CVR Energy, Inc. (NYSE:CVI) today announced net income of $51
million, or 59 cents per diluted share, on net sales of $1,914
million for the second quarter of 2018, compared to a net loss of
$11 million, or 12 cents per diluted share, on net sales of $1,434
million for the 2017 second quarter. Second quarter 2018 adjusted
EBITDA, a non-GAAP financial measure, was $103 million, compared to
second quarter 2017 adjusted EBITDA of $38 million.
For the first six months of 2018, net income was $117 million,
or $1.35 per diluted share, on net sales of $3,451 million,
compared to net income of $12 million, or 13 cents per diluted
share, on net sales of $2,942 million for the same period a year
earlier. Adjusted EBITDA for the first six months of 2018 was $189
million, compared to adjusted EBITDA of $118 million for the first
six months of 2017.
“CVR Refining reported solid results for the 2018 second
quarter, attributable to a $4.88 increase in Group 3 crack spreads,
low Renewable Identification Number (RIN) prices and wide crude oil
differentials compared to the same period last year,” said Dave
Lamp, CVR Energy’s Chief Executive Officer. “CVR Refining is off to
a good start in the third quarter. While crack spreads have
moderated in July, crude oil differentials are strong and RIN
prices remain low.
“CVR Partners’ second quarter 2018 production levels were
negatively impacted by both planned and unplanned downtime at the
Coffeyville, Kansas, and East Dubuque, Illinois, fertilizer
facilities,” Lamp said. “Looking toward the third quarter, the fall
fill season for ammonia and UAN is now complete and market pricing
was approximately 20 percent higher than last season.
“CVR Energy announced on May 29 that it had increased its
dividend to $3 per share on an annual basis due to its strong
balance sheet and operating performance. CVR Energy also announced
the commencement of an exchange offer of CVR Energy shares for CVR
Refining units. CVR Energy believes that, in light of recent tax
reform, many unitholders would prefer to hold their investment in
the form of common stock rather than partnership interests. In
addition, the exchange offer will allow CVR Energy to increase its
ownership in CVR Refining,” Lamp concluded.
Petroleum Business
The petroleum business, which is operated by CVR Refining and
includes the Coffeyville and Wynnewood refineries, reported second
quarter 2018 operating income of $117 million on net sales of
$1,824 million, compared to an operating loss of $7 million on net
sales of $1,338 million in the second quarter of 2017.
Refining margin adjusted for FIFO impact per combined total
throughput, a non-GAAP financial measure, was $12.61 in the 2018
second quarter, compared to $7.21 during the same period in 2017.
Direct operating expenses (exclusive of depreciation and
amortization), excluding major scheduled turnaround expenses, per
combined total throughput, for the 2018 second quarter were $4.76,
compared to $4.13 in the second quarter of 2017.
Second quarter 2018 combined crude oil throughput was
approximately 206,000 barrels per day (bpd), compared to
approximately 214,000 bpd of combined crude oil throughput for the
second quarter of 2017.
Nitrogen Fertilizers Business
The fertilizer business, which is operated by CVR Partners and
includes the Coffeyville and East Dubuque fertilizer facilities,
reported no operating income on net sales of $93 million for the
second quarter of 2018, compared to operating income of $12 million
on net sales of $98 million for the second quarter of 2017.
CVR Partners’ fertilizer facilities produced a combined 174,000
tons of ammonia during the second quarter of 2018, of which 66,000
net tons were available for sale while the rest was upgraded to
other fertilizer products, including 241,000 tons of UAN. In the
2017 second quarter, the fertilizer facilities produced 215,000
tons of ammonia, of which 78,000 net tons were available for sale
while the remainder was upgraded to other fertilizer products,
including 314,000 tons of UAN.
Cash, Debt and Dividend
Consolidated cash and cash equivalents was $534 million at June
30, 2018. Consolidated total debt was $1,167 million at June 30,
2018. The company had no debt exclusive of CVR Refining’s and CVR
Partners’ debt.
CVR Energy previously announced a second quarter 2018 cash
dividend of 75 cents per share. The dividend, as declared by CVR
Energy’s Board of Directors, will be paid on Aug. 13, 2018, to
stockholders of record on Aug. 6, 2018. CVR Energy’s second quarter
cash dividend brings the cumulative cash dividends paid or declared
for the first six months of 2018 to $1.25 per share.
Today, CVR Refining announced a 2018 second quarter cash
distribution of 66 cents per common unit. CVR Partners announced
that it will not pay a cash distribution for the 2018 second
quarter.
Second Quarter 2018 Earnings Conference
Call
CVR Energy previously announced that it will host its second
quarter 2018 Earnings Conference Call for analysts and investors on
Thursday, July 26, at 3 p.m. Eastern. The Earnings Conference Call
may also include discussion of company developments,
forward-looking information and other material information about
business and financial matters.
The Earnings Conference Call will be broadcast live over the
Internet at http://edge.media-server.com/m6/p/wrsh27n7. For
investors or analysts who want to participate during the call, the
dial-in number is (877) 407-8291.
For those unable to listen live, the webcast will be archived
and available for 14 days
at http://edge.media-server.com/m6/p/wrsh27n7. A repeat of the
conference call can be accessed by dialing (877) 660-6853,
conference ID 13681419.
THIS NEWS RELEASE DOES NOT CONSTITUTE AN
OFFER TO PURCHASE, OR A SOLICITATION OF AN OFFER TO SELL, ANY
SECURITIES. THE EXCHANGE OFFER OF CVR REFINING COMMON UNITS FOR CVR
ENERGY SHARES IS BEING MADE ONLY PURSUANT TO A PROSPECTUS/OFFER TO
EXCHANGE, LETTER OF TRANSMITTAL AND RELATED MATERIALS DISTRIBUTED
TO CVR REFINING’S UNITHOLDERS. CVR ENERGY FILED A REGISTRATION
STATEMENT ON FORM S-4 AND A TENDER OFFER STATEMENT ON SCHEDULE
TO WITH THE SEC, EACH OF WHICH INCLUDES THE PROSPECTUS/OFFER TO
EXCHANGE. CVR REFINING’S UNITHOLDERS SHOULD READ THESE MATERIALS
AND THE DOCUMENTS INCORPORATED BY REFERENCE THEREIN CAREFULLY AND
IN THEIR ENTIRETY BEFORE MAKING ANY DECISION WITH RESPECT TO THE
EXCHANGE OFFER. THESE MATERIALS CAN ALSO BE OBTAINED FREE OF CHARGE
FROM THE SEC’S WEBSITE AT
WWW.SEC.GOV.
Pursuant to the partnership agreement of CVR Refining, once the
general partner and its affiliates own more than 80% of the common
units of CVR Refining, the general partner and its affiliates will
have the right, but not the obligation, to purchase all, but not
less than all, of the common units of CVR Refining held by
unaffiliated unitholders of CVR Refining at a price not less than
their then-current market price, as calculated pursuant to the
terms of the partnership agreement. Accordingly, the general
partner and its affiliates will be entitled to exercise this call
right after the consummation of the exchange offer. Pursuant to the
partnership agreement, the general partner is not obligated to
obtain a fairness opinion regarding the value of the common units
of CVR Refining to be repurchased by it upon exercise of the call
right. Pursuant to the partnership agreement, the general partner
may use its own discretion, free of fiduciary duty restrictions, in
determining whether to exercise the call right. The general partner
and its affiliates (including CVR Energy and Icahn Enterprises L.P.
and its affiliates) have no current plans to exercise the call
right at this time or upon the consummation of the exchange offer.
