockholders may be called only by the chairman of the board of
directors, the chief executive officer or the board of directors, and establia
sh advance notice procedures
for the nomination of candidates for election as directors or for proposing matters that can be acted upon
at stockholder meetings; and
provide that our stockholders may only amend our bylaws with the approval of 75% or more of all of
the outstanding shares of our capital stock entitled to vote.
shed and the
These anti-takeover provisions and other provisions of Delaware law may have the effect of delaying or
deterring a change of control of our company. Certain provisions could also discourage proxy contests and
make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take
other corporate actions you desire. These provisions could limit the price that certain investors might be willing
to pay in the futuret
for shares of PBF Energy Class A common stock.
53
The market price of PBF Energyr Class
which couldll cause the value of you
ll
.ee
r investment to declinell
A common stock declinedii
ff
significantlyll
tt
in 2020 and may be volatll
ile,
The market price of PBF Energy Class A common stock declined significantly in 2020 and may be
highly volatile and subjecb
t to wide fluctuations due to a number of factors including:
• market conditions in the oil refining industry and volatility in commodity prices and the ongoing
•
•
•
•
•
•
•
•
impact of COVID-19;
changes in, or failure to meet, earnings estimates of securities analysts;
variations in actual or anticipated operating results or dividends, if any, to stockholders;
the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions
due to problems with third-party logistics infrastructure;
t
litigation and government investigations;
the timing and announcement of any potential acquisitions or divestitures
any future acquisitions or divestitures
operations;
changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof;
general economic and stock market conditions; and
the availability for sale, or sales by PBF Energy or its senior management, of a significant number of
shares of its Class A common stock in the public market.
and subsequent impact of
financial condition or results of
on our capita
al structure,
t
t
t
In addition, the stock markets generally may experience significant volatility, often unrelated to the
operating performance of the individual companies whose securities are publicly-traded. These and other factors
may cause the market price of PBF Energy Class A common stock to decrease significantly, which in turn
would adversely affecff
t the value of your investment.
In the past, following periods of volatility in the market price of a company’s securities, stockholders
have often instituted class action securities litigation against those companies. Such litigation, if instituted,
could result in substantial costs and a diversion of management’s attention and resources, which could
significantly harm our profitability and reputation.
Our current stockholdersrr could experience dilutio
common stock.
tt
ii
n, which could further
tt
depress the price of our Class A
We continue to require substantial working capita
al to fund our business. We may sell equity securities
or convertible securities or other derivative securities in the public or private markets if we continue to need
capita
al, and even when conditions or terms are not otherwise favorable, including at prices at or below the then
current market price of our shares of Class A common stock. As a result, stockholders may experience
substantial dilution, and the market price of our Class A common stock could decline as a result of the
introduction of a large number of shares of our Class A common stock, or securities convertible into or
exchangeable or exercisable for our Class A common stock, into the market or the perception that these sales
could occur. Sales of a large number of shares of our Class A common stock, or securities convertible into or
exchangeable or exercisable for our Class A common stock, or the possibility that these sales may occur, also
might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem
appropriate. In addition, any equity securities we issue may have rights, preferences or privileges senior to those
of our Class A common stock, and our current debt agreements contain, and any agreements for future debt or
preferred equity financings, if available, are likely to contain, covenants limiting or restricting our ability to take
specific actions, such as incurring additional debt. Holders of Class A common stock are not entitled to
preemptive rights or other protections against dilution. Because our decision to issue securities in any future
al needs as well as market conditions and other factors beyond om control, we
offering will depend on our capita
or impact of future issuances, if any. Our Class A common
cannot predict or estimate the amount, timing, naturet
stockholders bear the risk of our future offerings reducing the per share market price of our Class A common
stock.
54
Risks Related to Our Ownership of PBFX
We depeee nd upon PBFX for a substanti
minimii
alii
nts in our commerciali
um volume commitmett
portion of our refine
ries’ logisti
agreementstt withii PBFX.XX
e
tt
ii
cs needs and have obligati
i
ons for
We depend on PBFX to receive, handle, store and transfer crude oil, petroleum products and natural
gas
for us from our operations and sources located throughout the United States and Canada in support of certain of
our refineries under long-term, fee-based commercial agreements with our subsidiaries. These commercial
agreements have an initial term ranging from one to fifteen years and generally include minimum quarterly
commitments and inflation escalators. If we fail to meet the minimum commitments during any calendar
quarter, we will be required to make a shortfalff
l payment quarterly to PBFX equal to the volume of the shortfall
multiplied by the applicablea
fee.
t
disasters and acts of terrorism; mechanical or structural
PBFX’s operations are subject to all of the risks and operational hazards inherent in receiving, handling,
storing and transferring crude oil, petroleum products and natural
gas, including: damages to its facilities,
related equipment and surrounding properties caused by floods, fires, severe weather, explosions and other
failures at PBFX’s facilities or at third-party
t
natural
facilities on which its operations are dependent; curtailments of operations relative to severe seasonal weather;
inadvertent damage to our facilities from construction, farm and utility equipment; and other hazards. Any of
these events or factors could result in severe damage or destruction to PBFX’s assets or the temporary or
permanent shut-down of PBFX’s facilities. If PBFX is unable to serve our logistics needs, our ability to operate
our refineries and receive crude oil and distribute products could be adversely impacted, which could adversely
affect our business, financial condition and results of operations.
t
t
In addition, as of December 31, 2020, PBF LLC owns 29,953,631 common units representing 48.0%
limited partner interest in PBFX. The inability of PBFX to continue operations, perform under its commercial
arrangements with our subsidiaries or the occurrence of any of these risks or operational hazards, could also
adversely impact the value of our investment in PBFX and, because PBFX is a consolidated entity, our
business, financial condition and results of operations.
PBF Energy willii be requiredii
subsidiary flow-through entitiii es (includingii
Energyr
receives from PBF LLC.
to pay taxes on itstt
share of taxablell
income from PBF LLC and itstt other
PBFX), regardless of the amount of cash distributions PBF
The holders of limited liability company interests in PBF LLC, including PBF Energy, generally have to
include for purposes of calculating their U.S. federal, state and local income taxes their share of any taxable
income of PBF LLC, regardless of whether such holders receive cash distributions from PBF LLC. PBF Energy
ultimately may not receive cash distributions from PBF LLC equal to its share of the taxabla e income of PBF
LLC or even equal to the actual tax due with respect to that income. For example, PBF LLC is required to
include in taxable income PBF LLC’s allocable share of PBFX’s taxable income and gains (such share to be
determined pursuant to the partnership agreement of PBFX), regardless of the amount of cash distributions
received by PBF LLC from PBFX, and such taxable income and gains will flow-through to PBF Energy to the
extent of its allocable share of the taxabla e income of PBF LLC. As a result, at certain times, the amount of cash
otherwise ultimately availablea
to PBF Energy on account of its indirect interest in PBFX may not be sufficient
for PBF Energy to pay the amount of taxes it will owe on account of its indirect interests in PBFX.
55
If PBFX was to be treated as a corporati
purposes or if PBFX was otherwise subject to entityii
ders,
itstt unithol
ii
includingii
ll
ii
the unitstt held by us.
includingii
to us, would be reduced, likel
rr
on, rather than as a partnershi
-level taxation,
p,ii
ell
PBFX’s cash availabl
rr
tt
for U.S. federal income tax
tion to
ii
reduction in the value of units,
tt
for distribu
ii
yll causingn a substanti
ali
tt
The present U.S. federal income tax treatment of publicly-traded partnerships, including PBFX, or an
investment in its common units may be modified by administrative, legislative or judicial interpretation at any
time. For example, from time to time the U.S. Congress considers substantive changes to the existing federal
income tax laws that would affect publicly-traded partnerships. Any modification to the U.S. federal income tax
laws and interpretations thereof may or may not be applied retroactively and could make it more difficult or
impossible for PBFX to meet the exception to be treated as a partnership for U.S. federal income tax purposes.
We are unable to predict whether any of these changes, or other proposals, will ultimately be enacted. Any such
changes could negatively impact the value of an investment in PBFX common units.
If PBFX were treated as a corporation for U.S. federal income tax purposes, it would pay U.S. federal
income tax on income at the corporate tax rate, which is currently a maximum of 21% under the TCJA, and
would likely be liable for state income tax at varying rates. Distributions to PBFX unitholders would generally
be taxed again as corporate distributions, and no income, gains, losses, deductions or credits would flow
through to PBFX unitholders. Because taxes would be imposed upon PBFX as a corporation, the cash availablea
for distribution to PBFX unitholders would be substantially reduced. Therefore, PBFX’s treatment as a
to PBFX
would result in a material reduction in the anticipated cash flow and after-tax returnt
corporation
unitholders, likely causing a substantial reduction in the value of the units.
rr
Allll of the executive officers and a majority of the directors of PBF GP are also current or former officers or
directors of PBF Energy. Conflicts of interest could arise as a resultll of this arrangement.
a
PBF Energy indirectly owns and controls PBF GP, and appoints all of its officers and directors. All of the
executive officers and a majori
ty of the directors of PBF GP are also current or former officers or directors of
PBF Energy. These individuals will devote significant time to the business of PBFX. Although the directors and
officers of PBF GP have a fiduciary duty to manage PBF GP in a manner that is beneficial to PBF Energy, as
directors and officers of PBF GP they also have certain duties to PBFX and its unitholders. Conflicts of interest
may arise between PBF Energy and its affiliates, including PBF GP, on the one hand, and PBFX and its
unitholders, on the other hand. In resolving these conflicts of interest, PBF GP may favor its own interests and
the interests of PBFX over the interests of PBF Energy. In certain circumstances, PBF GP may refer any
conflicts of interest or potential conflicts of interest between PBFX, on the one hand, and PBF Energy, on the
other hand, to its conflicts committee (which must consist entirely of independent directors) for resolution,
which conflicts committee must act in the best interests of the public unitholders of PBFX. As a result, PBF GP
may manage the business of PBFX in a way that may differ from the best interests of PBF Energy or its
stockholders.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
See “Item 1. Business”.
56
ITEM 3. LEGAL PROCEEDINGS
On December 28, 2016, DNREC issued the Ethanol Permit to DCR allowing the utilization of existing
denatured ethanol to be loaded
tanks and existing marine loading equipment at their existing facilities to enablea
from storage tanks to marine vessels and shipped to offsite facilities. On January 13, 2017, the issuance of the
Ethanol Permit was appealed by two environmental groups. On February 27, 2017, the Coastal Zone Industrial
Control Board (the “Coastal Zone Board”) held a public hearing and dismissed the appeal, determining that the
appellants did not have standing. The appellants filed an appeal of the Coastal Zone Board’s decision with the
Delaware Superior Court (the “Superior Court”) on March 30, 2017. On January 19, 2018, the Superior Court
rendered an Opinion regarding the decision of the Coastal Zone Board to dismiss the appeal of the Ethanol
Permit for the ethanol project. The judge determined that the record created by the Coastal Zone Board was
insufficient for the Superior Court to make a decision, and therefore remanded the case back to the Coastal Zone
or Court directed the Coastal Zone Board
Board to address the deficiency in the record. Specifically
to address any evidence concerning whether the appellants’ claimed injuries would be affected by the increased
quantity of ethanol shipments. On remand, the Coastal Zone Board met on January 28, 2019 and reversed its
previous decision on standing ruling that the appellants have standing to appeal the issuance of the Ethanol
Permit. The parties to the action filed a joint motion with the Coastal Zone Board, requesting that the Board
concur with the parties’ proposal to secure from the Superior Court confirmation that all rights and claims are
preserved for any subsequent appeal to the Superior Court, and that the matter then be scheduled for a hearing
on the merits before the Coastal Zone Board. The Coastal Zone Board notified the parties in January of 2020
that it concurred with the parties’ proposed course of action. The appellants and DCR subsequently filed a
motion with the Superior Court requesting relief consistent with what was described to the Coastal Zone Board.
In March of 2020, the Superior Court issued a letter relinquishing jurisdiction over the matter, and concurring
with the parties’ proposal to allow the case to proceed to a hearing on the merits before the Coastal Zone Board.
The parties must now jointly propose to the Coastal Zone Board a schedule for prehearing activity and a merits
hearing to resolve the matter. The parties must, therefore, submit to the Coastal Zone Board a joint proposed
proceedings related to the merits hearing to resolve the matter.
schedule to govern futuret
, the Superi
u
ff
On September 11, 2020, DCR received two Citations and Notification of Penalties, with sub-parts, from
OSHA related to a combustion incident occurring on March 11, 2020. The citation seeks to impose penalties in
the amount of $401,923 related to alleged violations of the Occupation Safetyt
and Health Act of 1970. An
informal conference with OSHA on October 2, 2020 was unsuccessful in resolving the matter, and, as a result,
DCR filed a Notice of Contest with OSHA contesting the citations in their entirety at the end of the informal
conference. OSHA filed its Complaint on December 13, 2020, and DCR filed its response on January 4, 2021.
OSHA and DCR participated in mandatory meditation on February 2, 2021, which was unsuccessful. On
February 4, 2021, the parties filed a joint motion to continue settlement negotiations until February 25, 2021.
The motion was granted on February 4, 2021. If the settlement negotiations are unsuccessful, the matter will
proceed to litigation.
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. Furthermore, in connection with the acquisition, we assumed responsibility
for certain specified environmental matters that occurred prior to our ownership of the refinery and logistics
assets, including specified incidents and/or Notice of Violations (“NOVs”) issued by regulatory agencies in
various years before our ownership, including the South Coast Air Quality Management District (“SCAQMD”)
and the Division of Occupational Safetyt and Health of the State of California (“Cal/OSHA”).
57
Subsequent to the acquisition, further NOVs were issued by the SCAQMD, Cal/OSHA, the City of
Torrance, the City of Torrance Fire Department, and the Los Angeles County Sanitation District related to
alleged operational violations, emission discharges and/or flaring incidents at the refinery and the logistics
assets both before and after our acquisition. EPA in November 2016 conducted a Risk Management Plan
(“RMP”) inspection following the acquisition related to Torrance operations and issued preliminary findings in
March 2017 concerning RMP potential operational violations. Since EPA’s issuance of the preliminary findings
in March 2017, we have been in substantive discussions to resolve the preliminary findings. Effective January 9,
2020, we and EPA entered into a Consent Agreement and Final Order (“CAFO”), effective as of January 9,
2020, which contains no admission by us for any alleged violations in the CAFO, includes a release from all
alleged violations in the CAFO, requires payment of a penalty of $125,000 and the implementation of a
supplemental environmental project (“SEP”) of at least $219,000 that must be completed by December 15,
2021. The SEP will consist of configuring the northeast fire water monitor to automatically deploy water upon
detection of a release.
ff
EPA and the California
Department of Toxic Substances Control (“DTSC”) in December 2016
conducted a Resource Conservation and Recovery Act (“RCRA”)RR
inspection following the acquisition related to
Torrance operations and also issued in March 2017 preliminary findings concerning RCRA potential
operational violations. On June 14, 2018, the Torrance refinery and DTSC reached settlement regarding the oil
bearing materials. Following this settlement, in June 2018, DTSC referred the remaining alleged RCRA
violations from EPA’s and DTSC’s December 2016 inspection to the California
Attorney General for final
Attorney General are in discussions to resolve these alleged
resolution. The Torrance refinery and the California
remaining RCRA violations.
ff
ff
On May 8, 2020, we received a letter from the SCAQMD proposing to settle a NOV relating to Title V
deviations alleged to have occurred in the first half of 2017 for $878,450. We have offered to settle the NOV for
approximately $430,000 and are awaiting a response from the SCAQMD.
On February 4, 2021, we received a letter from the SCAQMD proposing to settle a NOV relating to Title
V deviations alleged to have occurred in the second half of 2017 for $1.3 million. We are evaluating the
allegations and will be communicating with the SCAQMD regarding the allegations and the settlement offer
upon the completion of our review.
On November 30, 2020, the San Francisco Bay Regional Water Quality Control Board (“RWQCB”)
issued a draft Stipulated Order to the Martinez refinery in connection with alleged total suspended solids
exceedances that occurred in March 2020, which draft order included a proposed penalty of $310,000.
Subsequently, the RWQCB proposed to settle these alleged exceedances for $126,000. We are reviewing and
will be communicating with the RWQCB regarding the allegations and the revised settlement offer upon the
completion of our review.
On December 4, 2020, the Pennsylvania Department of Environmental Protection ("PaDEP") issued a
draft Consent Order and Agreement to PBF Logistics Products Terminals LLC with respect to two alleged
violations at the Philadelphia terminal for failure to: 1) test and inspect regulated piping as required in
accordance with industry standards; and 2) have a professional engineering certification that all above ground
storage tanks meet the applicable performance standards and requirements as a result of an alleged release of oil
on January 10, 2020 into the Schuylkill River resulting from a pipe leak that was not contained by emergency
containment structure.
The draft order included a proposed penalty of $800,000. We are reviewing and will be
communicating with the PaDEP regarding the allegations and the settlement offer upon the completion of our
review.
t
As the ultimate outcomes of the 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.
58
On December 5, 1990, prior to our ownership of the Chalmette refinery, the plaintiff in Adamdd
Thomas, et
al. v. Exxonxx
Mobil Corporation and Chalmette Refining, filed an action on behalf of himself and potentially
thousands of other individuals in St. Bernard Parish and Orleans Parish who were allegedly exposed to
hydrogen sulfide and sulfur dioxide as a result of more than 100 separate flaring events that occurred between
1989 and 2010. The plaintiffsff claimed to have suffered physical injuries, property damage, and other damages
as a result of the releases. Plaintiffs seek to recover unspecified compensatory and punitive damages, interest,
and costs. On June 18, 2020, plaintiffs and defendants entered into a settlement agreement and release, the terms
and conditions of which are confidential. On that same date, the court entered a final judgment that dismissed
with prejudice all claims asserted against defendants in this matter. The outcome did not have a material impact
on our financial position, results of operations, or cash flows.
u
u
On February 17, 2017, in Arnold Goldstein, et al. v. Exxonxx
Mobil Corporation, et al., we and PBF
Energy Inc., 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
filed on behalf of Arnold Goldstein, John Covas, Gisela Janette La Bella and others similarly situated. The
complaint was filed in the Superi
or 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,ff Hany Youssef. On March 18, 2019, the
class certification hearing was held and the court took the matter under submission. On April 1, 2019, the court
issued an order denying class certification. On April 15, 2019, plaintiffs filed a Petition for Permission to
Appeal the Order Denying Motion for Class Certification. On May 3, 2019, plaintiffs filed a Motion with the
Central District Court for Leave to File a Renewed Motion for Class Certification. On May 22, 2019, the judge
granted plaintiffs’ motion. We filed our opposition to the motion on July 29, 2019. The plaintiffs’ff motion was
heard on September 23, 2019. 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
asses relate
subclasses based on negligence and on strict liability for ultrahazardous activities. The certifiedff
to trespass claims for ground contamination and nuisance for air emissions. On February 5, 2021, our motion
for Limited Extension of Discovery Cut-Off and a Motion by plaintiffs for Leave to File Third Amended
Complaint were heard by the court. On February 9, 2021, the court issued an Order taking both motions under
submission pending additional discovery and briefing related to plaintiff Youssef and whether a new class
d. The Court has also ordered that the rebuttal expert disclosure deadline, the
representative should be substitutet
expert discovery cut-off, the motion hearing cut-off, and all other case deadlines be stayed pending the court’s
decision as to whether the case can proceed with a new class representative and whether defendants will be
permitted to conduct additional soil vapor
sampling in the ground subclass area. Trial was previously scheduled
to commence on July 27, 2021. We presently believe the outcome will not have a material impact on our
financial position, results of operations or cash flows.
subclu
a
On September 18, 2018, in Michelle KeKK ndig and Jim Kendig,i
l Oil Corporation, et
xx
et al. v. ExxonMobi
ion and ExxonMobil
al., PBF Energy Limited and Torrance Refining along with ExxonMobil Oil Corporat
Pipeline Company were named as defendants in a class action and representative action complaint filed on
behalf of Michelle Kendig, Jim Kendig and others similarly situated. The complaint was filed in the Superior
Court of the State of California, County of Los Angeles and alleged failure to authorize and permit
uninterrupted rest and meal periods, failure to furnish accurate wage statements, violation of the Private
Unfair Business and Competition Law. Plaintiffs sought
Attorneys General Act and violation of the California
unspecified economic damages, statutory
, disgorgement of profits,
injunctive relief,ff declaratory relief, interest, attorney’s fees and costs. To the extent that plaintiffs’ claims
damages, civil penalties provided by statutet
ff
r
t
59
accruedr
prior to July 1, 2016, ExxonMobil has retained responsibility for any liabilities that would arise from
the lawsuit pursuant to the agreement relating to the acquisition of the Torrance refinery and logistics assets. On
October 26, 2018, the matter was removed to the Federal Court, California Central District. A mediation
hearing between the parties was held on August 23, 2019, and the parties reached a tentative agreement in
principle to settle. On March 17, 2019, plaintiffs filed with the court a Notice of Motion and Motion for
Preliminary Approval of Settlement Agreement for the Court’s approval of the proposed settlement pursuant to
which Torrance Refining would pay $2.9 million to resolve the matter and receive a full release and discharge
from any and all claims and make no admission of any wrongdoing or liability. On May 1, 2020 the court
entered an order preliminarily approving the proposed settlement. On August 6, 2020, the settlement of $2.9
million was paid to the class claims administrator. On August 17, 2020 the court granted approval of the final
settlement.
r
e
located at
On September 7, 2018, in Jeprece
Roussell,l et al. v. PBFBB Consultants,tt LLC,CC et al., the plaintiff fileff d an
action in the 19th Judicial District Court for the Parish of East Baton Rouge, alleging numerous causes of
action, including wrongful death, premises liabia lity, negligence, and gross negligence against PBF Holding,
PBFX Operating Company LLC, Chalmette Refining, two individual employees of the Chalmette refinery (the
“PBF Defendants”), two entities, PBF Consultants, LLC (“PBF Consultants”) and PBF Investments that are
Louisiana companies that are not associated with our companies, as well as Clean Harbors,
Inc. and Clean
Harbors Environmental Services, Inc. (collectively, “Clean Harbors”), Mr. Roussell’s employer. Mr. Roussell
was fatally injured on March 31, 2018 while employed by Clean Harbors and performing clay removal work
the Chalmette refinery. Plaintiff seeks unspecified
activities inside a clay treating vessel
compensatory damages for pain and suffering, past and future mental anguish, impairment, past and future
economic loss, attorney’s fees and court costs. On September 25, 2018, the PBF Defenff dants filed an answer in
the state court action denying the allegations. On October 10, 2018, the PBF Defenff dants filed to remove the
case to the United States District Court for the Middle District of Louisiana. On November 9, 2018, plaintiff
filed a motion to remand the matter back to state court and the PBF Defenff dants filed a response on November
30, 2018. On April 15, 2019, the Federal Magistrate Judge filed a Report and Recommendation denying
Plaintiff’s motion to remand and dismissing without prejudice the claims against John Sprafka, Wayne
LaCombe, PBF Consultants and PBF Investments. On June 24, 2019, the Federal Judge adopted the Magistrate
Judge’s Report and Recommendation denying plaintiff’s motion to remand and dismissing without prejudice the
claims against John Sprafka, Wayne LaCombe, PBF Consultants and PBF Investments. On September 18, 2020,
the Federal Magistrate Judge granted plaintiff’s motion to amend in order to add a non-diverse plaintiff and
remand to state court. PBF Defendants filed an opposition to plaintiff’s motion to amend on October 2, 2020.
On October 5, 2020, the Magistrate Judge granted plaintiff’s motion to amend and remanded the case back to
state court. Discovery will continue in state court. We cannot currently estimate the amount or the timing of the
resolution of this matter. The PBF Defenff dants previously issued a tender of defense and indemnity to Clean
Harbors and its insurer pursuant to indemnity obligations contained in the associated services agreement. Clean
Harbors has accepted the tender of defense and indemnity, and Clean Harbors’ insurer has accepted the tender
of defense and indemnity subject to a reservation of rights. We presently believe the outcome will not have a
material impact on our financial position, results of operations or cash flows.
In Varga, Sabrina, et al., v. CRU Railcar Services, LLC,CC et al., we and other of our entities were named
as defendants along with CRURR Railcar Services, LLC (“CRU”) in a lawsuit arising from a railcar explosion that
occurred while CRU employees were cleaning a railcar owned by us. The initial lawsuit alleged that an
employee of CRURR was fatally injured as a result of the explosion. On July 5, 2019, a petition for intervention
was filed alleging that another CRURR employee was fatally injured in the same explosion. On October 7, 2019, a
third CRURR employee joined the lawsuit alleging severe injuries from the incident. We have issued a tender of
defense and indemnity to CRURR and its insurer pursuant to indemnity obligations contained in the associated
services agreement which have not been accepted at this time. Discovery is currently ongoing and the trial date
is currently set for April 12, 2021. We cannot currently estimate the amount or the timing of the resolution of
this matter. We presently believe the outcome will not have a material impact on our financial position, results
of operations or cash flows.
60
We are subjeu
ct to obligations to purchase RINs. On February 15, 2017, we received notification that EPA
records indicated that PBF Holding used potentially invalid RINs that were in fact verified under EPA’s RIN
Quality Assurance Program (“QAP”) by an independent auditor as QAP A RINs. Under the regulations use of
potentially invalid QAP A RINs provided the user with an affirmative defense from civil penalties provided
certain conditions are met. We have asserted the affirmative defense and if accepted by EPA will not be
required to replace these RINs and will not be subject to civil penalties under the program. It is reasonably
possible that EPA will not accept our defense and may assess penalties in these matters but any such amount is
not expected to 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
resources and for the costs of certain health studies. As discussed more
environment, for damages to natural
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.
t
t
t
ITEM 4. MINE SAFETY DISCLOSURE
None.
61
PART II
ITEM 5. MARKET FOR REGISTRANRR
MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
T’S COMMON EQUITY, RELATED STOCKHOLDER
Market Information
PBF Energy Class A common stock trades on the New York Stock Exchange under the symbol “PBF.”
PBF Energy Class B common stock is not publicly-traded.
As of February
r
12, 2021 there were 144 holders of record of PBF Energy Class A common stock and 16
holders of record of PBF Energy Class B common stock.
Dividend and Distribution Policy
PBFBB Energy
PBF Energy is a holding company and has no material assets other than its ownership interests of PBF
LLC. In order for PBF Energy to pay any dividends, it needs to cause PBF LLC to make distributions to it and
the holders of PBF LLC Series A Units, and PBF LLC needs to cause PBF Holding and/or PBFX to make
distributions to it, in at least an amount sufficient to cover cash dividends, if any, declared by PBF Energy. Each
of PBF Holding and PBFX is generally prohibited under Delaware law from making a distribution to a member
to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of the limited
liability company (with certain exceptions) exceed the fair value of its assets. As a result, PBF LLC may be
unable to obtain cash from PBF Holding and/or PBFX to satisfy its obligations and make distributions to PBF
Energy for dividends, if any, to PBF Energy’s stockholders. If PBF LLC makes such distributions to PBF
Energy, the holders of PBF LLC Series A Units will also be entitled to receive pro rata distributions.
The ability of PBF Holding to pay dividends and make distributions to PBF LLC is, and in the future
may be, limited by covenants in its Revolving Credit Facility, the 2025 Senior Secured Notes, the 2028 Senior
Notes, the 2025 Senior Notes and other debt instruments. Subject to certain exceptions, the Revolving Credit
governing the senior notes prohibit PBF Holding from making distributions to PBF
Facility and the indentures
LLC if certain defaults exist. In addition, both the indentures
and the Revolving Credit Facility contain
additional restrictions limiting PBF Holding’s ability to make distributions to PBF LLC.
t
t
While it is impossible to estimate the duration or ultimate financial impact of the COVID-19 pandemic
on our business, our results have been adversely impacted in a significant manner. As part of our strategic plan
to navigate these current extraordinary and volatile markets, we have suspended PBF Energy’s quarterly
dividend on its Class A common stock. We will continue to monitor and evaluate our dividend policy as market
conditions develop and our business outlook becomes clearer, however, we do not anticipate that our Board of
Directors will declare a dividend in the foreseeable future.
t
The declaration, amount and payment of any future dividends on shares of PBF Energy Class A common
stock will be at the sole discretion of PBF Energy’s Board Of Directors, and we are not obligated under any
applicable laws, our governing documents or any contractual agreements with our existing owners or otherwise
to declare or pay any dividends or other distributions (other than the obligations of PBF LLC to make tax
distributions to its members).
62
PBF Logistics LP
Due to the uncertainty of the full impact of the COVID-19 pandemic will have on its business, PBFX has
decided to reduce their quarterly distribution to its minimum quarterly distribution of $0.30 per unit, which
represents a shift in its distribution strategy to build cash flow coverage, de-lever the business and strengthen its
financial resources as they continue to pursue potential organic growth projects or strategic acquisition
opportunities. PBFX intends to continue to pay at least the minimum quarterly distribution to the holders of its
common units, including PBF LLC, of at least $0.30 per unit per quarter, or $1.20 per unit on an annualized
basis, to the extent PBFX has sufficient cash from operations after the establia
shment of cash reserves and the
payment of costs and expenses, including reimbursements of expenses to PBFX’s general partner. However,
there is no guarantee that PBFX will pay the minimum quarterly distribution or any amount on the units we own
in any quarter. Even if PBFX’s cash distribution policy is not modified or revoked, the amount of distributions
paid under the policy and the decision to make any distribution is determined by its general partner, taking into
consideration the terms of PBFX’s partnership agreement and debt facilities.
PBF Holding made $23.1 million in distributions to PBF LLC during the year ended December 31, 2020.
PBF LLC used $36.3 million, which included $19.5 million distributed from PBF Holding, to make one non-tax
distribution of $0.30 per unit to its members, of which $35.9 million was distributed to PBF Energy and the
balance was distributed to PBF LLC’s other members. PBF Energy used this $35.9 million to pay an equivalent
cash dividend of $0.30 per share of its Class A common stock on March 17, 2020. There were no tax
distributions to PBF LLC’s other members in 2020. In addition, PBFX made aggregate quarterly distributions of
$89.3 million ($1.42 per unit) during the year ended December 31, 2020 to holders of its common units, of
which $42.5 million was paid to PBF LLC.
PBF LLC expects to continue to make tax distributions to its members in accordance with its amended
and restated limited liability company agreement.
63
Stock Performance Graph
In accordance with Stt
ECSS
not be deemed to be “solic
rules, the informat
iting material,”l
or to be “filed” with t
tt
“
l
as provided under Item 201(e) of Regul
ati
14A or 14C, oCC ther thantt
e Graph below shall
he SEC, oCC r subject to the SEC’s Regulati
on S-K, or to the liabilities of So
l
ecSS tion 18 of the
on
ion contained in the Stock Performanc
r
ff
e
to the extee ent that we specificff ally rll
equest that the
informat
ff
Securities Exchange Act of 1o
934, as amended, excepte
ion be treated as soliciting material or specifii cally incorporate it by rb
933, as amended.
under the Securities Act of 1o
eference into a document
dd
filed
This performance graph and the related textual
t
information are based on historical data and are not
indicative of futuret
performance. The following line grapha
compares the cumulative total returnt
on an
investment in our common stock against the cumulative total returnt
of the S&P 500 Composite Index and an
index of peer companies (that we selected) for the periods commencing December 31, 2015 through
December 31, 2020. Our peer group consists of the following companies that are engaged in refining operations
in the U.S.: CVR Energy Inc., Delek US Holdings Inc., HollyFrontier Corp, Marathon Petroleum Corp, Phillips
66 and Valero Energy Corp.
PBF Energy Class A common stock
$
100.00
$
79.45
$
106.11
$
100.87
$
101.04
$
23.14
12/31/2015
12/31/2016
12/31/2017
12/31/2018
12/31/2019
12/31/2020
S&P 500
Peer Group
100.00
100.00
111.96
102.08
136.40
135.56
130.42
120.68
171.49
146.17
203.04
95.97
64
Recent Sales of Unregistered Securities—Exchange of PBF LLC Series A Units for PBF Energy Class A
Common Stock
In the fourth quarter of 2020, there were no exchanges of PBF LLC Series A Units for shares of PBF
Energy Class A common stock in transactions exempt from registration under Section 4(2) of the Securities Act.
No exchanges were made by any of our directors or executive officers.
65
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATRR IONS
The following review of our results of operations and financial condition should be read in conjunction
with “Item 1. Business”, “Item 1A. Risk Factors”, “Item 2. Properties”, and “Item 8. Financial Statements and
Supplementary Data,” respectively, included in this Annual Report on Form 10-K.
CAUTIONARY STATEMENT FOR THE PURPOSE OF SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
a
This Annual Report on Form 10-K contains certain “forward-looking statements,” as defined in the
Private Securities Litigation Reform Act of 1995 (“PSLRA”), 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,” “approxim
ately,” “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 made under the safe harbor of the PSLRARR except to the extent such statements relate to the
operations of a partnership or limited liability company. In addition, we, through our senior management, from
time to time make forward-looki
ng 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 upon many detailed assumptim ons. While we believe that our assumptim ons 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.
ff
t
Important factors that could cause actual results to differ materially from our expectations, which we
refer to as “cautionary statements,” are disclosed under “Item 1A. Risk Factors,” and “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual Report
on Form 10-K. All forward-looking information in this Annual Report on Form 10-K and subsequent written
and oral forward-looking statements attributablea
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:
ff
•the effect of the COVID-19 pandemic and related governmental and consumer responses on our business,
financial condition and results of operations;
•our ability to target and execute expense reduction measures in 2021 and thereafter;
•supply, demand, prices and other market conditions for our products, including volatility in commodity
prices;
• the effects of competition in our markets;
•changes in currency exchange rates, interest rates and capita
al costs;
• adverse developments in our relationship with both our key employees and unionized employees;
•our ability to operate our businesses efficiently, manage capia tal expenditures and costs (including general
and administrative expenses) and generate earnings and cash flow;
bsubstantiiall i dindebbteddness, iincl di
•our
securedd notes andd unsecuredd notes;
ludi gng hthe iimpact of hthe recent downgra
downgraddes to our corporate
ing,
credit rating,
di
•our expectations with respect to our capita
al improvement and turnaround projects;
o• ur supply and inventory intermediation arrangements expose us to counterparty credit and performance
risk;
66
•termination of our Inventory Intermediation Agreements with J. Aron, which could have a material
adverse effect on our liquidity, as we would be required to finance our crude oil, intermediate and refined
products inventory covered by the agreements. Additionally, we are obligated to repurchase from J. Aron
certain J. Aron Products located at our J. Aron Storage Tanks upon termination of these agreements;
•restrictive covenants in our indebtedness that may adversely affecff
t our operational flexibility;
• payments by PBF Energy to the current and former holders of PBF LLC Series A Units and PBF LLC
Series B Units under PBF Energy’s Tax Receivable Agreement for certain tax benefits we may claim;
•our assumptim ons regarding payments arising under PBF Energy’s Tax Receivable Agreement and other
arrangements relating to our organizational structuret
are subject to change due to various factors,
including, among other factors, the timing of exchanges of PBF LLC Series A Units for shares of PBF
Energy Class A common stock as contemplated by the Tax Receivable Agreement, the price of PBF
Energy Class A common stock at the time of such exchanges, the extent to which such exchanges are
taxable, and the amount and timing of our income;
•our expectations and timing with respect to our acquisition activity and whether such acquisitions are
accretive or dilutive to shareholders;
•the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions due to
problems at PBFX or with third-party logistics infrastructuret
or operations, including pipeline, marine and
rail transportation;
•the possibility that we might not make further dividend payments;
•the inability of our subsidiaries to freely pay dividends or make distributions to us;
•the impact of current and future laws, ruli
of rules and regulations regarding transportation of crude oil by rail;
rr
ngs and governmental regulations, including the implementation
•the threat of cyber-attacks;
•our increased dependence on technology;
•the effectiveness of our crude oil sourcing strategies, including our crude by rail strategy and related
commitments;
•adverse impacts related to legislation by the federal government lifting the restrictions on exporting U.S.
crude oil;
•adverse impacts from changes in our regulatory environment, such as the effects of compliance with
AB32, or from actions taken by environmental interest groups;
•market risks related to the volatility in the price of RINs required to comply with the Renewable Fuel
Standard and GHG emission credits required to comply with various GHG emission programs, such as
AB32;
•our ability to complete the successful integration of the Martinez refinery and any other acquisitions into
our business and to realize the benefits from such acquisitions;
•unforeseen liabilities associated with the Martinez Acquisition and any other acquisitions;
•risk associated with the operation of PBFX as a separate, publicly-traded entity;
• potential tax consequences related to our investment in PBFX; and
•any decisions we continue to make with respect to our energy-related logistics assets that may be
transferff
red to PBFX.
67
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 Annual Report on Form 10-K 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 Annual Report on Form 10-K. 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 attributablea
to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing.
Executive Summary
ff
Our business operations are conducted by PBF LLC and its subsidiaries. We were formed
in March 2008
to pursue the acquisitions of crude oil refineries and downstream assets in North America. We own and operate
six domestic oil refineries and related assets located in Delaware City,t Delaware, Paulsboro, New Jersey,
Toledo, Ohio, Chalmette, Louisiana, Torrance, California, and Martinez, California. Based on current
to the East Coast Refining Reconfiguration), our refineries have a combined
configuration (subsequent
ity, known as throughput, of approximately 1,000,000 bpd, and a weighted-average Nelson
processing capac
a
Complexity Index of 13.2 based on current operating conditions. The complem xity and throughput capac
ity 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. We operate in two reportable business segments: Refining and Logistics. Our six
oil refineries are all engaged in the refining of crude oil and other feedstocks into petroleum products, and are
aggregated into the Refining segment. PBFX operates certain logistical assets such as crude oil and refined
petroleum products terminals, pipelines, and storage facilities, which are aggregated into the Logistics segment.
a
Factors Affecting Comparability
Our results over the past three years have been affected by the following events, the understanding of
e and financial
which will aid in assessing the comparability of our period to period financial performanc
condition.
ff
II
COVID-19
and Market Developme
ll
nts
The impact of the unprecedented global health and economic crisis sparked by the COVID-19 pandemic
was amplified late in the quarter ended March 31, 2020 due to movements made by the world’s largest oil
producers to increase market share. This created simultaneous shocks in oil supply and demand resulting in an
economic challenge to our industry which has not occurred since our formation. This combination has resulted
in significant demand reduction for our refined products and atypical volatility in oil commodity prices, which
are expected to continue for the foreseeable future. Our results for the year ended December 31, 2020 were
impacted by the sustained decreased demand for refined products and the significant decline in the price of
crude oil, both of which negatively impacted our revenues, cost of products sold and operating income and
lowered our liquidity. Throughput rates across our refining system also decreased and we are currently
operating our refineries at reduced
d rates. Refer to “Item 1. Business - Recent Developments” and “Item 1A.
Risk Factors” for further information.
68
East Coast Refining Reconfigur
ff
ation
On December 31, 2020, we completed the East Coast Refining Reconfiguration. As part of the
processing units at the Paulsboro refinery, resulting in
al and operating costs. Based on
reconfiguration process, we idled certain of our majora
lower overall throughput and inventory levels in addition to decreases in capita
this reconfiguration, our East Coast throughput capaa
city is approximately 285,000 barrels per day.
Turnaround Coststt and Assetstt under Construction
As a result of the East Coast Refining Reconfiguration, certain majora
processing units were temporarily
idled. As such, we accelerated the recognition of approximately $56.2 million of unamortized deferred
turnaround amortization costs associated with these idled units. Additionally, we abandoned certain projects
related to assets under construction related to these idled assets, resulting in an impairment charge of
approximately $11.9 million.
Capital Project Abandonments
In connection with our ongoing strategic initiative to address the COVID-19 pandemic, including our
East Coast Refining Reconfiguration, we reassessed our refinery wide slate of capita
al projects that were either in
process or not yet placed into service as of December 31, 2020. Based on this reassessment and our strategic
plan to reduce capita
al projects across the refining system,
resulting in an impairment charge of approximately $79.9 million.
al expenditures, we decided to abandon various capita
Severance Costs
Following the onset of the COVID-19 pandemic, we have implemented a number of cost reduction
initiatives to strengthen our financial flexibility and rationalize overhead expenses, including reductions in our
workforce. During the second quarter of 2020, we reduced headcount across our refineries, which resulted in
approximately $12.9 million of severance related costs. Additionally, as a result of the East Coast Refining
Reconfiguration, we incurred charges in the fourth quarter of 2020 of approximately $11.8 million of severance
related expenses. These severance costs are included in general and administrative expenses.
Tax Receivable Agreement
In connection with PBF Energy’s initial public offering, PBF Energy entered into a Tax Receivable
Agreement pursuant to which PBF Energy is required to pay the members of PBF LLC, who exchange their
units for PBF Energy Class A common stock or whose units PBF Energy purchases, approximately 85% of the
cash savings in income taxes that PBF Energy realizes as a result of the increase in the tax basis of its interest in
PBF LLC, including tax benefits attributablea
to payments made under the Tax Receivable Agreement. There
was no Tax Receivable Agreement liabia lity as of December 31, 2020. PBF Energy has recognized, as of
December 31, 2019 and 2018, a liability for the Tax Receivable Agreement of $373.5 million, reflecting the
estimate of the undiscounted amounts that PBF Energy expects to pay under the agreement, net of the impact of
a deferred tax asset valuation allowance recognized in accordance with ASC 740, Income Taxes. As future
taxable income is recognized, increases in our Tax Receivable Agreement liabia lity may be necessary in
conjunction with the revaluation of deferred tax assets. Refer to “Note 14 - Commitments and Contingencies”
and “Note 21 - Income Taxes” of our Notes to Consolidated Financial Statements for more details.
Early Return of Railcars
In the fourth quarter of 2020 we agreed to voluntarily returnt
a portion of railcars under an operating lease
in order to rationalize certain components of our railcar fleet. Under the terms of the lease amendment, we
agreed to pay amounts in lieu of satisfaction of returnt
conditions (the “early termination penalty”). As a result,
we recognized an expense of $12.5 million within Cost of sales, consisting of charges for the early termination
penalty and charges related to the remaining lease payments associated with the railcars identifiedff
within the
amended lease, all of which were idled and out of service as of December 31, 2020.
69
In the third quarter of 2018 we agreed to voluntarily returnt
a portion of railcars under an operating lease
in order to rationalize certain components of our railcar fleet. Under the terms of the lease amendment, we
agreed to pay the early termination penalty and a reduced rental fee over the remaining term of the lease. As a
result, we recognized an expense of $52.3 million for the year ended December 31, 2018 included within Cost
of sales consisting of (i) a $40.3 million charge for the early termination penalty and (ii) a $12.0 million charge
related to the remaining lease payments associated with the railcars identifiedff
within the amended lease, all of
which were idled and out of service as of December 31, 2018.
Torrance Land Sales
On December 30, 2020, August 1, 2019 and August 7, 2018, we closed on third-party sales of parcels of
real property acquired as part of the Torrance refinery, but not part of the refinery itself. The sales resulted in
gains of approximately $8.1 million, $33.1 million and $43.8 million in the fourth quarter of 2020, third quarter
of 2019 and third quarter of 2018, respectively, included within Gain on sale of assets in the Consolidated
Statements of Operations.
Sale of Hydrogen Plants
On April 17, 2020, we closed on the sale of five hydrogen plants to Air Products and Chemicals, Inc.
(“Air Products”) in a sale-leaseback transaction for gross cash proceeds of $530.0 million and recognized a gain
of $471.1 million. In connection with the sale, we entered into a transition services agreement through which
hydrogen, steam, carbon dioxide and other products (the “Products”) to the
Air Products will exclusively supply
Martinez, Torrance and Delaware Cityt
refineries for a specified period (not expected to exceed 18 months). The
transition services agreement also requires certain maintenance and operating activities to be provided by PBF
Holding, for which we will be reimbursed, during the term of the agreement. In August 2020, the parties
the Products for a term of
executed long-term supply agreements pursuant to which Air Products will supply
fifteen years at these same refineries.
u
u
Debt and Credit Facilities
Credit Ratings
h
iDuri gng hthe f
downgrad dded our corporate familymily
fourth quarter of 2020, ea hch of our credidit ra itingg gage
ra itingg as wellll as our unsecuredd
loutl kook as the refining
ings,
dand securedd notes ratings,
sector continues to experience weak refining margins due to the COVID-19 pandemic and related negative
demand impact. As a res lult of hthe downgra
borrowi gng under our Revolving Credit Facility has
increased in accordance with the Revolving Credit Agreement. The 2028 Senior Notes and the 2025 Senior
Notes are rated B3 by Moody’s, B+ by S&P, and B+ by Fitch. The 2025 Senior Secured Notes are rated Ba3 by
Moody’s, BB by S&P, and BB by Fitch.
incies downgra
ings on
downgradde, hthe cost of b
iwithh lalll ratings
gnega itive
i
Catalystyy Financing Obligati
i
ons
On September 25, 2020, we closed on agreements to sell a portion of our precious metals catalyst to
certain major commercial banks for approximately $51.9 million and subsequently leased the catalyst back. The
precious metals financing arrangements cover a portion of the catalyst used in our East Coast Refining System,
Martinez and Toledo refineries. The volumes of the precious metal catalyst and the interest rates are fixed over
the term of each financing arrangement. We are obligated to repurchase the precious metals catalyst at fair
market value upon expiration of these leases, and the earliest expiration is September 2021. For all leases not
renewed at maturity, we have the ability and intent to finance such debt through availability under our revolving
credit facilities.
70
Senior Notes
On May 13, 2020, we issued $1.0 billion in aggregate principal amount of the initial 2025 Senior Secured
Notes. The net proceeds from this offering were approximately $982.9 million after deducting the initial
purchasers’ discount and offering expenses. We used the net proceeds for general corporate purposes.
On December 21, 2020, we issued $250.0 million, in a tack-on offering, in aggregate principal amount of
the additional 2025 Senior Secured Notes. The net proceeds from this offering were approximately
$245.7 million after deducting the initial purchasers’ discount and estimated offering expenses. We used the net
proceeds for general corporate purposes.
On January 24, 2020, we issued $1.0 billion in aggregate principal amount of the 2028 Senior Notes. The
net proceeds from this offering were approximately $987.0 million after deducting the initial purchasers’
discount and offering expenses. We used $517.5 million of the proceeds to fully redeem our 2023 Senior Notes
and the balance to fund a portion of the cash consideration for the Martinez Acquisition.
On February 14, 2020, we exercised our rights under the indenturet
governing the 2023 Senior Notes to
redeem all of the outstanding 2023 Senior Notes at a price of 103.5% of the aggregate principal amount thereof
plus accrued and unpaid interest. The aggregate redemption price for all 2023 Senior Notes approximated
$517.5 million plus accrued and unpaid interest. The difference
between the carrying value of the 2023 Senior
Notes on the date they were redeemed and the amount for which they were redeemed was $22.2 million and has
been classified as Debt extinguishment costs in the Consolidated Statements of Operations for the year ending
December 31, 2020.
ff
Refer to “Note 10 - Credit Facilities and Debt” of our Notes to Consolidated Financial Statements, for
further information.
PBFBB Holding Revolving Credit Facilitytt
During the year ended December 31, 2020, we used advances under our Revolving Credit Facility to
fund a portion of the Martinez Acquisition and for other general corporate purposes.
On May 2, 2018, PBF Holding and certain of its wholly-owned subsidiaries, as borrowers or subsidiary
guarantors, replaced our existing asset-based revolving credit agreement dated as of August 15, 2014 (the
“August 2014 Revolving Credit Agreement”) with the Revolving Credit Facility. Among other things, the
Revolving Credit Facility increases the maximum commitment available to PBF Holding from $2.6 billion to
$3.4 billion, extends the maturity date to May 2023, and redefines certain components of the Borrowing Base,
as defined in the Revolving Credit Agreement, to make more funding available for working capita
al and other
general corporate purposes. In addition, an accordion feature allows for commitments of up to $3.5 billion. The
commitment fees on the unused portion, the interest rate on advances and the fees for letters of credit are
consistent with the August 2014 Revolving Credit Agreement and further described in “Note 10 - Credit
Facilities and Debt” of our Notes to Consolidated Financial Statements.
The outstanding borrowings under the Revolving Credit Facility as of December 31, 2020 were
$900.0 million. There were no outstanding borrowings under the Revolving Credit Facility as of December 31,
2019 and 2018, respectively.
PBFXBB
Revolving Credit Facilitytt
On July 30, 2018, PBFX entered into the PBFX Revolving Credit Facility with Wells Fargo Bank,
National Association, as administrative agent, and a syndicate of lenders. The PBFX Revolving Credit Facility
amended and restated the May 2014 PBFX Revolving Credit Facility to, among other things, increase the
to PBFX from $360.0 million to $500.0 million and extend the maturity date
maximum commitment availablea
to July 2023. PBFX has the ability to increase the maximum amount of the PBFX Revolving Credit Facility by
an aggregate amount of up to $250.0 million to a total facility size of $750.0 million, subject to receiving
71
increased commitments from lenders or other financial institutions and satisfaction of certain conditions. The
commitment fees on the unused portion, the interest rate on advances, and the fees for letters of credit are
consistent with the May 2014 PBFX Revolving Credit Facility. The PBFX Revolving Credit Facility is
guaranteed by a limited guaranty of collection from PBF LLC.
During the year ended December 31, 2020, PBFX made net repayments of $83.0 million on the PBFX
Revolving Credit Facility. During 2019 and 2018, PBFX incurred net borrowings of $127.0 million and $126.3
million, respectively, primarily to fund acquisitions and capita
al projects.
The outstanding borrowings under the PBFX Revolving Credit Facility were $200.0 million, $283.0
million and $156.0 million as of December 31, 2020, 2019 and 2018, respectively.
Martinez Acquisition
We acquired the Martinez refinery and related logistics assets from Shell Oil Products on February 1,
2020 for an aggregate purchase price of $1,253.4 million, including final working capita
al of $216.1 million and
the obligation to make certain post-closing earn-out payments to Shell Oil Products based on certain earnings
thresholds of the Martinez refinery for a period of up to four years (the “Martinez Contingent Consideration”).
The transaction was financed through a combination of cash on hand, including proceeds from the 2028 Senior
Notes, and borrowings under the Revolving Credit Facility.
The Martinez refinery is located on an 860-acre site in the City of Martinez, 30 miles northeast of San
Francisco, California. The refinery is a high-conversion 157,000 bpd, dual-coking facility with a Nelson
Complexity Index of 16.1, making it one of the most complex refineries in the United States. The facility is
strategically positioned in Northern California and provides for operating and commercial synergies with the
Torrance refinery located in Southern California. In addition to refining assets, the Martinez Acquisition
includes a number of high-quality onsite logistics assets including a deep-water marine facility, product
distribution terminals and refinery crude and product storage facilities with approximately 8.8 million barrels of
shell capac
ity.
a
Inventory Intermediation Agreements
The Inventory Intermediation Agreements with J. Aron were amended in the first quarter of 2019 and
amended and restated in the third quarter of 2019, pursuant
to which certain terms of the Inventory
Intermediation Agreements were amended, including, among other things, the maturity date. On March 29,
2019 the Inventory Intermediation Agreement by and among J. Aron, PBF Holding and DCR was amended to
add the East Coast Storage Assets as a location and crude oil as a new product type to be included in the
products sold to J. Aron by DCR. On August 29, 2019, the Inventory Intermediation Agreement by and among
J. Aron, PBF Holding and PRC was extended to December 31, 2021, which term may be further extended by
mutual
consent of the parties to December 31, 2022 and the Inventory Intermediation Agreement by and among
t
J. Aron, PBF Holding and DCR was extended to June 30, 2021, which term may be further extended by mutual
consent of the parties to June 30, 2022. We intend to either extend or replace the Inventory Intermediation
Agreements prior to their expirations.
t
Pursuant to each Inventory Intermediation Agreement, J. Aron continues to purchase and hold title to the
J. Aron Products produced by the refinery, and delivered into our J. Aron Storage Tanks. The J. Aron Products
are sold back to us as they are discharged out of our J. Aron Storage Tanks. J. Aron has the right to store the J.
Aron Products purchased in tanks under the Inventory Intermediation Agreements and will retain these storage
rights for the term of the agreements. At expiration or termination of each of the Inventory Intermediation
Agreements, we will have to repurchase the inventories outstanding under
Inventory
Intermediation Agreement at that time. PBF Holding continues to market and sell the J. Aron Products
independently to third parties.
the applicablea
72
PBF Energy Inc. Public Offerff
ings
As a result of the initial public offering and related reorganization transactions, PBF Energy became the
sole managing member of PBF LLC with a controlling voting interest in PBF LLC and its subsidiaries.
Effective with completion of the initial public offering, PBF Energy consolidates the financial results of PBF
LLC and its subsidiaries and records a noncontrolling interest
in its Consolidated Financial Statements
representing the economic interests of PBF LLC unitholders other than PBF Energy. Additionally, a series of
secondary offerings were made subsequent to our IPO whereby funds affiliated with The Blackstone Group L.P.
(“Blackstone”) and First Reserve Management L.P. (“First Reserve”) sold their interests in us. As a result of
these secondary offerings, Blackstone and First Reserve no longer hold any PBF LLC Series A units.
On August 14, 2018, PBF Energy completed a public offering of an aggregate of 6,000,000 shares of
PBF Energy Class A common stock for net proceeds of $287.3 million, after deducting underwriting discounts
and commissions and other offering expenses (the “August 2018 Equity Offering”).
As of December 31, 2020, including the offerings described above, PBF Energy owns 120,122,872 PBF
LLC Series C Units and our current and former executive officers and directors and certain employees and
others beneficially own 970,647 PBF LLC Series A Units. The holders of our issued and outstanding shares of
PBF Energy Class A common stock have 99.2% of the voting power in us and the members of PBF LLC, other
than PBF Energy through their holdings of Class B common stock, have the remaining 0.8% of the voting
power in us.
PBFX Equity Offerings
24,
On April
2019, PBFX entered
aggregate
of 6,585,500 common units to certain institutional investors in a registered direct offering (the “2019 Registered
Direct Offering”) for gross proceeds of approximately $135.0 million. The 2019 Registered Direct Offering
closed on April 29, 2019.
subscription
agreements
into
sell
an
to
On July 30, 2018, PBFX closed on a common unit purchase agreement with certain funds managed by
Tortoise Capital Advisors, L.L.C. providing for the issuance and sale in a registered direct offering of an
aggregate of 1,775,750 common units for net proceeds of approximately $34.9 million.
