PBF Energy Inc.

webcast. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following management's prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that 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, Savannah. Good morning and welcome to today's call. With me today are Matt Lucey, our President and CEO, Karen Davis, our CFO, and several other members of our management team. Copies of today's earnings release and our 10-Q filing, including supplemental information, are 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. Statements in our press release and those made on this call that express the company's or management's expectations or predictions of the future forward-looking statements intended to be covered by the state PARVA 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, which are further described in today's press release. Also included in today's press release is further guidance information related to our expectations for third quarter 2024 throughput. For any questions on these items or follow-up questions, please contact Investor Relations after today's call. For reconciliations of any non-GAAP measures mentioned on today's call, please refer to the supplemental tables provided in the press release. I'll now turn the call over to Matt Lucey.

Thank you, Colin. Good morning, everyone, and thank you for joining the call. As we mentioned in our press release, While earnings for the quarter were a disappointment, we were able to maintain our strong cash position coming out of the quarter. As backdrop, second quarter market conditions represented a bit of a break from typical seasonal patterns, with rent-adjusted crack spreads declining almost $10 a barrel from the beginning of the quarter to the end. We also saw tightening crude diffs, and headwinds on the coproduct side. Earlier in the quarter, we completed maintenance in the East Coast and MidCon. However, each of these efforts extended past our original plans, primarily to increase scope, which was discovered during the turnarounds. Unfortunately, the extended work overlapped with the highest product margin periods early in the quarter. Additionally, we performed a planned turnaround of the Martinez hydrocracker from early May through the end of the quarter. A consequence of our extended turnaround activity on the East Coast and the Mid-Con was a decrease in the high-value product yield and inventory builds during the early part of the quarter. This resulted in decreased realized margins for the quarter as the feedstock builds were subsequently consumed as operations improved and products were sold into the weaker market. Again, despite the disappointing earnings, we were able to maintain our strong cash position through the quarter by reducing the elevated working capital position to normalized levels by the end of the quarter. We are pleased that all this is behind us. Our assets are running well today. Looking ahead, We have completed the majority of our planned maintenance for the year, and our last turnaround is expected to commence in the fall at Chalmette. Safe, reliable operations of all our assets remains our primary focus. Building on that foundation, we continue to prioritize capital allocation toward the opportunities that promote the greatest long-term shareholder value. We continue to demonstrate our commitment to return cash to shareholders with approximately $100 million of share repurchases in the second quarter. In addition, our board of directors approved the payment of our quarterly dividend of $0.25 per share. Longer term, we remain constructive on the global refining market. Global capacity, including the new additions, and refined product demand remain tightly balanced. In the immediate term, demand looks okay, nothing spectacular nor terrible. But importantly, we are seeing utilization across the sector come off its highs, and as a result, both crude differentials and cracks are now improving. With that, I'll turn it over to Karen.