However, there can be no assurance that the general partner and its
affiliates will not exercise the call right in the future.
Forward-Looking StatementsThis news release may
contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Statements
concerning current estimates, expectations and projections about
future results, performance, prospects, opportunities, plans,
actions and events and other statements, concerns, or matters that
are not historical facts are “forward-looking statements,” as that
term is defined under the federal securities laws. These
forward-looking statements include, but are not limited to,
statements regarding future: crude oil differentials; RINs, crude
oil, feedstock and product prices; distributions of CVR Refining
and CVR Partners; operating performance of CVR Refining and CVR
Partners; reserves; ammonia and UAN pricing; third quarter
performance including throughput, production, direct operating
expenses, capital spending and depreciation; and other matters. You
can generally identify forward-looking statements by our use of
forward-looking terminology such as “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “explore,” “evaluate,”
“intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,”
“should,” or “will,” or the negative thereof or other variations
thereon or comparable terminology. These forward-looking statements
are only predictions and involve known and unknown risks and
uncertainties, many of which are beyond our control. Investors are
cautioned that various factors may affect these forward-looking
statements, including (among others) price volatility of crude oil,
other feedstocks and refined products; the ability of CVR Refining
and CVR Partners to make cash distributions; potential operating
hazards; costs of compliance with existing, or compliance with new,
laws and regulations and potential liabilities arising therefrom;
impacts of planting season on CVRR Partners; general economic and
business conditions; and other risks. For additional discussion of
risk factors which may affect our results, please see the risk
factors and other disclosures included in our most recent Annual
Report on Form 10-K, any subsequently filed Quarterly Reports on
Form 10-Q and our other SEC filings. These risks also include the
possibility that expected benefits from the exchange offer may not
materialize as expected; that the exchange offer may not be timely
completed, if at all; and that, prior to or after the completion of
the exchange offer, the businesses of CVR Energy or CVR Refining
may not perform as expected. These and other risks may cause our
actual results, performance or achievements to differ materially
from any future results, performance or achievements expressed or
implied by these forward-looking statements. Given these risks and
uncertainties, you are cautioned not to place undue reliance on
such forward-looking statements. The forward-looking statements
included in this news release are made only as of the date hereof.
CVR Energy disclaims any intention or obligation to update publicly
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except to the extent
required by law.
About CVR Energy, Inc.Headquartered in Sugar
Land, Texas, CVR Energy is a diversified holding company primarily
engaged in the petroleum refining and nitrogen fertilizer
manufacturing industries through its holdings in two limited
partnerships, CVR Refining, LP and CVR Partners, LP. CVR Energy
subsidiaries serve as the general partner and own 66 percent of the
common units of CVR Refining and 34 percent of the common units of
CVR Partners.
For further information, please contact:
Investor Contact:Jay FinksCVR Energy, Inc.(281)
207-3588InvestorRelations@CVREnergy.com
Media Relations:Brandee StephensCVR Energy,
Inc.(281) 207-3516MediaRelations@CVREnergy.com
|
CVR Energy, Inc. |
|
Financial
and Operational Data (all information in this release is
unaudited other than the balance sheet data as of December 31,
2017). |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions, except per share
data) |
Consolidated
Statement of Operations Data: |
|
|
|
|
|
|
|
Net sales |
$ |
1,914 |
|
|
$ |
1,434 |
|
|
$ |
3,451 |
|
|
$ |
2,942 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
Cost of materials and
other |
1,570 |
|
|
1,229 |
|
|
2,809 |
|
|
2,450 |
|
Direct operating
expenses(1) |
141 |
|
|
124 |
|
|
273 |
|
|
262 |
|
Depreciation and
amortization |
52 |
|
|
52 |
|
|
102 |
|
|
100 |
|
Cost of
sales |
1,763 |
|
|
1,405 |
|
|
3,184 |
|
|
2,812 |
|
Selling, general and
administrative expenses(1) |
32 |
|
|
25 |
|
|
55 |
|
|
55 |
|
Depreciation and
amortization |
3 |
|
|
2 |
|
|
6 |
|
|
5 |
|
Loss on asset
disposals |
5 |
|
|
1 |
|
|
5 |
|
|
1 |
|
Operating
income |
111 |
|
|
1 |
|
|
201 |
|
|
69 |
|
Interest expense,
net |
(27 |
) |
|
(27 |
) |
|
(53 |
) |
|
(54 |
) |
Gain on derivatives,
net |
10 |
|
|
— |
|
|
70 |
|
|
12 |
|
Other income, net |
2 |
|
|
— |
|
|
3 |
|
|
— |
|
Income
(loss) before income tax expense |
96 |
|
|
(26 |
) |
|
221 |
|
|
27 |
|
Income tax expense
(benefit) |
17 |
|
|
(7 |
) |
|
38 |
|
|
8 |
|
Net
income (loss) |
79 |
|
|
(19 |
) |
|
183 |
|
|
19 |
|
Less: Net
income (loss) attributable to noncontrolling interest |
28 |
|
|
(8 |
) |
|
66 |
|
|
7 |
|
Net
income (loss) attributable to CVR Energy stockholders |
$ |
51 |
|
|
$ |
(11 |
) |
|
$ |
117 |
|
|
$ |
12 |
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share |
$ |
0.59 |
|
|
$ |
(0.12 |
) |
|
$ |
1.35 |
|
|
$ |
0.13 |
|
Dividends declared per
share |
$ |
0.75 |
|
|
$ |
0.50 |
|
|
$ |
1.25 |
|
|
$ |
1.00 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA* |
$ |
103 |
|
|
$ |
38 |
|
|
$ |
189 |
|
|
$ |
118 |
|
Adjusted net income
(loss)* |
$ |
45 |
|
|
$ |
(3 |
) |
|
$ |
79 |
|
|
$ |
20 |
|
Adjusted net income
(loss) per diluted share* |
$ |
0.52 |
|
|
$ |
(0.04 |
) |
|
$ |
0.91 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding - basic and diluted |
86.8 |
|
|
86.8 |
|
|
86.8 |
|
|
86.8 |
|
______________________________ *
See “Use of Non-GAAP Financial Measures” below.
