CVR Energy, Inc. (NYSE: CVI) today announced a net loss of $87
million, or 87 cents per diluted share, on net sales of $1.1
billion for the first quarter of 2020, compared to net income of
$101 million, or $1.00 per diluted share, on net sales of $1.5
billion for the first quarter of 2019. First quarter 2020 EBITDA
was a negative $38 million, compared to first quarter 2019 positive
EBITDA of $230 million.
“CVR Energy’s first quarter 2020 results were
negatively impacted by the global crude oil price war, lower
throughput volumes due to the planned turnaround at the Coffeyville
refinery and unprecedented refined product demand destruction
caused by COVID-19,” said Dave Lamp, CVR Energy’s Chief Executive
Officer. “We have revised our business plan to protect our balance
sheet by reducing costs, capital spending and refining runs to
match customer demand, while continuing to focus on maintaining
safe, reliable operations.
“CVR Energy’s Board of Directors has reduced our
first quarter dividend to 40 cents per share to preserve cash as we
believe there are better shareholder return opportunities in the
current market environment, including the potential for industry
consolidation,” Lamp said.
Petroleum
The Petroleum Segment reported a first quarter
2020 operating loss of $127 million on net sales of $1.1 billion,
compared to operating income of $156 million on net sales of $1.4
billion in the first quarter of 2019.
Refining margin per total throughput barrel was
$1.52 in the first quarter of 2020, compared to $16.55 during the
same period in 2019. Crude oil pricing during the quarter led to an
unfavorable inventory valuation impact of $136 million, including a
$58 million loss on the value of inventory to reflect its net
realizable value, or $9.54 per total throughout barrel. The
favorable inventory valuation impact for the first quarter of 2019
was $32 million, or $1.68 per total throughput barrel. Unfavorable
market pricing and crack spreads also contributed to the reduction
in refining margins during the first quarter of 2020. Partially
offsetting these impacts, the Petroleum Segment recognized a first
quarter 2020 derivative gain of $46 million, or $3.20 per total
throughput barrel, compared to a gain of $16 million, or
81 cents per total throughput barrel, for the first quarter of
2019. Included in this derivative gain for the first quarter of
2020 was an unrealized gain of $12 million, compared to an
unrealized loss of $7 million for the first quarter of 2019.
First quarter 2020 combined total throughput was
approximately 157,000 barrels per day (bpd), compared to
approximately 213,000 bpd of combined total throughput for the
first quarter of 2019. This decrease was primarily attributable to
the turnaround at our Coffeyville refinery, which began in late
February 2020.
Fertilizer
The Nitrogen Fertilizer Segment reported an
operating loss of $5 million on net sales of $75 million for the
first quarter of 2020, compared to operating income of $9 million
on net sales of $92 million for the first quarter of
2019.
First quarter 2020 average realized gate prices
for urea ammonia nitrate (UAN) decreased over the prior year, down
25 percent to $166 per ton, and ammonia was down 28 percent over
the prior year to $264 per ton. Average realized gate prices
for UAN and ammonia were $222 per ton and $367 per ton,
respectively, for the first quarter of 2019.
CVR Partners’ fertilizer facilities produced a
combined 201,000 tons of ammonia during the first quarter of 2020,
of which 78,000 net tons were available for sale while the rest was
upgraded to other fertilizer products, including 317,000 tons of
UAN. During the first quarter 2019, the fertilizer facilities
produced 179,000 tons of ammonia, of which 41,000 net tons were
available for sale while the remainder was upgraded to other
fertilizer products, including 335,000 tons of UAN.
Corporate
The Company reported an income tax benefit of
$36 million, or 27 percent of loss before income taxes, for the
three months ended March 31, 2020, compared to income tax expense
of $35 million, or 25.5 percent of income before income taxes for
the three months ended March 31, 2019. The change in income tax
expense was due primarily to a decrease in non-controlling interest
and state income tax credits generated from the three months ended
March 31, 2019 to the three months ended March 31, 2020.
Additionally, the Company recognized investment income from
marketable securities of $31 million during the three months ended
March 31, 2020.
Cash, Debt and Dividend
Consolidated cash and cash equivalents was $805
million at March 31, 2020. Consolidated total debt and finance
lease obligations was $1.7 billion at March 31, 2020, with no debt
other than that held by the Nitrogen Fertilizer Segment and CVR
Energy.
