PBF Energy Inc.

Good day everyone and welcome to the PBF Energy Second Quarter 2021 Earnings Conference Call and Webcast. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the management's prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir, you may begin.

Thank you, Laura. Good morning and welcome to today's call. With me today are Tom Nimley, our CEO, Matt Lucey, our President, Eric Young, our CFO, and several other members of our management team. A copy of today's earnings release, including supplemental information, is available on our website. Before getting started, I'd like to direct your attention to the safe harbor statement contained in today's press release. In summary, it outlines that statements contained in the press release and on this call which express the company's or management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions under federal securities laws. There are many factors that could cause actual results to differ from our expectations, including those we describe in our filings with the SEC. Consistent with our prior periods, we will discuss our results today, excluding special items. In today's press release, we described the non-cash special items included in our second quarter 2021 results. The cumulative impact of the special items increased net income by an after-tax benefit of approximately $200 million, or $1.65 per share. As noted in our press release, we'll use certain non-GAAP measures while describing PVF's operating performance and financial results. For reconciliations of non-GAAP measures to the appropriate GAAP figure, please refer to the supplemental tables provided in today's press release. I'll now turn the call over to Tom Nimley.

Tom Nimley Thanks, Colin. Good morning, everyone, and thank you for joining our call today. As we expected coming into this year, general market conditions are continuing to improve. Before providing comments on the market, I would like to address last week's decision by the Board of the Bay Area Air Quality Management District to implement stricter particulate emission standards related to fluid catalytic cracking units, or SCCs. The Board has set a numerical standard, and we have five years to meet it. Importantly, how we meet that standard is entirely up to us. They have not required us to install any specific technology, including a wet gas scrubber. As such, we will not have to incur the estimated $800 million that this project would conservatively have cost. What we are doing is progressing a project included in our capital plan for this year that will get us below a 0.02 emissions level, which is a long way towards the 0.01 level established by the recent rulemaking. After that project is complete, we will have time to test our emissions and identify possible changes that could potentially reduce emissions further. Last week's rulemaking was another step in an ongoing process. We anticipated the outcome. We expect that the rule or parts of the rule will likely face legal challenges in which the California Environmental Quality Act requires a mandatory mediation between all parties. We appreciate the support received from the building and trade unions, Western States Petroleum Association, and other business partners in our efforts to present alternatives that achieve the mutually desired goal of improving air quality while continuing to supply our products to one of the largest markets in our country. I want to reinforce the fact that we have many potential options and time to address the newly implemented standard. Five years, which as one analyst noted last week, is a lifetime in refining. Moving to the present, the refining market has improved somewhat as we expected over the course of 2021. The recovery continues. Inventories have fallen back within historical bands. Demand is improving. With gasoline and distillate at or above pre-pandemic levels, Jet demand has increased to 80 to 85 percent of pre-pandemic levels, up from 65 percent earlier in the year. Benchmark cracks have improved during the quarter, driven in part by rising gasoline demand, but the realized crack continues to be hindered by the high costs associated with RINs. We saw a softening of the gasoline market late in the quarter, which in part was driven by an increase in imports. More recently, we've seen an improvement in gasoline margins as European demand has improved and refinery issues in other regions have reduced transatlantic shipments. On the crude side, ongoing discussions and production limits by OPEC Plus have kept global crude prices elevated and the light heavy spreads narrow. There appear now to be an agreement in principle that will allow the expected OPEC Plus output increase to proceed through the rest of the year. and we believe this could help maintain overall prices and provide incentives for more production to come to market. With the incremental crude being predominantly heavier, higher sulfur crude, we expect to see some additional widening of the light heavy and sweet-sour spreads. Demand remains the key driver. Domestically, demand continues to gradually improve, and we see the next inflection point coming towards the end of the third quarter as the nation's students return to school, which will allow more parents to return to normal work routines. We expect, as this occurs going forward, we will also see increasing business travel, which should incrementally improve jet demand and margins. Internationally, the recovery has been less consistent, but we expect those regions to recover, which should set the stage for gradual but sustained growth in product demand globally. With that, I will now turn the call over to Matt.