A month has gone by since the last earnings report for PBF Energy (NYSE:PBF). Shares have added about 27% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PBF Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PBF Energy Q1 Earnings Miss Estimates
PBF Energy reported first-quarter 2020 loss of $1.19 a share, wider than the Zacks Consensus Estimate of a loss of $1.09 and the year-ago quarter’s loss of $1.18.
Total revenues increased to $5,277.5 million from $5,216.2 million in the prior-year quarter. Moreover, the top line beat the Zacks Consensus Estimate of $4,898 million.
The weak quarterly earnings can be attributed to huge loss at the Refining business, and higher costs and expenses. A decline in realized refining margin per barrel of throughput in the West Coast and Mid-Continent affected profits. This was partially offset by higher crude oil and feedstock throughput volumes, as well as increased refining margin per barrel in the Gulf and East Coasts.
Segmental Performance
Operating loss at the Refining segment was $1,386.4 million against a profit of $389.5 million a year ago.
The company generated a profit of $47.7 million from the Logistics segment, which reflects an improvement from the prior-year quarter’s $34.2 million.
Throughput Analysis
Volumes:
In the quarter under review, crude oil and feedstocks throughput volumes were 852.9 thousand barrels per day (bpd), higher than the year-ago figure of 743.1 thousand bpd.
The East Coast, Mid-Continent, Gulf Coast and West Coast regions accounted for 38.5%, 10.6%, 20.5% and 30.4%, respectively, of the total oil and feedstock throughput volume.
Margins:
Company-wide gross refining margin per barrel of throughput — excluding special items — was recorded at $6.60, higher than the year-earlier quarter’s $6.38.
Refining margin per barrel of throughput was $6.92 in the East Coast, up from $3.35 in the year-earlier quarter. Realized refining margin was $8.07 per barrel in the Gulf Coast, up from $3.33 in the prior-year quarter. However, the metric was $7.09 per barrel in the West Coast, down from $10.76 a year ago. Also, the metric was $1.16 a barrel in the Mid-Continent, much lower than $12.28 a year ago.
Refinery operating expense per barrel of throughput was $6.54, lower than $6.78 in the year-ago quarter.
Costs & Expenses
Total costs and expenses in the reported quarter were $6,644.3 million, significantly higher than $4,851.6 million in the year-ago period. Cost of sales — which includes operating expenses, cost of products and others — amounted to $6,611.7 million, higher than the year-ago level of $4,791.2 million. General and administrative expenses rose to $82.5 million from $57.6 million in the year-ago period.
Capital Expenditure & Balance Sheet
Through the first quarter, the company spent $1,304.1 million capital on refining operations and $6.1 million on logistics businesses.
At the end of the quarter, it had cash and cash equivalents of $722.1 million, down from the fourth-quarter level of $814.9 million. As of Mar 31, it had a total debt of $3,546.1 million, up from the fourth quarter’s $2,064.9 million. This resulted in total debt to capitalization of 59%.
Guidance
Coronavirus-induced lockdowns and travel bans have destroyed demand for energy. As such, the company reduced crude oil processing in refineries starting from March-end through early April. It has idled several units in different refineries as a temporary measure to navigate through the current market uncertainties. Moreover, the refineries are currently running at minimum rates, resulting in a throughput reduction of around 30% from prior expectations.
Near-term throughput volumes will likely be in the range of 650,000-750,000 barrels. The company expects 2020 operating expenses to be down $140 million from the original budget. It expects capital expenditures to be down more than $350 million from its original 2020 guidance. The company has suspended quarterly dividend payout of 30 cents per share, which will likely lead to savings of around $35 million per quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -38.96% due to these changes.
VGM Scores
Currently, PBF Energy has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PBF Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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