CVR Energy, Inc. (NYSE: CVI) today announced net income of $116
million, or $1.16 per diluted share, on net sales of $1,687 million
for the second quarter of 2019, compared to net income of $43
million, or 50 cents per diluted share, on net sales of $1,914
million for the second quarter of 2018. Second quarter 2019 EBITDA
was $273 million, compared to second quarter 2018 EBITDA of $180
million.
“CVR Energy delivered strong results for the second quarter
2019, primarily attributable to safe and reliable operations, lower
Renewable Identification Number prices, higher crack spreads and
increased fertilizer sales volumes and pricing,” said Dave Lamp,
CVR Energy’s Chief Executive Officer. “In addition, in May we
announced that our subsidiary had successfully sold its 1.5 million
barrel Cushing, Oklahoma, crude oil terminal and related assets,
resulting in an asset sale gain.
“During the 2019 second quarter, CVR Partners continued to be
impacted by wet weather across the Midwest. However, it experienced
solid demand for nitrogen fertilizer during the quarter and was
able to deliver significant volumes of products to customers at
netback prices much higher than the same period last year,” Lamp
said. “CVR Partners’ plants ran well during the quarter, with
ammonia utilization rates of 97 percent at Coffeyville and 98
percent at East Dubuque. CVR Partners also created positive
distributable cash and declared a second quarter distribution of 14
cents per unit.”
Petroleum
The petroleum segment reported second quarter 2019 operating
income of $163 million on net sales of $1,552 million, compared to
operating income of $113 million on net sales of $1,824 million in
the second quarter of 2018.
Refining margin per total throughput barrel was $15.66 in the
second quarter of 2019, compared to $14.13 during the same period
in 2018. Crude oil pricing during the quarter led to an inventory
valuation impact of less than $1 million, or 2 cents per total
throughout barrel, compared to $22 million, or $1.10 per total
throughput barrel, in the second quarter of 2018. The petroleum
segment also recognized a second quarter 2019 derivative gain of $4
million, or 22 cents per total throughput barrel, compared to a
gain of $10 million, or 51 cents per total throughput barrel, for
the prior year period. Included in the total derivative gain for
the second quarter of 2019 was an unrealized gain of $2 million,
compared to an unrealized loss of $7 million a year earlier.
Second quarter 2019 combined total throughput was approximately
216,000 barrels per day (bpd), compared to approximately 218,000
bpd of combined total throughput for the second quarter of
2018.
Fertilizer
The nitrogen fertilizer segment reported operating income of $35
million on net sales of $138 million for the second quarter of
2019, compared to an operating loss of less than $1 million on net
sales of $93 million for the second quarter of 2018.
For the second quarter of 2019, CVR Partners’ consolidated
average realized gate prices for urea ammonia nitrate (UAN)
improved significantly over the prior year, up 14 percent to $217
per ton, while ammonia was up 31 percent over the prior year to
$456 per ton. Average realized gate prices for UAN and ammonia
were $191 per ton and $348 per ton, respectively, for the second
quarter of 2018.
CVR Partners’ fertilizer facilities produced a combined 211,000
tons of ammonia during the second quarter 2019, of which 71,000 net
tons were available for sale while the rest was upgraded to other
fertilizer products, including 316,000 tons of UAN. During the
second quarter 2018, the fertilizer facilities produced 174,000
tons of ammonia, of which 65,000 net tons were available for sale
while the remainder was upgraded to other fertilizer products,
including 241,000 tons of UAN.
Cash, Debt and Dividend
Consolidated cash and cash equivalents was $540 million at
June 30, 2019. Consolidated total debt and finance lease
obligations was $1,195 million at June 30, 2019, with no debt
other than the Company’s segments’ debt.
CVR Energy also announced a second quarter 2019 cash dividend of
75 cents per share. The dividend, as declared by CVR Energy’s Board
of Directors, will be paid on Aug. 12, 2019, to stockholders
of record as of the close of market on Aug. 5, 2019. The
annualized dividend of $3 per share represents an industry leading
dividend yield of 6 percent based on the July 23, 2019,
closing stock price.
