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CVR Energy Reports First Quarter 2023 Results and Announces a Cash Dividend of 50 Cents

CVR Energy, Inc.
CVR Energy, Inc.

SUGAR LAND, Texas, May 01, 2023 (GLOBE NEWSWIRE) -- CVR Energy, Inc. (“CVR Energy” or the “Company”) (NYSE: CVI) today announced net income of $195 million, or $1.94 per diluted share, on net sales of $2.3 billion for the first quarter of 2023, compared to net income of $94 million, or 93 cents per diluted share, on net sales of $2.4 billion for the first quarter of 2022. Adjusted earnings for the first quarter of 2023 was $1.44 per diluted share compared to adjusted earnings of 2 cents per diluted share in the first quarter of 2022, primarily driven by improved crack spreads. First quarter 2023 EBITDA was $401 million, compared to first quarter 2022 EBITDA of $278 million. Adjusted EBITDA for the first quarter of 2023 was $334 million, up from $155 million in the first quarter of 2022.

“CVR Energy reported solid results for the first quarter 2023 including the impacts of scheduled downtime related to the Coffeyville refinery’s coker turnaround,” said Dave Lamp, CVR Energy’s Chief Executive Officer. “The Petroleum Segment’s results were driven by continued strong diesel cracks and improved gasoline cracks. The Wynnewood Renewable Diesel Unit processed approximately 23 million gallons of bean oil during the quarter. In addition, the Company continued progress on Wynnewood’s Pre-Treatment Unit, currently expected to be in service in the third quarter 2023. CVR Energy also announced a 2023 first quarter cash dividend of 50 cents per share.

“CVR Partners achieved strong results for the first quarter 2023 driven by record production offset somewhat by lower fertilizer pricing during the quarter,” Lamp said. “CVR Partners declared a 2023 first quarter cash distribution of $10.43 per common unit.”

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Petroleum

The Petroleum Segment reported first quarter 2023 operating income of $237 million on net sales of $2.0 billion, compared to operating income of $130 million on net sales of $2.2 billion in the first quarter of 2022.

Refining margin per total throughput barrel was $23.24 in the first quarter of 2023, compared to $16.75 during the same period in 2022. The increase in refining margin of $114 million was primarily due to an increase in product crack spreads. The Group 3 2-1-1 crack spread increased by $11.96 per barrel relative to the first quarter of 2022, driven by tight inventory levels and supply concerns due to the ongoing Russia-Ukraine conflict.

The Petroleum Segment recognized costs to comply with the Renewable Fuel Standard (“RFS”) of $95 million, or $5.36 per throughput barrel, which excludes the RINs’ revaluation benefit impact of $56 million, or $3.17 per total throughput barrel, for the first quarter of 2023. This is compared to RFS compliance costs of $88 million, or $4.93 per throughput barrel, which excludes the RINs’ revaluation expense impact of $19 million, or $1.08 per total throughput barrel, for the first quarter of 2022. The increase in RFS compliance costs in 2023 was primarily related to a higher renewable volume obligation (“RVO”) for the first quarter of 2023 compared to the 2022 period. The favorable RINs’ revaluation in 2023 was a result of a mark-to-market benefit in the current quarter due to a decline in RIN prices and a lower outstanding obligation in the current period compared to the 2022 period.

The Petroleum Segment also recognized a first quarter 2023 derivative net gain of $39 million, or $2.20 per total throughput barrel, compared to a derivative net gain of $8 million, or 47 cents per total throughput barrel, for the first quarter of 2022. Included in this derivative net gain for the first quarter of 2023 was a $31 million unrealized gain primarily a result of inventory hedging activity, Canadian crude oil forwards and sales, and crack spread swaps, compared to a $5 million unrealized gain for the first quarter of 2022. Offsetting these impacts, crude oil prices decreased during the quarter, which led to an unfavorable inventory valuation impact of $12 million, or 67 cents per total throughput barrel, compared to a favorable inventory valuation impact of $133 million, or $7.51 per total throughput barrel, during the first quarter of 2022.

First quarter 2023 combined total throughput was approximately 196,000 bpd, compared to approximately 197,000 bpd of combined total throughput for the first quarter of 2022.

Nitrogen Fertilizer

The Nitrogen Fertilizer Segment reported an operating income of $109 million on net sales of $226 million for the first quarter of 2023, compared to operating income of $104 million on net sales of $223 million for the first quarter of 2022.

First quarter 2023 average realized gate prices for urea ammonia nitrate (“UAN”) showed a reduction over the prior year, down 8 percent to $457 per ton, and ammonia was down 16 percent over the prior year to $888 per ton. Average realized gate prices for UAN and ammonia were $496 and $1,055 per ton, respectively, for the first quarter of 2022.

