PBF Energy 2026年第三季度业绩电话会：EBITDA达23亿美元及削减债务

核心要点

• PBF Energy公布2026年第三季度调整后每股净收益为12.78美元， 调整后EBITDA约为23亿美元，这主要得益于成品油供应紧张、 需求稳健以及市场捕获率的提升。
• 经营活动产生的现金流量达到约19亿美元。PBF在该季度内将 净债务减少了12亿美元以上，今年迄今减少了20亿美元以上， 第三季度末拥有4.26亿美元的净现金。
• 炼油厂日均加工量约为92.4万桶。 随着Martinez和Paulsboro炼厂大修的完成，管理层指引第四季度 日加工量为92.5万–98.5万桶。
• 炼油业务改进计划在2026年计划中实现了超过2.3亿美元的 运行率成本改善。PBF预计到2026年底该数字将超过3.5亿美元。
• PBF维持其2026年资本支出指引为8.25亿–8.75亿美元（不包括 与Martinez重建相关的支出），并将季度股息提高了18%。
• 管理层预计，2026年的再融资和还债举措将在2027年 减少至少1.3亿美元的利息支出。

核心财务数据

业务与运营 表现

PBF的全系统日均加工量约为92.4万桶，符合其季度指引。Martinez加氢裂化装置和Paulsboro原油装置的大修于9月开始，并在10月按计划完成，且符合预算和行业基准目标。管理层表示，公司在2026年剩余时间内拥有顺畅的运营前景。

公司完成了对服务于Torrance炼油厂的两座氢气厂的收购。管理层预计，运营、维护和大修计划的更紧密整合将提高炼油厂的利用率和可靠性。该交易不会改变整体现金流，但将其会计分类从经营租赁转为融资活动。

PBF的炼油业务改进计划在2026年计划中实现了超过2.3亿美元的运行率成本改善。资本支出的削减达到约8800万美元，高于公司7000万美元的承诺目标。今年迄今，全系统的天然气使用强度下降了约11%，而战略采购举措识别出每年约5500万美元的节省空间。

在Chalmette炼厂，收率提升项目的第一阶段正将高硫柴油转化为每日约1万桶的航空煤油。PBF计划在2027年将该能力提升至每日2万桶。2027年计划中包含的另一个Paulsboro项目预计将使汽油收率和调合能力增加约1万桶/日。管理层强调，这些是提升收率的项目，而非扩产项目。

St. Bernard Renewables合资企业日产可再生柴油约19,200桶，处于指引的高端。PBF在该季度收到了来自SBR的首笔股息分红，总计约2000万美元。

管理层将强劲的炼油市场环境归因于成品油供应有限和需求具有韧性。全球有超过500万桶/日的炼油产能处于停产状态，而全球库存据称比战前水平低了约5亿桶。第三季度纽约港2-1-1裂解价差平均接近65美元/桶，而去年同期约为26美元/桶。

管理层指引

管理层将第四季度的炼油环境描述为积极利好，理由是原油价差扩大、10月份市场表现强劲且无计划内的大修。然而，管理层拒绝预测近期裂解价差。

PBF预计在年底前结清Martinez保险索赔。管理层表示，最终赔付金额应与近期先例的范围类似，但未提供具体金额。

风险与关注领域

• 第四季度的营运资金将受到现金税支付和大宗商品价格变动的影响。管理层表示，最终影响取决于价格走势。
• 高企的运费仍是一项市场风险，尽管PBF约一半的船队已有期租合同保护，且其采购路线短于许多亚洲炼油商。
• 在推迟了Chalmette和Toledo工厂的工作后，2027年的大修日程将比大多数年份更加繁重。PBF尚未发布具体的2027年资本支出指引。
• 炼油利润率仍保持波动。管理层预计成品油市场的正常化比原油流向的正常化需要更长时间，但即期裂解价差可能会大幅波动。
• 加利福尼亚州的原油采购目前受制于产量而非管道输送能力。管理层预计该州的政治环境在短期内不会发生重大转变。

分析师问答环节亮点

分析师主要关注原油折扣、资产负债表策略、维持性资本支出、西海岸运营以及资本配置。

管理层表示，轻重质原油价差扩大有利于PBF复杂的炼油系统。受运费成本驱动，拉丁美洲重质原油的折扣也在影响加拿大原油市场。PBF意图在全系统内最大化使用具经济吸引力的重质油品。