Today, CVR Partners announced that the Board of Directors of its
general partner declared a second quarter 2019 cash distribution of
14 cents per common unit, which will be paid on Aug. 12, 2019,
to common unitholders of record as of the close of market on
Aug. 5, 2019.
Second Quarter 2019 Earnings Conference
Call
CVR Energy previously announced that it will host its second
quarter 2019 Earnings Conference Call on Thursday, July 25, 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 second quarter 2019 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/u8jjdt8s. A repeat of
the call also can be accessed for 14 days by dialing (877)
660-6853, conference ID 13692311.
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: dividends and distributions including
the amount and timing thereof; refinery throughput, direct
operating expenses, capital spending, depreciation and amortization
and turnaround expense; continued safe and reliable operations; 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 CVR 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 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 marketing business through
its interest in CVR Refining and the nitrogen fertilizer
manufacturing business through its interest in CVR Partners, LP.
CVR Energy subsidiaries serve as the general partner and own 34
percent of the common units of CVR Partners.
For further information, please contact:
Investor Contact:Richard RobertsCVR Energy,
Inc.(281) 207-3205InvestorRelations@CVREnergy.com
Media Relations:Brandee StephensCVR Energy,
Inc.(281) 207-3516MediaRelations@CVREnergy.com
Non-GAAP Measures
Our management uses certain non-GAAP performance measures to
evaluate current and past performance and prospects for the future
to supplement our GAAP financial information presented in
accordance with U.S. 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.
Effective January 1, 2019, the Company revised its accounting
policy method for the costs of planned major maintenance activities
(turnarounds) specific to the Petroleum Segment from being expensed
as incurred (the direct expensing method) to the deferral method.
See Note 3 (“Recent Accounting Pronouncements and Accounting
Changes”) in the notes to our condensed consolidated quarterly
financial statements for a further discussion of the impacts of
this change in accounting policy. As a result of this change in
accounting policy, the non-GAAP measures of Adjusted EBITDA,
Petroleum Adjusted EBITDA, Nitrogen Fertilizer Adjusted EBITDA,
Adjusted Net Income (Loss) and Direct Operating Expenses per Total
Throughput Barrel net of Turnaround Expense are no longer being
presented.
The following are non-GAAP measures that continue to be
presented for the period ended June 30, 2019:
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 Impact -
Refining Margin adjusted to exclude the impact of current period
market price and volume fluctuations on crude oil and refined
product inventories recognized in prior periods. 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. 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.
Refining Margin and Refining Margin adjusted for Inventory
Valuation Impact, per Throughput Barrel - Refining Margin adjusted
to exclude the impact of current period market price and volume
fluctuations on crude oil and refined product inventories
recognized in prior periods, 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.