(1) Direct operating expenses and selling, general and
administrative expenses for the three and six months ended
June 30, 2018 and 2017 are shown exclusive of depreciation and
amortization, which amounts are presented separately below direct
operating expenses and selling, general and administrative
expenses.
|
|
|
|
|
As of June 30, 2018 |
|
As of December 31, 2017 |
|
|
|
(audited) |
|
(in millions) |
Balance Sheet
Data: |
|
|
|
Cash and cash
equivalents |
$ |
534 |
|
$ |
482 |
Working capital |
620 |
|
550 |
Total assets |
3,850 |
|
3,807 |
Total debt, including
current portion |
1,167 |
|
1,166 |
Total CVR stockholders’
equity |
883 |
|
919 |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions) |
Cash Flow
Data: |
|
|
|
|
|
|
|
Net cash flow provided
by (used in): |
|
|
|
|
|
|
|
Operating
activities |
$ |
204 |
|
|
$ |
105 |
|
|
$ |
229 |
|
|
$ |
242 |
|
Investing
activities |
(21 |
) |
|
(33 |
) |
|
(41 |
) |
|
(59 |
) |
Financing
activities |
(69 |
) |
|
(45 |
) |
|
(136 |
) |
|
(89 |
) |
Net
increase in cash and cash equivalents |
$ |
114 |
|
|
$ |
27 |
|
|
$ |
52 |
|
|
$ |
94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Information
Our operations are organized into two reportable segments,
Petroleum and Nitrogen Fertilizer. Our operations that are not
included in the Petroleum and Nitrogen Fertilizer segments are
included in the Corporate and Other segment (along with elimination
of intersegment transactions). The Petroleum segment is operated by
CVR Refining, LP (“CVR Refining”), in which we own a majority
interest as well as serve as the general partner. The Petroleum
segment includes the operations of the Coffeyville, Kansas and
Wynnewood, Oklahoma refineries along with the crude oil gathering
and pipeline systems. Detailed operating results for the Petroleum
segment for the three and six months ended June 30, 2018 are
included in CVR Refining’s press release dated July 25, 2018.
The Nitrogen Fertilizer segment is operated by CVR Partners, LP
(“CVR Partners”), in which we own approximately 34% of the common
units as of June 30, 2018 and serve as the general partner.
The Nitrogen Fertilizer segment consists of nitrogen fertilizer
manufacturing facilities located in Coffeyville, Kansas and East
Dubuque, Illinois. Detailed operating results for the Nitrogen
Fertilizer segment for the three and six months ended June 30,
2018 are included in CVR Partners’ press release dated
July 25, 2018.
|
|
|
|
|
|
|
|
|
Petroleum (CVR Refining) |
|
Nitrogen Fertilizer (CVR
Partners) |
|
Corporate and Other |
|
Consolidated |
|
(in millions) |
Three Months
Ended June 30, 2018 |
|
|
|
|
|
|
|
Net sales |
$ |
1,824 |
|
|
$ |
93 |
|
|
$ |
(3 |
) |
|
$ |
1,914 |
|
Cost of materials and
other |
1,553 |
|
|
19 |
|
|
(2 |
) |
|
1,570 |
|
Direct operating
expenses |
94 |
|
|
47 |
|
|
— |
|
|
141 |
|
Selling, general and
administrative |
22 |
|
|
7 |
|
|
3 |
|
|
32 |
|
Depreciation and
amortization |
33 |
|
|
20 |
|
|
2 |
|
|
55 |
|
Loss on asset
disposals |
5 |
|
|
— |
|
|
— |
|
|
5 |
|
Operating
income (loss) |
$ |
117 |
|
|
$ |
— |
|
|
$ |
(6 |
) |
|
$ |
111 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
$ |
16 |
|
|
$ |
6 |
|
|
$ |
— |
|
|
$ |
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum (CVR Refining) |
|
Nitrogen Fertilizer (CVR
Partners) |
|
Corporate and Other |
|
Consolidated |
|
(in millions) |
Six Months
Ended June 30, 2018 |
|
|
|
|
|
|
|
Net sales |
$ |
3,282 |
|
|
$ |
173 |
|
|
$ |
(4 |
) |
|
$ |
3,451 |
|
Cost of materials and
other |
2,771 |
|
|
42 |
|
|
(4 |
) |
|
2,809 |
|
Direct operating
expenses |
187 |
|
|
86 |
|
|
— |
|
|
273 |
|
Selling, general and
administrative |
38 |
|
|
12 |
|
|
5 |
|
|
55 |
|
Depreciation and
amortization |
67 |
|
|
37 |
|
|
4 |
|
|
108 |
|
Loss on asset
disposals |
5 |
|
|
— |
|
|
— |
|
|
5 |
|
Operating
income (loss) |
$ |
214 |
|
|
$ |
(4 |
) |
|
$ |
(9 |
) |
|
$ |
201 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
$ |
32 |
|
|
$ |
9 |
|
|
$ |
1 |
|
|
$ |
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum (CVR Refining) |
|
Nitrogen Fertilizer (CVR
Partners) |
|
Corporate and Other |
|
Consolidated |
|
(in millions) |
Three Months
Ended June 30, 2017 |
|
|
|
|
|
|
|
Net sales |
$ |
1,338 |
|
|
$ |
98 |
|
|
$ |
(2 |
) |
|
$ |
1,434 |
|
Cost of materials and
other |
1,208 |
|
|
22 |
|
|
(2 |
) |
|
1,229 |
|
Direct operating
expenses |
86 |
|
|
38 |
|
|
— |
|
|
124 |
|
Selling, general and
administrative |
19 |
|
|
6 |
|
|
1 |
|
|
25 |
|
Depreciation and
amortization |
32 |
|
|
20 |
|
|
2 |
|
|
54 |
|
Loss on asset
disposals |
— |
|
|
— |
|
|
1 |
|
|
1 |
|
Operating
income (loss) |
$ |
(7 |
) |
|
$ |
12 |
|
|
$ |
(4 |
) |
|
$ |
1 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
$ |
28 |
|
|
$ |
4 |
|
|
$ |
1 |
|
|
$ |
33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum (CVR Refining) |
|
Nitrogen Fertilizer (CVR
Partners) |
|
Corporate and Other |
|
Consolidated |
|
(in millions) |
Six Months
Ended June 30, 2017 |
|
|
|
|
|
|
|
Net sales |
$ |
2,762 |
|
|
$ |
183 |
|
|
$ |
(3 |
) |
|
$ |
2,942 |
|
Cost of materials and
other |
2,409 |
|
|
44 |
|
|
(3 |
) |
|
2,450 |
|
Direct operating
expenses |
188 |
|
|
74 |
|
|
— |
|
|
262 |
|
Selling, general and
administrative |
40 |
|
|
12 |
|
|
3 |
|
|
55 |
|
Depreciation and
amortization |
66 |
|
|
35 |
|
|
4 |
|
|
105 |
|
Loss on asset
disposals |
— |
|
|
— |
|
|
1 |
|
|
1 |
|
Operating
income (loss) |
$ |
59 |
|
|
$ |
18 |
|
|
$ |
(8 |
) |
|
$ |
69 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
$ |
48 |
|
|
$ |
9 |
|
|
$ |
1 |
|
|
$ |
58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum (CVR Refining) |
|
Nitrogen Fertilizer (CVR
Partners) |
|
Corporate and Other |
|
Consolidated |
|
(in millions) |
June 30,
2018 |
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
258 |
|
|
$ |
28 |
|
|
$ |
248 |
|
|
$ |
534 |
|
Total assets |
2,366 |
|
|
1,200 |
|
|
284 |
|
|
3,850 |
|
Total debt, including
current portion |
540 |
|
|
627 |
|
|
— |
|
|
1,167 |
|
|
|
|
|
|
|
|
|
December 31,
2017 |
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
174 |
|
|
$ |
49 |
|
|
$ |
259 |
|
|
$ |
482 |
|
Total assets |
2,270 |
|
|
1,234 |
|
|
303 |
|
|
3,807 |
|
Total debt, including
current portion |
541 |
|
|
626 |
|
|
— |
|
|
1,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum Segment Operating Data
The following tables set forth information about our
consolidated Petroleum segment operated by CVR Refining, of which
we own a majority interest and serve as the general partner, and
the Coffeyville and Wynnewood refineries. Reconciliations of
certain non-GAAP financial measures are provided under “Use of
Non-GAAP Financial Measures” below. Additional discussion of
operating results for the Petroleum segment for the three and six
months ended June 30, 2018 are included in CVR Refining’s
press release dated July 25, 2018.