在流动性方面，管理层认为鉴于近期的市场波动，更有力的资产负债表是必要的。PBF保留了两种资本市场工具——5亿美元的债券和5.5亿美元的零息可交换票据——以保持市场融资渠道和财务灵活性。这些工具的年利息预计约为3750万美元，而历史利息支出约为1.75亿美元。

管理层指出，计划前的基准维持性资本支出约为2.3亿美元，炼油业务改进（RBI）带来了约2500万–3000万美元的节省。管理层还表示，大修成本表现已从行业基准的后半段提升至前半段。

尽管价格出现波动，西海岸的需求依然保持韧性，同时PBF的批发业务量略有增加。管理层强调了其加州炼油厂和M-70管道的战略价值，该管道提供了获取当地原油产量的途径。

在资本配置方面，PBF优先考虑资产负债表强度、高回报炼油项目以及可持续的股东分配。股票回购仍是公司框架的一部分，但管理层强调优先考虑较小的收率和效率提升项目，而非大规模产能扩张。

业绩电话会议 完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good day, everyone, and welcome to the PBF Energy Third Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions] 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.

Colin Murray

Thank you, Jeanie. Good morning, and welcome to today's call. With me today are Matt Lucey, our President and CEO; Mike Bukowski, our Senior Vice President and Head of Refining; Joe Marino, 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 expressing 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. Consistent with our prior periods, we'll discuss our results excluding special items, which are described in today's press release. Also included in the press release is forward-looking guidance information. For any questions on these items or other follow-up questions, please contact Investor Relations.

I'll now turn the call over to Matt Lucey.

Matthew Lucey

Thanks, Colin. Good morning, everyone, and thanks for joining our call. Third quarter earnings speak for themselves. We intend to convert those earnings into lasting improvements in our business. The company reduced net debt by more than $1.2 billion during the quarter and by more than $2 billion this year. As Joe will detail, our balance sheet transformation has put the company on strongest financial footing since our formation.

Over the last 7 years, markets have become increasingly volatile with shorter cycles as evidenced by the 3 once-in-a-generation events over that period. Prudence dictates a deeper balance sheet to navigate this new reality. The company's focus is to execute, execute, execute. Execute our base business and do so efficiently and importantly, through our business improvement initiatives to improve the competitive positioning of each asset we own. extract incremental profitability through all cycles, up or down. We are investing in our assets to improve utilization, reliability and yields, which will translate into stronger through-the-cycle cash flow and make our system more resilient. By executing well on these priorities, we will maximize the resilience of our system, create greater long-term shareholder value and increase our ability to return capital to shareholders.

Turning to the market. The biggest disruption to the oil market have materialized in the availability of refined products. The disruptions have coincided with what was an already structurally tight refining market. On the crude side, the market has adapted reasonably given the circumstances. Flows through the Strait of Hormuz have recovered to roughly 3/4 of pre-war levels with some recent weekly reports higher, but product flows remain well below pre-war levels.

Recently, the dramatic increase in freight rates has really put pressure on the Asian refiners. Freight, coupled with rising natural gas costs overseas, is raising the cost to run international capacity. Headwinds that U.S. refiners are less exposed to due to our shorter transit times and abundant domestic supply of natural gas. Freight dynamics paired with growing production of heavy crudes has widened the light heavy differentials. PBF's crude slate flexibility and close proximity to production is a real tailwind going into the fourth quarter for our cost of crude. The freight realities raised the bar for delivery of imports needed in our product short coastal markets. PBF sells the majority of our products domestically, thereby avoiding costly transits.

The story on products remains a supply story. More than 5 million barrels a day of global capacity is offline, a portion of which with physical damage. With global inventories roughly 500 million barrels below pre-war levels, there is essentially 0 cushion in the system. Policy responses can be helpful on the margin. However, at the core, the world is simply short refined products. Benchmark cracks reflected the tightness. The New York Harbor 2-1-1 averaged nearly $65 a barrel in the third quarter compared with about $26 a year ago. Nowhere are current product dynamics more clear than our coasts, which are structurally short refining capacity and dependent on imports. California alone roughly -- imports roughly 250,000 barrels a day of gasoline, about 30% of its demand. The situation reinforces the point we have made for some time. U.S. refining is critical infrastructure.