CVR Partners, LP’s (“CVR Partners”) fertilizer facilities produced a combined 224,000 tons of ammonia during the first quarter of 2023, of which 62,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 366,000 tons of UAN. During the first quarter 2022, the fertilizer facilities produced 187,000 tons of ammonia, of which 52,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 317,000 tons of UAN. These increases were due to operating reliability after completing the planned turnarounds during the third quarter of 2022.

In January 2023, CVR Partners and one of its subsidiaries entered into a series of agreements to allow CVR Partners to monetize certain tax credits available to joint ventures under Section 45Q of the Internal Revenue Code of 1986, as amended, expected to be generated from January 6, 2023, until March 31, 2030 (the “45Q Transaction”). In connection with these agreements, CVR Partners received an initial distribution, net of expenses, of approximately $18.1 million and could receive up to an additional $60 million in payments through March 31, 2030, if certain carbon oxide capture and sequestration milestones are met, subject to the terms of the applicable agreements. Among other items, the 45Q Transaction resulted in the creation of CVR-CapturePoint Parent LLC, a joint venture in which CVR Partners indirectly holds a 50 percent interest.

Corporate and Other

The Company reported an income tax expense of $56 million, or 17.8 percent of income before income taxes, for the three months ended March 31, 2023, as compared to an income tax expense of $34 million, or 18.0 percent of income before income taxes, for the three months ended March 31, 2022. The increase in income tax expense was due primarily to an increase in pretax earnings.

The renewable diesel unit at the Wynnewood refinery continued to increase production, with total vegetable oil throughputs for the first quarter of 2023 of approximately 22.4 million gallons, up from 12.8 million gallons in the fourth quarter of 2022.

Cash, Debt and Dividend

Consolidated cash and cash equivalents were $601 million at March 31, 2023, an increase of $91 million from December 31, 2022. Consolidated total debt and finance lease obligations were $1.6 billion at March 31, 2023, including $547 million held by the Nitrogen Fertilizer Segment.

CVR Energy announced a first quarter 2023 cash dividend of 50 cents per share. The dividend, as declared by CVR Energy’s Board of Directors, will be paid on May 22, 2023, to stockholders of record as of May 15, 2023.

Today, CVR Partners announced that the Board of Directors of its general partner declared a first quarter 2023 cash distribution of $10.43 per common unit, which will be paid on May 22, 2023, to common unitholders of record as of May 15, 2023.

First Quarter 2023 Earnings Conference Call

CVR Energy previously announced that it will host its first quarter 2023 Earnings Conference Call on Tuesday, May 2, at 1 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 first quarter 2023 Earnings Conference Call will be webcast live and can be accessed on the Investor Relations section of CVR Energy’s website at www.CVREnergy.com. For investors or analysts who want to participate during the call, the dial-in number is (877) 407-8291. The webcast will be archived and available for 14 days at https://edge.media-server.com/mmc/p/iack3rjy. A repeat of the call also can be accessed for 14 days by dialing (877) 660-6853, conference ID 13737894.

Forward-Looking Statements
This 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: impact of scheduled downtime on results; diesel and gasoline cracks, including the continued strength or improvement thereof; progress on Wynnewood’s Pre-Treatment Unit; crude oil and RIN pricing; crack spreads; operating income; net sales; refining margin; EBITDA and Adjusted EBITDA; refined product demand; inventory levels, including the tightness thereof and factors impacting same; throughput rates, including factors impacting same; impacts of plant outages and weather events on throughput volume; renewables initiatives; conversion of hydrocrackers at Coffeyville and/or feed pre-treaters, including the completion, operation, capacities, timing, costs, optionality and benefits thereof; margins, spreads and economics relating to renewables; carbon capture and decarbonization initiatives; utilization rates; global fertilizer industry conditions; crop and planting conditions; cost to comply with the Renewable Fuel Standard, RIN prices and valuation of our net RVO; derivative activities and gains or losses associated therewith; UAN, ammonia and fertilizer production, demand, pricing and sales volumes, including the factors impacting same; rates at which ammonia will be upgraded to other fertilizer products; operational reliability, including the factors impacting same; Section 45Q credits and future payments arising under the 45Q Transaction (if any), including the amount, timing and receipt thereof; tax rates and expense; dividends and distributions, including the timing, payment and amount (if any) thereof; total throughput, direct operating expenses, capital expenditures, depreciation and amortization and turnaround expense; continued safe and reliable operations; the expected timing and completion of turnaround projects; natural gas and global energy costs; exports; consideration of a potential spin-off of Company’s interests in its nitrogen fertilizer business; and other matters. You can generally identify forward-looking statements by our use of forward-looking terminology such as “outlook,” “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 the rate of any economic improvement, demand for fossil fuels, price volatility of crude oil, other feedstocks and refined products (among others); the ability of the Company to pay cash dividends 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 CVR Partners; the health and economic effects of the COVID-19 pandemic and any variant thereof; general economic and business conditions; political disturbances, geopolitical instability and tensions, and associated changes in global trade policies and economic sanctions, including, but not limited to, in connection with Russia’s invasion of Ukraine in February 2022; 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 Securities and Exchange Commission (“SEC”) filings. 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 renewables, petroleum refining and marketing business as well as in the nitrogen fertilizer manufacturing business through its interest in CVR Partners. CVR Energy subsidiaries serve as the general partner and own 37 percent of the common units of CVR Partners.