Thanks, Matt, and good morning. For the second quarter, we reported an adjusted net loss of $0.54 per share, and adjusted EBITDA of $94.8 million. As Matt stated, our results did not meet our expectations. We estimate the impact of the extended turnaround activity to be in the $150 million range, with approximately $100 million of the lost opportunity associated with operations and $50 million related to the sale of inventory bills into the weaker late quarter cash markets. Earnings per share included a two cents per share impact related to an increase in our effective tax rate to approximately 28%, primarily due to the tax deduction for employee compensation related to stock options exercise during the quarter. We expect our effective tax rate to return to the normalized range of 24 to 26%. Also included in our results is a $10 million loss related to PBF's equity investment in St. Bernard Renewables. This is after adding back our share of SBR's lower of cost or market adjustment. Standalone EBITDA for SBR, net of the LCM adjustment, was a loss of approximately $3 million for the quarter. SBR produced an average of 16,500 barrels per day of renewable diesel in the second quarter. In the third quarter, production is expected to be approximately 12,500 barrels per day, which reflects a planned catalyst change which began in late July and will be completed in late August. Cash flow from operations for the quarter was approximately 425 million, including a working capital benefit of approximately 300 million, primarily related to the normalization of our hydrocarbon net payable position following our turnaround activities during the first and second quarters. Consolidated capex for the second quarter was approximately $333 million, which includes refining, corporate, and logistics. Full-year 2024 capex is likely to be near the top end of our previously provided guidance range, or approximately $850 million. Through share repurchases and our dividend, we continue to demonstrate our commitment to shareholder returns by delivering approximately $130 million to shareholders in the second quarter. Since our repurchase program was introduced in December of 2022 through the end of the second quarter, we have completed approximately $914 million in share repurchases. This represents over 16% of our outstanding shares at the beginning of the program. we've reduced our total share count to approximately 117 million shares as of June 30th. We ended the quarter with approximately $1.4 billion in cash and approximately $1.3 billion of debt. Also of note, the final payment of the Martinez earn-out of $18.8 million was made during the quarter. Maintaining our firm financial footing and strong balance sheet remain priorities. To the extent our operations generate cash beyond the needs of the business and the requirements to continuously invest in our assets, a greater percentage of that cash should be available for shareholder return. Sustainable dividends and share repurchases are important components of our overall long-term capital allocation and shareholder return objectives. As always, we will look at all opportunities to allocate capital through the lens that directs cash to the option that generates the greatest long-term value for our shareholders. Operator, we've completed our opening remarks, and we'd be pleased to take questions.

Thank you. And if you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And we do ask that you please limit yourself to one question and one follow-up. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And one moment while we poll for questions. And our first question will come from Roger Reed with Wells Fargo. Please go ahead.

Thank you. Good morning. Good morning. Yes, let's come back on the share repo performance pretty impressive to date. Your comments about, you know, potentially an increasing percentage of cash that will be available. What's the right way for us to think about CapEx? Let's say the 850 that you indicated for this year is kind of the right number going forward. And any other obligations you may have, you know, because we know over time you've had sort of the environmental issues. as well as CAPEX and SBR build out, et cetera?

Yeah, I think the CAPEX number, you know, they're all the bits and bobs year to year, but the CAPEX numbers that you cited is probably right. And I don't see any other pulls on cash that are extraordinary or above and beyond. And then we intend to generate significant amount of cash. from earnings and after paying CapEx interest and taxes. And we're going to allocate that in the most shareholder friendly way we can. Obviously, we're developing projects and we're committed to return cash to shareholders.

And then the dividend is part of that framework. Should we think of that as fairly steady here or something you'd want to grow over time?

Well, we grew it this past year. We reinstated it two years ago in the fall. And so what we've said is we'll look at the dividend more on an annual basis. And so it's at 25 cents today. We think it's a good dividend, and we'll take a look at it, like I said, on an annual basis.

Okay. Those are my questions. Thank you. Thanks, Roger.

Our next question will come from Ryan Todd with Piper Sandler. Please go ahead.

Sorry. Thanks. Maybe starting out, can you talk a little bit about what you're seeing on the West Coast?

The second quarter was particularly volatile. We've seen the impact of imports and how they're impacting the market over there. What have you been seeing over there on the West Coast, and how do you think about the outlook going forward over the second half of the year?

Yeah, I think there's some unique aspects in the second quarter, and you're right, it got particularly weak. I'd say the best driver of that was significant weakness in Asia. You had high utilization rates in Pad 5 for the refineries that are still there. But it drew a lot of imports. I think if someone were to go back and look at those imports that came in, I'm not sure they ended up working out in terms of generating positive returns unto themselves. So there may be a bit more caution you have. About a month's transit time and you're buying crude a couple months in advance of that. There's no way to hedge the basis differentials going into that trade. So it's a difficult trade to make. But your product's short and you need to draw imports. A particularly weak Asian market will lower the bar for that. What we've seen is that as Asian markets have strengthened, utilization has come off to some degree there. And so there's a higher bar and so we don't see the same imports coming in sort of on a forward basis that we saw on a on a look back over the second quarter. But to be clear, the West Coast is going to have to. Incent those those imports and and so, but it will be a function of what the West Coast market is and what the local markets that, you know, we're drawing those imports from. And so I do think the West Coast was negatively impacted by a particularly weak Asian market in the second quarter. Paul, would you add anything?