CVR Energy announced a first quarter 2020 cash
dividend of 40 cents per share. The dividend, as declared by CVR
Energy’s Board of Directors, will be paid on May 26, 2020, to
stockholders of record as of the close of market on May 18,
2020.
CVR Partners will not pay a cash distribution
for the 2020 first quarter.
On May 6, 2020, the Board of Directors of
CVR Partners’ general partner authorized a unit repurchase program
(the “Unit Repurchase Program”). The Unit Repurchase Program would
enable CVR Partners to repurchase up to $10 million of its
common units, giving CVR Partners another potential mechanism for
returning cash to unitholders. Unit repurchases may be made from
time-to-time through open market transactions, block trades,
privately negotiated transactions, or otherwise and are subject to
market conditions, as well as corporate, regulatory, and other
considerations. This Unit Repurchase Program does not obligate CVR
Partners to acquire any common units and may be cancelled or
terminated by its general partner’s Board of Directors at any
time.
First Quarter 2020 Earnings Conference
Call
CVR Energy previously announced that it will
host its first quarter 2020 Earnings Conference Call on Thursday,
May 7, 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 2020 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/nc2m8r4m. A repeat of the call
also can be accessed for 14 days by dialing (877) 660-6853,
conference ID 13701951.
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: impacts of
COVID-19 on the Company and the economy including volatility in
commodity prices; reductions in costs, capital spending and
refining runs; customer demand; dividends and distributions
including the timing, payment and amount (if any) thereof; impacts
of global crude oil pricing; repurchases (if any) of CVR Partners
common units including the amount and timing thereof; finished
product pricing; refinery throughput, crude oil prices including
impacts to inventory valuation; direct operating expenses, capital
expenditures, depreciation and amortization; turnaround
expenditures; continued safe and reliable operations; ammonia
utilization rates; shareholder return opportunities; industry
consolidation; refined product demand; derivative gains or losses;
income tax benefits and expenses; 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 the health and economic effects of COVID-19,
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 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.
The following are non-GAAP measures presented
for the period ended March 31, 2020:
EBITDA - Consolidated net income (loss) before
(i) interest expense, net, (ii) income tax expense 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.
Petroleum EBITDA and Refining Margin, adjusted
for Inventory Valuation Impacts - Petroleum EBITDA and 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 divided by the total throughput barrels during 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 (Loss) Earnings per Share - (Loss)
Earnings per share adjusted for inventory valuation impacts and
other significant non-cash items on an after-tax basis.
Net Debt and Finance Lease Obligations Exclusive
of Nitrogen Fertilizer - Net debt 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 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 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 March 31, |
(in millions, except share
data) |
2020 |
|
2019 |
Consolidated Statement
of Operations Data |
|
|
|
Net sales |
$ |
1,130 |
|
|
|
$ |
1,486 |
|
|
Operating costs and
expenses: |
|
|
|
Cost of materials and other |
1,058 |
|
|
|
1,101 |
|
|
Direct operating expenses (exclusive of depreciation and
amortization as reflected below) |
119 |
|
|
|
126 |
|
|
Depreciation and amortization |
62 |
|
|
|
65 |
|
|
Cost of sales |
1,239 |
|
|
|
1,292 |
|
|
Selling, general and administrative expenses (exclusive of
depreciation and amortization as reflected below) |