Investors and others should note that CVR Energy may announce material information using SEC filings, press releases, public conference calls, webcasts and the Investor Relations page of its website. CVR Energy may use these channels to distribute material information about the Company and to communicate important information about the Company, corporate initiatives and other matters. Information that CVR Energy posts on its website could be deemed material; therefore, CVR Energy encourages investors, the media, its customers, business partners and others interested in the Company to review the information posted on its website.

For further information, please contact:

Investor Relations
Richard Roberts
CVR Energy, Inc.
(281) 207-3205
InvestorRelations@CVREnergy.com

Media Relations
Brandee Stephens
CVR Energy, Inc.
(281) 207-3516
MediaRelations@CVREnergy.com

Non-GAAP Measures

Our management uses certain non-GAAP performance measures, and reconciliations to those measures, to evaluate current and past performance and prospects for the future to supplement our financial information presented in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures are important factors in assessing our operating results and profitability and include the performance and liquidity measures defined below.

The following are non-GAAP measures we present for the period ended March 31, 2023:

EBITDA - Consolidated net income (loss) before (i) interest expense, net, (ii) income tax expense (benefit) and (iii) depreciation and amortization expense.

Petroleum EBITDA and Nitrogen Fertilizer EBITDA - Segment net income (loss) before segment (i) interest expense, net, (ii) income tax expense (benefit), and (iii) depreciation and amortization.

Refining Margin - The difference between our Petroleum Segment net sales and cost of materials and other.

Refining Margin, adjusted for Inventory Valuation Impacts - Refining Margin adjusted to exclude the impact of current period market price and volume fluctuations on crude oil and refined product inventories purchased in prior periods and lower of cost or net realizable value adjustments, if applicable. We record our commodity inventories on the first-in-first-out basis. As a result, significant current period fluctuations in market prices and the volumes we hold in inventory can have favorable or unfavorable impacts on our refining margins as compared to similar metrics used by other publicly-traded companies in the refining industry.

Refining Margin and Refining Margin adjusted for Inventory Valuation Impacts, per Throughput Barrel - Refining Margin and Refining Margin adjusted for Inventory Valuation Impacts divided by the total throughput barrels during the period, which is calculated as total throughput barrels per day times the number of days in the period.

Direct Operating Expenses per Throughput Barrel - Direct operating expenses for our Petroleum Segment divided by total throughput barrels for the period, which is calculated as total throughput barrels per day times the number of days in the period.

Adjusted EBITDA, Adjusted Petroleum EBITDA and Adjusted Nitrogen Fertilizer EBITDA - EBITDA, Petroleum EBITDA and Nitrogen Fertilizer EBITDA adjusted for certain significant non-cash items and items that management believes are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends.

Adjusted Earnings (Loss) per Share - Earnings (loss) per share adjusted for certain significant non-cash items and items that management believes are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends.

Free Cash Flow - Net cash provided by (used in) operating activities less capital expenditures and capitalized turnaround expenditures.

Net Debt and Finance Lease Obligations - Net debt and finance lease obligations is total debt and finance lease obligations reduced for cash and cash equivalents.

Total Debt and Net Debt and Finance Lease Obligations to EBITDA Exclusive of Nitrogen Fertilizer - Total debt and net debt and finance lease obligations is calculated as the consolidated debt and net debt and finance lease obligations less the Nitrogen Fertilizer Segment’s debt and net debt and finance lease obligations as of the most recent period ended divided by EBITDA exclusive of the Nitrogen Fertilizer Segment for the most recent twelve-month period.

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 and fertilizer industries, 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. See “Non-GAAP Reconciliations” included herein for reconciliation of these amounts. Due to rounding, numbers presented within this section may not add or equal to numbers or totals presented elsewhere within this document.

 

CVR Energy, Inc.