Looking ahead, demand has proven resilient, holding up well domestically. Peace may and hopefully will normalize trade flows, but it will not restore damaged capacity, rebuild depleted inventories or reverse years of capacity rationalization. Crude normalization will happen much quicker than stabilization in the product markets. Taken together, we believe that refining has entered a new higher cycle characterized by higher volatility with a bias towards wider crude differentials.

Given our high complex coastal refining system, PBF is well positioned for this market environment. None of this changes what we can control. To be successful and enhance value for our investors, we must operate safely, reliably and responsibly, and we must execute on our process improvement initiatives to maximize market capture.

With that, I'll turn the call over to Mike.

Michael A. Bukowski

Thank you, Matt. Good morning, everyone. In the third quarter, our throughput averaged approximately 924,000 barrels a day across the system, which is in line with our overall guidance for the quarter. On the West Coast, we began the Martinez hydrocracker turnaround in September and completed it in October as planned. Also in September, we closed the acquisition of the 2 hydrogen plants servicing our Torrance refinery from Air Products.

Owning and operating those assets allows us to more closely integrate their operations, maintenance and turnarounds with the refinery, which we expect will improve the overall reliability of Torrance. On the East Coast, the Paulsboro crude unit turnaround also commenced in September and was completed in October as planned. Both the Martinez and Paulsboro turnarounds were within budget and industry benchmark targets. With Paulsboro back online, we are well positioned to supply our markets as temperatures drop in the Northeast.

At Chalmette, the pretreater and reformer that were taken offline in May are back in service. Chalmette had no impact from Hurricane Isaias. With our turnarounds complete, we have a clear operational runway for the remainder of 2026. For the fourth quarter, we expect total throughput of 925,000 to 985,000 barrels per day. We continue to make progress on our refining business improvement program. RBI generated in excess of $230 million of run rate cost improvements that were included in our 2026 plans, and we expect that to grow to more than $350 million by year-end 2026.

Some recent accomplishments. Our turnaround performance continues to improve as demonstrated by the execution of the Martinez and Paulsboro turnarounds this quarter. Our RBI-driven 2026 capital reductions are tracking approximately $88 million versus $70 million versus our $70 million commitment, including approximately $54 million from turnarounds.

Natural gas intensity across our system is down approximately 11% year-to-date, and for instance, Toledo has improved its overall energy intensity by 10% to 15%. Our strategic sourcing organization has identified approximately $55 million per year of savings across 3 waves of contract renewals. As Matt mentioned, investing in our assets is a key pillar of our strategy to enhance the long-term value of our system. We've identified a number of relatively small to mid-scale projects that will improve utilization, yields and reduce costs, and we've already begun executing this plan. In the third quarter, we completed the first phase of a jet fuel project at Chalmette. By upgrading high sulfur diesel, we are now producing approximately 10,000 barrels per day of jet fuel. And in 2027, we plan to increase that capability to 20,000 barrels per day.

As a further example, we've identified a similar opportunity at Paulsboro included in our 2027 plans, where upgrading lower-value intermediates will increase our gasoline yield and blending capability by about 10,000 barrels per day. To be clear, these are yield improvement projects, not capacity expansions. We are not pursuing high-cost mega projects, and we have no intention of investing in large capacity expansions. RBI is central to improving PBF's future performance, but it will not distract us from our obligation to operate in a safe, reliable and environmentally responsible way every day.

I'll now turn the call over to Joe Marino for our financial overview.

Joseph Marino

Thanks, Mike. For the third quarter, excluding special items, we reported adjusted net income of $12.78 per share and adjusted EBITDA of approximately $2.3 billion. Our discussion of third quarter results excludes the net effect of special items, which decreased net income by a net after-tax charge of $29 million or $0.24 per share. These primarily consisted of approximately $11 million of costs associated with the RBI initiative and $28 million pretax loss on extinguishment of debt related to the redemption of our 7.875% Senior Notes due 2030 and the write-off of a portion of deferred financing costs in connection with refinancing activities.

PBF results for the quarter are primarily a reflection of the strong product markets driven by tight supply and relatively firm demand. With our full system available this quarter, we were able to improve our capture in an elevated market environment. On the Martinez insurance claim, total recoveries to date are $1.25 billion, net of our deductibles and retention. As expected, we did not receive further payments in the third quarter, and we are working with our insurance group to finalize the claim process before year-end with a final payment expected in a similar range to the recent precedents.