24 |
|
|
|
30 |
|
|
Depreciation and amortization |
2 |
|
|
|
2 |
|
|
Loss on asset disposals |
— |
|
|
|
2 |
|
|
Operating (loss) income |
(135 |
) |
|
|
160 |
|
|
Other (expense) income: |
|
|
|
Interest expense, net |
(35 |
) |
|
|
(26 |
) |
|
Investment income from marketable securities |
31 |
|
|
|
— |
|
|
Other income, net |
2 |
|
|
|
3 |
|
|
(Loss) income before income tax expense |
(137 |
) |
|
|
137 |
|
|
Income tax expense |
(36 |
) |
|
|
35 |
|
|
Net (loss) income |
(101 |
) |
|
|
102 |
|
|
Less: Net (loss) income attributable to noncontrolling
interest |
(14 |
) |
|
|
1 |
|
|
Net (loss) income attributable to CVR Energy stockholders |
$ |
(87 |
) |
|
|
$ |
101 |
|
|
|
|
|
|
Basic and diluted (loss) earnings per share |
$ |
(0.87 |
) |
|
|
$ |
1.00 |
|
|
Dividends declared per share |
$ |
0.80 |
|
|
|
$ |
0.75 |
|
|
|
|
|
|
EBITDA* |
$ |
(38 |
) |
|
|
$ |
230 |
|
|
|
|
|
|
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, 2020 |
|
December 31, 2019 |
Cash and cash equivalents |
$ |
805 |
|
|
$ |
652 |
|
Working capital |
892 |
|
|
678 |
|
Total assets |
4,125 |
|
|
3,905 |
|
Total debt and finance lease
obligations |
1,691 |
|
|
1,195 |
|
Total liabilities |
2,639 |
|
|
2,237 |
|
Total CVR stockholders’
equity |
1,225 |
|
|
1,393 |
|
|
|
|
|
|
|
Selected Cash Flow Data
|
Three Months Ended March 31, |
(in millions) |
2020 |
|
2019 |
Net cash flow provided by
(used in): |
|
|
|
Operating activities |
$ |
(58 |
) |
|
|
$ |
228 |
|
|
Investing activities |
(196 |
) |
|
|
(42 |
) |
|
Financing activities |
407 |
|
|
|
(387 |
) |
|
Net increase in cash and cash equivalents |
$ |
153 |
|
|
|
$ |
(201 |
) |
|
|
Selected Segment Data
(in millions) |
Petroleum |
|
Nitrogen Fertilizer |
|
Consolidated |
Three Months Ended
March 31, 2020 |
|
|
|
|
|
Net sales |
$ |
1,057 |
|
|
|
$ |
75 |
|
|
|
$ |
1,130 |
|
|
Operating (loss) income |
(127 |
) |
|
|
(5 |
) |
|
|
(135 |
) |
|
Net loss |
(130 |
) |
|
|
(21 |
) |
|
|
(101 |
) |
|
EBITDA* |
(77 |
) |
|
|
11 |
|
|
|
(38 |
) |
|
|
|
|
|
|
|
Capital expenditures
(1) |
|
|
|
|
|
Maintenance capital
expenditures |
$ |
37 |
|
|
|
$ |
4 |
|
|
|
$ |
43 |
|
|
Growth capital
expenditures |
3 |
|
|
|
2 |
|
|
|
5 |
|
|
Total capital expenditures |
$ |
40 |
|
|
|
$ |
6 |
|
|
|
$ |
48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Petroleum |
|
Nitrogen Fertilizer |
|
Consolidated |
Three Months Ended
March 31, 2019 |
|
|
|
|
|
Net sales |
$ |
1,397 |
|
|
$ |
92 |
|
|
|
$ |
1,486 |
|
Operating income |
156 |
|
|
9 |
|
|
|
160 |
|
Net income (loss) |
149 |
|
|
(6 |
) |
|
|
102 |
|
EBITDA* |
209 |
|
|
26 |
|
|
|
230 |
|
|
|
|
|
|
|
Capital expenditures
(1) |
|
|
|
|
|
Maintenance capital
expenditures |
$ |
18 |
|
|
$ |
3 |
|
|
|
$ |
21 |
|
Growth capital
expenditures |
2 |
|
|
— |
|
|
|
2 |
|
Total capital expenditures |
$ |
20 |
|
|
$ |
3 |
|
|
|
$ |
23 |
|
_____________________________* See “Non-GAAP
Reconciliations” section below.(1) Capital expenditures are shown
exclusive of capitalized turnaround expenditures and capitalized
software costs.
Selected Balance Sheet Data
(in millions) |
Petroleum |
|
Nitrogen Fertilizer |
|
Consolidated |
March 31,
2020 |
|
|
|
|
|
Cash and cash equivalents |
$ |
434 |
|
|
$ |
58 |
|
|
$ |
805 |
|
Total assets |
2,961 |
|
|
1,134 |
|
|
4,125 |
|
Total debt and finance lease
obligations |
64 |
|
|
633 |
|
|
1,691 |
|
|
|
|
|
|
|
December 31,
2019 |
|
|
|
|
|
Cash and cash equivalents |
$ |
583 |
|
|
$ |
37 |
|
|
$ |
652 |
|
Total assets |
3,187 |
|
|
1,138 |
|
|
3,905 |
|
Total debt and finance lease
obligations |
563 |
|
|
632 |
|
|
1,195 |
|
|
|
|
|
|
|
|
|
|
Petroleum Segment
Key Operating Metrics per Total Throughput
Barrel
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Refining margin * |
$ |
1.52 |
|
|
$ |
16.55 |
|
Refining margin adjusted for inventory valuation impacts * |
11.06 |
|
|
14.87 |
|
Direct operating expenses * |
5.87 |
|
|
4.74 |
|
_____________________________* See “Non-GAAP
Reconciliations” section below.