(all information in this release is unaudited)

 

Consolidated Statement of Operations Data

 

 

 

Three Months Ended

 

March 31,

(in millions, except per share data)

 

2023

 

 

 

2022

 

Net sales

$

2,286

 

 

$

2,373

 

Operating costs and expenses:

 

 

 

Cost of materials and other

 

1,680

 

 

 

1,887

 

Direct operating expenses (exclusive of depreciation and amortization)

 

169

 

 

 

160

 

Depreciation and amortization

 

66

 

 

 

65

 

Cost of sales

 

1,915

 

 

 

2,112

 

Selling, general and administrative expenses (exclusive of depreciation and amortization)

 

39

 

 

 

39

 

Depreciation and amortization

 

2

 

 

 

2

 

Operating income

 

330

 

 

 

220

 

Other (expense) income:

 

 

 

Interest expense, net

 

(18

)

 

 

(24

)

Other income (expense), net

 

3

 

 

 

(9

)

Income before income tax expense

 

315

 

 

 

187

 

Income tax expense

 

56

 

 

 

34

 

Net income

 

259

 

 

 

153

 

Less: Net income attributable to noncontrolling interest

 

64

 

 

 

59

 

Net income attributable to CVR Energy stockholders

$

195

 

 

$

94

 

 

 

 

 

Basic and diluted earnings per share

$

1.94

 

 

$

0.93

 

Dividends declared per share

$

0.50

 

 

$

 

 

 

 

 

Adjusted earnings per share

$

1.44

 

 

$

0.02

 

EBITDA*

$

401

 

 

$

278

 

Adjusted EBITDA *

$

334

 

 

$

155

 

 

 

 

 

Weighted-average common shares outstanding - basic and diluted

 

100.5

 

 

 

100.5

 


______________________________

*

See “Non-GAAP Reconciliations” section below.


Selected Balance Sheet Data

 

 

 

 

(in millions)

March 31, 2023

 

December 31, 2022

Cash and cash equivalents

$

601

 

 

$

510

 

Working capital

 

290

 

 

 

154

 

Total assets

 

4,208

 

 

 

4,119

 

Total debt and finance lease obligations, including current portion

 

1,590

 

 

 

1,591

 

Total liabilities

 

3,279

 

 

 

3,328

 

Total CVR stockholders’ equity

 

675

 

 

 

531

 


Selected Cash Flow Data

 

 

 

Three Months Ended

 

March 31,

(in millions)

 

2023

 

 

 

2022

 

Net cash provided by:

 

 

 

Operating activities

$

247

 

 

$

322

 

Investing activities

 

(34

)

 

 

(41

)

Financing activities

 

(122

)

 

 

(115

)

Net increase in cash and cash equivalents and restricted cash

$

91

 

 

$

166

 

 

 

 

 

Free cash flow*

$

213

 

 

$

281

 


______________________________

*

See “Non-GAAP Reconciliations” section below.


Selected Segment Data

 

 

 

Three Months Ended March 31, 2023

(in millions)

Petroleum

 

Nitrogen Fertilizer

 

Consolidated

Net sales

$

1,993

 

 

$

226

 

 

$

2,286

 

Operating income

 

237

 

 

 

109

 

 

 

330

 

Net income

 

259

 

 

 

102

 

 

 

259

 

EBITDA*

 

285

 

 

 

124

 

 

 

401

 

 

 

 

 

 

 

Capital expenditures (1)

 

 

 

 

 

Maintenance capital expenditures

$

36

 

 

$

4

 

 

$

41

 

Growth capital expenditures

 

6

 

 

 

 

 

 

18

 

Total capital expenditures

$

42

 

 

$

4

 

 

$

59

 


 

Three Months Ended March 31, 2022

(in millions)

Petroleum

 

Nitrogen Fertilizer

 

Consolidated

Net sales

$

2,154

 

 

$

223

 

 

$

2,373

 

Operating income

 

130

 

 

 

104

 

 

 

220

 

Net income

 

126

 

 

 

94

 

 

 

153

 

EBITDA*

 

167

 

 

 

123

 

 

 

278

 

 

 

 

 

 

 

Capital expenditures (1)

 

 

 

 

 

Maintenance capital expenditures

$

18

 

 

$

5

 

 

$

23

 

Growth capital expenditures

 

1

 

 

 

 

 

 

27

 

Total capital expenditures

$

19

 

 

$

5

 

 

$

50

 


______________________________

*

See “Non-GAAP Reconciliations” section below.

(1)

Capital expenditures are shown exclusive of capitalized turnaround expenditures and business combinations.


Selected Balance Sheet Data

 

 

 

 

 

March 31, 2023

 

December 31, 2022

(in millions)

Petroleum

 

Nitrogen Fertilizer

 

Consolidated

 

Petroleum

 

Nitrogen Fertilizer

 

Consolidated

Cash and cash equivalents (1)

$

320

 

 

$

121

 

 

$

601

 

 

$

235

 

 

$

86

 

 

$

510

 

Total assets

 

4,114

 

 

 

1,116

 

 

 

4,208

 

 

 

4,354

 

 

 

1,100

 

 

 

4,119

 

Total debt and finance lease obligations, including current portion (2)

 

47

 

 

 

547

 

 

 

1,590

 

 

 

48

 

 

 

547

 

 

 

1,591

 


______________________________

(1)

Corporate cash and cash equivalents consisted of $160 million and $189 million at March 31, 2023 and December 31, 2022, respectively.