No, I think you said it perfectly.

Thanks. And maybe maybe one follow up on the other earlier question and comments. I mean, I think, Karen, I think you previously said that you wanted to maintain a cash balance around one to one and a half billion dollars. you're now within that range as we, I mean, depending on how the, how the macro environment proceeds over the next few quarters, you know, you've been willing to lean into that cash balance a little bit to, um, help support the buyback up to this point is will you continue to do that? Or, um, I guess, how should we expect you to is one to one and a half still the right, the right level to think about the cash balance that you want to maintain?

Well, as you said, that is our our stated range and we've been remaining at the top end of that range, so there is there is room for us to comfortably go lower and still be there.

OK. Great, thank you.

And our next question will come from Neil Meadow with Golden Saks. Please go ahead.

Yes, thank you so much. I just want to touch back on maintenance. And Matt, as you said, it was a choppier quarter. Do you spend a little bit more time talking about lessons learned from this? And as you go forward to future periods of maintenance, what do you take forward so we get more of a steadier operation?

Great question and a real driver. And look, we were three weeks late, just over three weeks late in Delaware City. That cat had a real long run to it, which was great, but we had some discovery work in that when we were in the turnaround. Toledo was a couple weeks late. There was some increased scope, but there was also a bit of decreased productivity there, which is, I think, going to be an industry problem, and the industry is trying to address that when you build in, when you bring in the craftsmen, the building and trades, and... The experience level has declined a bit since COVID, certainly. But these are challenges. This is what we get paid for. We must deliver our turnarounds on time. And if you don't, nothing good happens. You lose margin, you increase your capital, you increase your expenses, and you lose barrels. That is a very, very bad combination of four factors. So it's completely unforgiving and unacceptable not be able to deliver our projects on time. We take great pride in the expertise we have in-house. We are myopically focused on executing our next turnaround show mat as we design it. And that will be commencing in the fall. I'm more than pleased Mike Bukowski has joined us and is now He's no longer the new guy. He's putting his imprint on the organization. Mike, would you add any specific comments in regards to focus around turnarounds?

Sure. So, Matt, you said it well. Our turnaround performance currently is not where it's been in the past, and it didn't meet our expectations, and it hasn't met our expectations that we have for going forward. The key thing for us, when you look at Delaware City, for example, that was a situation where it was discovery work. The unit wasn't talking to us. There was no indication that there was a problem, but certainly when we got in there, we had to make adjustments to our scope to make sure that we had a safe, reliable run. We are refocusing the organization on our turnaround best practices. It's not rocket science. The industry has learned how to do turnarounds well. It's just reinforcing those expectations. It's leadership and accountability out in the field.

The important thing is we did the right thing. We fixed the equipment as it should be fixed, and we expect to get a good run out of the equipment. So while displeased with the extended period, I have no doubt that the turnaround, which can only be judged by the time of our next turnaround, should be a good run.

Yeah, thank you for that, Collin, and very clear. The follow-up is you talked a little bit about the West Coast, but I'd be curious on your perspective on Pad 1. Do you view the market as still a structurally short market? We've had so much capacity that's been retired out of Pad 1 here over the last couple of years, and you are seeing screen cracks. New York Harbor sustained at a decent premium relative to the rest of the country. So your perspective on East Coast margins would be great.

I don't think anything's changed, quite honestly. If someone pays attention to the board cracks every day, I think the shortness of pad one is demonstrated with, generally speaking, the highest crack, certainly when compared to the Gulf Coast and MidCon. The MidCon's higher today because of some unplanned downtime that others are having. But I think over time, The structural shift in what's happened in Pad 1 is bearing out. Crude diffs certainly impact our business. And over the quarter, if there was one overriding theme over this quarter was crude was tight, utilization was very high, and so you were able to build some product inventory. And so as the quarter developed, that was a negative. The good news is we think we're through the trough of that. Uralization is coming down sort of across the sector, as I said, for a host of reasons. Look, in the summertime, we're going to lose some uralization. There's been some unplanned downtime, which can be expected. The U.S. sector running at 95% was not going to hold. We've seen some economic run cuts outside the country, and then we're heading into we're heading into turnaround season. So I think we may be entering a period where it's the exact opposite, where crude will be loosening and products will be tightening.