Throughput Data by Refinery
|
Three Months Ended March 31, |
(in bpd) |
2020 |
|
2019 |
Coffeyville |
|
|
|
Regional crude |
38,874 |
|
|
41,591 |
|
WTI |
29,461 |
|
|
67,016 |
|
Midland WTI |
— |
|
|
12,702 |
|
Condensate |
4,687 |
|
|
5,293 |
|
Heavy Canadian |
2,549 |
|
|
7,563 |
|
Other feedstocks and blendstocks |
7,701 |
|
|
9,293 |
|
Wynnewood |
|
|
|
Regional crude |
51,822 |
|
|
44,363 |
|
WTL |
5,971 |
|
|
— |
|
Midland WTI |
2,019 |
|
|
12,507 |
|
Condensate |
9,429 |
|
|
7,754 |
|
Other feedstocks and blendstocks |
4,005 |
|
|
4,725 |
|
Total
throughput |
156,518 |
|
|
212,807 |
|
|
Production Data by Refinery
|
Three Months Ended March 31, |
(in bpd) |
2020 |
|
2019 |
Coffeyville |
|
|
|
Gasoline |
44,519 |
|
|
73,856 |
|
Distillate |
33,261 |
|
|
59,529 |
|
Other liquid products |
3,717 |
|
|
6,473 |
|
Solids |
2,719 |
|
|
4,970 |
|
Wynnewood |
|
|
|
Gasoline |
39,505 |
|
|
34,312 |
|
Distillate |
28,755 |
|
|
27,356 |
|
Other liquid products |
2,454 |
|
|
6,123 |
|
Solids |
25 |
|
|
28 |
|
Total
production |
154,955 |
|
|
212,647 |
|
|
|
|
|
|
|
Liquid volume yield (as % of
total throughput) |
97.2 |
% |
|
97.6 |
% |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Market Indicators
(dollars per barrel) |
|
|
|
West Texas Intermediate (WTI) NYMEX |
$ |
45.78 |
|
|
|
$ |
54.90 |
|
|
Crude Oil Differentials to
WTI: |
|
|
|
Brent |
5.04 |
|
|
|
8.94 |
|
|
WCS (heavy sour) |
(17.77 |
) |
|
|
(10.51 |
) |
|
Condensate |
(1.14 |
) |
|
|
(1.17 |
) |
|
Midland Cushing |
(0.06 |
) |
|
|
(1.18 |
) |
|
NYMEX Crack Spreads: |
|
|
|
Gasoline |
10.37 |
|
|
|
11.75 |
|
|
Heating Oil |
18.98 |
|
|
|
26.38 |
|
|
NYMEX 2-1-1 Crack Spread |
14.67 |
|
|
|
19.07 |
|
|
PADD II Group 3 Basis: |
|
|
|
Gasoline |
(3.12 |
) |
|
|
(2.05 |
) |
|
Ultra Low Sulfur Diesel |
(1.80 |
) |
|
|
(1.56 |
) |
|
PADD II Group 3 Product Crack
Spread: |
|
|
|
Gasoline |
7.25 |
|
|
|
9.70 |
|
|
Ultra Low Sulfur Diesel |
17.18 |
|
|
|
24.82 |
|
|
PADD II Group 3 2-1-1 |
12.21 |
|
|
|
17.26 |
|
|
|
|
|
|
|
|
|
|
Q2 2020 Petroleum Segment Outlook
The table below summarizes our outlook for
certain operational statistics and financial information for the
second quarter of 2020. See “Forward-Looking Statements” above.
|
Q2 2020 |
|
Low |
|
High |
Total throughput (bpd) |
130,000 |
|
|
150,000 |
|
Direct operating expenses (1) (in millions) |
$ |
75 |
|
|
$ |
85 |
|
Total capital expenditures (2)
(in millions) |
$ |
30 |
|
|
$ |
40 |
|
Total turnaround expenditures
(2) (in millions) |
$ |
20 |
|
|
$ |
25 |
|
_____________________________(1) Direct operating expenses
are shown exclusive of depreciation and amortization.(2)
Capital expenditures and turnaround expenditures are disclosed on
an accrual basis.
