PBF Energy Inc. Price & Performance (PBF)

Thank you, Britney. Good morning and welcome to today's call. With me today are Matt Lucci, our President and CEO Mike Bukowski, our Senior Vice President and Head of Refining Karen Davis, our CFO and several other members of our management team. [indiscernible] Copies of today's earnings release and our 10 ks file Before getting started, I'd like to direct your attention to the Safe Harbor statement contained in today's press release. Statements that 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. 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, 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. Thanks, Colin. Good morning, everyone, and thank you for joining the call. [indiscernible] Before commenting on the fourth quarter, and '24 in general, I would like to address the fire that we experienced at the Martinez refinery on February 1.

I personally want to thank all the first responders including our own employees, the Contra Costa County Fire Department Martinez Police and the mutual aid responders from our local industrial peers. Who successfully battled the fire and established control. I'm thankful there were no injuries beyond first aid on a few folks. We do not ignore the impact of this incident had on the surrounding Martinez community. PBF earns the right to operate the communities where we have facilities by being a responsible safe and reliable operator. We apologize to everyone affected by the incident [indiscernible] We need to maintain a cooperative partnership with the state, county and city to move forward constructively. The fire began as refinery workers prepared for planned maintenance of a process unit. We were in the process of isolating shutdown equipment when the fire began. We are still early in the recovery process. Access to the point of origin is limited and the completion of ongoing investigations. We are in the process of assessing the extent of the damage and we experienced And we have experienced personnel set up to determine the necessary next steps. Looking ahead, while we don't have all the answers, we fully understand the importance of the products that we manufacture for the people of California.

While California is a difficult regulatory environment, the California market the short refined products and thus relies on imports The situation is set to compound itself With the announced shutdown of LA Basin refinery, scheduled for this fall. While the full impact from this incident is not yet known, it's important to note that PBF is properly insured for an event such as this. Moving on to the fourth quarter, results reflect the challenging markets faced by refiners. Comprised mainly of a weak margin environment and poor crude differentials which is a continuation of the conditions that dominated the second half of twenty twenty four. For the most part, our refineries operated well during We successfully executed a major cat turnaround [indiscernible] at Chalmette.

The turnaround work did adversely impact capture rates in that region. The operating performance of our assets reflects the dedication and focus of our outstanding employees who work 20 fourseven in all market conditions to supply the refined products that are still very much in demand. The weak margins and market conditions experienced recently do not reflect our longer term view that global refining supply and product demand remain tightly balanced. We believe this provides a constructive backdrop for refiners as demand for our product continues to grow globally. Indeed, forward cracks look constructive. We expect to see a balancing of the disproportionate capacity additions we saw in 2024. 2025 net capacity additions are expected in the 700,000 to 800,000 range, high demand growth in the 750,000 barrels of per day range. This assumes new capacity operates near announced capability something we have yet to see in some regions. Additionally, narrow white heavy sweet sour spreads have been a headwind to our capture rate.

This rewards lower complexity assets in the near term. That said, we like our predominantly coastal and system and access to a broad variety of feedstocks that provides. As the global crude picture continues to evolve, if we see a shift in the market conditions that allows incremental heavy and sour barrels to become economically available, that will benefit our system. There's a lot of turbulence in the market and PBF is focused on controlling the aspects of our business that we can control. To best position ourselves going forward. One of PBF's strengths our financial position. In this current market style, market cycle, DBS balance sheet provides us with flexibility to weather challenging markets and look ahead to next market cycle. To be successful and enhance value for our investors, we must operate safely, safely, reliably, and responsibly and we must do it efficiently. With that in mind, our team has been developing a business improvement initiative across our refining [indiscernible] And as promised, we'll now turn the call over to Mike Pokowski for comments on our cost savings program. Thank you, Matt. Good morning, everyone. As Matt mentioned, have a number of initiatives ongoing at PBF that we are collectively calling our refining business improvement program.