Thank you, Matt.

Our next question will come from Doug Leggett with Wolf Research. Please go ahead.

Hey guys, Matt, thanks for all your comments this morning. I've got two, one housekeeping for Karen and one strategic question, I guess, for you. So you brought back, I seem to recall, I think you brought back part of the Poulsbury unit into that tightness you were talking about in the East Coast. And I'm curious, there's been a lot of chatter about run cuts here recently. Where are you guys positioned across the portfolio, but on Poulsbury specifically? Will it continue to run in this environment? And my follow up is kind of wonder if you could just clarify the working capital moving quarter piece.

Yeah, in regards to I'm real, we don't comment necessarily on specific units per se, and I think there may have been some fake news that you're referring to with Paulsboro, but Paulsboro is certainly running today. We have an EMP team at each of the refineries where we optimize all of our assets on a daily basis to maximize our business in each local market in which we operate.

Karen? And with respect to working capital, it was a benefit of $300 million in the quarter. And that related almost entirely to our hydrocarbon net payable position returning to a more normalized level. Our turnaround activities in the first quarter and part of the second quarter had tightened that considerably. And that's what created the working capital headwind that we saw in the first quarter. And during our first quarter call, we said that we expected that that would turn around as we exited our turnaround activities. And, in fact, it did.

Okay, guys, that was it for me. Thanks so much.

Our next question will come from Manav Gupta with UBS. Please go ahead.

Good morning, guys. I just wanted to understand your outlook on the global heavy light differentials. They are narrow now, but looks like OPEC could add some volumes into year end, and then we are seeing some widening on the Canadian side, even with a lot of Canadian turnaround. So as those volumes ramp up in Canada, Like, what's your outlook for heavy light, both on the Gulf Coast as well as the Canadian heavies?

Thanks, Manav. It's Tom. I mean, I'd almost sort of say we agree with what you've stated. I mean, you know, I guess the JMCC met today or met and previously has given their guidance or no guidance at this point in terms of they would need to speak out in opposition to the return of product of crude in the fourth quarter. So... The runway looks open for that, and that certainly seems to be the expectation. I think at that point it's sort of comments that Matt made earlier in terms of, you know, we're sort of at the peak of sort of input to CDU globally. You know, in the seasonal aspect of Q3. And then come the fourth quarter with, you know, plan maintenance. And then also the reintroduction just seasonally right productions higher in the fourth quarter and then the third quarter, particularly, you know, in Western Canada. and then continued growth of what we're seeing across in different aspects, whether it's in the U.S. or whether it's in non-OPEC, that there's just generally going to be a fair bit of crude available for refiners to consume. And that's our base case assumption looking forward into the fourth and first quarters.

Perfect. My follow-up is a little bit on Ryan's question. The regulatory environment in California is pretty harsh. And I'm not specifically talking about your assets, but if they continue down that path, are there more refinery closures coming in the state of California? And then there's this whole thought process that maybe the government doesn't even want refineries there. They just want imported gasoline. Any thoughts on that thing?

A couple things. Look, California is a funny place in that They often complain about gasoline prices being too high, but at the same time, it's a regulatory environment that constricts supply. And so you have two conflicting issues there. And it is a very difficult regulatory environment to operate in. And is it possible that there could be of more refinery closures into the future? I would say yes. Now, can California sustain itself simply on imports? They simply don't have the infrastructure in place to do it. And wishing that everyone is going to snap their finger and not travel by internal combustion engine or not want to fly in planes or not deliver goods and services throughout the state through trucks, and other things is simply wishful thinking. The reality is PBF and the products we produce, as well as the other refiners in the state and across the country, we fuel the quality of life, meaning we provide an energy product that is affordable, reliable, deliverable, and rateable, which are incredibly important components. And simply wishing it away goes against the economic cost and the impact to people's lives every day. So there is the sort of the wishful thinking and the reality of the world and as we exist and the quality of life we all enjoy. So in regards to just eliminating all refineries and importing, there's no way that the infrastructure could support such a such an endeavor, and that would have dramatic impacts on people's lives in California.