Nitrogen Fertilizer Segment:
Key Operating Data:
Ammonia Utilization Rates (2) |
Two Years Ended March 31, |
(capacity utilization) |
2020 |
|
2019 |
Consolidated |
93 |
% |
|
92 |
% |
Coffeyville |
93 |
% |
|
94 |
% |
East Dubuque |
93 |
% |
|
91 |
% |
_____________________________(3) 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 March 31, |
|
2020 |
|
2019 |
Consolidated sales (thousand
tons): |
|
|
|
Ammonia |
54 |
|
|
36 |
|
UAN |
284 |
|
|
288 |
|
|
|
|
|
Consolidated product pricing
at gate (dollars per ton) (1): |
|
|
|
Ammonia |
$ |
264 |
|
|
$ |
367 |
|
UAN |
166 |
|
|
222 |
|
|
|
|
|
Consolidated production volume
(thousand tons): |
|
|
|
Ammonia (gross produced) (2) |
201 |
|
|
179 |
|
Ammonia (net available for sale) (2) |
78 |
|
|
41 |
|
UAN |
317 |
|
|
335 |
|
|
|
|
|
Feedstock: |
|
|
|
Petroleum coke used in production (thousand tons) |
125 |
|
|
132 |
|
Petroleum coke (dollars per ton) |
$ |
44.68 |
|
|
$ |
37.70 |
|
Natural gas used in production (thousands of MMBtu) (3) |
2,141 |
|
|
1,440 |
|
Natural gas used in production (dollars per MMBtu) (3) |
$ |
2.42 |
|
|
$ |
3.83 |
|
Natural gas in cost of materials and other (thousands of MMBtus)
(3) |
1,418 |
|
|
1,008 |
|
Natural gas in cost of materials and other (dollars per MMBtu)
(3) |
$ |
2.80 |
|
|
$ |
3.87 |
|
_____________________________(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, |
|
2020 |
|
2019 |
Ammonia — Southern Plains (dollars per ton) |
$ |
272 |
|
|
$ |
427 |
|
Ammonia — Corn belt (dollars
per ton) |
364 |
|
|
497 |
|
UAN — Corn belt (dollars per
ton) |
169 |
|
|
229 |
|
|
|
|
|
Natural gas NYMEX (dollars per
MMBtu) |
$ |
1.87 |
|
|
$ |
2.88 |
|
|
|
|
|
|
|
|
|
Q2 2020 Nitrogen Fertilizer Segment Outlook
The table below summarizes our outlook for
certain operational statistics and financial information for the
second quarter of 2020. See “Forward-Looking Statements” above.
|
Q2 2020 |
|
Low |
|
High |
Ammonia utilization rates
(1) |
|
|
|
Consolidated |
95 |
% |
|
100 |
% |
Coffeyville |
95 |
% |
|
100 |
% |
East Dubuque |
95 |
% |
|
100 |
% |
|
|
|
|
Direct operating expenses (2) (in millions) |
$ |
35 |
|
|
$ |
40 |
|
|
|
|
|
Total capital expenditures (3)
(in millions) |
$ |
6 |
|
|
$ |
10 |
|
_____________________________(1) Ammonia utilization rates
exclude the impact of Turnarounds.(2) Direct operating
expenses are shown exclusive of depreciation and amortization,
turnaround expenses, and impacts of inventory adjustments.(3)
Capital expenditures are disclosed on an accrual basis.