(2)

Corporate total debt and finance lease obligations, including current portion consisted of $996 million and $996 million at March 31, 2023 and December 31, 2022, respectively.


Petroleum Segment

 

 

Key Operating Metrics per Total Throughput Barrel

 

 

 

Three Months Ended

 

March 31,

(in millions)

 

2023

 

 

 

2022

 

Refining margin *

$

23.24

 

 

$

16.75

 

Refining margin adjusted for inventory valuation impacts *

 

23.91

 

 

 

9.24

 

Direct operating expenses *

 

5.90

 

 

 

5.57

 


______________________________

*

See “Non-GAAP Reconciliations” section below.


Throughput Data by Refinery

 

 

 

Three Months Ended

 

March 31,

(in bpd)

2023

 

2022

Coffeyville

 

 

 

 

 

Regional crude

45,353

 

 

39,766

 

WTI

37,664

 

 

47,815

 

Midland WTI

 

 

2,602

 

Condensate

9,174

 

 

11,352

 

Heavy Canadian

4,121

 

 

6,761

 

DJ Basin

13,813

 

 

18,035

 

Other feedstocks and blendstocks

13,235

 

 

11,344

 

Wynnewood

 

 

 

 

 

Regional crude

49,822

 

 

43,403

 

WTL

3,957

 

 

344

 

Midland WTI

 

 

1,634

 

WTS

 

 

578

 

Condensate

15,930

 

 

10,285

 

Other feedstocks and blendstocks

3,425

 

 

3,425

 

Total throughput

196,494

 

 

197,344

 


Production Data by Refinery

 

 

 

Three Months Ended

 

March 31,

(in bpd)

2023

 

2022

Coffeyville

 

 

 

Gasoline

64,489

 

 

 

75,050

 

 

Distillate

50,160

 

 

 

54,665

 

 

Other liquid products

5,112

 

 

 

4,988

 

 

Solids

3,345

 

 

 

4,359

 

 

Wynnewood

 

 

 

Gasoline

39,987

 

 

 

29,366

 

 

Distillate

25,254

 

 

 

22,518

 

 

Other liquid products

6,282

 

 

 

5,134

 

 

Solids

10

 

 

 

20

 

 

Total production

194,639

 

 

 

196,100

 

 

 

 

 

 

Light product yield (as % of crude throughput) (1)

100.0

 

%

 

99.5

 

%

Liquid volume yield (as % of total throughput) (2)

97.3

 

%

 

    97.2

 

%

Distillate yield (as % of crude throughput) (3)

41.9

 

%

 

42.3

 

%


______________________________

(1)

Total Gasoline and Distillate divided by total Regional crude, WTI, WTL, Midland WTI, WTS, Condensate, Heavy Canadian, and DJ Basin throughput.

(2)

Total Gasoline, Distillate, and Other liquid products divided by total throughput.

(3)

Total Distillate divided by total Regional crude, WTI, WTL, Midland WTI, WTS, Condensate, Heavy Canadian, and DJ Basin throughput.


Key Market Indicators

 

 

 

Three Months Ended

 

March 31,

 

 

2023

 

 

 

2022

 

West Texas Intermediate (WTI) NYMEX

$

76.02

 

 

$

95.01

 

Crude Oil Differentials to WTI:

 

 

 

Brent

 

6.11

 

 

 

2.89

 

WCS (heavy sour)

 

(19.71

)

 

 

(12.78

)

Condensate

 

0.13

 

 

 

0.10

 

Midland Cushing

 

1.51

 

 

 

1.43

 

NYMEX Crack Spreads:

 

 

 

Gasoline

 

29.80

 

 

 

23.46

 

Heating Oil

 

46.93

 

 

 

33.88

 

NYMEX 2-1-1 Crack Spread

 

38.37

 

 

 

28.67

 

PADD II Group 3 Product Basis:

 

 

 

Gasoline

 

(3.77

)

 

 

(7.16

)

Ultra-Low Sulfur Diesel

 

(4.64

)

 

 

(5.78

)

PADD II Group 3 Product Crack Spread:

 

 

 

Gasoline

 

26.03

 

 

 

16.30

 

Ultra-Low Sulfur Diesel

 

42.29

 

 

 

28.10

 

PADD II Group 3 2-1-1

 

34.16

 

 

 

22.20

 


Nitrogen Fertilizer Segment:

 

 

Ammonia Utilization Rates (1)

 

 

 

Three Months Ended

 

March 31,

(percent of capacity utilization)

2023

 

2022

Consolidated

105

 

%

 

88

 

%


______________________________

(1)

Reflects our ammonia utilization rates on a consolidated basis. Utilization is an important measure used by management to assess operational output at each of CVR Partners’ facilities. Utilization is calculated as actual tons produced divided by capacity. We present our utilization for the three months ended March 31, 2023 and 2022 and take into account the impact of our current turnaround cycles on any specific period. Additionally, we present utilization solely on ammonia production rather than each nitrogen product as it provides a comparative baseline against industry peers and eliminates the disparity of plant configurations for upgrade of ammonia into other nitrogen products. With our efforts being primarily focused on ammonia upgrade capabilities, this measure provides a meaningful view of how well we operate.


