PBF Nears Martinez Restart as Crude Tailwinds Boost Earnings

Date of Call: Feb 12, 2026

Financials Results

• EPS: $0.49 per share (adjusted net income, excluding special items)

Guidance:

• Expect to use periods of strength to focus on reducing gross and net debt.
• 2026 total capital guidance is higher than 2025 due to increased turnaround activity; savings and efficiencies will become evident over the system-wide turnaround cycle (5-7 years).

Business Commentary:

Refinery Restart and Market Outlook:

• PBF Energy is on the cusp of restarting the Martinez refinery, with all construction work to be completed by February 16, 2026, and expects full operations by early March.
• The market landscape for 2026 is described as very good, with refining fundamentals supported by tight refining balances and demand growth aligning well with transportation fuel capacity additions.

Crude Differentials and Financial Performance:

• Fourth quarter results showed a sequential improvement, benefiting from widening crude differentials, with heavy and medium crudes increasing light-heavy spreads.
• The company's exposure to improving crude dynamics resulted in strong fourth-quarter performance, with adjusted net income of $0.49 per share and adjusted EBITDA of $258 million.

Operational Efficiencies and Savings:

• PBF achieved $230 million in annualized run rate savings through the Refinery Business Improvement (RBI) initiative in 2025, with an additional $120 million identified for 2026, targeting a total of $350 million.
• These savings were driven by improvements in procurement practices, energy consumption reduction, and enhanced turnaround performance.

Insurance Recoveries and Financial Position:

• PBF received a $394 million gain on insurance recoveries related to the Martinez fire in 2025, with total recoveries reaching $894 million net of deductibles.
• The company ended the quarter with $528 million in cash and approximately $1.6 billion in net debt, maintaining a net debt to cap ratio of 28%, and plans to use periods of strength to reduce both gross and net debt.

Product Market Dynamics in California:

• With the Martinez refinery restart, PBF anticipates participating in a California market that is tighter on products and looser on crude, with significant import dependencies for gasoline and jet fuel.
• The competitive landscape has shifted with a competitor refinery shutdown, contributing to tighter product markets and favorable logistics constraints for PBF.

Sentiment Analysis:

Overall Tone: Positive

• Management stated: 'PBF exited 2025 on a strong trajectory' and 'the market landscape taking shape in 2026 is looking very good.' They highlighted strong crude differentials, a constructive refining market, $230 million in achieved efficiencies, and the imminent restart of the Martinez refinery, expressing optimism for 'very positive results in the quarters to come.'

Q&A:

• Question from Manav Gupta (UBS): Concerns about shipping above consumption and the impact of additional Venezuelan crude barrels on PBF's tailwinds.
  Response: Management emphasized PBF's high leverage to heavy/sour crude (55-60% of throughput), stating that every dollar of widening crude differentials equates to a $200 million improvement, and the lifting of Venezuelan sanctions provides an instantaneous supply boost.

• Question from Manav Gupta (UBS): What to watch for between February 16 and March 7 to ensure Martinez restarts on time.
  Response: Management expressed high confidence in the restart timeline, citing the team's top-quartile safety performance and the expectation to be fully operational by early March, with a very tight California product market and loose crude dynamics expected to be attractive.

• Question from Ryan Todd (Piper Sandler): Drivers of margin capture improvement in Q4 and potential for Crude Differentials to remain a tailwind in Q1 2026 and beyond.
  Response: Attributed the improvement primarily to widening crude differentials, which directly increase capture rates, with every dollar improvement equating to $200 million annually for the company.

• Question from Ryan Todd (Piper Sandler): Granularity on the $230 million run-rate savings from the RBI initiative and expected future improvements.
  Response: The $230 million includes $160 million in OpEx savings (driven by procurement and energy efficiency) and $70 million in reduced capital/turnaround costs. Future $120 million savings will likely come from energy efficiency and third-party spend, not capital.

• Question from Matt Amil (Goldman Sachs): Optimal net debt level and path to get there, given the balance sheet.
  Response: Near-term focus is on reducing net debt as leverage is low, especially entering a strong market cycle, with plans to blend debt repayment with returning cash to shareholders.

• Question from Matt Amil (Goldman Sachs): Thoughts on product market fundamentals, specifically gasoline vs. distillate spreads.
  Response: Sees constructive product fundamentals with tight refining balances; gasoline markets are tightening due to imports to California, while distillate inventories are moderating.

• Question from Doug Legate (Wolfe Research): Insurance proceeds payout timeline and quantification of lost opportunity costs from Martinez being offline.
  Response: Insurance proceeds are unallocated; property rebuild costs will be fully covered, and business interruption losses are being modeled against expected performance. The event is nearly behind them, and the insurance process is progressing better than average.

• Question from Doug Legate (Wolfe Research): Clarification on RIN liability and why it should not be considered equivalent to net debt.
  Response: RIN liability is a rolling, working-capital-like obligation that is neutral from a cash flow perspective as it is continually settled annually.