Non-GAAP Reconciliations:
Reconciliation of Net (Loss) Income to
EBITDA
|
Three Months Ended March 31, |
(in millions) |
2020 |
|
2019 |
Net (loss) income |
$ |
(101 |
) |
|
|
$ |
102 |
|
Add: |
|
|
|
Interest expense, net |
35 |
|
|
|
26 |
|
Income tax (benefit) expense |
(36 |
) |
|
|
35 |
|
Depreciation and amortization |
64 |
|
|
|
67 |
|
EBITDA |
$ |
(38 |
) |
|
|
$ |
230 |
|
|
Reconciliation of Petroleum Segment Net
(Loss) Income to EBITDA and EBITDA Adjusted for Inventory Valuation
Impacts
|
Three Months Ended March 31, |
(in millions) |
2020 |
|
2019 |
Petroleum net (loss) income |
$ |
(130 |
) |
|
|
$ |
149 |
|
|
Add: |
|
|
|
Interest expense, net |
5 |
|
|
|
11 |
|
|
Depreciation and amortization |
48 |
|
|
|
49 |
|
|
Petroleum EBITDA |
$ |
(77 |
) |
|
|
$ |
209 |
|
|
Inventory valuation impacts,
(favorable) unfavorable (1) (2) |
136 |
|
|
|
(32 |
) |
|
Petroleum EBITDA adjusted for inventory valuation impacts |
$ |
59 |
|
|
|
$ |
177 |
|
|
_____________________________(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.(2)
Includes an inventory valuation charge of $58 million, as
inventories are stated at the lower of cost or net realizable
value.
Reconciliation of Petroleum Segment
Gross Profit to Refining Margin and Refining Margin Adjusted for
Inventory Valuation Impacts
|
Three Months Ended March 31, |
(in millions) |
2020 |
|
2019 |
Net sales |
$ |
1,057 |
|
|
|
$ |
1,397 |
|
|
Cost of materials and
other |
1,035 |
|
|
|
1,080 |
|
|
Direct operating expenses
(exclusive of depreciation and amortization as reflected
below) |
84 |
|
|
|
91 |
|
|
Depreciation and
amortization |
48 |
|
|
|
49 |
|
|
Gross (loss) profit |
(110 |
) |
|
|
177 |
|
|
Add: |
|
|
|
Direct operating expenses
(exclusive of depreciation and amortization as reflected
below) |
84 |
|
|
|
91 |
|
|
Depreciation and
amortization |
48 |
|
|
|
49 |
|
|
Refining margin |
22 |
|
|
|
317 |
|
|
Inventory valuation impacts,
(favorable) unfavorable (1) (2) |
136 |
|
|
|
(32 |
) |
|
Refining margin adjusted for inventory valuation impacts |
$ |
158 |
|
|
|
$ |
285 |
|
|
_____________________________(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.(2)
Includes an inventory valuation charge of $58 million, as
inventories are stated at the lower of cost or net realizable
value.
Reconciliation of Petroleum Segment Total Throughput
Barrels
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Total throughput barrels per day |
156,518 |
|
|
212,807 |
|
Days in the period |
91 |
|
|
90 |
|
Total throughput barrels |
14,243,161 |
|
|
19,152,670 |
|
|
Reconciliation of Petroleum Segment Refining Margin per
Total Throughput Barrels
|
Three Months Ended March 31, |
(in millions, except for per
throughput barrel data) |
2020 |
|
2019 |
Refining margin |
$ |
22 |
|
|
$ |
317 |
|
Divided by: total throughput
barrels |
14 |
|
|
19 |
|
Refining margin per total throughput barrel |
$ |
1.52 |
|
|
$ |
16.55 |
|
|
Reconciliation of Petroleum Segment
Refining Margin Adjusted for Inventory Valuation Impact per Total
Throughput Barrel
|
Three Months Ended March 31, |
(in millions, except for
throughput barrel data) |
2020 |
|
2019 |
Refining margin adjusted for inventory valuation impacts |
$ |
158 |
|
|
$ |
285 |
|
Divided by: total throughput
barrels |
14 |
|
|
19 |
|
Refining margin adjusted for inventory valuation impacts per total
throughput barrel |
$ |
11.06 |
|
|
$ |
14.87 |
|
|
Reconciliation of Petroleum Segment Direct Operating
Expenses per Total Throughput Barrel
|
Three Months