Thank you so much.

Our next question will come from Matthew Blair with TPH. Please go ahead.

Thank you, and good morning. On the refining side, Matt, you mentioned some headwinds on coproducts in the second quarter. Are there any numbers you can share in terms of of the impact on your capture for Q2? And could you also talk about how co-products are trending so far in the third quarter?

I'll turn that over to Paul.

Look, on the second quarter with all the work we had, we had just a myriad of LVPs or low value products that we built. And then we had to dispose of those. And so that absolutely is a factor in your capture rate. But across the system, Paul, asphalt, materially lower than it had been. Asphalt's been impacted by a tremendous amount of imports from what we see from Canada and Colombia. So the asphalt market's changed dramatically in the second quarter and going into the third quarter. On the flip side of that, lubricants market's been quite impressive in the second quarter going into the third quarter.

So lubes have been strong, asphalt's been weak, and LPGs have been weak. That's how I'd describe it. In regards to exclusively side and capture rates, we're not going to get into that prescriptive detail.

Okay. Sounds good. And then on the renewable diesel side, I think the loss worsened a little bit in the third quarter. Did your carbs pathways come through in the second quarter? And I guess, you know, do you expect that to be a tailwind moving forward? And overall, can you just talk about your outlook for renewable diesel in the back half of the year?

Sure. So we're in the midst of a catalyst change right now, so that will impact throughputs. There's no doubt the market's been soft, softer than our expectation. I would bring you back to one of the main pieces of why we got into this business as an obligated party. We get the ancillary benefit of the RINs that are manufactured there. And so when we take a sort of stock on the business, I would say a couple of things. We've been operating for, well, let me back up before we get into operations. We've run a partner in E&I. I can say only good things about that partnership. It's constructed in a way where the alignment of interests are well aligned and both parties are getting benefits from each other, us being a local manufacturer and with local expertise in these markets for E&I and E&I having a number of these plants in Europe, as well as providing full access into the European markets. And both companies are aligned in the way in which we think about the business. There's no doubt the market itself has been disappointing over the last year, just when you isolate RD specifically. Again, for PBF, we do get the benefit of manufacturing the RINs and contributing to the RIN supply driving down the overall price of RINs. And as an obligated party, we get that benefit. We're doing, as I said, we've been in business for about a year, just a little over a year. And I'm actually pleased where the business is lining out in terms of our ability to operate the plant, our ability to source feedstocks and dispose of the products that we're manufacturing. So certainly there were some lessons learned, but I think in terms of operating the business and getting the best economic outcome from it, even though we're We're new to it. I've been pleased with that. And then in regards to the outlook going forward, we did not get into this specifically for the year 2024. It is a fledgling market. Markets are developing. And I think markets will continue to develop. I have no doubt over the long term, medium to long term, putting aside the short term, that the global markets will compensate those manufacturing renewable diesel, i.e., that the cost of the carbon will incentivize the manufacturing of renewable diesel, specifically for the renewable diesel manufacturers that are advantaged. And we feel like we have that with our location, our cost of natural gas, our location to feed stocks, our ability to distribute products. And so looking ahead, we're still constructive. It will be interesting to see how the market develops as those that are considering converting to sustainable aviation fuel and those that remain in renewable diesel. Indeed, we will and we are evaluating that as is a number of the other players. And so it's early days, but I have no doubt, like I say, in the medium to long term, is going to be very constructive having our foot in the renewable diesel business.

Sounds good. Thanks for your comments.

Our next question will come from Paul Chang with Scotiabank. Please go ahead.