Sales and Production Data

 

 

 

Three Months Ended

 

March 31,

 

 

2023

 

 

 

2022

 

Consolidated sales (thousand tons):

 

 

 

Ammonia

 

42

 

 

 

40

 

UAN

 

359

 

 

 

322

 

 

 

 

 

Consolidated product pricing at gate (dollars per ton):(1)

 

 

 

Ammonia

$

888

 

 

$

1,055

 

UAN

 

457

 

 

 

496

 

 

 

 

 

Consolidated production volume (thousand tons):

 

 

 

Ammonia (gross produced) (2)

 

224

 

 

 

187

 

Ammonia (net available for sale) (2)

 

62

 

 

 

52

 

UAN

 

366

 

 

 

317

 

 

 

 

 

Feedstock:

 

 

 

Petroleum coke used in production (thousand tons)

 

131

 

 

 

108

 

Petroleum coke used in production (dollars per ton)

$

77.24

 

 

$

56.46

 

Natural gas used in production (thousands of MMBtu) (3)

 

2,102

 

 

 

1,761

 

Natural gas used in production (dollars per MMBtu) (3)

$

5.76

 

 

$

     5.54

 

Natural gas in cost of materials and other (thousands of MMBtus) (3)

 

1,315

 

 

 

 1,528

 

Natural gas in cost of materials and other (dollars per MMBtu) (3)

$

7.79

 

 

$

5.62

 


______________________________

(1)

Product pricing at gate represents 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.

(2)

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 ammonia available for sale that was not upgraded into other fertilizer products.

(3)

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.


Key Market Indicators

 

 

 

Three Months Ended

 

March 31,

 

 

2023

 

 

 

2022

 

Ammonia — Southern Plains (dollars per ton)

$

739

 

 

$

1,277

 

Ammonia — Corn belt (dollars per ton)

 

894

 

 

 

1,376

 

UAN — Corn belt (dollars per ton)

 

373

 

 

 

615

 

 

 

 

 

Natural gas NYMEX (dollars per MMBtu)

$

2.76

 

 

$

4.59

 


Q2 2023 Outlook

 

The table below summarizes our outlook for certain operational statistics and financial information for the second quarter of 2023. See “Forward-Looking Statements” above.

 

 

 

Q2 2023

 

Low

 

High

Petroleum

 

 

 

Total throughput (bpd)

 

195,000

 

 

 

 

210,000

 

 

Direct operating expenses (in millions) (1)

$

90

 

 

 

$

100

 

 

 

 

 

 

Renewables (2)

 

 

 

Total throughput (in millions of gallons)

 

15

 

 

 

 

22

 

 

Direct operating expenses (in millions) (1)

$

6

 

 

 

$

8

 

 

 

 

 

 

Nitrogen Fertilizer

 

 

 

Ammonia utilization rates

 

 

 

Consolidated

 

95

 

%

 

 

100

 

%

Coffeyville Fertilizer Facility

 

95

 

%

 

 

100

 

%

East Dubuque Fertilizer Facility

 

95

 

%

 

 

100

 

%

Direct operating expenses (in millions) (1)

$

50

 

 

 

$

55

 

 

 

 

 

 

Capital Expenditures (in millions) (3)

 

 

 

Petroleum

$

35

 

 

 

$

45

 

 

Renewables (2)

 

20

 

 

 

 

30

 

 

Nitrogen Fertilizer

 

7

 

 

 

 

12

 

 

Other

 

1

 

 

 

 

5

 

 

Total capital expenditures

$

63

 

 

 

$

92

 

 


______________________________

(1)

Direct operating expenses are shown exclusive of depreciation and amortization and, for the Nitrogen Fertilizer Segment, turnaround expenses and inventory valuation impacts.

(2)

Renewables reflects spending on the Wynnewood renewable diesel unit project. As of March 31, 2023, Renewables does not meet the definition of a reportable segment as defined under Accounting Standards Codification 280.

(3)

Capital expenditures is disclosed on an accrual basis.