Ended March 31, |
(in millions, except for
throughput barrel data) |
2020 |
|
2019 |
Direct operating expenses (exclusive of depreciation and
amortization) |
$ |
84 |
|
|
$ |
91 |
|
Divided by: total throughput
barrels |
14 |
|
|
19 |
|
Direct operating expenses per total throughput barrel |
$ |
5.87 |
|
|
$ |
4.74 |
|
|
Reconciliation of Nitrogen Fertilizer Segment Net Loss
to EBITDA
|
Three Months Ended March 31, |
(in millions) |
2020 |
|
2019 |
Nitrogen fertilizer net loss |
$ |
(21 |
) |
|
|
$ |
(6 |
) |
|
Add: |
|
|
|
Interest expense, net |
16 |
|
|
|
16 |
|
|
Depreciation and amortization |
16 |
|
|
|
16 |
|
|
Nitrogen Fertilizer
EBITDA |
$ |
11 |
|
|
|
$ |
26 |
|
|
|
Reconciliation of Basic and Diluted (Loss) Earnings per
Share to Adjusted (Loss) Earnings per Share
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Basic and diluted (loss) earnings per share |
$ |
(0.87 |
) |
|
|
$ |
1.00 |
|
|
Adjustments: |
|
|
|
Inventory valuation impacts (1) |
1.00 |
|
|
|
(0.24 |
) |
|
Unrealized gain on marketable securities (1) |
(0.22 |
) |
|
|
— |
|
|
Adjusted (loss) earnings per
share |
$ |
(0.09 |
) |
|
|
$ |
0.76 |
|
|
_____________________________(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 Total Debt and Net Debt and Finance
Lease Obligations to EBITDA Exclusive of Nitrogen
Fertilizer
|
Twelve Months Ended March 31,
2020 |
Total debt and finance lease obligations (1) |
$ |
1,691 |
|
Less: |
|
Nitrogen Fertilizer debt and finance lease obligations |
633 |
|
Total debt and finance lease
obligations exclusive of Nitrogen Fertilizer |
1,058 |
|
|
|
EBITDA exclusive of Nitrogen
Fertilizer |
$ |
519 |
|
|
|
Total debt and finance
lease obligations to EBITDA exclusive of Nitrogen
Fertilizer |
2.04 |
|
|
|
Consolidated cash and cash
equivalents |
$ |
805 |
|
Less: |
|
Nitrogen Fertilizer cash and cash equivalents |
58 |
|
Cash and cash equivalents
exclusive of Nitrogen Fertilizer |
747 |
|
|
|
Net debt and finance lease
obligations exclusive of Nitrogen Fertilizer (2) |
$ |
311 |
|
|
|
Net debt and finance
lease obligations to EBITDA exclusive of Nitrogen Fertilizer
(2) |
0.60 |
|
_____________________________(1) Amounts are shown
inclusive of the current portion of 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,
2020 |
|
June 30, 2019 |
|
September 30, 2019 |
|
December 31, 2019 |
|
March 31, 2020 |
|
Consolidated |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
128 |
|
|
$ |
104 |
|
|
|
$ |
28 |
|
|
|
$ |
(101 |
) |
|
|
$ |
159 |
|
|
Add: |
|
|
|
|
|
|
|
|
|
Interest expense, net |
26 |
|
|
26 |
|
|
|
24 |
|
|
|
35 |
|
|
|
111 |
|
|
Income tax expense (benefit) |
41 |
|
|
34 |
|
|
|
19 |
|
|
|
(36 |
) |
|
|
58 |
|
|
Depreciation and amortization |
78 |
|
|
71 |
|
|
|
71 |
|
|
|
64 |
|
|
|
284 |
|
|
EBITDA |
$ |
273 |
|
|
$ |
235 |
|
|
|
$ |
142 |
|
|
|
$ |
(38 |
) |
|
|
$ |
612 |
|
|
|
|
|
|
|
|
|
|
|
|
Nitrogen
Fertilizer |
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
19 |
|
|
$ |
(23 |
) |
|
|
$ |
(25 |
) |
|
|
$ |
(21 |
) |
|
|
$ |
(50 |
) |
|
Add: |
|
|
|
|
|
|
|
|
|
Interest expense, net |
16 |
|
|
16 |
|
|
|
16 |
|
|
|
16 |
|
|
|
64 |
|
|
Depreciation and amortization |
25 |
|
|
18 |
|
|
|
20 |
|
|
|
16 |
|
|
|
79 |
|
|
EBITDA |
$ |
60 |
|
|
$ |
11 |
|
|
|
$ |
11 |
|
|
|
$ |
11 |
|
|
|
$ |
93 |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA exclusive of
Nitrogen Fertilizer |
$ |
213 |
|
|
$ |
224 |
|
|
|
$ |
131 |
|
|
|
$ |
(49 |
) |
|
|
$ |
519 |
|
|
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