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions) |
Petroleum
Segment Summary Financial Results: |
|
|
|
|
|
|
|
Net sales |
$ |
1,824 |
|
|
$ |
1,338 |
|
|
$ |
3,282 |
|
|
$ |
2,762 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
Cost of materials and
other |
1,553 |
|
|
1,208 |
|
|
2,771 |
|
|
2,409 |
|
Direct operating
expenses(1) |
94 |
|
|
86 |
|
|
187 |
|
|
188 |
|
Depreciation and
amortization |
32 |
|
|
31 |
|
|
65 |
|
|
65 |
|
Cost of
sales |
1,679 |
|
|
1,325 |
|
|
3,023 |
|
|
2,662 |
|
Selling, general and
administrative expenses(1) |
22 |
|
|
19 |
|
|
38 |
|
|
40 |
|
Depreciation and
amortization |
1 |
|
|
1 |
|
|
2 |
|
|
1 |
|
Loss on asset
disposals |
5 |
|
|
— |
|
|
5 |
|
|
— |
|
Operating
income (loss) |
117 |
|
|
(7 |
) |
|
214 |
|
|
59 |
|
Interest expense,
net |
(11 |
) |
|
(12 |
) |
|
(22 |
) |
|
(23 |
) |
Gain on derivatives,
net |
10 |
|
|
— |
|
|
70 |
|
|
12 |
|
Other income, net |
2 |
|
|
— |
|
|
3 |
|
|
— |
|
Net
income (loss) |
$ |
118 |
|
|
$ |
(19 |
) |
|
$ |
265 |
|
|
$ |
48 |
|
|
|
|
|
|
|
|
|
Refining margin* |
$ |
271 |
|
|
$ |
130 |
|
|
$ |
511 |
|
|
$ |
353 |
|
Refining margin
adjusted for FIFO impact* |
$ |
249 |
|
|
$ |
146 |
|
|
$ |
469 |
|
|
$ |
369 |
|
Adjusted Petroleum
EBITDA* |
$ |
147 |
|
|
$ |
43 |
|
|
$ |
273 |
|
|
$ |
158 |
|
______________________________ *
See “Use of Non-GAAP Financial Measures” below.
(1) Direct operating expense for the three and six months ended
June 30, 2018 and 2017 are shown exclusive of depreciation and
amortization, which amounts are presented separately below direct
operating expenses. Selling, general and administrative expense for
the three and six months ended June 30, 2018 and 2017 are
shown exclusive of depreciation and amortization, which amounts are
presented separately below selling, general and administrative
expenses.
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(dollars per barrel) |
Petroleum
Segment Key Operating Statistics: |
|
|
|
|
|
|
|
Per total throughput
barrel: |
|
|
|
|
|
|
|
Gross
profit |
$ |
7.29 |
|
|
$ |
0.60 |
|
|
$ |
7.05 |
|
|
$ |
2.43 |
|
Refining
margin* |
13.71 |
|
|
6.45 |
|
|
13.93 |
|
|
8.64 |
|
FIFO
impact, (favorable) unfavorable |
(1.10 |
) |
|
0.76 |
|
|
(1.15 |
) |
|
0.39 |
|
Refining
margin adjusted for FIFO impact* |
12.61 |
|
|
7.21 |
|
|
12.78 |
|
|
9.03 |
|
Direct
operating expenses and major turnaround expenses |
4.76 |
|
|
4.27 |
|
|
5.10 |
|
|
4.62 |
|
Direct
operating expenses excluding major turnaround expenses |
4.76 |
|
|
4.13 |
|
|
5.10 |
|
|
4.23 |
|
______________________________ *
See “Use of Non-GAAP Financial Measures” below.
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Market
Indicators (dollars per barrel): |
|
|
|
|
|
|
|
West Texas Intermediate
(WTI) NYMEX |
$ |
67.91 |
|
|
$ |
48.15 |
|
|
$ |
65.46 |
|
|
$ |
49.95 |
|
Crude Oil
Differentials: |
|
|
|
|
|
|
|
WTI less
WTS (light/medium sour) |
8.50 |
|
|
1.06 |
|
|
5.05 |
|
|
1.24 |
|
WTI less
WCS (heavy sour) |
18.02 |
|
|
10.00 |
|
|
21.81 |
|
|
11.88 |
|
WTI less
condensate |
0.46 |
|
|
0.15 |
|
|
0.42 |
|
|
0.12 |
|
Midland
Cushing Differential |
8.12 |
|
|
0.83 |
|
|
4.34 |
|
|
0.41 |
|
NYMEX Crack
Spreads: |
|
|
|
|
|
|
|
Gasoline |
20.63 |
|
|
18.07 |
|
|
18.06 |
|
|
16.39 |
|
Heating
Oil |
22.22 |
|
|
15.11 |
|
|
21.36 |
|
|
15.32 |
|
NYMEX
2-1-1 Crack Spread |
21.43 |
|
|
16.59 |
|
|
19.71 |
|
|
15.85 |
|
PADD II Group 3
Basis: |
|
|
|
|
|
|
|
Gasoline |
(4.44 |
) |
|
(3.95 |
) |
|
(3.19 |
) |
|
(2.96 |
) |
Ultra Low
Sulfur Diesel |
(0.05 |
) |
|
(0.62 |
) |
|
(0.33 |
) |
|
(1.10 |
) |
PADD II Group 3 Product
Crack Spread: |
|
|
|
|
|
|
|
Gasoline |
16.19 |
|
|
14.12 |
|
|
14.87 |
|
|
13.42 |
|
Ultra Low
Sulfur Diesel |
22.17 |
|
|
14.49 |
|
|
21.03 |
|
|
14.23 |
|
PADD II Group 3
2-1-1 |
19.18 |
|
|
14.30 |
|
|
17.95 |
|
|
13.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Petroleum
Segment Summary |
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
Refining
Throughput and Production Data (bpd): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Throughput: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensate |
9,127 |
|
|
4.2 |
|
|
1,258 |
|
|
0.6 |
|
|
15,560 |
|
|
7.7 |
|
|
4,363 |
|
|
1.9 |
|
Sweet |
190,595 |
|
|
88.0 |
|
|
200,812 |
|
|
90.4 |
|
|
172,969 |
|
|
85.4 |
|
|
195,610 |
|
|
86.9 |
|
Sour |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Heavy
sour |
6,249 |
|
|
2.9 |
|
|
11,771 |
|
|
5.3 |
|
|
3,385 |
|
|
1.7 |
|
|
14,130 |
|
|
6.3 |
|
Total
crude oil throughput |
205,971 |
|
|
95.1 |
|
|
213,841 |
|
|
96.3 |
|
|
191,914 |
|
|
94.8 |
|
|
214,103 |
|
|
95.1 |
|
All other
feedstocks and blendstocks |
10,694 |
|
|
4.9 |
|
|
8,113 |
|
|
3.7 |
|
|
10,681 |
|
|
5.2 |
|
|
11,161 |
|
|
4.9 |
|
Total
throughput |
216,665 |
|
|
100.0 |
|
|
221,954 |
|
|
100.0 |
|
|
202,595 |
|
|
100.0 |
|
|
225,264 |
|
|
100.0 |
|
Production: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline |
106,431 |
|
|
49.1 |
|
|
112,284 |
|
|
50.4 |
|
|
99,279 |
|
|
49.0 |
|
|
115,600 |
|
|
51.2 |
|
Distillate |
94,784 |