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. See “Non-GAAP
Reconciliations” section 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)
Financial and Operational Data
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions, except share
data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Consolidated Statement
of Operations Data |
|
|
|
|
|
|
|
Net sales |
$ |
1,687 |
|
|
$ |
1,914 |
|
|
$ |
3,173 |
|
|
$ |
3,451 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
Cost of materials and other |
1,267 |
|
|
1,560 |
|
|
2,368 |
|
|
2,739 |
|
Direct operating expenses (exclusive of depreciation and
amortization as reflected below) |
132 |
|
|
140 |
|
|
258 |
|
|
271 |
|
Depreciation and amortization |
76 |
|
|
68 |
|
|
141 |
|
|
131 |
|
Cost of sales |
1,475 |
|
|
1,768 |
|
|
2,767 |
|
|
3,141 |
|
Selling, general and administrative expenses (exclusive of
depreciation and amortization as reflected below) |
27 |
|
|
31 |
|
|
57 |
|
|
55 |
|
Depreciation and amortization |
2 |
|
|
3 |
|
|
4 |
|
|
6 |
|
(Gain) loss on asset disposals |
(9 |
) |
|
5 |
|
|
(7 |
) |
|
5 |
|
Operating income |
192 |
|
|
107 |
|
|
352 |
|
|
244 |
|
Other (expense) income: |
|
|
|
|
|
|
|
Interest expense, net |
(26 |
) |
|
(26 |
) |
|
(52 |
) |
|
(53 |
) |
Other income, net |
3 |
|
|
2 |
|
|
6 |
|
|
3 |
|
Income before income tax expense |
169 |
|
|
83 |
|
|
306 |
|
|
194 |
|
Income tax expense |
41 |
|
|
15 |
|
|
76 |
|
|
33 |
|
Net income |
128 |
|
|
68 |
|
|
230 |
|
|
161 |
|
Less: Net income attributable to noncontrolling interest |
12 |
|
|
25 |
|
|
13 |
|
|
58 |
|
Net income attributable to CVR Energy stockholders |
$ |
116 |
|
|
$ |
43 |
|
|
$ |
217 |
|
|
$ |
103 |
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share |
$ |
1.16 |
|
|
$ |
0.50 |
|
|
$ |
2.16 |
|
|
$ |
1.19 |
|
Dividends declared per share |
$ |
0.75 |
|
|
$ |
0.75 |
|
|
$ |
1.50 |
|
|
$ |
1.25 |
|
|
|
|
|
|
|
|
|
EBITDA* |
$ |
273 |
|
|
$ |
180 |
|
|
$ |
503 |
|
|
$ |
384 |
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding - basic and diluted |
100.5 |
|
|
86.8 |
|
|
100.5 |
|
|
86.8 |
|
_____________________
* See “Non-GAAP Reconciliations” section below.
Selected Balance Sheet Data
(in millions) |
June 30, 2019 |
|
December 31, 2018 |
Cash and cash equivalents |
$ |
540 |
|
|
$ |
668 |
|
Working capital |
675 |
|
|
797 |
|
Total assets |
3,830 |
|
|
4,000 |
|
Total debt and finance lease
obligations |
1,195 |
|
|
1,170 |
|
Total liabilities |
2,124 |
|
|
2,057 |
|
Total CVR stockholders’
equity |
1,384 |
|
|
1,286 |
|
Selected Cash Flow Data
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Net cash flow provided by
(used in): |
|
|
|
|
|
|
|
Operating activities |
$ |
156 |
|
|
$ |
212 |
|
|
$ |
384 |
|
|
$ |
238 |
|
Investing activities |
(1 |
) |
|
(29 |
) |
|
(43 |
) |
|
(50 |
) |
Financing activities |
(82 |
) |
|
(69 |
) |
|
(469 |
) |
|
(136 |
) |
Net increase (decrease) in cash and cash equivalents |
$ |
73 |
|
|
$ |
114 |
|
|
$ |
(128 |
) |
|
$ |
52 |
|
Selected Segment Data
(in millions) |
Petroleum |
|
Nitrogen Fertilizer |
|
Consolidated |
Three Months Ended