As of December 31, 2020, PBF LLC held a 48.0% limited partner interest in PBFX with the remaining
52.0% limited partner interest owned by public common unitholders.
PBFX Assets and Transactions
PBFX’s assets consist of various logistics assets (as described in “Item 1. Business”). Apart from
business associated with certain third-party acquisitions, PBFX’s revenues are derived from long-term, fee-
based commercial agreements with subsidiaries of PBF Holding, which include minimum volume
commitments, for receiving, handling, transferring and storing crude oil, refinff ed products and natural
gas. These
transactions are eliminated by PBF Energy and PBF LLC in consolidation.
t
Since the inception of PBFX in 2014, PBF LLC and PBFX have entered into a series of drop-down
transactions. Such transactions and third-party acquisitions made by PBFX occurring in the three years ended
December 31, 2020 are discussed below.
73
TVPC Acquisit
ii
ion
On April 24, 2019, PBFX entered into the TVPC Contribution Agreement, pursuant to which PBF LLC
contributed to PBFX all of the issued and outstanding limited liability company interests of TVP Holding for
total consideration of $200.0 million. Prior to the TVPC Acquisition, TVP Holding owned a 50% membership
interest in TVPC. Subsequent to the closing of the TVPC Acquisition on May 31, 2019, PBFX owns 100% of
the membership interests in TVPC. The transaction was financed through a combination of proceeds from the
2019 Registered Direct Offeri
ng and borrowings under the PBFX Revolving Credit Facility.
ff
PBFXBB
IDR Restructuring
On February 28, 2019, PBFX closed on the IDR Restructuring Agreement with PBF LLC and PBF GP,
pursuant to which PBFX’s IDRs held by PBF LLC were canceled and converted into 10,000,000 newly issued
PBFX common units. Subsequent to the closing of the IDR Restructuring, no distributions were made to PBF
LLC with respect to the IDRs and the newly issued PBFX common units are entitled to normal distributions by
PBFX.
East Coast Storage Assets Acquisition
On October 1, 2018, PBFX closed on its agreement with Crown Point to purchase its wholly-owned
subsidiary, CPI Operations LLC (the “East Coast Storage Assets Acquisition”) for total consideration of
al and the Contingent Consideration (as defined in “Note
approximately $127.0 million, including working capita
4 - Acquisitions” of our Notes to Consolidated Financial Statements), comprised of an initial payment at closing
of $75.0 million with a remaining balance of $32.0 million that was paid on October 1, 2019. The residuald
purchase consideration consists of an earn-out provision related to an existing commercial agreement with a
third-party, based on the future results of certain of the acquired idled assets (the “PBFX Contingent
Consideration”). The consideration was financed through a combination of cash on hand and borrowings under
the PBFX Revolving Credit Facility.
Development Assets Acquisition
On July 16, 2018, PBFX and PBF LLC entered into the Development Assets Contribution Agreements,
pursuant to which PBFX acquired from PBF LLC all of the issued and outstanding limited liability company
interests of Toledo Rail Logistics Company LLC, whose assets consist of a loading and unloading rail facility
located at PBF Holding’s Toledo refinery (the “Toledo Rail Products Facility”); Chalmette Logistics Company
LLC, whose assets consist of a truck loading rack facility (the “Chalmette Truckrr
Rack”) and a rail yard facility
(the “Chalmette Rosin Yard”), both of which are located at PBF Holding’s Chalmette refinery; Paulsboro
Terminaling Company LLC, whose assets consist of a lube oil terminal facility located at PBF Holding’s
Paulsboro refinery (the “Paulsboro Lube Oil Terminal”); and DCR Storage and Loading Company LLC, whose
refinery (the “Delaware
assets consist of an ethanol storage facility located at PBF Holding’s Delaware Cityt
Ethanol Storage Facility” and collectively with the Toledo Rail Products Facility, the Chalmette Truckrr
Rack,
the Chalmette Rosin Yard, and the Paulsboro Lube Oil Terminal, the “Development Assets”). The acquisition
of the Development Assets closed on July 31, 2018 for total consideration of $31.6 million consisting of
1,494,134 common units representing limited partner interests in PBFX, issued to PBF LLC.
Knoxville Terminal Acquisiti
ii
on
On April 16, 2018, PBFX completed the purchase of two refined product terminals located in Knoxville,
Tennessee, which include product tanks, pipeline connections to the Colonial Pipeline Company and Plantation
Pipe Line Company pipeline systems and truck loading facilities (the “Knoxville Terminals”) from Cummins
Terminals, Inc. for total cash consideration of $58.0 million, excluding working capita
al adjustments. The
transaction was financed through a combination of cash on hand and borrowings under the PBFX Revolving
Credit Facility.
74
Renewable Fuels Standard
We are subject to obligations to purchase RINs required to comply with the Renewable Fuels Standard.
Our overall RINs obligation is based on a percentage of domestic shipments of on-road fuels as established by
EPA. To the degree we are unable to blend the required amount of biofuels to satisfy our RINs obligation, RINs
must be purchased on the open market to avoid penalties and fines. We record our RINs obligation on a net
basis in Accrued expenses when our 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. We incurred approximately $326.4 million in RINs costs during the year ended
December 31, 2020 as compared to $122.7 million and $143.9 million during the years ended December 31,
2019 and 2018, respectively. The fluctuations in RINs costs are due primarily to volatility in prices for ethanol-
linked RINs and increases in our production of on-road transportation fuels since 2012. Our RINs purchase
obligation is dependent on our actual shipment of on-road transportation fuels domestically and the amount of
blending achieved.
Factors Affecting Operating Results
Overview
Our earnings and cash flows from operations are primarily affected by the relationship between refined
product prices and the prices for crude oil and other feedstocks. The cost to acquire crude oil and other
feedstocks and the price of refined petroleum products ultimately sold depends on numerous factors beyond our
control, including the supply of, and demand for, crude oil, gasoline, diesel and other refined petroleum
products, which, in turn, depend on, among other factors, changes in global and regional economies, weather
conditions, global and regional political affairs, production levels, the availabila
ity of imports, the marketing of
ity, prevailing exchange rates and the extent of government regulation. Our
competitive fuels, pipeline capac
revenue and income from operations fluctuate significantly with movements in industry refined petroleum
product prices, our materials cost fluctuate significantly with movements in crude oil prices and our other
operating expenses fluctuate with movements in the price of energy to meet the power needs of our refineries.
In addition, the effect of changes in crude oil prices on our operating results is influenced by how the prices of
refined products adjust to reflect such changes.
a
Crude oil and other feedstock costs and the prices of refined petroleum products have historically been
subject to wide fluctuation. Expansion and upgrading of existing facilities and installation of additional refinery
distillation or conversion capac
international political and
economic developments and other factors beyond our control are likely to continue to play an important role in
refining industry economics. These factors can impact, among other things, the level of inventories in the
market, resulting in price volatility and a reduction or increase in product margins. Moreover, the industry
typically experiences seasonal fluctuations in demand for refined petroleum products, such as for gasoline and
diesel, during the summer driving season and for home heating oil during the winter.
ity, price volatility, governmental regulations,
a
Benchmark Refie niii ngii Margins
In assessing our operating performance, we compare the refining margins (revenue less materials cost) of
each of our refineries against a specific benchmark industry refining margin based on crack spreads. Benchmark
refining margins take into account both crude and refined petroleum product prices. When these prices are
l—that, when multiplied by
combined in a formula they provide a single value—a gross margin per barrer
throughput, provides an approximation of the gross margin generated by refining activities.
The performance of our East Coast refinerie
s generally follows the Dated Brent (NYH) 2-1-1 benchmark
refining margin. Our Toledo refinery generally follows the WTI (Chicago) 4-3-1 benchmark refining margin.
generally follows the LLS (Gulf Coast) 2-1-1 benchmark refining margin. Our Torrance
Our Chalmette refinery
refinery generally follows the Alaskan North Slope (“ANS”AA
) (West Coast) 4-3-1 benchmark refining margin.
Our Martinez refinery generally follows the ANS (West Coast) 3-2-1 benchmark refining margin.
ff
ff
75
While the benchmark refinery margins presented below under “Results of Operations—Market
Indicators” are representative of the results of our refineries, each refinery’s realized gross margin on a per
barrel basis will differ from the benchmark due to a variety of factors affecting the perfoff rmance of the relevant
type of crude oil
refinery to its corresponding benchmark. These factors include the refinery’s actual
throughput, product yield differenti
als and any other factors not reflected in the benchmark refining margins,
such as transportation costs, storage costs, credit fees, fuel consumed during production and any product
premiums or discounts, as well as inventory fluctuations, timing of crude oil and other feedstock purchases, a
rising or declining crude and product pricing environment and commodity price management activities. As
discussed in more detail below, each of our refineries, depending on market conditions, has certain feedstock-
cost and product-value advantages and disadvantages as compared to the refinery’s relevant benchmark.
ff
Creditdd Riskii Manageme
a
nt
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
amount of the receivables that are
financial loss to us. Our exposure to credit risk is reflected in the carrying
presented in our Consolidated Balance Sheets. To minimize credit risk, all customers are subjeu
ct to extensive
credit verification procedures and extensions of credit above defined thresholds are to be approved by the senior
management. Our intention is to trade only with recognized creditworthy third parties. In addition, receivable
balances are monitored on an ongoing basis. We also limit the risk of bad debts by obtaining security such as
guarantees or letters of credit.
rr
We continually monitor our market risk exposure, including the impact and developments related to the
COVID-19 pandemic and the related governmental and consumer responses which have introduced significant
volatility in the financial markets.
Other Factorsrr
We currently source our crude oil for our refineries on a global basis through a combination of market
purchases and short-term purchase contracts, and through our crude oil supply
agreements. We believe
purchases based on market pricing has given us flexibility in obtaining crude oil at lower prices and on a more
accurate “as needed” basis. Since our East Coast refineries access their crude slates from the Delaware River via
ship or barge and through our rail facilities at Delaware City, these refinff eries have the flexibility to purchase
crude oils from the Mid-Continent and Western Canada, as well as a number of different countries. We have not
sourced crude oil under our crude supply arrangement with PDVSA since 2017 as PDVSA has suspended
deliveries due to our inabila
payment terms and because of U.S. government
ly acceptablea
sanctions against PDVSA.
ity to agree to mutual
u
t
In the past several years, we expanded and upgraded the existing on-site railroad infrastructuret
on the
east coast. Currently, crude oil delivered by rail is consumed at our East Coast refineries. The Delaware City rail
unloading facilities, and the East Coast Storage Assets, allow our East Coast refineries to source WTI-based
crude oils from Western Canada and the Mid-Continent, which we believe, at times, may provide cost
advantages versus traditional Brent-based international crude oils. In support of this rail strategy, we have at
ly
times entered into agreements to lease or purchase crude railcars. Certain of these railcars were subsequent
sold to a third-party, which has leased the railcars back to us for periods of between four and seven years. In
subsequent periods, we have sold or returned
railcars to optimize our railcar portfolio. Our railcar fleet, at times,
provides transportation flexibility within our crude oil sourcing strategy that allows our East Coast refineries to
process cost advantaged crude
from Canada and the Mid-Continent.
u
rr
t
is also important to our profitability. Major operating costs include costs
Our operating cost structuret
relating to employees and contract labor,
energy, maintenance and environmental compliance, and emission
a
control regulations, including the cost of RINs required for compliance with the Renewable Fuels Standard. The
predominant variablea
cost is energy, in particular, the price of utilities, natural gas and electricity.
76
Our operating results are also affected by the reliability of our refinery operations. Unplanned downtime
of our refinery assets generally results in lost margin opportunity and increased maintenance expense. The
financial impact of planned downtime, such as majoa r turnaround maintenance, is managed through a planning
ity of resources to perform the
process that considers such things as the margin environment, the availabila
needed maintenance and feed logistics, whereas unplanned downtime does not afford us this opportunity.
Furthermore, during 2020 our operating results were negatively impacted by the ongoing COVID-19
pandemic which has caused a significant decline in the demand for our refined products and a decrease in the
prices for crude oil and refined products, both of which have negatively impacted our revenues, cost of sales
and operating income.
ii
Refie nery
-Specifici
Information
The following section includes refinery-specific information related to our operations, crude oil
differentials, ancillary costs, and local premiums and discounts.
ll
East Coast Refine
ing System (Delaware City and Paulsboro
Refie neries). The benchmark refining margin
for the East Coast Refining System is calculated by assuming that two barrels of Dated Brent crude oil are
converted into one barrel of gasoline and one barrel of diesel. We calculate this benchmark using the NYH
market value of reformulated blendstock for oxygenate blending (“RBOB”) and ULSD against the market value
of Dated Brent and refer to the benchmark as the Dated Brent (NYH) 2-1-1 benchmark refining margin. The
East Coast Refining System has a product slate of approximately 47% gasoline, 32% distillate, 2% high-value
Group I lubricants, 2% high-value petrochemicals, with the remaining portion of the product slate comprised of
lower-value products (3% petroleum coke, 4% LPGs, 7% black oil and 3% other). For this reason, we believe
the Dated Brent (NYH) 2-1-1 is an appropriate benchmark industry refining margin. The majoa rity of East Coast
refining revenues are generated off NYH-based market prices.
The East Coast Refining System’s realized gross margin on a per barrel basis is projected to differ from
the Dated Brent (NYH) 2-1-1 benchmark refining margin due to the following factors:
d
the system processes a slate of primarily medium and heavy sour crude oils, which has constitutet
•
approximately 60% to 70% of total throughput. The remaining throughput consists of sweet crude oil and
other feedstocks and blendstocks. In addition, we have the capabi
lity to process a significant volume of
light, sweet crude oil depending on market conditions. Our total throughput costs have historically priced at
a discount to Dated Brent; and
a
•
as a result of the heavy, sour crude slate processed at our East Coast Refining system, we produce
lower value products including sulfur, carbon dioxide and petroleum coke. These products are priced at a
significant discount to RBOB and ULSD.
•
the Paulsboro refinery produces Group I lubricants which carry a premium sales price to RBOB and
ULSD and the black oil is sold as asphalt which may be sold at a premium or discount to Dated Brent based
on the market.
Toledo Refie nery. The benchmark refining margin for the Toledo refinery is calculated by assuming that
four barrels of WTI crude oil are converted into three barrels of gasoline, one-half barrel of ULSD and one-half
barrel of jet fuel. We calculate this refining margin using the Chicago market values of CBOB and ULSD and
the United States Gulf Coast value of jet fuel against the market value of WTI and refer to this benchmark as the
WTI (Chicago) 4-3-1 benchmark refining margin. Our Toledo refinery has a product slate of approximately
53% gasoline, 30% distillate, 4% high-value petrochemicals (including nonene, tetramer, benzene, xylene and
toluene) with the remaining portion of the product slate comprised of lower-value products (4% LPGs, 8%
black oil and 1% other). For this reason, we believe the WTI (Chicago) 4-3-1 is an appropriate benchmark
industry refining margin. The majoa rity of Toledo revenues are generated off Chicago-based market prices.
77
The Toledo refinery’s realized gross margin on a per barrel basis has historically differed
ff
from the WTI
(Chicago) 4-3-1 benchmark refining margin due to the following factors:
the Toledo refinery processes a slate of domestic sweet and Canadian synthetic crude oil. Historically,
•
Toledo’s blended average crude
r
costs have differed from the market value of WTI crude
r
oil;
the Toledo refinery configuration enablea
•
generates a pricing benefit; and
s it to produce more barrels of product than throughput which
the Toledo refinery generates a pricing benefit on some of its refined products, primarily its
•
petrochemicals.
Chalmell
tte Refie nery. The benchmark refining margin for the Chalmette refinery is calculated by assuming
two barrels of LLS crude oil are converted into one barrel of gasoline and one barrel of diesel. We calculate this
benchmark using the US Gulf Coast market value of 87 conventional gasoline and ULSD against the market
value of LLS and refer to this benchmark as the LLS (Gulf Coast) 2-1-1 benchmark refining margin. Our
Chalmette refinery has a product slate of approximately 42% gasoline and 32% distillate, 2% high-value
petrochemicals with the remaining portion of the product slate comprised of lower-value products (9% black
oil, 5% LPGs, 4% petroleum coke, 3% LPGs, and 3% other). For this reason, we believe the LLS (Gulf Coast)
2-1-1 is an appropriate benchmark industry refining margin. The majoa rity of Chalmette revenues are generated
off Gulf Coast-based market prices.
The Chalmette refinery’s realized gross margin on a per barrel basis has historically differed from the LLS
(Gulf Coast) 2-1-1 benchmark refining margin due to the following factors:
the Chalmette refinery has generally processed a slate of primarily medium and heavy sour crude oils,
throughput. The remaining
d approximately 65% to 75% of total
•
which has historically constitutet
throughput consists of sweet crude oil and other feedstocks and blendstocks; and
•
as a result of the heavy, sour crude slate processed at Chalmette, we produce lower-value products
including sulfur and petroleum coke. These products are priced at a significant discount to 87 conventional
gasoline and ULSD.
The PRL (pre-treater, reformer, light ends) project was completed in 2017 which has increased high-
octane, ultra-low sulfur reformate and chemicals production. The new crude oil tank was also commissioned in
2017 and is allowing additional gasoline and diesel exports, reduced RINs compliance costs and lower crude
ship demurrage costs.
Additionally, the idled 12,000 barrel per day coker unit was restarted in the fourth quarter of 2019 to
the potential benefit in the price for heavy and
a
ity to approximately 40,000
increase the refinery’s long-term feedstock flexibility to capture
high-sulfur feedstocks. The unit has increased the refinery’s total coking capac
barrels per day.
a
Torrance Refie nery. The benchmark refining margin for the Torrance refinery is calculated by assuming
that four barrels of ANS crude oil are converted into three barrels of gasoline, one-half barrel of diesel and one-
half barrel of jet fuel. We calculate this benchmark using the West Coast Los Angeles market value of
Californi
a reformulated blendstock for oxygenate blending (“CARBOB”), CARB diesel and jet fuel and refer to
ff
the benchmark as the ANS (West Coast) 4-3-1 benchmark refining margin. Our Torrance refinery has a product
slate of approximately 64% gasoline and 19% distillate with the remaining portion of the product slate
comprised of lower-value products (3% LPG, 3% black oil and 11% other). For this reason, we believe the ANS
(West Coast) 4-3-1 is an appropriate benchmark industry refining margin. The majoa rity of Torrance revenues
are generated off West Coast Los Angeles-based market prices.
78
The Torrance refinery’s realized gross margin on a per barrel basis has historically differed
ff
from the ANS
(West Coast) 4-3-1 benchmark refining margin due to the following factors:
the Torrance refinery has generally processed a slate of primarily heavy sour crude oils, which has
•
historically constituted approximately 80% to 90% of total throughput. The Torrance crude slate has the
lowest API gravity (typically an American Petroleum Institute (“API”) gravity of less than 20 degrees) of
all of our refineries. The remaining throughput consists of other feedstocks and blendstocks; and
as a result of the heavy, sour crude slate processed at Torrance, we produce lower-value products
•
including petroleum coke and sulfur. These products are priced at a significant discount to gasoline and
diesel.
Martinez Refine
ery. The benchmark refining margin for the Martinez refinff eryrr
is calculated by assuming
that three barrels of ANS crude oil are converted into two barrels of gasoline, one-quarter barrel of diesel and
three-quarter barrel of jet fuel. We calculate this benchmark using the West Coast San Francisco market value
of California reformulated blendstock for oxygenate blending (CARBOB), CARB diesel and jet fuel and refer
to the benchmark as the ANS (West Coast) 3-2-1 benchmark refining margin. Our Martinez refinery has a
product slate of approximately 56% gasoline and 34% distillate with the remaining portion of the product slate
comprised of lower-value products (4% petroleum coke, 3% LPG and 3% other). For this reason, we believe the
ANS (West Coast) 3-2-1 is an appropriate benchmark industry refining margin. The majoa rity of Martinez
revenues are generated off West Coast San Francisco-based market prices.
The Martinez refinery’s realized gross margin on a per barrel basis has historically differed from the ANS
(West Coast) 4-3-1 benchmark refining margin due to the following factors:
the Martinez refinery has generally processed a slate of primarily heavy sour crude oils, which has
•
historically constituted approximately 80% to 90% of total throughput. The remaining throughput consists
of other feedstocks and blendstocks; and
as a result of the heavy, sour crude slate processed at Martinez, we produce lower-value products
•
including petroleum coke and sulfur. These products are priced at a significant discount to gasoline and
CARB diesel.
79
Results of Operations
The tablea
s below reflecff
t our consolidated financial and operating highlights for the years ended
December 31, 2020, 2019 and 2018 (amounts in millions, except per share data). Differences between the
results of operations of PBF Energy and PBF LLC primarily pertain to income taxes, interest expense and
noncontrolling interest as shown below. Earnings per share information applies only to the financial results of
PBF Energy. We operate in two reportable business segments: Refining and Logistics. Our oil refineries,
excluding the assets owned by PBFX, are all engaged in the refining of crude oil and other feedstocks into
petroleum products, and are aggregated into the Refining segment. PBFX is a publicly-traded MLP that operates
certain logistics assets such as crude oil and refined petroleum products terminals, pipelines and storage
facilities. PBFX’s operations are aggregated into the Logistics segment. We do not separately discuss our results
by individual segments as, apart from PBFX’s third-party acquisitions, our Logistics segment did not have any
significant third-party revenues and a significant portion of its operating results eliminated in consolidation.
80
PBF Energy
Revenues
Cost and expenses:
Cost of products and other
Year Ended December 31,
2020
2019
2018
$
15,115.9
$
24,508.2
$
27,186.1
14,275.6
21,387.5
24,503.4
Operating expenses (excluding depreciation and
amortization expense as reflected below)
Depreciation and amortization expense
Cost of sales
General and administrative expenses (excluding
depreciation and amortization expense as reflected
below)
Depreciation and amortization expense
Change in fair value of contingent consideration
Impairment expense
Gain on sale of assets
Total cost and expenses
Income (loss) from operations
Other income (expense):
Interest expense, net
Change in Tax Receivablea
Agreement liability
Change in fair value of catalyst obligations
Debt extinguishment costs
Other non-service components of net periodic
benefit cost
Income (loss) before income taxes
Income tax expense
Net income (loss)
Less: net income attributablea
interests
to noncontrolling
Net income (loss) attributable to PBF Energy Inc.
stockholders
Consolidated gross margin
Gross refining margin (1)
Net income available to Class A common stock per
share:
Basic
Diluted
——————————
(1) See Non-GAAP Financial Measures.
$
$
$
$
$
81
1,918.3
551.7
16,745.6
248.5
11.3
(93.7)
98.8
(477.8)
16,532.7
(1,416.8)
(258.2)
373.5
(11.8)
(22.2)
4.3
(1,331.2)
2.1
(1,333.3)
59.1
(1,392.4) $
(1,629.7) $
1,782.3
425.3
23,595.1
284.0
10.8
(0.8)
—
(29.9)
23,859.2
649.0
(159.6)
—
(9.7)
—
(0.2)
479.5
104.3
375.2
55.8
319.4
913.1
496.8
$
2,801.2
(11.64) $
(11.64) $
2.66
2.64
$
$
$
$
$
1,721.0
359.1
26,583.5
277.0
10.6
—
—
(43.1)
26,828.0
358.1
(169.9)
13.9
5.6
—
1.1
208.8
33.5
175.3
47.0
128.3
602.6
2,419.4
1.11
1.10
PBF LLC
Revenues
Cost and expenses:
Cost of products and other
Operating expenses (excluding depreciation and
amortization expense as reflected below)
Depreciation and amortization expense
Cost of sales
General and administrative expenses (excluding
depreciation and amortization expense as reflected
below)
Depreciation and amortization expense
Change in fair value of contingent consideration
Impairment expense
Gain on sale of assets
Total cost and expenses
Income (loss) from operations
Other income (expense):
Interest expense, net
Change in fair value of catalyst obligations
Debt extinguishment costs
Other non-service components of net periodic benefit
cost
Income (loss) before income taxes
Income tax expense (benefit)
Net income (loss)
Less: net income attributablea
interests
to noncontrolling
Net income (loss) attributable to PBF Energy
Company LLC
Year Ended December 31,
2019
2020
2018
$
15,115.9
$
24,508.2
$
27,186.1
14,275.6
21,387.5
24,503.4
1,918.3
551.7
16,745.6
247.7
11.3
(93.7)
98.8
(477.8)
16,531.9
(1,416.0)
(268.5)
(11.8)
(22.2)
4.3
(1,714.2)
6.1
(1,720.3)
76.2
1,782.3
425.3
23,595.1
282.3
10.8
(0.8)
—
(29.9)
23,857.5
650.7
(169.1)
(9.7)
—
(0.2)
471.7
(8.3)
480.0
51.5
$
(1,796.5) $
428.5
$
1,721.0
359.1
26,583.5
275.2
10.6
—
—
(43.1)
26,826.2
359.9
(178.5)
5.6
—
1.1
188.1
8.0
180.1
42.3
137.8
82
Operating Highlights
Key Operating Information
Production (bpd in thousands)
Crude oil and feedstocks throughput (bpd in thousands)
Total crude oil and feedstocks throughput (millions of
barrels)
Consolidated gross margin per barrel of throughput
Gross refining margin, excluding special items, per barrel of
throughput (1)
Refinery operating expense, per barrel of throughput
Crude and feedstocks (% of total throughput) (2)
Year Ended December 31,
2020
2019
2018
737.1
727.7
266.3
(6.12)
3.23
6.89
$
$
$
825.2
823.1
300.4
3.04
8.51
5.61
$
$
$
$
$
$
854.5
849.7
310.0
1.94
9.09
5.34
Heavy
Medium
Light
Other feeff dstocks and blends
Total throughput
Yield (% of total throughput)
Gasoline and gasoline blendstocks
Distillates and distillate blendstocks
Lubes
Chemicals
Other
Total yield
——————————
(1) See Non-GAAP Financial Measures.
42 %
26 %
17 %
15 %
32 %
28 %
26 %
14 %
36 %
30 %
21 %
13 %
100 %
100 %
100 %
51 %
30 %
1 %
1 %
18 %
101 %
49 %
32 %
1 %
2 %
16 %
100 %
50 %
32 %
1 %
2 %
16 %
101 %
(2) We define heavy crude oil as crude oil with an API gravity of less than 24 degrees. We definff e 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.
83
The table below summarizes certain market indicators relating to our operating results as reported by Platts.
Dated Brent crude oil
West Texas Intermediate (WTI) crude oil
Light Louisiana Sweet (LLS) crude oil
Alaska North Slope (ANS) crude
r
oil
Crack Spreads
Dated Brent (NYH) 2-1-1
WTI (Chicago) 4-3-1
LLS (Gulf Coast) 2-1-1
ANS (West Coast-LA) 4-3-1
ANS (West Coast-SF) 3-2-1
Crude Oil Differentials
Dated Brent (foreign) less WTI
Dated Brent less Maya (heavy, sour)
Dated Brent less WTS (sour)
Dated Brent less ASCI (sour)
WTI less WCS (heavy, sour)
WTI less Bakken (light, sweet)
WTI less Syncrude (light, sweet)
WTI less LLS (light, sweet)
WTI less ANSAA
(light, sweet)
t
Natural
gas (dollars per MMBTU)
2020 Comparem
d to 2tt
019
Year Ended December 31,
2020
2019
2018
(dollars per barrel, except as noted)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
41.62
39.25
41.13
42.20
9.11
6.30
7.59
11.30
9.99
2.37
5.37
2.33
1.81
10.72
2.41
2.13
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
64.34
57.03
62.67
65.00
12.68
15.25
12.43
18.46
17.16
7.31
6.76
8.09
3.73
13.61
0.66
0.18
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(1.88) $
(2.95) $
2.13
$
(5.64) $
(7.97) $
2.53
$
71.34
65.20
70.23
71.54
13.17
14.84
12.30
15.48
14.49
6.14
8.70
13.90
4.64
26.93
2.86
6.84
(5.03)
(6.34)
3.07
ff
Overview—ww PBF Energy net loss was $(1,333.3) million for the year ended December 31, 2020 compared
to net income of $375.2 million for the year ended December 31, 2019. PBF LLC net loss was $(1,720.3)
million for the year ended December 31, 2020 compared to net income of $480.0 million for the year ended
to PBF Energy stockholders was $(1,392.4) million, or $(11.64) per
December 31, 2019. Net loss attributablea
diluted share, for the year ended December 31, 2020 ($(11.64) per share on a full
y-exchanged, fully-diluted
basis based on adjusted full
y-exchanged, fully-diluted basis
y-converted net loss excluding special items, as described below in Non-GAAP Financial
based on adjusted full
to PBF Energy stockholders of $319.4 million, or $2.64 per
Measures) compared to net income attributablea
y-exchanged, fully-diluted basis
diluted share, for the year ended December 31, 2019 ($2.64 per share on a full
based on adjusted full
y-exchanged, fully-diluted basis based
y-converted net income excluding special items, as described below in Non-GAAP Financial
on adjusted full
to PBF Energy stockholders represents PBF Energy’s equity interest in
Measures). The net income attributablea
PBF LLC’s pre-tax income, less appl
icable income tax expense. PBF Energy’s weighted-average equity interest
in PBF LLC was 99.1% and 99.0% for the years ended December 31, 2020 and 2019, respectively.
y-converted net loss, or $(11.78) per share on a full
y-converted net income, or $0.90 per share on a full
a
ff
ff
ff
ff
ff
ff
ff
84
Our results for the year ended December 31, 2020 were positively impacted by special items consisting of
a gain on the sale of hydrogen plants of $471.1 million, or $345.8 million net of tax, a pre-tax gain on the sale of
land at our Torrance refinery of $8.1 million, or $5.9 million net of tax, a change in fair value of the contingent
consideration related to both the Martinez Acquisition and the East Coast Storage Asset Acquisition of $93.7
million, or $68.8 million net of tax and a pre-tax change in the Tax Receivable Agreement liability of $373.5
million, or $274.1 million net of tax. Our results for the year ended December 31, 2020 were negatively
impacted by special items consisting of a non-cash, pre-tax LCM inventory adjustment of approximately $268.0
million, or $196.7 million net of tax, pre-tax, debt extinguishment costs associated with the early redemption of
the 2023 Senior Notes of $22.2 million, or $16.3 million net of tax, severance costs related to reductions in
workforce of $24.7 million, or $18.1 million net of tax, impairment expense of $98.8 million or $72.5 million
net of tax, related to the write-down of certain assets and project abandonments, early returnt
of certain leased
railcars of $12.5 million or $9.2 million net of tax, accelerated turnaround amortization costs of $56.2 million
or $41.3 million net of tax, a LIFO inventory decrement of $83.0 million or $60.9 million net of tax,
reconfiguration charges of $5.3 million or $3.9 million net of tax and $259.1 million of tax expense associated
with the remeasurement of certain deferred tax assets. Our results for the year ended December 31, 2019 were
positively impacted by special
items consisting of a non-cash, pre-tax LCM inventory adjustment of
approximately $250.2 million, or $188.0 million net of tax and a pre-tax gain on the sale of land at our Torrance
refinery of $33.1 million, or $24.9 million net of tax. The LCM inventory adjustments were recorded due to
movements in the price of crude oil and refined products in the periods presented.
Excluding the impact of these special items, our results were negatively impacted by the ongoing
COVID-19 pandemic which has caused a significant decline in the demand for our refined products and a
decrease in the prices for crude oil and refined products, both of which have negatively impacted our revenues,
cost of products sold and operating income. In addition, during the year ended December 31, 2020 we
als and overall lower throughput volumes and
experienced unfavorablea
barrels sold across our refineries, as well as lower refinff
ing margins. All our operating regions experienced lower
refining margins for the year ended December 31, 2020 compared to the prior year. Our results for the year
ended December 31, 2020 were negatively impacted by higher general and administrative expenses associated
with integration costs associated with the Martinez Acquisition and increased depreciation and amortization
expense associated with the Martinez Acquisition and accelerated amortization costs associated with the East
Coast Refinff
movements in certain crude differenti
ing Reconfiguration.
ff
Revenues— Revenues totaled $15.1 billion for the year ended December 31, 2020 compared to $24.5
billion for the year ended December 31, 2019, a decrease of approximately $9.4 billion or 38.4%. Revenues per
barrel sold were $49.43 and $69.93 for the years ended December 31, 2020 and 2019, respectively, a decrease
of 29.3% directly related to lower hydrocarbon commodity prices. For the year ended December 31, 2020, the
total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged
approximately 263,000 bpd, 96,700 bpd, 137,700 bpd and 230,300 bpd, respectively. For the year ended
December 31, 2019, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast
refineries averaged approximately 336,400 bpd, 153,000 bpd, 177,900 bpd and 155,800 bpd, respectively. For
the year ended December 31, 2020, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West
Coast refineries averaged approximately 296,200 bpd, 114,500 bpd, 159,700 bpd and 265,200 bpd, respectively.
For the year ended December 31, 2019, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and
West Coast refineries averaged approximately 382,500 bpd, 163,900 bpd, 225,300 bpd and 188,600 bpd,
respectively.
The throughput rates at our refineries were lower in the year ended December 31, 2020 compared to the
same period in 2019. Our Martinez refinery was not acquired until the first quarter of 2020 and is therefore not
included in the prior period West Coast throughput. We operated our refineries at reduced
d rates beginning in
March 2020, and, based on current market conditions, we plan on continuing to operate our refineries at lower
utilization until such time that sustained product demand justifies higher production. 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.
85
Consolidated Gross Margin— Consolidated gross margin totaled $(1,629.7) million for the year ended
December 31, 2020, compared to $913.1 million for the year ended December 31, 2019, a decrease of $2,542.8
million. Gross refining margin (as described below in Non-GAAP Financial Measures) totaled $496.8 million,
or $1.86 per barrel of throughput, for the year ended December 31, 2020 compared to $2,801.2 million, or $9.34
per barrel of throughput, for the year ended December 31, 2019, a decrease of approximately $2,304.4 million.
Gross refining margin excluding special items totaled $860.3 million, or $3.23 per barrel of throughput, for the
year ended December 31, 2020 compared to $2,551.0 million, or $8.51 per barrel of throughput, for the year
ended December 31, 2019, a decrease of $1,690.7 million.
Consolidated gross margin and gross refining margin were negatively impacted in the current year by a
non-cash LCM inventory adjustment of approximately $268.0 million on a net basis, resulting from the decrease
in crude oil and refined product prices from the year ended 2019, a LIFO inventory decrement charge of
$83.0 million mainly related to our East Coast LIFO inventory layer and the reduction to our East Coast
inventory experienced as part of the East Coast Refining Reconfiguration, and early returnt
of certain leased
railcars of $12.5 million. Gross refining margin, excluding the impact of special items, decreased due to
unfavorablea movements in certain crude differenti
als and an overall decrease in throughput rates. For the year
non-cash LCM
ended December 31, 2019, special items impacting our margin calculations included a favorablea
inventory adjustment of approximately $250.2 million on a net basis, resulting from an increase in crude oil and
refined product prices from the year ended December 31, 2018.
ff
Additionally, our results continue to be impacted by significant costs to comply with the Renewable Fuel
Standard. Total Renewable Fuel Standard costs were $326.4 million for the year ended December 31, 2020 in
comparison to $122.7 million for the year ended December 31, 2019.
Average industry margins were mixed during the year ended December 31, 2020 compared with the prior
year, primarily due to the impacts of the COVID-19 pandemic on regional demand and commodity prices in
2020, in addition to impacts related to 2019 planned turnarounds, all of which were completed in the first half of
the prior year.
On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately $9.11 per
barrel, or 28.2% lower, in the year ended December 31, 2020, as compared to $12.68 per barrel in the same
period in 2019. Our margins were negatively impacted from our refinery specific slate on the East Coast by
weakened Dated Brent/Maya
al, which decreased by $1.39 per barrel, in comparison to the same
period in 2019. Additionally, WTI/WCS differential decreased to $10.72 per barrel in 2020 compared to $13.61
per barrel
impacted our cost of heavy Canadian crude. The WTI/Bakken
differentials increased by $1.75 per barrel when comparem
in 2019, which unfavorablya
d to 2019.
differenti
ff
tt
Across the Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was $6.30 per barrel, or 58.7%
lower, in the year ended December 31, 2020, as compared to $15.25 per barrel in the prior year. Our margins
were positively impacted from our refinery specific slate in the Mid-Continent by an increasing WTI/Bakken
differential, which averaged $2.41 per barrel in the year ended December 31, 2020, as compared to $0.66 per
barrel in the prior year. Additionally, the WTI/Syncrude differenti
al averaged $2.13 per barrel for the year
ended December 31, 2020 as compared to $0.18 per barrel in the prior year.
ff
On the Gulf Coast, the LLS (Gulf Coast) 2-1-1 industry crack spread was $7.59 per barrel, or 38.9%
lower, in the year ended December 31, 2020 as compared to $12.43 per barrel in the prior year. Margins on the
al,
Gulf Coast were positively impacted from our refinery specific slate by a strengthening WTI/LLS differenti
which averaged a premium of $1.88 per barrel for the year ended December 31, 2020 as compared to a premium
of $5.64 per barrel in the prior year.
ff
86
On the West Coast, the ANS (West Coast) 4-3-1 industry crack spread was $11.30 per barrel, or 38.8%
lower, in the year ended December 31, 2020 as compared to $18.46 per barrel in the prior year. Additionally,
margins on the West Coast were positively impacted from our refinery specific slate by a strengthening WTI/
ANS differential, which averaged a premium of $2.95 per barrel for the year ended December 31, 2020 as
compared to a premium of $7.97 per barrel in the prior year.
Favorablea
movements in these benchmark crude different
positively impact our earnings, while reductions in these benchmark crude differenti
crude costs and negatively impact our earnings.
ials typically result in lower crude costs and
als typically result in higher
ff
ff
x
Operating Expens
es— Operating expenses totaled $1,918.3 million for the year ended December 31,
2020 compared to $1,782.3 million for the year ended December 31, 2019, an increase of approximately $136.0
million, or 7.6%. Of the total $1,918.3 million of operating expenses for the year ended December 31, 2020,
$1,835.2 million, or $6.89 per barrel of throughput, related to expenses incurred by the Refining segment, while
the remaining $83.1 million related to expenses incurred by the Logistics segment ($1,684.3 million or $5.61
per barrel of throughput, and $98.0 million of operating expenses for the year ended December 31, 2019 related
to the Refining and Logistics segments, respectively). Increases in operating expenses were due to costs
associated with the Martinez refinery and related logistic assets which totaled approximately $356.1 million for
the year ended December 31, 2020. Total operating expenses for the year ended December 31, 2020 excluding
our Martinez refinery, decreased due to our cost reduction initiatives taken to strengthen our financial flexibility
and offset the negative impact of COVID-19, such as significant reductions in discretionary activities and third
party services. Operating expenses related to our Logistics segment decreased as a result of lower discretionary
spending, including maintenance and outside service costs, in response to the COVID-19 pandemic, as well as
lower environmental clean-up remediation costs and lower utility expenses due to reduced energy usage.
ii
x
ive Expenses
General and Administrat
— General and administrative expenses totaled $248.5 million for
the year ended December 31, 2020, compared to $284.0 million for the year ended December 31, 2019, a
decrease of $35.5 million or 12.5%. The decrease in general and administrative expenses for the year ended
December 31, 2020 in comparison to the year ended December 31, 2019 primarily relates to reduction in our
workforce as a result of the East Coast Refining Reconfiguration and reduction in overhead expenses through
temporary salary reductions to a large portion of our workforce. These costs decreases were offset by headcount
reduction severance costs across the refineries as well as integration costs pertaining to the Martinez
Acquisition. Our general and administrative expenses are comprised of personnel, facilities and other
infrastructuret
costs necessary to support our refineries and related logistics assets.
Gain on Sale of Assets— There was a gain of $477.8 million for the year ended December 31, 2020
related primarily to the sale of five hydrogen plants and the sale of a parcel of land at our Torrance refinery.
There was a gain on sale of assets of $29.9 million for the year ended December 31, 2019, primarily attributablea
to the sale of a parcel of land at our Torrance refinery.
x
Depreciation and Amortization Expense
— Depreciation and amortization expense totaled $563.0 million
for the year ended December 31, 2020 (including $551.7 million recorded within Cost of sales) compared to
$436.1 million for the year ended December 31, 2019 (including $425.3 million recorded within Cost of sales),
an increase of $126.9 million. The increase was a result of additional depreciation expense associated with the
assets acquired in the Martinez Acquisition and a general increase in our fixed asset base due to capita
al projects
and turnarounds completed since the third quarter of 2019. Additionally, amortization expense recorded in 2020
includes $56.2 million of accelerated unamortized deferred turnaround costs associated with assets that were
idled as part of the East Coast Refining Reconfiguration.
Change in Fair Value of Contingent Consider
ation— Change in fair value of contingent consideration
represented a gain of $93.7 million and $0.8 million for the years ended December 31, 2020 and December 31,
2019, respectively. This change represents the decrease in the estimated fair value of the Martinez Contingent
Consideration and the PBFX Contingent Consideration (as defined in “Note 4 - Acquisitions” of our Notes to
Consolidated Financial Statements), both associated with acquisition related earn-out obligations.
CC
87
Change in Fair Value of Catalystyy Obligations— Change in fair value of catalyst obligations represented a
loss of $11.8 million for the year ended December 31, 2020, compared to a loss of $9.7 million for the year
ended December 31, 2019. These losses relate to the change in value of the precious metals underlying the sale
and leaseback of our refineries’ precious metal catalysts, which we are obligated to repurchase at fair market
value on the catalyst financing arrangement termination dates.
Impairment expense
x — Impairment expense totaled $98.8 million for the year ended December 31, 2020,
and was associated with the write-down of certain assets as a result of the East Coast Refining Reconfiguration,
other refinery wide project abandonments and the write-down of certain PBFX long-lived assets. There was no
such expense recorded in the prior year.
Change in Tax Receivable Agreement Liabilitytt —yy Change in Tax Receivable Agreement liabia lity for the
year ended December 31, 2020, represented a gain of $373.5 million. This gain was primarily the result of a
deferred tax asset valuation allowance recorded in accordance with ASC 740, Income Taxes, related to the
reduction of deferred tax assets associated with the payments made or expected to be made in connection with
the Tax Receivable Agreement liability and based on future taxabla e income. There was no change in the Tax
Receivable Agreement liability for the year ended December 31, 2019.
Debt Extinguishment Costs— Debt extinguishment costs of $22.2 million incurred in the year ended
December 31, 2020 relate to the early redemption of our 2023 Senior Notes. There were no such costs in the
same period of 2019.
Interest Expex nse, net— PBF Energy interest expense totaled $258.2 million for the year ended
December 31, 2020, compared to $159.6 million for the year ended December 31, 2019, an increase of $98.6
million. This net increase is mainly attributablea
to higher interest costs associated with the issuance of the 2028
Senior Notes in January 2020, the issuance of the 2025 Senior Secured Notes in May 2020 and December 2020,
as well as higher outstanding borrowings on our Revolving Credit Facility. Interest expense includes interest on
long-term debt including the PBFX credit facilities, costs related to the sale and leaseback of our precious metal
catalysts, financing costs associated with the Inventory Intermediation Agreements with J. Aron, letter of credit
fees associated with the purchase of certain crude oils and the amortization of deferred financing costs. PBF
LLC interest expense totaled $268.5 million and $169.1 million for the year ended December 31, 2020 and
December 31, 2019, respectively (inclusive of $10.3 million and $9.5 million, respectively, of incremental
interest expense on the affiliate note payabla e with PBF Energy that eliminates in consolidation at the PBF
Energy level).
x
u
Income Tax Expens
e— PBF LLC is organized as a limited liability company and PBFX is an MLP, both
of which are treated as “flow-through” entities for federal income tax purposes and therefore are not subject to
ries of Chalmette Refining and our Canadian subsidiary, PBF Energy
income tax. However, two subsidia
Limited (“PBF Ltd.”), are treated as C-Corporations for income tax purposes and may incur income taxes with
respect to their earnings, as applicablea
. The members of PBF LLC are required to include their proportionate
share of PBF LLC’s taxable income or loss, which includes PBF LLC’s allocable share of PBFX’s pre-tax
PBF LLC generally makes distributions to its members, per the
income or loss, on their respective tax returns.
terms of PBF LLC’s amended and restated limited liability company agreement, related to such taxes on a pro-
rata basis. PBF Energy recognizes an income tax expense or benefit in our consolidated financial statements
based on PBF Energy’s allocablea
share of PBF LLC’s pre-tax income or loss, which was approximately 99.1%
and 99.0%, on a weighted-average basis for the years ended December 31, 2020 and 2019, respectively. PBF
Energy’s Consolidated Financial Statements do not reflect any benefit or provision for income taxes on the pre-
tax income or loss attributablea
to the noncontrolling interests in PBF LLC or PBFX (although, as described
above, PBF LLC must make tax distributions to all its members on a pro-rata basis). PBF Energy’s effective tax
rate,
the years ended December 31, 2020 and
2019 was 0.2% and 21.8%, respectively. The effective tax rate for the year ended December 31, 2020 was
significantly impacted by the recording of a $358.4 million deferred tax asset valuation allowance.
including the impact of noncontrolling interests,
for
t
88
t
Noncontroll
including PBFX. With respect
to the consolidation of PBF LLC,
ing Interest— PBF Energy is the sole managing member of, and has a controlling interest in,
PBF LLC. As the sole managing member of PBF LLC, PBF Energy operates and controls all of the business
and affairs of PBF LLC and its subsidiaries. PBF Energy consolidates the financial results of PBF LLC and its
the Company records a
subsidiaries,
noncontrolling interest for the economic interest in PBF LLC held by members other than PBF Energy, and
with respect to the consolidation of PBFX, the Company records a noncontrolling interest for the economic
interests in PBFX held by the public unitholders of PBFX, and with respect to the consolidation of PBF
Holding, the Company records a 20% noncontrolling interest for the ownership interests in two subsidiaries of
Chalmette Refining held by a third party. The total noncontrolling interest on the Consolidated Statements of
Operations represents the portion of the Company’s earnings or loss attributablea
to the economic interests held
by members of PBF LLC other than PBF Energy, by the public common unitholders of PBFX and by the third-
party stockholders of certain of Chalmette Refining’s subsidiaries. The total noncontrolling interest on the
Consolidated Balance Sheets represents the portion of the Company’s net assets attributablea
to the economic
interests held by the members of PBF LLC other than PBF Energy, by the public common unitholders of PBFX
and by the third-party stockholders of the two Chalmette Refining subsidiaries. PBF Energy’s weighted-average
equity noncontrolling interest ownership percentage in PBF LLC for the years ended December 31, 2020 and
amount of the noncontrolling interest on
2019 was approximately 0.9% and 1.0%, respectively. The carrying
our Consolidated Balance Sheets attributablea
to the noncontrolling interest is not equal to the noncontrolling
interest ownership percentage due to the effect of income taxes and related agreements that pertain solely to
PBF Energy.
rr
2019 Compared to 2018
Overview— PBF Energy net income was $375.2 million for the year ended December 31, 2019 compared
to net income of $175.3 million for the year ended December 31, 2018. PBF LLC net income was $480.0
million for the year ended December 31, 2019 compared to net income of $180.1 million for the year ended
December 31, 2018. Net income attributablea
to PBF Energy stockholders was $319.4 million, or $2.64 per
diluted share, for the year ended December 31, 2019 ($2.64 per share on a fully-exchanged, fully-diluted basis
based on adjusted fully-converted net income, or $0.90 per share on a fully-exchanged, fully- diluted basis
based on adjusted fully-converted net income excluding special items, as described below in Non-GAAP
Financial Measures) compared to net income attributablea
to PBF Energy stockholders of $128.3 million, or
$1.10 per diluted share, for the year ended December 31, 2018 ($1.10 per share on a fully-exchanged, fully-
diluted basis based on adjusted fully-converted net income, or $3.26 per share on a fully-exchanged, fully-
diluted basis based on adjusted fully-converted net income excluding special items, as described below in Non-
GAAP Financial Measures). The net income attributablea
to PBF Energy stockholders represents PBF Energy’s
equity interest in PBF LLC’s pre-tax income, less applicable income tax expense. PBF Energy’s weighted-
average equity interest in PBF LLC was 99.0% and 98.3% for the years ended December 31, 2019 and 2018,
respectively.
Our results for the year ended December 31, 2019 were positively impacted by special items consisting of
a non-cash, pre-tax LCM inventory adjustment of approximately $250.2 million, or $188.0 million net of tax,
and a pre-tax gain on the sale of land at our Torrance refinery of $33.1 million, or $24.9 million net of tax. Our
results for the year ended December 31, 2018 were negatively impacted by special items consisting of a non-
cash, pre-tax LCM inventory adjustment of approximately $351.3 million, or $260.0 million net of tax, and the
of certain leased railcars, resulting in a pre-tax charge of $52.3 million, or $38.7 million net of tax.
early returnt
impacts were partially offset by special items related to a pre-tax benefit associated with the
These unfavorablea
change in the Tax Receivable Agreement liability of $13.9 million, or $10.3 million net of tax, and a pre-tax
gain on the sale of land at our Torrance refinery of $43.8 million, or $32.4 million net of tax.
89
ff
Excluding the impact of these special items, our results were negatively impacted by unfavorablea
movements in crude differenti
als and overall lower throughput volumes and barrels sold across our refineries,
partially offset by higher crack spreads realized at our West Coast refinery. Refining margins for the current
year compared to the prior year were weaker at our East Coast, Mid-Continent and Gulf Coast refineries, offset
by significantly stronger margins realized on the West Coast. Our results for the year ended December 31, 2019
were also negatively impacted by increased operating expenses and depreciation and amortization expense
associated with our continued investment in our refining assets and the effect of significant turnaround and
maintenance activity during 2019.
Revenues— Revenues totaled $24.5 billion for the year ended December 31, 2019 compared to $27.2
billion for the year ended December 31, 2018, a decrease of approximately $2.7 billion, or 9.9%. Revenues per
barrel sold were $69.93 and $77.08 for the years ended December 31, 2019 and 2018, respectively, a decrease
of 9.3% directly related to lower hydrocarbon commodity prices. For the year ended December 31, 2019, the
total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged
approximately 336,400 bpd, 153,000 bpd, 177,900 bpd and 155,800 bpd, respectively. For the year ended
December 31, 2018, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast
refineries averaged approximately 344,700 bpd, 149,600 bpd, 185,600 bpd and 169,800 bpd, respectively. The
throughput rates at our East Coast and West Coast refineries were lower in the year ended December 31, 2019
compared to the same period in 2018 due to planned downtime associated with turnarounds of the coker and
associated units at our Delaware City and Torrance refineries and the crude unit at our Paulsboro refinery, all of
refinery in the
which were completed in the first half of 2019, and unplanned downtime at our Delaware Cityt
first quarter of 2019. Throughput rates at our Mid-Continent refinery were higher in the year ended
December 31, 2019 compared to 2018 due to a planned turnaround at our Toledo refinery in the first half of
2018. Throughput rates at our Gulf Coast refinery were lower in the year ended December 31, 2019 compared
to the same period in 2018 due to unplanned downtime in the fourth quarter of 2019. For the year ended
December 31, 2019, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast
refineries averaged approximately 382,500 bpd, 163,900 bpd, 225,300 bpd and 188,600 bpd, respectively. For
the year ended December 31, 2018, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West
Coast refineries averaged approximately 372,700 bpd, 161,800 bpd, 233,700 bpd and 198,100 bpd, respectively.
Total refined product barrels sold were higher than throughput rates, reflecting sales from inventory as well as
sales and purchases of refined products outside the refineries.
Consolidated Gross Margin— Consolidated gross margin totaled $913.1 million for the year ended
December 31, 2019, compared to $602.6 million for the year ended December 31, 2018, an increase of $310.5
million. Gross refining margin (as described below in Non-GAAP Financial Measures) totaled $2,801.2 million,
or $9.34 per barrel of throughput,
for the year ended December 31, 2019 compared to $2,419.4 million, or
$7.79 per barrel of throughput, for the year ended December 31, 2018, an increase of approximately $381.8
million. Gross refining margin excluding special items totaled $2,551.0 million, or $8.51 per barrel of
throughput for the year ended December 31, 2019 compared to $2,823.0 million or $9.09 per barrel of
throughput, for the year ended December 31, 2018, a decrease of $272.0 million.
Consolidated gross margin and gross refining margin were positively impacted in the year ended
December 31, 2019 by a non-cash LCM inventory adjustment of approximately $250.2 million on a net basis,
resulting from the increase in crude oil and refined product prices from the year ended 2018. Gross refining
margin excluding the impact of special items decreased due to unfavorablea
movements in certain crude
differentials and refining margins and reduced throughput rates at the majority of our refineries, partially offset
by higher throughput rates in the Mid-Continent and stronger crack spreads on the West Coast. For the year
ended December 31, 2018, special items impacting our margin calculations included a non-cash LCM inventory
adjustment of approximately $351.3 million on a net basis, resulting from a decrease in crude oil and refined
product prices and a $52.3 million charge resulting from costs associated with the early returnt
of certain leased
railcars.
90
Additionally, our results continue to be impacted by significant costs to comply with the Renewable Fuel
Standard, although at a reduced level from the prior year. Total Renewable Fuel Standard costs were $122.7
million for the year ended December 31, 2019 compared with $143.9 million for the year ended December 31,
2018.