|
|
43.7 |
|
|
96,578 |
|
|
43.4 |
|
|
86,870 |
|
|
42.9 |
|
|
93,260 |
|
|
41.3 |
|
Other
(excluding internally produced fuel) |
15,609 |
|
|
7.2 |
|
|
13,775 |
|
|
6.2 |
|
|
16,495 |
|
|
8.1 |
|
|
17,019 |
|
|
7.5 |
|
Total
refining production (excluding internally produced fuel) |
216,824 |
|
|
100.0 |
|
|
222,637 |
|
|
100.0 |
|
|
202,644 |
|
|
100.0 |
|
|
225,879 |
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
Coffeyville
Refinery Throughput and Production Data (bpd): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Throughput: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensate |
1,547 |
|
|
1.1 |
|
|
1,258 |
|
|
0.9 |
|
|
9,586 |
|
|
8.0 |
|
|
4,363 |
|
|
3.1 |
|
Sweet |
120,975 |
|
|
89.3 |
|
|
120,790 |
|
|
86.4 |
|
|
100,863 |
|
|
84.2 |
|
|
113,804 |
|
|
80.9 |
|
Sour |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Heavy
sour |
6,249 |
|
|
4.6 |
|
|
11,771 |
|
|
8.4 |
|
|
3,385 |
|
|
2.8 |
|
|
14,130 |
|
|
10.0 |
|
Total
crude oil throughput |
128,771 |
|
|
95.0 |
|
|
133,819 |
|
|
95.7 |
|
|
113,834 |
|
|
95.0 |
|
|
132,297 |
|
|
94.0 |
|
All other
feedstocks and blendstocks |
6,671 |
|
|
5.0 |
|
|
6,077 |
|
|
4.3 |
|
|
6,022 |
|
|
5.0 |
|
|
8,482 |
|
|
6.0 |
|
Total
throughput |
135,442 |
|
|
100.0 |
|
|
139,896 |
|
|
100.0 |
|
|
119,856 |
|
|
100.0 |
|
|
140,779 |
|
|
100.0 |
|
Production: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline |
66,577 |
|
|
48.6 |
|
|
70,032 |
|
|
49.3 |
|
|
57,565 |
|
|
47.5 |
|
|
72,271 |
|
|
50.5 |
|
Distillate |
59,797 |
|
|
43.7 |
|
|
59,703 |
|
|
42.1 |
|
|
52,064 |
|
|
42.9 |
|
|
59,573 |
|
|
41.6 |
|
Other
(excluding internally produced fuel) |
10,500 |
|
|
7.7 |
|
|
12,146 |
|
|
8.6 |
|
|
11,657 |
|
|
9.6 |
|
|
11,246 |
|
|
7.9 |
|
Total
refining production (excluding internally produced fuel) |
136,874 |
|
|
100.0 |
|
|
141,881 |
|
|
100.0 |
|
|
121,286 |
|
|
100.0 |
|
|
143,090 |
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
Wynnewood
Refinery Throughput and Production Data (bpd): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Throughput: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensate |
7,580 |
|
|
9.3 |
|
|
— |
|
|
— |
|
|
5,974 |
|
|
7.2 |
|
|
— |
|
|
— |
|
Sweet |
69,620 |
|
|
85.7 |
|
|
80,022 |
|
|
97.5 |
|
|
72,106 |
|
|
87.1 |
|
|
81,806 |
|
|
96.8 |
|
Sour |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Heavy
sour |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total
crude oil throughput |
77,200 |
|
|
95.0 |
|
|
80,022 |
|
|
97.5 |
|
|
78,080 |
|
|
94.3 |
|
|
81,806 |
|
|
96.8 |
|
All other
feedstocks and blendstocks |
4,023 |
|
|
5.0 |
|
|
2,036 |
|
|
2.5 |
|
|
4,659 |
|
|
5.7 |
|
|
2,679 |
|
|
3.2 |
|
Total
throughput |
81,223 |
|
|
100.0 |
|
|
82,058 |
|
|
100.0 |
|
|
82,739 |
|
|
100.0 |
|
|
84,485 |
|
|
100.0 |
|
Production: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline |
39,854 |
|
|
49.8 |
|
|
42,252 |
|
|
52.3 |
|
|
41,714 |
|
|
51.3 |
|
|
43,329 |
|
|
52.3 |
|
Distillate |
34,987 |
|
|
43.8 |
|
|
36,875 |
|
|
45.7 |
|
|
34,806 |
|
|
42.8 |
|
|
33,687 |
|
|
40.7 |
|
Other
(excluding internally produced fuel) |
5,109 |
|
|
6.4 |
|
|
1,629 |
|
|
2.0 |
|
|
4,838 |
|
|
5.9 |
|
|
5,773 |
|
|
7.0 |
|
Total
refining production (excluding internally produced fuel) |
79,950 |
|
|
100.0 |
|
|
80,756 |
|
|
100.0 |
|
|
81,358 |
|
|
100.0 |
|
|
82,789 |
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nitrogen Fertilizer Segment Operating Data
The following tables set forth information about the Nitrogen
Fertilizer segment operated by CVR Partners, of which we own
approximately 34% of the common units as of June 30, 2018 and
serve as the general partner. Reconciliations of certain non-GAAP
financial measures are provided under “Use of Non-GAAP Financial
Measures” below. Additional discussion of operating results for the
Nitrogen Fertilizer segment for the three and six months ended
June 30, 2018 are included in CVR Partners’ press release
dated July 25, 2018.
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions) |
Nitrogen
Fertilizer Segment Business Financial Results: |
|
|
|
|
|
|
|
Net sales |
$ |
93 |
|
|
$ |
98 |
|
|
$ |
173 |
|
|
$ |
183 |
|
Cost of materials and
other |
19 |
|
|
22 |
|
|
42 |
|
|
44 |
|
Direct operating
expenses(1) |
47 |
|
|
38 |
|
|
86 |
|
|
74 |
|
Depreciation and
amortization |
20 |
|
|
20 |
|
|
37 |
|
|
35 |
|
Cost of
sales |
86 |
|
|
80 |
|
|
165 |
|
|
153 |
|
Selling, general and
administrative expenses |
7 |
|
|
6 |
|
|
12 |
|
|
12 |
|
Loss on asset
disposals |
— |
|
|
— |
|
0 |
|
— |
|
|
— |
|
Operating
income (loss) |
— |
|
|
12 |
|
|
(4 |
) |
|
18 |
|
Interest expense,
net |
(16 |
) |
|
(16 |
) |
|
(32 |
) |
|
(32 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
Net
loss |
$ |
(16 |
) |
|
$ |
(4 |
) |
|
$ |
(36 |
) |
|
$ |
(14 |
) |
|
|
|
|
|
|
|
|
Adjusted Nitrogen
Fertilizer EBITDA* |
$ |
26 |
|
|
$ |
32 |
|
|
$ |
39 |
|
|
$ |
53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
___________________________________
* See “Use of Non-GAAP Financial
Measures” below.