June 30, 2019 |
|
|
|
|
|
Net sales |
$ |
1,552 |
|
|
$ |
138 |
|
|
$ |
1,687 |
|
Operating income |
163 |
|
|
35 |
|
|
192 |
|
Net income |
158 |
|
|
19 |
|
|
128 |
|
EBITDA* |
216 |
|
|
60 |
|
|
273 |
|
|
|
|
|
|
|
Capital expenditures
(1) |
|
|
|
|
|
Maintenance capital
expenditures |
$ |
15 |
|
|
$ |
2 |
|
|
$ |
20 |
|
Growth capital
expenditures |
2 |
|
|
— |
|
|
2 |
|
Total capital
expenditures |
$ |
17 |
|
|
$ |
2 |
|
|
$ |
22 |
|
|
|
|
|
|
|
Six Months Ended June
30, 2019 |
|
|
|
|
|
Net sales |
$ |
2,949 |
|
|
$ |
230 |
|
|
$ |
3,173 |
|
Operating income |
319 |
|
|
44 |
|
|
352 |
|
Net income |
307 |
|
|
13 |
|
|
230 |
|
EBITDA* |
425 |
|
|
86 |
|
|
503 |
|
|
|
|
|
|
|
Capital expenditures
(1) |
|
|
|
|
|
Maintenance capital
expenditures |
$ |
34 |
|
|
$ |
5 |
|
|
$ |
42 |
|
Growth capital
expenditures |
4 |
|
|
— |
|
|
4 |
|
Total capital expenditures |
$ |
38 |
|
|
$ |
5 |
|
|
$ |
46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Petroleum |
|
Nitrogen Fertilizer |
|
Consolidated |
Three Months Ended
June 30, 2018 |
|
|
|
|
|
Net sales |
$ |
1,824 |
|
|
$ |
93 |
|
|
$ |
1,914 |
|
Operating income |
113 |
|
|
— |
|
|
107 |
|
Net income (loss) |
104 |
|
|
(16 |
) |
|
68 |
|
EBITDA* |
164 |
|
|
20 |
|
|
180 |
|
|
|
|
|
|
|
Capital expenditures
(1) |
|
|
|
|
|
Maintenance capital
expenditures |
$ |
11 |
|
|
$ |
5 |
|
|
$ |
17 |
|
Growth capital
expenditures |
4 |
|
|
2 |
|
|
6 |
|
Total capital expenditures |
$ |
15 |
|
|
$ |
7 |
|
|
$ |
23 |
|
|
|
|
|
|
|
Six months ended June
30, 2018 |
|
|
|
|
|
Net sales |
$ |
3,282 |
|
|
$ |
173 |
|
|
$ |
3,451 |
|
Operating income (loss) |
256 |
|
|
(4 |
) |
|
244 |
|
Net income (loss) |
237 |
|
|
(36 |
) |
|
161 |
|
EBITDA* |
356 |
|
|
33 |
|
|
384 |
|
|
|
|
|
|
|
Capital expenditures
(1) |
|
|
|
|
|
Maintenance capital
expenditures |
$ |
21 |
|
|
$ |
9 |
|
|
$ |
32 |
|
Growth capital
expenditures |
8 |
|
|
2 |
|
|
10 |
|
Total capital expenditures |
$ |
29 |
|
|
$ |
11 |
|
|
$ |
42 |
|
_____________________
* See “Non-GAAP Reconciliations”
section below.
(1) Capital expenditures are shown exclusive of
turnaround costs.
Selected Balance Sheet Data
(in millions) |
Petroleum |
|
Nitrogen Fertilizer |
|
Consolidated |
June 30,
2019 |
|
|
|
|
|
Cash and cash equivalents |
$ |
419 |
|
|
$ |
69 |
|
|
$ |
540 |
|
Total assets |
2,833 |
|
|
1,190 |
|
|
3,830 |
|
Total debt and finance lease
obligations |
564 |
|
|
631 |
|
|
1,195 |
|
|
|
|
|
|
|
December 31,
2018 |
|
|
|
|
|
Cash and cash equivalents |
$ |
353 |
|
|
$ |
62 |
|
|
$ |
668 |
|
Total assets |
2,453 |
|
|
1,254 |
|
|
4,000 |
|
Total debt and finance lease
obligations |
541 |
|
|
629 |
|
|
1,170 |
|
Petroleum Segment
Key Operating Metrics per Total Throughput
Barrel
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Refining margin* |
$ |
15.66 |
|
|
$ |
14.13 |
|
|
$ |
16.10 |
|
|
$ |
15.72 |
|
Refining margin adjusted for inventory valuation impact * |
15.68 |
|
|
13.03 |
|
|
15.28 |
|
|
14.58 |
|
Direct operating expenses * |
4.40 |
|
|
4.68 |
|
|
4.57 |
|
|
5.00 |
|
_____________________
* See “Non-GAAP Reconciliations” section below.