Average industry margins were mixed during the year ended December 31, 2019 compared with the prior
year, primarily as a result of varying regional product inventory levels and seasonal and unplanned refining
compared with
downtime issues impacting product margins. Crude oil differenti
the prior year, with notablea
al compression negatively impacting our gross refining
ff
margin and moving our overall crude slate lighter.
als were generally unfavorablea
light-heavy crude differenti
ff
On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately $12.68 per
barrel, or 3.7% lower, in the year ended December 31, 2019 as compared to $13.17 per barrel in the same period
in 2018. Our margins were negatively impacted from our refinery specific slate on the East Coast by tightening
and WTI/Bakken differentials, which decreased $1.94 per barrel and $2.20 per barrel,
in the Dated Brent/Maya
al decreased significantly to
respectively, in comparison to the prior year. In addition, the WTI/WCS differenti
impacted our cost of heavy
$13.61 per barrel in 2019 compared to $26.93 per barrel in 2018, which unfavorablya
Canadian crude.
ff
tt
Across the Mid-Continent, the WTI (Chicago) 4-3-1 industry crack spread was $15.25 per barrel, or 2.8%
higher, in the year ended December 31, 2019, as compared to $14.84 per barrel in the same period in 2018. Our
margins were negatively impacted from our refinery specific slate in the Mid-Continent by a decreasing WTI/
Bakken differential, which averaged approximately $0.66 per barrel in the year ended December 31, 2019, as
compared to $2.86 per barrel in the prior year. Additionally, the WTI/Syncrude differenti
al averaged $0.18 per
barrel for the year ended December 31, 2019 as compared to $6.84 per barrel in the same period of 2018.
ff
In the Gulf Coast, the LLS (Gulf Coast) 2-1-1 industry crack spread was $12.43 per barrel, or 1.1%
higher, in the year ended December 31, 2019 as compared to $12.30 per barrel in the prior year. Margins in the
Gulf Coast were negatively impacted from our refinery specific slate by a weakening WTI/LLS differenti
al,
which averaged a premium of $5.64 for the year ended December 31, 2019 as compared to a premium of $5.03
per barrel experienced in the prior year.
ff
On the West Coast, the ANS (West Coast) 4-3-1 industry crack spread was $18.46 per barrel, or 19.3%
higher, in the year ended December 31, 2019 as compared to $15.48 per barrel in the same period in 2018.
Margins on the West Coast were negatively impacted from our refinery specific slate by a weakening WTI/ANS
differential, which averaged a premium of $7.97 per barrel for the year ended December 31, 2019 as compared
to a premium of $6.34 per barrel in the same period of 2018.
Favorable movements in these benchmark crude differenti
ff
positively impact our earnings, while reductions in these benchmark crude differenti
crude costs and negatively impact our earnings.
als typically result in lower crude costs and
als typically result in higher
ff
x
Operating Expenses
— Operating expenses totaled $1,782.3 million for the year ended December 31,
2019 compared to $1,721.0 million for the year ended December 31, 2018, an increase of approximately $61.3
million, or 3.6%. Of the total $1,782.3 million of operating expenses for the year ended December 31, 2019,
$1,684.3 million, or $5.61 per barrel of throughput, related to expenses incurred by the Refining segment, while
the remaining $98.0 million related to expenses incurred by the Logistics segment ($1,654.8 million or $5.34
per barrel of throughput, and $66.2 million of operating expenses for the year ended December 31, 2018 related
to the Refining and Logistics segments respectively). Increases in operating expenses were mainly attributed to
higher outside service costs related to turna
round and maintenance activity. Operating expenses related to our
Logistics segment increased when compared to 2018 due to expenses related to the operations of PBFX’s
recently acquired assets and higher environmental clean-up remediation costs and product contamination
remediation costs.
t
91
x
ative Expens
General and Administrii
es— General and administrative expenses totaled $284.0 million for
the year ended December 31, 2019, compared to $277.0 million for the year ended December 31, 2018, an
increase of $7.0 million or 2.5%. The increase in general and administrative expenses for the year ended
December 31, 2019 compared with the year ended December 31, 2018 primarily related to higher outside
services, including legal settlement charges, and transaction costs related to the Martinez Acquisition, partially
offset by a reduction in incentive compensation. Our general and administrative expenses are comprised of
costs necessary to support our refineries and related logistics assets.
personnel, facilities and other infrastructuret
Gain on Sale of Assets— Gain on sale of assets was $29.9 million and $43.1 million for the year ended
December 31, 2019 and December 31, 2018, respectively, mainly attributed to the sale of two separate parcels
of land at our Torrance refinery.
x
Depreciation and Amortization Expense
— Depreciation and amortization expense totaled $436.1 million
for the year ended December 31, 2019 (including $425.3 million recorded within Cost of sales) compared to
$369.7 million for the year ended December 31, 2018 (including $359.1 million recorded within Cost of sales),
an increase of $66.4 million. The increase was a result of additional depreciation expense associated with a
al projects and turnarounds completed during 2019 and
general increase in our fixed asset base due to capita
2018, as well as accelerated amortization related to the Delaware City and Torrance refinery turnarounds, which
were completed in the first half of 2019.
Change in Tax Receivable Agreement Liabilitytt —yy
There was no change in the Tax Receivable
Agreement liability for the year ended December 31, 2019. Change in the Tax Receivable Agreement liability
for the year ended December 31, 2018 represented a gain of $13.9 million.
Change in Fair Value of Catalyst
Obligations— Change in the fair value of catalyst obligations
represented a loss of $9.7 million for the year ended December 31, 2019, compared to a gain of $5.6 million for
the year ended December 31, 2018. These gains and losses relate to the change in value of the precious metals
underlying the sale and leaseback of our refineries’ precious metal catalysts, which we are obligated to returnt
or
repurchase at fair market value on the catalyst financing arrangement termination dates.
ll
Interest Expex nse, net— PBF Energy interest expense totaled $159.6 million for the year ended
December 31, 2019, compared to $169.9 million for the year ended December 31, 2018, a decrease of $10.3
million. This net decrease is mainly attributablea
to lower outstanding revolver borrowings for the year ended
December 31, 2019. Interest expense includes interest on long-term debt including the PBFX credit facilities,
costs related to the sale and leaseback of our precious metal catalysts, financing costs associated with the
Inventory Intermediation Agreements with J. Aron, letter of credit fees associated with the purchase of certain
crude oils and the amortization of deferred financing costs. PBF LLC interest expense totaled $169.1 million
and $178.5 million for the year ended December 31, 2019 and 2018, respectively (inclusive of $9.5 million and
$8.6 million, respectively, of incremental interest expense on the affiliate note payabla e with PBF Energy that
eliminates in consolidation at the PBF Energy level).
x
u
Income Tax Expens
e— PBF LLC is organized as a limited liability company and PBFX is an MLP, both
of which are treated as “flow-through” entities for federal income tax purposes and therefore are not subject to
ries of Chalmette Refining and PBF Ltd. are treated as C-Corporations for
income tax. However, two subsidia
income tax purposes and may incur income taxes with respect to their earnings, as applicablea
. The members of
PBF LLC are required to include their proportionate share of PBF LLC’s taxable income or loss, which includes
PBF LLC
PBF LLC’s allocable share of PBFX’s pre-tax income or loss, on their respective tax returns.
generally makes distributions to its members, per the terms of PBF LLC’s amended and restated limited liability
company agreement, related to such taxes on a pro-rata basis. PBF Energy recognizes an income tax expense or
benefit in our consolidated financial statements based on PBF Energy’s allocable share of PBF LLC’s pre-tax
income or loss, which was approximately 99.0% and 98.3%, on a weighted-average basis for the years ended
December 31, 2019 and 2018, respectively. PBF Energy’s Consolidated Financial Statements do not reflect any
benefit or provision for income taxes on the pre-tax income or loss attributablea
to the noncontrolling interests in
PBF LLC or PBFX (although, as described above, PBF LLC must make tax distributions to all its members on a
t
92
pro-rata basis). PBF Energy’s effective tax rate, excluding the impact of noncontrolling interest, for the years
ended December 31, 2019 and 2018 was 21.8% and 16.0%, respectively, reflecting tax adjustments for discrete
items and the impact of tax return to income tax provision adjustments.
including PBFX. With respect
to the consolidation of PBF LLC,
Noncontrolling Interest— PBF Energy is the sole managing member of, and has a controlling interest in,
PBF LLC. As the sole managing member of PBF LLC, PBF Energy operates and controls all of the business
and affairs of PBF LLC and its subsidiaries. PBF Energy consolidates the financial results of PBF LLC and its
the Company records a
subsidiaries,
noncontrolling interest for the economic interest in PBF LLC held by members other than PBF Energy, and
with respect to the consolidation of PBFX, the Company records a noncontrolling interest for the economic
interests in PBFX held by the public unitholders of PBFX, and with respect to the consolidation of PBF
Holding, the Company records a 20% noncontrolling interest for the ownership interests in two subsidiaries of
Chalmette Refining held by a third-party. The total noncontrolling interest on the Consolidated Statements of
Operations represents the portion of the Company’s earnings or loss attributablea
to the economic interests held
by members of PBF LLC other than PBF Energy, by the public common unitholders of PBFX and by the third-
party stockholders of certain of Chalmette Refining’s subsidiaries. The total noncontrolling interest on the
to the economic
Consolidated Balance Sheets represents the portion of the Company’s net assets attributablea
interests held by the members of PBF LLC other than PBF Energy, by the public common unitholders of PBFX
and by the third-party stockholders of the two Chalmette Refining subsidiaries. PBF Energy’s weighted-average
equity noncontrolling interest ownership percentage in PBF LLC for the years ended December 31, 2019 and
amount of the noncontrolling interest on
2018 was approximately 1.0% and 1.7%, respectively. The carrying
our Consolidated Balance Sheets attributablea
to the noncontrolling interest is not equal to the noncontrolling
interest ownership percentage due to the effect of income taxes and related agreements that pertain solely to
PBF Energy.
rr
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
e prepared
measures should not be considered a substitutet
in accordance with GAAP, and our calculations thereof may not be comparablea
to similarly entitled measures
reported by other companies. Such Non-GAAP financial measures are presented only in the context of PBF
Energy’s results and are not presented or discussed in respect to PBF LLC.
for, or superior to, measures of financial performanc
ff
Special Items
The Non-GAAP measures presented include Adjusted Fully-Converted Net Income (Loss) excluding
special items, EBITDA excluding special items and gross refining margin excluding special items. Special items
for the periods presented relate to LCM inventory adjustments, changes in the Tax Receivable Agreement
liability, debt extinguishment costs, changes in fair value of contingent consideration, gain on sale of hydrogen
plants, severance costs related to reductions in workforce,
tax expense on
remeasurement of deferred tax assets, gains on sale of assets at our Torrance refinery, charges associated with
the early return of certain leased railcars, turnaround acceleration costs, reconfiguration costs and a LIFO
inventory decrement. 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
for, or superior to, the financial measures prepared in
considered as a supplement to, and not as a substitutet
accordance with GAAP.
impairment expense, net
93
Adjudd stedtt Fully-
Speciali
ll Converted Net Income (Loss) and Adjustedtt Fully-Cll
s
Itemtt
onvCC
erted Net Income (Loss) Excluding
PBF Energy utilizes results presented on an Adjusted Fully-Converted basis that reflects an assumed
exchange of all PBF LLC Series A Units for shares of PBF Energy Class A common stock. In addition, we
present results on an Adjusted Fully-Converted basis excluding special items as described above. We believe
that
GAAP
measures, are useful to investors to compare PBF Energy results across different periods and to facilitate an
understanding of our operating results.
these Adjd usted Fully-Converted measures, when presented in conjunction with comparablea
Neither Adjusted Fully-Converted Net Income (Loss) nor Adjusted Fully-Converted Net Income (Loss)
excluding special items should be considered an alternative to net income presented in accordance with GAAP.
Adjusted Fully-Converted Net Income (Loss) and Adjusted Fully-Converted Net Income (Loss) excluding
special items presented by other companies may not be comparablea
to our presentation, since each company
may define these terms differently. The difference
s between Adjusted Fully-Converted and GAAP results are as
follows:
ff
1.
2.
Assumed exchange of all PBFBB LLC Series A Units for shares of PBFBB Energy Class A common stock. As
a result of the assumed exchange of all PBF LLC Series A Units, the noncontrolling interest related to
these units is converted to controlling interest. Management believes that it is useful to provide the per-
share effecff
t associated with the assumed exchange of all PBF LLC Series A Units.
Income Taxes. Prior to PBF Energy’s IPO, PBF Energy was organized as a limited liability company
treated as a “flow-through” entity for income tax purposes, and even after PBF Energy’s IPO, not all of
its earnings are subject to corporate-level income taxes. Adjustments have been made to the Adjusted
Fully-Converted tax provisions and earnings to assume that PBF Energy had adopted its post-IPO
corporate tax structuret
for all periods presented and is taxed as a C-corporation in the U.S. at the
prevailing corporate rates. These assumptions are consistent with the assumptim on in clause 1 above that
all PBF LLC Series A Units are exchanged for shares of PBF Energy Class A common stock, as the
assumed exchange would change the amount of PBF Energy’s earnings that are subject to corporate
income tax.
94
The folff
lowing table reconciles PBF Energy’s Adjusted Fully-Converted results with its results presented
in accordance with GAAP for the years ended December 31, 2020, 2019 and 2018 (in millions, except share and
per share amounts):
Net income (loss) attributable to PBF Energy Inc.
stockholders
Less: Income allocated to participating securities
Income (loss) available to PBF Energy Inc. stockholders -
basic
Add: Net income (loss) attributablea
interests(1)
Less: Income tax benefit (expense) (2)
to noncontrolling
Adjusted fulff
ly-converted net income (loss)
d ment
Special Items:(3)
Add: Non-cash LCM inventory adjust
Add: Change in fair value of contingent consideration
Add: Gain on sale of hydrogen plants
Add: Gain on Torrance land sales
Add: Impairment expense
Add: LIFO inventory decrement
Add: Turnaround acceleration costs
Add: Severance and reconfiguration costs
Add: Early railcar return expense
Add: Debt extinguishment costs
Add: Change in Tax Receivable Agreement liability
Add: Net tax expense on remeasurement of deferred tax
assets
Less: Recomputed income tax on special items
Adjusted fulff
special items
ly-converted net income (loss) excluding
Weighted-average shares outstanding of PBF Energy Inc.
Conversion of PBF LLC Series A Units (4)
Common stock equivalents (5)
Fully-converted shares outstanding—diluted
Year Ended December 31,
2020
2019
2018
$
$
(1,392.4) $
0.1
(1,392.5)
(17.1)
4.6
(1,405.0) $
319.4
0.5
318.9
4.3
(1.0)
322.2
$
$
268.0
(93.7)
(471.1)
(8.1)
98.8
83.0
56.2
30.0
12.5
22.2
(373.5)
259.1
99.9
(250.2)
—
—
(33.1)
—
—
—
—
—
—
—
—
70.4
128.3
0.7
127.6
4.6
(1.2)
131.0
351.3
—
—
(43.8)
—
—
—
—
52.3
—
(13.9)
—
(89.9)
$
(1,421.7) $
109.3
$
387.0
119,617,998
1,042,667
—
120,660,665
119,887,646
1,207,581
758,072
121,853,299
115,190,262
1,938,089
1,645,255
118,773,606
ly-converted net income (loss) per fully
Diluted net income (loss) per share
Adjusted fulff
exchanged, fully diluted shares outstanding (5)
Adjusted fulff
ly-converted net income (loss) excluding
special items per fully exchanged, fully diluted shares
outstanding
$
$
$
(11.64) $
(11.64) $
2.64
2.64
$
$
1.10
1.10
(11.78) $
0.90
$
3.26
——————————
See Notes to Non-GAAP Financial Measures.
95
Gross Refie ninii
g Mn
arginMM
and Gross Refie ninii
g Mn
arginMM
SS
Excluding Sn
peci
alii
s
Itemtt
Gross refining margin is defined as consolidated gross margin excluding refinery depreciation, refinery
operating expense, and gross margin of PBFX. We believe both gross refining margin and gross refining margin
excluding special items are important measures of operating performance and provide usefulff
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 refinery 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 tablea
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 floff ws frff om operating activities or
any other measure of financial perfoff rmance or liquidity presented in accordance with GAAP. Gross refining
margin and gross refining margin excluding special items presented by other companies may not be comparablea
to our presentation, since each company may define these terms differently. The following tablea
presents our
GAAP calculation of gross margin and a reconciliation of gross refining margin to the most directly comparable
each of the periods
GAAP financial measure, consolidated gross margin, on a historical basis, as appli
indicated (in millions, except per barrel amounts):
cablea
, forff
a
Year Ended December 31,
2020
2019
2018
per barrel
of
throughput
$
per barrel
of
throughput
$
per barrel
of
throughput
$
Calculation of consolidated gross
margin:
Revenues
Less: Cost of sales
Consolidated gross margin
Reconciliation of consolidated
gross margin to gross refining
margin:
Consolidated gross margin
Add: PBFX operating expense
Add: PBFX depreciation
expense
Less: Revenues of PBFX
Add: Refinery operating expense
Add: Refinery depreciation
expense
Gross refining margin
Special Items: (3)
Add: Non-cash LCM inventory
adjustment
Add: LIFO inventory decrement
Add: Early railcar return expense
Gross refining margin excluding
special items
$ 15,115.9 $
16,745.6
$ (1,629.7) $
$ (1,629.7) $
99.9
53.7
(360.3)
1,835.2
56.76
62.88
(6.12) $
$ 24,508.2 $
23,595.1
913.1 $
81.58
78.54
3.04
$ 27,186.1 $
26,583.5
$
602.6 $
87.67
85.73
1.94
(6.12) $
0.38
913.1 $
118.7
$
3.04
0.40
602.6 $
84.4
1.94
0.27
0.19
(1.35)
6.89
38.6
(340.2)
1,684.3
0.13
(1.13)
5.61
29.4
(281.5)
1,654.8
0.09
(0.91)
5.34
498.0
496.8 $
1.87
1.86
386.7
$ 2,801.2 $
1.29
9.34
329.7
$ 2,419.4 $
1.06
7.79
$
268.0
83.0
12.5
1.01
0.31
0.05
(250.2)
—
—
(0.83)
—
—
351.3
—
52.3
1.13
—
0.17
$
860.3 $
3.23
$ 2,551.0 $
8.51
$ 2,823.0 $
9.09
——————————
See Notes to Non-GAAP Financial Measures.
96
TT
EBITDA,
EBITDA Excluding Special ItII ems
tt
and Adjustedtt EBITBB DATT
Our management uses EBITDA (earnings before interest, income taxes, depreciation and amortization),
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 perfoff rmance. 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, the non-cash change in the fair value of catalyst obligations, gain on sale of
hydrogen plants, the write down of inventory to the LCM, changes in the liabia lity related to the Tax Receivable
Agreement due to factors out of PBF Energy’s control such as changes in tax rates, debt extinguishment costs
related to refinancing activities, change in the fair value of contingent consideration 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 substitutet
for analysis of our results as reported under GAAP.
Some of these limitations include that EBITDA, EBITDA excluding special items and Adjuste
d EBITDA:
d
•do not reflect depreciation expense or our cash expenditures,
expenditures
or contractual commitments;
t
t
or future requirements, for capita
al
•do not reflect changes in, or cash requirements for, our working capita
al 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 availablea
cash.
97
The folff
lowing tables reconcile net income (loss) as reflected in PBF Energy’s results of operations to
EBITDA, EBITDA excluding special items and Adjusted EBITDA for the periods presented (in millions):
Year Ended December 31,
2019
2018
2020
Reconciliation of net income (loss) to EBITDA and EBITDA
excluding special items:
Net income (loss)
$
(1,333.3) $
375.2
$
Add: Depreciation and amortization expense
Add: Interest expense, net
Add: Income tax expense
EBITDA
Special Items: (3)
Add: Non-cash LCM inventory adjust
Add: Change in fair value of contingent consideration
d ment
Add: Gain on sale of hydrogen plants
Add: Gain on Torrance land sales
Add: Impairment expense
Add: LIFO inventory decrement
Add: Severance and reconfiguration costs
Add: Early railcar return expense
Add: Debt extinguishment costs
563.0
258.2
2.1
436.1
159.6
104.3
$
(510.0) $
1,075.2
$
268.0
(93.7)
(471.1)
(8.1)
98.8
83.0
30.0
12.5
22.2
(250.2)
—
—
(33.1)
—
—
—
—
—
—
175.3
369.7
169.9
33.5
748.4
351.3
—
—
(43.8)
—
—
—
52.3
—
(13.9)
Add: Change in Tax Receivable Agreement liability
(373.5)
EBITDA excluding special items
Reconciliation of EBITDA to Adjusted EBITDA:
EBITDA
$
$
(941.9) $
791.9
$
1,094.3
(510.0) $
1,075.2
$
748.4
Add: Stock based compensation
Add: Change in fair value of catalyst obligations
d ment (3)
Add: Non-cash LCM inventory adjust
Add: Change in fair value of contingent consideration (3)
Add: Gain on sale of hydrogen plants (3)
Add: Gain on Torrance land sales (3)
Add: Impairment expense (3)
Add: LIFO inventory decrement (3)
Add: Severance and reconfiguration costs (3)
Add: Early railcar return expense (3)
Add: Debt extinguishment costs (3)
Add: Change in Tax Receivable Agreement liability (3)
34.2
11.8
268.0
(93.7)
(471.1)
(8.1)
98.8
83.0
30.0
12.5
22.2
(373.5)
37.3
9.7
(250.2)
—
—
26.0
(5.6)
351.3
—
—
(33.1)
(43.8)
—
—
—
—
—
—
—
—
—
52.3
—
(13.9)
Adjusted EBITDA
$
(895.9) $
838.9
$
1,114.7
——————————
See Notes to Non-GAAP Financial Measures.
98
Notestt
to Non-GAAP Financ
ii
ial Measures
The following notes are applicablea
to the Non-GAAP Financial Measures above:
(1)
(2)
Represents the elimination of the noncontrolling interest associated with the ownership by the members
of PBF LLC other than PBF Energy, as if such members had fully exchanged their PBF LLC Series A
Units for shares of PBF Energy Class A common stock.
corporate tax rate of
Represents an adjustment
approximately 26.6%, 24.9% and 26.0% for the 2020, 2019 and 2018 periods, respectively, applied to the
net income (loss) attributablea
to noncontrolling interest for all periods presented. The adjustment assumes
the full exchange of existing PBF LLC Series A Units as described in (1) above.
to reflect PBF Energy’s annualized statutory
t
(3)
Special items:
LCM iCC
nventory ar
djustment - 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 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 is determined based on an assessment of the current estimated replacement cost and net
realizablea
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 are included in the Refining segment’s income fromff
operations, but are excluded from the operating results presented, as applicablea
, in order to make such
information comparable between periods.
The following tabla e includes the LCM inventory reserve as of each date presented (in millions):
January 1,
December 31,
2020
2019
2018
$
401.6
$
669.6
651.8
$
401.6
300.5
651.8
The following tablea
income (loss) fromff
includes the corresponding impact of changes in the LCM inventory reserve on
operations and net income (loss) forff
the periods presented (in millions):
Year Ended December 31,
2020
2019
2018
Net LCM inventory adjust
d ment (charge)
benefit in income (loss) from operations
Net LCM inventory adjust
d ment (charge)
benefit in net income (loss)
$
(268.0) $
250.2
$
(351.3)
(196.7)
188.0
(260.0)
Change in fair value of contingent consideration - During the year ended December 31, 2020, we
recorded a change in fair value of the contingent consideration related to the Martinez Contingent
Consideration and the PBFX Contingent Consideration which increased income from operations and net
income by $93.7 million and $68.8 million, respectively. Change in fair value of contingent consideration
during the year ended December 31, 2019 was not significant. There were no such changes in fair value
of contingent consideration during the year ended December 31, 2018.
99
Gain on sale of hydrogen plantstt
- During the year ended December 31, 2020, we recorded a gain
on the sale of five hydrogen plants. The gain increased income from operations and net income by $471.1
million and $345.8 million, respectively. There were no such gains in the years ended December 31,
2019 and December 31, 2018.
Gain on Torrance land sales - During the years ended December 31, 2020, December 31, 2019
and December 31, 2018, we recorded gains on the sale of three separate parcels of real property acquired
as part of the Torrance refinery, but not part of the refinery itself. The gain on sale increased income from
operations and net income by $8.1 million and $5.9 million, respectively, during the year ended
December 31, 2020. The gain on sale increased income from operations and net income by $33.1 million
and $24.9 million, respectively, during the year ended December 31, 2019. The gain on sale increased
income from operations and net income by $43.8 million and $32.4 million, respectively, during the year
ended December 31, 2018.
x
Impairment expense
- During the year ended December 31, 2020, we recorded an impairment
charge which decreased income from operations and net income by $98.8 million and $72.5 million,
respectively, resulting from the write-down of certain assets as a result of the East Coast Refining
Reconfiguration, project abandonments and the write-down of certain PBFX long-lived assets. There
were no such charges during the years ended December 31, 2019 and December 31, 2018.
LIFO inventory decrement - As part of our overall reduction in throughput in 2020 and our
reduction in inventory volume as of December 31, 2020, the Company recorded a pre-tax charge to cost
of products and other related to a LIFO inventory layer decrement. The majoa rity of the decrement related
to our East Coast LIFO inventory layer and the reduction to our East Coast inventory experienced as part
of the East Coast Refining Reconfiguration. These charges decreased income from operations and net
income by $83.0 million and $60.9 million, respectively, for the year ended December 31, 2020.
Decrements recorded in the years ended December 31, 2019 and December 31, 2018 were not
significant.
Turnaround acceleration costs - During the year ended December 31, 2020, we accelerated the
recognition of turnaround amortization associated with units that were temporarily idled as part of the
East Coast Refining Reconfiguration. These costs decreased income from operations and net income by
$56.2 million and $41.3 million, respectively. There were no such costs in the years ended December 31,
2019 and December 31, 2018.
ff
Severance and reconfigurati
on costs - During the year ended December 31, 2020, we recorded
severance charges related to reductions in our workforce. These charges decreased income from
operations and net income by $24.7 million and $18.1 million, respectively. There were no such costs in
the years ended December 31, 2019 and December 31, 2018. During the year ended December 31, 2020,
we recorded reconfiguration charges related to the temporary idling of certain assets as part of our East
Coast Refining System. These charges decreased income from operations and net income by $5.3 million
and $3.9 million, respectively. There were no such costs in the years ended December 31, 2019 and
December 31, 2018.
Early return of railcars - During the years ended December 31, 2020 and December 31, 2018 we
of certain
recognized certain expenses within Cost of sales associated with the voluntary early returnt
leased railcars. These charges decreased income from operations and net income by $12.5 million and
$9.2 million, respectively, during the year ended December 31, 2020. These charges decreased income
from operations and net income by $52.3 million and $38.7 million, respectively, during the year ended
December 31, 2018. There were no such expenses recorded in the year ended December 31, 2019.
100
Debt extinguishment costs - During the year ended December 31, 2020, we recorded pre-tax debt
extinguishment costs of $22.2 million related to the redemption of the 2023 Senior Notes. These
nonrecurring charges decreased net income by $16.3 million for the year ended December 31, 2020.
There were no such costs in the years ended December 31, 2019 and December 31, 2018.
Change in Tax Receivable Agreement liabilitytt
- During the year ended December 31, 2020, we
recorded a change in the Tax Receivable Agreement liability that increased income before income taxes
and net income by $373.5 million and $274.1 million, respectively. During the year ended December 31,
2018, PBF Energy recorded a change in the Tax Receivable Agreement liability that increased income
before taxes and net income by $13.9 million and $10.3 million, respectively. There was no such change
during the year ended December 31, 2019. The changes in the Tax Receivable Agreement liability reflect
to changes in PBF Energy’s obligation under the Tax Receivable
charges or benefits attributablea
Agreement due to factors out of our control such as changes in tax rates, as well as periodic adjustments
to our liability based, in part, on an updated estimate of the amounts that we expect to pay, using
assumptim ons consistent with those used in our concurrent estimate of the deferred tax asset valuation
allowance.
ff
x
Net taxaa expense
on remeasurement of deferre
d tax assets - During the year ended December 31,
2020, we recorded a deferred tax valuation allowance of $358.4 million in accordance with ASC 740,
Income Taxes. This amount includes tax expense of approximately $99.3 million related to our net
change in the Tax Receivable Agreement liability or a net tax expense of $259.1 million related primarily
to the remeasurement of deferred tax assets. There was no such expense in the years ended December 31,
2019 and December 31, 2018.
ff
Recomputed income tax on special items - The income tax impact on special items, other than the
net tax expense special item discussed below, is calculated using the tax rates shown in (2) above.
(4)
(5)
Represents an adjustment to weighted-average diluted shares outstanding to assume the full exchange of
existing PBF LLC Series A Units as described in (1) above.
Represents weighted-average diluted shares outstanding assuming the conversion of all common stock
equivalents, including options and warrants for PBF LLC Series A Units and performance share units and
options for shares of PBF Energy Class A common stock as calculated under the treasury stock method
(to the extent the impact of such exchange would not be anti-dilutive) for the years ended December 31,
2020, 2019 and 2018, respectively. Common stock equivalents exclude the effects of performance share
units and options and warrants to purchase 14,446,894, 6,765,526 and 1,293,242 shares of PBF Energy
Class A common stock and PBF LLC Series A Units because they are anti-dilutive for the years ended
December 31, 2020, 2019 and 2018, respectively. For periods showing a net loss, all common stock
equivalents and unvested restricted stock are considered anti-dilutive.
101
Liquidity and Capital Resources
Overview
Typically our primary sources of liquidity are our cash flows from operations, cash and cash equivalents
and borrowing availability under our credit facilities, as described below; however, due to the COVID-19
pandemic and the related governmental and consumer responses, our business and results of operations are
being negatively impacted. The demand destruction as a result of the worldwide economic slowdown and
governmental responses, including travel restrictions, and stay-at-home orders, has resulted in a significant
decrease in the demand for and market prices of our products. In addition, the global geopolitical and
macroeconomic events that took place during the first quarter of 2020 further contributed to the overall
volatility in crude oil and refined product prices, contributing to an adverse impact on our liquidity. We
ng to the challenging operating environment and evaluating our
continue to be focused on assessing and adaptia
strategic measures to preserve liquidity and strengthen our balance sheet. Our response to the current economic
environment and its impact on our liquidity is more fully described in the “Liquidity” section below.
Cash Flowll
ll
Analysis
Cash Flowsww from Operating Activities
Net cash used in operating activities was $(631.6) million for the year ended December 31, 2020
compared to net cash provided by operating activities of $933.5 million for the year ended December 31, 2019.
Our operating cash flows for the year ended December 31, 2020 included our net loss of $1,333.3 million, gain
on sale of assets of $477.8 million mainly related to the sale of the hydrogen plants and the sale of land at our
Torrance refinery, change in the Tax Receivable Agreement liability of $373.5 million, net non-cash charges
relating to the change in the fair value of our inventory repurchase obligations of $12.6 million and change in
the fair value of the contingent consideration of $93.7 million, partially offset by depreciation and amortization
of $581.1 million, net non-cash charge of $268.0 million relating to an LCM inventory adjustment, impairment
expense of $98.8 million, pension and other post-retirement benefits costs of $55.7 million, stock-based
compensation of $34.2 million, debt extinguishment costs related to the early redemption of our 2023 Senior
Notes of $22.2 million, change in the fair value of our catalyst obligations of $11.8 million and deferred income
taxes of $1.6 million. In addition, net changes in operating assets and liabilities reflects cash inflows of $585.9
million driven by the timing of inventory purchases, payments for accrued expenses and accounts payablea
and
collections of accounts receivable. Our operating cash flows for the year ended December 31, 2019 included our
net income of $375.2 million, depreciation and amortization of $447.5 million, deferred income tax expense of
$103.7 million, pension and other post-retirement benefits costs of $44.8 million, stock-based compensation of
$37.3 million, net non-cash charges relating to the change in the fair value of our inventory repurchase
obligations of $25.4 million, and changes in the fair value of our catalyst obligations of $9.7 million, partially
offset by a net non-cash benefit of $250.2 million relating to an LCM inventory adjustment, a gain on sale of
assets of $29.9 million and change in fair value of contingent consideration of $0.8 million. In addition, net
changes in operating assets and liabilities reflected cash inflows of approximately $170.8 million driven by the
timing of inventory purchases, payments for accrued expenses and accounts payablea
and collections of accounts
receivables.
Net cash provided by operating activities was $933.5 million for the year ended December 31, 2019
compared to net cash provided by operating activities of $838.0 million for the year ended December 31, 2018.
Our operating cash flows for the year ended December 31, 2018 included our net income of $175.3 million,
depreciation and amortization of $378.6 million, deferred income tax expense of $32.7 million, pension and
other post-retirement benefits costs of $47.4 million, a net non-cash charge of $351.3 million relating to an
LCM inventory adjustment and stock-based compensation of $26.0 million, partially offset by a gain on sale of
assets of $43.1 million, net non-cash charges relating to the change in the fair value of our inventory repurchase
obligations of $31.8 million, change in the Tax Receivable Agreement liability of $13.9 million and changes in
the fair value of our catalyst obligations of $5.6 million. In addition, net changes in operating assets and
102
liabilities reflected
payments for accrued expenses and accounts payable and collections of accounts receivablea
uses of cash of approximately $78.9 million driven by the timing of inventory purchases,
s.
ff
Cash Flowsww from Investing Activities
Net cash used in investing activities was $1,026.5 million for the year ended December 31, 2020
compared to $712.6 million for the year ended December 31, 2019. The net cash flows used in investing
activities for the year ended December 31, 2020 was comprised of cash outflows of $1,176.2 million used to
for refinery
fund the Martinez Acquisition, capita
turnarounds of $188.1 million, and expenditures
for other assets of $9.1 million, partially offset by proceeds
from sale of assets of $543.1 million. Net cash used in investing activities for the year ended December 31,
2019 was comprised of cash outflows of $404.9 million for capita
for refinery
for other assets of $44.7 million, partially offset by proceeds of
turnarounds of $299.3 million and expenditures
$36.3 million related to the sale of land at our Torrance refinery.
al expenditures totaling $196.2 million, expenditures
al expenditures, expenditures
t
t
t
t
Net cash used in investing activities was $712.6 million for the year ended December 31, 2019 compared
to $685.6 million for the year ended December 31, 2018. Net cash used in investing activities for the year ended
December 31, 2018 was comprised of cash outflows of $317.5 million for capita
for
refinery turnarounds of $266.0 million, expenditures
for the
acquisition of the East Coast Storage Assets by PBFX of $75.0 million and expenditures
for the acquisition of
the Knoxville Terminals by PBFX of $58.4 million, partially offset by proceeds of $48.3 million related to the
sale of land at our Torrance refinery.
t
for other assets of $17.0 million, expenditures
al expenditures, expenditures
t
t
t
Cash Flows from Financing Activities
Net cash provided by financing activities was $2,452.7 million for the year ended December 31, 2020
compared to net cash used in financing activities of $3.3 million for the year ended December 31, 2019. For the
year ended December 31, 2020, net cash provided by financing activities consisted of cash proceeds of $1,228.7
million from the issuance of the 2025 Senior Secured Notes net of related issuance costs, cash proceeds of
$469.9 million from the issuance of the 2028 Senior Notes net of cash paid to redeem the 2023 Senior Notes
and related issuance costs, net borrowings under our Revolving Credit Facility of $900.0 million, and proceeds
from catalyst financing arrangements of $51.9 million, partially offset by net repayments on the PBFX
Revolving Credit Facility of $83.0 million, net settlements of precious metal catalyst obligations of $8.8
million, distributions and dividends of $82.2 million, principal amortization payments of the PBF Rail Term
Loan of $7.2 million, payments on finance leases of $12.4 million, taxes paid for net settlement of equity-based
compensation of $2.1 million, repurchases of our common stock in connection with tax withholding obligations
upon the vesting of certain restricted stock awards of $1.6 million and deferred financing costs and other of $0.5
million. For the year ended December 31, 2019, net cash used in financing activities consisted primarily of
distributions and dividends of $209.2 million, principal amortization payments of the PBF Rail Term Loan of
$7.0 million, settlements of catalyst obligations of $6.5 million, taxes paid for net settlement of equity-based
compensation of $4.8 million, repurchases of our common stock in connection with tax withholding obligations
upon the vesting of certain restricted stock awards of $4.9 million and deferred payment for the East Coast
Storage Assets Acquisition of $32.0 million, partially offset by $132.5 million in net proceeds from the issuance
of PBFX common units, net borrowings from the PBFX Revolving Credit Facility of $127.0 million and
deferred financing costs and other of $1.6 million. Additionally, during the year ended December 31, 2019, we
borrowed and repaid $1,350.0 million under our Revolving Credit Facility resulting in no net change to amounts
outstanding for the year ended December 31, 2019.
103
Net cash used in financing activities was $3.3 million for the year ended December 31, 2019 compared to
net cash used in financing activities of $128.1 million for the year ended December 31, 2018. For the year
ended December 31, 2018, net cash used in financing activities consisted primarily of distributions and
dividends of $189.3 million, principal amortization payments of the PBF Rail Term Loan of $6.8 million,
repayment of the note payablea
of $5.6 million, settlements of catalyst obligations of $9.1 million, taxes paid for
net settlement of equity-based compensation of $5.4 million, deferred financing costs and other of $16.2
million, repurchases of our common stock in connection with tax withholding obligations upon the vesting of
certain restricted stock awards of $8.2 million, and net repayments of our Revolving Credit Facility of $350.0
million, partially offset by $287.3 million in net proceeds from the August 2018 Equity Offering, $34.9
million in net proceeds from the issuance of PBFX common units, net borrowings from the PBFX Revolving
Credit Facility of $126.3 million and proceeds from stock options exercised of $14.0 million.
The cash flow activity of PBF LLC for the years ended December 31, 2020, 2019 and 2018 is materially
consistent with that of PBF Energy discussed above, other than changes in deferred income taxes and certain
working capita
al items, which are different from PBF Energy due to certain tax related items not applicable to
PBF LLC. Additionally, PBF LLC reflects net borrowings of $0.1 million and $3.1 million and net proceeds of
$44.1 million for the years ended December 31, 2020, 2019 and 2018, respectively, related to an affiliate loan
with PBF Energy, included in cash flows from financing activities, which eliminates in consolidation at PBF
Energy.
104
Capitalization
Our capital struct
r
uret
was comprised of the following as of December 31, 2020 (in millions):
Debt, including current maturities: (1)
PBF LLC debt
Affiliate note payable
PBF Holding debt
2025 Senior Secured Notes
2028 Senior Notes
2025 Senior Notes
Revolving Credit Facility
PBF Rail Term Loan
Catalyst financing arrangements
PBF Holding debt
PBFX debt
PBFX 2023 Senior Notes
PBFX Revolving Credit Facility
PBFX debt
Unamortized deferred finaff
ncing costs
Unamortized premium
Total PBF LLC debt, net of unamortized deferred finan
ff
cing costs and premium
Less: Affiliate note payable
Total PBF Energy debt, net of unamortized deferff red finan
premium (2)
ff
cing costs and
Total PBF Energy Equity
Total PBF Energy Capitalization (3)
Total PBF Energy Debt to Capitalization Ratio
_______________________________________________
December 31, 2020
$
376.3
1,250.0
1,000.0
725.0
900.0
7.4
102.5
3,984.9
525.0
200.0
725.0
(51.1)
2.2
5,037.3
(376.3)
4,661.0
2,202.3
6,863.3
68 %
$
$
$
(1) Refer to “Note 10 - Credit Facilities and Debt” and “Note 11 - Affiliate Note Payable - PBF LLC” of our
Notes to Consolidated Financial Statements forff
(2) Excludes the PBF LLC affilff
iate note payablea
(3) Total Capitalization refers to the sum of debt, excluding intercompany debt, plus total Equity.
further discussion related to debt.
that is eliminated at the PBF Energy level.
Revolving Cn
reCC dit Faciliii tiii es Overview
Typically, one of our primary sources of liquidity are borrowings available under our revolving lines of
credit. As of December 31, 2020, PBF Energy had $1,609.5 million of cash and cash equivalents, a $900.0
million outstanding balance under the Revolving Credit Facility and $200.0 million outstanding under the
PBFX Revolving Credit Facility. PBF LLC cash and cash equivalents totaled $1,607.3 million as of
December 31, 2020.
105
We had availablea
a
capac
ity under revolving credit facilities as foll
ff
ows at December 31, 2020 (in millions):
Total
Commitment
Amount Borrowed as
of December 31, 2020
Outstanding
Letters of Credit
base
Availabilit
y
Revolving Credit Facility (a)
PBFX Revolving Credit Facility
Total Credit Facilities
$
$
___________________________________
3,400.0
$
500.0
900.0
$
184.4
$
2,759.2
200.0
4.9
295.1
3,900.0
$
1,100.0
$
189.3
$
3,054.3
Expiration date
May 2023
July 2023
(a)
(ii) 85% of the book value of Eligible Accounts with respect to non-investment grade obligors plusp
The amount available for borrowings and letters of credit under the Revolving Credit Facility is calculated according to a
“borrowing base” formula based on (i) 90% of the book value of Eligible Accounts with respect to investment grade obligors
(iii) 80% of the cost of
plusp
Eligible Hydrocarbon Inventory plusp
(iv) 100% of Cash and Cash Equivalents in deposit accounts subject to a control agreement,
in each case as defined in the Revolving Credit Agreement. The borrowing base is subject to customary reserves and eligibility
criteria and in any event cannot exceed $3.4 billion.
Additiii onal Informff
ation on Indebtedness
Our debt, including our revolving credit facilities, term loans and senior notes, include certain typical
financial covenants and restrictions on our subsidiaries’ ability to, among other things, incur or guarantee new
debt, engage in certain business activities including transactions with affiliates and asset sales, make
investments or distributions, engage in mergers or pay dividends in certain circumstances. These covenants are
subject to a number of important exceptions and qualifications. We are in compliance as of December 31, 2020
with all covenants, including financial covenants, in all of our debt agreements. For further discussion of our
indebtedness and these covenants and restrictions, see “Note 10 - Credit Facilities and Debt” of our Notes to
Consolidated Financial Statements.
Liquidity
The outbreak of the COVID-19 pandemic and certain developments in the global oil markets began
negatively impacting our liquidity beginning towards the end of the firff st quarter of 2020.
As of December 31, 2020, our liquidity was approximately $2.3 billion ($2.3 billion as of December 31,
2019) based on $1.6 billion of cash, excluding cash held at PBFX, and more than $700.0 million of availability
under our Revolving Credit Facility. Our total liquidity includes the amount of excess availability under the
Revolving Credit Facility, which includes our cash on hand. In addition, as of December 31, 2020, PBFX had
ity under the PBFX Revolving Credit Facility compared with
approximately $295.1 million of borrowing capac
a
$340.0 million as of December 31, 2019. The PBFX Revolving Credit Facility is availablea
to fund working
al expenditures, and other general corporate purposes incurred by
capita
PBFX.
al, acquisitions, distributions, capita
Due to the unprecedented events caused by the COVID-19 pandemic and the negative impact it has
caused to our liquidity, we executed a plan to strengthen our balance sheet and increase our flexibility and
responsiveness by incorporating the following measurements:
•
•
•
Implemented cost reduction and cash preservation initiatives, including a significant decrease in 2020
capita
al expenditures, lowering 2020 operating expenses driven by minimizing discretionary activities and
third party services, headcount reductions, and cutting corporate overhead expenses through temporary
salary reductions to a significant portion of our workforce;
Suspended our quarterly dividend of $0.30 per share, anticipated to preserve approximately $35.0 million
of cash each quarter, to support the balance sheet;
Closed on the sale of five hydrogen facilities forff
2020;
gross cash proceeds of $530.0 million on April 17,
106
•
•
•
•
•
In May and December 2020, issued, respectively, $1.0 billion and $250.0 million in aggregate principal
amount of 2025 Senior Secured Notes for net proceeds of approximately $982.9 million and
$245.7 million, respectively. See “Note 10 - Credit Facilities and Debt” of our Notes to Consolidated
Financial Statements for additional details related to the notes offerings;
Entered into catalyst financing arrangements on September 25, 2020 for net proceeds of approximately
$51.9 million;
As of December 31, 2020 completed the operational reconfiguration of our East Coast Refining System
comprised of our Delaware Cityt and Paulsboro refineries. The reconfiguration resulted in the temporary
idling of certain Paulsboro Refining units and overall lower throughput and inventory levels. Annual
operating and capita
al expenditures savings are expected to be approximately $100.0 million and $50.0
million, respectively, relative to average historic levels;
On December 30, 2020, closed on a third-party sale of parcels of real property acquired as part of the
Torrance refinery, but not part of the refinery itself, for net proceeds of $13.7 million; and
In the fourth quarter of 2020, sold AB32 credits to a third party for gross proceeds of approximately
$87.5 million and concurrently entered into forward purchase agreements to repurchase these credits in
the fourth quarter of 2021 prior to settlement of our AB32 obligation.
We are actively responding to the impacts of the COVID-19 pandemic and ongoing rebalancing in the
global oil markets. We adjusted our operational plans to the evolving market conditions and took steps to lower
our 2020 operating expenses through significant reductions in discretionary activities and third party services.
We successfully reduced our 2020 operating expenses by $235.0 million, excluding energy savings, and
exceeded our full-year goal of $140.0 million in total operating expense reductions. Including energy expenses,
our full-year operating expenses reductions for 2020 totaled approximately $325.0 million. While some of these
savings are a result of reduced operational tempo, the majoa rity are deliberate operating and other expense
reductions. Looking ahead, we expect operating expenses on a system-wide basis for 2021 to be reduced by
$200.0 million to $225.0 million annually as a result of our efforts versus 2019 levels, including the East Coast
Reconfiguration.
We aggressively managed our capita
al expenditures in 2020, with total refining capita
al expenditures of
$370.4 million, an almost 50% reduction to our planned 2020 expenditures.
ff
t to meet our and our subsidiaries’ capita
While it is impossible to estimate the duration or complete financial impact of the COVID-19 pandemic,
al
we believe that the strategic actions we have taken, plus our cash flows from operations and available capita
resources will be sufficien
al needs, and
debt service requirements, for the next twelve months. We cannot assure you that our assumptim ons used to
estimate our liquidity requirements will be correct because the impact that the COVID-19 pandemic is having
on us and our industry is ongoing and unprecedented. The extent of the impact of the COVID-19 pandemic on
our business, financial condition, results of operation and liquidity will depend largely on future developments,
including the duration of the outbreak, particularly within the geographic areas where we operate, and the
related impact on overall economic activity, all of which are uncertain and cannot be predicted with certainty at
this time. As a result, we may require additional capita
al, and, from time to time, may pursue funding strategies
in the capia tal markets or through private transactions to strengthen our liquidity and/or fund strategic initiatives.
Such additional financing may not be available on favorable terms or at all.
al expenditures, working capita
107
l
addi iti
addi iti
dand, ifif
lonal i d b
ludi gng ddi
ymay iincur ddi
yany d bdebt iincurrence
Although we were iin co
appliic blable, lilien iincurrence lili
indebt dedness iin hthe future, iincl di
We
hthe sa itisfa iction of
fifina
inci gng gagreements. Although
Dece bmber 31, 2020, to hthe extent hthat
hthat
hsuch hcha gnges
couldd not hcha gnge signi
l
some of hthese iincurrence covenants at hthe itime hthat we need dded to.
couldd iimpose certaiin iincrementall res itrictiions on, am gong
securedd d bdebt))
repurchhase our sto kck or iincur new liliens.
subject to
iexisting
sting
iwi hth iincurrence covenants during
ended
d d
itriggggeredd hthese covenants, hthere are no assurances
couldd dadverselyly iimpact our biabilili yty to meet
iFaillure to meet hthe iincurrence covenants
uding
(including
l
hother matters, our biabilili yty to iincur new d bdebt (i
hiwhichh we mayy payy future didi ividde dnds, makke new iinvestments,
lmpliiance
yany of our ac iti ivitiies
dand hthat
lonal secur ded i dindebbteddness, subjec
imita ition covenants iin our
imit hthe extent to
during hthe yyear
dand lalso mayy lili
signifificantly,ly,
condi itions
di
l
l
During the fourth quarter of 2020, each of our credit rating agencies downgraded our corporate credit
rating in addition to the ratings on both our unsecured and secured notes, and maintained our outlook as
negative as the refining sector continues to experience weak refining margins due to the COVID-19 pandemic
and related negative demand impact. As a result of the downgrade, the cost of borrowings under our Revolving
Credit Facility has increased in accordance with the Revolving Credit Agreement. Given the current market
conditions, we expect that our other credit ratings agencies may also re-evaluate our corporate credit rating and
the ratings of our unsecured and secured notes. Further adverse actions taken by the rating agencies on our
corporate credit rating or the rating of our notes may further increase our cost of borrowings or hinder our
ability to raise financing in the capia tal markets, which could impair our ability to operate our business, increase
our liquidity and make futuret
cash distributions to our shareholders.
Working Capital
PBF Energy’s working capita
al at December 31, 2020 was approximately $1,415.9 million, consisting of
$3,867.4 million in total current assets and $2,451.5 million in total current liabia lities. PBF Energy’s working
al at December 31, 2019 was $1,314.5 million, consisting of $3,823.7 million in total current assets and
capita
$2,509.2 million in total current
al at December 31, 2020 was
liabia lities. PBF LLC’s working capita
approximately $1,374.1 million, consisting of $3,865.2 million in total current assets and $2,491.1 million in
total current liabia lities. PBF LLC’s working capita
al at December 31, 2019 was $1,281.7 million, consisting of
$3,821.5 million in total current assets and $2,539.8 million in total current liabilities.
Working capita
al has increased during the year ended December 31, 2020 primarily as a result of proceeds
from financing activities, partially offset by operating losses.
Crude and Feedstock Supply Agreements
Certain of our purchases of crude oil under our agreements with foreign national oil companies require
that we post letters of credit, if open terms are exceeded, and arrange for shipment. We pay for the crude when
invoiced, at which time any applicable letters of credit are lifted. We have a contract with Saudi Aramco
pursuant to which we have been purchasing up to approximately 100,000 bpd of crude oil from Saudi Aramco
that is processed at our Paulsboro refinery. In connection with the acquisition of the Chalmette refinery we
entered into a contract with PDVSA for the supply of 40,000 to 60,000 bpd of crude oil that can be processed at
any of our East or Gulf Coast refineries. We have not sourced crude oil under this agreement since 2017 when
PDVSA suspended deliveries due to the parties’ inability to agree to mutual
payment terms and
because of U.S. government sanctions against PDVSA. Notwithstanding the suspension, the recent U.S.
government sanctions imposed against PDVSA and Venezuela would prevent us from purchasing crude oil
under this agreement. In connection with the closing of the acquisition of the Torrance refinery, we entered into
a crude supply agreement with ExxonMobil for approximately 60,000 bpd of crude oil that can be processed at
our Torrance refinery. We currently purchase all of our crude and feedstock needs independently from a variety
of suppliers on the spot market or through term agreements for our Delaware City and Toledo refineries.
ly acceptablea
t
108
We have entered into various five-year crude supply agreements with Shell Oil Products for
approximately 145,000 bpd, in the aggregate, to support our West Coast and Mid-Continent refinery operations.
In addition, we have entered into certain offtake agreements for our West Coast system with the same
counterparty for clean products with varying terms up to 15 years.
Inventory Intermediation Agreements
We entered into Inventory Intermediation Agreements with J. Aron, to support the operations of the
Delaware Cityt and Paulsboro refineries. The Inventory Intermediation Agreement by and among J. Aron, PBF
Holding and DCR expires on June 30, 2021, which term may be further extended by mutual
consent of the
parties to June 30, 2022. The Inventory Intermediation Agreement by and among J. Aron, PBF Holding and
PRC expires on December 31, 2021, which term may be further extended by mutual
consent of the parties to
December 31, 2022. If not extended or replaced, at expiration, we will be required to repurchase the inventories
outstanding under the Inventory Intermediation Agreements at that time. We intend to either extend or replace
the Inventory Intermediation Agreements prior to their expirations.
t
t
At December 31, 2020, the LIFO value of the J. Aron Products included within Inventory in our
Consolidated Balance Sheets was $266.5 million. We accrue a corresponding liability for such crude oil,
intermediates and finished products.
Capital Spending
Capia tal spending, excluding $1,176.2 million attributed to the Martinez Acquisition, was $393.4 million
for the year ended December 31, 2020, which primarily included costs for the construction of the Delaware City
related enhancements and facility
refinery hydrogen plant, turnaround costs at our Toledo refinery, safetyt
al expenditures related to PBFX. Due
improvements at our refineries, and approximately $12.3 million of capita
to current challenging market conditions, we have taken strategic steps to increase our flexibility and
responsiveness, one of which is the reduction of capita
al expenditures for the
year ended December 31, 2020 totaled $370.4 million, an almost 50% reduction to our planned 2020
We currently expect to spend an aggregate of approximately $400.0 million to $475.0 million in
t
expenditures.
al expenditures during 2021, excluding PBFX, for facility improvements, refinery maintenance
net refining capita
and turnarounds with the intention of satisfying all required safety,t
al
commitments. In addition, PBFX expects to spend an aggregate of approximately $10.0 million to $20.0 million
in net capia tal expenditures during 2021.
environmental and regulatory capita
al expenditures. Total refining capita
On February 1, 2020 we acquired the Martinez refinery and related logistic assets. The purchase price for
the Martinez Acquisition was $960.0 million in cash, plus final working capita
al of $216.1 million and
$77.3 million related to the Martinez Contingent Consideration. The transaction was financed through a
combination of cash on hand including proceeds from the 2028 Senior Notes, and borrowings under the
Revolving Credit Facility.
109
Contractual Obligations and Commitments
The following tablea
summarizes our material contractual payment obligations as of December 31, 2020
below does not include any contractual obligations with PBFX as these related party
(in millions). The tablea
transactions are eliminated upon consolidation of our financial statements.
PBF Energy:
Credit facilities and debt (a)
Interest payments on credit facilities and debt (a)
Leases and other rental-related commitments (b)
Purchase obligations: (c)
Crude and Feedstock Supply and Inventory
Intermediation Agreements
Other Supply and Capacity Agreements
AB32 Settlement Obligations
Construction obligations
Environmental obligations (d)
Pension and post-retirement obligations (e)
Contingent Consideration (f)
Total contractual cash obligations for PBF
Energy
Adjustments for PBF LLC:
Add: Affiliate Note Payable (g)
Total contractual cash obligations for PBF
LLC
___________________________
Payments due by period
Total
Less than
1 year
1-3 Years
3-5 Years
More than
5 years
$
4,709.9
$
86.3
$
1,648.6
$
1,975.0
$
1,000.0
1,396.7
2,500.2
306.4
265.7
568.0
413.8
372.3
361.6
150.0
1,459.1
14,406.6
4,879.4
6,966.1
2,561.1
254.6
249.7
32.1
159.9
312.5
12.1
83.9
249.7
32.1
12.0
36.9
12.1
53.0
—
—
34.6
34.2
—
35.1
—
—
18.2
28.5
—
—
82.6
—
—
95.1
212.9
—
$ 24,034.3
$
5,964.5
$
9,718.3
$
5,351.8
$
2,999.7
376.3
—
—
—
376.3
$ 24,410.6
$
5,964.5
$
9,718.3
$
5,351.8
$
3,376.0
(a) Credit Fii
aciFF liii tiii es, ds
ebtdd
and relatedtt
interest payments
Credit and debt obligations represent (i) the repayment of the outstanding borrowings under the Revolving
Credit Facility; (ii) the repayment of indebtedness incurred in connection with the 2025 Senior Secured Notes,
2028 Senior Notes and 2025 Senior Notes; (iii) the repayment of our catalyst financing obligations on their
maturity dates; (iv) the repayment of outstanding amounts under the PBFX Revolving Credit Facility and the
PBFX 2023 Senior Notes and (v) the repayment of our PBF Rail Term Loan.