(1) Direct operating expenses for the three and six months ended
June 30, 2018 and 2017 are shown exclusive of depreciation and
amortization, which amounts are presented separately below direct
operating expenses.
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Nitrogen
Fertilizer Segment Key Operating Statistics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated sales
(thousand tons): |
|
|
|
|
|
|
|
Ammonia |
81.6 |
|
|
74.6 |
|
|
117.6 |
|
|
136.5 |
|
UAN |
269.6 |
|
|
330.9 |
|
|
615.0 |
|
|
652.5 |
|
|
|
|
|
|
|
|
|
Consolidated product
pricing at gate (dollars per ton) (1): |
|
|
|
|
|
|
|
Ammonia |
$ |
348 |
|
|
$ |
333 |
|
|
$ |
340 |
|
|
$ |
322 |
|
UAN |
$ |
191 |
|
|
$ |
174 |
|
|
$ |
169 |
|
|
$ |
167 |
|
|
|
|
|
|
|
|
|
Consolidated production
volume (thousand tons): |
|
|
|
|
|
|
|
Ammonia
(gross produced) (2) |
173.7 |
|
|
215.3 |
|
|
372.8 |
|
|
434.5 |
|
Ammonia
(net available for sale) (2) |
65.5 |
|
|
77.5 |
|
|
124.4 |
|
|
157.5 |
|
UAN |
240.9 |
|
|
313.8 |
|
|
580.2 |
|
|
655.7 |
|
|
|
|
|
|
|
|
|
Feedstock: |
|
|
|
|
|
|
|
Petroleum
coke used in production (thousand tons) |
89.8 |
|
|
124.0 |
|
|
208.0 |
|
|
256.6 |
|
Petroleum
coke used in production (dollars per ton) |
$ |
25 |
|
|
$ |
21 |
|
|
$ |
21 |
|
|
$ |
17 |
|
Natural
gas used in production (thousands of MMBtus)(3) |
1,964.1 |
|
|
2,134.0 |
|
|
3,814.4 |
|
|
4,225.3 |
|
Natural
gas used in production (dollars per MMBtu)(3) |
$ |
2.78 |
|
|
$ |
3.18 |
|
|
$ |
3.00 |
|
|
$ |
3.29 |
|
Natural
gas in cost of materials and other (thousands of MMBtus)(3) |
2,571.4 |
|
|
2,487.4 |
|
|
3,829.1 |
|
|
3,963.4 |
|
Natural
gas in cost of materials and other (dollars per MMBtu)(3) |
$ |
2.84 |
|
|
$ |
3.24 |
|
|
$ |
3.05 |
|
|
$ |
3.37 |
|
|
|
|
|
|
|
|
|
Coffeyville Facility
on-stream factor (4): |
|
|
|
|
|
|
|
Gasification |
72.8 |
% |
|
98.8 |
% |
|
86.3 |
% |
|
98.8 |
% |
Ammonia |
70.2 |
% |
|
98.2 |
% |
|
84.9 |
% |
|
98.3 |
% |
UAN |
67.0 |
% |
|
87.3 |
% |
|
83.0 |
% |
|
92.0 |
% |
|
|
|
|
|
|
|
|
East Dubuque Facility
on-stream factors (4): |
|
|
|
|
|
|
|
Ammonia |
93.3 |
% |
|
100.0 |
% |
|
90.0 |
% |
|
99.8 |
% |
UAN |
93.6 |
% |
|
99.4 |
% |
|
90.3 |
% |
|
98.8 |
% |
|
|
|
|
|
|
|
|
Market
Indicators: |
|
|
|
|
|
|
|
Ammonia — Southern
Plains (dollars per ton) |
$ |
343 |
|
|
$ |
316 |
|
|
$ |
362 |
|
|
$ |
352 |
|
Ammonia — Corn belt
(dollars per ton) |
$ |
396 |
|
|
$ |
365 |
|
|
$ |
412 |
|
|
$ |
395 |
|
UAN — Corn belt
(dollars per ton) |
$ |
211 |
|
|
$ |
196 |
|
|
$ |
211 |
|
|
$ |
205 |
|
Natural gas NYMEX
(dollars per MMBtu) |
$ |
2.83 |
|
|
$ |
3.14 |
|
|
$ |
2.84 |
|
|
$ |
3.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_________________________________
- Product pricing at gate represents net sales less freight
revenue divided by product sales volume in tons and is shown in
order to provide a pricing measure that is comparable across the
fertilizer industry.
- Gross tons produced for ammonia represent total ammonia
produced, including ammonia produced that was upgraded into other
fertilizer products. Net tons available for sale represent the
ammonia available for sale that was not upgraded into other
fertilizer products.
- The feedstock natural gas shown above does not include natural
gas used for fuel. The cost of fuel natural gas is included in
direct operating expense (exclusive of depreciation and
amortization).
- On-stream factor is the total number of hours operated divided
by the total number of hours in the reporting period and is
included as a measure of operating efficiency.
Use of Non-GAAP Financial Measures
To supplement our actual results in accordance with accounting
principles generally accepted in the United States of America
("GAAP") for the applicable periods, we also use the non-GAAP
financial measures noted above, which are reconciled to our
GAAP-based results below. These non-GAAP financial measures should
not be considered an alternative for GAAP results. The adjustments
are provided to enhance an overall understanding of our financial
performance for the applicable periods and are indicators
management believes are relevant and useful for planning and
forecasting future periods.
Performance and Liquidity Measures
We use the following performance and liquidity measures:
EBITDA and Adjusted EBITDA. EBITDA represents net income (loss)
attributable to CVR Energy stockholders before consolidated (i)
interest expense and other financing costs, net of interest income;
(ii) income tax expense (benefit); and (iii) depreciation and
amortization, less the portion of these adjustments attributable to
noncontrolling interest. Adjusted EBITDA represents EBITDA adjusted
for consolidated (i) FIFO impact (favorable) unfavorable; (ii)
major turnaround expenses (that many of our competitors capitalize
and thereby exclude from their measures of EBITDA and adjusted
EBITDA); (iii) (gain) loss on derivatives, net; and (iv) current
period settlements on derivative contracts. EBITDA and Adjusted
EBITDA are not recognized terms under GAAP and should not be
substituted for net income (loss) or cash flow from operations. We
believe that EBITDA and Adjusted EBITDA enable investors to better
understand and evaluate our ongoing operating results and allow for
greater transparency in reviewing our overall financial,
operational and economic performance. EBITDA and Adjusted EBITDA
presented by other companies may not be comparable to our
presentation, since each company may define these terms
differently. EBITDA and Adjusted EBITDA represent EBITDA and
Adjusted EBITDA that is attributable to CVR Energy
stockholders.
Adjusted net income (loss) is not a recognized term under GAAP
and should not be substituted for net income (loss) as a measure of
our performance, but rather should be utilized as a supplemental
measure of financial performance in evaluating our business.
Management believes that adjusted net income (loss) provides
relevant and useful information that enables external users of our
financial statements, such as industry analysts, investors, lenders
and rating agencies, to better understand and evaluate our ongoing
operating results and allow for greater transparency in the review
of our overall financial, operational and economic performance.