RBI for short. Achieving our targeted cash expenditure savings will be a corporate wide effort that focuses on improving our current standards of fiscal discipline and operational excellence. Are committed to improving what are already excellent programs. We have identified several opportunity areas within the refining business. We've established teams to systematically capture these opportunities and effectively institutionalize the improvements. To ensure the durability of these savings year over year into the future. We've launched five separate efforts led by different subject matter experts targeting over $200,000,000 in run rate cost savings to be implemented by the end of twenty twenty five.

As a basic framework for the program, we've identified energy usage and turnarounds as the largest opportunity areas representing approximately 30% to 50% of our overall target.

Beyond those areas, are looking at our procurement practices, capital planning and expenditures, maintenance and organizational design, These areas represent approximately 10% to 15% each of our targeted savings.

The five teams have held several idea generation sessions in the field at our refineries, and have identified multiple initiatives to capture the savings goal.

Some of these initiatives are already underway. [indiscernible] new ideas will be prioritized developed into implementation plans and resourced. By the end of the first quarter, we expect to have an overall implementation plan with clear line of sight our goal.

As a commitment to our employees, and to our external stakeholders, in the future, we will provide more detail in terms of what we are doing and the savings generated all while continuing to operate safely. With that, I'll now turn it over to Karen Davis, for our financial overview. Thank you, Mike.

For the fourth quarter, we reported an adjusted net loss of $2.82 and adjusted EBITDA loss of 249 Included in our results is a $4,800,000 loss related to PBF's equity investment in St. Bernard Renewables. SBR produced an average of 17,000 barrels per day of renewable diesel in the fourth quarter First quarter RD production is expected to be 10,000 to 12,000 barrels per day as a result of a planned catalyst change in March.

Cash flow used in operations for the quarter was approximately $330,000,000 which includes a working capital headwind of approximately $83,000,000 Consolidated CapEx for the fourth quarter was approximately $237,000,000 which includes refining, [indiscernible] and logistics.

Full year 2024 CapEx was approximately $1,000,000,000 As mentioned on our third quarter call, this amount includes approximately $145,000,000 of cash [indiscernible] related to our 2023 capital program for work completed at the end of twenty twenty three. You should note that our CapEx guidance is on an incurred basis.

But our cash flow statement will reflect what we actually spend for the capital expenditures and turnarounds in the period. Through share repurchases and our dividend, we returned approximately $60,000,000 to shareholders in the fourth quarter. Since our repurchase program was introduced in December of twenty twenty two, through the end of the fourth quarter, we completed approximately $1,000,000,000 in share repurchases.

This represents over 17% of our outstanding shares at the beginning of the program. Additionally, our Board of Directors approved a regular quarterly dividend of $0.275 per share. We ended the quarter with approximately $536,000,000 in cash.

And approximately $921,000,000 of net debt.

Maintaining our firm financial footing and strong balance sheet remain priorities. Our ability to fund operations and continuously invest in our assets will always be of paramount importance.

We entered last year with the strongest balance sheet we have ever had.

Our under levered balance sheet enabled us to increase net debt during the weak market conditions of 2024.

As the market rebalances off the 2024 lows, we expect to use periods of strength to focus on delevering and preserving the balance sheet.

After prioritizing our balance sheet and operations, we'll look at all capital allocation opportunities. To determine which promotes the greatest long term value. Operator, we've completed our opening remarks and we'd be pleased And we will take our first question from Roger Redd with Wells Fargo. Your line is now open.

Hey, good morning, everybody. I don't think changed my name, but I'll roll with it here.