Interest payments on debt facilities include cash interest payments on the 2025 Senior Secured Notes, 2028
Senior Notes, 2025 Senior Notes, PBFX Revolving Credit Facility, PBFX 2023 Senior Notes, catalyst financing
obligations, PBF Rail Term Loan, plus cash payments forff
on the unused portion on our
revolving credit facff
ilities and letter of credit fees on the letters of credit outstanding at December 31, 2020. With
the exception of our PBF Rail Term Loan and our catalyst financing obligations, we have no debt maturing
before 2023 as of December 31, 2020.
the commitment fees
ff
Refer to “Note 10 - Credit Facilities and Debt” of our Notes to Consolidated Financial Statements forff
further
discussion related to debt.
110
(b) Leases and other rental-rell
latedtt
commitmett
nts
We enter into leases and other rental-related agreements in the normal course of business. As described in
“Note 2 - Summary of Significant Accounting Policies” of our Notes to Consolidated Financial Statements, we
adopted new guidance on leases effective January 1, 2019 which brought substantially all leases with initial
terms of over twelve months outstanding as of the implementation date onto our Consolidated Balance Sheets.
Leases with initial terms of twelve months or less are considered short-term and we elected the practical
expedient in the new lease guidance to exclude these leases from our Consolidated Balance Sheets. Some of our
leases provide us with the option to renew the lease at or before expiration of the lease terms. Future lease
obligations would change if we chose to exercise renewal options or if we enter into additional operating or
finance lease agreements. Certain of our lease obligations contain a fixed and variable component. The tabla e
above
reflects the fixed component of our lease obligations, including short-term lease expense. The variabla e
a
component could be significant. In addition, we have entered into certain agreements for the supply of hydrogen
that contain both lease and non-lease components. The tabla e above
also includes such non-lease components of
these agreements. See “Note 15 - Leases” of our Notes to Consolidated Financial Statements for further details
and disclosures regarding our operating and finance lease obligations.
a
We also enter into contractual obligations with third parties for the right to use property for locating
pipelines and accessing certain of our assets (also referred to as land easements) in the normal course of
business. Our obligations regarding such land easements are included within Leases and other rental-related
commitments in the tablea
above.
(c) Purchase obligati
i
ons
We have obligations to repurchase the J. Aron Products under the Inventory Intermediation Agreements with
J. Aron as further explained in “Note 2 - Summary of Significant Accounting Policies”, “Note 6 - Inventories”
and “Note 9 - Accrued Expenses” of our Notes to Consolidated Financial Statements. Additionally, purchase
obligations under “Crude and Feedstock Supply and Inventory Intermediation Agreements” include
commitments to purchase crude oil from certain counterparties under supply agreements entered into to ensure
adequate supplies of crude oil for our refineries. These obligations are based on aggregate minimum volume
commitments at 2020 year end market prices.
t
Payments under “Other Supply and Capacity Agreements” include contracts for the transportation of crude
gas to certain of our refineries, contracts for the treatment of
oil and supply of hydrogen, steam, or natural
wastewater, and contracts for pipeline capac
ity. We enter into these contracts to facilitate crude oil deliveries
and to ensure an adequate supply of energy or essential services to support our refinery operations. Substantially
all of these obligations are based on fixed prices. Certain agreements include fixed or minimum volume
requirements, while others are based on our actual usage. The amounts included in this tablea
are based on fixed
or minimum quantities to be purchased and the fixed or estimated costs based on market conditions as of
December 31, 2020.
a
Payments under “AB32 Settlement Obligations” include future obligations to repurchase AB32 credits
ities related to these
previously sold to third parties and will be used to settle our AB32 liability. Liabila
obligations are included in “Accrued expenses” in the Consolidated Balance Sheets at December 31, 2020. See
“Note 9 - Accrued Expenses” of our Notes to Consolidated Financial Statements for details.
The amounts included in this tablea
exclude our crude supply agreement with PDVSA. We have not sourced
crude oil under this agreement since the third quarter of 2017 as PDVSA has suspended deliveries due to the
parties inabila
payment terms and because of U.S. government sanctions
against PDVSA.
ity to agree to mutuall
y acceptablea
t
111
(d) Environmii
entaltt
tt
obligat
ions
ll
In connection with certain of our refinery and logistics acquisitions, we have assumed certain environmental
remediation obligations to address matters that were outstanding at the time of such acquisitions. In addition, in
connection with most of these acquisitions, we have purchased environmental insurance policies to insure
against unknown environmental
reflect our
undiscounted best estimate in cost and tenure to remediate our outstanding obligations and are further discussed
in “Note 14 - Commitments and Contingencies” of our Notes to Consolidated Financial Statements.
liabilities at each site. The obligations in the tabla e above
a
(e) Pension and post-retireme
ii
i
nt obligati
ons
Pension and post-retirement obligations include only those amounts we expect to pay out in benefit
payments and are further explained in “Note 19 - Employee Benefit Plans” of our Notes to Consolidated
Financial Statements.
(f) Contingen
tt
t Consideration
Contingent consideration includes our obligations to pay certain contractual earn-outs entered into as part of
acquisitions. As of December 31, 2020 we do not expect to achieve any earn-out obligations related to the
Martinez acquisition. Our earn-out obligation related to the East Coast Storage Assets acquisition and our
amount payablea
in 2021 with no future
estimated earn-out obligations for years thereafter.
to Crown Point relates to our year one earn-out obligation payablea
(g) Affiliat
ett Note Payable
ll
As described in “Note 11 - Affiliate Note Payable - PBF LLC” of our Notes to Consolidated Financial
with PBF Energy for an
Statements, as of December 31, 2020, PBF LLC had an outstanding note payablea
aggregate principal amount of $376.3 million. The note has an interest rate of 2.5% and matures in April 2030,
but may be prepaid in whole or in part at any time, at the option of PBF LLC without penalty or premium. This
affiliate note payable is a cash obligation of PBF LLC only and eliminates in consolidation for PBF Energy.
(h) Tax Receivablell Agreement obligat
iontt
ll
The tablea
above does not include an amount associated with our Tax Receivable Agreement obligation as
our liability was reduced to zero as of December 31, 2020 in conjunction with our recording of a deferred tax
asset valuation allowance recognized in accordance with ASC 740, Income Taxes. Refer to “Note 14 -
Commitments and Contingencies” and “Note 21 - Income Taxes” of our Notes to Consolidated Financial
Statements for further discussion of the Tax Receivable Agreement.
112
Tax Distributions
PBF LLC is required to make periodic tax distributions to the members of PBF LLC, including PBF
Energy, pro rata in accordance with their respective percentage interests for such period (as determined under
the amended and restated limited liability company agreement of PBF LLC), subject to available cash and
applicable law and contractual restrictions (including pursuant to our debt instruments) and based on certain
assumptim ons. Generally, these tax distributions will be an amount equal to our estimate of the taxabla e income of
PBF LLC for the year multiplied by an assumed tax rate equal to the highest effective marginal combined U.S.
federal, state and local income tax rate prescribed for an individual or corporate resident in New York, New
York (taking into account the nondeductibility of certain expenses). If, with respect to any given calendar year,
the aggregate periodic tax distributions were less than the actual taxable income of PBF LLC multiplied by the
up” tax distribution, no later than March 15 of the following year,
assumed tax rate, PBF LLC will make a “truer
cash and borrowings of PBF LLC. As these distributions are
equal to such difference, subject to the availablea
conditional they have been excluded from the tabla e above.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as of December 31, 2020, other than outstanding letters of
credit of approximately $189.3 million.
Critical Accounting Policies
The following summary provides further information about our critical accounting policies that involve
critical accounting estimates and should be read in conjunction with “Note 2 - Summary of Significant
Accounting Policies” of our Notes to Consolidated Financial Statements. The following accounting policies
involve estimates that are considered critical due to the level of subjectivity and judgment involved, as well as
the impact on our financial position and results of operations. We believe that all of our estimates are
reasonable. Unless otherwise noted, estimates of the sensitivity to earnings that would result from changes in
the assumptim ons used in determining our estimates is not practicablea
due to the number of assumptim ons and
contingencies involved, and the wide range of possible outcomes.
Inventory
Inventories are carried at the lower of cost or market. The cost of crude oil, feedstocks, blendstocks and
refined products is determined under the LIFO method using the dollar value LIFO method with increments
valued based on average cost during the year. The cost of supplies and other inventories is determined
principally on the weighted average cost method. In addition, the use of the LIFO inventory method may result
in increases or decreases to cost of sales in years that inventory volumes decline as the result of charging cost of
sales with LIFO inventory costs generated in prior periods. At December 31, 2020 and 2019, market values had
fallen below historical LIFO inventory costs and, as a result, we recorded an LCM or market inventory
valuation reserves of $669.6 million and $401.6 million, respectively. The LCM or market inventory valuation
reserve, or a portion thereof, is subject to reversal as a reduction to cost of products sold in subsequent periods
as inventories giving rise to the reserve are sold, and a new reserve is established. Such a reduction to cost of
products sold could be significant if inventory values returnt
to historical cost price levels. Additionally, further
decreases in overall inventory values could result in additional charges to cost of products sold should the LCM
or market inventory valuation reserve be increased.
113
Environmental Mattersrr
Liabilities for future clean-up costs are recorded when environmental assessments and/or clean-up efforts
of
are probable and the costs can be reasonably estimated. Other than for assessments, the timing and magnitude
these accruals generally are based on the completion of investigations or other studies or a commitment to a
formal plan of action. Environmental liabilities are based on best estimates of probable future costs using
currently available technology and applying current regulations, as well as our own internal environmental
policies. The actual settlement of our liability for environmental matters could materially differ from our
estimates due to a number of uncertainties such as the extent of contamination, changes in environmental laws
and regulations, potential improvements in remediation technologies and the participation of other responsible
parties. While we believe that our current estimates of the amounts and timing of the costs related to the
remediation of these liabilities are reasonable, we have had limited experience with certain of these
environmental obligations due to our short operating history with certain of our assets. It is possible that our
estimates of the costs and duration of the environmental remediation activities related to these liabilities could
materially change.
t
Business Combinations
We use the acquisition method of accounting for the recognition of assets acquired and liabilities
assumed in business combinations at their estimated fair values as of the date of acquisition. Any excess
consideration transferred over the estimated fair values of the identifiable net assets acquired is recorded as
goodwill. Significant judgment is required in estimating the fair value of assets acquired. As a result, in the case
of significant acquisitions, we obtain the assistance of third-party valuation specialists in estimating fair values
of tangible and intangible assets based on available historical information and on expectations and assumptim ons
about the future, considering the perspective of marketplat
ce participants. While management believes those
they are inherently uncertain. Unanticipated market or
expectations and assumptim ons are reasonable,
macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the
estimates and assumptions.
Certain of our acquisitions may include earn-out provisions or other forms of contingent consideration.
As of the acquisition date, we record contingent consideration, as applicablea
, at the estimated fair value of
expected future payments associated with the earn-out. Any changes to the recorded fair value of contingent
consideration, subsequent to the measurement period, will be recognized as earnings in the period in which it
occurs. Such contingent consideration liabilities are based on best estimates of future expected payment
obligations, which are subject to change due to many factors outside of our control. Changes to the estimate of
expected future contingent consideration payments may occur, from time to time, due to various reasons,
including actual results differing
from estimates and adjustments to the revenue or earnings assumptim ons used as
the basis for the liability based on historical experience. While we believe that our current estimate of the fair
value of our contingent consideration liability is reasonable, it is possible that the actual future settlement of our
earn-out obligations could materially differ.
ff
Deferred Turnaround Coststt
Refinery turnaround costs, which are incurred in connection with planned majora maintenance activities at
our refineries, are capa italized when incurred and amortized on a straight-line basis over the period of time
estimated until the next turnaround occurs (generally three to six years). While we believe that the estimates of
time until the next turnaround are reasonable, it should be noted that factors such as competition, regulation or
environmental matters could cause us to change our estimates thus impacting amortization expense in the future.
114
Derivative Instruments
We are exposed to market risk, primarily related to changes in commodity prices for the crude oil and
feedstocks used in the refining process, as well as the prices of the refined products sold and the risk associated
with the price of credits needed to comply with various governmental and regulatory environmental compliance
programs. The accounting treatment for commodity and environmental compliance contracts depends on the
intended use of the particular contract and on whether or not the contract meets the definition of a derivative.
Non-derivative contracts are recorded at the time of delivery.
All derivative instruments that are not designated as normal purchases or sales are recorded in our
Consolidated Balance Sheets as either assets or liabilities measured at their fair values. Changes in the fair value
of derivative instruments that either are not designated or do not qualify for hedge accounting treatment or
normal purchase or normal sale accounting are recognized in income. Contracts qualifying for the normal
purchases and sales exemption are accounted for upon settlement. We elect fair value hedge accounting for
certain derivatives associated with our inventory repurchase obligations.
Derivative accounting is complex and requires management
in the following respects:
identification of derivatives and embedded derivatives; determination of the fair value of derivatives;
identification of hedge relationships; assessment and measurement of hedge ineffectiveness; and election and
designation of the normal purchases and sales exception. All of these judgments, depending upon their timing
and effecff
t, can have a significant impact on earnings.
judgment
Impairment of Long-Lived Assets
amount of the asset may not be recoverablea
Long-lived assets are tested for recoverabila
rr
ity whenever events or changes in circumstances indicate that
if its carrying
the carrying
amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition.
If a long-lived asset is not recoverablea
, an impairment loss is recognized for the amount by which the carrying
amount of the long-lived asset exceeds its fair value, with fair value determined based on discounted estimated
net cash flows or other appropriate methods.
. A long-lived asset is not recoverablea
rr
The global crisis resulting from the COVID-19 pandemic has had a substantial impact on the economy
and overall consumer demand for energy and hydrocarbon products. As a result of the significant decrease in
PBF Energy’s stock price in 2020, enduring throughput reductions across our refineries and noticeable decrease
in demand for our products, we determined that an impairment triggering event had occurred. Therefore, we
performed an impairment assessment on certain long-lived assets as of December 31, 2020. As a result of the
impairment test, we determined that our long-lived assets were not impaired when comparing the carrying
value
of the long-lived assets to the estimated undiscounted future cash flows expected to result from use of the assets
over their remaining estimated useful life. If adverse market conditions persist or there is further deterioration in
the general economic environment due to the COVID-19 pandemic, there could be additional indicators that our
assets are impaired requiring evaluation that may result in future impairment charges to earnings. Refer to “Note
1 - Description of the Business and Basis of Presentation” of our Notes to Consolidated Financial Statements.
rr
115
Income Taxes and Tax Receivable Agreement
As a result of PBF Energy’s acquisition of PBF LLC Series A Units or exchanges of PBF LLC Series A
Units for PBF Energy Class A common stock, it expects to benefit from amortization and other tax deductions
reflecting the step up in tax basis in the acquired assets. Those deductions will be allocated to PBF Energy and
will be taken into account in reporting its taxable income. As a result of a federal income tax election made by
PBF LLC, applicable to a portion of PBF Energy’s acquisition of PBF LLC Series A Units, the income tax basis
of the assets of PBF LLC, underlying a portion of the units PBF Energy acquired, has been adjusted based upon
the amount that PBF Energy paid for that portion of its PBF LLC Series A Units. PBF Energy entered into the
Tax Receivable Agreement (as defined in “Note 14 - Commitments and Contingencies” of the Notes to our
Consolidated Financial Statements) which provides for the payment by PBF Energy equal to 85% of the amount
of the benefits, if any, that it is deemed to realize as a result of (i) increases in tax basis and (ii) certain other tax
to payments
benefits related to entering into the Tax Receivable Agreement, including tax benefits attributablea
under the Tax Receivable Agreement. As a result of these transactions, PBF Energy’s tax basis in its share of
PBF LLC’s assets will be higher than the book basis of these same assets. This resulted in a deferred tax asset of
$155.2 million as of December 31, 2020.
Deferred taxes are calculated using a liability method, whereby deferred tax assets are recognized for
deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences represent the differences between reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment. We recognize tax
benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its
technical merits. Interest and penalties on uncertain tax positions are included as a component of the provision
for income taxes on the Consolidated Statements of Operations. As a result of management’s assessment of the
available positive and negative evidence to estimate whether sufficient future taxabla e income will be generated
to permit use of the existing deferred tax assets as of December 31, 2020, a valuation allowance of $358.4
million was recorded to recognize only the portion of deferred tax assets that are more likely than not to be
, however, could be adjusted if estimates of
realized. The amount of the deferred tax assets considered realizablea
future taxabla e income are reduced or increased or if objective negative evidence in the form of cumulative
losses is no longer present and additional weight is given to subjective evidence such as our projections for
future taxabla e income. As a result of the valuation allowance, the liabia lity associated with the Tax Receivable
Agreement was reduced
d to zero.
ff
Pursuant to the Tax Receivable Agreement PBF Energy entered into at the time of its initial public
offering, it is required to pay the current and former PBF LLC Series A unitholders, who exchange their units
for PBF Energy stock or whose units we purchase, approximately 85% of the cash savings in income taxes that
PBF Energy is deemed to realize as a result of the increase in the tax basis of its interest in PBF LLC, including
tax benefitff s attributable to payments made under the Tax Receivable Agreement. These payment obligations are
of PBF Energy and not of PBF LLC or any of its subsidiaries. PBF Energy has recognized a liability for the Tax
g its estimate of the undiscounted amounts that it expects to pay under the
Receivable Agreement reflectin
agreement. PBF Energy’s estimate of the Tax Receivable Agreement liability is based, in part, on forecasts of
future taxaba le income over the anticipated life of PBF Energy’s future business operations, assuming no
material changes in the relevant tax law. The assumptions used in the forecasts are subject to substantial
uncertainty about PBF Energy’s future business operations and the actual payments that it is required to make
under the Tax Receivable Agreement could diffeff r materially from its current estimates. PBF Energy must adjust
the estimated Tax Receivablea
Agreement liability each time we purchase PBF LLC Series A Units or upon an
exchange of PBF LLC Series A Units for PBF Energy Class A common stock. Such adjustments will be based
on forecasts of future taxabla e income and PBF Energy’s future business operations at the time of such purchases
or exchanges. Periodically, PBF Energy may adjust the liabia lity based on an updated estimate of the amounts
that it expects to pay, using assumptim ons consistent with those used in its concurrent estimate of the deferred
tax
asset valuation allowance. These periodic adjustments to the Tax Receivable Agreement liability, if any, are
ff
116
recorded in general and administrative expense and may result in adjustments to our income tax expense and
deferred tax assets and liabilities.
Recent Accounting Pronouncements
Refer to “Note 2 - Summary of Significant Accounting Policies” of our Notes to Consolidated Financial
Statements, for Recently Issued Accounting Pronouncements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks, including changes in commodity prices and interest rates. Our primary
between the prices we sell our refined products and the
nts to manage the risks from
market
a
commodity price risk is associated with the difference
prices we pay for crude oil and other feedstocks. We may use derivative instrume
changes in the prices of crude oil and refined products, natural
opportunities.
gas, interest rates, or to capture
r
ff
t
Commodityii Price Riskii
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 availabila
ity 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.
t
t
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.
t
The negative impact of the unprecedented global health and economic crisis sparked by the COVID-19
pandemic, combined with uncertainty around future output levels of the world’s largest oil producers has
increased unpredictability in oil supply and demand resulting in an economic challenge to our industry which
has not occurred since our formation. This combination has resulted in significant reduction in demand for our
refined products and abnormal volatility in oil commodity prices, which may continue for the foreseeable
future.
At December 31, 2020 and 2019, we had gross open commodity derivative contracts representing 10.0
million barrels and 11.3 million barrels, respectively, with an unrealized net loss of $3.0 million and unrealized
net gain of $0.2 million, respectively. The open commodity derivative contracts as of December 31, 2020 expire
at various times during 2021.
We carryrr
inventories of crude oil, intermediates and refined products (“hydrocarbon inventories”) on our
Consolidated Balance Sheets, the values of which are subject to fluctuations in market prices. Our hydrocarbon
inventories totaled approximately 28.2 million barrels and 30.2 million barrels at December 31, 2020 and
December 31, 2019, respectively. The average cost of our hydrocarbon inventories was approximately $78.64
and $79.63 per barrel on a LIFO basis at December 31, 2020 and December 31, 2019, respectively, excluding
the net impact of LCM inventory adjustments of approximately $669.6 million and $401.6 million, respectively.
117
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
electricity. We are therefore sensitive to movements in natural
conditions, we annually consume a total of between 75 million and 97 million MMBTUs of natural
our six refineries as of December 31, 2020. Accordingly, a $1.00 per MMBTU change in natural
would increase or decrease our natural
t
gas costs by approximately $75.0 million to $97.0 million.
gas and
gas prices. Assuming normal operating
gas amongst
gas prices
t
t
t
t
i
Complim ance
Program Price Riskii
We are exposed to market risks related to the volatility in the price of credits needed to comply with
various governmental and regulatory compliance programs, which includes RINs, required to comply with the
Renewable Fuel Standard. Our overall RINs obligation is based on a percentage of our domestic shipments of
on-road fuels as established by EPA. 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 this risk on
our results of operations and cash flows we may purchase RINs or other environmental credits when the price of
these instruments is deemed favorable.
In addition, we are exposed to risks associated with complying with federal and state legislative and
regulatory measures to address greenhouse gas 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. For example, AB32 in California requires the state to reduce its GHG
emissions to 1990 levels by 2020. 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 instrume
nts. We generally
elect the normal purchase normal sale exception under ASC 815, Derivatives and Hedging for such instruments,
and therefore do not record these contracts at their fair value.
r
tt
Interes
t Rate Risk
The maximum commitment under our Revolving Credit Facility is $3.4 billion. Borrowings under the
Revolving Credit Facility bear interest either at the Alternative Base Rate plus the Applicable Margin or at
Adjusted LIBOR plus the Applicablea Margin, all as defined in the Revolving Credit Agreement. If this facility
was fully drawn, a 1.0% change in the interest rate would increase or decrease our interest expense by
approximately $24.9 million annually.
The PBFX Revolving Credit Facility, with a maximum commitment of $500.0 million, bears interest
either at the Alternative Base Rate plus the Applicable Margin or at Adjusted LIBOR plus the Applicablea
Margin, all as defined in the PBFX Revolving Credit Agreement. If this facility was fully drawn, a 1.0% change
in the interest rate would increase or decrease our interest expense by approximately $4.0 million annually.
We also have interest rate exposure in connection with our Inventory Intermediation Agreements under
which we pay a time value of money charge based on LIBOR.
Creditdd Riskii
We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties. We
sh credit
continue to closely monitor the creditworthiness of customers to whom we grant credit and establia
limits in accordance with our credit policy.
118
Concentratt
tion Risk
For the year ended December 31, 2020, only one customer, Royal Dutch Shell, accounted for 10% or
ately 13%). For the years ended December 31, 2019 and 2018, no single
more of our revenues (approxim
customer accounted for 10% or more of our revenues.
a
As of December 31, 2020, only one customer, Royal Dutch Shell, accounted for 10% or more of our total
trade accounts receivable (approximately 16%). No single customer accounted for 10% or more of our total
trade accounts receivablea
as of December 31, 2019.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is set forth beginning on page F-1 of this Annual Report on
Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
ll
Disclosure
Controlsll and Procedures
PBF Energy and PBF LLC conducted separate evaluations under the supervision and with the
participation of each company’s management, including the principal executive officer and principal financial
officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934 as amended (the “Exchange Act”)) as of the end of the period covered by this
report. Based upon these evaluations as required by Exchange Act Rule 13a-15(b), the principal executive
officer and principal financial officer, in each case, concluded that the disclosure controls and procedures are
effective.
Management’s Report
ee
on Intertt nal
rr
Control over Financ
ii
ee
ial Reporti
ngii
- PBF Energyr
PBF Energy’s management is responsible for establia
shing and maintaining adequate internal control over
financial reporting as defined in Rule 13a-15(f) of the Exchange Act. PBF Energy’s internal control system is
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
external purposes in accordance with generally accepted accounting principles in the
financial statements forff
United States of America. Due to its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation.
On February 1, 2020, we completed the Martinez Acquisition. As of December 31, 2020 we were in the
process of integrating Martinez Refining’s operations, including internal controls over financial reporting and,
therefore, management's evaluation and conclusion as to the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this Annual Report on Form 10-K excludes any evaluation of
ing. Martinez Refining accounts for
the internal controls over financial reporting of the Martinez Refinff
approximately 7% of our total assets and approximately 13% of our total revenues as of the year ended
December 31, 2020. During the first quarter of 2021 we completed the integration of Martinez Refining's
operations, including internal controls over financial reporting.
119
Management assessed the effectiveness of PBF Energy’s internal control over financial reporting as of
December 31, 2020, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control — Integrated Framework (2013). Based on such assessment, management
concluded that as of December 31, 2020, PBF Energy’s internal control over financial reporting is effective.
Management’s Report
ee
tt
on Internal
tt
Control
over Financial Reportingii
- PBF LLC
PBF LLC’s management is responsible for establia
shing and maintaining adequate internal control over
financial reporting as defined in Rule 13a-15(f) of the Exchange Act. PBF LLC’s internal control system is
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements forff
external purposes in accordance with generally accepted accounting principles in the
United States of America. Due to its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation.
On February 1, 2020, we completed the Martinez Acquisition. As of December 31, 2020 we were in the
ing’s operations, including internal controls over financial reporting
process of integrating the Martinez Refinff
and, therefore, management's evaluation and conclusion as to the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this Annual Report on Form 10-K excludes any evaluation of
the internal controls over financial reporting of the Martinez Refinff
ing. During the first quarter of 2021 we
completed the integration of Martinez Refining's operations, including internal controls over financial reporting.
Martinez Refining accounts for approximately 7% of our total assets and approximately 13% of our total
revenues as of the year ended December 31, 2020.
Management assessed the effectiveness of PBF LLC’s internal control over financial reporting as of
December 31, 2020, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control — Integrated Framework (2013). Based on such assessment, management
concluded that as of December 31, 2020, PBF LLC’s internal control over financial reporting is effective.
Auditdd ortt Attestat
iontt
tt
Report
ee
Our independent registered public accounting firm has issued an attestation report on the effectiveness of
PBF Energy’s internal control over financial reporting, which is on page F-4 of this report.
Changes in Internal
tt
Control
tt Over Financ
ii
ial Reportingii
On February 1, 2020, we completed the Martinez Acquisition. As of December 31, 2020 we were in the
process of integrating the Martinez Refinff
ing's operations, including internal controls over financial reporting.
There has been no other change in PBF Energy’s or PBF LLC’s internal control over financial reporting during
the quarter ended December 31, 2020 that has materially affecff
ted, or is reasonably likely to materially affect
PBF Energy’s or PBF LLC’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
120
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required under this Item will be contained in our 2021 Proxy Statement, incorporated
herein by reference.
We have adopted a Code of Business Conduct and Ethics that applies to our principal executive officer,
principal financial officer and principal accounting officer. The Code of Business Conduct and Ethics is
available on our website at www.pbfenergy.com
under the heading “Investors”. Any amendments to the Code
of Business Conduct and Ethics or any grant of a waiver from the provisions of the Code of Business Conduct
and Ethics requiring disclosure under applicable Securities and Exchange Commission rules will be disclosed
on the Company’s website.
gy
p
See also Information About Our Executive Officers under “Item 1. Business” of this Annual Report on
Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required under this Item will be contained in our 2021 Proxy Statement, incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Information required by this Item,
including Securities Authorized for
Issuance Under Equity
Compensation Plans, will be contained in our 2021 Proxy Statement, incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACT
INDEPENDENCE
RR
IONS, AND DIRECTOR
The information required under this Item will be contained in our 2021 Proxy Statement, incorporated
herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required under this Item will be contained in our 2021 Proxy Statement, incorporated
herein by reference.
121
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(a) 1. Financial Statements. The consolidated financial statements of PBF Energy Inc., PBF Energy Company
LLC and their subsidiaries, required by Part II, Item 8, are included in Part IV of this report. See Index to
Consolidated Financial Statements beginning on page F-1.
s
2. Financial Statement Schedules and Other Financial Information. No financial statement scheduled
are submitted because either they are not applicable or because the required information is included in the
consolidated financial statements or notes thereto.
3. Exhibits. Filed as part of this Annual Report on Form 10-K are the following exhibits:
Number Description
2.1†
2.2†
2.3
3.1
3.2
4.1
4.2
4.3
Contribution Agreement dated as of April 24, 2019 by and between PBF Energy Company
LLC and PBF Logistics LP (incorporated by reference to Exhibit 2.1 filed with PBF Energy
Inc.’s Current Report on Form 8-K dated April 26, 2019 (File No. 001-35764))
Sale and Purchase Agreement dated June 11, 2019 by and between PBF Holding Company LLC
and Equilon Enterprises LLC d/b/a Shell Oil Producd ts US (incorporated by reference to Exhibit 2.1
filed with PBF Energy Inc.’s Current Report on Form 8-K dated June 11, 2019 (File No.
001-35764)).
Amendment No. 1 dated February 1, 2020 to Sale and Purchase Agreement dated June 11, 2019 by
and between PBF Holding Company LLC and Equilon Enterprises LLC d/b/a Shell Oil Products
US (incorporated by reference to Exhibit 2.2 filed with PBF Energy Inc.'s Current Report on Form
8-K dated February 6, 2020 (File No. 001-35764)).
Amended and Restated Certificate of Incorporation of PBF Energy Inc. (incorporated by reference
to Exhibit 3.1 filed with PBF Energy Inc.’s Amendment No. 4 to Registration Statement on Form
S-1 (Registration No. 333-177933)).
Second Amended and Restated Bylaws of PBF Energy Inc. (incorporated by reference to
Exhibit 3.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated February 15,
2017 (File No. 001-35764)).
the Guarantors named on the signaturet
dated as of May 30, 2017, among PBF Holding Company LLC, PBF Finance
Indenturet
Corporation,
pages thereto, Wilmington Trust,
National Association, as Trustee and Deutsche Bank Trust Company Americas, as Paying
Agent, Registrar, Transfer Agent and Authenticating Agent and form of 7.25% Senior Notes
due 2025 (included as Exhibit A) (incorporated by reference to Exhibit 4.1 of PBF Energy
Inc.’s Current Report on Form 8-K (File No. 001-35764) filed on May 30, 2017).
the Guarantors named on the signaturet
dated as of January 24, 2020, among PBF Holding Company LLC, PBF Finance
Indenturet
Corporation,
pages thereto, Wilmington Trust,
National Association, as Trustee and Deutsche Bank Trust Company Americas, as Paying
Agent, Registrar, Transfer Agent and Authenticating Agent and form of 6.00% Senior Notes
due 2028 (included as Exhibit A) (incorporated by reference to Exhibit 4.1 filed with PBF
Energy Inc.’s Current Report on Form 8-K dated January 24, 2020 (File No. 001-35764)).
Registration Rights Agreement dated January 24, 2020, among PBF Holding Company LLC
and PBF Finance Corporation, the Guarantors named therein and BofA Securities, Inc., as
Representative of the several Initial Purchasers (incorporated by reference to Exhibit 4.3 filed
with PBF Energy Inc.’s Current Report on Form 8-K dated January 24, 2020 (File No.
001-35764)).
122
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
dated February
First Supplemental Indenturet
3, 2020, among PBF Holding Company LLC,
PBF Finance Corporation, Martinez Refining Company LLC, Martinez Terminal Company
LLC, Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company
Americas, as paying agent, transfer agent, registrar and authenticating agent (6.00% Senior
Notes due 2028) (incorporated by reference to Exhibit 4.3 filed with PBF Energy Inc.’s
Quarterly Report on Form 10-Q dated May 15, 2020 (File No. 001-35764).
rr
dated February
First Supplemental Indenturet
3, 2020, among PBF Holding Company LLC,
PBF Finance Corporation, Martinez Refining Company LLC, Martinez Terminal Company
LLC, Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company
Americas, as paying agent, transfer agent, registrar and authenticating agent (7.25% Senior
Notes due 2025) (incorporated by reference to Exhibit 4.4 filed with PBF Energy Inc.’s
Quarterly Report on Form 10-Q dated May 15, 2020 (File No. 001-35764).
rr
dated May 12, 2015, among PBF Logistics LP, PBF Logistics Finance Corporation,
Indenturet
the Guarantors named therein and Deutsche Bank Trust Company Americas, as trustee and
form of 6.875% Senior Notes due 2023 (included as Exhibit A) (incorporated by reference
herein to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-36446) filed on May
18, 2015).
Supplemental Indenturet
dated June 19, 2015, among PBF Logistics LP, PBF Logistics
Finance Corporation, the Guarantors named therein and Deutsche Bank Trust Company
Americas, as trustee (incorporated by reference herein to Exhibit 4.1.1 to the Annual Report
on Form 10-K (File No. 001-36446) filed on February 22, 2016).
dated as of June 28, 2016, among PBF Logistics Products
Second Supplemental Indenturet
Terminals LLC, PBF Logistics LP, PBF Logistics Finance Corporation, and Deutsche Bank
Trust Company Americas, as trustee (incorporated by reference herein to Exhibit 4.2 to the
Quarterly Report on form 10-Q for the quarter ended June 30, 2016 (File No. 001-36446) filed
on August 4, 2016).
Third Supplemental Indenturet
dated as of October 24, 2016, among Torrance Valley Pipeline
Company LLC, PBFX Operating Company LLC, PBF Logistics LP, PBF Logistics Finance
Corporat
ion, and Deutsche Bank Trust Company Americas, as trustee (incorprr orated by
r
reference herein to Exhibit 4.8 to the Annual Report on Form 10-K (File No. 001-36446) filed
on February 24, 2017).
Fourth Supplemental Indenturet
dated as of March 13, 2017, among Paulsboro Natural Gas
Pipeline Company LLC, PBF Logistics LP, PBF Logistics Finance Corporation, and Deutsche
Bank Trust Company Americas, as trustee (incorporated by reference herein to Exhibit 4.2 to
the Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No.
001-36446) filed on May 4, 2017).
Fifth Supplemental Indenturet
dated October 6, 2017, among PBF Logistics LP, PBF Logistics
Finance Corporation, the Guarantors named therein and Deutsche Bank Trust Company
Americas, as Trustee (incorprr orated by reference herein to Exhibit 4.1 to the Current Report on
Form 8-K (File No. 001-36446) filed on October 6, 2017).
Sixth Supplemental Indenturet
dated as of September 11, 2018, among DCR Storage and
Loading LLC, Chalmette Logistics Company LLC, Toledo Rail Logistics Company LLC,
Paulsboro Terminaling Company LLC, PBF Logistics LP, PBF Logistics Finance
Corporation, and Deutsche Bank Trust Company Americas, as trustee (incorporated by
reference herein to Exhibit 4.1 to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2018 (File No. 001-36446) filed on October 31, 2018).
Seventh Supplemental Indenturet
dated as of October 25, 2018, among CPI Operations LLC,
PBF Logistics LP, PBF Logistics Finance Corporation, and Deutsche Bank Trust Company
by reference herein to Exhibit 4.1 to the Quarterly Report
Americas, as trustee (incorporated
on Form 10-Q for the quarter ended March 31, 2019 (File No. 001-36446) filed on May 1,
2019).
rr
Eighth Supplemental Indenturet
dated March 4, 2020, among PBFX Ace Holdings LLC, PBF
Logistics LP, PBF Logistics Finance Corporation, and Deutsche Bank Trust Company
Americas, as trustee (incorporated by reference to Exhibit 4.1 filed with PBF Logistics LP’s
Quarterly Report on Form 10-Q dated May 15, 2020 (File No. 001-36446)).
123
4.15
4.16
4.17
4.18*
10.1**
10.2**
10.3**
10.4**
10.5**
10.6**
10.7**
10.8**
10.9**
10.10**
the Guarantors named on the signaturet
dated as of May 13, 2020, among PBF Holding Company LLC, PBF Finance
Indenturet
Corporation,
pages thereto, Wilmington Trust,
National Association, as Trustee, Paying Agent, Registrar, Transfer Agent, Authenticating
Agent and Notes Collateral Agent and form of 9.25% Senior Secured Notes due 2025
(included as exhibit A) (incorporated by reference to Exhibit 4.1 filed with PBF Energy Inc.’s
Current Report on Form 8-K dated May 13, 2020 (File No. 001-35764)).
dated December 21, 2020, among PBF Holding Company LLC, PBF
Supplemental Indenturet
Finance Corporation, the Guarantors named on the signaturet
pages thereto, Wilmington Trust,
National Association, as Trustee, Paying Agent, Registrar, Transfer Agent, Authenticating
Agent and Notes Collateral Agent (9.25% Senior Secured Notes due 2025) (incorporated by
reference to Exhibit 4.3 filed with PBF Energy Inc.’s Current Report on Form 8-K dated
December 22, 2020 (File No. 001-35764)).
Amended and Restated Registration Rights Agreement of PBF Energy Inc. dated as of
December 12, 2012 (incorporated by reference to Exhibit 4.1 filed with PBF Energy Inc.’s
Current Report on Form 8-K dated December 18, 2012 (File No. 001-35764)).
Description of Registrant’s Securities
PBF Energy Inc. Amended and Restated 2012 Equity Incentive Plan (incorporated by
reference to DEF 14A filed with PBF Energy Inc.’s Proxy Statement dated March 22, 2016
(File No. 001-35764)).
PBF Energy Inc. Amended and Restated 2017 Equity Incentive Plan (incorporated by
reference to Appendix A to PBF Energy Inc.’s Definitive Proxy Statement on Schedule 14A
filed on April 13, 2018 (File No. 001-35764)).
Form of PBF Energy Non-Qualified Stock Option Agreement (prior to 2020) under the
Amended and Restated PBF Energy Inc. 2017 Equity Incentive Plan (incorporated by
reference to Exhibit 10.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated
November 2, 2018 (File No. 001-35764)).
Form of PBF Energy Performance Share Unit Award Agreement (prior to 2020) under the
Amended and Restated PBF Energy Inc. 2017 Equity Incentive Plan (incorporated by
reference to Exhibit 10.2 filed with PBF Energy Inc.’s Current Report on Form 8-K dated
November 2, 2018 (File No. 001-35764)).
Form of PBF Energy Performance Unit Award Agreement (prior to 2020) under the Amended
and Restated PBF Energy Inc. 2017 Equity Incentive Plan (incorporated by reference to
Exhibit 10.3 filed with PBF Energy Inc.’s Current Report on Form 8-K dated November 2,
2018 (File No. 001-35764)).
Form of PBF Energy Non-Qualified Stock Option Agreement (2020 and thereafter) under the
Amended and Restated PBF Energy Inc. 2017 Equity Incentive Plan (incorporated by
reference to Exhibit 10.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated
November 13, 2020 (File No. 001-35764)).
Form of PBF Energy Performance Share Unit Award Agreement (2020 and thereafter) under
the Amended and Restated PBF Energy Inc. 2017 Equity Incentive Plan (incorporated by
reference to Exhibit 10.2 filed with PBF Energy Inc.’s Current Report on Form 8-K dated
November 13, 2020 (File No. 001-35764)).
Form of PBF Energy Performance Unit Award Agreement (2020 and thereafter) under the
Amended and Restated PBF Energy Inc. 2017 Equity Incentive Plan (incorporated by
reference to Exhibit 10.3 filed with PBF Energy Inc.’s Current Report on Form 8-K dated
November 13, 2020 (File No. 001-35764)).
Form of Non-Qualified Stock Option Agreement under the PBF Energy Inc. 2012 Equity
Incentive Plan (incorporated by reference to Exhibit 10.28 filed with PBF Energy Inc.’s
Amendment No. 6 to Registration Statement on Form S-1 (Registration No. 333-177933)).
Form of Restricted Stock Agreement for Non-Employee Directors under the PBF Energy Inc.
2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 filed with PBF Energy
Inc.’s Quarterly Report on Form 10-Q dated August 3, 2017 (File No. 001-35764)).
124
10.11**
10.12**
10.13**
10.14**
10.15**
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
Form of 2017 Equity Incentive Plan Restricted Stock Agreement for Employees (incorporated
by reference to Exhibit 10.1 of PBF Energy Inc.’s Current Report on Form 8-K (File No.
001-35764) filed on October 31, 2017).
rr
Form of 2017 Equity Incentive Plan Non-Qualified Stock Agreement (incorporated
by
reference to Exhibit 10.2 of PBF Energy Inc.’s Current Report on Form 8-K (File No.
001-35764) filed on October 31, 2017).
rr
Amended and Restated Restricted Stock Agreement for non-employee Directors under the
PBF Energy Inc. 2017 Equity Incentive Plan. (incorporated by reference to Exhibit 10.3 of
PBF Energy Inc.’s Annual Report on Form 10-K (File No. 001-35764) filed on February
23,
2018).
rr
Form of Amended and Restated Restricted Stock Agreement for Employees, under PBF
Energy Inc. 2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 of PBF
Energy Inc.’s Annual Report on Form 10-K (File No. 001-35764) filed on February 23, 2018).
Form of Amended and Restated Non-Qualified Stock Option Agreement under the PBF
Energy Inc. 2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 filed with
PBF Energy Inc.’s Current Report on Form 8-K dated February 16, 2018 (File No.
001-35764)).
Transportation Services Agreement dated as of August 31, 2016 among PBF Holding
Company LLC and Torrance Valley Pipeline Company LLC (incorporated by reference to
Exhibit 10.3 filed with PBF Energy Inc.’s Current Report on Form 8-K dated September 7,
2016 (File No. 001-35764)).
Pipeline Service Order dated as of August 31, 2016, by and between Torrance Valley Pipeline
Company LLC, and PBF Holding Company LLC (incorporated by reference to Exhibit 10.4
filed with PBF Energy Inc.’s Current Report on Form 8-K dated September 7, 2016 (File No.
001-35764)).
Pipeline Service Order dated as of August 31, 2016, by and between Torrance Valley Pipeline
Company LLC, and PBF Holding Company LLC (incorporated by reference to Exhibit 10.5
filed with PBF Energy Inc.’s Current Report on Form 8-K dated September 7, 2016 (File No.
001-35764)).
Dedicated Storage Service Order dated as of August 31, 2016, by and between Torrance
Valley Pipeline Company LLC, and PBF Holding Company LLC (incorporated by reference
to Exhibit 10.6 filed with PBF Energy Inc.’s Current Report on Form 8-K dated September 7,
2016 (File No. 001-35764)).
Throughput Storage Service Order dated as of August 31, 2016, by and between Torrance
Valley Pipeline Company LLC, and PBF Holding Company LLC (incorporated by reference
to Exhibit 10.7 filed with PBF Energy Inc.’s Current Report on Form 8-K dated September 7,
2016 (File No. 001-35764)).
Asset Purchase Agreement dated as of April 17, 2020, among PBF Holding Company LLC,
Torrance Refining Company LLC, Martinez Refining Company LLC, Delaware Cityt Refining
Company LLC and Air Products and Chemicals Inc. (incorporated by reference to Exhibit
10.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated April 22, 2020 (File No.
001-35764))
Transition Services Agreement dated as of April 17, 2020, among PBF Holding Company
LLC, Torrance Refining Company LLC, Martinez Refining Company LLC, Delaware Cityt
Refining Company LLC and Air Products and Chemicals Inc. and Air Products West Coast
Hydrogen LLC (incorporated by reference to Exhibit 10.2 filed with PBF Energy Inc.’s
Current Report on Form 8-K dated April 22, 2020 (File No. 001-35764).
Guarantee Agreement dated as of April 17, 2020 among PBF Energy Inc. PBF Energy
Company LLC and Air Products and Chemicals Inc. (incorporated by reference to Exhibit
10.3 filed with PBF Energy Inc.’s Current Report on Form 8-K dated April 22, 2020 (File No.
001-35764).
125
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32†
10.33†
10.34†*
10.35†*
10.36
Senior Secured Revolving Credit Agreement dated as of May 2, 2018 (incorporated by
reference to Exhibit 10.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated May
7, 2018 (File No. 001-35764)).
Second Amendment dated as of May 7, 2020 to Senior Secured Revolving Credit Agreement
dated as of May 2, 2018, as amended (incorporated by reference to Exhibit 10.1 filed with
PBF Energy Inc.’s Current Report on Form 8-K dated May 7, 2020 (File No. 001-35764)).
Amendment dated as of February
18, 2020 to Senior Secured Revolving Credit Agreement
dated as of May 2, 2018 (incorporated by reference to Exhibit 10.3 filed with PBF Energy
Inc.’s Quarterly Report on Form 10-Q dated May 15, 2020 (File No. 001-35764).
rr
Fifth Amended and Restated Omnibus Agreement dated as of July 31, 2018, among PBF
Holding Company LLC, PBF Energy Company LLC, PBF Logistics GP LLC and PBF
Logistics LP (incorporated by reference to Exhibit 10.2 filed with PBF Logistics LP’s
Quarterly Report on Form 10-Q dated October 31, 2018 (File No. 001-36446)).
Sixth Amended and Restated Operation and Management Services and Secondment
Agreement dated as of July 31, 2018, among PBF Holding Company LLC, Delaware Cityt
Refining Company LLC, Toledo Refining Company LLC, Torrance Refining Company LLC,
Torrance Logistics Company LLC, Chalmette Refining L.L.C., Paulsboro Refining Company
LLC, PBF Logistics GP LLC, PBF Logistics LP, DCR Storage and Loading LLC, Delaware
City Terminaling Company LLC, Toledo Terminaling Company LLC, Delaware Pipeline
Company LLC, Delaware Cityt Logistics Company LLC, Paulsboro Terminaling Company
LLC, Paulsboro Natural Gas Pipeline Company LLC, Toledo Rail Logistics Company LLC,
Chalmette Logistics Company LLC and PBFX Operating Company LLC (incorporated by
reference to Exhibit 10.3 filed with PBF Logistics LP’s Quarterly Report on Form 10-Q dated
October 31, 2018 (File No. 001-36446)).
Delaware Pipeline Services Agreement dated as of May 15, 2015 among PBF Holding
Company LLC and Delaware Pipeline Company LLC (incorporated by reference to Exhibit
10.3 filed with PBF Energy Inc.’s Current Report on Form 8-K dated May 12, 2015 (File No.
001-35764)).
Delaware City Truck Loading Services Agreement dated as of May 15, 2015 among PBF
Holding Company LLC and Delaware City Logistics Company LLC (incorporated by
reference to Exhibit 10.4 filed with PBF Energy Inc.’s Current Report on Form 8-K dated May
12, 2015 (File No. 001-35764)).
Equity Restructuring Agreement dated February 13, 2019, entered into by and among PBF
Energy Company LLC, PBF Logistics GP LLC and PBF Logistics LP (incorporated by
reference to Exhibit 10.1 filed with PBF Energy Inc.’s Current Report on Form 8-K dated
February 14, 2019 (File No. 001-35764)).
Second Amended and Restated Inventory Intermediation Agreement dated as of August 29,
2019, among J. Aron & Company LLC, PBF Holding Company LLC and Paulsboro Refining
Company LLC (incorporated by reference to Exhibit 10.1 filed with PBF Energy Inc.’s
Current Report on Form 8-K dated September 4, 2019 (File No. 001-35764)).
Second Amended and Restated Inventory Intermediation Agreement dated as of August 29,
2019, among J. Aron & Company LLC, PBF Holding Company LLC and Delaware Cityt
Refining Company LLC (incorporated by reference to Exhibit 10.2 filed with PBF Energy
Inc.’s Current Report on Form 8-K dated September 4, 2019 (File No. 001-35764))
Amended to the Inventory Intermediation Agreement dated as of November 19, 2020, among
J. Aron & Company LLC, PBF Holding Company LLC and Paulsboro Refining Company
LLC .
Amended to the Inventory Intermediation Agreement dated as of November 19, 2020, among
J. Aron & Company LLC, PBF Holding Company LLC and Delaware City Refining Company
LLC.
Amended and Restated Delaware City Rail Terminaling Services Agreement (incorprr orated by
reference to Exhibit 10.1 filed with PBF Logistics LP’s Quarterly Report on Form 10-Q dated
May 3, 2018 (File No. 001-36446)).
126
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
Amendment to Amended and Restated Delaware City Rail Terminaling Service Agreement
dated February 13, 2019 among PBF Holding Company LLC, Delaware Cityt Terminaling
Company LLC and CPI Operations LLC (incorporated by reference to Exhibit 10.2 filed with
PBF Energy Inc.’s Current Report on Form 8-K dated February 14, 2019 (File No.
001-35764)).
Terminaling Service Agreement dated February 13, 2019 among PBF Holding Company LLC,
Delaware City Terminaling Company LLC and CPI Operations LLC (incorporated
by
reference to Exhibit 10.3 filed with PBF Energy Inc.’s Current Report on Form 8-K dated
rr
February
14, 2019 (File No. 001-35764)).
rr
Amended and Restated Toledo Truck Unloading & Terminaling Agreement effective as of
June 1, 2014 (incorporated by reference to Exhibit 10.10 filed with PBF Energy Inc.’s
Quarterly Report on Form 10-Q dated August 7, 2014 (File No. 001-35764)).
Assignment and Amendment of Amended and Restated Toledo Truck Unloading &
Terminaling Agreement dated as of December 12, 2014 by and between PBF Holding
Company LLC, PBF Logistics LP and Toledo Terminaling Company LLC (incorporated by
reference to Exhibit 10.4 filed with PBF Logistics LP’s Current Report on Form 8-K dated
December 16, 2014 (File No. 001-36446)).
Lease Agreement dated as of February 15, 2017 by and between PBFX Operating Company
LLC and Chalmette Refining, L.L.C. (incorporated by reference to Exhibit 10.3 of PBF
Energy Inc.’s Current Report on Form 8-K (File No. 001-35764) filed on February 22, 2017).
Storage Services Agreement dated as of February 15, 2017 by and between PBFX Operating
Company LLC and PBF Holding Company LLC (incorporated by reference to Exhibit 10.1 of
PBF Energy Inc.’s Current Report on Form 8-K (File No. 001-35764) filed on February 22,
2017).
Amended and Restated Guaranty of Collection, dated as of October 6, 2017 (incorporated by
reference to Exhibit 10.1 of PBF Energy Inc.’s Current Report on Form 8-K (File No.
001-35764) filed on October 6, 2017).
Designation of Other Guaranteed Revolving Credit Obligations, dated as of December 12,
2014 with respect to the Amended and Restated Guaranty of Collection (incorporated by
reference to Exhibit 10.8.2 filed with PBF Energy Inc.’s Quarterly Report on Form 10-Q dated
August 6, 2015 (File No. 001-35764)).
Amended and Restated Revolving Credit Agreement dated as of July 30, 2018, among PBF
the lender party hereto and Wells Fargo Bank, National Association as
Logistics LP,
Administrative Agent (incorporated
by reference to Exhibit 10.1 filed with PBF Energy Inc.’s
Current Report on Form 8-K dated August 2, 2018 (File No. 001-35764)).
rr
Joinder Agreement dated as of September 7, 2018, among DCR Storage and Loading LLC,
Chalmette Logistics Company LLC, Toledo Rail Logistics Company LLC, Paulsboro
Terminaling Company LLC and Wells Fargo Bank, National Association, as Administrative
Agent (incorporated by reference to Exhibit 10.4 filed with PBF Logistics LP’s Quarterly
Report on Form 10-Q dated October 31, 2018 (File No. 001-36446)).
Joinder Agreement dated May 26, 2016, among PBF Logistics Products Terminals LLC and
Wells Fargo Bank, National Association, as Administrative Agent (incorprr orated by reference
to Exhibit 4.1 filed with PBF Logistics LP’s Quarterly Report on Form 10-Q dated August 4,
2016 (File No. 001-36446)).
Joinder Agreement to the ABL Security Agreement dated as of February
1, 2020, among
Martinez Refining Company LLC, Martinez Terminal Company LLC and Bank of America,
N.A., as Administrative Agent (incorporated
by reference to Exhibit 10.1 filed with PBF
Energy Inc.’s Quarterly Report on Form 10-Q dated May 15, 2020 (File No. 001-35764).
r
rr
127
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58**
10.59**
10.60**
10.61
Joinder Agreement to the Credit Agreement dated as of February 1, 2020, among PBF
Holding Company LLC, the Guarantors named on the signaturet
pages thereto including
Martinez Refining Company LLC, Martinez Terminal Company LLC and Bank of America,
N.A., as Administrative Agent to Senior Secured Revolving Credit Agreement dated as of
May 2, 2018 (incorporated by reference to Exhibit 10.2 filed with PBF Energy Inc.’s
Quarterly Report on Form 10-Q dated May 15, 2020 (File No. 001-35764).
Second Amended and Restated Agreement of Limited Partnership of PBF Logistics LP dated
as of September 15, 2014 (incorporated by reference to Exhibit 3.1 filed with PBF Logistics
LP’s Current Report on Form 8-K dated September 19, 2014 (File No. 001-36446)).
Amended and Restated Delaware City West Ladder Rack Terminaling Services Agreement
(incorporated by reference to Exhibit 10.2 filed with PBF Logistics LP’s Quarterly Report on
Form 10-Q dated May 3, 2018 (File No. 001-36446)).
Storage and Terminaling Services Agreement dated as of December 12, 2014 among PBF
Holding Company LLC and Toledo Terminaling Company LLC (incorporated by reference to
Exhibit 10.3 to the Current Report on Form 8-K filed on December 16, 2014 (File No.
001-36446)).
Amended and Restated Limited Liability Company Agreement of PBF Energy Company LLC
(incorporated by reference to Exhibit 10.1 filed with PBF Energy Inc.’s Current Report on
Form 8-K dated December 18, 2012 (File No. 001-35764)).