Adjusted net income (loss) per diluted share represents adjusted
net income (loss) divided by the weighted-average diluted shares
outstanding. Adjusted net income (loss) represents net income
(loss), as adjusted, that is attributable to CVR Energy
stockholders.
Petroleum EBITDA. EBITDA is a performance measure
representing net income (loss) before (i) interest expense and
other financing costs, net of interest income, (ii) income tax
expense and (iii) depreciation and amortization.
Petroleum Adjusted EBITDA. Adjusted EBITDA is a performance
measure representing EBITDA adjusted for (i) (favorable)
unfavorable FIFO impacts associated with our crude oil and refined
product inventories, (ii) major turnaround expenses (that many of
our competitors capitalize and thereby exclude from their measures
of EBITDA and adjusted EBITDA), (iii) (gain) loss on derivatives,
net and (iv) current period settlements on derivative contracts.
Adjusted EBITDA represents the starting point for determining
available cash for distribution. Refer to discussion below for the
Refining margin, adjusted for FIFO impact non-GAAP measure for
discussion of why management adjusted for the FIFO impact of our
inventories. We exclude major turnaround expenses because these
amounts are required expenditures for our refineries, are not
closely related to current period operations, and many of our peer
companies capitalize these amounts thereby excluding these amounts
from their EBITDA-related measures. For derivatives, we adjust
EBITDA to exclude the unrealized or non-cash portion of our
derivative gain or loss from our results in order to arrive at our
starting point for available cash for distribution.
Nitrogen EBITDA. Nitrogen Fertilizer EBITDA represents nitrogen
fertilizer net loss adjusted for (i) interest (income) expense;
(ii) income tax expense; and (iii) depreciation and amortization
expense. Adjusted Nitrogen Fertilizer EBITDA represents Nitrogen
Fertilizer EBITDA adjusted for (i) major turnaround expenses, when
applicable; (ii) gain or loss on extinguishment of debt; and (iii)
business interruption insurance recovery, when applicable. We
present Adjusted Nitrogen Fertilizer EBITDA because we have found
it helpful to consider an operating measure that excludes expenses,
such as major turnaround expense, gain or loss on extinguishment of
debt, and business interruption insurance recovery, relating to
transactions not reflective of CVR Partner's core operations.
Refining margin. This performance measure represents the
difference between net sales and cost of materials and other as
reported on our Condensed Consolidated Statements of
Operations.
Refining margin, adjusted for FIFO impact. This performance
measure represents our refining margin adjusted to exclude the
impact of price changes in our crude oil and refined products
inventories. Under our FIFO accounting method for crude oil and
refined products, changes in crude oil prices can cause
fluctuations in the inventory valuation of our raw material, work
in process and finished good inventories, thereby resulting in a
favorable FIFO impact when crude oil prices increase and an
unfavorable FIFO impact when crude oil prices decrease. In periods
of significant price volatility, these price changes have a
significant impact on the valuation on our inventories and thus our
results.
Available cash for distribution. This performance and liquidity
measure is equal to Adjusted EBITDA reduced for cash needed for (i)
debt service, (ii) reserves for environmental and maintenance
capital expenditures, (iii) reserves for major turnaround expenses
and, to the extent applicable, (iv) reserves for future operating
or capital needs that the board of directors of our general partner
deems necessary or appropriate, if any. Available cash for
distribution may be increased by the release of previously
established cash reserves, if any, and other excess cash, at the
discretion of the board of directors of our general partner.
Operating Metrics
During the second quarter of 2018, we changed the metrics
discussed below from a crude oil throughput barrel basis to a total
throughput barrel basis. Prior period information has been revised
to conform to current presentation.
Refining margin and refining margin adjusted for FIFO impact per
total throughput barrel. For both refining margin and refining
margin adjusted for FIFO impact, we present these measures on a per
total throughput barrel basis. In order to calculate these non-GAAP
operating metrics, we utilize the total dollar figures for refining
margin and refining margin adjusted for FIFO impact, as derived
above and divide by the applicable number of total throughput
barrels for the period.
Direct operating expenses, excluding major turnaround expenses,
per total throughput barrel. We provide this performance measure to
exclude major turnaround expenses from the reported amounts of
direct operating expense during a given period. Major turnaround
expenses are not directly correlated to our current period
operations and thus excluding them provides investors and analysts
with the current period cost, exclusive of depreciation and
amortization, we incur to convert a barrel of crude oil into
refined product.
We present these measures because we believe they may help
investors, analysts, lenders and ratings agencies analyze our
results of operations and liquidity in conjunction with our U.S.
GAAP results, including but not limited to our operating
performance as compared to other publicly traded companies in the
refining industry, without regard to historical cost basis or
financing methods and our ability to incur and service debt and
fund capital expenditures. Non-GAAP measures have important
limitations as analytical tools, because they exclude some, but not
all, items that affect net earnings and operating income. These
measures should not be considered substitutes for their most
directly comparable U.S. GAAP financial measures
A reconciliation of net income (loss) attributable to CVR Energy
stockholders to EBITDA and EBITDA to Adjusted EBITDA for the three
and six months ended June 30, 2018 and 2017 is as follows:
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions) |
Net income (loss)
attributable to CVR Energy stockholders |
$ |
51 |
|
|
$ |
(11 |
) |
|
$ |
117 |
|
|
$ |
12 |
|
Add: |
|
|
|
|
|
|
|
Interest
expense, net |
27 |
|
|
27 |
|
|
53 |
|
|
54 |
|
Income
tax expense (benefit) |
17 |
|
|
(7 |
) |
|
38 |
|
|
8 |
|
Depreciation and amortization |
55 |
|
|
54 |
|
|
108 |
|
|
105 |
|
Adjustments attributable to noncontrolling interest |
(39 |
) |
|
(37 |
) |
|
(76 |
) |
|
(74 |
) |
EBITDA |
111 |
|
|
26 |
|
|
240 |
|
|
105 |
|
Add: |
|
|
|
|
|
|
|
FIFO
impact, (favorable) unfavorable |
(22 |
) |
|
15 |
|
|
(42 |
) |
|
16 |
|
Major
turnaround expenses |
6 |
|
|
3 |
|
|
6 |
|
|
16 |
|
Gain on
derivatives, net |
(10 |
) |
|
— |
|
|
(70 |
) |
|
(12 |
) |
Current
period settlement on derivative contracts (1) |
17 |
|
|
— |
|
|
31 |
|
|
1 |
|
Adjustments attributable to noncontrolling interest |
1 |
|
|
(6 |
) |
|
24 |
|
|
(8 |
) |
Adjusted EBITDA |
$ |
103 |
|
|
$ |
38 |
|
|
$ |
189 |
|
|
$ |
118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions, except per share
data) |
Reconciliation
of Income (Loss) before income tax expense to Adjusted Net Income
(Loss): |
|
|
|
|
|
|
|
Income (loss) before
income tax expense |
$ |
96 |
|
|
$ |
(26 |
) |
|
$ |
221 |
|
|
$ |
27 |
|
Adjustments: |
|
|
|
|
|
|
|
FIFO
impact, (favorable) unfavorable |
(22 |
) |
|
15 |
|
|
(42 |
) |
|
16 |
|
Major
turnaround expenses |
6 |
|
|
3 |
|
|
6 |
|
|
16 |
|
Gain on
derivatives, net |
(10 |
) |
|
— |
|
|
(70 |
) |
|
(12 |
) |
Current
period settlement on derivative contracts (1) |
17 |
|
|
— |
|
|
31 |
|
|
1 |
|
Adjusted
net income (loss) before income tax expense and noncontrolling
interest |
87 |
|
|
(8 |
) |
|
146 |
|
|
48 |
|
Adjusted
net (income) loss attributed to noncontrolling interest |
(27 |
) |
|
3 |
|
|
(43 |
) |
|
(14 |
) |
Income
tax benefit (expense), as adjusted |
(15 |
) |
|
2 |
|
|
(24 |
) |
|
(14 |
) |
Adjusted
net income (loss) |
$ |
45 |
|
|
$ |
(3 |
) |
|
$ |
79 |
|
|
$ |
20 |
|
|
|
|
|
|
|
|
|
Adjusted
net income (loss) per diluted share |
$ |
0.52 |
|
|
$ |
(0.04 |
) |
|
$ |
0.91 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We have changed our metrics in the second quarter of 2018 from a
crude oil throughput barrel basis to a total throughput barrel
basis, and we have revised the historical information for the
corresponding period of the prior fiscal year from to reflect this
change in metrics.