Thank you. Good morning, Chang. The first question I think is for May and Matt. When you're looking at all your refinery around the nation, when you put them compared to the industry, whether they are in the second quartile or that third quartile, and you're also saying that you're going to say, we look at the turnaround process and trying to do a better job. So we assume over the next several years, your cathetics and turnaround calls and also that the scheduling may end up to be longer than usual in order for you to fix perhaps some of the deficits in the plants. That's the first question.

All right. So in regards to our refineries and where they fall, I think if someone's going to step back and do that analysis, they must break down You can't put all the refineries in the country and break them down in quartile. You have to put them in the markets in which they operate. And, you know, the East Coast, as we talked about before, is structurally short and has gotten substantially more structurally short over the last number of years. And so our assets within the pad, I think, line up. very, very well, quite frankly. It's the only refining capacity on the East Coast that has the complexity that we do to be able to process any crudes in the world. You go out to the West Coast, again, these plants do not compete with the lowest cost provider in the Gulf Coast, but the lowest cost provider in the Gulf Coast has impediment to get their products into these markets. Obviously, Colonial is full, and the islandized market that is California has unique blends. Our assets on the West Coast, I believe, are top quartile assets, and I think we'll be able to demonstrate that over time. Our differentiating factor at Chalmette is obviously having a renewable diesel business there. But broadly speaking, we as a company are more bullish our coastal refining kit going into this next cycle than the previous cycle. So I think over time, having access to waterborne crudes and having access to heavy and sour grades of crude um will will be more advantaged uh than it was the previous cycle previous cycle call it from 10 to 19. um and then toledo toledo's been a horse for us since the day we bought it indeed today is our most profitable refinery the refinery has always been able to distinguish itself while it doesn't have it doesn't run heavy and sour grades it has other attributes with a very high high value product make and the total value products or total yield. We got more products than we put in crude and feedstocks at Toledo, which is a big advantage. Mike, do you want to talk about turnarounds?

I think the question centered around our turnaround improvement initiative and how that will impact schedules going forward and what that will do in capital costs The main thing that we're seeing here, there's no lack of maintenance on our units. It's a question of efficiency, and that's what it boils down to. A capital efficiency in terms of how much we spend per turnaround, so it's another way of how much work we're getting for the dollar we spend, and also the LPO minimization by optimizing the schedule. So looking forward, as we work to do this, whether we're a second quartile, third quartile, I'm looking at a turnaround where we're two weeks late and just talked about before, I don't need a benchmarking study to tell me that we're not where we need to be. But that being said, the drive would be to focus on the things, get the same scope we're doing now, get it done cheaper, and also doing in the timeframe that we allotted and driving that towards a more efficient milestone. So I wouldn't expect us to have turnaround durations that are planned longer because we're really driving poor efficiency. And then in terms of what that does to capital budgets, our expectation is that we'll be more efficient on turnarounds, which could free up that capital for reinvestment and return opportunities or however we want to allocate that capital, how Matt wants to allocate that.

All right. Thank you. The same question that with the TM8 that's up and running, I think they're literally going to the West Coast for about a quarter now. Matt, how would that, if any, that impact on the way that how you run your West Coast operation? How much of additional Canadian heavy oil that you may be taking in in your system and how that impact in terms of your yield or your OPEX cost? Thank you.

So I would answer it this way, Paul. We're currently about 25,000 barrels a day taking off of TMX. So that is directionally positive. It's displacing other crews, which puts back pressure on those crews, obviously. And by the end of the year, I would expect we'll double that yet again. So, you know, by the time we get to early 25, I expect we'll be up to 50,000 barrels a day. Again, very directionally positive. And so as we buy, and other refiners, we're not a big buyer of ANS, but other refiners are in the state. As they buy the Canadian grades and back out ANS, that should put some pressure on ANS, which will raise the bar, quite frankly, for imports coming in because California product market is an ANS market. And so it is all directionally positive from my perspective.

Does it impact your yield?

Does it impact our yield? Not in a substantial way. Every grade of crude is going to impact yield to a certain extent, but we run our LPs to maximize not only the cost of crude, but our yield. So from your perspective, out looking in, I don't think you should expect any change in yield.