Also included in our results is $62 million of equity income from our investment in SBR or approximately $72 million of EBITDA as the renewable business continues to benefit from strong margins and higher credit prices. SBR produced an average of approximately 19,200 barrels per day of renewable diesel in the third quarter at the upper end of our guidance range, and we expect fourth quarter production of 18,000 to 20,000 barrels per day.

PBF cash from operations for the quarter was approximately $1.9 billion, which includes a modest working capital tailwind of $56 million, primarily driven by the timing and delivery of hydrocarbon purchases. Higher commodity prices are generally a tailwind to working capital, but as a significant portion of the price increases occurred late in the quarter, we are seeing benefits flow through in early Q4. We also expect the cash tax payment to flow through working capital in the fourth quarter. However, the ultimate impact on Q4 working capital will depend on where prices go from here.

Cash invested in consolidated CapEx for the quarter was $177 million, which includes refining, corporate and logistics. This amount excludes approximately $8 million related to the Martinez rebuild and $46.5 million associated with the Air Products asset purchase. Our guidance for 2026 capital expenditures remains $825 million to $875 million, excluding capital related to the Martinez rebuild. Included in that guidance is funding for advanced purchases of materials for the turnarounds we scheduled for 2027.

We ended the quarter with approximately $2.5 billion of cash, approximately $2.1 billion of total debt and $426 million of net cash, reducing net debt by more than $1.2 billion during the quarter. In September, we issued $550 million of 0% exchangeable notes due 2032 and used the proceeds and cash on hand to fully redeem the $500 million of 7.875% Senior Notes due 2030. We also closed the acquisition of the Torrance hydrogen plant, which was financed with the seller's promissory note of approximately $340 million that is included in our total debt.

Subsequent to quarter end, we fully redeemed the outstanding $800 million 9.875% Senior Notes due 2030 using cash on hand. Following this redemption, our gross debt is approximately $1.4 billion, inclusive of the Air Products promissory note. As a result of these actions, interest expense is coming down. However, including refinancing costs, we expect 2026 interest expense to be within our guidance. Importantly, while we are still in the midst of our 2027 budgeting process, we expect this year's refinancing and debt paydown to reduce interest expense by at least $130 million in 2027.

We project using a substantial majority of our NOLs in 2026, and you can continue to use an effective tax rate of approximately 26% for modeling purposes. As Matt mentioned, our capital allocation framework is focused on strengthening the balance sheet, investing in our assets and delivering long-term value and returns to shareholders. While we do envision allocating capital to strategic and margin-enhancing spending at the refinery, our intention is to be prudent stewards of capital and allocate tactically for long-term strategic benefit. Today's 18% increase in our quarterly dividend reflects our confidence in that approach.

Operator, we completed our opening remarks, and we'd be pleased to take any questions.

Operator

[Operator Instructions] Your first question comes from the line of Manav Gupta with UBS.

分析师问答

Manav Gupta

Congrats team and great job. Dividend raised, debt lowered. My first question is, you are one of the biggest users of beneficiaries of quality discounts. We are seeing quality discounts widen across the world. So if you could talk about what is driving that and how PBF benefits from it. And again, on the West Coast, it's a little tricky because ANS is trading at a slight premium to Brent. So I'm just trying to understand how you're managing your crude purchases on the West Coast. So if you can talk about all those things.

Matthew Lucey

Sure. Thanks, Manav. Simply put, crude costs across our system in California and PADD1 and in the Gulf Coast look like real tailwinds for our system. Our strength has always been on the back of our complexity. And as crude differentials widen out, we're certainly the beneficiary of that situation. California is a bit unique because the California grades, in particular, impact our West Coast system. We're maximizing how much California crude we can run. Indeed, the dynamics in California are a bit unique, but we have a proprietary pipeline that has even a little space left. So we try to gobble up as much California crude as we can. But the other aspect is the Gulf Coast and the East Coast will directly benefit from a widening light heavy differential. Follow-up, Tom?

Thomas O'Connor

The Latin American heavies are really driving the discounts that everybody is seeing and talking about. We're seeing freight drive the FOB valuations in South America much lower. The Canadian markets are following that, and our system is taking advantage of that everywhere we can. We run a substantial amount of heavies, so very beneficial.