• Question from Philip Juneworth (BPO Capital Markets): Confidence in higher West Coast utilization after Q1 and the sustainability of wider crude differentials.
  Response: Expressed high confidence in West Coast utilization post-Martinez restart and Torrance turnaround. Sees the improvement in light-heavy crude differentials as structural due to increased Venezuelan and Canadian supply, not just seasonal.

• Question from Paul Chang (Scotia): 2026 OpEx outlook considering inflation, higher throughput, and RBI savings, and sensitivity to natural gas prices.
  Response: RBI savings are net of inflation and include a higher natural gas price assumption. A $1 increase in natural gas price equates to approximately a $100 million increase in costs.

• Question from Paul Chang (Scotia): Explanation for the significant sequential improvement in West Coast margin capture in Q4 vs. Q3.
  Response: Attributed the improvement to reliable operations, efficiency gains, and lower crude costs, not one-off benefits.

• Question from Jason Gibelman (D.A. Davidson): Turnaround schedule trends after 2026 and whether 2025/2026 represent a normalized cadence.
  Response: 2026 is an exceptionally heavy turnaround year (man-hours up 30%), but the cadence will normalize in future years, with 2024-2025 providing a better indicator.

• Question from Jason Gibelman (D.A. Davidson): Whether the cash flow split between operating and investing activities reflects insurance proceeds for business interruption vs. equipment repair.
  Response: The current accounting split is not indicative of the final allocation; the final determination will be made upon settling the insurance claim.

Contradiction Point 1

Insurance Proceeds Allocation

Contradiction on whether the split of insurance proceeds in financial statements indicates the final allocation between repair costs and business interruption.

Can you discuss the company's earnings results? - Jason Gibelman (D.A. Davidson)

2025Q4: The split of insurance proceeds between cash flow from operations and investing activities is an accounting convention and not indicative of the final allocation. - [Joe Marino](CFO)

Does the allocation of insurance proceeds between operating and investing cash flows reflect the division between business interruption and repair costs? - Ryan Todd (Piper Sandler & Co.)

2025Q3: The $250 million payment was received shortly after Q3... The company maintains a strong relationship with insurers and expects manageable recoveries for any remaining arrears. - [Matthew Lucey](CEO)

Contradiction Point 2

Crude Differential Widening Trend

Contradiction on whether the current widening in crude differentials is a structural shift or a temporary, seasonal phenomenon.

What are your expectations for the company's performance in the next quarter? - Philip Juneworth (BMO Capital Markets)

2025Q4: The recent improvement is structural, driven by the liberation of previously constrained crude supplies... creating a persistent, fundamental shift. - [Tom](Refinery Ops), [Matt Lucey](CEO)

Is the widening in crude differentials a structural shift or a seasonal effect? - Manav Gupta (UBS Investment Bank)

2025Q3: Crude markets have been constrained; OPEC’s recent supply shifts are now showing effects as demand peaks. The lag in OPEC’s policy shift... is sustaining differential widening. - [Matthew Lucey](CEO), [Thomas D. O'Malley](Consultant)

Contradiction Point 3

Martinez Refinery Restart Timeline

Inconsistent timeline for refinery restart creates uncertainty for operational planning.

What are the key takeaways from the earnings call? - Ryan Todd (Piper Sandler)

2025Q4: Construction will wrap up by February 16, followed by a methodical restart. A successful restart positions PBF to capitalize on this dynamic market, with a \"very, very good\" outlook. - [Matt Lucey](CEO)

What key factors should be monitored between now and the Martinez refinery's March restart to ensure a successful startup, and what are the long-term earnings implications? - Neil Singhvi Mehta (Goldman Sachs Group, Inc.)

2025Q2: The schedule has been pushed to late 2025 due to pressure on delivery timings... A permit to operate is expected imminently. The restart is targeted for end of 2025. - [Matthew C. Lucey](CEO)

Contradiction Point 4

Financial Impact of Wider Crude Differentials

Contradiction on whether the benefit from wider differentials is a direct, quantifiable tailwind or a market-specific advantage.

What were your earnings for the quarter? - Manav Gupta (UBS Financial)

2025Q4: Every dollar improvement in crude differentials translates to a $200 million benefit. - [Matt Lucey](CEO)

How will the widening of crude differentials from increased Venezuelan barrels impact PBF's performance? - Manav Gupta (UBS)

2025Q1: Positive OPEC+ news is expected to widen crude differentials. While some headwinds exist... PBF is a major beneficiary of this potential change. - [Michael Bukowski](SVP, Head of Refining)

Contradiction Point 5

Characterization of the RIN Liability

Contradiction on whether the RIN obligation is a significant, debt-like liability or a cash-neutral, working capital item.

What are your thoughts on the recent earnings report? - Doug Legate (Wolfe Research)

2025Q4: The RIN obligation is a... liability that is settled annually. Any cash outflow for one period is offset by ongoing accruals from operations, making it essentially cash-neutral over time. - [Joe Marino](CFO)

Why isn't RIN liability considered equivalent to net debt, especially with rising RIN costs? - Roger Read (Wells Fargo)

2025Q1: The market is unstable... This links D6 RINs to D4 and could lead to another 'RIN wall,' potentially increasing gasoline prices and threatening refinery margins. - [Matt Lucey](CEO)