Exchange Agreement, dated as of December 12, 2012 (incorporated by reference to Exhibit
10.3 filed with PBF Energy Inc.’s Current Report on Form 8-K dated December 18, 2012 (File
No. 001-35764)).
Tax Receivablea
Agreement, dated as of December 12, 2012 (incorporated by reference to
Exhibit 10.2 filed with PBF Energy Inc.’s Current Report on Form 8-K dated December 18,
2012 (File No. 001-35764)).
Restated Warrant and Purchase Agreement between PBF Energy Company LLC and the
officers party thereto, as amended (incorporated by reference to Exhibit 10.17 filed with PBF
Energy Inc.’s Amendment No. 4 to Registration Statement on Form S-1 (Registration No.
333-177933)).
Form of Indemnification Agreement between PBF Energy Inc. and each of the executive
officers and directors of PBF Energy Inc. (incorporated by reference to Exhibit 10.5 filed with
PBF Energy Inc.’s Current Report on Form 8-K dated December 18, 2012 (File No.
001-35764)).
PBF Logistics LP 2014 Long-Term Incentive Plan, adopted as of May 14, 2014 (incorporated
by reference to Exhibit 10.8 filed with PBF Logistics LP’s Current Report on Form 8-K dated
May 14, 2014 (File No. 001-36446)).
Form of Phantom Unit Agreement for Employees, under the PBF Logistics LP 2014 Long-
Term Incentive Plan (incorporated by reference to Exhibit 10.8 filed with PBF Logistics LP’s
Registration Statement on Form S-1, as amended, originally filed on April 22, 2014 (File No.
333-195024)).
Form of Phantom Unit Agreement for Non-Employee Directors, under the PBF Logistics LP
2014 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.7 filed with PBF
Logistics LP’s Registration Statement on Form S-1, as amended originally filed on April 22,
2014 (File No. 333-195024)).
Form of Indemnification Agreement between PBF Logistics LP, PBF Logistics GP LLC and
each of the executive officers and directors of PBF Logistics LP and PBF Logistics GP LLC
(incorporated by reference to Exhibit 10.11 filed with PBF Logistics LP’s Registration
Statement on Form S-1, as amended, originally filed on April 22, 2014 (File No.
333-195024)).
128
10.62**
10.63**
10.64**
10.65**
10.66**
21.1*
23.1*
23.2*
24.1*
31.1*
31.2*
31.3*
31.4*
Employment Agreement dated as of September 4, 2014 between PBF Investments LLC and
Thomas O’Connor (incorporated by reference to Exhibit 10.9 filed with PBF Energy Inc.’s
Annual Report on Form 10-K dated February 29, 2016 (File No. 001-35764)).
Employment Agreement dated as of April 1, 2014 between PBF Investments LLC and
Timothy Paul Davis (incorporated by reference to Exhibit 10.4 filed with PBF Energy Inc.’s
Quarterly Report on Form 10-Q dated May 7, 2014 (File No. 001-35764)).
Employment Agreement dated as of April 1, 2014 between PBF Investments LLC and Erik
Young. (incorporated by reference to Exhibit 10.2 filed with PBF Energy Inc.’s Quarterly
Report on Form 10-Q dated May 7, 2014 (File No. 001-35764)).
Amended and Restated Employment Agreement dated as of December 17, 2012, between
PBF Investments LLC and Thomas J. Nimbley (incorporated
by reference to Exhibit 10.8 filed
with PBF Energy Inc.’s Current Report on Form 8-K dated December 18, 2012 (File No.
001-35764)).
rr
Second Amended and Restated Employment Agreement, dated as of December 17, 2012,
between PBF Investments LLC and Matthew C. Lucey (incorporated by reference to Exhibit
10.9 filed with PBF Energy Inc.’s Current Report on Form 8-K dated December 18, 2012 (File
No. 001-35764)).
Subsidiaries of PBF Energy and PBF Energy Company LLC
Consent of Deloitte & Touche LLP
Consent of Deloitte & Touche LLP
Power of Attorney (included on signature page)
Certification by Chief Executive Officer of PBF Energy Inc. pursuant
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
to Rule
Certification by Chief Financial Officer of PBF Energy Inc. pursuant
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
to Rule
Certification by Chief Executive Officer of PBF Energy Company LLC pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification by Chief Financial Officer of PBF Energy 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 by Chief Executive Officer of PBF Energy Inc. pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*(1)
32.3*(1)
32.4*(1)
Certification by Chief Financial Officer of PBF Energy Inc. pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbar nes-Oxley Act of 2002
Certification by Chief Executive Officer of PBF Energy Company LLC pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification by Chief Financial Officer of PBF Energy 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 Labea
l Linkbase Document.
129
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101).
——————————
*
Filed herewith.
**
Indicates management compensatory plan or arrangement.
†
(1)
Portions of the exhibits have been omitted because such information is both (i) not material
and (ii) could be competitively harmful if publicly disclosed.
This exhibit should not be deemed to be “filed” for purposes of Section 18 of the Exchange
Act.
130
F-2
F- 10
F- 11
F- 12
F- 13
F- 15
F- 17
F- 18
F- 19
F- 20
F- 21
F- 22
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firm
F Energy Inc.
gy
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations For the Years Ended December 31, 2020, 2019 and
2018
Consolidated Statements of Comprehensive Income (Loss) For the Years Ended December
31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity For the Years Ended December 31, 2020,
2019 and 2018
Consolidated Statements of Cash Flows For the Years Ended December 31, 2020, 2019
and 2018
PBF Energy Company LLC
p y
gy
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations For the Years Ended December 31, 2020, 2019 and
2018
Consolidated Statements of Comprehensive Income (Loss) For the Years Ended December
31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity For the Years Ended December 31, 2020,
2019 and 2018
Consolidated Statements of Cash Flows For the Years Ended December 31, 2020, 2019
and 2018
Notes to PBF Energy and PBF LLC Consolidated Financial Statements
F- 1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of PBF Energy Inc. and subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of PBF Energy Inc. and subsidiaries (the
"Company") as of December 31, 2020 and 2019,
the related consolidated statements of operations,
comprehensive income (loss), changes in equity, and cash flows, for each of the three years in the period ended
December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United
States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020,
Framework (2013)3 issued by the Committee of
e
based on criteria established in Internal Control — Integrated
Sponsoring Organizations of the Treadway Commission and our report dated Februaryrr 18, 2021, expressed an
unqualified opinion on the Company's internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 2 to the financial statements, effecff
tive January 1, 2019, the Company adopted FASB
Accounting Standards Update 2016-02, Leases (“ASC 842”), using the modified retrospective approach.
Consistent with management’s disclosure in Note 2, the adoption of ASC 842 has a material effeff ct on the
financial statements and financial statement disclosures. As of the date of implementation on January 1, 2019,
the impact of the adoption of ASC 842 resulted in the recognition of a right of use asset and lease liabilities on
the Company’s consolidated balance sheet of approximately $250.0 million. As the right of use asset and the
lease liabilities were the same upon adoption of ASC 842, there was no cumulative effect on the Company’s
retained earnings.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on the Company's financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicablea
rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
F- 2
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to
which it relates.
Acquisitions - Martinez
tt
financial statements
Acquisition Valuation and Purchase Price Allocation — Refer to Note 4 to the
Critical Audit Matter Descripti
i
on
On February 1, 2020, the Company completed the acquisition of the Martinez refinery for an aggregate
purchase price of $1,253.4 million, including working capita
al and contingent consideration. Management of the
Company accounted for the acquisition of the Martinez refinery as a business combination. Accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values at
the date of acquisition. The primary asset acquired was property, plant and equipment the valuation of which
involved management making significant estimates and assumptim ons related to discount rate, replacement cost
and market value of the acquired property, plant and equipment. Contingent consideration also involved
management making significant estimates related to discount rate and projected futuret
cash flows.
ingent
equipment
We ididentifiifi ded hthe vallu iation of propertyy,
considideratiion
dand
di
icritiic lal
lrelat ded to hthe Martiinez refifi
assumptions made by management. This required a high degree of auditor judgment and an increased extent of
audit proceddures to evalluate hthe
effort, iincl di
reasonablblea
dand hthe
replacement cost andd ma krket
dand hthe vallu iation of hthe liliabilbila
audit matter bbecause of hthe isignifi
lvalue spe ici laliists, hwhen performinging
i
ludi gng hthe i
l
ness of ma gnagement’s proje
project ded future ca hsh flflows, hthe sel
lection of a didiscount rate
involvement of our f ifair
lplant
dand
ynery as a
gnificant es itimates
iqui dred prope yrty,
ityity for continge
dand eq iuipment.
lvalue of hthe ac
lplant
di
l
i
How the Critical Audit Matter Was Addredd
ssed in the Audit
Our audit procedures related to management’s projected future cash flows, the selection of a discount rate, and
the replacement cost and market value of acquired property, plant and equipment for the Martinez refinery
included the following, among others:
• We tested the effectiveness of controls over the purchase price allocation, including management’s
controls over the assumptim ons used in the valuation of the property, plant and equipment, including
estimating the replacement cost and market value of the acquired property, plant and equipment,
determination of the discount rate, and reviewing the work of third-party specialists. We also tested the
effectiveness of controls over the contingent consideration valuation, including managements’ estimation
of future cash flows and determination of the discount rate.
• With the assistance of our fair value specialists
◦ We tested the appropriateness of the valuation methodology
◦ We tested the cost to acquire or construct comparablea
assets and the remaining useful lives used
for the cost approach for property, plant and equipment, including comparing such estimates to
independent market information to determine reasonableness
◦ We tested the underlying source information used for the market approach for land
◦ We tested the reasonableness of the discount rate and the underlying source information
◦ We tested the valuation of the contingent consideration by evaluating the valuation model and
assumptim ons, including an assessment of the probability of achieving projected future cash flows,
assessing the mathematical accuracy of the valuation, and performing a sensitivity analysis to
ensure reasonableness
F- 3
Summary of Significant Accountingii
Developmentstt and Commitmii
to the financiali
statett ments
entstt and Contingen
Policll
ii
ies – Impairme
ii
cies – Contingen
nt Assessment and COVID-19
II
t Consideration — Refere
and Market
to Notes 2 and 14
ii
Critical Audit Matter Description
Management of the Company prepares and uses projected operational results (“Management’s Projections”) for
various accounting analysis and considerations, including the impairment analysis of long-lived assets, the
determination of the contingent consideration liability in connection with the Martinez refinery acquisition, and
the evaluation of the Company’s future liquidity. The assumptim ons used in Management’s Projections are
subject
the results of PBF Energy’s future business operations. The
judgments and
development of Management’s Projections
assumptim ons in estimating future cash flows, including assumptions related to future refinery throughput, future
gross margin, future operating expenses and future levels of sustaining capia tal expenditures.
involves management making significant
to substantial uncertainty about
Given that the development of Management’s Projections require management to make significant estimates
related to assumptions, performing audit procedures to evaluate the reasonablea
ness of these assumptim ons
required a high degree of auditor judgment and an increased extent of effort, including the need to involve our
fair value specialists to evaluate future pricing data assumed in Management’s Projections.
How the Critical Audit Matter Was Addresse
dd
d in the Audit
Our audit procedures related to Management’s Projections included the following, among others:
• We tested the effectiveness of controls over the determination of Management’s Projections, including
management’s controls over the determination of future refinery throughput, future gross margin, future
operating expenses, and future levels of sustaining capia tal expenditures.
• We tested the reasonableness of management’s future refinery throughput, future gross margin, future
operating expenses and future levels of sustaining capia tal expenditures by comparing the forecasts to:
◦ Historical
t
expenditures
refinery throughput, operating expenses, and levels of sustaining capita
al
◦ Analyst EBITDA projections
◦
◦
Internal communications to management and the Board of Directors
Industry reports for the Company and certain of its peer companies
• With the assistance of our fair value specialists we tested the future pricing used in Management’s
Projections in determining future gross margin by agreeing future pricing to independently obtained
information.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
February 18, 2021
We have served as the Company's auditor since 2011.
F- 4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To PBF Energy Inc., the Managing Member of PBF Energy Company LLC
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of PBF Energy Company LLC and subsidiaries
(the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations,
comprehensive income (loss), changes in equity, and cash flows, for each of the three years in the period ended
December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United
States of America.
Change in Accounting Principle
As discussed in Note 2 to the financial statements, effecff
tive January 1, 2019, the Company adopted FASB
Accounting Standards Update 2016-02, Leases (“ASC 842”), using the modified retrospective approach.
Consistent with management’s disclosure in Note 2, the adoption of ASC 842 has a material effeff ct on the
financial statements and financial statement disclosures. As of the date of implementation on January 1, 2019,
the impact of the adoption of ASC 842 resulted in the recognition of a right of use asset and lease liabilities on
the Company’s consolidated balance sheet of approximately $250.0 million. As the right of use asset and the
lease liabilities were the same upon adoption of ASC 842, there was no cumulative effect on the Company’s
retained earnings.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on the Company's financial statements based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain
an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on
the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
F- 5
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to
which it relates.
Acquisitions - Martinez
tt
financial statements
Acquisition Valuation and Purchase Price Allocation — Refer to Note 4 to the
Critical Audit Matter Descripti
i
on
On February 1, 2020, the Company completed the acquisition of the Martinez refinery for an aggregate
purchase price of $1,253.4 million, including working capita
al and contingent consideration. Management of the
Company accounted for the acquisition of the Martinez refinery as a business combination. Accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values at
the date of acquisition. The primary asset acquired was property, plant and equipment the valuation of which
involved management making significant estimates and assumptim ons related to discount rate, replacement cost
and market value of the acquired property, plant and equipment. Contingent consideration also involved
management making significant estimates related to discount rate and projected futuret
cash flows.
We ididentifiifi ded hthe vallu iation of propertyy,
lrelat ded to hthe Martiinez refifi
considideratiion
hiThis
assumptiions madde byby ma gnagement.
effort, iincl di
reasonablblea
replacement cost andd ma krket
ludi gng hthe i
l
ness of ma gnagement’s proje
involvement of our f ifair
lvalue of hthe ac
l
i
dand hthe vallu iation of hthe liliabilbila
equipment
lplant
dand
audit matter bbecause of hthe isignifi
di
ynery as a
icritiic lal
auditor judgmjudgment
degree of
requi dred a highhigh degre
i
lvalue spe ici laliists, hwhen performinging
di
i
ingent
gnificant es itimates
dand
dand an iincreasedd extent of
audit proceddures to evalluate hthe
dand hthe
lection of a didiscount rate
ityity for continge
project ded future ca hsh flflows, hthe sel
di
iqui dred prope yrty,
lplant
dand eq iuipment.
How the Critical Audit Matter Was Addredd
ssed in the Audit
Our audit procedures related to management’s projected future cash flows, the selection of a discount rate, and
the replacement cost and market value of acquired property, plant and equipment for the Martinez refinery
included the following, among others:
• We tested the effectiveness of controls over the purchase price allocation, including management’s
controls over the assumptim ons used in the valuation of the property, plant and equipment, including
estimating the replacement cost and market value of the acquired property, plant and equipment,
determination of the discount rate, and reviewing the work of third-party specialists. We also tested the
effectiveness of controls over the contingent consideration valuation,
including management’s
estimation of future cash flows and determination of the discount rate.
• With the assistance of our fair value specialists
◦ We tested the appropriateness of the valuation methodology
◦ We tested the cost to acquire or construct comparablea
assets and the remaining useful lives
used for the cost approach for property, plant and equipment, including comparing such
estimates to independent market information to determine reasonableness
◦ We tested the underlying source information used for the market approach for land
◦ We tested the reasonableness of the discount rate and the underlying source information
◦ We tested the valuation of the contingent consideration by evaluating the valuation model and
assumptim ons, including an assessment of the probability of achieving projected future cash
flows, assessing the mathematical accuracy of the valuation, and performing a sensitivity
analysis to ensure reasonableness
F- 6
Summary of Significant Accountingii
Developmentstt and Commitmii
to the financiali
statett ments
entstt and Contingen
Policll
ii
ies – Impairme
ii
cies – Contingen
nt Assessment and COVID-19
II
t Consideration — Refere
and Market
to Notes 2 and 14
ii
Critical Audit Matter Description
Management of the Company prepares and uses projected operational results (“Management’s Projections”) for
various accounting analysis and considerations, including the impairment analysis of long-lived assets, the
determination of the contingent consideration liability in connection with the Martinez refinery acquisition and
the evaluation of the Company’s future liquidity. The assumptim ons used in Management’s Projections are
subject
the results of PBF Energy’s future business operations. The
judgments and
development of Management’s Projections
assumptim ons in estimating future cash flows, including assumptions related to future refinery throughput, future
gross margin, future operating expenses and future levels of sustaining capia tal expenditures.
involves management making significant
to substantial uncertainty about
Given that the development of Management’s Projections require management to make significant estimates
related to assumptions, performing audit procedures to evaluate the reasonablea
ness of these assumptim ons
required a high degree of auditor judgment and an increased extent of effort, including the need to involve our
fair value specialists to evaluate future pricing data assumed in Management’s Projections.
How the Critical Audit Matter Was Addresse
dd
d in the Audit
Our audit procedures related to Management’s Projections included the following, among others:
• We tested the effectiveness of controls over the determination of Management’s Projections, including
management’s controls over the determination of future refinery throughput, future gross margin,
future operating expenses, and future levels of sustaining capia tal expenditures.
• We tested the reasonableness of management’s future refinery throughput, future gross margin, future
operating expenses and future levels of sustaining capia tal expenditures by comparing the forecasts to:
◦ Historical
t
expenditures
refinery throughput, operating expenses, and levels of
sustaining capita
al
◦ Analyst EBITDA projections
◦
◦
Internal communications to management and the Board of Directors
Industry reports for the Company and certain of its peer companies
• With the assistance of our fair value specialists we tested the future pricing used in Management’s
Projections in determining future gross margin by agreeing future pricing to independently obtained
information.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
February 18, 2021
We have served as the Company's auditor since 2011.
F- 7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of PBF Energy Inc. and subsidiaries
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of PBF Energy Inc. and subsidiaries (the
“Company”) as of December 31, 2020, based on criteria establia
shed in Internal Control — Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). As described in Management’s Report on Internal Control over Financial Reporting, management
excluded from its assessment the internal control over financial reporting of the Martinez refinery and related
logistics assets which was acquired on February 1, 2020, and whose financial statements constitutet
7% of total
assets and 13% of total revenues of the consolidated financial statement amount as of and for the year ended
December 31, 2020. Accordingly, our audit did not include the internal control over financial reporting of the
Martinez refinery and related logistics assets. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control — Integrated
Framework (2013) issued by COSO.
e
e
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31,
2020, of the Company and our report dated Februaryrr 18, 2021, expressed an unqualified opinion on those
financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting
included in the
and for its assessment of the effectiveness of internal control over financial reporting,
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the
rules and regulations of the
Company in accordance with the U.S. federal securities laws and the applicablea
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
F- 8
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonablea
detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
of
statements in accordance with generally accepted accounting principles, and that receipts and expenditures
the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effeff ct on the financial
statements.
t
Because of its inherent
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
limitations,
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
February 18, 2021
F- 9
PBF ENERGY INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
December 31,
2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents (PBFX $36.3 and $35.0, respectively)
$
1,609.5
$
Accounts receivable
Inventories
Prepaid and other current assets
Total current assets
Property, plant and equipment, net (PBFX: $820.2 and $854.6, respectively)
Lease right of use assets
Deferred charges and other assets, net
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Accrued expenses
Deferred revenue
Current operating lease liabilities
Current debt
Total current liabilities
Long-term debt (PBFX: $720.8 and $802.1, respectively)
Payable to related parties pursuant to Tax Receivable Agreement
Deferred tax liabilities
Long-term operating lease liabilities
Long-term financing lease liabilities
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 14)
Equity:
PBF Energy Inc. equity
Class A common stock, $0.001 par value, 1,000,000,000 shares authorized, 120,101,641
shares outstanding at December 31, 2020, 119,804,971 shares outstanding at December 31,
2019
Class B common stock, $0.001 par value, 1,000,000 shares authorized, 16 shares outstanding
at December 31, 2020, 20 shares outstanding at December 31, 2019
Preferred stock, $0.001 par value, 100,000,000 shares authorized, no shares outstanding at
December 31, 2020 and December 31, 2019
Treasury stock, at cost, 6,549,449 shares outstanding at December 31, 2020 and 6,424,787
shares outstanding at December 31, 2019
Additional paid in capital
Retained earnings (accumulated deficit)
Accumulated other comprehensive loss
Total PBF Energy Inc. equity
Noncontrolling interest
Total equity
Total liabilities and equity
See notes to consolidated financial statements.
F- 10
512.9
1,686.2
58.8
3,867.4
4,843.3
916.9
872.2
$
$
10,499.8
$
407.0
$
1,911.5
47.2
78.4
7.4
2,451.5
4,653.6
—
99.6
756.0
68.3
268.5
814.9
835.0
2,122.2
51.6
3,823.7
4,023.2
330.6
954.9
9,132.4
601.4
1,815.6
20.1
72.1
—
2,509.2
2,064.9
373.5
96.9
233.1
18.4
250.9
8,297.5
5,546.9
0.1
—
—
(167.3)
2,846.2
(1,027.1)
(9.1)
1,642.8
559.5
2,202.3
$
10,499.8
$
0.1
—
—
(165.7)
2,812.3
401.2
(8.3)
3,039.6
545.9
3,585.5
9,132.4
PBF ENERGY INC.
CONSOLIDATED STATEMENTS OF OPERATIRR
ONS
(in millions, except share and per share data)
Revenues
Cost and expenses:
$
Year Ended December 31,
2019
24,508.2
2020
15,115.9
$
$
2018
27,186.1
Cost of products and other
Operating expenses (excluding depreciation and
amortization expense as reflected below)
Depreciation and amortization expense
Cost of sales
General and administrative expenses (excluding
depreciation and amortization expense as reflected below)
Depreciation and amortization expense
Change in fair value of contingent consideration
Impairment expense
Gain on sale of assets
Total cost and expenses
Income (loss) from operations
Other income (expense):
Interest expense, net
Change in Tax Receivablea
Change in fair value of catalyst obligations
Debt extinguishment costs
Other non-service components of net periodic benefit cost
Agreement liability
Income (loss) before income taxes
Income tax expense
Net income (loss)
Less: net income attributablea
to noncontrolling interests
Net income (loss) attributable to PBF Energy Inc.
stockholders
Weighted-average shares of Class A common stock
outstanding
14,275.6
21,387.5
24,503.4
1,918.3
551.7
16,745.6
248.5
11.3
(93.7)
98.8
(477.8)
16,532.7
(1,416.8)
(258.2)
373.5
(11.8)
(22.2)
4.3
(1,331.2)
2.1
(1,333.3)
59.1
1,782.3
425.3
23,595.1
284.0
10.8
(0.8)
—
(29.9)
23,859.2
1,721.0
359.1
26,583.5
277.0
10.6
—
—
(43.1)
26,828.0
649.0
358.1
(159.6)
—
(9.7)
—
(0.2)
479.5
104.3
375.2
55.8
(169.9)
13.9
5.6
—
1.1
208.8
33.5
175.3
47.0
$
(1,392.4) $
319.4
$
128.3
Basic
Diluted
119,617,998
120,660,665
119,887,646
121,853,299
115,190,262
118,773,606
Net income (loss) available to Class A common stock per
share:
Basic
Diluted
$
$
(11.64) $
(11.64) $
2.66
2.64
$
$
1.11
1.10
See notes to consolidated financial statements.
F- 11
PBF ENERGY INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
Net income (loss)
$
(1,333.3) $
375.2
$
175.3
Year Ended December 31,
2019
2018
2020
Other comprehensive income (loss):
Unrealized (loss) gain on availablea
securities
Net (loss) gain on pension and other post-
retirement benefits
for sale
Total other comprehensive income (loss)
Comprehensive income (loss)
Less: comprehensive income attributablea
noncontrolling interests
to
(0.1)
(0.7)
(0.8)
(1,334.1)
59.1
0.4
13.8
14.2
389.4
55.9
Comprehensive income (loss) attributable to PBF
Energy Inc. stockholders
$
(1,393.2) $
333.5
$
(0.1)
3.1
3.0
178.3
47.0
131.3
See notes to consolidated financial statements.
F- 12
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1
-
F
PBF ENERGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Year Ended December 31,
2019
2018
2020
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash (used in) provided by
operating activities:
Depreciation and amortization
Impairment expense
Stock-based compensation
Change in fair value of catalyst obligations
Deferred income taxes
Change in Tax Receivable Agreement liability
Non-cash change in inventory repurchase obligations
Non-cash lower of cost or market inventory adjustment
Change in fair value of contingent consideration
Debt extinguishment costs
Pension and other post-retirement benefit costs
Gain on sale of assets
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Prepaid and other current assets
Accounts payable
Accrued expenses
Deferred revenue
Other assets and liabilities
Net cash (used in) provided by operating activities
Cash flows from investing activities:
Expenditures for property, plant and equipment
Expenditures for deferred turnaround costs
Expenditures for other assets
Acquisition of Martinez refinery
Acquisition of Knoxville Terminal by PBFX
Acquisition of East Coast Storage Assets by PBFX
Proceeds from sale of assets
Net cash used in investing activities
$
(1,333.3) $
375.2
$
175.3
581.1
98.8
34.2
11.8
1.6
(373.5)
(12.6)
268.0
(93.7)
22.2
55.7
(477.8)
322.1
392.2
(1.8)
(206.6)
116.0
27.1
(63.1)
(631.6) $
447.5
—
37.3
9.7
103.7
—
25.4
(250.2)
(0.8)
—
44.8
(29.9)
(116.1)
(6.3)
2.7
137.5
208.1
0.1
(55.2)
933.5
$
(196.2)
(188.1)
(9.1)
(1,176.2)
—
—
543.1
(1,026.5) $
(404.9)
(299.3)
(44.7)
—
—
—
36.3
(712.6) $
$
$
378.6
—
26.0
(5.6)
32.7
(13.9)
(31.8)
351.3
—
—
47.4
(43.1)
234.3
(3.3)
10.1
(111.6)
(227.1)
11.2
7.5
838.0
(317.5)
(266.0)
(17.0)
—
(58.4)
(75.0)
48.3
(685.6)
See notes to consolidated financial statements.
F- 15
PBF ENERGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(in millions)
Cash flows from financing activities:
Net proceeds from issuance of PBF Energy Class A common stock
Net proceeds from issuance of PBFX common units
Dividend payments
Distributions to PBFX public unitholders
Distributions to PBF Energy Company LLC members other than PBF
Energy
Proceeds from 2025 9.25% Senior Secured Notes
Proceeds from 2028 6.00% Senior Notes
Redemption of 2023 7.00% Senior Notes
Proceeds from revolver borrowings
Repayments of revolver borrowings
Repayments of PBF Rail Term Loan
Proceeds from PBFX revolver borrowings
Repayments of PBFX revolver borrowings
Repayments of note payable
Deferred payment for the East Coast Storage Assets Acquisition
Settlements of catalyst obligations
Proceeds from catalyst financing arrangements
Payments on financing leases
Taxes paid for net settlement of equity-based compensation
Proceeds from stock options exercised
Purchases of treasury stock
Deferred financing costs and other
Net cash provided by (used in) financing activities
Net increase in cash and cash equivalents
Cash and equivalents, beginning of period
Cash and equivalents, end of period
Supplemental cash flow disclosures
Non-cash activities:
Accrued and unpaid capital expenditures
Assets acquired under operating and financing
Fair value of the Martinez Contingent Consideration at acquisition
Deferred payment for PBFX East Coast Storage Assets Acquisition
East Coast Storage Assets Contingent Consideration at acquisition
leases
ff
Cash paid during year for:
Interest, net of capitalized interest of $12.6, $18.1 and $9.5 in 2020,
2019 and 2018, respectively
Income taxes
Year Ended December 31,
2019
2018
2020
$
— $
—
(35.9)
(45.9)
— $
132.5
(143.5)
(62.5)
(0.4)
1,250.6
1,000.0
(517.5)
1,450.0
(550.0)
(7.2)
100.0
(183.0)
—
—
(8.8)
51.9
(12.4)
(2.1)
—
(1.6)
(35.0)
2,452.7
794.6
814.9
1,609.5
32.1
702.0
77.3
—
—
$
$
$
(3.2)
—
—
—
1,350.0
(1,350.0)
(7.0)
228.0
(101.0)
—
(32.0)
(6.5)
—
—
(4.8)
—
(4.9)
1.6
(3.3) $
$
$
217.6
597.3
814.9
37.2
434.9
—
—
—
$
$
$
$
287.3
34.9
(139.0)
(48.2)
(2.1)
—
—
—
—
(350.0)
(6.8)
170.0
(43.7)
(5.6)
—
(9.1)
—
—
(5.4)
14.0
(8.2)
(16.2)
(128.1)
24.3
573.0
597.3
90.2
—
—
30.9
21.1
$
206.9
2.1
$
154.0
2.7
164.4
0.7
See notes to consolidated financial statements.
F- 16
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except unit and per unit data)
December 31,
2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents (PBFX: $36.3 and $35.0, respectively)
Accounts receivable
Inventories
Prepaid and other current assets
Total current assets
Property, plant and equipment, net (PBFX: $820.2 and $854.6, respectively)
Lease right of use assets
Deferred charges and other assets, net
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Accrued expenses
Deferred revenue
Current operating lease liabilities
Current debt
Total current liabilities
Long-term debt (PBFX: $720.8 and $802.1, respectively)
Affiliate note payable
Deferred tax liabilities
Long-term operating lease liabilities
Long-term financing lease liabilities
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 14)
Series B Units, 1,000,000 issued and outstanding, no par or stated value
PBF Energy Company LLC equity:
Series A Units, 970,647 and 1,215,317 issued and outstanding at December 31,
2020 and 2019, no par or stated value
Series C Units, 120,122,872 and 119,826,202 issued and outstanding at December
31, 2020 and 2019, no par or stated value
Treasury stock, at cost
Retained earnings (accumulated deficit)
Accumulated other comprehensive loss
Total PBF Energy Company LLC equity
Noncontrolling interest
Total equity
Total liabilities, Series B units and equity
$
$
$
$
$
$
$
1,607.3
512.9
1,686.2
58.8
3,865.2
4,843.3
916.9
872.3
10,497.7
406.9
1,951.2
47.2
78.4
7.4
2,491.1
4,653.6
376.3
38.7
756.0
68.3
268.5
8,652.5
5.1
17.6
2,220.3
(167.3)
(690.5)
(6.1)
1,374.0
466.1
1,840.1
10,497.7
$
813.7
834.0
2,122.2
51.6
3,821.5
4,023.2
330.6
953.8
9,129.1
601.4
1,846.2
20.1
72.1
—
2,539.8
2,064.9
376.4
31.4
233.1
18.4
250.9
5,514.9
5.1
20.0
2,189.4
(165.7)
1,142.4
(9.7)
3,176.4
432.7
3,609.1
9,129.1
See notes to consolidated financial statements.
F- 17
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
ONS
CONSOLIDATED STATEMENTS OF OPERATIRR
(in millions)
Revenues
Cost and expenses:
Cost of products and other
Operating expenses (excluding depreciation and
amortization expense as reflected below)
Depreciation and amortization expense
Cost of sales
General and administrative expenses (excluding
depreciation and amortization expense as reflected below)
Depreciation and amortization expense
Change in fair value of contingent consideration
Impairment expense
Gain on sale of assets
Total cost and expenses
Income (loss) from operations
Other income (expense):
Interest expense, net
Change in fair value of catalyst obligations
Debt extinguishment costs
Other non-service components of net periodic benefit cost
Income (loss) before income taxes
Income tax expense (benefit)
Net income (loss)
Less: net income attributablea
to noncontrolling interests
Net income (loss) attributable to PBF Energy Company
LLC
Year Ended December 31,
2019
2018
2020
$
15,115.9
$
24,508.2
$
27,186.1
14,275.6
21,387.5
24,503.4
1,918.3
551.7
16,745.6
247.7
11.3
(93.7)
98.8
(477.8)
16,531.9
(1,416.0)
(268.5)
(11.8)
(22.2)
4.3
(1,714.2)
6.1
(1,720.3)
76.2
1,782.3
425.3
23,595.1
1,721.0
359.1
26,583.5
282.3
10.8
(0.8)
—
(29.9)
275.2
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(43.1)
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26,826.2
650.7
359.9
(169.1)
(178.5)
(9.7)
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(0.2)
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(8.3)
480.0
51.5
5.6
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8.0
180.1
42.3
137.8
$
(1,796.5) $
428.5
$
See notes to consolidated financial statements.
F- 18
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
Net income (loss)
$
(1,720.3) $
480.0
$
180.1
Year Ended December 31,
2019
2018
2020
Other comprehensive income (loss):
Unrealized (loss) gain on availablea
securities
Net gain on pension and other post-retirement
benefits
for sale
Total other comprehensive income
Comprehensive income (loss)
Less: comprehensive income attributablea
noncontrolling interests
to
(0.1)
3.7
3.6
(1,716.7)
76.2
0.4
13.8
14.2
494.2
51.5
Comprehensive income (loss) attributable to PBF
Energy Company LLC
$
(1,792.9) $
442.7
$
(0.1)
3.1
3.0
183.1
42.3
140.8
See notes to consolidated financial statements.
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PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Year Ended December 31,
2019
2018
2020
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash (used in) provided by
operating activities:
Depreciation and amortization
Impairment expense
Stock-based compensation
Change in fair value of catalyst obligations
Deferred income taxes
Non-cash change in inventory repurchase obligations
Non-cash lower of cost or market inventory adjustment
Change in fair value of contingent consideration
Debt extinguishment costs
Pension and other post-retirement benefit costs
Gain on sale of assets
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Prepaid and other current assets
Accounts payable
Accrued expenses
Deferred revenue
Other assets and liabilities
Net cash (used in) provided by operating activities
Cash flows from investing activities:
Expenditures for property, plant and equipment
Expenditures for deferred turnaround costs
Expenditures for other assets
Acquisition of Martinez refinery
Acquisition of Knoxville Terminal by PBFX
Acquisition of East Coast Storage Assets by PBFX
Proceeds from sale of assets
Net cash used in investing activities
$
(1,720.3) $
480.0
$
180.1
581.1
98.8
34.2
11.8
7.3
(12.6)
268.0
(93.7)
22.2
55.7
(477.8)
321.0
392.2
(1.8)
(206.6)
124.9
27.1
(63.7)
(632.2) $
447.5
—
37.3
9.7
(8.8)
25.4
(250.2)
(0.8)
—
44.8
(29.9)
(115.1)
(6.3)
2.2
137.5
219.5
0.1
(56.0)
936.9
$
(196.2)
(188.1)
(9.1)
(1,176.2)
—
—
543.1
(1,026.5) $
(404.9)
(299.3)
(44.7)
—
—
—
36.3
(712.6) $
$
$
378.6
—
26.0
(5.6)
7.2
(31.8)
351.3
—
—
47.4
(43.1)
234.3
(3.3)
(1.1)
(111.6)
(226.3)
11.2
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820.7
(317.5)
(266.0)
(17.0)
—
(58.4)
(75.0)
48.3
(685.6)
See notes to consolidated financial statements.
F- 21
PBF ENERGY COMPANY LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(in millions)
Cash flows from financing activities:
Proceeds from issuance of PBF LLC Series C units
Net proceeds from issuance of PBFX common units
Distributions to PBF Energy Company LLC members
Distributions to PBFX public unitholders
Proceeds from 2025 9.25% Senior Secured Notes
Proceeds from 2028 6.00% Senior Notes
Redemption of 2023 7.00% Senior Notes
Proceeds from revolver borrowings
Repayments of revolver borrowings
Repayments of PBF Rail Term Loan
Proceeds from PBFX revolver borrowings
Repayments of PBFX revolver borrowings
Affiliate note payable with PBF Energy Inc.
Repayments of note payable
Deferred payment for the East Coast Storage Assets Acquisition
Settlements of catalyst obligations
Proceeds from catalyst financing arrangements
Payments on financing leases
Taxes paid for net settlement of equity-based compensation
Proceeds from stock options exercised
Purchases of treasury stock
Deferred financing costs and other
Net cash provided by (used in) financing activities
Net increase in cash and cash equivalents
Cash and equivalents, beginning of period
Cash and equivalents, end of period
Supplemental cash flow disclosures
Non-cash activities:
Accrued and unpaid capital expenditures
Assets acquired under operating and financing
Fair value of the Martinez Contingent Consideration at acquisition
Deferred payment for PBFX East Coast Storage Assets Acquisition
East Coast Storage Assets Contingent Consideration at acquisition
leases
ff
Cash paid during year for:
Interest, net of capitalized interest of $12.6, $18.1 and $9.5 in 2020,
2019 and 2018, respectively
Income taxes
Year Ended December 31,
2019
2018
2020
$
$
$
$
$
— $
—
(36.3)
(45.9)
1,250.6
1,000.0
(517.5)
1,450.0
(550.0)
(7.2)
100.0
(183.0)
(0.1)
—
—
(8.8)
51.9
(12.4)
(2.1)
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(1.6)
(35.3)
2,452.3
$
$
$
793.6
813.7
1,607.3
32.1
702.0
77.3
—
—
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132.5
(146.7)
(62.5)
—
—
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1,350.0
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(7.0)
228.0
(101.0)
(3.1)
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(6.5)
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(4.8)
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596.0
813.7
37.2
434.9
—
—
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287.3
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(141.1)
(48.2)
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—
—
—
(350.0)
(6.8)
170.0
(43.7)
44.1
(5.6)
—
(9.1)
—
—
(8.7)
0.2
(8.2)
(16.2)
(101.1)
34.0
562.0
596.0
90.2
—
—
30.9
21.1
$
206.9
1.0
$
154.0
1.2
164.4
0.6
See notes to consolidated financial statements.
F- 22
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
Description of the Business
PBF Energy Inc. (“PBF Energy”) was formed as a Delaware corporation on November 7, 2011 and is the sole
managing member of PBF Energy Company LLC (“PBF LLC”), a Delaware limited liability company, with a
controlling interest in PBF LLC and its subsidiaries. PBF Energy consolidates the financial results of PBF LLC
and its subsidiaries and records a noncontrolling interest in its Consolidated Financial Statements representing
the economic interests of PBF LLC’s members other than PBF Energy (refer to “Note 17 - Noncontrolling
Interests”).
PBF Energy holds a 99.2% economic interest in PBF LLC as of December 31, 2020 through its ownership of
PBF LLC Series C Units, which are held solely by PBF Energy. Holders of PBF LLC Series A Units, which are
held by parties other than PBF Energy (“the members of PBF LLC other than PBF Energy”), hold the remaining
0.8% economic interest in PBF LLC. The PBF LLC Series C Units rank on parity with the PBF LLC Series A
Units as to distribution rights, voting rights and rights upon liquidation, winding up or dissolution. In addition,
the amended and restated limited liability company agreement of PBF LLC provides that any PBF LLC Series
A Units acquired by PBF Energy will automatically be reclassified as PBF LLC Series C Units in connection
with such acquisition.
PBF LLC, together with its consolidated subsidiaries, owns and operates oil refineries and related facilities in
North America. PBF Holding Company LLC (“PBF Holding”) is a wholly-owned subsidiary of PBF LLC. PBF
Investments LLC, Toledo Refining Company LLC, Paulsboro Refining Company LLC (“PRC”), Delaware City
Refinff
ing Company LLC (“DCR”), 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 are PBF LLC’s principal operating subsidiaries and are all wholly-owned subsidiaries of PBF
Holding. Discussions or areas of the Notes to Consolidated Financial Statements that either apply only to PBF
Energy or PBF LLC are clearly noted in such footnotes.
As of December 31, 2020, PBF LLC also held a 48.0% limited partner interest in PBF Logistics LP (“PBFX”),
a publicly-traded master limited partnership (“MLP”) (refer to “Note 3 - PBF Logistics LP”). PBF Logistics GP
LLC (“PBF GP”) owns the noneconomic general partner interest and serves as the general partner of PBFX and
is wholly-owned by PBF LLC. PBF Energy, through its ownership of PBF LLC, consolidates the financial
results of PBFX and its subsidiaries and records a noncontrolling interest in its consolidated financial statements
representing the economic interests of PBFX’s unitholders other than PBF LLC (refer to “Note 17 -
Noncontrolling Interests”). Collectively, PBF Energy and its consolidated subsidiaries, including PBF LLC,
PBF Holding, PBF GP and PBFX are referred to hereinafter as the “Company” unless the context otherwise
requires.
Substantially all of the Company’s operations are in the United States. The Company operates in two reportable
business segments: Refining and Logistics. The Company’s oil refineries are all engaged in the refining of crude
oil and other feedstocks into petroleum products, and are aggregated into the Refining segment. PBFX is a
publicly-traded MLP that was formed to operate logistics assets such as crude oil and refined petroleum
products terminals, pipelines and storage facilities. The Logistics segment consists solely of PBFX’s operations.
To generate earnings and cash flows from operations, the Company is primarily dependent upon processing
crude oil and selling refined petroleum products at margins sufficient to cover fixed and variablea
costs and other
expenses. Crude oil and refined petroleum products are commodities; and factors that are largely out of the
Company’s control can cause prices to vary over time. The resulting potential margin volatility can have a
material effect
on the Company’s financial position, earnings and cash flows.
ff
F- 23
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Public Offeff rings
In connection with certain of the secondary offerings completed in 2015, 2014 and 2013, investment funds
associated with the initial investors in PBF LLC exchanged all of their PBF LLC Series A Units for an equal
number of shares of PBF Energy Class A common stock which were subsequently sold to the public and,
accordingly, no longer hold any PBF LLC Series A Units. The holders of PBF LLC Series B Units, which
include certain current and former executive officers of PBF Energy, had the right to receive a portion of the
proceeds of the sale of the PBF Energy Class A common stock by the investment funds associated with the
initial investors in PBF LLC. PBF Energy did not receive any proceeds from any of the secondary offerings.
Since the secondary offerings, PBF Energy has completed a series of follow-on equity offerings. Such
transactions occurring in the three years ended December 31, 2020 are discussed in “Note 17 - Noncontrolling
Interests”.
As a result of these equity offerings and certain other transactions such as stock option exercises, as of
December 31, 2020, PBF Energy owned 120,122,872 PBF LLC Series C Units and the Company’s current and
former executive officers and directors and certain employees and others beneficially owned 970,647 PBF LLC
Series A Units. As of December 31, 2020, the holders of PBF Energy’s issued and outstanding shares of Class
A common stock have 99.2% of the voting power in the Company and the members of PBF LLC other than
PBF Energy through their holdings of Class B common stock have the remaining 0.8% of the voting power in
the Company.
Tax Receivable Agreement
PBF LLC intends to have an election under Section 754 of the Internal Revenue Code in effect for each taxable
year in which an exchange of PBF LLC Series A Units for PBF Energy Class A common stock as described
above occurs, which may result in an adjustment to the tax basis of the assets of PBF LLC at the time of an
exchange of PBF LLC Series A Units. As a result of both the initial purchase of PBF LLC Series A Units from
the PBF LLC Series A unitholders in connection with the initial public offering of PBF Energy Class A
common stock which closed on December 18, 2012 and subsequent exchanges, PBF Energy will become
entitled to a proportionate share of the existing tax basis of the assets of PBF LLC. In addition, the purchase of
PBF LLC Series A Units and subsequent exchanges have resulted in and are expected to continue to result in
increases in the tax basis of the assets of PBF LLC that otherwise would not have been availablea
. Both this
proportionate share and these increases in tax basis may reduce the amount of tax that PBF Energy would
otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase
losses) on future dispositions of certain capita
al assets to the extent tax basis is allocated to those capita
al assets.
COVID-19 and Market Developments
The impact of the unprecedented global health and economic crisis sparked by the novel coronavirus
(“COVID-19”) pandemic and related adverse impact on economic and commercial activity has resulted in a
significant reduction in demand for refined petroleum and petrochemical products. This significant demand
reduction has had an adverse impact on the Company’s results of operations and liquidity position for the year
ended December 31, 2020. In response, the Company has reduced throughput rates across its entire refining
system and is currently operating all refineries at reduced rates.
It is impossible to estimate the duration or significance of the financial impact that will result from the
COVID-19 pandemic. However, the extent of the impact of the COVID-19 pandemic on the Company’s
business, financial condition, results of operations and liquidity will depend largely on future developments,
including the duration of the outbreak, particularly within the geographic areas where the Company operates,
and the related impact on overall economic activity, all of which are uncertain and cannot be predicted with
certainty at this time.
F- 24
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Presentation
These Consolidated Financial Statements include the accounts of PBF Energy and subsidiaries in which PBF
Energy has a controlling interest. All
intercompany accounts and transactions have been eliminated in
consolidation.
Cost Classifications
Cost of products and other consists of the cost of crude oil, other feedstocks, blendstocks and purchased refined
products and the related in-bound freight and transportation costs.
maintenance and
Operating expenses (excluding depreciation and amortization) consists of direct costs of labor,
services, utilities, property taxes, environmental compliance costs and other direct operating costs incurred in
connection with our refining operations. Such expenses exclude depreciation related to refining and logistics
assets that are integral to the refinery production process, which is presented separately as Depreciation and
amortization expense as a component of Cost of sales on the Company’s Consolidated Statements of
Operations.
a
Reclassification
As of December 31, 2020, Financing lease right of use assets, previously included in Deferred charges and other
assets, net, in the Consolidated Balance Sheets, are reflected within Lease right of use assets, which is inclusive
of both operating and financing lease right of use assets. Financing lease liabilities, previously included in Other
long-term liabia lities,
in the Consolidated Balance Sheets, are presented as separate line items in the
Consolidated Financial Statements. The amounts related to such balance sheet accounts have also been
reclassified in their respective footnotes for prior periods to conform to the 2020 presentation.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the
United States (“GAAP”) requires management to make estimates and assumptim ons that affect the reported
amounts of assets, liabilities, revenues and expenses and the related disclosures. Actual results could differ from
those estimates.
Impairment Assessment
The global crisis resulting from the spread of the COVID-19 pandemic continues to have a substantial impact
on the economy and overall consumer demand for energy and hydrocarbon products. As a result of the
sustained decrease in PBF Energy’s stock price, enduring throughput reductions across the Company’s
refineries and continued decrease in demand for the Company’s products,
the Company determined an
impairment triggering event had occurred as of December 31, 2020. As such, the Company performed an
impairment assessment on its long-lived assets as of December 31, 2020. As a result of the impairment test, the
Company concluded that the carrying
values of its long-lived assets were not impaired when comparing the
carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from
use of the assets over their remaining estimated useful life.
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F- 25
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In connection with the Company’s ongoing strategic response plan to deal with the COVID-19 pandemic and its
East Coast Refining Reconfiguration (as defined in “Note 7 - Property, Plant and Equipment, net”), it recorded
an impairment charge of approximately $91.8 million associated to the write-down of certain assets and project
abandonments. Refer to “Note 7 - Property, Plant and Equipment, net” for further details.
As discussed further in “Note 3 - PBF Logistics LP” and “Note 14 - Commitments and Contingencies”, PBFX
recognized an impairment charge of $7.0 million during the third quarter of 2020 as a result of a third party
contract termination which led to the write-down of certain processing unit assets and a customer contract
intangible asset that were directly tied to the contract.
If adverse market conditions persist or there is further deterioration in the general economic environment due to
the COVID-19 pandemic, there could be additional indicators that the Company’s assets are impaired requiring
evaluation that may result in future impairment charges to earnings.
Business Combinations
We use the acquisition method of accounting for the recognition of assets acquired and liabilities assumed in
business combinations at their estimated fair values as of the date of acquisition. Any excess consideration
transferred over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.
Significant judgment is required in estimating the fair value of assets acquired. As a result, in the case of
significant acquisitions, we obtain the assistance of third-party valuation specialists in estimating fair values of
tangible and intangible assets based on available historical information and on expectations and assumptim ons
about the future, considering the perspective of marketplat
ce participants. While management believes those
expectations and assumptim ons are reasonable,
they are inherently uncertain. Unanticipated market or
macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the
estimates and assumptions.
Certain of the Company’s acquisitions may include earn-out provisions or other forms of contingent
consideration. As of the acquisition date, the Company records contingent consideration, as applicablea
, at the
estimated fair value of expected future payments associated with the earn-out. Any changes to the recorded fair
value of contingent consideration, subsequent to the measurement period, will be recognized as earnings in the
period in which it occurs.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash
equivalents. The carrying
amount of the cash equivalents approximates fair value due to the short-term maturity
rr
of those instruments.
Concentrations of Credit Risk
For the year ended December 31, 2020, only one customer, Royal Dutch Shell, accounted for 10% or more of
the Company’s revenues (approximately 13%). For the years ended December 31, 2019, and 2018 no single
customer amounted to greater than or equal to 10% of the Company’s revenues.
As of December 31, 2020, only one customer, Royal Dutch Shell, accounted for 10% or more of the Company’s
total trade accounts receivable (approximately 16%). No single customer accounted for 10% or more of the
as of December 31, 2019.
Company’s total trade accounts receivablea
F- 26
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue, Deferred
ff
Revenue and Accounts Receivable
Effective January 1, 2018, the Company adopted ASC 606, Revenues from Contracts with Customers (“ASC
606”). As a result, the Company has changed its accounting policy for the recognition of revenue from contracts
with customers. The Company sells various refined products primarily through its refinery subsidiaries and
recognizes revenue related to the sale of products when control of the promised goods or services is transferred
to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange
for those goods or services. Refer to “Note 20 - Revenues” for further discussion of the Company’s revenue
recognition policy, including deferred revenues and the practical expedients elected as part of the transition to
ASC 606.
During 2019, PBF Holding and its subsidiaries, DCR and PRC, entered into amendments to the existing
inventory intermediation agreements (as amended in the first quarter of 2019 and amended and restated in the
third quarter of 2019, the “Inventory Intermediation Agreements”) with J. Aron & Company, a subsidiary of
The Goldman Sachs Group, Inc. (“J. Aron”), pursuant to which certain terms of the existing inventory
intermediation agreements were amended, including, among other things, the maturity date. On March 29, 2019
the Inventory Intermediation Agreement by and among J. Aron, PBF Holding and DCR was amended to add the
East Coast Storage Assets (as defined in “Note 3 - PBF Logistics LP”) as a location and crude oil as a new
product type to be included in the J. Aron Products (as defined in “Note 6 - Inventories”) sold to J. Aron by
DCR. On August 29, 2019 the Inventory Intermediation Agreement by and among J. Aron, PBF Holding and
consent of the parties
PRC was extended to December 31, 2021, which term may be further extended by mutual
to December 31, 2022 and the Inventory Intermediation Agreement by and among J. Aron, PBF Holding and
DCR was extended to June 30, 2021, which term may be further extended by mutual
consent of the parties to
June 30, 2022.
t
t
Pursuant to each Inventory Intermediation Agreement, J. Aron purchases and holds title to the J. Aron Products
produced by the refinery and delivered into the J. Aron Storage Tanks (as defined in “Note 6 - Inventories”).
The J. Aron Products are sold back to the Company as the J. Aron Products are discharged out of the J. Aron
Storage Tanks. These purchases and sales are settled monthly at the daily market prices related to those J. Aron
Products. These transactions are considered to be made in contemplation of each other and, accordingly, do not
result in the recognition of a sale when title passes from the Delaware City and Paulsboro refineries to J. Aron.
Additionally, J. Aron has the right to store the J. Aron Products purchased in J. Aron Storage Tanks under the
Inventory Intermediation Agreements and will retain these storage rights for the term of the agreements. PBF
Holding continues to market and sell the J. Aron Products independently to third parties.
shed, if
Accounts receivable are carried at invoiced amounts. An allowance for doubtful accounts is establia
required,
their estimated net realizable value. In estimating probable losses,
management reviews accounts that are past due and determines if there are any known disputes. There was no
allowance for doubtful accounts at December 31, 2020 and 2019.
to report such amounts at
Excise taxes on sales of refined products that are collected from customers and remitted to various
governmental agencies are reported on a net basis.
Inventory
Inventories are carried at the lower of cost or market. The cost of crude oil, feedstocks, blendstocks and refined
products are determined under the last-in first-out (“LIFO”) method using the dollar value LIFO method with
increments valued based on average purchase prices during the year. The cost of supplies and other inventories
is determined principally on the weighted average cost method.
F- 27
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Leases
Effeff ctive January 1, 2019, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting
Standards Update (“ASU”) 2016-02, Leases (“ASC 842”), using the modified retrospective approach. As of the
date of implementation on January 1, 2019, the impact of the adoption of ASC 842 resulted in the recognition of
a right of use asset and lease liability on the Company’s Consolidated Balance Sheets of approximately
$250.0 million.
The Company leases office space, office equipment, refinery facilities and equipment, railcars and other
operating leases, with terms typically ranging from one to
logistics assets primarily under non-cancelablea
twentyt years, subject to certain renewal options as applicablea
. The Company considers those renewal or
termination options that are reasonably certain to be exercised in the determination of the lease term and initial
measurement of lease liabilities and right-of-use assets. Lease expense for operating lease payments is
recognized on a straight-line basis over the lease term. Interest expense for finance leases is incurred based on
the carrying
value of the lease liability. Leases with an initial term of 12 months or less are not recorded on the
rr
Company’s Consolidated Balance Sheets.
The Company determines whether a contract is or contains a lease at inception of the contract and whether that
lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate
implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not
provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an
estimate of its incremental borrowing rate.
For substantially all classes of underlying assets, the Company has elected the practical expedient not to
separate lease and non-lease components, which allows for combining the components if certain criteria are
met. For certain leases of refinery support facilities, the Company accounts for the non-lease service component
separately.
Property, Plant and Equipment
alizes the interest cost associated with majora
alizes costs associated with the
Property, plant and equipment additions are recorded at cost. The Company capita
construction project. The Company
preliminary, pre-acquisition and development/ctt onstruction stages of a majora
construction projects based on the effective interest rate of
capita
total borrowings. The Company also capita
alizes costs incurred in the acquisition and development of software
for internal use, including the costs of software, materials, consultants and payroll-related costs for employees
incurred in the application development stage.