Non-GAAP Reconciliations:

 

 

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 

 

 

Three Months Ended

 

March 31,

(in millions)

 

2023

 

 

 

2022

 

Net income

$

259

 

 

$

153

 

Interest expense, net

 

18

 

 

 

24

 

Income tax expense

 

56

 

 

 

34

 

Depreciation and amortization

 

68

 

 

 

67

 

EBITDA

$

401

 

 

$

278

 

Adjustments:

 

 

 

Revaluation of RFS liability

 

(56

)

 

 

19

 

Unrealized gain on derivatives, net

 

(31

)

 

 

(6

)

Inventory valuation impacts, unfavorable (favorable)

 

20

 

 

 

(136

)

Adjusted EBITDA

$

334

 

 

$

155

 


Reconciliation of Basic and Diluted Earnings per Share to Adjusted Earnings per Share

 

 

 

Three Months Ended

 

March 31,

 

 

2023

 

 

 

2022

 

Basic and diluted earnings per share

$

1.94

 

 

$

0.93

 

Adjustments: (1)

 

 

 

Revaluation of RFS liability

 

(0.42

)

 

 

0.14

 

Unrealized gain on derivatives, net

 

(0.23

)

 

 

(0.05

)

Inventory valuation impacts, unfavorable (favorable)

 

0.15

 

 

 

(1.00

)

Adjusted earnings per share

$

1.44

 

 

$

0.02

 


______________________________

(1)

Amounts are shown after-tax, using the Company’s marginal tax rate, and are presented on a per share basis using the weighted average shares outstanding for each period.


Reconciliation of Net Cash Provided By Operating Activities to Free Cash Flow

 

 

 

Three Months Ended

 

March 31,

(in millions)

 

2023

 

 

 

2022

 

Net cash provided by operating activities

$

247

 

 

$

322

 

Less:

 

 

 

Capital expenditures

 

(45

)

 

 

(26

)

Capitalized turnaround expenditures

 

(8

)

 

 

(15

)

Return on equity method investment

 

19

 

 

 

 

Free cash flow

$

213

 

 

$

281

 


Reconciliation of Petroleum Segment Net Income to EBITDA and Adjusted EBITDA

 

 

 

Three Months Ended

 

March 31,

(in millions)

 

2023

 

 

 

2022

 

Petroleum net income

$

259

 

 

$

126

 

Interest income, net

 

(20

)

 

 

(5

)

Depreciation and amortization

 

46

 

 

 

46

 

Petroleum EBITDA

 

285

 

 

 

167

 

Adjustments:

 

 

 

Revaluation of RFS liability

 

(56

)

 

 

19

 

Unrealized gain on derivatives, net

 

(31

)

 

 

(5

)

Inventory valuation impacts, unfavorable (favorable) (1)

 

12

 

 

 

(133

)

Petroleum Adjusted EBITDA

$

210

 

 

$

48

 


Reconciliation of Petroleum Segment Gross Profit to Refining Margin and Refining Margin Adjusted for Inventory Valuation Impacts

 

 

 

Three Months Ended

 

March 31,

(in millions)

 

2023

 

 

 

2022

 

Net sales

$

1,993

 

 

$

2,154

 

Less:

 

 

 

Cost of materials and other

 

(1,582

)

 

 

(1,857

)

Direct operating expenses (exclusive of depreciation and amortization)

 

(104

)

 

 

(99

)

Depreciation and amortization

 

(46

)

 

 

(46

)

Gross profit

 

261

 

 

 

152

 

Add:

 

 

 

Direct operating expenses (exclusive of depreciation and amortization)

 

104

 

 

 

99

 

Depreciation and amortization

 

46

 

 

 

46

 

Refining margin

 

411

 

 

 

297

 

Inventory valuation impacts, unfavorable (favorable) (1)

 

12

 

 

 

(133

)

Refining margin adjusted for inventory valuation impacts

$

423

 

 

$

164

 


______________________________

(1)

The Petroleum Segment’s basis for determining inventory value under GAAP is First-In, First-Out (“FIFO”). Changes in crude oil prices can cause fluctuations in the inventory valuation of crude oil, work in process and finished goods, thereby resulting in a favorable inventory valuation impact when crude oil prices increase and an unfavorable inventory valuation impact when crude oil prices decrease. The inventory valuation impact is calculated based upon inventory values at the beginning of the accounting period and at the end of the accounting period. In order to derive the inventory valuation impact per total throughput barrel, we utilize the total dollar figures for the inventory valuation impact and divide by the number of total throughput barrels for the period.