Manav Gupta

Perfect. My second follow-up is a little more tricky. I'm just trying to understand what's the right level of cash for a company like PBF to hold on the balance sheet look. Too low of a cash is a problem, but too much of the cash on the balance sheet kind of makes you a very interesting acquisition target because you have a unique footprint, the world realizes the benefits of North American refining. And if you start getting to a point where 40%, 50% of your market cap start sitting as cash on the balance sheet, then you become a very interesting acquisition target. So I'm just trying to understand what's the right amount of cash to be holding on the balance sheet?

Matthew Lucey

It is a bit tricky because the volatility has been so severe in the marketplace. As I commented, three once in a generation or once in a career events in 7 years, it gives you pause. And obviously, the up cycle, we've had down cycles on the back of the pandemic. But in refining, there's no replacement for a strong balance sheet. So we intend to maintain that. The sort of percentages you're quoting there, we're a bit a ways from that. So that's not an issue for today. But if you take a step back and get the balance sheet as strong as it possibly can be, then we just bring good, prudent, disciplined management of the capital that we have. We've increased our dividend.

We did that very methodically. We always look at our dividend this time of year. And we stated that we wanted to be competitive and maybe most importantly, sustainable through all markets. And obviously, we've completely reconfigured the debt side of the balance sheet. And so we have tremendous confidence in our dividend and the increase there from as sustainable through all markets. So we addressed the net debt. We increased the competitive dividend this quarter.

Share buybacks are always a critical component of shareholder return programs. But we also think we can benefit significantly from low-hanging fruit. If you think back to PBF history for standing on our feet when we first became public and then growing. We're really at a moment now where as a company across our system, my guess of our inventory of low-hanging fruit is simply larger than others. And when I say low-hanging fruit, I'm really implying no one in these halls are contemplating, as Mike said, mega projects or massive expansions.

But the example of what we did at Chalmette, where we're converting high-sulfur diesel into jet fuel, and we're doing that for under $20 million of capital. That delta of high-sulfur diesel in the Gulf to jet is about $0.20 a gallon. So if you want to say $8, $9 a barrel and 20,000 barrels a day, that really makes us a more resilient company, and that capital has such a high return, that's the best -- that project has such a high return. That's the best allocation of that capital. But we have other projects like that through our system. And so we're going to be evaluating those very prudently, very cautiously, very disciplined. But we think we have a tremendous opportunity to deepen the keel. And so that's where our focus is.

Manav Gupta

Congrats on a great quarter and looks like the first one will be very, very strong also.

Operator

Your next question comes from the line of Doug Leggate with Wolfe Research.

Douglas George Blyth Leggate

Let me echo, Matt, what a turnaround in the last year after all you've been through. But I do -- if I don't mind, I'm going to follow up on Manav's question and ask the question about cash a little differently. So you've done this 0 cost coupon convertible. You're basically looking, it seems to keep some level of debt on the balance sheet. And you are still quite a volatile business just by the nature of the cost base and everything else. So my question is, why keep any permanent financing? You've taken the net debt to 0. Why have any permanent financing on the balance sheet? Because all it does is exacerbate the volatility of your business. That's my first question.

My second question is, I just wonder, coming out the other side of Martinez, can you give us a refresh on what you think the sustaining capital and the operating cost base of the businesses because on our numbers, your capacity to generate extraordinary free cash flow in this environment continues. But clearly, the market is not giving you credit for that. So we're just trying to figure out where the gap is.

Matthew Lucey

All right. So in regards to why have any debt at all? We have a view that it makes -- again, it's prudent. It makes a lot of sense to maintain access to the capital markets. So we have 2 pieces of paper now. We have a $500 million bond and a $550 million convertible bond. But what we've done over the last year is if you look at our historical interest expense, it's been roughly $175 million a year. The interest expense on those 2 pieces of paper is less than $40 million, $37.5 million a year. So we've dramatically reduced the cost of the fixed charge of carrying the debt. And I think it's absolutely appropriate for our company to maintain access to the capital markets. So that is what really drove the decision to maintain the instruments that we have in place. And I think it just makes the company stronger going forward and maximizes optionality going forward.