Throughput Data by Refinery
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in bpd) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Coffeyville |
|
|
|
|
|
|
|
Regional crude |
49,979 |
|
|
28,538 |
|
|
45,808 |
|
|
29,116 |
|
WTI |
75,090 |
|
|
75,595 |
|
|
71,075 |
|
|
63,280 |
|
Midland WTI |
863 |
|
|
16,842 |
|
|
6,750 |
|
|
8,467 |
|
Condensate |
3,125 |
|
|
1,547 |
|
|
4,203 |
|
|
9,586 |
|
Heavy Canadian |
3,511 |
|
|
6,249 |
|
|
5,526 |
|
|
3,385 |
|
Other feedstocks and blendstocks |
8,083 |
|
|
7,543 |
|
|
8,685 |
|
|
6,843 |
|
Wynnewood |
|
|
|
|
|
|
|
Regional crude |
52,359 |
|
|
56,773 |
|
|
48,383 |
|
|
52,669 |
|
WTI |
— |
|
|
2,108 |
|
|
— |
|
|
4,514 |
|
Midland WTI |
13,410 |
|
|
10,739 |
|
|
12,961 |
|
|
14,922 |
|
Condensate |
7,038 |
|
|
7,580 |
|
|
7,394 |
|
|
5,974 |
|
Other feedstocks and blendstocks |
2,825 |
|
|
4,591 |
|
|
3,770 |
|
|
5,174 |
|
Total
throughput |
216,283 |
|
|
218,105 |
|
|
214,555 |
|
|
203,930 |
|
Production Data by Refinery
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in bpd) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Coffeyville |
|
|
|
|
|
|
|
Gasoline |
70,506 |
|
|
67,390 |
|
|
72,170 |
|
|
58,357 |
|
Distillate |
59,049 |
|
|
59,855 |
|
|
59,288 |
|
|
52,093 |
|
Other liquid products |
6,786 |
|
|
5,231 |
|
|
6,631 |
|
|
6,900 |
|
Solids |
5,113 |
|
|
5,267 |
|
|
5,042 |
|
|
4,758 |
|
Wynnewood |
|
|
|
|
|
|
|
Gasoline |
39,153 |
|
|
39,853 |
|
|
36,746 |
|
|
41,714 |
|
Distillate |
31,997 |
|
|
34,985 |
|
|
29,689 |
|
|
34,804 |
|
Other liquid products |
1,360 |
|
|
5,060 |
|
|
3,728 |
|
|
4,787 |
|
Solids |
33 |
|
|
49 |
|
|
31 |
|
|
51 |
|
Total
production |
213,997 |
|
|
217,690 |
|
|
213,325 |
|
|
203,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquid volume yield (as % of
total throughput) |
96.6 |
% |
|
97.4 |
% |
|
97.1 |
% |
|
97.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Market Indicators
(dollars per barrel) |
|
|
|
|
|
|
|
West Texas Intermediate (WTI) NYMEX |
$ |
59.91 |
|
|
$ |
67.91 |
|
|
$ |
57.44 |
|
|
$ |
65.46 |
|
Crude Oil Differentials: |
|
|
|
|
|
|
|
WTI less WTS (light/medium sour) |
— |
|
|
8.50 |
|
|
— |
|
|
5.05 |
|
WTI less WCS (heavy sour) |
12.63 |
|
|
18.02 |
|
|
11.59 |
|
|
21.81 |
|
WTI less condensate |
— |
|
|
0.46 |
|
|
— |
|
|
0.42 |
|
Midland Cushing Differential |
2.27 |
|
|
8.12 |
|
|