Anyway, quick question for you on just focusing on Martinez here. Recognizing regulatory environment in California is is what it is. What's the timeline you believe that we will get greater clarity on what the damage is, what it will take to fix it, and when you'll be allowed to do the work? What's [indiscernible] a broad guideline we should consider here. Thanks, Mr. Red. Look, the reality is that sort of ground zero where the ignition took place, it's actually still cordoned off. We expected quite frankly, to have access to it already, but we don't. So again, I'm getting come dangerously close to speculating. I suspect that we will get access to that area [indiscernible] And as I said in my comments, I mean, we have collaboratively with all all the different stakeholders as we look at and investigate what happened. Once we get full access to the site, we have to appreciate were commencing a turnaround and obviously now there's damage from the fire. So there's a multipronged effort to [indiscernible] source moving forward But I suspect we'll be getting access to that Corded Off area very soon. And then we already have teams as I said, on the ground [indiscernible] the work they can do now, but we should be able to over the next short period of time, have a much better of assessment It just so happens this call coincided at a moment in time. [indiscernible] that was in front of that, but over the next week or so, I think we'll have a much better view and all I can promise to you and to our shareholders is to communicate openly as we and transparently as we learn things going forward.

Understood. Yes, timing is everything, right?

The second part or the second question I have also ties in with this. Given it is premature to know exactly how long is down and what the costs are, If we look at Q4 results, which consumes some cash, Q1, which let's just say it's neutral or a little bit of a negative impact based on where things are tracking so far. What are some of the levers you can pull on in 2025 to ensure that the company is in a sufficient position liquidity wise to operate with one of the units down to do whatever repairs are necessary Are there deferrals of CapEx? Are all these some of the bigger kind of topics out there for you to answer rather than putting words in your mouth. But what should we be watching? Maybe that's more of a question for you, Karen. I'm not really just with the uncertainty, how should we think about what you'll from a cash position standpoint.

I'll make a couple of comments and then turn it over to Karen In regards to our financial strength, Karen, I think mentioned in her remarks that we started 2024 with the strongest financial position in our history. I would say we started 2024 with the strongest financial position in our industry even where we sit today after a difficult '24 market conditions If you go back to when we became a public company and we had the intent on coming out with a conservative balance sheet Our balance sheet today, even though our company is more than twice the size, And we own all the inventory Our company today on any debt metric is well below where we originally designed it when we became public. And when you look at 2024, we were able to navigate the year [indiscernible] impacting CapEx because we felt like that was the right thing to do. Everything is predicated on your your view of the market. You're not always right, but you're always evolving that view. And so we'll always take that view in combination with the financial strength we have and operate our business the best we can. So in 2024, we didn't defer any spending.

We invested in our plants as we as we should. And 2025 looks constructive. The downtime at Martinez, we were scheduled to be down for sixty days for a major turnaround at Torrance. This will impact that schedule. But our ability to generate cash as a company will not hinder on On Martinez in isolation. So we're in a really strong financial position. Our outlook is positive. But we always have the capability to the degree our outlook changes or the market changes to manage our business and the the capital and the work that we do at our facilities in conjunction with the market that exists. Karen, if you have any other? Well, I just would add, obviously, over the past few quarters, you've seen us rely on our under levered balance sheet to support both operations and share repurchases. At the end of the fourth quarter, we were at a 16% net debt to cap ratio. We've got $2,400,000,000 available under our ABL as well as The other triggers that Matt mentioned. Going forward, as the market normalizes, and we see improved cash generation, going to refocus again on reducing leverage as a top priority over share repurchases.

It is a core tenant of how we're running this business and that is when markets are strong, we're generating cash, we intend to under lever ourselves. And that gives us the flexibility and the luxury of managing the business without being hindered by financial constraints. When markets are more difficult.

Thank you. Thanks, Roger. We'll take our next question from Ryan Todd with Piper Sandler. [indiscernible] a follow-up one follow-up on Martinez. You mentioned the insurance that you have that should offset some of the impact to this. Can Can you maybe help us walk through how the insurance offset works What sort of the impact it might offset or if it's too early to say at this point? And then as a second question, on renewable diesel, if we switch gears over there, could you maybe provide an update? There's a lot of moving pieces here into the early part of twenty twenty five. Maybe an update on your view of the market and how you might approach how you think you might approach 45 C credits in the first quarter if you're you'll be able to book or not book in any of those dynamics?

Sure. So in regards to insurance, and I can get into absolute specifics of it.