In regards to your second question, Martinez, the issue with Martinez is completely behind us. In fact, Martinez just completed its turnaround on its hydrocracker on time. And so in terms of having the full force and effect of our business, we have it. We think we have real tailwinds. The required spending, there's no material change going forward. '27 will be a heavier turnaround schedule than most years. It's never ratable. It's never perfectly ratable, and we were able to move some turnarounds from this year because of the market we've been in. So -- but there's nothing changed. I would say 2027 is probably a higher turnaround year. And actually, I know '28 is going to be a lighter turnaround year. But was there anything else specific you want in regards to that?

Douglas George Blyth Leggate

Well, I think really what I'm driving at, Matt, is obviously, you've had your business optimization, the benefits coming through there, but you -- we haven't really seen a clean year for capital with Martinez back up and running. So what I was really trying to get to was what is the call on your cash flow to maintain the business, including turnarounds and the operating cost post the business improvement initiatives that you've had underway -- you can take it offline if necessary but I wanted to --

Matthew Lucey

No, I think it's important to address. Happy to. Mike, why don't you speak to the success that we've had with RBI and how that will play out over '27.

Michael A. Bukowski

So as you look at -- so as we said, RBI was $230 million, and that was broken down between capital and OpEx. So we said that roughly $70 million was going to come out of capital and $160 million was going to come out of OpEx. So let's talk about OpEx first. When we contemplated this program back in the tail end of 2024, there was a couple of things that happened that we didn't anticipate. One, as you mentioned, was the Martinez. And so that delayed some of the savings. And then the other thing that happened was the market that we've had in the past couple of months or past quarters or so.

So as I look at the OpEx, we're like we're maybe about 10%, maybe $8 million to $10 million of savings shy for this year. But then you flip that and look at the capital and the turnarounds, we're up about $20 million. And so net-net, we're meeting our commitment. Turnaround is an interesting thing, and it's difficult to measure year-on-year. As Matt said, it's not usually ratable. But one thing that we look at is we benchmark every turnaround. And prior to kicking off RBI, we were in the bottom half of the industry in terms of our turnaround cost performance. And we put a lot of things together in place in 2024 to get better, to get predictable first and foremost. And then 2026, we focused on competitive. And now '26 current performance is in the top half of the industry benchmarks.

And then when you look at sustaining capital, we took a baseline of where we were spending sustaining capital before, and it was about $230 million, and we saved about $25 million to $30 million on that. So it will change from year-to-year based on the size and the complexity of the turnarounds. So it's not always ratable. And as Matt mentioned, next year is going to be one of our larger turnarounds because of our 2 deferrals that we had into this year. But we continue to make continuous improvement on both the OpEx and the capital side. So that's how we look at it.

Matthew Lucey

And just one final comment -- in that regard, which is we're just stacking these wins, right? So the reduction in interest expense, the RBI savings on the operating cost side, the RBI savings on the capital side, the margin improvement in projects such as the Chalmette jet production. Each one of these is deepening the keel and making our company more resilient. And obviously, it will make us more profitable through -- not only through down cycles, but through up cycles as well.

Operator

Your next question comes from the line of Joe Laetsch?with Morgan Stanley.

Joseph Laetsch

So I wanted to start on the refining side. And within the regions, one of the areas that came in stronger than we had expected was the West Coast. Could you just talk a bit about how those assets are running post turnaround? And then also what you're seeing just on the ground in that market from a demand perspective as well?

Matthew Lucey

Paul, do you want to quickly comment on demand?

Paul Davis

I mean, look, West Coast demand has been resilient. We -- even with these volatile prices that we've seen in the marketplace out there, it's been remarkably resilient. Our wholesale numbers have gone up actually a little bit. We think that's probably some branded going to wholesale. But in general, from a demand standpoint, West Coast has been pretty steady over the last 12 months.

Matthew Lucey

I think broadly on the marketplace, I think our assets are -- now that we're fully up and running with a very clean runway, we're very, very well positioned in the marketplace. And as we've talked about for multiple quarters, it's on the product side, it is a market that requires massive imports into the state just to balance. But importantly, on the crude side as well, where we have not only the 2 refineries, we have our M-70 pipeline where we can maximize our access to California-grade crudes. And obviously, some production has come online, some new production has come online this year. So I think as a competitive positioning, PBF and our access and exposure to California looks very, very attractive going forward.