Reconciliation of Petroleum Segment Total Throughput Barrels

 

 

 

Three Months Ended

 

March 31,

 

2023

 

2022

Total throughput barrels per day

196,494

 

 

197,344

 

Days in the period

90

 

 

90

 

Total throughput barrels

17,684,480

 

 

17,760,998

 


Reconciliation of Petroleum Segment Refining Margin per Total Throughput Barrel

 

 

 

Three Months Ended

 

March 31,

(in millions, except for per throughput barrel data)

 

2023

 

 

 

2022

 

Refining margin

$

411

 

 

$

297

 

Divided by: total throughput barrels

 

18

 

 

 

18

 

Refining margin per total throughput barrel

$

23.24

 

 

$

16.75

 


Reconciliation of Petroleum Segment Refining Margin Adjusted for Inventory Valuation Impacts per Total Throughput Barrel

 

 

 

Three Months Ended

 

March 31,

(in millions, except for throughput barrel data)

 

2023

 

 

 

2022

 

Refining margin adjusted for inventory valuation impacts

$

423

 

 

$

164

 

Divided by: total throughput barrels

 

18

 

 

 

     18

 

Refining margin adjusted for inventory valuation impacts per total throughput barrel

$

23.91

 

 

$

9.24

 


Reconciliation of Petroleum Segment Direct Operating Expenses per Total Throughput Barrel

 

 

 

Three Months Ended

 

March 31,

(in millions, except for throughput barrel data)

 

2023

 

 

 

2022

 

Direct operating expenses (exclusive of depreciation and amortization)

$

104

 

 

$

99

 

Divided by: total throughput barrels

 

18

 

 

 

18

 

Direct operating expenses per total throughput barrel

$

5.90

 

 

$

5.57

 


Reconciliation of Nitrogen Fertilizer Segment Net Income to EBITDA and Adjusted EBITDA

 

 

 

Three Months Ended

 

March 31,

(in millions)

 

2023

 

 

 

2022

 

Nitrogen fertilizer net income

$

102

 

 

$

94

 

Interest expense, net

 

7

 

 

 

10

 

Depreciation and amortization

 

15

 

 

 

19

 

Nitrogen Fertilizer EBITDA and Adjusted EBITDA

$

124

 

 

$

123

 


Reconciliation of Total Debt and Net Debt and Finance Lease Obligations to EBITDA Exclusive of Nitrogen Fertilizer

 

 

(in millions)

Twelve Months Ended March 31, 2023

Total debt and finance lease obligations (1)

$

1,590

 

Less:

 

Nitrogen Fertilizer debt and finance lease obligations (1)

$

547

 

Total debt and finance lease obligations exclusive of Nitrogen Fertilizer

 

1,043

 

 

 

EBITDA exclusive of Nitrogen Fertilizer

$

893

 

 

 

Total debt and finance lease obligations to EBITDA exclusive of Nitrogen Fertilizer

 

1.17

 

 

 

Consolidated cash and cash equivalents

$

601

 

Less:

 

Nitrogen Fertilizer cash and cash equivalents

 

121

 

Cash and cash equivalents exclusive of Nitrogen Fertilizer

 

480

 

 

 

Net debt and finance lease obligations exclusive of Nitrogen Fertilizer (2)

$

563

 

 

 

Net debt and finance lease obligations to EBITDA exclusive of Nitrogen Fertilizer (2)

 

0.63

 


______________________________

(1)

Amounts are shown inclusive of the current portion of long-term debt and finance lease obligations.

(2)

Net debt represents total debt and finance lease obligations exclusive of cash and cash equivalents.


 

Three Months Ended

 

Twelve Months Ended March 31, 2023

(in millions)

June 30, 2022

 

September 30, 2022

 

December 31, 2022

 

March 31, 2023

 

Consolidated

 

 

 

 

 

 

 

 

 

Net income

$

239

 

 

$

80

 

 

$

172

 

 

$

259

 

 

$

750

 

Interest expense, net

 

23

 

 

 

19

 

 

 

18

 

 

 

18

 

 

 

78

 

Income tax expense

 

66

 

 

 

7

 

 

 

50

 

 

 

56

 

 

 

179

 

Depreciation and amortization

 

73

 

 

 

75

 

 

 

73

 

 

 

68

 

 

 

289

 

EBITDA

$

401

 

 

$

181

 

 

$

313

 

 

$

401

 

 

$

1,296

 

 

 

 

 

 

 

 

 

 

 

Nitrogen Fertilizer

 

 

 

 

 

 

 

 

 

Net income (loss)

$

118

 

 

$

(20

)

 

$

95

 

 

$

102

 

 

$

295

 

Interest expense, net

 

8

 

 

 

8

 

 

 

8

 

 

 

7

 

 

 

31

 

Depreciation and amortization

 

21

 

 

 

22

 

 

 

19

 

 

 

15

 

 

 

77

 

EBITDA

$

147

 

 

$

10

 

 

$

122

 

 

$

124

 

 

$

403

 

 

 

 

 

 

 

 

 

 

 

EBITDA exclusive of Nitrogen Fertilizer

$

254

 

 

$

171

 

 

$

191

 

 

$

277

 

 

$

893

 


______________________________

(1)

Due to rounding, numbers within this table may not add or equal to totals presented.