Depreciation is computem
d using the straight-line method over the following estimated useful lives:
Process units and equipment
Pipeline and equipment
Buildings
Computers, furniture and fixtures
Leasehold improvements
Railcars
5-25 years
5-25 years
25 years
3-7 years
20 years
50 years
Maintenance and repairs are charged to operating expenses as they are incurred. Improvements and betterments,
which extend the lives of the assets, are capia talized.
F- 28
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred Charges and Other Assets, Net
Deferred charges and other assets include refinery turnaround costs, catalyst, precious metal catalysts, linefill,
deferred financing costs and intangible assets. Refinery turnaround costs, which are incurred in connection with
planned majora maintenance activities, are capitalized when incurred and amortized on a straight-line basis over
the period of time estimated to lapsea
until the next turnaround occurs. The amortization period generally ranges
from 3 to 6 years; however, based upon the specific facts and circumstances, different periods of deferral occur.
As a result of the East Coast Refining Reconfiguration (as defined in “Note 7 - Property, Plant and Equipment,
net), certain majora
processing units were temporarily idled. As such, the Company accelerated the recognition
of approximately $56.2 million of unamortized deferred turnaround costs associated with these idled units.
Precious metal catalysts, linefill and certain other intangibles are considered indefinite-lived assets as they are
not expected to deteriorate in their prescribed functions. Such assets are assessed for impairment in connection
with the Company’s review of its long-lived assets.
Deferred financing costs are capita
years).
alized when incurred and amortized over the life of the loan (generally 1 to 8
Intangible assets with finite lives primarily consist of emission credits, permits and customer relationships and
are amortized over their estimated useful lives (generally 1 to 10 years).
Long-Lived Assets and Definite-Lived Intangibles
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances
indicate the carrying value may not be recoverablea
value of
the long-lived assets to the estimated undiscounted future cash flows expected to result from use of the assets
and their ultimate disposition. If such analysis indicates that the carrying value of the long-lived assets is not
considered to be recoverable, the carrying value is reduced to the fair value.
. Impairment is evaluated by comparing the carrying
rr
Impairment assessments inherently involve judgment as to assumptim ons about expected future cash flows and
the impact of market conditions on those assumptim ons. Although management utilizes assumptim ons that it
believes are reasonable, future events and changing market conditions may impact management’s assumptions,
which could produce different results.
Asset Retirement Obligations
The Company records an asset retirement obligation at fair value for the estimated cost to retire a tangible long-
lived asset at the time the Company incurs that liability, which is generally when the asset is purchased,
constructed, or leased. The Company records the liabia lity when it has a legal or contractual obligation to incur
costs to retire the asset and when a reasonable estimate of the fair value of the liabia lity can be made. If a
reasonable estimate cannot be made at the time the liability is incurred, the Company will record the liability
to estimate the liability’s fair value. Certain of the Company’s asset
when sufficient information is availablea
sites when it
retirement obligations are based on its legal obligation to perform remedial activity at its refinff eryrr
permanently ceases operations of the long-lived assets. The Company therefore considers the settlement date of
these obligations to be indeterminable. Accordingly,
the Company cannot calculate an associated asset
retirement liability for these obligations at this time. The Company will measure and recognize the fair value of
.
these asset retirement obligations when the settlement date is determinablea
F- 29
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Environmental Matters
Liabilities for future remediation costs are recorded when environmental assessments and/or remedial efforts are
of
probable and the costs can be reasonably estimated. Other than for assessments, the timing and magnitude
these accruals generally are based on the completion of investigations or other studies or a commitment to a
formal plan of action. Environmental liabilities are based on best estimates of probable future costs using
currently available technology and applying current regulations, as well as the Company’s own internal
environmental policies. The measurement of environmental remediation liabilities may be discounted to reflect
the time value of money if the aggregate amount and timing of cash payments of the liabia lities are fixed or
reliablya
. The actual settlement of the Company’s liability for environmental matters could
materially differ from its estimates due to a number of uncertainties such as the extent of contamination,
changes in environmental laws and regulations, potential improvements in remediation technologies and the
participation of other responsible parties.
determinablea
t
Stock-Based Compensation
Stock-based compensation includes the accounting effect of options to purchase PBF Energy Class A common
stock granted by the Company to certain employees, Series A warrants issued or granted by PBF LLC to
employees in connection with their acquisition of PBF LLC Series A units, options to acquire Series A units of
PBF LLC granted by PBF LLC to certain employees, Series B units of PBF LLC that were granted to certain
members of management and restricted PBF LLC Series A Units and restricted PBF Energy Class A common
stock granted to certain directors and officers. The estimated fair value of the options to purchase PBF Energy
Class A common stock and the PBF LLC Series A warrants and options is based on the Black-Scholes option
pricing model and the fair value of the PBF LLC Series B units is estimated based on a Monte Carlo simulation
model. The estimated fair value is amortized as stock-based compensation expense on a straight-line method
recognized in the
over the vesting period and included in General and administrative expense with forfeitures
period they occur.
t
Additionally, stock-based compensation includes unit-based compensation provided to certain officers, non-
employee directors and seconded employees of PBFX’s general partner, PBF GP, or its affiliates, consisting of
PBFX phantom units. The fair value of PBFX’s phantom units are measured based on the fair market value of
the underlying common units on the date of grant based on the common unit closing price on the grant date. The
estimated fair value of PBFX’s phantom units is amortized over the vesting period using the straight-line
method. Awards vest over a four year service period. The phantom unit awards may be settled in common units,
cash or a combination of both. Expenses related to unit-based compensation are also included in General and
tures recognized in the period they occur.
administrative expenses with forfeiff
PBF Energy grants performance share unit awards and performance unit awards to certain key employees.
Performance awards granted to employees prior to November 1, 2020 are based on a three-year performance
cycle with four measurement periods and performance awards granted to employees after November 1, 2020 are
based on a three-year performance cycle having a single measurement period. The payout for each, which
ranges from 0% to 200%, is based on the relative ranking of the total shareholder returnt
(“TSR”) of PBF
Energy’s common stock as compared to the TSR of a selected group of industry peer companies over an
e share unit awards and performance unit awards are each
average of four measurement periods. The performanc
e share unit awards will be
measured at fair value based on Monte Carlo simulation models. The performanc
settled in PBF Energy Class A common stock and are accounted for as equity awards and the performanc
e unit
ff
awards will be settled in cash and are accounted for as liabila
ity awards.
ff
ff
F- 30
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes
As a result of the PBF Energy’s acquisition of PBF LLC Series A Units or exchanges of PBF LLC Series A
Units for PBF Energy Class A common stock, PBF Energy expects to benefit from amortization and other tax
deductions reflecting the step up in tax basis in the acquired assets. Those deductions will be allocated to PBF
Energy and will be taken into account in reporting PBF Energy’s taxable income. As a result of a federal
income tax election made by PBF LLC, applicable to a portion of PBF Energy’s acquisition of PBF LLC Series
A Units, the income tax basis of the assets of PBF LLC, underlying a portion of the units PBF Energy acquired,
has been adjusted based upon the amount that PBF Energy paid for that portion of its PBF LLC Series A Units.
PBF Energy entered into the Tax Receivable Agreement (as defined in “Note 14 - Commitments and
Contingencies”) which provides for the payment by PBF Energy equal to 85% of the amount of the benefits, if
any, that PBF Energy is deemed to realize as a result of (i) increases in tax basis and (ii) certain other tax
to payments
benefits related to entering into the Tax Receivable Agreement, including tax benefits attributablea
under the Tax Receivable Agreement. As a result of these transactions, PBF Energy’s tax basis in its share of
PBF LLC’s assets will be higher than the book basis of these same assets. This resulted in a deferred tax asset of
$155.2 million as of December 31, 2020.
Deferred taxes are calculated using a liability method, whereby deferred tax assets are recognized for deductible
temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary
differences represent the differences between reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effect of changes in tax laws and rates on the date of enactment. PBF Energy recognizes tax
benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its
technical merits. Interest and penalties on uncertain tax positions are included as a component of the provision
for income taxes on the Consolidated Statements of Operations. As a result of management’s assessment of the
available positive and negative evidence to estimate whether sufficient future taxabla e income will be generated
to permit use of the existing deferred tax assets as of December 31, 2020, a valuation allowance of
$358.4 million was recorded to recognize only the portion of deferred tax assets that are more likely than not to
, however, could be adjusted if estimates
be realized. The amount of the deferred tax assets considered realizablea
of future taxabla e income during the carryforward
period are reduced or increased or if objective negative
evidence in the form of cumulative losses is no longer present and additional weight is given to subjective
evidence such as our projections for future taxabla e income. As a result of the valuation allowance, the liabia lity
associated with the Tax Receivable Agreement was reduced to zero.
rr
The Federal tax returns for all years since 2017 and state tax returns
Income Taxes”) are subject to examination by the respective tax authorities.
t
for all years since 2015 (see “Note 21 -
Net Income Per Share
Net income per share is calculated by dividing the net income available to PBF Energy Class A common
stockholders by the weighted average number of shares of PBF Energy Class A common stock outstanding
during the period. Diluted net income per share is calculated by dividing the net income available to PBF
Energy Class A common stockholders, adjusted for the net income attributablea
to the noncontrolling interest
and the assumed income tax expense thereon, by the weighted average number of PBF Energy Class A common
shares outstanding during the period adjusted to include the assumed exchange of all PBF LLC Series A units
outstanding for PBF Energy Class A common stock, if applicable under the if converted method, and the
potentially dilutive effect of outstanding options to purchase shares of PBF Energy Class A common stock,
performance share awards and options and warrants to purchase PBF LLC Series A Units, subjec
t to forfeituret
utilizing the treasury stock method.
u
F- 31
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Pension and Other Post-Retirement Benefiff ts
of its
The Company recognizes an asset for the overfunded status or a liability for the underfunded statust
ities or
pension and post-retirement benefit plans. The funded status is recorded within Other long-term liabila
assets. Changes in the plans’ funded status are recognized in other comprehensive income in the period the
change occurs.
Fair Value Measurement
A fair value hierarchy (Level 1, Level 2, or Level 3) is used to categorize fair value amounts based on the
quality of inputs used to measure fair value. Accordingly, fair values derived from Level 1 inputs utilize quoted
prices in active markets for identical assets or liabilities. Fair values derived from Level 2 inputs are based on
quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are
either directly or indirectly observable for the asset or liability. Level 3 inputs are unobservable inputs for the
asset or liability, and include situat
ions where there is little, if any, market activity for the asset or liability.
t
The Company uses appropriate valuation techniques based on the availablea
inputs to measure the fair values of
its applicable assets and liabilities. When available, the Company measures fair value using Level 1 inputs
because they generally provide the most reliablea
evidence of fair value. In some valuations, the inputs may fall
into different
levels in the hierarchy. In these cases, the asset or liability level within the fair value hierarchy is
ff
based on the lowest level of input that is significant to the fair value measurements.
Financial Instruments
The estimated fair value of financial instruments has been determined based on the Company’s assessment of
available market information and appropriate valuation methodologies. The Company’s non-derivative financial
instrume
nts that are included in current assets and current liabilities are recorded at cost in the Consolidated
r
Balance Sheets. The estimated fair value of these financial instruments approximates their carrying value due to
their short-term nature.
Derivative instruments are recorded at fair value in the Consolidated Balance Sheets.
t
The Company’s commodity contracts are measured and recorded at fair value using Level 1 inputs based on
quoted prices in an active market, Level 2 inputs based on quoted market prices for similar instruments, or
Level 3 inputs based on third-party sources and other available market based data. The Company’s catalyst
obligations and derivatives related to the Company’s crude oil and feedstocks and refined product purchase
obligations are measured and recorded at fair value using Level 2 inputs on a recurring basis, based on
observable market prices for similar instruments.
Derivative Instruments
The Company is exposed to market risk, primarily related to changes in commodity prices for the crude oil and
feedstocks used in the refining process as well as the prices of the refined products sold and the risk associated
with the price of credits needed to comply with various governmental and regulatory environmental compliance
programs. The accounting treatment for commodity and environmental compliance contracts depends on the
intended use of the particular contract and on whether or not the contract meets the definition of a derivative.
All derivative instruments, not designated as normal purchases or sales, are recorded in the Consolidated
Balance Sheets as either assets or liabilities measured at their fair values. Changes in the fair value of derivative
instruments that either are not designated or do not qualify for hedge accounting treatment or normal purchase
or normal sale accounting are recognized currently in earnings. Contracts qualifying for the normal purchase
and sales exemption are accounted for upon settlement. Cash flows related to derivative instruments that are not
designated or do not qualify for hedge accounting treatment are included in operating activities.
F- 32
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company designates certain derivative instruments as fair value hedges of a particular risk associated with
a recognized asset or liability. At the inception of the hedge designation, the Company documents the
relationship between the hedging instrument and the hedged item, as well as its risk management objective and
strategy for undertaking various hedge transactions. Derivative gains and losses related to these fair value
hedges, including hedge ineffectiveness, are recorded in cost of sales along with the change in fair value of the
hedged asset or liability attributablea
to the hedged risk. Cash flows related to derivative instruments that are
designated as fair value hedges are included in operating activities.
Economic hedges are hedges not designated as fair value or cash flow hedges for accounting purposes that are
used to (i) manage price volatility in certain refinery feedstock and refined product inventories, and (ii) manage
price volatility in certain forecasted refinery feedstock purchases and refined product sales. These instruments
are recorded at fair
nts are recognized currently in
cost of sales.
value and changes in the fair value of the derivative instrume
ff
r
Derivative accounting is complex and requires management judgment in the following respects: identification
of derivatives and embedded derivatives, determination of the fair value of derivatives, documentation of hedge
relationships, assessment and measurement of hedge ineffectiveness and election and designation of the normal
purchases and sales exception. All of these judgments, depending upon their timing and effect, can have a
significant impact on the Company’s earnings.
Recently Adopted Accounting Pronouncements
the Accounting
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740)”: Simplifying
for Income Taxes, as part of its overall simplificatio
n initiative to reduce costs and complexity of applying
ff
accounting standards while maintaining or improving the usefulness of the information provided to users of
financial statements. Amendments include removal of certain exceptions to the general principles of ASC 740,
Income Taxes, and simplification in several other areas. The amendments in this ASU are effective for fiscal
years beginning after December 15, 2020, for public business entities. Early adoption is permitted for all
entities. The Company adopted this ASU effective January 1, 2020, which did not have a material impact on its
Consolidated Financial Statements and related disclosures.
ff
In August 2018, the FASB issued ASU No. 2018-14, “Compensation - Retirement Benefits - Defined Benefit
Plans - General (Subtopic 715-20)”, to improve the effectiveness of benefit plan disclosures in the notes to
financial statements by facilitating clear communication of the information required by GAAP that is most
important to users of each entity’s financial statements. The amendments in this ASU modify the disclosure
requirements for employers that sponsor defined benefit pension or other postretirement plans. Additionally, the
amendments in this ASU remove disclosures that no longer are considered cost beneficial, clarify the specific
requirements of disclosures, and add disclosure requirements identified as relevant. The amendments in this
ASU are effective for fiscal years ending after December 15, 2020, for public business entities and early
adoption is permitted for all entities. The Company adopted this ASU effective January 1, 2020, which did not
have a material impact on its Consolidated Financial Statements. Refer to “Note 19 - Employee Benefits Plans”
for further disclosure related to our adoption of this pronouncement.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments” (“ASU 2016-13”). This guidance amends the guidance on measuring
credit losses on financial assets held at amortized cost. ASU 2016-13 requires the measurement of all expected
credit losses for financial assets held at the reporting date based on historical experience, current conditions, and
reasonable and supportable forecasts. This guidance is effective for fiscal years beginning after December 15,
2019, including interim periods within those fiscal years. The Company adopted this ASU effective January 1,
2020, which did not have a material impact on its Consolidated Financial Statements. Refer to “Note 5 - Current
Expected Credit Losses” for further disclosure related to our adoption of this pronouncement.
F- 33
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the effects
of reference rate reform on financial reporting”. The amendments in this ASU provide optional guidance to
alleviate the burden in accounting for reference rate reform, by allowing certain expedients and exceptions in
applying GAAP to contracts, hedging relationship and other transactions affected by the expected market
transition from London Interbank Offered Rate (“LIBOR”) and other interbank rates. The amendments in this
ASU are effective for all entities at any time beginning on March 12, 2020 through December 31, 2022 and may
be applied from the beginning of an interim period that includes the issuance date of the ASU. The Company is
currently evaluating the impact of this new standard on its Consolidated Financial Statements and related
disclosures.
3. PBF LOGISTICS LP
PBFX is a fee-based, growth-oriented, publicly-traded Delaware MLP formed by PBF Energy to own or lease,
operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and
similar logistics assets. PBFX engages in the processing of crude oil and the receiving, handling, storage and
transferring of crude oil, refinff ed 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. As of
ty of PBFX’s revenues are derived from long-term, fee-based
December 31, 2020, a substantial majori
commercial agreements with PBF Holding, which include minimum volume commitments, for receiving,
handling, storing and transferring crude oil, refinff ed products and natural
gas. PBF Energy also has agreements
with PBFX that establia
sh fees for certain general and administrative services and operational and maintenance
services provided by PBF Holding to PBFX. These transactions, other than those with third parties, are
eliminated by PBF Energy and PBF LLC in consolidation.
a
t
t
PBFX, a variable interest entity, is consolidated by PBF Energy through its ownership of PBF LLC. PBF LLC,
through its ownership of PBF GP, has the sole ability to direct the activities of PBFX that most significantly
impact its economic performance. PBF LLC is considered to be the primary beneficiary of PBFX for accounting
purposes.
As of December 31, 2020, PBF LLC held a 48.0% limited partner interest in PBFX (consisting of 29,953,631
common units), with the remaining 52.0% limited partner interest held by the public unitholders. PBF LLC also
indirectly owns a non-economic general partner interest in PBFX through its wholly-owned subsidiary, PBF
GP, the general partner of PBFX.
Since its inception in 2014, PBFX has entered in a series of transactions including drop-down transactions,
acquisitions, and offerings. Such transactions occurring in the three years ended December 31, 2020 are
discussed below.
Offerings and Equity Transactions
On April 24, 2019, PBFX entered into subscription agreements to sell an aggregate of 6,585,500 common units
to certain institutional investors in a registered direct public offering (the “2019 Registered Direct Offering”) for
gross proceeds of approximately $135.0 million. The 2019 Registered Direct Offering closed on April 29, 2019.
On February 28, 2019, PBFX closed on the transaction contemplated by the equity restructuring agreement with
PBF LLC and PBF GP, pursuant to which PBFX’s incentive distribution rights (the “IDRs”) held by PBF LLC
were canceled and converted into 10,000,000 newly issued PBFX common units (the “IDR Restructuring”).
Subsequent to the closing of the IDR Restructuring, no distributions were made to PBF LLC with respect to the
IDRs and the newly issued PBFX common units are entitled to normal distributions by PBFX. Prior to the IDR
Restrucr
turing, the IDRs entitled PBF LLC to receive increasing percentages, up to a maximum of 50.0%, of the
cash PBFX distributed from operating surplus in excess of $0.345 per unit per quarter.
F- 34
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On July 30, 2018, PBFX closed on a common unit purchase agreement with certain funds managed by Tortoise
Capita
al Advisors, L.L.C. providing for the issuance and sale in a registered direct offering (the “2018 Registered
Direct Offering”) of an aggregate of 1,775,750 of its common units for net proceeds of approximately $34.9
million.
TVPC Acquisition
On April 24, 2019, PBFX entered into a contribution agreement with PBF LLC (the “TVPC Contribution
Agreement”), pursuant to which PBF LLC contributed to PBFX all of the issued and outstanding limited
liability company interests of TVP Holding Company LLC (“TVP Holding”) for total consideration of $200.0
million (the “TVPC Acquisition”). Prior to the TVPC Acquisition, TVP Holding owned a 50% membership
interest in Torrance Valley Pipeline Company LLC (“TVPC”). Subsequent to the closing of the TVPC
Acquisition on May 31, 2019, PBFX owns 100% of the membership interests in TVPC.
July 2018 Drop-down Transaction
On July 16, 2018, PBFX entered into four contribution agreements with PBF LLC (the “Development Assets
to the Development Assets Contribution Agreements, PBF LLC
Contribution Agreements”). Pursuant
contributed all of the issued and outstanding limited liability company interests of: Toledo Rail Logistics
Company LLC, whose assets consist of a loading and unloading rail facility located at the Toledo refinery (the
“Toledo Rail Products Facility”); Chalmette Logistics Company LLC, whose assets consist of a truck loading
rack facility (the “Chalmette Trucr k Rack”) and a rail yard facility (the “Chalmette Rosin Yard”), both of which
are located at the Chalmette refinery; Paulsboro Terminaling Company LLC, whose assets consist of a lube oil
terminal facility located at the Paulsboro refinery (the “Paulsboro Lube Oil Terminal”); and DCR Storage and
Loading Company LLC, whose assets consist of an ethanol storage facility located at the Delaware City refinery
(the “Delaware Ethanol Storage Facility” and collectively with the Toledo Rail Products Facility, the Chalmette
Truckrr
Rack, the Chalmette Rosin Yard, and the Paulsboro Lube Oil Terminal, the “Development Assets”), to
PBFX Operating Company LLC effective July 31, 2018. In consideration for the Development Assets limited
liability company interests, PBFX delivered to PBF LLC total consideration of $31.6 million, consisting of
1,494,134 common units of PBFX (the “Development Assets Acquisition”).
F- 35
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
East Coast Storage Assets Acquisition
On October 1, 2018, PBFX closed the acquisition of CPI Operations LLC, whose assets include a storage
terminal,
a
facility with multi-use storage capac
equipment, contracts and certain other idled assets (collectively, the “East Coast Storage Assets”) located on the
Delaware River near Paulsboro, New Jersey (the “East Coast Storage Assets Acquisition”), which had been
contemplated by a purchase and sale agreement dated as of July 16, 2018 between PBFX and Crown Point
International, LLC (“Crown Point”) and is further described in “Note 4 - Acquisitions”.
e marine facility, a rail facility, a truckr
ity, an Aframax-capabl
a
In connection with the acquisition, the purchase and sale agreement included an earnout provision related to an
existing commercial agreement with a third party, based on the future results of certain of the acquired idled
assets, which recommenced operations in October 2019. Pursuant to the terms of the commercial agreement, in
the third quarter of 2020, the counterparty exercised its right to terminate the contract at the conclusion of the
current contract year, resulting in an adjustment to the PBFX Contingent Consideration (as defined in “Note 4 -
Acquisitions” and further discussed in “Note 14 - Commitments and Contingencies”). In addition, as a result of
the contract termination, PBFX recorded a $7.0 million impairment charge to write-down the related processing
unit assets and customer contract intangible asset. This impairment charge has been recorded in the current
period Logistics segment income from operations.
Knoxville Terminals Purchase
On April 16, 2018, PBFX completed the purchase of two refined product terminals located in Knoxville,
Tennessee, which include product tanks, pipeline connections to the Colonial and Plantation pipeline systems
Terminals”) from Cummins Terminals, Inc.
and truck loading facilities with nine loading bays (the “Knoxville
for total cash consideration of approximately $58.0 million, excluding working capita
al adjustments (the
“Knoxville Terminals Purchase”). The transaction was financed through a combination of cash on hand and
borrowings under the $500.0 million amended and restated revolving credit facility (as amended, the “PBFX
Revolving Credit Facility”).
KK
F- 36
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. ACQUISITIONS
Martinez Acquisition
rr
1, 2020, the Company acquired fromff
On February
Equilon Enterprises LLC d/b/a Shell Oil Products US (the
"Seller"), the Martinez refinery and related logistics assets (collectively, the "Martinez Acquisition"), pursuant
to a sale and purchase agreement dated June 11, 2019 (the “Sale and Purchase Agreement”). The Martinez
is strategically
located in Martinez, California,
refinery,
positioned in Northern California and provides forff
operating and commercial synergies with the Torrance
refinery located in Southern California.
is a high-conversion, dual-coking facility that
In addition to refining assets, the Martinez Acquisition includes a number of onsite logistics assets, including a
deep-water marine facility, product distribution terminals and refinery crude
and product storage facilities.
rr
the Martinez Acquisition was $1,253.4 million, including final working capita
The aggregate purchase price forff
al
of $216.1 million and the Martinez Contingent Consideration, as defined below. The transaction was financed
through a combination of cash on hand, including proceeds from the 2028 Senior Notes (as defined in “Note 10
- Credit Facilities and Debt”), and borrowings under PBF Holding’s asset-based revolving credit agreement (the
“Revolving Credit Facility”).
The Company accounted for the Martinez Acquisition as a business combination under GAAP whereby it
recognizes assets acquired and liabilities assumed in an acquisition at their estimated faiff
r values as of the date of
acquisition. The finff al purchase price and fair value allocation were completed as of September 30, 2020.
The total purchase consideration and the fair values of the assets and liabilities at the acquisition date were as
follows:
(in millions)
Gross purchase price
Working capita
Contingent consideration (a)
Total consideration
al, including post close adjustments
Purchase Price
960.0
$
216.1
77.3
1,253.4
$
_________________________
(a) The Martinez Acquisition includes an obligation for the Company to make post-closing earn-out payments
to the Seller based on certain earnings thresholds of the Martinez refinery (as set forff
th in the Sale and Purchase
Agreement), for a period of up to four years following the acquisition closing date (the “Martinez Contingent
Consideration”). The Company recorded the Martinez Contingent Consideration based on its estimated faiff
r
value of $77.3 million at the acquisition date, which was recorded within “Other long-term liabilities” within the
Consolidated Balance Sheets.
F- 37
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
lowing table summarizes the final amounts recognized for assets acquired and liabilities assumed as of
The folff
the acquisition date:
(in millions)
Inventories
Prepaid and other current assets
Property, plant and equipment
Operating lease right of use assets (a)
Financing lease right of use assets (a)
Deferred charges and other assets, net
Accrued expenses
Current operating lease liabila
ities
Current financing lease liabila
ities (b)
Long-term operating lease liabilities
Long-term financing lease liabilities
Other long-term liabilities - environmental obligation
Fair value of net assets acquired
$
Fair Value
Allocation
224.1
5.4
987.9
7.8
63.5
63.7
(1.4)
(1.9)
(6.0)
(5.9)
(57.5)
(26.3)
$
1,253.4
________________________
(a) Operating and Financing lease right of use assets are recorded in Lease right of use assets within the
Consolidated Balance Sheets.
(b) Current financing lease liabilities are recorded in Accrued expenses within the Consolidated Balance Sheet.
rr
The Company’s Consolidated Financial Statements for the year ended December 31, 2020 include the results of
operations of the Martinez refinff ery a
nd related logistics assets subsequent to the Martinez Acquisition. The
same period in 2019 does not include the results of operations of such assets. On an unaudited pro-forma basis,
the revenues and net income (loss) of the Company, assuming the acquisition had occurred on January 1, 2019,
are shown below. The unaudited pro-forma information does not purport to present what the Company’s actual
results would have been had the Martinez Acquisition occurred on January 1, 2019, nor is the financial
information indicative of the results of future
operations. The unaudited pro-forma financial information
includes the depreciation and amortization expense related to the Martinez Acquisition and interest expense
associated with the related financing.
ff
(Unaudited, in millions)
PBF Energygy
Pro-forma revenues
Pro-forma net income (loss) attributable to PBF Energy Inc.
stockholders
Pro forma net income (loss) availablea
A common stock per share:
to PBF Energy Class
Basic:
Diluted:
PBF LLC
Pro-forma revenues
Pro-forma net income (loss) attributable to PBF LLC
December 31,
2020
December 31,
2019
$
$
$
$
15,479.7
$
28,323.1
(1,423.4)
122.6
(11.90) $
(11.90) $
15,479.7
$
(1,827.8)
1.02
1.01
28,323.1
165.2
F- 38
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
East Coast Storage Assets Acquisition
On October 1, 2018, PBFX closed the East Coast Storage Assets Acquisition, which had been contemplated by
a purchase and sale agreement dated as of July 16, 2018 between PBFX and Crown Point. The East Coast
Storage Assets consist of a storage facility with multi-use storage capac
e marine facility,
a rail facility, a truck terminal, equipment, contracts and certain other idled assets located on the Delaware River
near Paulsboro, New Jersey. Additionally, the East Coast Storage Assets Acquisition includes an earn-out
provision related to an existing commercial agreement with a third-party, based on the future results of certain
of the acquired idled assets (the “PBFX Contingent Consideration”), which recommenced operations in October
2019.
an Afrff amax-capabl
ity,t
a
a
the East Coast Storage Assets Acquisition was $127.0 million, including
The aggregate purchase price forff
working capita
al and the Contingent Consideration, which was comprised of an initial payment at closing of
$75.0 million with a remaining balance of $32.0 million that was paid on October 1, 2019. The consideration
was financed through a combination of cash on hand and borrowings under the PBFX Revolving Credit
Facility. The finff al purchase price and fair value allocation were completed as of September 30, 2019.
PBFX accounted for the East Coast Storage Assets Acquisition as a business combination in accordance with
GAAP whereby PBFX recognizes assets acquired and liabilities assumed at their estimated faiff
r values as of the
date of acquisition.
The total purchase consideration and the fair values of the assets and liabilities at the acquisition date were as
follows:
(in millions)
Gross purchase price (a)
Working capita
al adjustments
Contingent consideration (b)
Total consideration
_______________________
Purchase Price
105.9
$
—
21.1
127.0
$
(a) Includes $30.9 million net present value payablea
The remaining $32.0 million payment was paid in fulff
of $32.0 million due to Crown Point one year after closing.
l on October 1, 2019.
(b) The East Coast Storage Asset Acquisition includes consideration in the form of the PBFX Contingent
Consideration over a contractual term of up to three years starting in 2019. PBFX recorded the Contingent
Consideration based on its estimated faiff
r value of $21.1 million at the acquisition date. The remaining short-
term PBFX Contingent Consideration is included in “Accrued expenses” in the Consolidated Balance Sheets at
December 31, 2020.
F- 39
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
lowing table summarizes the final amounts recognized for assets acquired and liabilities assumed as of
The folff
the acquisition date:
(in millions)
Accounts receivable
Prepaid and other current assets
Property, plant and equipment
Intangible assets (a)
Accounts payable
Accrued expenses
Other long-term liabilities
Fair value of net assets acquired
Fair Value
Allocation
0.4
0.6
115.6
13.3
(0.9)
(1.3)
(0.7)
127.0
$
$
_____________________
(a) Intangible assets are included in “Deferred charges and other assets” within the Consolidated Balance
Sheets.
The Company’s Consolidated Financial Statements for the year ended December 31, 2020 and 2019 include the
results of operations of the East Coast Storage Assets for the full year. The Company’s Consolidated Financial
Statements for the year ended December 31, 2018 include the results of operations of the East Coast Storage
Assets since the date of its acquisition on October 1, 2018, during which period the East Coast Storage Assets
contributed third-party revenue of $5.9 million, and net income of $0.8 million. On an unaudited pro forma
basis, the revenues and net income of the Company, assuming the acquisition had occurred on January 1, 2017,
are shown below. The unaudited pro forma information does not purport to present what the Company’s actual
results would have been had the East Coast Storage Assets Acquisition occurred on January 1, 2017, nor is the
financial
information indicative of the results of future operations. The unaudited pro forma financial
inforff mation includes the depreciation and amortization expense related to the East Coast Storage Assets
Acquisition and interest expense associated with the related financing.
(Unaudited)
PBF Energygy
Pro forma revenues
Pro forma net income attributable to PBF Energy Inc. stockholders
to Class A common stock per share:
Pro forma net income availablea
Basic
Diluted
PBF LLC
Pro forma revenues
Pro forma net income attributable to PBF LLC
Acquisition Expenses
Year Ended
December 31, 2018
$
$
$
$
27,203.5
124.6
1.08
1.07
27,203.5
130.2
The Company incurred acquisition related costs consisting primarily of consulting and legal expenses related to
completed, pending and non-consummated acquisitions of $12.5 million, $11.6 million and $2.9 million in the
years ended December 31, 2020, 2019 and 2018, respectively. These costs are included in the Consolidated
Statements of Operations in General and administrative expenses.
F- 40
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. CURRENT EXPECTED CREDIT LOSSES
Credit Losses
The Company has exposure to credit losses primarily through its sales of refined products. The Company
evaluates creditworthiness on an individual customer basis. The Company utilizes a financial review model for
purposes of evaluating creditworthiness which is based on information from financial statements and credit
s the Company to assess the customer’s risk profile and determine
reports. The financial review model enablea
credit limits on the basis of their financial strength, including but not limited to, their liquidity, leverage, debt
serviceabila
ity, longevity and how they pay their bills. The Company may require security in the form of letters
of credit or cash payments in advance of product delivery for certain customers that are deemed higher risk.
a
The Company’s payment terms on its trade receivables are relatively short, generally 30 days or less for a
substantial majori
ty of its refined products. As a result, the Company’s collection risk is mitigated to a certain
extent by the fact that sales are collected in a relatively short period of time, allowing for the ability to reduce
exposure on defaults if collection issues are identified. Notwithstanding, the Company reviews each customer’s
on
credit risk profile at least annually or more frequently if warranted. Following the widespread market disrupti
that has resulted from the COVID-19 pandemic and related governmental responses, the Company has been
performing ongoing credit reviews of its customers including monitoring for any negative credit events such as
customer bankruptcy or insolvency events. As a result, the Company has adjusted payment terms or limited
available trade credit for certain customers, as well as for customers within industries that are deemed to be at
higher risk.
r
The Company performs a quarterly allowance for doubtful accounts analysis to assess whether an allowance
needs to be recorded for any outstanding trade receivables. In estimating credit losses, management reviews
accounts that are past due, have known disputes or have experienced any negative credit events that may result
in future collectabila
ity issues. There was no allowance for doubtful accounts recorded as of December 31, 2020
and December 31, 2019, respectively.
F- 41
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. INVENTORIES
Inventories consisted of the following:
(in millions)
Crude oil and feedstocks
Refined products and blendstocks
Warehouse stock and other
Lower of cost or market adjustment
Total inventories
(in millions)
Crude oil and feedstocks
Refined products and blendstocks
Warehouse stock and other
Lower of cost or market adjustment
Total inventories
December 31, 2020
Titled
Inventory
Inventory
Intermediation
Agreements
1,018.9
$
— $
933.7
136.7
2,089.3
(572.4)
1,516.9
$
$
266.5
—
266.5
(97.2)
169.3
$
$
$
$
$
December 31, 2019
Titled
Inventory
Inventory
Intermediation
Agreements
1,071.4
$
2.7
$
976.0
120.8
2,168.2
(324.8)
1,843.4
$
$
352.9
—
355.6
(76.8)
278.8
$
$
$
$
$
Total
1,018.9
1,200.2
136.7
2,355.8
(669.6)
1,686.2
Total
1,074.1
1,328.9
120.8
2,523.8
(401.6)
2,122.2
Inventory under the Inventory Intermediation Agreements, includes crude oil, intermediate and certain finished
products (the “J. Aron Products”) purchased or produced by the Paulsboro and Delaware City r
efineries, and
sold to counterparties in connection with such agreements. This inventory is held in the Company’s storage
nd Paulsboro refineries and at PBFX’s East Coast Storage Assets, (collectively, the
tanks at the Delaware City at
“J. Aron Storage Tanks”).
t
During the year ended December 31, 2020, the Company recorded an adjustment to value its inventories to the
lower of cost or market which decreased income from operations by $268.0 million, reflecting the net change in
the lower of cost or market (“LCM”) inventory reserve from $401.6 million at December 31, 2019 to $669.6
million at December 31, 2020. During the year ended December 31, 2019, the Company recorded an adjustment
to value its inventories to the lower of cost or market which increased income from operations by $250.2
million, reflecting the net change in the LCM inventory reserve from $651.8 million at December 31, 2018 to
$401.6 million at December 31, 2019.
An actual valuation of inventories valued under the LIFO method is made at the end of each year based on
inventory levels and costs at that time. The Company recorded a pre-tax charge related to a LIFO layer
decrement of $83.0 million and $4.9 million in the Refining segment during the years ended December 31, 2020
and 2019, respectively. The majora
ity of the decrement recorded in 2020 related to the Company’s East Coast
LIFO inventory layer and the reduction in the Company’s East Coast inventory experienced as part of the East
Coast Refinff
ing Reconfiguration.
F- 42
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the folff
lowing:
(in millions)
Land
Processing units, pipelines and equipment
Buildings and leasehold improvements
Computers, furniture and fixtures
Construction in progress
Less—Accumulated depreciation
Total property, plant and equipment, net
December 31,
2020
December 31,
2019
$
$
534.7
5,026.2
127.0
164.3
199.2
6,051.4
(1,208.1)
4,843.3
$
$
360.5
4,108.0
64.6
143.5
312.2
4,988.8
(965.6)
4,023.2
Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $223.0 million, $178.0
million and $162.2 million, respectively. The Company capita
alized $12.6 million and $18.1 million in interest
during 2020 and 2019, respectively, in connection with construction in progress.
East Coast Refini
ff ng Reconfigur
ff
ation
On December 31, 2020, the Company reconfigured the Delaware and Paulsboro refineries (the “East Coast
Refining Reconfiguration”) temporarily idling certain of its major processing units at the Paulsboro refinery, in
order to operate the two refineries as one functional unit referred to as the “East Coast Refinff
ing System”. The
reconfiguration process resulted in lower overall throughput and inventory levels in addition to decreases in
capita
al and operating costs. The Company abandoned certain projects related to assets under construction
related to these idled assets, resulting in an impairment charge of approximately $11.9 million and a
corresponding decrease to its construction in progress account in the fourth quarter of 2020.
Capital Project Abandonments
In connection with the Company’s ongoing strategic response plan to deal with the COVID-19 pandemic and its
East Coast Refining Reconfiguration, it assessed its refinery wide slate of capita
al projects that were either in
process or not yet placed into service as of December 31, 2020. Based on this assessment and the Company’s
strategic plan to reduce capital expenditures, it decided to abandon various capita
al projects across the refinery
system, resulting in an impairment charge of approximately $79.9 million in the fourth quarter of 2020.
Sale of Hydrogen Plants
On April 17, 2020, the Company closed on the sale of five hydrogen plants to Air Products and Chemicals, Inc.
(“Air Products”) in a sale-leaseback transaction for gross cash proceeds of $530.0 million and recognized a gain
of $471.1 million. In connection with the sale, the Company entered into a transition services agreement which
was followed by the execution of long-term supply agreements in August 2020. Refer to “Note 15 - Leases” forff
further information.
Torrance Land Sales
On December 30, 2020, August 1, 2019 and August 7, 2018, the Company closed on third-party sales of parcels
of real property acquired as part of the Torrance refinery, but not part of the refinery itself. The sales resulted in
a gain of approxi
mately $8.1 million, $33.1 million and $43.8 million in the fourth quarter of 2020, third quarter
of 2019 and third quarter of 2018, respectively, included within (Gain) loss on sale of assets in the Consolidated
Statements of Operations.
a
F- 43
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. DEFERRED CHARGES AND OTHER ASSETS, NET
ff
Deferre
d charges and other assets, net consisted of the following:
PBF Energy (in millions)
December 31,
2020
December 31,
2019
Deferred turna
t
round costs, net
Catalyst, net
Environmental credits
Linefill
Pension plan assets
Intangible assets, net
Other
Total deferred charges and other assets, net
PBF LLC (in millions)
Deferred turna
t
round costs, net
Catalyst, net
Environmental credits
Linefill
Pension plan assets
Intangible assets, net
Other
Total deferred charges and other assets, net
$
$
$
$
598.2
$
155.2
39.6
27.4
21.2
10.1
20.5
872.2
$
722.7
132.7
37.8
19.5
10.3
24.3
7.6
954.9
December 31,
2020
December 31,
2019
598.2
$
155.2
39.6
27.4
21.2
10.1
20.6
872.3
$
722.7
132.7
37.8
19.5
10.3
24.3
6.5
953.8
Catalyst, net includes $115.2 million and $74.5 million of indefinite-lived precious metal catalysts (both owned
or financed as part of existing catalyst financing arrangements) as of December 31, 2020 and December 31,
2019, respectively.
The Company recorded amortization expense related to deferred turnaround costs, catalyst and intangible assets
of $325.9 million, $258.1 million and $207.6 million for the years ended December 31, 2020, 2019 and 2018,
respectively. Included in the current year amortization expense is approximately $56.2 million of accelerated
unamortized deferred turnaround costs associated with assets that were idled as part of the East Coast Refining
Reconfiguration.
Intangible assets, net primarily consists of customer relationships, permits and emission credits. Our net balance
as of December 31, 2020 and December 31, 2019 is shown below:
(in millions)
Intangible assets - gross
Accumulated amortization
Intangible assets - net
December 31,
2020
December 31,
2019
$
$
25.5
(15.4)
10.1
$
$
29.5
(5.2)
24.3
F- 44
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. ACCRUED EXPENSES
Accrued expenses consisted of the following:
PBF Energy (in millions)
s
Inventory-related accrual
r
Renewable energy credit and emissions obligations
Inventory intermediation agreements
Excise and sales tax payablea
Accrued transportation costs
Accrued utilities
Accrued interest
Accrued salaries and benefits
Accrued refinery maintenance and support costs
Accrued capia tal expenditures
Current finance lease liabilities
Contingent Consideration
ities
Environmental liabila
Customer deposits
Other
Total accrued expenses
PBF LLC (in millions)
s
Inventory-related accrual
r
Renewable energy credit and emissions obligations
Inventory intermediation agreements
Excise and sales tax payablea
Accrued interest
Accrued transportation costs
Accrued utilities
Accrued salaries and benefits
Accrued refinery maintenance and support costs
Accrued capia tal expenditures
Current finance lease liabilities
Contingent Consideration
Environmental liabila
ities
Customer deposits
Other
Total accrued expenses
F- 45
December 31,
2020
December 31,
2019
$
695.0
$
528.1
225.8
120.1
72.1
58.6
46.1
42.2
35.7
15.0
14.4
12.1
11.8
4.0
30.5
1,103.2
17.7
278.1
98.6
88.7
40.1
12.1
81.1
16.9
32.2
6.5
10.0
12.8
1.8
15.8
$
$
$
1,911.5
$
1,815.6
December 31,
2020
December 31,
2019
695.0
$
528.1
225.8
120.1
83.8
72.1
58.6
42.2
35.7
15.0
14.4
12.1
11.8
4.0
1,103.2
17.7
278.1
98.6
39.5
88.7
40.1
81.1
16.9
32.2
6.5
10.0
12.8
1.8
32.5
1,951.2
$
19.0
1,846.2
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has the obligation to repurchase the J. Aron Products that are held in its J. Aron Storage Tanks in
accordance with the Inventory Intermediation Agreements with J. Aron. As of December 31, 2020 and
December 31, 2019, a liability is recognized for the Inventory Intermediation Agreements and is recorded at
market price for the J. Aron owned inventory held in the Company’s J. Aron Storage Tanks under the Inventory
Intermediation Agreements, with any change in the market price being recorded in Cost of products and other.
The Company is subject to obligations to purchase Renewable Identification Numbers (“RINs”) required to
comply with the Renewable Fuels Standard. The Company’s overall RINs obligation is based on a percentage
of domestic shipments of on-road fuels as established by Environmental Protection Agency. 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
to address environmental compliance and greenhouse gas and other emissions. These
32 (“AB32”),
requirements include incremental costs to operate and maintain our facilities as well as to implement and
manage new emission controls and programs. Renewable energy credit and emissions obligations fluctuate with
the volume of applicablea
product sales and timing of credit purchases.
F- 46
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. CREDIT FACILITIES AND DEBT
Long-term debt outstanding consisted of the folff
lowing:
(in millions)
2025 Senior Secured Notes
2028 Senior Notes
2025 Senior Notes
2023 Senior Notes
PBFX 2023 Senior Notes
Revolving Credit Facility
PBFX Revolving Credit Facility
PBF Rail Term Loan
Catalyst financing arrangements
Less—Current debt
Unamortized deferred financing costs
Long-term debt
2025 Senior Secured Notes
December 31,
2020
December 31,
2019
$
$
1,250.6
1,000.0
725.0
—
526.6
900.0
200.0
7.4
102.5
4,712.1
(7.4)
(51.1)
4,653.6
$
$
—
—
725.0
500.0
527.2
—
283.0
14.5
47.6
2,097.3
—
(32.4)
2,064.9
On May 13, 2020, PBF Holding entered into an indenture among PBF Holding and PBF Holding’s wholly-
owned subsidiary, PBF Finance Corporation (together with PBF Holding, the “Issuers”), the guarantors named
therein (collectively the “Guarantors”), and Wilmington Trust, National Association, as Trustee, Paying Agent,
Registrar, Transfer Agent, Authenticating Agent and Notes Collateral Agent, under which the Issuers issued
2025 (the “initial 2025 Senior
$1.0 billion in aggregate principal amount of 9.25% senior secured notes dued
Secured Notes”). The Issuers received net proceeds of approximately $982.9 million from the offering after
deducting the initial purchasers’ discount and offering expenses.
On December 21, 2020 PBF Holding issued an additional $250.0 million in aggregate principal amount of tack
on 9.25% senior secured notes dued
2025 (the “additional 2025 Senior Secured Notes”). The additional 2025
Senior Secured Notes were issued at an offering price of 100.25% plus accrued and unpaid interest from and
including, November 15, 2020. The additional 2025 Senior Secured Notes were issued under the indenturet
governing the initial 2025 Senior Secured Notes and, together with the additional 2025 Senior Secured Notes,
the (“2025 Senior Secured Notes”). The additional 2025 Senior Secured Notes are treated as a single series with
the initial 2025 Senior Secured Notes and have the same terms except that a portion of the additional 2025
Senior Secured Notes were issued initially under a new temporary CUSIP number to be used during the 40-day
distribution compliance period. The Issuers received net proceeds of approximately $245.7 million from the
offering after deducting the initial purchasers’ discount and estimated offering expenses.
The 2025 Senior Secured Notes are guaranteed on a senior secured basis by substantially all of PBF Holding’s
subsidiaries. The 2025 Senior Secured Notes and guarantees are senior obligations and secured, subject to
ority basis, by substantially all of PBF Holding's and the
certain exceptions and permitted liens, on a first-pri
guarantors’ present and future assets (other than assets securing the Revolving Credit Facility), which may also
constitute collateral securing certain hedging obligations and any existing or future indebtedness that is
permitted to be secured on a pari passu basis with the 2025 Senior Secured Notes. The 2025 Senior Secured
Notes and guarantees are senior secured obligations and rank equal in right of payment with all of the Issuers’
and the Guarantors’ existing and future senior indebtedness, including the Revolving Credit Facility, the 6.00%
2025 (the
senior unsecured notes dued
2028 (the “2028 Senior Notes”) and the 7.25% senior unsecured notes dued
ff
F- 47
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
“2025 Senior Notes”). The 2025 Senior Secured Notes and guarantees rank effectively senior to all of the
Issuers’ and the Guarantors’ existing and future indebtedness that is not secured by the collateral (including the
Revolving Credit Facility, the 2028 Senior Notes and the 2025 Senior Notes), subject to permitted liens on such
collateral and certain other exceptions, and senior in right of payment to the Issuers’ and the Guarantors’
existing and future indebtedness that is expressly subordinated in right of payment thereto. The 2025 Senior
Secured Notes and the guarantees are effectively subordinated to any of the Issuers’ and the Guarantors’
existing or future secured indebtedness that is secured by liens on assets owned by the Company that do not
constitute part of the collateral securing the 2025 Senior Secured Notes and the guarantees (including the assets
securing the Revolving Credit Facility) to the extent of the value of the collateral securing such indebtedness.
The 2025 Senior Secured Notes and the guarantees are structural
ly subordinated to any existing or future
indebtedness and other obligations of the Issuers’ non-guarantor subsidiaries. In addition, the 2025 Senior
Secured Notes contain customary terms, events of default and covenants for an issuer of non-investment grade
debt securities. These covenants include limitations on the incurrence of additional indebtedness, equity
issuances, and payments. Many of these covenants will cease to apply or will be modified if the 2025 Senior
Secured Notes are rated investment grade.
t
At any time prior to May 15, 2022, the Issuers may on any one or more occasions redeem up to 35% of the
aggregate principal amount of the 2025 Senior Secured Notes in an amount not greater than the net cash
proceeds of certain equity offerings at a redemption price equal to 109.250% of the principal amount of the
2025 Senior Secured Notes, plus any accrued and unpaid interest through the date of redemption. On or after
May 15, 2022, the Issuers may redeem all or part of the 2025 Senior Secured Notes, in each case at the
redemption prices described in the indenture,
together with any accrued and unpaid interest through the date of
redemption. In addition, prior to May 15, 2022, the Issuers may redeem all or part of the 2025 Senior Secured
Notes at a “make-whole” redemption price described in the indenture,
together with any accrued and unpaid
interest to the date of redemption.
t
t
In addition, the Issuers may redeem in the aggregate up to 35% of the original aggregate principal amount of the
2025 Senior Secured Notes using net proceeds of any loan received pursuant to a Regulatory Debt Facility (as
defined in the indenture)
at a redemption price equal to 104.625% of the principal amount of the notes
redeemed, plus accrued and unpaid interest to the redemption date as long as any such redemption occurs on or
prior to 120 days after receipt of such net proceeds.
t
2028 Senior Notes
On January 24, 2020, PBF Holding entered into an indenture among the Issuers, the Guarantors, Wilmington
Trust, National Association, as Trustee and Deutsche Bank Trust Company Americas, as Paying Agent,
Registrar, Transfer Agent and Authenticating Agent, under which the Issuers issued $1.0 billion in aggregate
principal amount of the 6.00% 2028 Senior Notes. The Issuers received net proceeds of approximately
$987.0 million from the offering after deducting the initial purchasers’ discount and offering expenses. The
Company primarily used the net proceeds to fully redeem the 7.00% senior notes due 2023 (the “2023 Senior
Notes”), including accrued and unpaid interest, on February 14, 2020, and to fund a portion of the cash
consideration for the Martinez Acquisition. The difference
between the carrying value of the 2023 Senior Notes
on the date they were reacquired and the amount for which they were reacquired has been classified as Debt
extinguishment costs in the Consolidated Statements of Operations.
ff
The 2028 Senior Notes included a registration rights arrangement whereby the Issuer and the Guarantors agreed
to file with the U.S. Securities and Exchange Commission and use commercially reasonable efforts to
consummate an offer to exchange the 2028 Senior Notes for an issue of registered notes with terms substantially
identical to the notes not later than 365 days after the date of the original issuance of the notes. This registration
statement was declared effective on October 14, 2020 and the exchange was consummated during the fourth
quarter of 2020. As such, the Company did not have to transfer any consideration as a result of the registration
rights agreement and thus no loss contingency was recorded.
F- 48
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The 2028 Senior Notes are guaranteed on a senior unsecured basis by substantially all of PBF Holding’s
subsidiaries. The 2028 Senior Notes and guarantees are senior unsecured obligations and rank equal in right of
payment with all of the Issuers’ and the Guarantors’ existing and future indebtedness, including PBF Holding’s
Revolving Credit Facility, the 2025 Senior Notes and the 2025 Senior Secured Notes. The 2028 Senior Notes
and the guarantees rank senior in right of payment to the Issuers’ and the Guarantors’ existing and future
indebtedness that is expressly subordinated in right of payment thereto. The 2028 Senior Notes and the
guarantees are effectively subordinated to any of the Issuers’ and the Guarantors’ existing or future secured
indebtedness (including the Revolving Credit Facility) to the extent of the value of the collateral securing such
indebtedness. The 2028 Senior Notes and the guarantees are structural
ly subordinated to any existing or future
indebtedness and other obligations of the Issuers’ non-guarantor subsidiaries. In addition, the 2028 Senior Notes
contain customary terms, events of default and covenants for an issuer of non-investment grade debt securities.
indebtedness, equity issuances, and
These covenants include limitations on the incurrence of additional
payments. Many of these covenants will cease to apply or will be modified if the 2028 Senior Notes are rated
investment grade.
t
At any time prior to February 15, 2023, the Issuers may on any one or more occasions redeem up to 35% of the
aggregate principal amount of the 2028 Senior Notes in an amount not greater than the net cash proceeds of
certain equity offerings at a redemption price equal to 106.000% of the principal amount of the 2028 Senior
Notes, plus any accrued and unpaid interest through the date of redemption. On or after February 15, 2023, the
Issuers may redeem all or part of the 2028 Senior Notes, in each case at the redemptim on prices described in the
indenture, together with any accrued and unpaid interest through the date of redemption. In addition, prior to
February 15, 2023, the Issuers may redeem all or part of the 2028 Senior Notes at a “make-whole” redemption
price described in the indenture,
and unpaid interest through the date of redemption.
together with any accruedr
t
2025 Senior Notes
On May 30, 2017, PBF Holding entered into an indenture among Issuers, the Guarantors, Wilmington Trust,
National Association, as Trustee, and Deutsche Bank Trust Company Americas, as Paying Agent, Registrar,
Transfer Agent and Authenticating Agent, under which the Issuers issued $725.0 million in aggregate principal
amount of 7.25% 2025 Senior Notes. The Issuers received net proceeds of approximately $711.6 million from
the offering after deducting the initial purchasers’ discount and offering expenses, all of which was used to fund
the cash tender offer (the “Tender Offer”) for any and all of its outstanding 8.25% Senior Secured Notes due
2020 (the “2020 Senior Secured Notes”), to pay the related redemption price and accrued and unpaid interest for
any 2020 Senior Secured Notes which remained outstanding after the completion of the Tender Offer, and for
general corporate purposes.
The 2025 Senior Notes are guaranteed by substantially all of PBF Holding’s subsidiaries. The 2025 Senior
Notes and guarantees are senior unsecured obligations which rank equal in right of payment with all of the
Issuers’ and the Guarantors’ existing and future senior indebtedness, including the Revolving Credit Facility,
the 2028 Senior Notes and the 2025 Senior Secured Notes. The 2025 Senior Notes and the guarantees rank
senior in right of payment to the Issuers’ and the Guarantors’ existing and future indebtedness that is expressly
subordinated in right of payment thereto. The 2025 Senior Notes and the guarantees are effectively subordinated
to any of the Issuers’ and the Guarantors’ existing or future secured indebtedness (including the Revolving
Credit Facility) to the extent of the value of the collateral securing such indebtedness. The 2025 Senior Notes
and the guarantees are structural
ly subordinated to any existing or future indebtedness and other obligations of
the Issuers’ non-guarantor subsidiaries.
t
PBF Holding has optional redemption rights to repurchase all or a portion of the 2025 Senior Notes at varying
prices which are no less than 100% of the principal amount plus accrued and unpaid interest. The holders of the
2025 Senior Notes have repurchase options exercisable only upon a change in control, certain asset sale
In addition, the 2025 Senior Notes contain
transactions, or in event of a default as defined in the indenture.
customary terms, events of default and covenants for an issuer of non-investment grade debt securities that limit
t
F- 49
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
certain types of additional debt, equity issuances, and payments. Many of these covenants will cease to apply or
will be modified if the 2025 Senior Notes are rated investment grade.
