Understanding PBF’s 4Q15 Earnings by Segment
PBF Energy's 4Q15 Earnings Beat Estimates, But What's the Outlook?
PBF’s Refining segment
PBF Energy (PBF) noted a fall in its gross refining margin by $3.6 per barrel over 4Q14 to $8.8 per barrel in 4Q15. This was partly offset by a fall in operating costs by $0.7 per barrel in 4Q15 over 4Q14. Still, the company’s net refining margin fell by $2.9 per barrel over 4Q14 to $4.2 per barrel in 4Q15. In 4Q15, PBF’s throughput rose, however, from 38 million barrels in 4Q14 to 58 million barrels in 4Q15, as it included two months of operations of the recently acquired Chalmette refinery.
Peer performance in 4Q15
PBF’s peers Valero Energy Corporation (VLO) and Tesoro Corporation (TSO) also witnessed declines in gross refining margins in 4Q15 over 4Q14. VLO and TSO saw their refining margins narrow by $0.3 and $3 per barrel over 4Q14 to $10.9 and $12.8 per barrel, respectively, in 4Q15.
However, Phillips 66 (PSX) noted a marginal rise of $0.1 per barrel over 4Q14 to $9.4 per barrel in 4Q15. For exposure to refining sector stocks, investors can consider the Vanguard Energy ETF (VDE), which has ~11% exposure to the sector.
Logistics segment
PBF’s Logistics segment reported a rise in operating income from $16 million in 4Q14 to $24 million in 4Q15. PBF plans to strengthen PBF Logistics (PBFX) by growing and acquiring new logistics assets. Also, drop-downs will likely provide further impetus to PBFX’s growth.
Yearly operating performance
On a yearly basis, PBF’s refining segment’s operating income rose from $283 million in 2014 to $441 million in 2015. This was on account of higher throughput, which stood at 188 million barrels in 2015 compared to 165 million barrels in 2014. However, this was partially offset by a fall in gross refining margin from $12.1 per barrel in 2014 to $10.3 per barrel in 2015. Notably, the Logistic segment’s operating income rose from $20 million in 2014 to $96 million in 2015.
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