But as a company, we've been procuring property insurance since we began. It's a proper risk management tool We have a very good relationship with insurance providers. With the insurance community and we've worked very close with them every year. And so all I can tell you is we absolutely [indiscernible] have the proper coverages with the proper providers and we'll be working with them as we assess what happens. And it's it's truly to speculate on that. So I feel very, very paying for it when you don't need it and you hate the fact that you need it but you're happy that's there. And as a time like this. So in regards to RD, nothing is [indiscernible] I think the developments over '25 are getting incredibly interesting to watch.

The 45 gs is going to be below by all in indications, although that was the previous administration's guidance. So there's no guarantees, but I would think the 45 Z economics from the 45 Z will probably be less wonders tax credit and over time, I guess, is will [indiscernible] sort of set the market for how much RD needs to be manufactured. But I come back to and I can't bring up RD without bringing up our partner. We've been in lockstep with them. Similar outlook on the marketplace. Similar commitment to our SBR venture, So we're very pleased with the partnership we have. I think as we look at the marketplace, our ability to pretreat feeds, our location in the Gulf Coast, I think we're well positioned to be a top quartile performer in the marketplace as it evolves.

In regards to accounting for unclear 45 Z or producer tax rate language.

We're going to use the language that we have at the time that we That we create, we publish our books and records. Karen, I don't know if you have No, that's right. Similar to what some of our peers have announced we will, we do expect to accrue the the credit based on the guidelines that are available right now.

Great.

Thank you. We'll take our next question from Mena Goup with UBS. Your line is open.

Good morning. I have more of a theoretical question, but let's say we do go down the line of a piece between Ukraine and Russia, it will have multiple impacts for refiners. Obviously, more product can come in. But what can also happen is more heavier crudes come to the market, BGO comes to the market, Do you think in that scenario, if we do have a piece between UK and Russia, you could see a wider quality discounts, heavy light widening, which could help out? I do, but that's Tom. Yes. Thanks, Manal.

In regards to the question, I mean, I think it's probably really what are the terms of the piece, but broadly speaking in the way that you presented it, in terms of piece at that point certainly should be a catalyst for a wider wide heavy differential, I think particularly also in the Atlantic Basin just because the Pacific Basin has been the primary beneficiary of Russian crude over the last several years.

But I think we really need to watch that as that plays out. I mean, clearly, there there's a lot of factors in the market today I think in terms of some aspects of the things that we see that for every policy action there's a countermeasure or another reaction and some other things as we've gone through the sequencing. But in a vacuum, that coming to some resolution certainly would be a positive catalyst [indiscernible] [indiscernible] Perfect. My quick follow-up, which I wanted to ask you was, when you did buy Martinez, one of the thought processes was if one of the assets on the West Coast does go down, you want to a couple of assets there to benefit from it, In this scenario, when Martinez is down, can you run Torrance hard at nameplate capacity or maybe even over to actually benefit from a spike in the West Coast margins?

The Torrance refinery is running and we'll maximize as we do at all of our facilities. To the market that exists. So So as I said, Torrance is there and is producing products which are desperately needed in California.

Thank you. Thank you. We'll take our next question from Neil Mehta with Goldman Sachs. Your line is open.

Yes. Stan, on the math macro, obviously, very dynamic environment around tariffs, and you guys do import some barrels including some crude from Canada, but also some waterborne barrels. So just your perspective of how this potentially could ripple through the system and any any frameworks that you're using to evaluate a very dynamic situation?

Dynamic it is. I'll ask Tom to comment as well.

Look, the Canadian Mexican tariffs seem to be different [indiscernible] some of the other tariffs that are being imposed and that it does seem to be a cudgel to broader geopolitical issues, whether it's immigration or Fentanyl or other things. And so the duration of those tariffs may be different It does seem to be sort of isolated into a person of one of how these decisions are being made. But he's clearly getting advice because even when the the tariffs were a trend before there was a recognition obviously that oil was getting a a different a different mark than the rest. Of the imports from Canada.

Canada and Mexico are a bit different. I'd sort of chuckle to myself. Canada is more of a Mexican standoff because their alternatives are much less in terms of if they don't sell to The U. S, It's going to stay in the ground.