PBFX 2023 Senior Notes
On May 12, 2015, PBFX entered into an indenture among PBFX and PBF Logistics Finance Corporation, a
Delaware corporation and wholly-owned subsidiary of PBFX (together with PBFX, the “PBFX Issuers”), the
Guarantors named therein and Deutsche Bank Trust Company Americas, as Trustee, under which the PBFX
Issuers issued $350.0 million in aggregate principal amount of 6.875% Senior Notes due 2023.
On October 6, 2017, PBFX entered into a supplemental indenture for the purpose of issuing an additional
$175.0 million in aggregate principal amount of 6.875% Senior Notes due 2023 (together with the initially
issued notes, the “PBFX 2023 Senior Notes”). The additional amount of the PBFX 2023 Senior Notes were
issued at 102% of face value, or an effective interest rate of 6.442%. The additional amount of the PBFX 2023
Senior Notes are treated as a single series with the initially issued PBFX 2023 Senior Notes and have the same
terms as those of the initially issued PBFX 2023 Senior Notes, except that (i) the additional amount of PBFX
2023 Senior Notes are subject to a separate registration rights agreement, and (ii) the additional amount of
PBFX 2023 Senior Notes were issued initially under CUSIP numbers different from the initially issued PBFX
2023 Senior Notes.
PBF LLC agreed to a limited guarantee of collection of the principal amount of the PBFX 2023 Senior Notes,
The PBFX 2023 Senior Notes are general senior
but is not otherwise subject to the covenants of the indenture.
unsecured obligations of the PBFX Issuers and are equal in right of payment with all of the PBFX Issuers’
existing and future senior indebtedness, including amounts outstanding under the PBFX Revolving Credit
Facility. The PBFX 2023 Senior Notes are effectively subordinated to all of the PBFX Issuers’ and the
Guarantors’ existing and future secured debt, including the PBFX Revolving Credit Facility, to the extent of the
value of the assets securing that secured debt and will be struct
ly subordinated to all indebtedness of
t
ural
PBFX’s subsidiaries that do not guarantee the PBFX 2023 Senior Notes. The PBFX 2023 Senior Notes will be
senior to any futuret
subordinated indebtedness the PBFX Issuers may incur.
r
t
The PBFX indenturet
contains customary terms, events of default and covenants for transactions of this nature.
These covenants include limitations on PBFX’s and its restricted subsidiaries’ ability to, among other things: (i)
make investments; (ii) incur additional indebtedness or issue preferred units; (iii) pay dividends or make
distributions on units or redeem or repurchase its subordinated debt; (iv) create liens; (v) incur dividend or other
payment restrictions affecting subsidiaries; (vi) sell assets; (vii) merge or consolidate with other entities; and
(viii) enter into transactions with affiliates. These covenants are subject to a number of important limitations and
exceptions.
t
PBFX has optional redemption rights to repurchase all or a portion of the PBFX 2023 Senior Notes at varying
prices which are no less than 100% of the principal amount, plus accrued and unpaid interest. The holders of the
PBFX 2023 Senior Notes have repurchase options exercisable only upon a change in control, certain asset
dispositions, or in event of default as defined in the indenture.
t
PBF Holding Revolving Credit Facility
On May 2, 2018, PBF Holding and certain of its wholly-owned subsidiaries, as borrowers or subsidiary
guarantors, replaced the existing asset-based revolving credit agreement dated as of August 15, 2014 with the
new Revolving Credit Facility. The Revolving Credit Facility has a maximum commitment of $3.4 billion, a
maturity date of May 2023 and redefines certain components of the Borrowing Base, as defined in the
agreement governing the Revolving Credit Facility (the “Revolving Credit Agreement”), to make more funding
available for working capita
al needs and other general corporate purposes. An accordion feature allows for
commitments of up to $3.5 billion. Borrowings under the Revolving Credit Facility bear interest at the
Alternative Base Rate plus the Applicablea Margin or at the Adjusted LIBOR plus the Applicablea Margin (all as
defined in the Revolving Credit Agreement). The Applicablea Margin ranges from 0.25% to 1.00% for
F- 50
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Alternative Base Rate Loans and from 1.25% to 2.00% for Adjusted LIBOR Loans, in each case depending on
the Company’s corporate credit rating. In addition, the LC Participation Fee ranges from 1.00% to 1.75%
depending on the Company’s corporate credit rating and the Fronting Fee is capped at 0.25%.
The Revolving Credit Agreement contains customary covenants and restrictions on the activities of PBF
Holding and its subsidiaries, including, but not limited to, limitations on incurring additional indebtedness,
liens, negative pledges, guarantees, investments, loans, asset sales, mergers and acquisitions, prepayment of
al stock, transactions with affiliates and the
other debt, distributions, dividends and the repurchase of capita
ability of PBF Holding to change the nature of its business or its fiscal year; all as defined in the Revolving
Credit Agreement.
In addition, the Revolving Credit Agreement has a financial covenant which requires that if at any time Excess
Availability, as defined in the Revolving Credit Agreement, is less than the greater of (i) 10% of the lesser of
the then existing Borrowing Base and the then aggregate Revolving Commitments of the Lenders (the
“Financial Covenant Testing Amount”), and (ii) $100.0 million, and until such time as Excess Availability is
greater than the Financial Covenant Testing Amount and $100.0 million for a period of 12 or more consecutive
days, PBF Holding will not permit the Consolidated Fixed Charge Coverage Ratio, as defined in the Revolving
Credit Agreement and determined as of the last day of the most recently completed quarter, to be less than 1 to
1.
PBF Holding’s obligations under the Revolving Credit Facility are (a) guaranteed by each of its domestic
operating subsidiaries that are not Excluded Subsidiaries (as defined in the Revolving Credit Agreement) and
(b) secured by a lien on (i) PBF LLC’s equity interest in PBF Holding and (ii) certain assets of PBF Holding
and the subsidiary guarantors, including all deposit accounts (other than zero balance accounts, cash collateral
accounts, trust accounts and/or payroll accounts, all of which are excluded from the definition of collateral), all
accounts receivable, all hydrocarbon inventory (other than the J. Aron Products owned by J. Aron pursuant to
the Inventory Intermediation Agreements) and to the extent evidencing, governing, securing or otherwise
related to the foregoing, all general intangibles, chattel papea
nts, documents, letter of credit rights and
r
r, instrume
supporting obligations; and all products and proceeds of the foregoing.
On February 18, 2020, in connection with its entry into a $300.0 million uncommitted receivables purchase
facility (the “Receivables Facility”), the Company amended the Revolving Credit Agreement and entered into a
related intercreditor agreement to allow it to sell certain Eligible Receivables (as defined in the Revolving
Credit Agreement) derived from the sale of refined product over truck racks. Under the Receivables Facility, the
Company sells such receivables to a bank subject to bank approval and certain conditions. The sales of
receivables under the Receivables Facility are absolute and irrevocablea
but subject to certain repurchase
obligations under certain circumstances.
On May 7, 2020, the Company further amended the Revolving Credit Facility, to increase PBF Holding’s
ability to incur certain secured debt from an amount equal to 10% of its total assets to 20% of its total assets.
During 2020 the Company used advances under the Revolving Credit Facility to fund the Martinez Acquisition
al requirements.
and other capia tal expenditures and working capita
Outstanding borrowings under the Revolving Credit Facility as of December 31, 2020 were $900.0 million.
There were no outstanding borrowings under the Revolving Credit Facility as of December 31, 2019. Issued
letters of credit were $184.4 million and $221.4 million as of December 31, 2020 and 2019, respectively.
PBFX Credit Facilities
On May 14, 2014, in connection with the PBFX initial public offering (the “PBFX Offering”), PBFX entered
into a five-year, $275.0 million senior secured revolving credit facility (the “2014 PBFX Revolving Credit
Facility”) with the administrative agent and a syndicate of lenders. On July 30, 2018, PBFX replaced the 2014
PBFX Revolving Credit Facility with the $500.0 million amended and restated PBFX Revolving Credit Facility.
F- 51
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
t
t
al, acquisitions, distributions, capita
al
The PBFX Revolving Credit Facility is available to fund working capita
expenditures
, and other general partnership purposes and is guaranteed by a guaranty of collection from PBF
LLC. PBFX has the ability to increase the maximum amount of the PBFX Revolving Credit Facility by up to
$250.0 million to a total facility size of $750.0 million, subject to receiving increased commitments from the
lenders or other financial instituti
ons and satisfaction of certain conditions. The PBFX Revolving Credit Facility
includes a $75.0 million sublimit for standby letters of credit and a $25.0 million sublimit for swingline loans.
Obligations under the PBFX Revolving Credit Facility are guaranteed by PBFX’s restricted subsidiaries, and
are secured by a first priority lien on PBFX’s assets and those of PBFX’s restricted subsidiaries. The maturity
date of the PBFX Revolving Credit Facility is July 30, 2023, but may be extended for one year on up to two
occasions, subject to certain customary terms and conditions. Borrowings under the PBFX Revolving Credit
Facility bear interest at the Alternative Base Rate plus the Applicable Margin or the Adjusted LIBOR Rate plus
an Applicable Margin, all as defined in the agreement governing the PBFX Revolving Credit Facility (the
“PBFX Revolving Credit Agreement”). The Applicablea Margin ranges from 0.75% to 1.75% for Alternative
Base Rate Loans and from 1.75% to 2.75% for Adjusted LIBOR Rate Loans in each case depending on PBFX’s
Consolidated Total Leverage Ratio, as defined in the PBFX Revolving Credit Agreement.
The PBFX Revolving Credit Agreement contains affirmative and negative covenants customary for revolving
credit facilities of this naturet
which, among other things, limit or restrict PBFX’s ability and the ability of its
restricted subsidiaries to incur or guarantee debt, incur liens, make investments, make restricted payments,
amend material contracts, engage in certain business activities, engage in mergers, consolidations and other
organizational changes, sell, transfer or otherwise dispose of assets, enter into burdensome agreements, or enter
into transactions with affilff
iates on terms which are not at arm’s length.
Additionally, PBFX is required to maintain (a) Consolidated Interest Coverage Ratio of at least 2.50 to 1.00; (b)
Consolidated Total Leverage Ratio of not greater than 4.50 to 1.00; and (c) Consolidated Senior Secured
Leverage Ratio of not greater than 3.50 to 1.00 (all terms as defined in the PBFX Revolving Credit Agreement).
The PBFX Revolving Credit Agreement contains events of default customary for transactions of their nature,
including, but not limited to (and subject to any applicable grace periods when applicable), the failure to pay
any principal, interest or fees when due, failure to perform or observe any covenant contained in the PBFX
Revolving Credit Agreement or related documentation, any representation or warrantyt made in the agreements
or related documentation being untrue in any material respect when made, default under certain material debt
agreements, commencement of bankruptcy or other insolvency proceedings, certain changes in PBFX’s
ownership or the ownership or board composition of PBF GP and material judgments or orders. Upon the
occurrence and during the continuation of an event of default under the PBFX Revolving Credit Agreement, the
lenders may, among other things, terminate their commitments, declare any outstanding loans to be immediately
due and payablea
and/or exercise remedies against PBFX and the collateral as may be available to the lenders
under the PBFX Revolving Credit Agreement and related documentation or applicablea
law.
t
During 2018 PBFX used advances under the PBFX Revolving Credit Facility to fund the Knoxville Terminals
Purchase, the East Coast Storage Asset Acquisition, the TVPC Acquisition and other capita
and
working capita
al requirements. PBFX made net repayments of $83.0 million during the year ended December 31,
2020.
al expenditures
t
The PBFX Revolving Credit Facility may be repaid, from time-to-time, without penalty. As of December 31,
2020,
there were $200.0 million of borrowings and $4.9 million of letters of credit outstanding. At
December 31, 2019, there were $283.0 million of borrowings and $4.8 million of letters of credit outstanding
under the PBFX Revolving Credit Facility.
F- 52
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PBF Rail Term Loan
On December 22, 2016, PBF Rail Logistics Company LLC (“PBF Rail”) entered into a $35.0 million term loan
year term and bears
(the “PBF Rail Term Loan”). The PBF Rail Term Loan amortizes monthly over its fiveff
interest at a rate equal to one month LIBOR plus the margin as defined in the agreement governing the PBF Rail
Term Loan (the “Rail Credit Agreement”). As security for the PBF Rail Term Loan, PBF Rail pledged, among
other things: (i) certain Eligible Railcars; (ii) the Debt Service Reserve Account (as defined in the Rail Credit
Agreement); and (iii) PBF Holding’s membership interest in PBF Rail. Additionally, the Rail Credit Agreement
contains customary terms, events of default and covenants forff
PBF Rail may at any
time repay the PBF Rail Term Loan without penalty in the event that railcars securing the loan are sold,
scrapped or otherwise removed from the collateral pool.
transactions of this nature.
t
The outstanding balances under the PBF Rail Term Loan were $7.4 million and $14.5 million as of
December 31, 2020 and 2019, respectively. As the PBF Rail Term Loan expires in December 2021, the
outstanding balance as of December 31, 2020 is reflected as Current debt on the Consolidated Balance Sheet.
Precious Metal Catalyst Financing Arrangements
Certain subsidiaries of the Company have entered into agreements whereby such subsidiary sold a portion of its
precious metal catalysts to a major commercial bank and subsequently refinanced the precious metal catalysts
under contractual arrangements. The volume of the precious metal catalysts and the interest rate are fixed over
precious
the term of each financing arrangement. At maturit
metal catalysts, or otherwise settle its obligation with the counterparty, at its then fair market value. The
Company believes that there is a substantial market for precious metal catalysts and that it will be able to release
such catalysts at maturity. The Company treated these transactions as financing arrangements, and the related
payments are recorded as interest expense over the agreements’ terms. The Company has elected the fair value
option for accounting for its catalyst repurchase obligations as the Company’s liability is directly impacted by
the change in value of the underlying precious metal catalysts. The fair value of these repurchase obligations as
reflected in the fair value of long-term debt outstanding tabla e below is measured using Level 2 inputs.
y, the Company must repurchase the applicablea
t
Details of the catalyst financing arrangements at each of the Company’s refineries as of December 31, 2020 are
included in the following tabla e:
Refinery
Metal
Annual interest
rate
Paulsboro
Delaware City
Delaware City
Toledo
Chalmette
Chalmette
Torrance
Martinez
Martinez
Platinum
Platinum
Palladium
Platinum
Platinum
Platinum
Platinum
Platinum
Palladium
1.47 %
2.75 %
3.45 %
4.05 %
2.10 %
1.80 %
1.78 %
4.05 %
3.45 %
Expiration date
December 2022
October 2021(1)
September 2021(1)
September 2021(1)
October 2021(1)
November 2022
July 2022
September 2021(1)
September 2021(1)
__________________
(1) These catalyst financing arrangements are included in Long-term debt as of December 31, 2020 as the
Company has the ability and intent to finance this debt through availability under other credit facilities if the
catalyst financing arrangements are not renewed at maturi
ty.
t
In total, aggregate annual catalyst financing fees were approxi
December 31, 2020 and 2019, respectively.
a
mately $2.7 million and $0.7 million as of
F- 53
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Debt Maturities
Debt maturing in the next five years and thereafter is as foll
ff
ows (in millions):
Year Ending December 31,
2021
2022
2023
2024
2025
Thereafter
$
$
86.3
23.6
1,626.6
—
1,975.6
1,000.0
4,712.1
11. AFFILIATE NOTE PAYABLE - PBF LLC
As of December 31, 2020 and December 31, 2019, PBF LLC had an outstanding note payablea
with PBF Energy
for an aggregate principal amount of $376.3 million and $376.4 million, respectively. During the second quarter
of 2019, the note payablea
was amended to extend the maturity date froff m April 2020 to April 2030. The note has
an annual interest rate of 2.5% and may be prepaid in whole or in part at any time, at the option of PBF LLC
without penalty or premium.
12. OTHER LONG-TERM LIABILITIES
Other long-term liabilities consisted of the folff
lowing:
ities
(in millions)
Environmental liabila
Defined benefit pension plan liabia lities
Post-retirement medical plan liabila
ities
Early railcar returnt
East Coast Storage Assets Contingent Consideration
Other
Total other long-term liabilities
liability
December 31,
2020
December 31,
2019
$
$
141.9
73.5
22.0
13.9
—
17.2
268.5
$
$
121.8
73.8
17.5
17.6
16.1
4.1
250.9
13. RELATED PARTY TRANSACTIONS
Pursuant to the amended and restated limited liability company agreement of PBF LLC, the holders of PBF
LLC Series B Units are entitled to an interest in the amounts received by the investment funds associated with
the initial investors in PBF LLC in excess of their original investment in the form of PBF LLC distributions and
from the shares of PBF Energy Class A common stock issuablea
to such investment funds (for their own account
and on behalf of the holders of PBF LLC Series B Units) upon an exchange, and the proceeds from the sale of
such shares. Such proceeds received by the investment funds associated with the initial investors in PBF LLC
are distributed to the holders of the PBF LLC Series B Units in accordance with the distribution percentages
specified in the PBF LLC amended and restated limited liability company agreement. There were no
distributions to PBF LLC Series B unitholders for the years ended December 31, 2020, 2019 and 2018.
F- 54
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. COMMITMENTS AND CONTINGENCIES
Other Commitments
In addition to commitments related to lease obligations accounted for in accordance with ASC 842 and
disclosed in “Note 15 - Leases”, the Company is party to agreements which provide for the treatment of
certain of its refineries. The Company made purchases of
wastewater and the supply of hydrogen and steam forff
$69.0 million, $65.0 million and $68.6 million under these supply agreements forff
the years ended December 31,
2020, 2019 and 2018, respectively.
The fixed and determinable amounts related to obligations under these agreements are as follows:
Year Ending December 31,
2021
2022
2023
2024
2025
Thereafter
Total obligations
Employment Agreements
(in millions)
43.6
16.8
16.8
12.5
12.5
42.9
145.1
$
$
The Company has entered into various employment agreements with members of executive management and
certain other key personnel that include automatic annual renewals, unless canceled. Under some of the
agreements, certain of the executives would receive a lump sum payment of between 1.50 to 2.99 times their
base salary and continuation of certain employee benefits forff
the same period upon termination by the Company
“Without Cause”, or by the employee “For Good Reason”, or upon a “Change in Control”, as defined in the
agreements. Upon death or disability, certain of the Company’s executives, or their estates, would receive a
lump sum payment of at least one half of their base salary.
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, 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
capita
al costs to construct, maintain and upgrade equipment and facilities.
equirements. However,
These laws and permits raise potential exposure to future claims and lawsuits involving environmental and
atters which could include soil and water contamination, air pollution, personal injury and property
safety mt
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 substantial compliance with existing environmental and
there have been and will continue to be ongoing discussions about
t
safety r
environmental and safety mt
atters between the Company and federal and state authorities, including notices of
violations, citations and other enforcement actions, some of which have resulted or may result in changes to
al expenditures. While it is often difficult to quantify future environmental or
operating procedures and in capita
al investments and changes in
t
safety r
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.
the Company anticipates that continuing capita
elated expenditures,
ff
t
F- 55
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In connection with the acquisition of the Torrance refinery and related logistics assets, the Company assumed
certain pre-existing environmental liabilities totaling $113.7 million as of December 31, 2020 ($121.3 million as
of December 31, 2019), related to certain environmental remediation obligations to address existing soil and
groundwater contamination and monitoring activities and other clean-up activities, which reflects the current
estimated cost of the remediation obligations. The current portion of the environmental liabila
ity is recorded in
Accrued expenses and the non-current portion is recorded in Other long-term liabia lities. The Company expects
to make aggregate payments for this liabila
ity of approximately $52.7 million over the next five years.
ff
The aggregate environmental liabia lity reflected
in the Company’s Consolidated Balance Sheets was $153.7
million and $134.6 million at December 31, 2020 and December 31, 2019, respectively, of which $141.9
million and $121.8 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.
Applicable Federal and State Regulatory Requirements
The Company’s operations and many of the products it manufactures are subject
to certain specific
requirements of the Clean Air Act (the “CAA”) and related state and local regulations. The CAA contains
provisions that require capia tal expenditures for the installation of certain air pollution control devices at the
Company’s refineries. Subsequent rule making authorized by the CAA or similar laws or new agency
interpretations of existing rules, may necessitate additional expenditures
in futuret
years.
t
In 2010, New York State adopted a Low-Sulfur Heating Oil mandate that, beginning July 1, 2012, requires all
heating oil sold in New York State to contain no more than 15 parts per million (“PPM”) sulfur. Since July 1,
2012, other states in the Northeast market began requiring heating oil sold in their state to contain no more
than 15 PPM sulfur. Currently, all of the Northeastern states and Washington DC have adopted sulfur controls
on heating oil. Most of the Northeastern states require heating oil with 15 PPM or less sulfur. The mandate and
other requirements are not expected to have a material impact on the Company’s financial position, results of
operations or cash flows.
The United States Environmental Protection Agency (“EPA”) issued the final Tier 3 Gasoline standards on
March 3, 2014 under the CAA. This final rule establishes more stringent vehicle emission standards and further
reduces the sulfur content of gasoline starting in January 2017. The new standard is set at 10 PPM sulfur in
gasoline on an annual average basis starting January 1, 2017, with a credit trading program to provide
compliance flexibility. EPA responded to industry comments on the proposed rule and maintained the per
gallon sulfur capa on gasoline at the existing 80 PPM cap.a
The refineries are complying with these new
requirements as planned, either directly or using flexibility provided by sulfur credits generated or purchased in
are not expected to have a material
advance as an economic optimization. The standards set by the new rulerr
impact on the Company’s financial position, results of operations or cash flows.
The Company is required to comply with the renewable fuel standard implemented by EPA, which sets annual
quotas for the quantity of renewable fuels (such as ethanol) that must be blended into motor fuels consumed in
the United States (the “Renewable Fuel Standard”). In July 2018, EPA issued proposed amendments to the
Renewable Fuel Standard program regulations that would establia
sh annual percentage standards for cellulosic
biofuel, biomass-based diesel, advanced biofuel, and renewable fuels that would apply to all gasoline and diesel
produced in the U.S. or imported in the year 2019. In addition, the separate proposal includes a proposed
biomass-based diesel applicable volume for 2020. It is likely that RIN production will continue to be lower than
needed forcing obligated parties, such as the Company, to purchase cellulosic waiver credits or purchase excess
RINs from suppliers on the open market.
F- 56
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EPA published a Final Rule to the Clean Water Act Section 316(b) in August 2014 regarding cooling water
, which includes requirements for petroleum refineries. The purpose of this rule is to prevent
intake structures
t
fish from being trapped
against cooling water intake screens (impingement) and to prevent fish from being
drawn through cooling water systems (entrainment). Facilities will be required to implement best technology
available as soon as possible, but state agencies have the discretion to establia
sh implementation time lines. The
Company has evaluated, and continues to evaluate, the impact of this regulation, and at this time does not
expect this regulation to materially impact the Company’s financial position, results of operations or cash flows.
a
t
The Company is subject to greenhouse gas emission control regulations in the state of California pursuant to
AB32. AB32 imposes a statewide capa on greenhouse gas emissions, including emissions from transportation
fuels, with the aim of returning
the state to 1990 emission levels by 2020. AB32 is implemented through two
market mechanisms including the Low Carbon Fuel Standard and Cap and Trade. The Company is responsible
for the AB32 obligations related to the Torrance refinery beginning on July 1, 2016 and the Martinez refinery
beginning on February 1, 2020 and must purchase emission credits to comply with these obligations.
Additionally, in September 2016, the state of California enacted Senate Bill 32 (“SB32”) which further reduces
greenhouse gas emissions targets to 40 percent below 1990 levels by 2030. California Air Resources Board also
amended the LCFS in 2018 to require a 20% reduction by 2030.
a
The Company recovers the majori
ty of these costs from its customers, and does not expect these obligations to
materially impact the Company’s financial position, results of operations, or cash flows. To the degree there are
changes to AB32 or SB32 regulations or the Company is unable to recover such compliance costs
unfavorablea
from customers, these regulations could have a material adverse effect on our financial position, results of
operations and cash flows.
The Company is subject to obligations to purchase RINs. On February 15, 2017, the Company received a
notification that EPA records indicated that PBF Holding used potentially invalid RINs that were in fact verified
under EPA’s RIN Quality Assurance Program (“QAP”) by an independent auditor as QAP A RINs. Under the
regulations, use of potentially invalid QAP A RINs provided the user with an affirmative defense from civil
penalties provided certain conditions are met. The Company has asserted the affirmative defense and if accepted
by EPA will not be required to replace these RINs and will not be subject to civil penalties under the program. It
is reasonably possible that EPA will not accept the Company’s defense and may assess penalties in these
matters but any such amount is not expected to have a material impact on the Company’s financial position,
results of operations or cash flows.
As of January 1, 2011, the Company is required to comply with EPA’s Control of Hazardous Air Pollutants
From Mobile Sources, or MSAT2, regulations on gasoline that impose reductions in the benzene content of its
produced gasoline. The Company purchases benzene credits to meet these requirements when necessary. The
al projects to reduce the amount of benzene credits that the Company needs to
Company may implement capita
purchase. In additions, the Renewable Fuel Standard mandate the blending of prescribed percentages of
renewable fuels (e.g., ethanol and biofuels) into the Company’s produced gasoline and diesel. These
requirements, other requirements of the CAA and other presently existing or future environmental regulations
may cause the Company to make substantial capita
al expenditures as well as the purchase of credits at significant
cost, to enablea
its refineries to produce products that meet applicable requirements.
F- 57
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
resources and for the costs of certain health studies. As discussed more fully above, certain of the
t
natural
to these laws and the Company may be held liable for investigation and
Company’s sites are subject
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 the Company’s current normal operations, it has
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.
t
t
The Company is also currently subject to certain other existing environmental claims and proceedings. The
Company believes that there is only a remote possibility that future costs related to any of these other known
contingent liability exposures would have a material impact on its financial position, results of operations or
cash flows.
Contingent Consideration
In connection with the Martinez Acquisition, the Sale and Purchase Agreement includes an earn-out provision
based on certain earnings thresholds of the Martinez refinery.
Pursuant to the agreement, the Company will
in excess of certain
make payments to the Seller based on the future earnings of the Martinez refinery
thresholds, as defined in the agreement, for a period of up to four years following the acquisition closing date.
The Company recorded the acquisition date fair value of the earn-out provision as contingent consideration of
$77.3 million within “Other long-term liabila
ities” within the Company’s Consolidated Balance Sheets. There
was no balance under the Martinez Contingent Consideration as of December 31, 2020, representing no
anticipated future earn-out payments.
ff
ff
In connection with the East Coast Storage Assets Acquisition, the purchase and sale agreement between PBFX
and Crown Point included an earn-out provision related to the PBFX Contingent Consideration. PBFX and
Crown Point will share equally in the future operating profits of the restarted assets, as defined in the purchase
and sale agreement, over a contractual term of up to three years starting in 2019. The PBFX Contingent
Consideration recorded was $12.1 million and $26.1 million as of December 31, 2020 and December 31, 2019,
respectively, representing the present value of expected future payments. The short-term PBFX Contingent
Consideration is included in “Accrued expenses” within the Company’s Consolidated Balance Sheets. The
acquired idled assets that are subject to the PBFX Contingent Consideration recommenced operations in
October 2019.
Pursuant to the terms of the commercial agreement, in the third quarter of 2020, the counterparty exercised its
right to terminate the contract at the conclusion of the current contract year, resulting in an adjustment in the fair
value of the PBFX Contingent Consideration for the year ended December 31, 2020 of $16.4 million, reflecting
the elimination of the estimated earn-out for years two and three of the perfoff rmance period. There were no
material changes in the fair value of the PBFX Contingent Consideration for the year ended December 31, 2019.
F- 58
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tax Receivable Agreement
PBF Energy entered into a tax receivable agreement with the PBF LLC Series A and PBF LLC Series B
unitholders (the “Tax Receivable Agreement”) that provides for the payment by PBF Energy to such persons of
an amount equal to 85% of the amount of the benefits, if any, that PBF Energy is deemed to realize as a result of
(i) increases in tax basis, as described below, and (ii) certain other tax benefits related to entering into the Tax
Receivable Agreement, including tax benefits attributablea
to payments under the Tax Receivable Agreement.
For purposes of the Tax Receivable Agreement, the benefits deemed realized by PBF Energy will be computed
by comparing the actual income tax liability of PBF Energy (calculated with certain assumptim ons) to the amount
of such taxes that PBF Energy would have been required to pay had there been no increase to the tax basis of
the assets of PBF LLC as a result of purchases or exchanges of PBF LLC Series A Units for shares of PBF
Energy Class A common stock and had PBF Energy not entered into the Tax Receivable Agreement. The term
of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless:
(i) PBF Energy exercises its right to terminate the Tax Receivable Agreement, (ii) PBF Energy breaches any of
its material obligations under the Tax Receivable Agreement or (iii) certain changes of control occur, in which
case all obligations under the Tax Receivable Agreement will generally be accelerated and due as calculated
under certain assumptim ons.
The payment obligations under the Tax Receivable Agreement are obligations of PBF Energy and not of PBF
LLC, PBF Holding or PBFX. In general, PBF Energy expects to obtain funding for these annual payments from
PBF LLC, primarily through tax distributions, which PBF LLC makes on a pro-rata basis to its owners. Such
owners include PBF Energy, which holds a 99.2% interest in PBF LLC as of December 31, 2020 (99.0% as of
December 31, 2019). PBF LLC generally obtains funding to pay its tax distributions by causing PBF Holding to
distribute cash to PBF LLC and from distributions it receives from PBFX.
No liability for the Tax Receivable Agreement was recognized as of December 31, 2020, reflecting the estimate
of the undiscounted amounts that PBF Energy expects to pay under the agreement, net of the impact of a
deferred tax asset valuation allowance recognized in accordance with ASC 740, Income Taxes. As future
taxable income is recognized, increases in our Tax Receivable Agreement liabila
ity may be necessary in
conjunction with the revaluation of deferred tax assets. PBF Energy recognized a liability for the Tax
Receivable Agreement of $373.5 million as of December 31, 2019. Refer to “Note 21 - Income Taxes” for more
details.
F- 59
15. LEASES
The Company leases office space, office equipment, refinery support facilities and equipment, railcars and other
operating leases, with terms typically ranging from one to
logistics assets primarily under non-cancelablea
twentyt years, subject to certain renewal options as applicablea
. The Company considers those renewal or
termination options that are reasonably certain to be exercised in the determination of the lease term and initial
measurement of lease liabilities and right-of-use assets. Lease expense for operating lease payments is
recognized on a straight-line basis over the lease term. Interest expense for finance leases is incurred based on
the carrying
value of the lease liability. Leases with an initial term of 12 months or less are not recorded on the
rr
balance sheet.
The Company determines whether a contract is or contains a lease at inception of the contract and whether that
lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate
implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not
provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an
estimate of its incremental borrowing rate.
For substantially all classes of underlying assets, the Company has elected the practical expedient not to
separate lease and non-lease components, which allows for combining the components if certain criteria are
met. For certain leases of refinery support facilities, the Company accounts for the non-lease service component
separately. There are no material residual value guarantees associated with any of the Company’s leases. There
are no significant restrictions or covenants included in the Company’s lease agreements other than those that are
customary in such arrangements. Certain of the Company’s leases, primarily for the Company’s commercial
and logistics asset classes, include provisions for variable payments. These variable payments are typically
determined based on a measure of throughput or actual days the asset has operated during the contract term or
another measure of usage and are not included in the initial measurement of lease liabilities and right-of-use
assets.
F- 60
Lease Positioii n as of Do
ecember 31, 2020 and December 31, 2019
The tablea
Balance Sheets as of December 31, 2020 and December 31, 2019:
below presents the lease related assets and liabilities recorded on the Company’s Consolidated
(in millions)
Assets
Operating lease assets
Finance lease assets
Total lease right of use
assets
Liabilities
Current liabilities:
Operating lease
liabilities
Finance lease
liabilities
Noncurrent liabilities:
Operating lease
liabilities
Finance lease
liabilities
Classification on the Balance Sheet
December 31,
2020
December 31,
2019
Lease right of use assets
Lease right of use assets
$
$
$
836.5
80.4
916.9
$
Current operating lease liabila
ities
$
78.4
$
Accrued expenses
Long-term operating lease liabilities
Long-term financing lease liabilities
14.4
756.0
68.3
917.1
$
306.4
24.2
330.6
72.1
6.5
233.1
18.4
330.1
Total lease liabilities
$
Lease Costs
The tablea
December 31, 2020 and December 31, 2019:
below presents certain information related to costs forff
the Company’s leases for the year ended
Lease Costs (in millions)
Components of total lease costs:
Finance lease costs
Amortization of right of use assets
Interest on lease liabilities
Operating lease costs
Short-term lease costs
Variablea
lease costs
Total lease costs
December 31,
2020
December 31,
2019
$
$
14.0
$
4.3
162.3
92.3
11.6
284.5
$
2.0
0.8
109.8
89.2
8.3
210.1
F- 61
Sale-leaseback Transactions
r
On April 17, 2020, the Company closed on the sale of five hydrogen plants to Air Products in a sale-leaseback
transaction for gross cash proceeds of $530.0 million and recognized a gain of $471.1 million. In connection
with the sale, the Company entered into a transition services agreement through which Air Products will
exclusively supply hydrogen, steam, carbon
dioxide and other products (the “Products”) to the Martinez,
Torrance
and Delaware City refineries for a specified period (not expected to exceed 18 months). The transition
services agreement also requires certain maintenance and operating activities to be provided by PBF Holding,
for which the Company will be reimbursed, during the term of the agreement. In August 2020, the parties
executed long-term supply agreements through which Air Products will supply the Products forff
a term of fiftff een
years at these same refineries. As a result of these transactions, the Company recorded lease right of use assets
of $504.1 million and corresponding operating lease liabilities of approximately $503.9 million. There were no
net gains or losses on any sale-leaseback transactions for the year ended December 31, 2020.
r
II
Other Inform
ation
The tablea
2020 and December 31, 2019 (in millions):
below presents supplemental cash floff w information related to leases for the year ended December 31,
Year Ended December 31, 2020
2020
2019
Cash paid for amounts included in the measurement of lease
liabilities:
Operating cash flows forff
operating leases
$
163.1
$
Operating cash flows for finance leases
Financing cash flows forff
finance leases
Supplemental non-cash amounts of lease liabilities arising from
obtaining right-of-use assets
4.3
12.4
702.0
110.3
0.8
1.4
184.9
Lease Term and Discount Rate
The tablea
average discount rate for the Company’s leases as of December 31, 2020:
below presents certain information related to the weighted average remaining lease term and weighted
Weighted average remaining lease term - operating leases
Weighted average remaining lease term - finaff
nce leases
Weighted average discount rate - operating leases
Weighted average discount rate - finaff
nce leases
13.8 years
7.1 years
9.6 %
5.5 %
F- 62
Undiscii ountedtt Cash Flowsw
The tablea
presented to the lease liabilities recorded on the Consolidated Balance Sheets as of December 31, 2020:
below reconciles the fixed component of the undiscounted cash flows
for each of the periods
ff
Amounts due in the year ended December 31, (in millions)
Finance Leases Operating Leases
2021
2022
2023
2024
2025
Thereafter
Total minimum lease payments
Less: effect of discounting
Present value of future minimum lease payments
Less: current obligations under leases
Long-term lease obligations
$
$
18.6
12.8
12.8
12.8
11.4
31.7
100.1
17.4
82.7
14.4
68.3
$
$
153.0
134.1
111.8
111.4
98.0
907.3
1,515.6
681.2
834.4
78.4
756.0
As of December 31, 2020, the Company has entered into certain leases that have not yet commenced. Such
leases include a 15-year lease for water treatment equipment, with future lease payments estimated to total
approximately $34.1 million, and is not expected to commence prior to April 1, 2021. No other such pending
leases, either individually or in the aggregate, are material. There are no material lease arrangements in which
the Company is the lessor.
16. STOCKHOLDERS’ AND MEMBERS’ EQUITY STRUCTURE
PBF Energy Capital Structure
ClasCC s A Common Stock
Holders of Class A common stock are entitled to receive dividends when and if declared by the Board of
Directors out of funds legally available therefore, subject to any statutory
or contractual restrictions on the
payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any
outstanding preferred stock. Upon the Company’s dissolution or liquidation or the sale of all or substantially all
of the assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred
stock having liquidation preferences, if any, the holders of shares of Class A common stock will be entitled to
receive pro rata remaining assets availablea
for distribution. Holders of shares of Class A common stock do not
have preemptive, subscription, redemption or conversion rights.
t
Class B Common Stock
Holders of shares of Class B common stock are entitled, without regard to the number of shares of Class B
common stock held by such holder, to one vote for each PBF LLC Series A Unit beneficially owned by such
holder. Accordingly, the members of PBF LLC other than PBF Energy collectively have a number of votes in
PBF Energy that is equal to the aggregate number of PBF LLC Series A Units that they hold.
Holders of shares of Class A common stock and Class B common stock vote together as a single class on all
matters presented to stockholders for their vote or approval
, except as otherwise required by applicablea
law.
a
F- 63
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Holders of Class B common stock do not have any right to receive dividends or to receive a distribution upon a
liquidation or winding up of PBF Energy.
Preferred Stock
Authorized preferred stock may be issued in one or more series, with designations, powers and preferences as
shall be designated by the Board of Directors.
PBF LLC Capital Structure
PBF LLC Series A Unitsii
The allocation of profits and losses and distributions to PBF LLC Series A unitholders is governed by the
limited liability company agreement of PBF LLC. These allocations are made on a pro rata basis with PBF LLC
Series C Units. PBF LLC Series A unitholders do not have voting rights.
PBF LLC Series B Unitsii
The PBF LLC Series B Units are intended to be “profit interests” within the meaning of Revenue Procedures
93-27 and 2001-43 of the Internal Revenue Service and have a stated value of zero at issuance. The PBF LLC
Series B Units are held by certain of the Company’s current and former officers, have no voting rights and are
on
designed to increase in value only after the Company’s financial sponsors achieve certain levels of returnt
their investment in PBF LLC Series A Units. Accordingly, the amounts paid to the holders of PBF LLC Series
to the PBF LLC Series A Units held by the
B Units, if any, will reduce only the amounts otherwise payablea
Company’s financial sponsors, and will not reduce or otherwise impact any amounts payablea
to PBF Energy
(the holder of PBF LLC Series C Units), the holders of the Company’s Class A common stock or any other
holder of PBF LLC Series A Units. The maximum number of PBF LLC Series B Units authorized to be issued
is 1,000,000.
PBF LLC Series C Unitsii
The PBF LLC Series C Units rank on a parity with the PBF LLC Series A Units as to distribution rights, voting
rights and rights upon liquidation, winding up or dissolution. PBF LLC Series C Units are held solely by PBF
Energy.
Treasury Stock
The Company’s Board of Directors previously authorized the repurchase of up to $300.0 million of the PBF
Energy Class A common stock (the “Repurchase Program”). From the inception of the Repurchase Program
through its expiration date, the Company has purchased approximately 6,050,717 shares of the PBF Energy
Class A common stock through open market transactions under the Repurchase Program, for a total of $150.8
million. The Repurchase Program expired on September 30, 2018 and was not renewed.
The Company also records PBF Energy Class A common stock surrendered to cover income tax withholdings
for certain directors and employees and others pursuant to the vesting of certain awards under the Company’s
equity-based compensat
ion plans as treasury shares.
m
F- 64
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. NONCONTROLLING INTERESTS
Noncontrollingll
tt
Interest
in PBF LLC
PBF Energy is the sole managing member of, and has a controlling interest in, PBF LLC. As the sole managing
member of PBF LLC, PBF Energy operates and controls all of the business and affairs of PBF LLC and its
subsidiaries. PBF Energy’s equity interest
in PBF LLC was approximately 99.2% and 99.0% as of
December 31, 2020 and 2019, respectively.
PBF Energy consolidates the financial results of PBF LLC and its subsidiaries, and records a noncontrolling
interest for the economic interest in PBF Energy held by the members of PBF LLC other than PBF Energy.
Noncontrolling interest on the Consolidated Statements of Operations includes the portion of net income or loss
to the economic interest in PBF Energy held by the members of PBF LLC other than PBF Energy.
attributablea
Noncontrolling interest on the Consolidated Balance Sheets represents the portion of net assets of PBF Energy
attributablea
to the members of PBF LLC other than PBF Energy.
The noncontrolling interest ownership percentages in PBF LLC as of the completion dates of each of the equity
offerings and as of the years ended December 31, 2020, 2019 and 2018 are calculated as foll
ows:
ff
January 1, 2018
August 14, 2018 - Equity offering
December 31, 2018
December 31, 2019
December 31, 2020
Noncontrollingll
tt
Interest
in PBFX
Outstanding
Shares
of PBF Energy
Class A
Common
Stock
110,565,531
Holders of
PBF LLC Series
A Units
3,767,464
Total
114,332,995
3.3%
96.7%
100.0%
1,206,325
119,852,874
121,059,199
1.0%
99.0%
100.0%
1,206,325
119,874,191
121,080,516
1.0%
99.0%
100.0%
1,215,317
119,804,971
121,020,288
1.0%
99.0%
100.0%
970,647
120,101,641
121,072,288
0.8%
99.2%
100.0%
PBF LLC held a 48.0% limited partner interest in PBFX, with the remaining 52.0% limited partner interest
owned by the public common unitholders as of December 31, 2020. PBF LLC is also the sole member of PBF
GP, the general partner of PBFX. As noted in “Note 3 - PBF Logistics LP”, pursuant to the IDR Restructurt
ing,
the IDRs held by PBF LLC were canceled and converted into newly issued common units. In addition, PBFX
onal investors in connection with the 2019 Registered Direct
issued 6,585,500 common units to certain instituti
Offering on April 29, 2019.
t
for
PBF Energy, through its ownership of PBF LLC, consolidates the financial results of PBFX, and records a
in PBFX held by the public common unitholders.
noncontrolling interest
Noncontrolling interest on the Consolidated Statements of Operations includes the portion of net income or loss
attributablea
to the economic interest in PBFX held by the public common unitholders of PBFX other than PBF
Energy (through its ownership in PBF LLC). Noncontrolling interest on the Consolidated Balance Sheets
includes the portion of net assets of PBFX attributable to the public common unitholders of PBFX.
the economic interest
F- 65
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The noncontrolling interest ownership percentages in PBFX as of the 2018 Registered Direct Offering, the
Development Assets Acquisition, the 2019 Registered Direct Offering and the years ended December 31, 2020,
2019 and 2018 are calculated as follows:
January 1, 2018
Units of PBFX
Held by the
Public
23,441,211
Units of PBFX
Held by PBF
LLC (Including
Subordinated
Units)
18,459,497
Total
41,900,708
55.9 %
44.1 %
100.0 %
July 30, 2018 - Registered Direct Offering
25,391,037
18,459,497
43,850,534
July 31, 2018 - Development Assets consideration
25,391,037
19,953,631
45,344,668
57.9 %
42.1 %
100.0 %
December 31, 2018
56.0 %
44.0 %
100.0 %
25,395,032
19,953,631
45,348,663
56.0 %
44.0 %
100.0 %
April 29, 2019 - Registered Direct Offering
32,047,718
29,953,631
62,001,349
December 31, 2019
December 31, 2020
51.7 %
48.3 %
100.0 %
32,176,404
29,953,631
62,130,035
51.8 %
48.2 %
100.0 %
32,411,207
29,953,631
62,364,838
52.0 %
48.0 %
100.0 %
Noncontrollingll
tt
Interest
in PBF HoldiHH ngii
In connection with the acquisition of the Chalmette refinery, PBF Holding recorded noncontrolling interests in
two subsidiaries of Chalmette Refining. PBF Holding, through Chalmette Refining, owns an 80% ownership
interest
in both Collins Pipeline Company and T&M Terminal Company. In both of the years ended
December 31, 2020 and 2019 the Company recorded a noncontrolling interest in the earnings of these
subsidiaries of less than $0.3 million.
F- 66
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in Equity att
nd Noncontrollingll
stt
Interest
tt
On August 14, 2018, PBF Energy completed a public offering of an aggregate of 6,000,000 shares of its Class A
net proceeds of $287.3 million, after deducting
common stock (the “August 2018 Equity Offering”) forff
underwriting discounts and commissions and other offering expenses.
The following tablea
Energy for the years ended December 31, 2020, 2019 and 2018:
s summarize the changes in equity for the controlling and noncontrolling interests of PBF
PBF Energy (in millions)
PBF Energy
Inc. Equity
Noncontrolling
Interest in PBF
LLC
Noncontrolling
Interest in PBF
Holding
Noncontrolling
Interest in
PBFX
Balance at January 1, 2020
$
3,039.6
$
113.2
$
10.9
$
421.8
$
Comprehensive income (loss)
Dividends and distributions
Effects of changes in deferred tax
assets and liabilities and tax receivable
agreement obligation
Stock-based compensation
Exchanges of PBF Energy Company
LLC Series A Units for PBF Energy
Class A common stock
Exercise of PBF LLC and PBF Energy
options and warrants, net
Taxes paid for net settlement of equity-
based compensation
Other
(1,393.2)
(35.9)
(2.1)
28.2
2.3
0.2
(1.2)
4.9
(17.1)
(0.4)
—
—
(2.3)
—
—
—
(0.3)
—
—
—
—
—
—
—
76.5
(46.8)
—
4.9
—
—
(0.9)
—
Total Equity
3,585.5
(1,334.1)
(83.1)
(2.1)
33.1
—
0.2
(2.1)
4.9
Balance at December 31, 2020
$
1,642.8
$
93.4
$
10.6
$
455.5
$
2,202.3
PBF Energy (in millions)
PBF Energy
Inc. Equity
Noncontrolling
Interest in PBF
LLC
Noncontrolling
Interest in PBF
Holding
Noncontrolling
Interest in
PBFX
Total Equity
Balance at January 1, 2019
$
2,676.5
$
112.2
$
10.9
$
448.9
$
3,248.5
Comprehensive income
Dividends and distributions
Effects of changes in PBFX ownership
interest on deferred tax assets and
liabilities
Issuance of additional PBFX common
units
Stock-based compensation
Exercise of PBF LLC and PBF Energy
options and warrants, net
Taxes paid for net settlement of equity-
based compensation
Other
333.5
(143.8)
(1.3)
152.0
27.2
0.3
(4.6)
(0.2)
4.4
(3.2)
—
—
—
—
(0.2)
—
—
—
—
—
—
—
—
—
51.5
(64.1)
—
(19.5)
6.8
—
—
(1.8)
389.4
(211.1)
(1.3)
132.5
34.0
0.3
(4.8)
(2.0)
Balance at December 31, 2019
$
3,039.6
$
113.2
$
10.9
$
421.8
$
3,585.5
F- 67
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PBF Energy (in millions)
PBF Energy
Inc. Equity
Noncontrolling
Interest in PBF
LLC
Noncontrolling
Interest in PBF
Holding
Noncontrolling
Interest in
PBFX
Total Equity
Balance at January 1, 2018
$
2,336.6
$
110.2
$
10.8
$
445.3
$
2,902.9
Comprehensive income
Dividends and distributions
Effects of equity offerings and
exchanges of PBF LLC Series A Units
on deferred tax assets and liabilities and
tax receivable agreement obligation
Issuance of additional PBFX common
units
Stock-based compensation
August 2018 Equity Offering
Exercise of PBF LLC and PBF Energy
options and warrants, net
Taxes paid for net settlement of equity-
based compensation
Other
131.3
(139.3)
(4.9)
28.6
19.7
287.3
14.0
(4.8)
8.0
4.7
(2.1)
—
—
—
—
—
(0.6)
—
0.1
—
—
—
—
—
—
—
—
42.2
(49.5)
178.3
(190.9)
—
6.3
5.7
—
—
—
(1.1)
(4.9)
34.9
25.4
287.3
14.0
(5.4)
6.9
Balance at December 31, 2018
$
2,676.5
$
112.2
$
10.9
$
448.9
$
3,248.5
The following tabla es summarize the changes in equity forff
LLC forff
the years ended December 31, 2020, 2019, and 2018 respectively:
the controlling and noncontrolling interests of PBF
PBF LLC (in millions)
Balance at January 1, 2020
Comprehensive income (loss)
Dividends and distributions
Stock-based compensation
Exercise of Series A warrants and options
Other
PBF Energy
Company LLC
Equity
Noncontrolling
Interest in PBF
Holding
Noncontrolling
Interest in
PBFX
Total Equity
$
3,176.4
$
(1,792.9)
(36.3)
28.2
(1.3)
(0.1)
10.9
$
(0.3)
—
—
—
—
421.8
$
76.5
(46.8)
4.9
—
(0.9)
3,609.1
(1,716.7)
(83.1)
33.1
(1.3)
(1.0)
Balance at December 31, 2020
$
1,374.0
$
10.6
$
455.5
$
1,840.1
PBF LLC (in millions)
Balance at January 1, 2019
Comprehensive income
Dividends and distributions
Issuance of additional PBFX common units
Stock-based compensation
Exercise of Series A warrants and options
Other
PBF Energy
Company LLC
Equity
Noncontrolling
Interest in PBF
Holding
Noncontrolling
Interest in
PBFX
Total Equity
$
2,759.6
$
10.9
$
448.9
$
3,219.4
442.7
(200.4)
152.0
27.2
(4.7)
—
—
—
—
—
—
51.5
(64.1)
(19.5)
6.8
—
(1.8)
494.2
(264.5)
132.5
34.0
(4.7)
(1.8)
Balance at December 31, 2019
$
3,176.4
$
10.9
$
421.8
$
3,609.1
F- 68
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PBF LLC (in millions)
Balance at January 1, 2018
Comprehensive income
Dividends and distributions
Issuance of additional PBFX common units
Stock-based compensation
Exercise of Series A warrants and options
Issuance of Series C units in connection with the August
2018 Equity Offering
Other
PBF Energy
Company LLC
Equity
Noncontrolling
Interest in PBF
Holding
Noncontrolling
Interest in
PBFX
Total Equity
$
2,422.4
$
10.8
$
445.3
$
2,878.5
140.8
(141.4)
28.6
19.7
(8.5)
287.3
10.7
0.1
—
—
—
—
—
—
42.2
(49.5)
6.3
5.7
—
—
(1.1)
183.1
(190.9)
34.9
25.4
(8.5)
287.3
9.6
Balance at December 31, 2018
$
2,759.6
$
10.9
$
448.9
$
3,219.4
Comprem hensive IncomII
e (Lo((
ss)
Comprehensive income (loss) includes net income (loss) and other comprehensive income (loss) arising from
activity related to the Company’s defined employee benefit plan and unrealized gain (loss) on available-for-sale
securities. The following tablea
summarizes the allocation of total comprehensive income (loss) of PBF Energy
between the controlling and noncontrolling interests for the year ended December 31, 2020:
PBF Energy (in millions)
Net income (loss)
Other comprehensive income (loss):
Unrealized loss on availablea
Amortization of defined benefit plans unrecognized
net loss
for sale securities
Total other comprehensive income (loss)
Total comprehensive income (loss)
Attributable to
PBF Energy Inc.
stockholders
Noncontrolling
Interests
Total
$
(1,392.4) $
59.1
$
(1,333.3)
(0.1)
(0.7)
(0.8)
(1,393.2) $
$
—
—
—
59.1
$
(0.1)
(0.7)
(0.8)
(1,334.1)
The following tablea
controlling and noncontrolling interests for the year ended December 31, 2019:
summarizes the allocation of total comprehensive income of PBF Energy between the
PBF Energy (in millions)
Net income
Other comprehensive income:
Attributable to
PBF Energy Inc.
stockholders
Noncontrolling
Interest
Total
$
319.4
$
55.8
$
375.2
Unrealized gain on availablea
Amortization of defined benefit plans unrecognized
net gain
for sale securities
Total other comprehensive income
Total comprehensive income
0.4
13.7
14.1
333.5
$
$
—
0.1
0.1
55.9
$
0
.4
13.8
14.2
389.4
F- 69
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
lowing table summarizes the allocation of total comprehensive income of PBF Energy between the
The folff
controlling and noncontrolling interests for the year ended December 31, 2018:
PBF Energy (in millions)
Net income
Other comprehensive income (loss):
Unrealized loss on availablea
Amortization of defined benefit plans unrecognized
net gain
for sale securities
Total other comprehensive income
Total comprehensive income
Attributable to
PBF Energy Inc.
stockholders
Noncontrolling
Interest
Total
$
128.3
$
47.0
$
175.3
(0.1)
3.1
3.0
131.3
$
$
—
—
—
47.0
$
(0.1)
3.1
3.0
178.3
The following tablea
controlling and noncontrolling interests for the year ended December 31, 2020:
summarizes the allocation of total comprehensive income (loss) of PBF LLC between the
PBF LLC (in millions)
Net income (loss)
Other comprehensive income (loss):
Unrealized loss on availablea
Amortization of defined benefit plans unrecognized
net gain
for sale securities
Total other comprehensive income
Total comprehensive income (loss)
Attributable to
PBF LLC
Noncontrolling
Interests
Total
$
(1,796.5) $
76.2
$
(1,720.3)
(0.1)
3.7
3.6
(1,792.9) $
$
—
—
—
76.2
$
(0.1)
3.7
3.6
(1,716.7)
The following tablea
controlling and noncontrolling interests for the year ended December 31, 2019:
summarizes the allocation of total comprehensive income of PBF LLC between the
PBF LLC (in millions)
Net income
Other comprehensive income:
Attributable to
PBF LLC
Noncontrolling
Interest
Total
$
428.5
$
51.5
$
480.0
Unrealized gain on availablea
Amortization of defined benefit plans unrecognized
net gain
for sale securities
Total other comprehensive income
Total comprehensive income
0.4
13.8
14.2
442.7
$
$
—
—
—
51.5
$
0
.4
13.8
14.2
494.2
F- 70
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
lowing table summarizes the allocation of total comprehensive income of PBF LLC between the
The folff
controlling and noncontrolling interests for the year ended December 31, 2018:
PBF LLC (in millions)
Net income
Other comprehensive income (loss):
Unrealized loss on availablea
Amortization of defined benefit plans unrecognized
net gain
for sale securities
Total other comprehensive income
Total comprehensive income
Attributable to
PBF LLC
Noncontrolling
Interest
Total
$
137.8
$
42.3
$
180.1
(0.1)
3.1
3.0
140.8
$
$
—
—
—
42.3
$
(0.1)
3.1
3.0
183.1
18. STOCK-BASED COMPENSATION
The Company grants awards of PBF Energy Class A common stock and PBFX phantom units under its equity
incentive plans which authorize the granting of various stock and stock-related awards to directors, employees,
prospective employees and non-employees. Awards include non-qualified or incentive stock options, stock
appreciation rights, stock awards (including restricted stock) and phantom unit awards, cash awards and
performance awards that vest over a period determined by the plans.