Joseph Laetsch

That's helpful. And then just looking into the fourth quarter, I recognize it's still early in the quarter, and there's a lot of volatility in the market. But could you maybe just walk through some of the puts and takes that you're thinking about on capture relative to 3Q, in particular. How should we think about the benefit from the wider WCS differentials? anything on crude backwardation, secondary product margins that you all are watching? Any color you can provide would be helpful.

Matthew Lucey

Sure. So we're further into the quarter on crude than we are on products just because you buy your crude in advance. And so I think my expectation for the fourth quarter is to have widening crude gaps, which obviously are quite impactful to our business. I think it will be folly for us to predict prompt cracks. Obviously, 1/3 through the quarter, they have been quite strong. And indeed, just my sneak peek into what October looks like, it looks quite strong. But going forward, as we talked about, a [ turn ] around the world is achieved today, none of the problems are solved on the product side. That being said, prompt prices and prompt cracks can jump around, but the fourth quarter looks obviously very constructive with the backdrop we have.

Operator

Your next question comes from the line of Phillip Jungwirth with BMO.

Phillip Jungwirth

Really strong results. Sticking with the fourth quarter, throughput guidance is really strong. I was looking back, and I think there's only one other quarter in PBF history where you were above the midpoint. Obviously, no turnarounds planned, but I was just hoping you could speak to the level of confidence in the system and just what's allowing you to run at a higher rate into the year-end? And separately, is there the ability to run a heavier crude slate into 4Q, just given the continued weakness in differentials? And if so, could you push a higher distillate yield also?

Matthew Lucey

I promise you, we will run the most economic grades that we can get our hand on and push our system in that regard. So there's nothing to discuss on that front other than we will absolutely maximize our economic outcome based on the crudes that are available. And so I'm sorry, your first question was in regards to throughput. The market is dictating it to a great degree. Generally speaking, you do have turnarounds in the fourth quarter. And generally speaking, the market doesn't always incent max runs. But obviously, the world is desperate for our products, and we intend to manufacture as many as we can in this period.

Phillip Jungwirth

Great. And then coming back to the sourcing of California crude, you referenced your advantageous pipeline into Torrance. But more specifically, how would you see any San Pablo Bay pipeline restart changing crude sourcing at Martinez? And just with the election coming up, how would you characterize current regulatory environment in California? And any expectation whether this could change for better or worse depending on the outcome of the governor election?

Matthew Lucey

Yes. The pipeline one is a funny one only because, as I mentioned before, we have space on our M-70 pipeline. And so now I think the San Pablo pipeline has been sold. So I don't yet know what the new owner's full intent is. But from PBF perspective, we get this a fair amount in California. When are we going to open San Pablo? It's like if you own a hotel in a town and you've got 20% vacancy and someone is saying, "Well, are you going to build a new hotel?" Well, when vacancy becomes a problem, we'll look to increase flows. Obviously, Martinez sits at the end of the San Pablo Bay pipeline. And to the degree that our M-70 pipeline is full, we would certainly look to bring crudes up to Martinez.

But at the moment, you've gotten a lot of legislation through California, which has decreased the friction in getting permits for the producers. So to the degree that production increases, I think the San Pablo Bay pipeline is sitting there in a perfect spot to take incremental grades that can't be taken south. But simply, egress is not the constraint at the moment. It is production. In regards to the election, it's not worth me prognosticating, but I don't see any material shift in the sort of the California political environment.

I do think there's been a great awakening in terms of how important and impactful and how necessary our products are to the economy and to the welfare of all the people that live there. So I think that's a very good thing. I don't see that backtracking. And clearly, California was a microcosm of what the world is going through now. So we'll see where the election goes. We've had a tremendous partnership with the state over the last couple of years sort of navigating all the changes that have existed, and we look forward to working with them going forward regardless of whoever the administration is.

Operator

Your next question comes from the line of Josiah Knight with Goldman Sachs.

Josiah Knight

Maybe just circling back on freight rates. Can you talk about how exposed to the elevated rates we're seeing in the system or in the market right now? And additionally, what steps have you been taking to mitigate these impacts?