Mexico obviously has more flexibility being having access to water, That being said, The Mid Con needs Canadian refineries Canadian oil to maintain throughput. Anytime that there's going to be disruption of that size, if it happens, it will have some impact on throughput, I'm sure.

I do think it's important to note certainly on the Canadian side, the movement, the respective dollars. So if you're a Canadian producer, what is What is the net difference, if you're looking at it sort of on a post currency [indiscernible] It'll be interesting dynamic. Tariffs are being threatened and On that Monday when the Canadian and Mexican tariffs were supposed to be implemented. And then postponed. We went in a six hour period where obviously there was going to be a bullish TI Event By Imposing Tariffs On Canada and Mexico.

And six hours later, that was off the table, but the Chinese were tariffs putting tariffs on U. S. Crude, which was bearish.

So there's nothing nothing static for even a moment.

But we've got a perfect team. I'll hand it over to Tom, sort of on every aspect of this. Terms of my Meta, Matt give a very Folsom response there. I mean, I think in terms of I think that market reaction, which we saw in Monday, I think is very a key indicator as to how the market would respond in terms of TI was outperforming the waterborne crudes. Certainly had a strong crack response in terms of products on the particularly in the observable markets are just staring at screens, right? You had outperformance in NYMEX. The cash markets in certain areas didn't have time to sort of respond as people were sort of just waiting and terms of figuring out from a little bit more certainty. But I think it does get to the point where when you look at the market today, I do think that the likelihood of tariffs the market is saying they're not there. I mean, you have TI spreads are basically on six month lows and that is a reflection of the fundamentals and the seasonal reality of the marketplace that we are in today. I mean, you're in the maintenance period, you got low runs, and you're sitting in a situation where crude is building coming off of basically the low of five year and is now moving closer towards the five year, but still has some work to do.

And products have been drawn. I mean, so I mean, if we get back specifically to the effects of tariffs, I think in terms of I don't really have anything else to add in terms of Matt's response to us. The only thing else I would add is As I look at it, I don't see PBF being disadvantaged relative to the rest of industry in The U. S. Any way, shape or form.

That's great. And the follow-up is, maybe this for you Matt, maybe for Karen, but you pointed to net debt to cap kind of at that 16% range. And therefore, the priority, even though that's a pretty good balance sheet, is to get is to delever a bit before you return capital to shareholders in the form of buybacks. What's the framework is that decision point of a certain leverage level, either on that metric or net debt to EBITDA that we should be looking for for when you say you want to flip from deleveraging back to buybacks?

I think it'd be impossible for us to give you one metric I think it's a combination of the current market we're in, the outlook going forward in the short term to medium term, [indiscernible] how our assets are running, You have a lot of sort of different equations in the bowl of soup. But what we intend to do is set up our company as best we can for our investors that includes a really, really strong balance sheet and it also includes returning cash to shareholders and we'll balance that to the best of our ability.

Is there a target through the cycle net debt number maybe way of asking it.

I would say Maybe I'll answer the question with what we could see as the maximum and that would be our goal has always been to maintain investment grade level credit Metrics, could be as high as less than 35%. Currently, we're at 16% It's our our goal to be very conservative.

Okay.

Karen. Thanks, Matt.

Thank you.

Thank you. Our next question will come from John Roheil with JPMorgan. Your line is open.

Hi, good morning. Thanks for taking my question. So my first question is on 4Q cash flows. We noticed cash from us even ex working capital came in a little late relative to It looks like there's $100,000,000 plus of deferred headwinds as one of the drivers.

Just hoping for some color on the deferred tax and any other major items to call out before Q3 of Yes. I think you hit on one of one of the drivers. The other one was just an overall and this was the main one, is an overall decline in our net payables. Related to inventory. Looking forward into Q1, Workland Capital is going to be driven primarily by hydrocarbon pricing, but I would also point out that we did make a TRA payment of $130,000,000 in January, which will provide a headwind.