Stock-based compensation expense included in general and administrative expenses consisted of the folff
lowing:
(in millions)
PBF Energy options
PBF Energy restricted shares
PBF Energy performance awards
PBFX phantom units
PBF Energy options
Years Ended December 31,
2020
2019
2018
$
$
16.1
5.3
7.9
4.9
34.2
$
$
15.8
6.5
8.2
6.8
37.3
$
$
11.5
7.5
1.2
5.8
26.0
PBF Energy grants stock options which represent the right to purchase share of the Company’s common stock
ff market value, which is the closing price of PBF Energy’s common stock on the date of grant. Stock
at its fair
options have a maximum term of ten years from the date they are granted,
equi isite ser ivice
periperi dod of hthre ye years, or four yyears for ggrants p irior to Nove bmber 2020, subject to acceleration in certain
circumstances. The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock
options granted, which requires the input of subjective assumptions.
dand vest over a r
i
F- 71
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Black-Scholes option-pricing model values used to value stock option awards granted were determined
based on the folff
lowing weighted average assumptim ons:
December 31, 2020
December 31, 2019
December 31, 2018
Expected life (in years)
Expected volatility
Dividend yield
Risk-free rate of returnt
Exercise price
Weighted average fair value per option
granted
$
$
6.08
69.1 %
1.41 %
0.81 %
13.58
5.49
$
$
6.25
38.6 %
3.54 %
2.16 %
34.11
9.43
$
$
6.25
35.8 %
3.49 %
2.82 %
35.25
9.55
The following tabla e summarizes activity for PBF Energy options for 2020:
Stock-based awards, outstanding at January 1, 2020
Granted
Exercised
Forfeited
Outstanding at December 31, 2020
Exercisablea
and vested at December 31, 2020
Expected to vest at December 31, 2020
Number of
PBF Energy
Class A
Common
Stock Options
10,073,916
3,947,726
(7,500)
(223,365)
13,790,777
7,124,039
13,790,777
$
$
$
Weighted
Average
Exercise Price
30.47
$
13.58
26.00
26.96
25.69
29.12
25.69
Weighted
Average
Remaining
Contractual
Life
(in years)
7.17
10.00
—
—
7.12
5.49
7.12
At December 31, 2020, the total intrinsic value of stock options outstanding and exercisable were $1.0 million
and $0.0 million, respectively. The total intrinsic value of stock options exercised during the years ended
December 31, 2020, 2019 and 2018 was $0.0 million, $0.3 million and $12.4 million, respectively.
Unrecognized compensation expense related to PBF Energy options at December 31, 2020 was $38.5 million,
which will be recognized from 2021 through 2024.
Restricted Stock Awards
The Company grants restricted stock to employees and non-employee directors. In general, restricted stock
granted to our employees vest over a requisite services period of four years, subject to acceleration in certain
circumstances. Restricted stock recipients who received grants subsequent to May 2017 have voting rights;
however, dividends are accrued and will be paid upon
vesting. Restricted stock units granted to non-employee
directors are considered to vest immediately at the time of the grant for accounting purposes, as they are non-
, but are issued in equal annual installments on each of the first three anniversaries of the grant date.
forfeitablea
The non-vested shares are not transferable and are held by our transfer agent. The fair values of restricted stock
are equal to the market price of our common stock on the grant date.
u
F- 72
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The folff
lowing table summarizes activity for PBF Energy restricted stock:
Nonvested at January 1, 2020
Granted
Vested
Forfeited
Nonvested at December 31, 2020
Number of
PBF Energy
Restricted Class A
Common Stock
Weighted Average
Grant Date
Fair Value
492,225
$
159,377
(347,855)
(192)
303,555
$
27.21
9.82
23.51
24.18
22.32
Unrecognized compensation expense related to PBF Energy Restricted Class A common stock at December 31,
2020 was $1.5 million, which will be recognized fromff
2021 through 2023.
The following tablea
reflects activity related to our restricted stock:
Weighted-average grant-date fair value per
share of restricted stock granted
Fair value of restricted stock vested (in
millions)
$
$
Performance Awards
December 31, 2020
December 31, 2019
December 31, 2018
9.82
4.2
$
$
28.20
11.6
$
$
47.24
13.0
The Company grants performance share awards, which are paid in stock, and performance share unit awards,
which are paid in cash, (collectively, the “performance awards”) to certain key employees. Performance awards
granted to employees prior to November 1, 2020 are based on a three-year performance cycle (the "performance
cycle") with four measurement periods and performance awards granted to employees after November 1, 2020
are based on a three-year performance cycle having a single measurement period. The perforff mance awards will
vest on the last day of the perfoff rmance cycle, subjeu
ct to forfeiture or acceleration under certain circumstances
in the award agreement. The number of performance awards that will ultimately vest is based on the
set forth
ff
over the perforff mance cycle. The number of shares ultimately issued or cash
Company’s total shareholder returnt
paid under these awards can range from zero to 200% of target award amounts.
Performance Share Unit Aii wards
The perfoff rmance share unit awards are accounted forff
on the grant date by appli
cation of a Monte Carlo valuation model.
a
as equity awards, forff which the fair value was determined
The grant date faiff
r value was calculated using a Monte Carlo valuation model with the following assumptions:
Expected life (in years)
Expected volatility
Dividend yield
Risk-free rate of returnt
Weighted average grant-date fair value per
PSU
December 31, 2020
2.89 - 3.14
December 31, 2019
2.17 - 2.88
39.88% - 82.63% 37.19% - 41.70%
3.40% - 3.67%
1.66% - 2.51%
0.00% - 4.28%
0.26% - 1.34%
December 31, 2018
2.17
39.04 %
2.95 %
2.89 %
$
10.77
$
27.99
$
50.23
F- 73
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The risk-free interest rate for the remaining performance period as of the grant date is based on a linear
interpolation of published yields of traded U.S. Treasury I
nterest-Only STRIP Bonds. The dividend yield
assumption is based on the annualized most recent quarterly dividend divided by the stock price on the grant
date. The assumption for the expected volatility of the Company’s stock price reflects the average of PBF
Energy’s common stock historical and implied volatility.
rr
The following tabla e summarizes activity for PBF Energy performance share awards:
Nonvested at January 1, 2020
Granted
Vested (a)
Forfeited
Nonvested at December 31, 2020
Number of
PBF Energy
Performance Share
Units (“PSU”)
Weighted Average
Grant Date
Fair Value
360,797
446,267
(179,072)
(4,832)
623,160
$
$
39.03
10.77
50.23
33.01
15.62
(a) In 2020, PSU’s with fair value of $0.8 million were vested.
As of December 31, 2020, unrecognized compensation cost related to performance share unit awards was $6.3
million, which is expected to be recognized over a weighted average period of 2.20 years.
PPe frformance UnitUU awards
e unit awards are dollar denominated with a target value of $1.00, with actual payout of up
ff
The performanc
to $2.00 per unit (or 200 percent of target). The perforff mance unit awards are settled in cash based on the payout
amount determined at the end of the perforff mance cycle. The Company accounts forff
the perforff mance unit
awards as liability awards which the Company recorded at fair market value on the date of grant. Subsequently,
the perforff mance unit awards will be marked-to-market at the end of each fiscal quarter by application of a
Monte Carlo simulation model.
The following tablea
summarizes activity forff PBF Energy performance unit awards:
(in millions)
Nonvested at January 1, 2020
Granted
Vested (a)
Forfeited
Nonvested at December 31, 2020
Number of
PBF Energy
Performance Units
(in equivalent $’s)
$
$
15.1
8.5
(7.3)
(0.2)
16.1
(a) In 2020, Performance Units with faiff
r value of $3.2 million were vested.
As of December 31, 2020, unrecognized compensation cost related to performance unit awards was $4.8
million, which is expected to be recognized over a weighted average period of 2.47 years.
F- 74
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PBFX Phantom Units
PBF GP’s board of directors adopted the PBF Logistics LP 2014 Long-Term Incentive Plan (the “PBFX LTIP”)
the benefit of employees,
in connection with the completion of the PBFX Offeff
consultants, service providers and non-employee directors of the general partner and its affiliates.
ring. The PBFX LTIP is forff
In the years ended December 31, 2020, 2019 and 2018, PBFX issued phantom unit awards under the PBFX
LTIP to certain directors, officers and employees of our general partner or its affiliates as compensation. The
fair value of each phantom unit on the grant date is equal to the market price of PBFX’s common unit on that
date. The estimated fair value of PBFX’s phantom units is amortized using the straight-line method over the
vesting period of four years, subject
to acceleration if certain conditions are met. Total unrecognized
compensation cost related to PBFX’s nonvested phantom units totaled $5.2 million as of December 31, 2020,
which will be recognized from 2021 through 2024. The fair value of nonvested phantom units outstanding as of
December 31, 2020 totaled $11.8 million.
A summary of PBFX’s unit award activity forff
below:
the years ended December 31, 2020, 2019 and 2018 is set forff
th
Nonvested at January 1, 2020
Granted
Vested
Forfeited
Nonvested at December 31, 2020
Number of
Phantom Units
761,840
342,482
(325,384)
(9,250)
769,688
$
$
Weighted
Average
Grant Date
Fair Value
20.77
8.14
20.63
13.34
15.29
The following tabla e refleff cts activity related to our phantom units:
Weighted-average grant-date fair value per
share of phantom unit granted
Fair value of phantom unit vested (in
millions)
$
$
8.14
3.2
$
$
21.39
6.2
$
$
19.95
4.7
December 31, 2020
December 31, 2019
December 31, 2018
The PBFX LTIP provides forff
the issuance of distribution equivalent rights (“DERs”) in connection with
phantom unit awards. A DER entitles the participant, upon vesting of the related phantom units, to a mandatory
cash payments equal to the product of the number of vested phantom unit awards and the cash distribution per
common unit paid by PBFX to its common unitholders. Cash payments made in connection with DERs are
vesting.
charged to partners’ equity, accruedr
and paid upon
u
F- 75
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. EMPLOYEE BENEFIT PLANS
Defined Contribution Plan
The Company’s defined contribution plan covers all employees. Employees are eligible to participate as of the
first day of the month following 30 days of service. Participants can make basic contributions up to 50 percent
of their annual salary subject
to Internal Revenue Service limits. The Company matches participants’
contributions at the rate of 200 percent of the first 3 percent of each participant’s total basic contribution based
on the participant’s total annual salary.rr The Company’s contribution to the qualified defined contribution plans
was $32.7 million, $27.5 million and $26.3 million for the years ended December 31, 2020, 2019 and 2018,
respectively.
Defined Benefit and Post-Retirement Medical Plans
The Company sponsors a noncontributory defined benefit pension plan (the “Qualified Plan”) with a policy to
fund pension liabilities in accordance with the limits imposed by the Employee Retirement Income Security Act
of 1974 and Federal income tax laws. In addition, the Company sponsors a supplemental pension plan covering
the Company’s
certain employees, which provides incremental payments that would have been payabla e fromff
principal pension plan, were it not for limitations imposed by income tax regulations (the “Supplemental Plan”).
The funded
is measured as the difference between plan assets at fair value and the projected benefit
ff
obligation which is to be recognized in the Consolidated Balance Sheets. The plan assets and benefit obligations
are measured as of the Consolidated Balance Sheet date.
statust
The non-union Delaware Cityt
employees and all Paulsboro, Toledo, Chalmette, Torrance and Martinez
employees became eligible to participate in the Company’s defined benefit plans as of the respective acquisition
employees became eligible to participate in the Company’s defined benefit
dates. The union Delaware Cityt
plans upon commencement of normal operations. The Company did not assume any of the employees’ pension
liability accruedrr
prior to the respective acquisitions.
The Company formed the Post-Retirement Medical Plan on December 31, 2010 to provide health care coverage
continuation from date of retirement to age 65 for qualifying employees associated with the Paulsboro
acquisition. The Company credited the qualifying employees with their prior service under Valero Energy
Corporat
ion which resulted in the recognition of a liability for the projected benefit obligation. The Post-
r
Retirement Medical Plan was amended during 2013 to include all corporate employees, amended in 2014 to
include Delaware City and Toledo employees, amended in 2015 to include Chalmette employees, amended in
2016 to include Torrance employees and amended in 2020 to include Martinez employees.
F- 76
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The changes in the benefit obligation, the changes in faiff
r value of plan assets, and the funded status of the
Company’s Pension and Post-Retirement Medical Plans as of and for the years ended December 31, 2020 and
2019 were as follows:
(in millions)
Change in benefit obligation:
Pension Plans
Post-Retirement
Medical Plan
2020
2019
2020
2019
Benefit obligation at beginning of year
$
271.2
$
218.4
$
17.5
$
19.3
Service cost
Interest cost
Plan amendments
Benefit payments
Actuarial loss (gain)
Projected benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
t
Actual
returnt
on plan assets
Benefits paid
Employer contributions
Fair value of plan assets at end of year
Reconciliation of funded status:
t
Fair value of plan assets at end of year
Less benefit obligations at end of year
Funded status at end of year
$
$
$
$
$
59.0
6.9
—
(18.0)
10.2
329.3
197.4
28.6
(18.0)
47.8
255.8
255.8
329.3
$
$
$
$
43.6
8.3
—
(9.0)
9.9
271.2
143.4
29.0
(9.0)
34.0
197.4
197.4
271.2
$
$
$
$
1.0
0.4
1.8
(0.6)
1.9
22.0
$
— $
—
(0.6)
0.6
— $
— $
22.0
1.0
0.7
—
(1.3)
(2.2)
17.5
—
—
(1.3)
1.3
—
—
17.5
(73.5) $
(73.8) $
(22.0) $
(17.5)
The accumulated benefitff obligations for the Company’s Pension Plans exceed the fair value of the assets of
those plans at December 31, 2020 and 2019. The accumulated benefitff obligation for the defined benefit plans
approximated $281.5 million and $228.0 million at December 31, 2020 and 2019, respectively.
Benefit payments, which reflect expected future services that the Company expects to pay are as follows for the
years ended December 31:
(in millions)
2021
2022
2023
2024
2025
Years 2026-2030
$
$
Pension Benefits
35.4
20.4
17.8
20.4
23.5
156.2
Post-Retirement
Medical Plan
2.1
2.0
1.9
1.7
1.7
7.8
The Company’s funding policy for its defined benefit plans is to contribute amounts sufficient to meet legal
funding requirements, plus any additional amounts that may be appropriate considering the funded statust
of the
tors. The Company plans to
plans, tax consequences, the cash flow generated by the Company and other facff
a
contribute approxim
ately $55.3 million to the Company’s Pension Plans during 2021.
F- 77
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of net periodic benefit cost were as foll
2018:
ff
ows for the years ended December 31, 2020, 2019 and
Pension Benefits
Post-Retirement
Medical Plan
2020
2019
2018
2020
2019
2018
(in millions)
Components of net periodic
benefit cost:
Service cost
Interest cost
Expected return on plan
assets
Amortization of prior
service cost and actuat
loss
rial
$
59.0
$
43.6
$
47.4
$
6.9
8.3
5.8
(12.5)
(9.6)
(8.5)
0.3
0.3
0.2
1.0
0.4
—
0.6
2.0
$
$
1.0
0.7
—
0.5
2.2
$
$
1.1
0.7
—
0.7
2.5
Net periodic benefit cost
$
53.7
$
42.6
$
44.9
$
Lump sum payments made by the Supplemental Plan to employees retiring in 2020, 2019 and 2018 did not
exceed the Plan’s total service and interest costs expected for those years.
The pre-tax amounts recognized in other comprehensive (income) loss forff
2019 and 2018 were as foll
ows:
ff
the years ended December 31, 2020,
(in millions)
Prior service costs
Net actuari
t
al (gain) loss
Amortization of losses and
prior service cost
Total changes in other
comprehensive (income) loss
Pension Benefits
Post-Retirement
Medical Plan
2020
2019
2018
2020
2019
2018
$
— $
— $
— $
(10.7)
1.9
(5.9)
(0.3)
(0.3)
(0.8)
(0.6)
1.8
1.9
$
— $
(2.3)
(0.5)
—
(3.4)
(0.7)
$
(6.2) $
(11.0) $
1.1
$
3.1
$
(2.8) $
(4.1)
The pre-tax amounts in accumulated other comprehensive income (loss) as of December 31, 2020, and 2019
that have not yet been recognized as components of net periodic costs were as follows:
(in millions)
Prior service costs
Net actuari
Total
t
al (loss) gain
Pension Benefits
Post-Retirement
Medical Plan
2020
2019
2020
2019
$
$
(0.6) $
(8.4)
(9.0) $
(0.7) $
(14.5)
(15.2) $
(5.0) $
3.9
(1.1) $
(4.0)
6.1
2.1
F- 78
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The weighted average assumptions used to determine the benefit obligations as of December 31, 2020, and
2019 were as follows:
Discount rate - benefit
obligations
Rate of compensation
increase
Qualified Plan
Supplemental Plan
Post-
Retirement Medical Plan
2020
2019
2020
2019
2020
2019
2.36 %
3.21 %
2.21 %
3.09 %
1.90 %
2.88 %
4.28 %
4.28 %
4.50 %
4.50 %
—
—
The weighted average assumptions used to determine the net periodic benefit costs for the years ended
December 31, 2020, 2019 and 2018 were as foll
ows:
ff
Discount rates:
Effective rate for service cost
Effective rate for interest cost
Effective rate for interest on
service cost
Cash balance interest credit rate
Expected long-term rate of return
on plan assets
Rate of compensation increase
Qualified Plan
Supplemental Plan
Post-Retirement Medical Plan
2020
2019
2018
2020
2019
2018
2020
2019
2018
2.94%
4.24%
3.62%
2.79%
4.19%
3.58%
2.86%
4.21%
3.59%
2.50%
3.92%
3.21%
2.33%
3.83%
3.15%
2.21%
3.69%
2.97%
2.59%
4.00%
3.32%
2.42%
3.90%
3.24%
2.68%
4.09%
3.46%
2.19%
3.34%
2.88%
2.19%
3.34%
2.88%
N/A
5.75%
4.28%
6.00%
4.55%
6.25%
4.53%
N/A
N/A
N/A
4.50%
5.00%
5.00%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
The assumed health care cost trend rates as of December 31, 2020 and 2019 were as foll
ff
ows:
Health care cost trend rate assumed forff
Rate to which the cost trend rate was assumed to decline (the ultimate
trend rate)
Year that the rate reaches the ultimate trend rate
next year
Post-Retirement
Medical Plan
2020
2019
5.4 %
4.5 %
2038
5.7 %
4.5 %
2038
F- 79
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The table below presents the fair values of the assets of the Company’s Qualified Plan as of December 31, 2020
and 2019 by level of fair value hierarchy. Assets categorized in Level 2 of the hierarchy consist of collective
trusts and are measured at fair value based on the closing net asset value (“NAV”) as determined by the fund
on a pay-
manager and reported daily. As noted above
as-you-go basis and has no assets.
, the Company’s post-retirement medical plan is funded
a
ff
(in millions)
Equities:
Domestic equities
Developed international equities
Global low volatility equities
Emerging market equities
Fixed-income
Real Estate
Cash and cash equivalents
Total
Fair Value Measurements Using
NAV as Practical Expedient
(Level 2)
December 31,
2020
2019
$
$
64.4
38.2
22.5
20.7
95.7
13.3
1.0
255.8
$
$
47.8
29.5
16.9
14.9
74.9
8.3
5.1
197.4
The Company’s investment strategy for its Qualified Plan is to achieve a reasonablea
n assets that
supports the plan’s interest credit rating, subject to a moderate level of portfolio risk that provides liquidity.
Consistent with these financial objectives as of December 31, 2020, the plan’s target allocations for plan assets
are 54% invested in equity securities, 40% fixed income investments and 6% in real estate. Equity securities
include international stocks and a blend of U.S. growth and value stocks of various sizes of capitalization. Fixed
income securities include bonds and notes issued by the U.S. government and its agencies, corporate bonds, and
mortgage-backed securities. The aggregate asset allocation is reviewed on an annual basis.
returt n or
The overall expected long-term rate of returnt
view of long-term expectations and asset mix.
on plan assets for the Qualified Plan is based on the Company’s
F- 80
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. REVENUES
Adoption of ASC 606, “Revenue from Contracts with Customers”
Effective January 1, 2018, the Company adopted ASC 606. The Company adopted ASC 606 using the modified
retrospective method, which has been appli
ed for the years ended December 31, 2020, 2019 and 2018. The
Company did not record a cumulative effect adjustment upon initially applying ASC 606 as there was not a
significant impact upon
adoption; however, the details of significant qualitative and quantitative disclosure
changes upon implem menting ASC 606 are detailed below.
u
a
Revenue Recognition
Revenues are recognized when control of the promised goods or services is transferred to our customers, in an
amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
As described in “Note 22 - Segment Information”, the Company’s business consists of the Refining Segment
and Logistics Segment. The following tablea
provides information relating to the Company’s revenues for each
product or group of similar products or services by segment for the periods presented.
(in millions)
Refining Segment:
Gasoline and distillates
Feedstocks and other
Asphalt and blackoils
Chemicals
Lubricants
Total Revenues
Logistics Segment:
Logistics
Total revenue prior to eliminations
Elimination of intercompany revenue
Total Revenues
Year Ended December 31,
2019
2018
2020
$
12,799.4
$
21,278.4
$
23,032.6
935.5
777.9
351.5
180.7
806.9
1,426.4
682.3
274.9
1,372.3
1,592.9
842.8
321.5
15,045.0
$
24,468.9
$
27,162.1
360.3
15,405.3
(289.4)
15,115.9
$
$
340.2
24,809.1
(300.9)
24,508.2
$
$
283.4
27,445.5
(259.4)
27,186.1
$
$
$
ity of the Company’s revenues are generated from the sale of refined petroleum products reported in
The majora
the Refining segment. 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 our 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 Refining segment
also has contracts which contain fixeff
tures with makeup periods,
or other facff
tors that have not materially been affected by the Company’s adoption of ASC 606.
d pricing, tiered pricing, minimum volume feaff
The Company’s Logistics segment revenues are generated by charging fees forff
crude oil and refined products
terminaling, storage and pipeline services based on the greater of contractual minimum volume commitments,
as applicablea
l volumes based on contractual rates applied to throughput or storage
volumes. A majority of the Company’s logistics revenues are generated by intercompany transactions and are
eliminated in consolidation.
, or the delivery orr
f actuat
F- 81
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred Revenues
The Company records deferred revenues when cash payments are received or are due in advance of
performance, including amounts which are refundable. Deferred revenue was $47.2 million and $20.1 million as
of December 31, 2020 and December 31, 2019, 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.
Significant Judgment and Practical Expedients
For performance obligations related to sales of products, the Company has determined that customers are able to
direct the use of, and obtain substantially all of the benefits from, the products at the point in time that the
products are delivered. The Company has determined that the transfer of control upon delivery to the customer’s
requested destination accurately depicts the transfer of goods. Upon the deliveryrr of the products and transfer of
control, the Company generally has the present right to payment and the customers bear the risks and rewards of
ownership of the products. The Company has elected the practical expedient to not disclose the value of
unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii)
contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for
services performed.
F- 82
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21. INCOME TAXES
ff
PBF Energy is required to file fede
ral and applicable state corporate income tax returns and recognizes income
taxes on its pre-tax income, which to-date has consisted primarily of its share of PBF LLC’s pre-tax income (see
“Note 16 - Stockholders’ and Members’ Equity Structure”
). PBF LLC is organized as a limited liability
company and PBFX is an MLP, both of which are treated as “flow-through” entities for federal income tax
purposes and therefore are not subject to income taxes apart from the income tax attributablea
to the two
subsidiaries acquired in connection with the acquisition of Chalmette Refining and PBF Holding’s wholly-
owned Canadian subsidiary, PBF Energy Limited, that are treated as C-Corporations for income tax purposes.
t
Valuation Allowance
positive and negative evidence to estimate whether sufficient future taxable
Management assesses the availablea
income will be generated to permit use of existing deferred tax assets. Negative evidence evaluated as part of
this assessment included PBF Energy’s cumulative loss incurred over the three-year period ended December 31,
2020. Such objective evidence limits PBF Energy’s ability to consider other subjective evidence, such as PBF
Energy’s projections for future taxable income as market conditions, commodity prices and demand for refined
petroleum products normalize.
On the basis of this evaluation, as of December 31, 2020, a valuation allowance of $358.4 million has been
recorded to recognize only the portion of deferred tax assets that are more likely than not to be realized. The
d tax assets considered realizable, however, could be adjusted if estimates of future taxable
amount of the deferre
income are reduced or increased or if objective negative evidence in the formff
of cumulative losses is no longer
present and additional weight is given to subjective evidence such as PBF Energy’s projections for future
taxable income.
ff
The income tax provision in the PBF Energy Consolidated Statements of Operations consists of the following:
(in millions)
Current expense (benefit):
Federal
Foreign
State
r
Total current
Deferred expense (benefit):
Federal
Foreign
State
Total deferred
Total provision for income taxes
Year Ended
December 31,
2020
Year Ended
December 31,
2019
Year Ended
December 31,
2018
$
$
(1.7)
—
2.2
0.5
(6.6)
5.4
2.8
1.6
2.1
$
$
0.2
0.1
0.3
0.6
91.8
(8.7)
20.6
103.7
104.3
$
$
0.8
—
—
0.8
18.7
7.2
6.8
32.7
33.5
F- 83
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The difference between PBF Energy’s effective income tax rate and the United States statutory
reconciled below:
t
rate is
Provision at Federal statutory rate
Increase (decrease) attributable to flowff
of certain tax adjustments:
-through
State income taxes (net of federal income
tax)
Nondeductible/nontaxable items
Rate differential fromff
foreign jurisdictions
adjustment
Provision to returnt
Adjustment to deferred tax assets and
liabilities for change in tax rates
Stock-based compensation
Deferred tax asset valuation allowance
Other
Effective tax rate
Year Ended
December 31,
2020
Year Ended
December 31,
2019
Year Ended
December 31,
2018
21.0 %
21.0 %
21.0 %
5.6 %
(0.1)%
— %
(0.1)%
0.1 %
— %
(25.8)%
(0.9)%
(0.2)%
3.9 %
0.1 %
(0.2) %
(0.1) %
(0.5) %
0.1 %
— %
0.3 %
24.6 %
5.0 %
1.0 %
0.9 %
(4.0)%
— %
(2.6)%
— %
(0.6)%
20.7 %
PBF Energy’s effective income tax rate forff
impact of income attributablea
respectively, was (0.2)%, 21.8% and 16.0%, respectively.
the years ended December 31, 2020, 2019 and 2018, including the
to noncontrolling interests of $59.1 million, $55.8 million and $47.0 million,
For the year ended December 31, 2020 PBF Energy’s effective tax rate was affff ecff
ted by the valuation allowance
described above. For the year ended December 31, 2019, PBF Energy’s effective tax rate was materially
consistent with its statutory federal and state tax rates. For the year ended December 31, 2018, the main drivers
of PBF Energy’s reduced effective tax rate related to the treatment of stock-based compensation excess tax
benefits under recently adopted ASU No. 2017-09, “Compensation—Stock Compensation”, and the provision
to return adjustmd
to the state business mix apportionment.
ents primarily attributablea
For financial reporting purposes,
stockholders includes the following components:
income (loss) before income taxes attributablea
to PBF Energy Inc.
(in millions)
United States income (loss)
Foreign income (loss)
Year Ended
December 31,
2020
Year Ended
December 31,
2019
Year Ended
December 31,
2018
$
(1,413.0) $
450.0
$
22.7
(26.3)
134.3
27.5
Total income (loss) before income taxes attributablea
Energy Inc. stockholders
to PBF
$
(1,390.3) $
423.7
$
161.8
F- 84
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the components of PBF Energy’s deferred tax assets and deferred tax liabila
following:
ities consists of the
(in millions)
Deferred tax assets
Purchase interest step-up
Inventory
Pension, employee benefits and compensation
Hedging
Net operating loss carry forwards
Environmental liabila
Lease liabilities
Interest expense limitation carry forwards
Other
ities
Total deferred tax assets
Valuation allowances
Total deferred tax assets, net
Deferred tax liabila
ities
Property, plant and equipment
Right of use assets
Other
Total deferred tax liabila
ities
Net deferred tax liabila
ities
December 31, 2020
December 31, 2019
$
$
155.2
146.5
48.5
4.3
566.9
100.8
223.4
55.8
28.4
1,329.8
(358.4)
971.4
845.1
223.4
2.5
1,071.0
$
(99.6) $
278.1
10.5
60.3
3.3
136.3
33.6
83.4
31.5
29.2
666.2
—
666.2
678.1
83.6
1.4
763.1
(96.9)
rds of
ff
As of December 31, 2020, PBF Energy has federal and state income tax net operating loss carry f
$2,313.0 million and $102.6 million, respectively. The portion of the federal net operating loss carry forward
that was generated in years prior to 2018 expires in varying amounts through 2037. A fede
ral net operating loss
of $1,764.2 million from 2019 and 2020 has an indefinite carry f
rd period and can be used to offset 80% of
ff
taxable income in future years. The state net operating loss carry forwards expire at various dates from 2029
through 2040 with certain jurisdictions having indefinite net operating loss carry forwards periods. The
Company has recorded valuation allowances against these assets, as it is deemed “more likely than not” that the
deferred tax assets will not be realized.
orwa
orwa
rr
ff
rr
The reported income tax (benefit) expense in the PBF LLC Consolidated Statements of Operations consists of
the following:
(in millions)
Current income tax (benefit) expense
Deferred income tax expense (benefit)
Total income tax expense (benefit)
Year Ended
December 31,
2020
Year Ended
December 31,
2019
Year Ended
December 31,
2018
$
$
(1.2)
7.3
6.1
$
$
0.5
(8.8)
(8.3)
$
$
0.8
7.2
8.0
F- 85
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income tax years that remain subject to examination by material jurisdictions, where an examination has not
already concluded are all years including and subsequent to:
United States
Federal
New Jersey
Michigan
Delaware
Indiana
Pennsylvania
New York
Louisiana
California
The Company does not have any unrecognized tax benefits.
2017
2015
2016
2017
2017
2017
2017
2017
2016
F- 86
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22. SEGMENT INFORMATION
The Company’s operations are organized into two reportable segments, Refining and Logistics. Operations that
are not included in the Refining and Logistics segments are included in Corporate. Intersegment transactions are
eliminated in the Consolidated Financial Statements and are included in Eliminations.
Refie ning
The Company’s Refining segment includes the operations of its six refineries, including certain related logistics
assets that are not owned by PBFX. The Company’s refineries are located in Delaware City,t Delaware,
Paulsboro, New Jersey, Toledo, Ohio, Chalmette, Louisiana, Torrance, California and Martinez, California. The
refineries produce unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other
petroleum products in the United States. The Company purchases crude oil, other feedstocks and blending
components from various third-party suppliers. The Company sells 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 is able to ship products to other international destinations.
Logistics
The Company’s Logistics segment is comprised of PBFX, a publicly-traded MLP, formed to own or lease,
operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and
similar logistics assets. PBFX’s assets primarily consist of rail and truck terminals and unloading racks, tank
farms and pipelines that were acquired from or contributed by PBF LLC and are located at, or nearby, the
Company’s refineries. PBFX provides various rail,
truck and marine terminaling services, pipeline
transportation services and storage services to PBF Holding and/or its subsidiaries and third-party customers
through fee-based commercial agreements. PBFX currently does not generate significant third-party revenues
and intersegment related-party revenues are eliminated in consolidation. From a PBF Energy and PBF LLC
perspective, the Company’s chief operating decision maker evaluates the Logistics segment as a whole without
regard to any of PBFX’s individual operating segments.
ff
e of its segments based primarily on income from operations. Income
The Company evaluates the performanc
from operations includes those revenues and expenses that are directly attributablea
to management of the
respective segment. The Logistics segment’s revenues include intersegment transactions with the Company’s
Refining segment at prices the Company believes are substantially equivalent to the prices that could have been
negotiated with unaffiliated parties with respect to similar services. Activities of the Company’s business that
are not included in the two operating segments are included in Corporate. Such activities consist primarily of
corporate staff operations and other items that are not specific to the normal operations of the two operating
segments. The Company does not allocate non-operating income and expense items, including income taxes, to
the individual segments. The Refining segment’s operating subsidiaries and PBFX are primarily pass-through
entities with respect to income taxes.
Total assets of each segment consist of property, plant and equipment, inventories, cash and cash equivalents,
accounts receivables and other assets directly associated with the segment’s operations. Corporate assets consist
primarily of non-operating property, plant and equipment and other assets not directly related to the Company’s
refinery and logistics operations.
Disclosures regarding the Company’s reportable segments with reconciliations to consolidated totals for the
years ended December 31, 2020, 2019 and 2018 are presented below. In connection with certain contributions
by PBF LLC to PBFX, the accompanying segment information is retrospectively adjusted to include the
historical results of those assets in the Logistics segment for all periods presented prior to such contributions, as
applicable.
F- 87
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2020
PBF Energy (in millions)
Revenues
Depreciation and amortization expense
Income (loss) from operations
Interest expense, net
Capital expenditures (1)
Refining
Logistics
Corporate
Eliminations
Consolidated Total
$
15,045.0
$
360.3
$
— $
(289.4) $
498.0
(1,450.4)
1.7
1,546.6
53.7
195.3
47.9
12.3
11.3
(161.7)
208.6
10.7
—
—
—
—
15,115.9
563.0
(1,416.8)
258.2
1,569.6
Year Ended December 31, 2019
Revenues
Depreciation and amortization expense
Income (loss) from operations (2) (3)
Interest expense, net
Capital expenditures
Refining
Logistics
Corporate
Eliminations
Consolidated Total
$
24,468.9
$
340.2
$
— $
(300.9) $
24,508.2
386.7
767.9
1.3
708.9
38.6
159.3
51.1
31.7
10.8
(270.3)
107.2
8.3
—
(7.9)
—
—
436.1
649.0
159.6
748.9
Year Ended December 31, 2018
Revenues
Depreciation and amortization expense
Income (loss) from operations (3)
Interest expense, net
Capital expenditures (4)
Refining
Logistics
Corporate
Eliminations
Consolidated Total
$
27,162.1
$
283.4
$
— $
(259.4) $
27,186.1
329.3
498.2
7.6
552.0
29.8
143.9
43.0
175.7
10.6
(266.2)
119.3
6.2
—
(17.8)
—
—
369.7
358.1
169.9
733.9
Total assets
$
9,565.0
$
933.6
$
54.4
$
(53.2) $
10,499.8
Refining
Logistics
Corporate
Eliminations
Consolidated Total
Balance at December 31, 2020
Total assets (2)
Refining
Logistics
Corporate
Eliminations
Consolidated Total
$
8,154.8
$
973.0
$
52.7
$
(48.1) $
9,132.4
Balance at December 31, 2019
Year Ended December 31, 2020
PBF LLC (in millions)
Revenues
Depreciation and amortization expense
Income (loss) from operations
Interest expense, net
Capital expenditures (1)
Refining
Logistics
Corporate
Eliminations
Consolidated Total
$
15,045.0
$
360.3
$
— $
(289.4) $
498.0
(1,450.4)
1.7
1,546.6
53.7
195.3
47.9
12.3
11.3
(160.9)
218.9
10.7
—
—
—
—
15,115.9
563.0
(1,416.0)
268.5
1,569.6
Year Ended December 31, 2019
Revenues
Depreciation and amortization expense
Income (loss) from operations (2) (3)
Interest expense, net
Capital expenditures
Refining
Logistics
Corporate
Eliminations
Consolidated Total
$
24,468.9
$
340.2
$
— $
(300.9) $
24,508.2
386.7
767.9
1.3
708.9
38.6
159.3
51.1
31.7
10.8
(268.6)
116.7
8.3
—
(7.9)
—
—
436.1
650.7
169.1
748.9
F- 88
PBF ENERGY INC. ANDAA
LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PBF ENERGY COMPANYAA
Year Ended December 31, 2018
Revenues
Depreciation and amortization expense
Income (loss) from operations (3)
Interest expense, net
Capital expenditures (4)
Refining
Logistics
Corporate
Eliminations
Consolidated Total
$
27,162.1
$
283.4
$
— $
(259.4) $
27,186.1
329.3
498.2
7.6
552.0
29.8
143.9
43.0
175.7
10.6
(264.4)
127.9
6.2
—
(17.8)
—
—
369.7
359.9
178.5
733.9
Total assets
$
9,565.0
$
933.6
$
52.3
$
(53.2) $
10,497.7
Refining
Logistics
Corporate
Eliminations
Consolidated Total
Balance at December 31, 2020
Total assets (2)
Refining
Logistics
Corporate
Eliminations
Consolidated Total
$
8,154.8
$
973.0
$
49.4
$
(48.1) $
9,129.1
Balance at December 31, 2019
(1)
(2)
(3)
(4)
The Refining segment includes capital expenditures of $1,176.2 million for the acquisition of the Martinez
refinery in the first quarter of 2020.
On April 24, 2019, PBFX entered into the TVPC Contribution Agreement, pursuant to which PBF LLC
contributed to PBFX all of the issued and outstanding limited liability company interests of TVP Holding.
Prior to the TVPC Acquisition, TVP Holding owned a 50% membership interest in TVPC. Subsequent to the
closing of the TVPC Acquisition on May 31, 2019, PBFX owns 100% of the membership interests in TVPC.
Prior to the TVPC Contribution Agreement, the Logistics segment included 100% of the income from
operations of TVPC, as TVPC was consolidated by PBFX. PBFX recorded net income attributable to
noncontrolling interest for the 50% equity interest in TVPC held by PBF Holding. PBF Holding (included in
the Refining segment) recorded equity income in investee related to its 50% noncontrolling ownership interest
in TVPC. For purposes of the Company’s Consolidated Financial Statements, PBF Holding’s equity income in
investee and PBFX’s net income attributable to noncontrolling interest eliminate in consolidation.
The Logistics segment includes capital expenditures of $58.4 million for the PBFX acquisition of the
Knoxville Terminals on April 16, 2018 and $75.0 million for the PBFX acquisition of the East Coast Storage
Assets on October 1, 2018.
F- 89
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
23. NET INCOME PER SHARE OF PBF ENERGY
The following tablea
common stock attributable to PBF Energy for the periods presented:
sets forth the computation of basic and diluted net income per share of PBF Energy Class A
(in millions, except share and per share amounts)
Basic Earnings Per Share:
Allocation of earnings:
Net income (loss) attributable to PBF Energy Inc.
stockholders
Less: Income allocated to participating securities
Income (loss) availablea
stockholders - basic
to PBF Energy Inc.
Denominator for basic net income (loss) per PBF
Energy Class A common share-weighted average
shares
Basic net income (loss) attributablea
to PBF Energy
per Class A common share
$
$
$
Year Ended December 31,
2019
2018
2020
(1,392.4) $
0.1
$
319.4
0.5
(1,392.5) $
318.9
$
128.3
0.7
127.6
119,617,998
119,887,646
115,190,262
(11.64) $
2.66
$
1.11
Diluted Earnings Per Share:
Numerator:
Income (loss) availablea
stockholders - basic
to PBF Energy Inc.
Plus: Net income (loss) attributable to
noncontrolling interest (1)
Less: Income tax benefit (expense) on net income
(loss) attributablea
to noncontrolling interest (1)
Numerator for diluted net income (loss) per Class A
common share - net income (loss) attributable to
PBF Energy Inc. stockholders (1)
Denominator (1):
Denominator for basic net income (loss) per PBF
Energy Class A common share-weighted average
shares
Effect of dilutive securities:
Conversion of PBF LLC Series A Units
Common stock equivalents (2)
Denominator for diluted net income (loss) per PBF
Energy Class A common share-adjusted weighted
average shares
Diluted net income (loss) attributablea
to PBF Energy
Inc. stockholders per Class A common share
$
(1,392.5) $
318.9
$
127.6
(17.1)
4.6
4.3
(1.0)
4.6
(1.2)
$
(1,405.0) $
322.2
$
131.0
119,617,998
119,887,646
115,190,262
1,042,667
—
1,207,581
758,072
1,938,089
1,645,255
120,660,665
121,853,299
118,773,606
$
(11.64) $
2.64
$
1.10
F- 90
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
——————————
(1)
The diluted earnings per share calculation generally assumes the conversion of all outstanding PBF
LLC Series A Units to PBF Energy Class A common stock. The net income (loss) attributablea
to
PBF Energy, used in the numerator of the diluted earnings per share calculation is adjusted to
reflect the net income (loss), as well as the corresponding income tax expense (benefit) (based on a
26.6%, 24.9% and 26.0% annualized statutory corporate tax rate for the years ended December 31,
2020, 2019 and 2018) attributable to the converted units.
(2)
Represents an adjustment
to weighted-average diluted shares outstanding to assume the full
exchange of common stock equivalents, including options and warrants for PBF LLC Series A
Units and PSUs and options for shares of PBF Energy Class A common stock as calculated under
the treasury stock method (to the extent the impact of such exchange would not be anti-dilutive).
Common stock equivalents exclude the effects of performance share units and options and warrants
to purchase 14,446,894, 6,765,526 and 1,293,242 shares of PBF Energy Class A common stock and
PBF LLC Series A units because they are anti-dilutive for the years ended December 31, 2020,
2019 and 2018, respectively. For periods showing a net loss, all common stock equivalents and
unvested restricted stock are considered anti-dilutive.
F- 91
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
24. FAIR VALUE MEASUREMENTS
The tablea
s 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 December 31, 2020 and 2019.
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
tablea
s below. The Company has posted cash margin with various counterparties to support hedging and trading
activities. The cash margin posted is required by counterparties as collateral deposits and cannot be offset
against the fair value of open contracts except in the event of default. The Company has no derivative contracts
that are subject to master netting arrangements that are reflected gross on the Consolidated Balance Sheets.
As of December 31, 2020
Fair Value Hierarchy
Level 1
Level 2
Level 3
Total
Gross Fair
Value
Effect of
Counter-
party
Netting
Net
Carrying
Value on
Balance
Sheet
(in millions)
Assets:
Money market funds
$
411.6
$
— $
— $
411.6
N/A $
411.6
Liabilities:
Commodity contracts
Derivatives included with
inventory intermediation
agreement obligations
Commodity contracts
Catalyst obligations
Contingent consideration
obligation
2.5
—
2.3
—
—
3.5
11.3
6.7
102.5
—
—
—
—
—
12.1
6.0
(6.0)
—
11.3
—
11.3
9.0
102.5
12.1
(6.0)
—
—
3.0
102.5
12.1
As of December 31, 2019
Fair Value Hierarchy
Level 1
Level 2
Level 3
Total
Gross Fair
Value
Effect of
Counter-
party
Netting
Net
Carrying
Value on
Balance
Sheet
$
111.8
$
— $
— $
32.5
32.8
—
—
—
1.5
1.0
47.6
1.3
—
—
—
—
—
26.1
111.8
34.0
33.8
47.6
1.3
26.1
N/A $
111.8
(33.8)
(33.8)
—
—
—
0.2
—
47.6
1.3
26.1
(in millions)
Assets:
Money market funds
Commodity contracts
Liabilities:
Commodity contracts
Catalyst obligations
Derivatives included with
inventory intermediation
agreement obligations
Contingent consideration
obligation
F- 92
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO 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.
The derivatives included with inventory intermediation agreement obligations and the catalyst
obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a
market approach based upon commodity prices forff
similar instruments quoted in active markets.
a
ontracts that relate to forec
• When applicable, commodity contracts categorized in Level 3 of the fair value hierarchy consist of
asted purchases of crude oil for which quoted
ff
to market illiquidity. The forward prices used to
are derived using broker quotes, prices from other third party sources and other
commodity price swap c
forward market prices are not readily available dued
value these swapsa
available market based data.
The contingent consideration obligation at December 31, 2020 is categorized in Level 3 of the fair
value hierarchy and is estimated using discounted cash flow models based on management’s estimate
of the future cash flows related to the earn-out periods.
•
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 December 31, 2020 and 2019, $21.2 million and
$10.3 million, respectively, were included within Deferred charges and other assets, net for these non-qualified
pension plan assets.
t
The tablea
hierarchy, which primarily includes the change in estimated future
Contingent Consideration and the PBFX Contingent Consideration:
below summarizes the changes in fair value measurements categorized in Level 3 of the fair value
earnings related to both the Martinez
ff
(in millions)
Balance at beginning of period
Additions
Accretion on discounted liabia lities
Settlements
Unrealized gain included in earnings
Balance at end of period
$
$
Year Ended December 31,
2020
2019
26.1 $
77.3
3.8
(3.0)
(92.1)
12.1 $
21.6
—
1.9
—
2.6
26.1
There were no transfers between levels during the years ended December 31, 2020 and 2019, respectively.
F- 93
PBF ENERGY INC. ANDAA
PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair value of debt
The tablea
below summarizes the fair value and carrying value of debt as of December 31, 2020 and 2019.
(in millions)
2025 Senior Secured Notes (a)
2028 Senior Notes (a)
2025 Senior Notes (a)
2023 Senior Notes (a) (b)
PBFX 2023 Senior Notes (a)
Revolving Credit Facility (c)
PBFX Revolving Credit Facility (c)
PBF Rail Term Loan (c)
Catalyst financing arrangements (d)
Less - Current debt
Less - Unamortized deferred financing
costs
Long-term debt
_________________________
December 31, 2020
December 31, 2019
Carryingy g
value
Fair
value
Carryingy g
value
Fair
value
$
$
1,250.6
1,000.0
725.0
—
526.6
900.0
200.0
7.4
102.5
4,712.1
(7.4)
(51.1)
$
1,232.9
562.5
475.3
—
503.0
900.0
200.0
7.4
102.5
3,983.6
(7.4)
— $
—
725.0
500.0
527.2
—
283.0
14.5
47.6
2,097.3
—
—
—
776.5
519.7
543.0
—
283.0
14.5
47.6
2,184.3
—
n/a
(32.4)
n/a
$
4,653.6
$
3,976.2
$
2,064.9
$
2,184.3
(a) The estimated faiff
future expected payments utilizing implied current market
outstanding senior notes.
r value, categorized as a Level 2 measurement, was calculated based on the present value of
interest rates based on quoted prices of the
(b) As disclosed in “Note 10 - Credit Facilities and Debt”, the 2023 Senior Notes were redeemed in full
February 14, 2020.
ff
on
(c) The estimated fair value approximates carrying value, categorized as a Level 2 measurement, as these
borrowings bear interest based upon short-term floating market interest rates.
(d) Catalyst financing arrangements are valued using a market approach based upon commodity prices for
similar instruments quoted in active markets and are categorized as a Level 2 measurement. The Company has
elected the fair value option for accounting for its catalyst repurchase obligations as the Company’s liability is
directly impacted by the change in fair value of the underlying catalyst.
F- 94
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
25. DERIVATIVES
The Company uses derivative instruments to mitigate certain exposures to commodity price risk. The Company
entered into the Inventory Intermediation Agreements that contain purchase obligations for certain volumes of
crude oil, intermediates and refined products. The purchase obligations related to crude oil, intermediates and
refined products under these agreements are derivative instruments that have been 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 is based on market prices of the underlying crude oil, intermediates and refined
products. The level of activity for these derivatives is based on the level of operating inventories.
As of December 31, 2020, there were no barrels of crude oil and feedstocks (27,580 barrels at December 31,
2019) outstanding under these derivative instruments designated as fair value hedges. As of December 31, 2020,
there were 2,604,736 barrels of intermediates and refined products (3,430,635 barrels at December 31, 2019)
outstanding under these derivative instruments designated as fair value hedges. These volumes represent the
notional value of the contract.
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, feedff
stock, 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 December 31, 2020, there
were 7,183,000 barrels of crude oil and 2,810,000 barrels of refined products (5,511,000 and 5,788,000,
respectively, as of December 31, 2019), 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 tablea
the fair values of these derivative instruments as of
December 31, 2020 and December 31, 2019 and the line items in the Consolidated Balance Sheets in which the
fair values are reflected.
s provide information about
Description
Derivatives designated as hedging instruments:
December 31, 2020:
Derivatives included with the inventory intermediation agreement
obligations
December 31, 2019:
Derivatives included with the inventory intermediation agreement
obligations
Derivatives not designated as hedging instruments:
December 31, 2020:
Commodity contracts
December 31, 2019:
Commodity contracts
Balance Sheet
Location
Fair Value
Asset/
(Liability)
(in millions)
Accrued expenses
$
11.3
Accrued expenses
$
(1.3)
Accounts receivable $
Accounts receivable $
(3.0)
0.2
F- 95
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
llo iwingg t bablle
hThe f lolff
ognizeded in income on these derivative
instruments and the line items in the Consolidated Statements of Operations in which such gains and losses are
reflected.
provide is informatiion babout hthe gaigains or llosses recogniz
id
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 year ended December 31, 2020:
Derivatives included with the inventory intermediation agreement obligations Cost of products and other $
For the year ended December 31, 2019:
Derivatives included with the inventory intermediation agreement obligations Cost of products and other $
For the year ended December 31, 2018:
Derivatives included with the inventory intermediation agreement obligations Cost of products and other $
Derivatives not designated as hedging instruments:
For the year ended December 31, 2020:
Commodity contracts
For the year ended December 31, 2019:
Commodity contracts
For the year ended December 31, 2018:
Commodity contracts
Hedged items designated in fair value hedges:
For the year ended December 31, 2020:
Crude oil, intermediate and refined product inventory
For the year ended December 31, 2019:
Intermediate and refined product inventory
For the year ended December 31, 2018:
Intermediate and refined product inventory
12.6
(25.4)
31.8
44.4
36.5
Cost of products and other $
Cost of products and other $
Cost of products and other $
(123.8)
Cost of products and other $
(12.6)
Cost of products and other $
25.4
Cost of products and other $
(31.8)
The Company had no ineffectiveness related to the fair value hedges as of December 31, 2020, 2019 and 2018.
F- 96
PBF ENERGY INC. AND PBF ENERGY COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
26. SUBSEQUENT EVENTS
PBFX Distributions
tt
On February 11, 2021, the Board of Directors of PBF GP announced a distribution of $0.30 per unit on
outstanding common units of PBFX. The distribution is payablea
on March 17, 2021 to PBFX unitholders of
record as of February 25, 2021.
F- 97
ITEM 16. FORM 10-K SUMMARY
Not applicablea
.
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
PBF ENERGY INC.
(Registrant)
By:
/s/ Thomas J. Nimbley
(Thomas J. Nimbley)
Chief Executive OfficO er
(Principal Executive Officer)
PBF ENERGY COMPANY LLC
(Registrant)
By:
/s/ Thomas J. Nimbley
(Thomas J. Nimbley)
Chief Executive OfficO er
(Principal Executive Officer)
Date: February 18, 2021
Date: February 18, 2021
POWER OF ATTORNEY
Each of the officers and directors of PBF Energy Inc., whose signature appears below, in so signing, also makes,
constitutes and appoints each of Erik Young, Matthew Lucey and Trecia Canty, and each of them, his true and lawful
attorneys-in-fact, with full power and substitution, for him in any and all capacities, to execute and cause to be filed with the
SEC any and all amendments to this Annual Report on Form 10-K, with exhibits thereto and other documents connected
therewith and to perform any acts necessary to be done in order to file such documents, and hereby ratifies and confirms all
that said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Thomas J. Nimbley
Chief Executive Officer and Chairman of the Board
February 18, 2021
(Thomas J. Nimbley)
of Directors (Principal Executive Officer)
/s/ Erik Young
(Erik Young)
/s/ John Barone
(John Barone)
/s/ Spencer Abraham
(Spencer Abraham)
/s/ Wayne A. Budd
(Wayne A. Budd)
/s/ Karen B. Davis
(Karen B. Davis)
/s/ Gene Edwards
(Gene Edwards)
/s/ William Hantke
(William Hantke)
/s/ Robert J. Lavinia
(Robert J. Lavinia)
/s/ Kimberly S. Lubel
(Kimberly S. Lubel)
/s/ George E. Ogden
(George E.Ogden)
Senior Vice President, Chief Financial Officer
February 1rr
8, 2021
(Principal Financial Officer)
Chief Accounting Officer
February 18, 2021
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
February 18, 2021
POWER OF ATTORNEY
Each of the officers of PBF Energy Company LLC, whose signature appears below, in so signing, also makes,
constitutes and appoints each of Erik Young, Matthew Lucey and Trecia Canty, and each of them, his true and lawful
attorneys-in-fact, with full power and substitution, for him in any and all capacities, to execute and cause to be filed with the
SEC any and all amendments to this Annual Report on Form 10-K, with exhibits thereto and other documents connected
therewith and to perform any acts necessary to be done in order to file such documents, and hereby ratifies and confirms all
that said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Thomas J. Nimbley
(Thomas J. Nimbley)
/s/ Erik Young
(Erik Young)
/s/ John Barone
(John Barone)
Managing Member:
PBF Energy Inc.
/s/ Trecia Canty
(Trecia Canty)
Chief Executive Officer
February 18, 2021
(Principal Executive Officer)
Senior Vice President, Chief Financial Officer
February 1rr
8, 2021
(Principal Financial Officer)
Chief Accounting Officer
February 18, 2021
(Principal Accounting Officer)
Senior Vice President, General Counsel & Corporate
February 1rr
8, 2021
Secretary
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