1.74 |
|
|
4.34 |
|
NYMEX Crack Spreads: |
|
|
|
|
|
|
|
Gasoline |
21.37 |
|
|
20.63 |
|
|
16.64 |
|
|
18.06 |
|
Heating Oil |
23.46 |
|
|
22.22 |
|
|
24.90 |
|
|
21.36 |
|
NYMEX 2-1-1 Crack Spread |
22.41 |
|
|
21.43 |
|
|
20.77 |
|
|
19.71 |
|
PADD II Group 3 Basis: |
|
|
|
|
|
|
|
Gasoline |
(2.56 |
) |
|
(4.44 |
) |
|
(2.31 |
) |
|
(3.19 |
) |
Ultra Low Sulfur Diesel |
(0.93 |
) |
|
(0.05 |
) |
|
(1.24 |
) |
|
(0.33 |
) |
PADD II Group 3 Product Crack
Spread: |
|
|
|
|
|
|
|
Gasoline |
18.81 |
|
|
16.19 |
|
|
14.33 |
|
|
14.87 |
|
Ultra Low Sulfur Diesel |
22.52 |
|
|
22.17 |
|
|
23.65 |
|
|
21.03 |
|
PADD II Group 3 2-1-1 |
20.67 |
|
|
19.18 |
|
|
18.99 |
|
|
17.95 |
|
Q3 2019 Petroleum Segment Outlook
The table below summarizes our outlook for certain refining
statistics and financial information for the third quarter of 2019.
See “forward looking statements.”
|
Q3 2019 |
|
Low |
|
High |
Refinery
Statistics: |
|
|
|
Total throughput (bpd) |
215,000 |
|
|
225,000 |
|
|
|
|
|
Direct operating expenses (1) (in millions) |
$ |
90 |
|
|
$ |
100 |
|
|
|
|
|
Total capital spending (in
millions) |
$ |
40 |
|
|
$ |
60 |
|
_____________________
(1) Direct operating expenses are shown exclusive of
depreciation and amortization and turnaround expenses.
Nitrogen Fertilizer Segment:
Key Operating Data:
Ammonia Utilization Rates (1)
|
Two Years Ended June 30, |
(percent of capacity
utilization) |
2019 |
|
2018 |
Consolidated |
92 |
% |
|
94 |
% |
Coffeyville |
94 |
% |
|
93 |
% |
East Dubuque |
90 |
% |
|
95 |
% |
_____________________
(1) Reflects ammonia utilization rates on a consolidated basis
and at each of the Nitrogen Fertilizer facilities. Utilization is
an important measure used by management to assess operational
output at each of the facilities. Utilization is calculated as
actual tons produced divided by capacity. The Nitrogen Fertilizer
Segment presents utilization on a two-year rolling average to take
into account the impact of current turnaround cycles on any
specific period. The two-year rolling average is a more useful
presentation of the long-term utilization performance of our
plants. 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 the Nitrogen Fertilizer Segments’ efforts
being primarily focused on ammonia upgrade capabilities, this
measure provides a meaningful view of how well the facilities
operate.
