PBF Energy Inc. (PBF) Earnings

Management highlights

### Macro Market Positioning - Ongoing conflicts in the Middle East and Eastern Europe have created major dislocations in global oil markets, trapping ~15 million barrels per day of crude and 5 million barrels per day of product, pushing global refining utilization down 10% year-over-year and drawing down product inventories globally - Over 5 million barrels per day of global refining capacity is offline, with a portion suffering physical damage that will take significant time to repair; crude markets are expected to normalize faster than product markets, which will take extended time to restock inventories, supporting elevated refining margins for the foreseeable future - PBF Energy is uniquely positioned to capitalize on this environment with its flexible crude slate, proximity to stable North American crude supply, and no expected crude availability issues; U.S. coastal markets (West Coast and East Coast) that PBF serves are structurally short refining capacity and depend on volatile imports, making them particularly exposed to current tight supply and supportive of strong margins ### Operational Updates - All refineries are currently operating well; the fire-affected units at the Martinez refinery were safely restarted in May 2026, returning to full product slate output; a planned hydrocracker turnaround at Martinez will begin in Q3 2026 and finish in October 2026 - An agreement was reached in July 2026 to repurchase two hydrogen plants servicing the Torrance refinery from Air Products; ownership will improve overall refinery reliability by allowing coordinated maintenance and operational management - A Q2 2026 loss of containment event at Chalmette took a pre-treater and reformer offline (repairs will complete in Q3 2026) with no material throughput impact; the scheduled Q4 2026 crude unit and coker turnaround at Chalmette was shifted to 2027 after evaluation - Unplanned FCC maintenance at Toledo in Q2 2026 reduced throughput, but allowed key maintenance that enabled shifting the planned Q4 2026 FCC turnaround to H1 2027; East Coast assets ran well in Q2, with a planned Paulsboro crude unit turnaround still scheduled for late fall 2026 ### Efficiency and Cost Improvement Initiatives - A circuit-wide energy efficiency program has delivered a 20% reduction in purchased natural gas per barrel (price-adjusted) relative to the 2024 baseline - Turnaround execution performance has improved markedly, with PBF moving up among industry leaders in turnaround delivery - The new strategic procurement organization is halfway through renegotiating/rebidding over 60 contracts, with expected annual cost savings of ~$60 million for goods and services - The multi-year RBI (Risk-Based Inspection) program is delivering sustained improvements to reliability, efficiency, and cost structure without compromising safe, environmentally responsible operations ### Financial and Capital Allocation Updates - Q2 2026 adjusted net income was $6.22 per share, with adjusted EBITDA of $1.24 billion; operating cash flow was $1.6 billion, including a $430 million working capital benefit from inventory normalization, ending the quarter at normalized inventory levels - Net debt was reduced by over 62% in Q2 to ~$855 million, with a net debt-to-cap ratio of 15%; the company ended Q2 with $894 million in cash, and expects to hold ~$1.5 billion in cash by the end of July 2026 - Total insurance recoveries for the Martinez fire now stand at $1.25 billion net of deductibles, with an expected additional similar-size payment to be finalized in H2 2026; most Martinez rebuild spending is complete - Capital allocation priority order is: 1) invest in the business for reliability and efficiency, 2) strengthen the balance sheet, 3) shareholder returns; the company prioritizes a strong balance sheet to navigate industry cycles and maintain strategic flexibility

Guidance

- Full year 2026 capital expenditure guidance was reduced by ~$75 million to $850 million at the midpoint, driven by the decision to shift scheduled 2026 turnarounds at Toledo and Chalmette to 2027 - Management expects that elevated refining margins will be sustained through an extended period, with full inventory normalization not expected until well into 2027 at the earliest - The Torrance hydrogen plant acquisition is expected to close in Q3 2026, subject to regulatory review and customary closing conditions - The remaining Martinez insurance claim is expected to be finalized in H2 2026, with one additional payment expected of a similar size to the prior $250 million payment

Segment performance

The company's core refining segment generated strong results in Q2 2026, driven by tight global product supply and firm demand, contributing adjusted EBITDA of $1.2 billion (96.8% of total company adjusted EBITDA of $1.24 billion). The renewable diesel segment (FDR via the SBR investment) generated $40 million of EBITDA (3.2% of total adjusted EBITDA), producing an average of 15,100 barrels per day of renewable diesel in the quarter. Production was in line with expectations, with reduced output during the quarter due to an April catalyst change that has already delivered improved performance and longer expected runtimes, with robust renewable diesel margins supported by high global distillate margins and elevated RINS pricing.

Risks & headwinds

- Ongoing geopolitical conflicts create continued crude and product market volatility, with uncertain timing of any future market normalization - U.S. hurricane season poses material potential risk to both crude and product supply and operations along the Gulf Coast - The current RFS (Renewable Fuel Standard) program still imposes ~$14 per barrel of cost on PBF, with structural risks of escalating costs to meet mandated volumes due to competing mandates in Europe, which could pressure margins - Extending turnaround intervals carries tradeoffs, including the risk of larger turnarounds when they are eventually executed, and is constrained by available industry manpower - Restarting idled or mothballed refining capacity faces high cost and long lead times, with uncertain long-term market outlook to justify investments - The Martinez refinery incident remains subject to ongoing agency investigations, with uncertain regulatory outcomes

Analyst Q&A

• Q: Given that over 5 million barrels of global refining capacity is offline and product inventories are depleted, will the mid-cycle floor for refining margins rise permanently, and how long will normalization take? /

  A: Management confirms the floor for refining margins has unquestionably risen as a result of the conflicts. Capacity damage, particularly in regions under attack, will take a very long time to repair. Inventory normalization is not expected even under normal economic conditions until well into 2027, with crude normalization taking weeks to months and product normalization taking months to quarters.

• Q: Once the company reaches a net cash balance sheet position, when will it return capital to shareholders via buybacks? /

  A: Management confirms current expectations that Q3 2026 margins will be stronger than Q2 2026, and the company is on track to reach a net cash balance sheet position it has never held before. The company declines to speculate on unearned cash flow, and remains focused on completing balance sheet strengthening before moving forward with incremental shareholder return plans.

• Q: Why doesn't the company hedge current elevated refining margins to lock in gains for shareholders? /

  A: Management notes that aggressive hedging three months prior to the call would have locked in lower margins and missed the subsequent significant rally, cutting off upside for investors. The company's core strategy is to deliver full exposure to refining crack margins to investors, while the risk management team does selectively hedge around the edges to protect downside when appropriate.

• Q: Could you describe current West Coast market dynamics and the status of regulatory investigations at Martinez? /

  A: California requires imports of roughly one-third of its gasoline demand, and the inherent cost of these imports supports a structurally higher margin for in-state refiners; temporary Jones Act waivers have eased near-term pricing but are expected to remain temporary. Domestic crude production into California has increased, and PBF's proprietary M-70 pipeline has expanded volumes to 90,000 barrels per day with remaining capacity, benefiting crude differentials for PBF. There are no new updates to report for ongoing agency investigations of the Martinez incident.