Matthew Lucey

So if you think about freight rates for PBF, you think about supplying crude into the East Coast and into Northern California. We have about half of our fleet on time charter, which has obviously insulated us from the massive gyrations that are occurring. And we have closer proximity to much of the rest of the world in regards to where we're delivering our crude from. And obviously, we are in a freight firestorm at the moment. So I don't envision any material changes to that because this is not the time in which you want to go out and get more time charters. But -- so to a great degree, and it's PBF for certain. And to a great degree, U.S. refining is dramatically in a better place than, say, Asia in that regard because of the distance that they have to go. As Tom O'Connor always points out, the Atlantic Basin is -- has crude avail. And so our transit time is much shorter.

Josiah Knight

That's helpful. And then the follow-up is just on the delayed turnarounds at Chalmette and Toledo. Can you just remind us of the decision-making process here? And then additionally, how should we be framing out the impact of '27 throughput and then '27 CapEx?

Matthew Lucey

So we're not going to get into specific CapEx guidance yet. We usually put that out at a different time, we'll follow that. I mean in regards to the turnaround, it's no different than how we run our business every single day, which is evaluating the condition of our units, which are continuously and meticulously sort of evaluated on a day-by-day basis. And to the degree that we can optimize our turnarounds and our operations, that's what our job is. Mike, do you want to comment in regards to -- anything else in regards to turnarounds?

Michael A. Bukowski

I think you nailed it right there, and particularly in Toledo, as we stated on the call the last time. We had some downtime -- unplanned downtime in May, and we took advantage of going after a few things during that downtime to set us up to be in a position to defer this turnaround into next year. So there's an example of -- we're not just -- we're being applying rigor and discipline, analyzing performance in the unit, picking things and then moving forward.

Operator

Your next question comes from the line of John Royall with Piper Sandler.

John Royall

So my first question is on the performance of SBR. Obviously, it's a very positive macro for RD, but it looks like a really strong quarter on that equity earnings line for 3Q. Can you talk about that unit kind of operationally, how it's running and what feedstocks look like? And secondly, are you taking any dividend out of that JV right now? Just trying to understand the cash impact given that business is having a more meaningful contribution right now.

Joseph Marino

Sure. I'll start with the dividend. We did receive our first dividend distribution from SBR during the quarter of about $20 million that is reflected in the results. As far as operations, it's been running well. You can see we're at the top end of our throughput guidance for Q3. So everything going well there. Our feedstock slate obviously changes over time, although we try to source the most economic feet there, and it will move between the higher and lower CI. And I think for Q3, it was more in the lower CI level, which helped from a margin capture standpoint. But overall, as I said in my remarks, the strong margins there, the tightening of the HOBO spread and the RINs price kind of maintaining at high levels has helped to really charge the earnings of that business.

John Royall

And then my follow-up is on bringing the hydrogen plants back in-house. And I realize you touched on this in 2Q a little bit, but how should we expect to see the returns on that kind of investment? Is it just about reliability and reducing downtime? Does it reduce OpEx overall? Just trying to understand maybe how to model that acquisition. And also, I think there were a few others that were sold to Air Products when you did that initial transaction a few years ago. Was there any thought to bringing those back in-house as well?

Matthew Lucey

Just on your last piece, just on the last piece, I don't expect there to be any other. Torrance was a bit unique because of where it was situated within our refinery and the way it was being operated. Mike, why don't you walk through it?

Michael A. Bukowski

Yes. So jump on that point. The uniqueness of it was that they were so integrated to the operation of the facility where we shared utilities. The hydrogen plant was a major steam producer, for instance, for the refinery. And so any impact to the operation of the hydrogen plant and because of that refinery so beholden to hydrogen in terms of being able to perform and maximize the refinery had all kinds of impacts. And I would look at it like this. When we did the acquisition, it was firmly just based on increasing the utilization of the refinery. And in the past, because of either planned or unplanned downtime associated with those hydrogen plants and the lack of integrated plants really drove the performance of the refinery. So I would look at it, it's mainly just the utilization.

Joseph Marino

One thing I would add from a modeling standpoint is nothing changed with the transaction as far as the cash flows go or overall cash flows. It's just really a change in the classification with now -- in the past, it was classified as operating leases and would flow through as such in the P&L. Now it's going to be a debt promissory note that will flow through financing activities. But the cash flows itself remain the same.

Operator

We have reached the end of the question-and-answer session. And I will now turn the call over to Matt Lucey for closing remarks.

Matthew Lucey

Thanks for everyone's attention today, and we look forward to speaking to you after a very solid fourth quarter. Have a great day.

Operator

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