Sales and Production Data
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Consolidated sales (thousand
tons): |
|
|
|
|
|
|
|
Ammonia |
110 |
|
|
82 |
|
|
146 |
|
|
118 |
|
UAN |
340 |
|
|
270 |
|
|
628 |
|
|
615 |
|
|
|
|
|
|
|
|
|
Consolidated product pricing
at gate (dollars per ton): |
|
|
|
|
|
|
|
Ammonia |
$ |
456 |
|
|
$ |
348 |
|
|
$ |
434 |
|
|
$ |
340 |
|
UAN |
$ |
217 |
|
|
$ |
191 |
|
|
$ |
219 |
|
|
$ |
169 |
|
|
|
|
|
|
|
|
|
Consolidated production volume
(thousand tons): |
|
|
|
|
|
|
|
Ammonia (gross produced) |
211 |
|
|
174 |
|
|
390 |
|
|
373 |
|
Ammonia (net available for sale) |
71 |
|
|
65 |
|
|
112 |
|
|
124 |
|
UAN |
316 |
|
|
241 |
|
|
651 |
|
|
580 |
|
|
|
|
|
|
|
|
|
Feedstock: |
|
|
|
|
|
|
|
Petroleum coke used in production (thousand tons) |
134 |
|
|
90 |
|
|
266 |
|
|
208 |
|
Petroleum coke (dollars per ton) |
$ |
34.60 |
|
|
$ |
25.33 |
|
|
$ |
36.14 |
|
|
$ |
21.34 |
|
Natural gas used in production (thousands of MMBtu) (2) |
2,070 |
|
|
1,964 |
|
|
3,510 |
|
|
3,814 |
|
Natural gas used in production (dollars per MMBtu) (2) |
$ |
2.61 |
|
|
$ |
2.78 |
|
|
$ |
3.11 |
|
|
$ |
3.00 |
|
Natural gas in cost of materials and other (thousands of MMBtus)
(2) |
3,185 |
|
|
2,571 |
|
|
4,193 |
|
|
3,829 |
|
Natural gas in cost of materials and other (dollars per MMBtu)
(2) |
$ |
3.32 |
|
|
$ |
2.84 |
|
|
$ |
3.45 |
|
|
$ |
3.05 |
|
_____________________
(2) 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).
Key Market Indicators
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Ammonia — Southern Plains (dollars per ton) |
$ |
382 |
|
|
$ |
343 |
|
|
$ |
404 |
|
|
$ |
362 |
|
Ammonia — Corn belt (dollars
per ton) |
495 |
|
|
396 |
|
|
496 |
|
|
412 |
|
UAN — Corn belt (dollars per
ton) |
226 |
|
|
211 |
|
|
228 |
|
|
211 |
|
|
|
|
|
|
|
|
|
Natural gas NYMEX (dollars per
MMBtu) |
$ |
2.51 |
|
|
$ |
2.83 |
|
|
$ |
2.69 |
|
|
$ |
2.84 |
|
Non-GAAP Reconciliations:
Reconciliation of Net Income to EBITDA
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income |
$ |
128 |
|
|
$ |
68 |
|
|
$ |
230 |
|
|
$ |
161 |
|
Add: |
|
|
|
|
|
|
|
Interest expense, net |
26 |
|
|
26 |
|
|
52 |
|
|
53 |
|
Income tax expense |
41 |
|
|
15 |
|
|
76 |
|
|
33 |
|
Depreciation and amortization |
78 |
|
|
71 |
|
|
145 |
|
|
137 |
|
EBITDA |
$ |
273 |
|
|
$ |
180 |
|
|
$ |
503 |
|
|
$ |
384 |
|
Reconciliation of Petroleum Segment Net Income to
EBITDA
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Petroleum net income |
$ |
158 |
|
|
$ |
104 |
|
|
$ |
307 |
|
|
$ |
237 |
|
Add: |
|
|
|
|
|
|
|
Interest expense, net |
6 |
|
|
11 |
|
|
17 |
|
|
22 |
|
Depreciation and amortization |
52 |
|
|
49 |
|
|
101 |
|
|
97 |
|
Petroleum EBITDA |
$ |
216 |
|
|
$ |
164 |
|
|
$ |
425 |
|
|
$ |
356 |
|
Reconciliation of Petroleum Segment gross profit to
Refining Margin and Refining Margin adjusted for inventory
valuation impact (in millions and on per total throughput barrel
basis) and Direct operating expenses per total throughput
barrel
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Net sales |
$ |
1,552 |
|
|
$ |
1,824 |
|
|
$ |
2,949 |
|
|
$ |
3,282 |
|
Cost of materials and
other |
1,244 |
|
|
1,543 |
|
|
2,324 |
|
|
2,701 |
|
Direct operating expenses
(exclusive of depreciation and amortization as reflected
below) |
86 |