Great. Thank you, Karen. And then My follow-up is on the business improvement plan.

You gave a little bit of color in the opener and mentioned the key piece being around energy usage and turnaround. And I think next quarter maybe some more detail, but how do you expect the $200,000,000 to phase in this year?

How should we think about kind of first half versus second half? And does the outage at Martinez impact the plan in any way?

I'll make a couple of comments and then turn it over to Mike. In regards to $200,000,000 what we said last quarter and what the $200,000,000 is pointing to. Its run rate savings as of 01/01/2026. So we're going through each of our refineries, each of our processes that support our refineries and coming up with cost saving initiatives, plans and beginning to execute those savings, what we the pledge that we made was as of the beginning of next year would be fully implemented. So over the course of '25, there will be some savings, but the savings will not be fully achieved. In 2025. And no, I don't believe the events at March will impact this initiative at all Yes, well said, Matt. I think as we as as we develop the detailed prior to the end of the first quarter we'll have a really good line of sight to how much exactly going to hit in 2025.

But we will be adjusting every time we do an initiative and we account for the run rate savings, we will be adjusting our budget targets for 2026 so that those savings remain sustainable.

We'll be putting in operating KPIs as well as the financial KPIs, but operating KPIs associated with all those cost savings initiatives so that we keep our eye on the ball, and that those savings will be continued to be realized throughout 2026 and beyond.

Very clear. Thank you.

Thank you. We'll take our next question from Jason Gabelman with TD Cowen. Your line is open.

Yes. Hey, good morning.

Thanks for taking my questions. I wanted to go back to the Martinez incident, if I could. [indiscernible] not completely clear. Is the entire a unit that shutdown? Can you give us any more color as to what unit was impacted? And as you think about your contractual obligations, do you need to source product from third parties in order to meet those while [indiscernible] All right. So specifically in regards to the units, We were in the midst of commencing what I refer to as essentially a sixty day cat turnaround. The cat feed hydrotreater was shut down in front of that and pipework was being done. And so it's in the vicinity of Cathete hydrotreater. As a result of the fire, we did take down the entire refinery. So the refinery is down completely now. And so you have multiple work streams the turnaround work and then assessing the fire and then what it will take to get other units back on stream. All three their own schedule.

Got it. And in terms of Yes. From a commercial standpoint, We don't have anything to report. Will be able to manage through all the commercial [indiscernible] with Our team and there's nothing to highlight at this point.

Okay. Got it. And then just a quick accounting one. I noticed in your full year '25 guidance that Jan one share count [indiscernible] actually up versus 4Q it was guided to $121,000,000 versus $115,000,000 in 4Q. Was that just related to incentive comp Or was there something else that drove that? Thanks. I think that's going to be related to dilution potential dilution from incentive comp.

Okay.

Great.

Thanks for the answers. Thanks.

Your next question comes from Matthew Blair with TPH. Your line is now open.

Great. Thank you.

I wanted to circle back to the RBI program. So the hundred million dollars of run rate cost savings, think that comes out to about $0.6 a barrel.

Could you talk about how we can measure that? Does that all come through refining OpEx or would also come through corporate G and A? And then Just looking at your published OpEx, in 2024 versus like 2018, 2019 levels, it's about $2 a barrel higher So is this $0.6 should this be thought of as a pretty conservative figure and there might be more wood to chop after that? Thanks.

So first of all, in terms of the accounting, most of it it's going to come through refining OpEx, but the capital projects and the turnaround will come through our capital program. Would think about it that way. On the $0.6 per barrel versus previewed, years, I would consider this a start We think We think that there's more opportunity beyond 2025 This is a program which is not going to end. This is going to be a new way of life for us in terms of driving continuous improvement not only in how we manage cost, but how we innovate to drive And we will let that spill over to all the things that we do in terms of managing our business, including how we manage our reliability, how we manage health and safety as well. So I would look at the $0.6 per barrel as the first step of a Well, the long journey What Mike just said is My expectation, our internal expectations are higher than what we promised The Street. But as a management team, we certainly are focused on meaning what we say and and say what we mean in regards to we're going to not overpromise and deliver results as we communicate them.