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions) |
Petroleum
Segment: |
|
|
|
|
|
|
|
Petroleum net income
(loss) |
$ |
118 |
|
|
$ |
(19 |
) |
|
$ |
265 |
|
|
$ |
48 |
|
Add: |
|
|
|
|
|
|
|
Interest
expense, net |
11 |
|
|
12 |
|
|
22 |
|
|
23 |
|
Depreciation and amortization |
33 |
|
|
32 |
|
|
67 |
|
|
66 |
|
Petroleum EBITDA |
162 |
|
|
25 |
|
|
354 |
|
|
137 |
|
Add: |
|
|
|
|
|
|
|
FIFO
impact, (favorable) unfavorable |
(22 |
) |
|
15 |
|
|
(42 |
) |
|
16 |
|
Major
turnaround expenses |
— |
|
|
3 |
|
|
— |
|
|
16 |
|
Gain on
derivatives, net |
(10 |
) |
|
— |
|
|
(70 |
) |
|
(12 |
) |
Current
period settlements on derivative contracts (1) |
17 |
|
|
0 |
|
|
31 |
|
|
1 |
|
Adjusted Petroleum
EBITDA |
$ |
147 |
|
|
$ |
43 |
|
|
$ |
273 |
|
|
$ |
158 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions) |
Net sales |
$ |
1,824 |
|
|
$ |
1,338 |
|
|
$ |
3,282 |
|
|
$ |
2,762 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
Cost of materials and
other |
1,553 |
|
|
1,208 |
|
|
2,771 |
|
|
2,409 |
|
Direct operating
expenses (exclusive of depreciation and amortization as reflected
below) |
94 |
|
|
86 |
|
|
187 |
|
|
188 |
|
Depreciation and
amortization |
32 |
|
|
31 |
|
|
65 |
|
|
65 |
|
Gross
profit |
145 |
|
|
13 |
|
|
259 |
|
|
100 |
|
Add: |
|
|
|
|
|
|
|
Direct operating
expenses (exclusive of depreciation and amortization as reflected
below) |
94 |
|
|
86 |
|
|
187 |
|
|
188 |
|
Depreciation and
amortization |
32 |
|
|
31 |
|
|
65 |
|
|
65 |
|
Refining
margin |
271 |
|
|
130 |
|
|
511 |
|
|
353 |
|
FIFO impact,
(favorable) unfavorable |
(22 |
) |
|
15 |
|
|
(42 |
) |
|
16 |
|
Refining
margin adjusted for FIFO impact |
$ |
249 |
|
|
$ |
145 |
|
|
$ |
469 |
|
|
$ |
369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Total throughput
barrels per day |
216,665 |
|
|
221,954 |
|
|
202,595 |
|
|
225,264 |
|
Days in the period |
91 |
|
|
91 |
|
|
181 |
|
|
181 |
|
Total
throughput barrels |
19,716,515 |
|
|
20,197,814 |
|
|
36,669,695 |
|
|
40,772,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions, except for $ per barrel
data) |
Refining margin |
$ |
271 |
|
|
$ |
130 |
|
|
$ |
511 |
|
|
$ |
353 |
|
Divided by: total
throughput barrels |
20 |
|
|
20 |
|
|
37 |
|
|
41 |
|
Refining
margin per total throughput barrel |
$ |
13.71 |
|
|
$ |
6.45 |
|
|
$ |
13.93 |
|
|
$ |
8.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions, except for $ per barrel
data) |
Refining margin
adjusted for FIFO impact |
$ |
249 |
|
|
$ |
145 |
|
|
$ |
469 |
|
|
$ |
369 |
|
Divided by: total
throughput barrels |
20 |
|
|
20 |
|
|
37 |
|
|
41 |
|
Refining
margin adjusted for FIFO impact per total throughput barrel |
$ |
12.61 |
|
|
$ |
7.21 |
|
|
$ |
12.78 |
|
|
$ |
9.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions, except for $ per barrel
data) |
Direct operating
expenses (exclusive of depreciation and amortization) |
$ |
94 |
|
|
$ |
86 |
|
|
$ |
187 |
|
|
$ |
188 |
|
Major turnaround
expenses |
— |
|
|
3 |
|
|
— |
|
|
16 |
|
Direct operating
expenses (1) |
94 |
|
|
83 |
|
|
187 |
|
|
172 |
|
Divided by: total
throughput barrels |
20 |
|
|
20 |
|
|
37 |
|
|
41 |
|
Direct
operating expenses, excluding major turnaround expenses, per total
throughput barrel |
$ |
4.76 |
|
|
$ |
4.18 |
|
|
$ |
5.10 |
|
|
$ |
4.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
___________________________
(1) Direct operating expenses are shown exclusive of
depreciation and amortization and major turnaround expenses.
A reconciliation of net income (loss) to EBITDA and EBITDA to
Adjusted EBITDA for the Nitrogen Fertilizer segment for the three
and six months ended June 30, 2018 and 2017 is as follows:
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(in millions) |
Nitrogen
Fertilizer: |
|
|
|
|
|
|
|
Nitrogen fertilizer net
loss |
$ |
(16 |
) |
|
$ |
(4 |
) |
|
$ |
(36 |
) |
|
$ |
(14 |
) |
Add: |
|
|
|
|
|
|
|
Interest
expense, net |
16 |
|
|
16 |
|
|
32 |
|
|
32 |
|
Depreciation and amortization |
20 |
|
|
20 |
|
|
37 |
|
|
35 |
|
Nitrogen Fertilizer
EBITDA |
20 |
|
|
32 |
|
|
33 |
|
|
53 |
|
Add: |
|
|
|
|
|
|
|
Major
turnaround expenses |
6 |
|
|
— |
|
|
6 |
|
|
— |
|
Adjusted Nitrogen
Fertilizer EBITDA |
$ |
26 |
|
|
$ |
32 |
|
|
$ |
39 |
|
|
$ |
53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
___________________________________________________
(1) Represents the portion of gain on derivatives, net related
to contracts that matured during the respective periods and settled
with counterparties. There are no premiums paid or received at
inception of the derivative contracts and upon settlement, there is
no cost recovery associated with these contracts.
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