All right. Thank you.

Our next question will come from Joe Leach with Morgan Stanley. Please go ahead.

Hey, good morning. I'd like to take my questions. I wanted to ask one on the demand side. I know you talked a bit about it in the opening remarks, but would you mind just giving us an update of what you're seeing in your system across gasoline, diesel, and jet? And then also we saw the May EIA data for gasoline demand get revised higher. So any thoughts on the weekly data versus the monthlies would be helpful as well. Thank you.

Yeah, I mean, that's the theme, right? And it has been for some time that demand, you almost have to wait a couple months to see what it is. It's a bit disappointing. that we've gotten ourselves in this Duke loop from the DOEs, but it is what it is. From our system, like I said, I say it's okay. We haven't seen any degradation on our racks, but it's nothing extraordinary. I do expect demand to pick up. Indeed, you know, I think there's some green shoots in regards to what demand looks like. So I wouldn't be surprised if the second half of the year was better than the first half of the year. I described the first half of the year as okay, as meh, you know, sort of blah, blah. But we'll see where it goes from here. But we haven't seen it. We look at our racks every single day. And like I said, it looks okay. What I'd like to see is some growth, not only in this country, But the rest of the world, and we've been in sort of a stagnant market for some time, so I would expect growth to pick up a bit. Paul, any other comments?

No, I mean, from a RAC standpoint, we're actually up year over year on our RACs. In particular, gasoline on the West Coast is double digits higher than it was for us last year. That's the PBF system. That doesn't necessarily correlate to national numbers, but From our vantage point, our demands have been pretty steady if not climbing year over year.

Thanks. It's helpful. And then I just wanted to ask a quick question or a quick follow-up on RG. So there's a catalyst change going on currently, and there's another one in fourth quarter, if I remember right. Should we expect one to two catalyst changes per year going forward, or is that just related to the startup?

There's now one in the fourth quarter.

Oh, sorry. I just meant the fourth quarter of 23.

Oh, before a quarter of last year.

Yes. Yeah, yeah, yeah, yeah. Yeah, hi, this is Jim. So, yeah, the catalyst changes. There's a guard catalyst that gets changed out generally about on an annual basis, and the isomeric catalyst gets changed out generally on a two-year cycle.

Thank you.

And our final question will come from Jason Gableman with TD Cowan. Please go ahead.

yeah hey thanks uh morning i may miss this earlier but i just wanted to ask specifically on the east coast margin in 2q it looked uh pretty weak and i was wondering what specifically was going on there if there were any one-time items that are potentially going to reverse in 3q just any color you could provide around that thanks i'm sorry jason were you referring to the benchmark crack No, the East Coast realized the margin.

Yeah, the big thing again, you got to go back to our East Coast, you know, to the Dell City turnaround, which ran 23 days late. And that compounded itself as they always do and always will. To the extent you have extended down period as we did talk a little bit before. But if you correct for that. We would have exceeded expectations. And so it is as simple as simple as that.

OK, do you have a can? Can you quantify the loss profit opportunity?

Well, we did. I mean across the system. we quantified it as $100 million from that extended period at Dell City and Toledo primarily. That was over two-thirds of it, and Dell City was the majority of that two-thirds. And then there was an incremental $50 million, which was paying from going from a stronger market tool into a weaker market. If we were lucky, the market would have gone the other way and we would have benefited from that, but sort of the random walk of prices that went against us. So in the quarter for corporate standpoint, you have about $100 million of LPOs primarily driven by extended turnarounds and about $50 million from a weakening market, by the way, which as I mentioned in my remarks, is counterintuitive. You would have thought that the, you know, traditionally Q2 gets stronger as you go as opposed to weaker, but such is life.

All right, great. Thanks for those answers.

And we have reached the end of the question and answer session. I will now like to turn the call over to Matt Lucie for closing remarks.

Thank you very much for your time and attention today and your continued attention going forward. We look forward to speaking to you next quarter. Have a great day.

And this concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.