|
|
93 |
|
|
177 |
|
|
185 |
|
Depreciation and
amortization |
52 |
|
|
49 |
|
|
101 |
|
|
97 |
|
Gross profit |
170 |
|
|
139 |
|
|
347 |
|
|
299 |
|
Add: |
|
|
|
|
|
|
|
Direct operating expenses
(exclusive of depreciation and amortization as reflected
below) |
86 |
|
|
93 |
|
|
177 |
|
|
185 |
|
Depreciation and
amortization |
52 |
|
|
49 |
|
|
101 |
|
|
97 |
|
Refining margin |
308 |
|
|
281 |
|
|
625 |
|
|
581 |
|
Inventory valuation impact,
(favorable) unfavorable (1) |
— |
|
|
(22 |
) |
|
(32 |
) |
|
(42 |
) |
Refining margin adjusted for inventory valuation impact |
$ |
308 |
|
|
$ |
259 |
|
|
$ |
593 |
|
|
$ |
539 |
|
_____________________
(1) FIFO is the petroleum business’ basis for determining
inventory value under GAAP. 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 June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Total throughput barrels per day |
216,283 |
|
|
218,105 |
|
|
214,555 |
|
|
203,930 |
|
Days in the period |
91 |
|
|
91 |
|
|
181 |
|
|
181 |
|
Total throughput barrels |
19,681,753 |
|
|
19,847,555 |
|
|
38,834,455 |
|
|
36,911,330 |
|
Reconciliation of Petroleum Segment Refining Margin (in
millions and on per total throughput barrel basis)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions, except for per
throughput barrel data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Refining margin |
$ |
308 |
|
|
$ |
281 |
|
|
$ |
625 |
|
|
$ |
581 |
|
Divided by: total throughput
barrels |
20 |
|
|
20 |
|
|
39 |
|
|
37 |
|
Refining margin per total throughput barrel |
$ |
15.66 |
|
|
$ |
14.13 |
|
|
$ |
16.10 |
|
|
$ |
15.72 |
|
Reconciliation of Petroleum Segment Refining Margin
adjusted for inventory valuation impact (in millions and on per
total throughput barrel basis)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions, except for
throughput barrel data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Refining margin adjusted for inventory valuation impact |
$ |
308 |
|
|
$ |
259 |
|
|
$ |
593 |
|
|
$ |
539 |
|
Divided by: total throughput
barrels |
20 |
|
|
20 |
|
|
39 |
|
|
37 |
|
Refining margin adjusted for inventory valuation impact per total
throughput barrel |
$ |
15.68 |
|
|
$ |
13.03 |
|
|
$ |
15.28 |
|
|
$ |
14.58 |
|
Reconciliation of Petroleum Segment Direct operating
expenses (in millions and on per total throughput barrel
basis)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions, except for
throughput barrel data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Direct operating expenses (exclusive of depreciation and
amortization) |
$ |
86 |
|
|
$ |
93 |
|
|
$ |
177 |
|
|
$ |
185 |
|
Divided by: total throughput
barrels |
20 |
|
|
20 |
|
|
39 |
|
|
37 |
|
Direct operating expenses per total throughput barrel |
$ |
4.40 |
|
|
$ |
4.68 |
|
|
$ |
4.57 |
|
|
$ |
5.00 |
|
Reconciliation of Nitrogen Fertilizer Segment Net Income
(Loss) to EBITDA
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Nitrogen fertilizer net income (loss) |
$ |
19 |
|
|
$ |
(16 |
) |
|
$ |
13 |
|
|
$ |
(36 |
) |
Add: |
|
|
|
|
|
|
|
Interest expense, net |
16 |
|
|
16 |
|
|
31 |
|
|
32 |
|
Depreciation and amortization |
25 |
|
|
20 |
|
|
42 |
|
|
37 |
|
Nitrogen Fertilizer
EBITDA |
$ |
60 |
|
|
$ |
20 |
|
|
$ |
86 |
|
|
$ |
33 |
|
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