So The other thing I would say that this program is very, very focused on if you go back to the depths of COVID at that time, we announced cost savings to the tune of we achieved cost savings to the tune about $140,000,000 Much of that eventually came back through the different cycles that we existed in. We're very, very focused on the sustainability of these cost savings on a go forward basis. So not that it's cut once, but it's cut once and it doesn't return.

Sounds good. And then you also mentioned that refining capacity additions should match up pretty well. With incremental demand growth this year. I think there's also a comment that the forward cracks look constructive Do you think at the strip that PBF be free cash flow positive [indiscernible] Yes.

Great.

I'll leave it there. Thanks.

Thank you. Your final question will come from Paul Chiang with Scotiabank. Your line is open.

Hey, guys. Good morning.

Matt, when I'm looking at your first quarter throughput guidance, East Coast seems like it's low. Given that you only have the hydrocracker turnaround there, which is pretty small unit. Is there anything we should be aware why that the guidance is relatively low and now that impact on your full year expectation for that region? That's the first question. Second question that somewhat related to tariff, but I'm not going to ask that you think about the tariff. But instead, for Tonito, you run a lot of the same crew. If you repay same crew with domestic light oil, how that impact your refinery yield, throughput and OpEx Just trying to get some better understanding on that.

Yes. Okay. So your first question was in regard to East Coast throughput.

I think the throughput of that is down is a bit on the back of the market that has existed And so, obviously, we throttle throughput based on the market in which we're operating and what's weaker market throughput can come down. So there's certainly nothing structural or nothing from a work standpoint that's precluding us And if the market is there, we'll certainly capture as much it as we possibly can. Regards to Toledo, there is some element, I referred to it as a Mexican standoff before in terms of we do not have the ability nor does any anyone in the region have the ability to simply replace all Canadian barrels by domestic supplies. The pipelines pass season there, pipelines have been reversed. And so there is some element of tariffs could could push down throughputs.

Or ultimately the producers are going to pay or the end consumer is going to pay but to the degree there's not a market for the refiner to run, we're not We're not in the business of manufacturing fuel that is uneconomic to run. So like I said, it's incredibly dynamic situation. And if there is tariffs put in the market, we'll balance itself to produce the the products that are needed in all the regions.

Matthew, if the domestic light oil is available. For Tornado and you did that you're going to replace [indiscernible] How that impacts your product yield and throughput if that is available and you make that decision. So I'm trying to understand what technically is available is the capability that you can do in that particular case? And also that on my first question on the East Coast If the first quarter end up, that will be the one way so we assume full year your run rate will be lower than the previous full year guidance? Thank you.

No, as I said, you have to make a market assumption. To drive what you think throughputs are, but we're not limited by any stretch on the East Coast. In regards to the theater, I think your question is theoretical. If you are able to deliver [indiscernible] U. S. Domestic lights we crude, what would be the yield impact [indiscernible] Toledo, not unlike any other refinery would have a yield impact We run a significant slate of synthetic crude out of Kano, specifications and qualities.

That, Toledo is optimized around to the extent you change that cruise light for Toledo or for any other refinery in Chicago or throughout the pad There will be yield impacts.

And it's it's too difficult to get into the specifics of exactly what happened There's no quite by the way, that's not limited to pad two. I mean, that's true in PADD V or any other PADD. To the degree you're not running your optimized crude, it's the optimized crude for a reason. There will be throughput yield specs.

Thank you. Matt, since I'm the last caller here, can I sneak in a third question? Paul, just for you. Thank you. We know, Peter. On insurance, I assume that you have the business interruption insurance also in here. And can you tell us that what's the deductible Look, I don't want to get into specifics on on insurance. We have a manageable deductible And as I said before, we have all the proper insurance in place.

Okay. We do. Thank you. [indiscernible] We have reached the end of our question and answer session and we'll call over to Matt Lucey for closing remarks. This concludes today's conference. And you may disconnect your lines at this time.